EDA Minutes 04-20-2004
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MINUTES
MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
Tuesday, April 20'\ 2004- 4:00 p.m.
Academy Room
Members Present:
Chair Bill Oemeules, Clint Herbst, Darrin Lahr, Robbie Smith
Absent:
Barb Schwientek, Ron Hoglund, Roger Carlson
Staff Present:
Executive Director Ollie Koropchak, Treasurer Rick Wolfsteller, and
Recorder Angela Schumann
Guests:
Mike Pudil, Paul Sheely - WSI Industries, Inc.
I. Call to Order.
Chair Demueles called the meeting to order at 4:20 p.m. and declared a quorum.
2.
Consideration to approve Januarv 27th. 2004 EDA minutes.
A MOTION WAS MADE BY SMITH TO APPROVE THE MINUTES OF THE
JANUARY 27TH, 2004 EDA MEETING. LAHR SECONDED THE MOTION.
MOTION CARRIED.
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Consideration of adding or removing items from the agenda.
None.
4. Consideration to review for discussion the preliminary GMEF application from WSI
Industries. Inc.
Koropchak provided the staff report, covering items provided for the EDA in their
agena packet.
Koropchak stated that the amount of the loan request was $350,000 for real estate
acquisition and development loan. Mike Pudil provided the EDA with a brief
introduction to WSI Industries. Pudil informed the EOA that WSI is a publicly traded
company which began in 1950 and focuses on contract machining and manufacturing.
WSI currently employs 46-47 persons. mostly machinists. The company is currently
located in Osseo, where they have outgrown their space. Pudil stated that the
EDA Minutes ~ 04/20/04
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Remmele building's former use for precision contract machining makes it an
appropriate choice.
Lahr inquired whether any employees would be moving as a result of the company
relocation. Pudil indicated that the move had just been announced last week. He
stated that some may consider relocating, although a large share of employees are
already in the general area. Pudil commented that it is critical to keep skilled
employees and have them move with the company.
Korpochak stated that the EDA is asked to consider approval or denial of the request
for a $350,000 GMEF loan. To determine approval, the EDA must consider whether
the applicant meets the following criteria. First, the EDA needs to determine if this
GMEF loan application from WSI will encourage economic development. Secondly,
the EDA must determine ifthe preliminary real property acquisition and development
loan application complies with the EDA Business Subsidy Criteria - GMEF
Guidelines. Lastly, the EDA must determine the amount, terms, and fee of the loan
for approval.
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Koropchak stated that WSI meets four or more of the Public Purpose Criteria as
outlined. WSI meets the required number of employees, wage goals, and requirements
for annual reports until termination the termination of the loan. As the industry will
utilize a currently vacant building, Koropchak reported that market value will be
retained.
The use is compatible with the comprehensive plan and zoning for the area.
Koropchak stated that WSI meets the requirement that the GMEF loan be used as a
secondary source of financing to the banklconventionalloan. Koropchak also noted
the supporting data provided by the primary lender lender indicating that they have
determined WSI is a credit-worthy enterprise. Also, Koropchak has provided the
FDA with financial and goal and accomplishments statements.
Smith inquired what the primary lender's rating of 4-A indicated. Koropchak
indicated that the term is internal to that bank. The statements provided by the bank
are specific to WSI.
Under the Business Eligibility Criteria, Koropchak stated that GMEF guidelines allow
WSI to qualify for up to $10,000 for each job created, for a total of $460,000.
However, WSI is asking for $350,000. The guidelines also state that the maximum
loan is not to exceed 50% of remaining loan fund balance. Koropchak has
determined that the 50% requirement would be met and would leave an approximate
loan fund balance of $400,000. The request also meets the EDA equity requirement
of 10% minimum at 54%.
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Koropchak recommends that the EDA amortization is consistent with the lender at 25
years with a balloon payment in year 5. Regarding the interest rate. Koropchak stated
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EDA Minutes - 04/20/04
that it must be no less than 2%, Minneapolis prime. Koropchak indicated that prime
is currently 4%, as it has been since June 2003. Koropchak noted that the
recommendation can be up to 2% below the 4%.
Koropchak stated that the loan fee minimum is $200 or is not to exceed 1.5% of
project. The fee is due no later than April 30'\ 2004. Koropchak recommends the
$200 minimum.
Koropchak briefly reviewed the remaining terms, indicating that the prepayment
policies are standard, no collateral or personal guarantee is necessary, and the loan
becomes null and void if funds are not disbursed by October 20th, 2004.
Herbst asked Pudil when they sought to close. Pudil indicated that they are seeking to
close May I sl and then begin to move into the building in phases.
DeMueles inquired whether any additions or changes would be made to the building.
Pudil stated that only internal reorganization would be occurring to accommodate
more machining space.
Koropchak and Wolfsteller recommended approval at the amount and terms stated.
5.
Public Hearing - Consideration to approve or deny GMEF No. 023. a business
subsidv, for WSI Industries, Inc.
Chair Demeules opened the public hearing to call for public comment on
consideration to approve or deny GMEF No. 023, a business subsidy, for WSI
Industries, Inc.
AFTER REVIEWING THE APPLlCA nON AND DETERMING THAT IT MEETS
THE GREATER MONTICELLO BUSINESS SUBSIDY CRITERIA, LAHR MADE
A MOTION TO APPROVE GMEF LOAN NO. 023 FOR WSIINDUSTRIES, 1Ne.
IN THE AMOUNT OF $350,000 SUBJECT TO THE FOLLOWING TERMS:
(A) FIXED INTERST RATE OF 2%
(B) LOAN FEE OF $200
(C) AMORTIZATION OVER 25 YEARS WITH A BALLOON PAYMENT IN 5
YEARS
(D) LOAN BECOMES NULL AND VOID OCTOBER 20Tl!, 2004
(E) COLLATERAL PER EDA ATTORNEY (NO PERSONAL GUARANTEE
AS PUBLICLY HELD COMPANY)
(F) JOBS AND WAGE LEVELS PER APPLICANT
(G) LEGAL FEES RESPONSIBILITY OF APPLICANT
MOTION SECONDED BY SMITH.
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EDA M inules - 04/20/04
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MOTION CARRIED.
Hearing no comment, ChairDemeules closed the public hearing.
Koropchak noted the item would be placed on the consent agenda for Monday's
Council meeting.
6. Executive Director's Report.
Reviewed and accepted.
7. Other Business.
The Tuesday, April 27, 2004 EDA Annual Meeting was noted.
8. Adjournment.
A MOTION WAS MADE TO ADJOURN AT 5:00 PM BY LAHR, SECONDED BY
HERBST. MOTION CARRIED.
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Angela Schumann, Recorder
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