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EDA Minutes 04-26-2005 . . . MINUTES MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY Thursday, April 26th, 2005 - 4:00 p.m. City Hall - Academy Room MEMBERS: Chair Bill Demeules, Barb Sch\vientek, Tom Perrault, Wayne Meyer, Susie Wojchouski, Darrin Labr, Ron Hoglund ABSENT: None STAFF: Executive Director Ollie Koropchak, Recorder Angela Schumann, Rick Wolfsteller I . Call to Order. Chair Demeules called the meeting to order at 4:00 PM, declaring a quorum. 2. Consideration to approve the February 10th. 2005 and October 26th, 2004 EDA minutes. MOTION BY COMMISSIONER SCHWIENTEK TO APPROVE THE MINUTES OF OCTOBER 26th, 2004. MOTION SECONDED BY COMMISSIONER LAHR. MOTION CARRIED. Prior to a motion on thc February minutes, Koropchak noted corrections, including a notation that thc loan rate would be 2% below prime, with a minimum fec of $200 or maximum fee not to exceed 1.5% of the EDA loan. MOTION BY COMMISSTONER PERRAULT TO APPROVE THE MINUTES OF FEBRUARY 10th, 2005. MOTIOl\ SECONDED BY COMMISSIONER LAHR. MOTION CARRIED. 3. Consideration of adding or removing agenda items. NONE. 4. Consideration to elect 2005 EDA officers. Commissioner Perrault noted an inconsistency betwcen the bylaws and slate of officers. Koropchak clarified that the correct position title should be assistant secretary rather than treasurer. . . . EDA Minutes - 04/26/05 MOTION BY COMMISSIONER LAHR TO APPROVE THE SLATE OF CANDIDATES WITH THE CORRECTION TO ASSISTANT SECRETARY AS FOLLOWS. President: Bill DeMueles Vice President: Barbara Schwientek Treasurer: Rick Wolfsteller Assistant Secretary: Ron Hoglund Secretary: Ollie Koropchak MOTION SECONDED BY COMMISSIONER SCHWIENTEK. MOTION CARRIED. 5. Consideration to review and accept the year-end EDA Financial Statements. Activitv Report. and proposed 2005 Budget. In reviewing the budget. Koropchak stated that for 2004. there were only two appropriations. as in many cases recycled funds has bcen used. For WSL the Small Cities Economic Recovery Fund and Minnesota Investment Fund, both using recycled dollars, had been used. Koropchak commented on the loan and investment interest, as well as the collection of legal fees. which resulted in revenues of over $83,000. She noted that some expenses. including legal, planning, and engineering costs, have not yet shown up on the records. Koropchak stated that she expects approximately $1,848 in total expenses in those areas. For the end of2004, the report shows $1,625,000 balance. Koropchak reported on accounts receivable. Wojchouski inquired who the TJ Martin loan was for. Koropchak indicated that the party was Lake Tool. Koropchak explained that most loans had been paid off. She rcported on remaining principal balances and cash in the bank. Koropchak estimated cash now projections for 2005, noting that the first payment on the Tapper loan was due in July. Koropchak stated that the total receipts for 2005 are estimatcd at $1,072,941. Koropchak stat cd that the EDA has made payments back to the liquor store in the past, usually waiting until later in the year to make that decision. Koropchak reported that the expected cash balance without repayment is $627,850.72. She notcd that thc recycling funds will change the total funds available amount. Perrault asked about the parking lot project on Block 35 and whethcr the funds for that project could come from recycled funds. Koropchak noted the original funding had been intended for fayade improvements. Hoglund noted that the $200,000 originally allotted by the EDA would have been matching funds. Koropchak noted that the reports presented would be going on to the Council for review and approval as rcquired by the by-laws. 2 EDA Minutes - 04/26105 . Koropchak noted that the summary included details the EDA's activity throughout the year. Koropchak stated that funding for the Block 35 project would have come from the Downtown Monticcllo Revitalization Fund. Lahr stated it was a fayade improvement program and was geared toward improving the back of the Block 35 buildings. The loan would have esscntially matched $195,000 for $25,000 worth of improvements by the property owners. Mayer asked why the project fell apart. Sehwientek explained that there were issues regarding parking concerns. It was also noted that not all property owners wanted to participate in the project. Koropchak explained that when using EDA or HRA funds, a public purpose must be established. Koropchak continued with the 2004 report, noting that the EDA was created in 1989. The report shows approved loans through 2004, including approved paybacks and loan disbursements. She commented that since inception, the EDA has only had to forgive $27,000 in loans. . In explaining the tracking for specific funds and when they get paid back, Koropchak stated that the UDAG funds have been paid back and that the two of the SMERG have been paid back in full. The EDA is now into recycled funds for those programs. Schwientek asked how much the EDA owes to the Liquor Store. Koropchak statcd that amount is $236.000. Lahr clarified that original purpose of the liquor store fund was to be start-up funds for industry. The City set aside funds from the liquor store for start-up enticement. Additionally, there are federal and state grants that can be received by businesses. The City has to match certain amount of those grants. Koropchak explained that the interest and principal on the loan is paid back to thc City, which can then be used only for cconomic development. 