EDA Minutes 07-21-1992
.
.
.
MINUTES
MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
Tuesday, July 21, 1992 ~ 7:00 p.m.
City Hall
MEMBERS PRESENT:
Chairperson Ron Hoglund, Vice Chairperson Barb
Schwientek, Brad Fyle, Clint Herbst, and Al
Larson.
MEMBERS ABSENT:
Assist Treasurer Bob Mosford and Harvey
Kendall.
STAFF PRESENT:
Executive Director Ollie Koropchak.
STAFF ABSENT:
Treasurer Rick Wolfsteller and Jeff O'Neill.
GUEST PRESENT:
Bradley Barger, Suburban Machine &
Manufacturing, Inc.
Jerry and Steve Schoen, Aroplax Corporation.
1.
CALL TO ORDER.
Chairperson Hoglund called the EDA meeting to order at 7:00
p.m.
2 .
CONSIDERATION TO APPROVE THE APRIL 28, 1992 EDA MINUTES.
Al Larson made a motion to approve the April 28, 1992 EDA
minutes, seconded by Ron Hoglund. Wi th no corrections or
additions, the minutes were approved as written.
3. CONSIDERATION TO REVIEW A PRELIMINARY AND FORMAL GMEF
APPLICATION FOR SUBURBAN MACHINE & MANUFACTURING, INC. (SMM).
Koropchak reviewed the enclosed agenda supplement data
(preliminary and formal application) for compliance with the
GMEF public purpose criteria and policies. Mr. Barger was
present to answer questions of the EDA members. FirStar Bank-
Plymouth Branch is the lender participant and the approximate
land acquisition is 3.66 acres.
4.
CONSIDERATION TO APPROVE OR DISAPPROVE GMEF LOAN NO. 004 FOR
SMM.
After the EDA determined that the SMM application met all six
of the GMEF public purpose criteria and the general policies,
Barb Schwientek made a motion to approve GMEF Loan No. 004 for
Bradley D. and Mary A. Barger, Suburban Machine &
Manufacturing, Inc. The motion was seconded by Al Larson and
without further discussion or comment the motion passed
unanimously. The loan was approved for the requested amount
.
EDA MINUTES
JULY 21, 1992
of $50,000 at 4.5% interest rate amortized over 20 years with
balloon payment in five years for real property development.
Loan fee was set at $750. TIF of $50,000 was accepted as
equity which is 100% of the GMEF because company equity was
ingested into financing new equipment (equipment is not
financed in this package). Minimum collateral of a second
mortgage lien on real estate, corporate guarantee, and
assigment of lease, and other condition requirements as so
determined and prepared by the Ci ty Attorney. The loan
approval was subject to total project funding, final plat
approval, project compliance with the city zoning and
ordinance, and execution of the Private Development Contract
prior to Council approval of TIF District No. 1-14. GMEF Loan
No. 004 becomes null and void November 21, 1992 if funds are
not disbursed.
The approved loan will be submitted to the City Council to
review for violations of the GMEF Guidelines on July 27, 1992.
Upon Council ratification, the remaining GMEF balance will be
$150,000.
.
5 .
CONSIDERATION TO REVIEW A PRELIMINARY AND FORMAL GMEF
APPLICATION FOR AROPLAX CORPORATION.
Koropchak reviewed the enclosed agenda supplement data
(preliminary and formal application) for compliance with the
GMEF public purpose criteria and policies. The EDA reviewed
the up-to"-date report of Ci ty' s dollars into the Aroplax
project. Jerry Schoen and son, Steve, were present to answer
questions of the EDA members. Mr. Schoen informed the EDA
that the bank closing would be delayed by four weeks because
of the need for a certified appraisal. With Marquette Bank-
New Hope acceptance of an appraisal by Mr. Jack Maxwell, the
EDA assured Mr. Schoen the appraisal could be completed much
faster. With land surveys and soil borings being completed,
Fab Con products need to be ordered to keep the project on
line, reported Mr. Schoen. Additionally, he reported that
Aroplax's market has branched into Europe via a water
purification product.
6. CONSIDERATION TO APPROVE OR DISAPPROVE GMEF LOAN NO. 005 FOR
AROPLAX CORPORATION.
.
The EDA determined that the Aroplax application met all six of
the GMEF publ ie purpose cr iter ia, however, the requested
$85,000 loan does not comply with the GMEF Loan Size policy:
"Minimum of $5,000 and maximum not to exceed 50% of the
remaining revolving loan fund balance." Remaining GMEF
Page 2
.
