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EDA Minutes 04-27-2004MINUTES • MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY Tuesday, Apri127`", 2004- 4:00 p.m. Academy Room Members Present: Absent: Staff Present: Guests: 1. Call to Order. Chair Bill Demeules, Clint Herbst, Darrin Lahr, Barb Schwientek, Roger Carlson, Ron Hoglund Robbie Smith Executive Director Ollie Koropchak, Treasurer Rick Wolfsteller, Public Works Director John Simola, and Recorder Angela Schumann Bruce Hamond - VisiCom; Pat Jensen- GWJ, LLC; Block 35 property owners Chair Demueles called the meeting to order at 4:00 p.m. and declared a quorum. . 2. Consideration to approve April 20th, 2004 EDA minutes. A MOTION WAS MADE BY LAHR TO APPROVE THE MINUTES OF THE APRIL 20`", 2004 EDA MEETING. DEMEULES SECONDED THE MOTION. CARLSON AND HOGLUND ABSTAINED DUE TO ABSENCE AT SAID MEETING. MOTION CARRIED. Consideration of adding or removingitems from the agenda. None. 4. Continued -Consideration of a request from Aroplax Corporation to extend balloon payment date for GMEF Loan No. 016. Steve Bubul did not recommend the extension of the balloon payment. Koropchak stated that Aroplax had indicated that they are able to re-finance without the extension, they were just researching all options available to them. Koropchak indicated that Aroplax withdrew their request. Demeules noted that there are provisions that allow the EDA to refinance such loans if • needed. EDA Minutes - 01/27/04 5. Consideration of a request from VisiCom to extend the balloon payment date of DMRF Loan No. 111. Koropchak indicated that VisiCom had a downtown revitalization loan. They have completed a rehabilitation of their property at 200 West Broadway. The balloon payment for the loan is due on May 1St, 2004. The remaining balance on the loan is $6073.01. If the balloon payment date is extended, applicable interest would be added to that amount. Bruce Hamond is asking for an extension of the balloon payment date in order to accommodate a new project on south side of Broadway. Hamond presented the project plan to the EDA, indicating that a second building would be breaking ground in three months. There would now be two separate building structures, totaling 6000 square feet. Hamond is requesting the extension until the conventional lender approves new loan for the proposed construction. He indicated that the project would also include new facades for both buildings. The second building would include apartments on second floor. Hamond approximated that VisiCom would need an extension of approximately six months, pending appraisal. A balloon extension to November 1St would accommodate that timeframe. Herbst asked if the plan Hamond had presented had been reviewed by Council or with planning staff. Hamond replied that he had reviewed plan with the Building Official, Fred Patch. Hamond indicated that any concerns on potential parking issues had been addressed. They will be re-using the current parking footprint. . Koropchak indicated that extending the balloon payment would also allow time for the appropriate staff review as noted above. MOTION BY HOGLUND TO APPROVE THE EXTENSION OF BALLOON PAYMENT DATE FROM MAY 1, 2004 TO NOVEMBER 1, 2004, FOR THE LOAN AGREEMENT BETWEEN THE MONTICELLO EDA AND VISICOM, INC., DATED APRIL 10, 2001, SUPPORTED BY LENDER'S LETTER AND THAT THE DMRF GUIDELINES DO NOT ADDRESS BALLOON DATE EXTENSION. MOTION SECONDED BY CARLSON. MOTION CARRIED. 6. Consideration of a request from GWJ LLC to extend the Compliance Date of GMEF Loan No. 019. Pat Jensen, representative from GWJ, was present to address the EDA on the extension of the compliance date. Koropchak reviewed the GMEF Loan and the conditions set forth as a part of the loan. The loan criteria included a commitment to job creation and wage level. Each year, by law, companies in receipt of the loan are required to report on those items. Koropchak stated that the commitment for this loan was three jobs. Koropchak reported that they have hired two employees, with wages above what they had anticipated in the original terms of the loan. As they are currently in default under the original terms for employment, GWJ is requesting an extension of the "Compliance Date" in order to create the additional job. 2 EDA Minutes - 01/27/04 . Koropchak is recommending approval of the extension to August 30, 2005 to allow GWJ to come into compliance. Koropchak stated that it is likely that the default in employment is most likely related to the economy. Jensen indicated a portion of the business has been sold off, while another area of the business is expanding. Jensen reported that the first quarter report on business was the best it had been in approximately 3 years. MOTION BY SCHWIENTEK TO APPROVE AN EXTENSION OF THE COMPLIANCE DATE FROM AUGUST 30, 2003, TO AUGUST 30, 2005, WITHIN THE LOAN AGREEMENT BETWEEN GWJ, LLC AND THE MONTICELLO EDA DATED AUGUST 30, 2001, FOR GMEF LOAN NO. 019. MOTION SECONDED BY HERBST. MOTION CARRIED. 