1n terms of the federal funds, the City gets to keep all the principal and interest. The caveat is that the funding has to be accountcd for scparately. A recycled loan has to meet federal guidelines for job income by HUD guidelines. Koropchak stated that with state grants, the City keeps the tlrst $100,000 in principal and interest. with the balance going back to the state. Those do not have to meet HUD standards. Wolfsteller asked which EDA loan returned principal and interest to the County. Koropchak responded that it was the loan to Standard Iron and noted that the City is only allowed a certain amount of grant funding per year. As Standard Iron paid their loan back, the funding went back to the County. . o -' . . . EDA Minutes - 04/26/05 Mayer asked about which fimd could be used for Block 35 improvements. Koropchak answered that the liquor store funding could be spent on anything. However. the EDA chose to spend it downtown. Demeules asked if the loan paybacks could be used to pay back the liquor store funds. Koropchak stated about $106,000 in cash could be paid back to the liquor store, which would deplete funds for projects downtown. Perrault asked if the funding could be used for the industrial park. Koropchak stated that was originally what it was intended to do. MOTION BY COMMISSIONER SCHWIENTEK TO ACCEPT THE 2004 YEAR-END FINANCIAL STATEMENT AND ACTIVITY REPORT FOR SUBMISSION TO THE CITY COUNIL ON MAY 9th or 23Rll, 2005. MOTION SECONDED BY COMMISSIONER HOGLUND. MOTION CARRIED UNANIMOUSL Y. MOTION TO BY COMMISSIONER SCHWIENTEK TO TABLE DISCUSSION ON PAY BACK TO LIQUOR STORE FUNDS TO THE OCTOBER MEETING OF THE EDA. MOTION SECONDED BY COMMISSIONER WOJCHOUSKI. MOTION CARRIED UNANIMOUSLY. 6. Consideration to review vear-end balances of the GMEF, DMRF. UDAG. and LRG FWlds. Koropchak reviewed the re-payments and disbursements ofloan payments. Koropchak noted that additional funds are available for EDA in the MN Investment Fund. All other funds have been recycled from SCERG and UDAG funds. Koropchak reported that the final close-out report for the Twin City Die Cast loan was submitted to the State. Once confirmed by the State, the EDA can start recycling those funds. Koropchak stated that the City had to extend timeframe for job creation. The State advised the City not to use the funds until jobs created. Koropchak completed a review of the summary of activity and financial reports for the noted funds, which was included in the ED/'\. Commissioner's packets. 7. Consideration to review for amendment the Business Subsidv Criteria and bvlaws of the EDA. Koropchak stated that it is required by the bylaws for the EDA to review for amendment both the Business Subsidy Criteria and bylaws each year. 4 . . . EDA Minutes - 04/26/05 Koropchak explained that in terms of the Business Subsidy Criteria, amendments to the business subsidy criteria require a public hearing notice. MOTION BY COMMISSIONER HOGLUND TO ACCEPT THE BUSINESS SUBSIDY CRITERIA AS WRITTEN. MOTION SECONDED BY COMMISSIONER SCHWIENTEK. MOTION CARRIED UNANIMOUSLY. MOTION BY COMMISSIONER SCHWIENTEK TO ACCEPT THE BY -LAWS OF TIlE EDA AS WRITTEN. Commissioncr Perrault asked to staff to confirm that the by-laws reflect correct onicer appointments as noted earlier. Koropchak indicatcd that she will verify appointments are correct as Ii sted. MOTION SECONDED BY COMMISSIONER WOJCHOUSKI. MOTION CARRIED UNANIMOUSLY. 8. Consideration of an update on the approved GMEF Loan No. 074 between the FDA and Tappcr's Holdings. LLC. Koropchak stated that no action was required on this item. Koropchak reported that the attorney did request some minor changes to the loan document. The EDA's attorney advised the EDA to stand firm on the request for promissory note and personal guarantee. Koropchak notcd that the SBA may also contribute financing, which puts the FDA in third position on the loan. Demeules stated that will not require action as it was not part of criteria. 9. Executivc Director's Report Koropchak provided a brief report on UMC's and WSl'sjob creation. Koropchak stated that the HRA' s Transformation Home Loan had startcd to generate leads. 7. Othcr B usi ness. Mayer rcported that tbe Council had authorized rescarch of a fiber-optic backbone for the City. Mayer stated that a workshop had been set for the 23,d of May. 8. Adjournment. MOTION BY COMMISSIONER LAHR TO ADJOURN. 5 EDA Minutes - 04/26/05 . MOTION SECONDED BY COMMISSIONER SCHWIENTEK. MOTION CARRIED UNANIMOUSL Y. L@y/f/wMg, , Record / ,- . . 6