EDA MINUTES
JULY 21, 1992
balance is $150,000. Koropchak suggested that the EDA
consider requesting City Council to transfer $20,000 from the
Liquor Fund thereby securing a GMEF balance of $170,000 which
would allow the requested loan to be incompliance with the
GMEF Loan Size policy. More importantly, this transfer would
indicate to the State of Minnesota strong local-support of the
Aroplax project and would add credibility to the submitted
State application through documentation of the GMEF Maximum
Loan Size Policy, thereby substantiating the need for the
requested $170,000 of State dollars. The first $100,000
principal and interest payback of the State's $170,000 Grant
is retained by City for the EDA revolving fund, this a good
investment. Barb Schwientek made a motion requesting City
Council consider transferring $20,000 from the Liquor Fund to
the GMEF account for the reasons outlined above. The motion
was seconded by Al Larson and without further discussion or
comment the motion passed unanimously.
.
Based upon the assumption that City Council would authorize
transferral of the $20,000 into the GMEF account for
compliance of policy, Al Larson made a motion to approve GMEF
Loan No. 005 for Jerald J. and Mary E. Schoen, Aroplax
Corporation. The motion was seconded by Barb Schwientik and
without further discussion or comment the motion passed
unanimously. The loan was approved for the requested amount
of $85,000 at 6% interest rate over seven years. Of the
$85,000 loan, $55,000 is for equipment and $30,000 is for
overrun/contingency of fixed assets. Loan fee was set at
$1,275. Company equity accepted at $75,000 would be 88% of
the GMEF, or a combined company/TIF equity accepted at
$145,000 would be 170% of the GMEF. The GMEF to share first
position with the Central Minnesota Initiatve Fund and the
State's Economic Recovery Grant Fund on the equipment, and to
share first or third position on fixed asset
overrun/ cant ingency. The $55,000 is to be disbursed upon
certification of purchase and/or payment of the equipment; the
$30,000 overrun/contingency is to be disbursed upon
certification of completion/purchase and payment of fixed
assets. Collateral, guarantees, and other condi tion
requirements as so determined and prepared by the City
Attorney. The loan approval was subject to total project
funding approval, project compliance with the city zoning and
ordinances, execution of the Private Development Contract
prior to Monday, July 27, 1992, and transfer of $20,000 to the
GMEF account. GMEF Loan No. 005 becomes null and void
November 21, 1992 if funds are not disbursed.
.
Page 3
.
.
.
EDA MINUTES
JULY 21, 1992
The approved loan will be submitted to the City Council to
review for violations of the GMEF Guidelines on .July 27, 1992.
Upon Council ratification, the remaining GMEF balance will be
$85,000.
7. CONSIDERATION TO MEET ON TUESDAY, JULY 28, 1992, THE REGULAR
QUARTERLY EDA MEETING DATE.
By consensus of the EDA members, the regular July 28 meeting
was cancelled. Unless the need for a loan application review
or approval, the next EDA meeting will be held in October.
8. OTHER BUSINESS.
Koropchak reported that Modern Molding, Inc. decided to locate
in Delano. Industrial property became available which
originally was not accessible.
Secondly, Koropchak reported that Q-A Thermal representatives,
Bi 11 King, Kevin Doty, Tom Golewski, and hersel f met to
discuss the need for a $50,000 line-of-credit in addition to
the $100,000 equity. The $150,000 would serve as the four to
six month interim financing necessary between the acquisition
of the exclusive heat-treating license and the completion of
a fa.cill ty wi th operational equipment. Acquistion of the
license is a key issue as it captures an established market in
the Upper Midwest. Acquisi tion is expected August 1. The
Ci ty and Mr. Golewski marketed the Shingobee/TIF' Preplan.
Later, another meeting with Mr. Golewski, his technical
personnel, and company representatives further outlined the
specifics of the building. Kevin Doty has again met with the
company representatives to further define the timelines and
financial commitments associated with the license acquisition
and the need for additional financial information.
Maureen Steinwall continues to be interested in Monticello as
a site location for their relocation and expansion. Project
development expected in '93 or '94.
9. ADJOURNMENT.
By consensus of the EDA, the meeting adjourned at 8:45 p.m.
~~ '<~~
Ollie Koropchak, Executive Director
Page 4