7. Consideration to review Block 35 facade improvement concept and costs, contract, final site improvement concept public/private ratio for approval of EDA funding and to request Council to approve the concept and to order a feasibilit sy turfy. Koropchak reviewed the staff report, indicating that the project had begun in April of 2002. The property owners and City staff have worked to develop a concept that works • for all parties. Koropchak reiterated some of the guidelines for the downtown revitalization project. Additionally, the EDA had identified specific improvement goals and objectives for Block 35. Koropchak referred to July's financial package and the latest site improvement concept. Al Loch spoke on behalf of Block 35 property owners. Loch provided an overview of the project to date. Loch stated that each roof within the block had serious water issues, which would cost approximately $1400 to fix, per building. The water problems are directly related to storm and water lines and catch basins. Loch indicated that until the City had determined where the catch basins would be, providing the EDA with an estimate was difficult. Loch reported that with the decision on the locations, it was determined that 4 of 8 buildings can share common lines. This results in an approximate cost of $14,800 for 6 lines. Loch stated that the estimate for garbage services would include service for all businesses, as well as vacant building and lot, and any renters. Service was estimated based on dumping twice a week. The project plan layout does not account for how services could be condensed in the new design. Herbst asked if the Masons are in favor of building upgrades. Loch indicated that the Masons had said no to awning, but had agreed to the underground improvements. All other property owners have now signed a contract for awnings. Masons did not want to remove canopy, which has accounted for their lack of agreement. A concept image for what the awning would look like was presented. EDA Minutes - 01/27/04 Hoglund indicated that awnings served the primary purpose of hiding roof lines. Herbst and Hoglund stated that they did not see the Masons refusal as a reason to holdup the project. Loch indicated that it was their understanding that the awnings would be the last improvement, occurring sometime in August or September, after all other construction had been completed. Koropchak inquired whether everyone was on board in terms of the maintenance agreement. Loch indicated that Brad Larson and Jim Agusto had put the agreement together. At this time, only the Masons and Brad Larson need to sign. Loch stated that landowners are listed by lot number so that the agreement continues with the property in the event of sale. Koropchak inquired why a commencement date was included in the agreement. Agusto indicated that the maintenance agreement needed some kind of term limit as it couldn't be perpetual. Koropchak stated her concern regarding the possible sale of property and the agreement being recorded against the property. Agusto indicated that instead, the agreement is binding to the owner, not the property, even in the event of sale. It also states that the City has the right to assess should a property owner default on the terms of the agreement. Lahr inquired whether there would be any statement that further defines what the actual • improvements will be. Augusto indicates that the agreement only covers what the City is improving. Koropchak inquired whether DAT had reviewed the plans. Wojchouski indicated that no final plan had been submitted. EDA commended the property owners on their effort. Koropchak stated that the EDA needed to determine if their goals as listed in the staff report had been met. These include making a determination whether the ratio had been developed based on a more extensive package of facade treatments. Koropchak stated that it would appear, based on the estimates provided, that the City investment is at a 3 to 1 ratio. Koropchak suggested that if the EDA is interested in proceeding, aright-to-enter document would be needed from property owners stating that the City can proceed with improvements on private property. Larson indicated that a temporary construction easement would be needed for this purpose. Larson also suggested that the EDA attorney would need to review those documents as well. Koropchak also recommended that the EDA set a date in terms of completion date for the facade. Koropchak stated that as the EDA is considering use of public dollars, it should be noted that one of the property owners is delinquent in paying property taxes. Karen Schneider inquired whether the fact that property values would go up as a result of the improvements can be considered as an offset to the ratio. Koropchak stated that there is no set ratio the property owners needed to meet on the project, she would just like this 4 EDA Minutes - 01/27/04 to be noted in terms of the consideration of public purpose. • Koropchak outlined the process for moving forward as noted in the staff report. Carlson inquired who would be paying for feasibility study. Koropchak stated that it had been included in the original funding estimate for engineer fees. Herbst inquired how much funding was originally intended. Koropchak stated that $145,000 had been allotted for this project, as well as another $30,000 for the City parking lot. Herbst indicated he was not concerned about the ratio of public/private dollars as much as whether the merits of the project warranted funding input. Herbst stated that the EDA can't fault the property owners for seeking the best rate in order to keep costs down. It was asked what would happen if the bids and project came in much higher than expected. Koropchak indicated that at that point, the. City and EDA would need to determine if the project goes forward. Koropchak noted that the improvement project numbers had come from WSB and Public Works a few years ago. In regard to design, Koropchak indicated that the City Planner, Steve Grittman, recommended that the garbage container and islands stay as is. Koropchak indicated the trees and shrubs could be removed. The container size may be reduced based on number of times garbage is removed. It was noted that under new contract, all property owners and renters would use the same garbage removal service. Loch indicated that may save money. • Loch asked if the five points addressed in the report meet the required criteria. Demeules indicated that the City would need to get firm numbers and address the deliquent tax property owner situation. Loch inquired whether that issue should put the entire project on hold, as it is out of their hands. Herbst indicated that it just rolls over and devalues it for re-sale. Demeules stated that it does call in to question whether they can afford to do the awnings if they can't pay their taxes. Loch clarified that the tenants are paying for some and the landowners are paying for some, however, the maintenance agreement is signed by the land owner. Herbst stated that the project is far enough along to complete the feasibility study. Demeules indicated that the City would need to move forward with the study to obtain firm project estimates. Koropchak clarified that at this time, the EDA is asking Council to look at the concept as provided and to authorize a feasibility study on its merits. Koropchak also recommends establishing a timeframe for completion. Wolfsteller asked what kind of documentation would support that improvements would actually be made. Larson indicated a simple consent agreement with the fee owner of the property could be executed, by which if the improvement is not completed, the City can complete the work and assess the cost back. Herbst and Lahr agreed that such an agreement would definitely be needed. • Koropchak clarified that the process to follow will be to proceed with the feasibility study, then establish a design, go out for bid, then accept bids, and finally commence project work. 5 EDA Minutes - 01/27/04 MOTION BY HOGLUND TO REQUEST THAT COUNCIL APPROVE THE CONCEPT FOR BLCOK 35 IMPROVEMENTS AND AUTHORIZE A FEASIBILITY STUDY. MOTION SECONDED BY SCHWIENTEK. MOTION CARRIED. Koropchak indicated that this would be placed on the Council agenda for May 10~n Loch inquired what the next steps would be. Koropchak indicated that the group would not meet until the feasibility study comes back. That date is estimated to be June l Otn. It is likely that a date of August 1st is the earliest construction commencement date. Consideration to elect 2004 officers. MOTION BY HERBST TO NOMINATE THE CURRENT EDA OFFICER SLATE TO INCLUDE BILL DEMUELES AS CHAIR, BARB SCHWIENTEK AS VICE CHAIR, RICK WOLFSTELLER AS TREASURER, RON HOGLUND AS ASSISTANT TREASURER, AND OLLIE KOROPCHAK AS SECRETARY FOR 2004. MOTION SECONDED BY CARLSON. MOTION CARRIED. 9. Consideration to review wear-end EDA financial statements, Activity Report, and • proposed 2004 Budget. Koropchak reported that cash flow projections for 2004 indicate a beginning cash balance of approximately $924,000. The combined principal and interest payments due and loan fees are approximately $257,700. Koropchak noted that the Mainline and Aroplax loans will be coming due later in 2004. With estimated expenditures of $602,000, the projected cash balance as of December, 2004 is $580,000. Total 2003 assets and liabilities on the balance sheet are estimated at $1,396,631.42. Koropchak noted total revenues for 2003 were at $106,639.01 and expenditures were at $72,177.25. Koropchak reported that based on projections, the expected cash balance at December 2004 would be close to $579,866.64. Lahr inquired why 2003 and 2002 interest income/investments appeared on the statements. Wolfsteller indicated that they were not shown on previous statements; this report illustrates the actual amounts for those years correctly. Herbst indicated that payment back to Liquor Store could be held off in order to accommodate a potential large project. Koropchak also reviewed the EDA Activity Report and noted that the report includes a summary of EDA loans. That summary includes information on the original loan, principal paid, balance remaining and interest paid. Also illustrated in the report are investment interest earnings. EDA Minutes - O 1 /27/04 MOTION BY LAHR TO ACCEPT THE 2003 YEAR-END FINANCIAL STATEMENT AND ACTIVITY REPORT FOR SUBMISSION TO THE CITY COUNCIL ON MAY 10, 2004. MOTION SECONDED BY HERBST. MOTION CARRIED. 10. Consideration to review year-end balances of the GMEF, DMRF, UDAG, and ERG Funds Koropchak provided an update on other fund balances, including those for GMEF No. 017 and 0018, which were pre-paid in 2003. Koropchak reminded the EDA that although GMEF Loan No. 021 and 022 were approved in 2002, the loan closings and disbursements took place in 2003. She noted that the EDA showed a loss of $27,866.00 for the TJ Martin loan. Balloon payments for Aroplax, Mainline and VisCom are due in 2004. Koropchak noted that all GMEF loan payments are current. Koropchak reported that no disbursements have been made from the Downtown fund. Koropchak stated that the total dollars available to the EDA for GMEF and DMRF programs is approximately $574,198.55, after disbursement of the WSI loan. • 11. Consideration for amendment to the Business Subsidy Criteria and Bylaws of the EDA. MOTION BY SCHWIENTEK TO ACCEPT THE BUSINESS SUBSIDY CRITERIA OF THE EDA AS WRITTEN. MOTION SECONDED BY HOGLUND. MOTION CARRIED. 12. Executive Director's Report. Koropchak reviewed her report, providing an update on the proposed Chadwick property purchase. The purchase negotiations continue to move forward. Council tabled approving authorization of entering into the Purchase Agreement until further contract details were resolved. Koropchak noted that the closing for the GMEF Loan to WSI Industries had been scheduled and on clarified for EDA members that the 4-A rating indicated a high credit rating for the company. 13. Other Business. None. 14. Adjournment. MOTION BY LAHR TO ADJOURN AT 6:45 PM. MOTION SECONDED BY HOGLUND. MOTION CARRIED. Angela Schumann, Recorder EDA Minutes - 01/27/04 i • i