EDA Minutes 04-02-2003
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MINUTES
MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
Wednesday, April 2, 2003 - 4:00 p.m.
City Hall - Academy Room
MEMBERS PRESENT:
Chair Bill Demeules, Vice Chair Barb Schwientek, Roger Carlson,
Robbie Smith, Darrin Lahr, and Clint Herbst.
MEMBERS ABSENT:
Ron Hoglund.
STAFF PRESENT: Executive Director Ollie Koropchak.
GUEST:
Steve Budd, Integrated Recycling Technologies, Inc.
Eric Bondhus and Dennis I3ondhus, T. J. Martin dba Lake Tool, Inc.
1. Call to Order.
Chair Demeules called the EDA meeting to order at 4:05 p.m.
2.
Consideration to approve the January 29, 2003 EDA Minutes.
Clint Ilerhst made a motion to approve the January 29, 20()] EDA minutes as written.
i)'econd hy Darrin Lahr. ('orison and Snlith ahstained (ahsent) and Schweintek arrived
later; therefhre, motion died due to a lack olquorum.
3.
Consideration of adding or removinl-'. agenda item.
None. Koropchak welcomed City Council Member Robbie Smith as a commissioner of
the EDA.
4. Status report and consideration to approve subordinating to take-out the Lender's loan
and adding additional dollars (GMEF Loan No. 018 -IRTD.
Koropchak inf<mlled the commissioners that Integrated Recycling Technology, Inc,
(Steve Budd) and the EOA entered into a Loan Agreement on June 29, 200 I. Ci-MEF
Loan No. 0] 8 in the amount of $72,500 was a real estate loan subordinated to the lender,
21 th Century Bank. The Guaranty Agreement with partners: Budd, Meyer, and Berquam.
The remaining principal balance of the EOA loan is $69,377.01 as of May 2, 2003
(advanced payment.) PCI' the request of Mr. McIrose, State Bank of Rogers, the EDA is
asked to subordinate taking~out the first bank loan and to add additional dollars
(consolidating debt). The remaining principal balance of the initial $350,000 bank loan is
$340,377. Mr. Budd informed the commissioners he has bought-out his partners and is
refinancing with a new lender. Mr. Budd also told the EDA, he was not requesting
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EDA Minutes - 4/2/03
adding additional dollars. IRTI is growing and initially, Budd thought he'd rent out a
portion of the building but instead is utilizing the entire facility.
The Borrmver heing o,/j;ood credit and standing, DWTin Lahr made a motion to approve
suhordinating GMEF Loan No. OJ8 to hike-out the existing hank loan (~l$340,377
su/~ject to execution oldocumenls as deemed necessary and prepared by the EDA
Attorney at the cost olthe Borrower. Second by Robbie 5,'mith and l,vith nofiJrther
discussion, the motion passed unaninwus~y.
The request to approve adding an additional $50,000 to the Bank's first position
construction/working capital loan ($391,000) was withdrawn from the agenda by Steve
Budd.
5.
Status report and consideration to proceed with recoverv of funds for GMEF Loan No.
014 Cr. 1. Martin).
The EDA and 1. 1. Martin, Inc. entered into a Loan Agreement on February 18, 1998.
The M&E loan in the amount of $87,500 was in second position to Marquette Bank. The
existing principal amount of the EDA loan (GMEF Loan No. 014) is $45,886.66 as of
October 2002. The EDA has Personal Guarantees from Carl, Dennis, and Eric Bondhus
as well as a Security Agreement and Prolnissory Note. Sometime ago, First National
Bank of Elk River assumed the M&E. real estate, and other debt loan in the amount of
$719,000 of which the unpaid principal amount is $29,620 per the I,ender. A second loan
(lease agreements) with US Bank has an unpaid balance of about $11,000. Koropchak
informed the cOIn missioners that per First NationaL both lenders have negotiated a
settlement via a cash buy-out of $29,620 and $11,000, respectively.
Eric and Carl Bondhus inf(lrIned the FDA that the receivables left to collect are six
months old and viewed as dead. They otTered the EDA a settlement of an $18,000 loan at
6% interest rate over three years in lieu of the EDA proceeding to recovery funds on
deEmlted GMEF Loan No. 014. Eric further noted that Eric, Carl, and Dennis must all
agree. They still have personal guarantee liability, Carl is making payments on a
$180,000 piece of machinery and they continue to utilize their credit cards as cash.
Koropchak asked if they could accept a cash buy-out settlement of $18,000. Eric
responded they can take a look at it.
Commissioner IIerbst said he favored the $18,000 loan settlement as a means to end an
unj()rtunate situation stating the City and the EDA recognized both the benefits and the
risks of the GMEF Loan Program when established.. Lahr agreed with Herhst and. asked.
[':ric if they preferred a monthly or quarterly payment schedule. Eric replied either way.
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EDA Minutes - 4/2/03
Schwientek also agreed with Herbst and Lahr. Due to home financing, Eric Sondhus
requested the EDA loan settlement be elTective June 1,2003.
Barh Schwientek made a motion to aeee!JI a sel/lemenl olan $18,000 loan al 6.0%
interesl rate over three years effeclive .June I, 2003, Borrol1'er 10 pay all ADA al/orney
fees, eosls, and expenses up-fronlfilr preparalion oj'doeuments deemed necessary by the
EDA attorney. Clint Herbsl second the mol ion and with no/ifrther discussion, the molion
passed unanimously. Koropehak was asked to get an estimated cost from the EDA
Attorney for preparation of necessary documents.
6.
Executive Director's Report.
Koropchak reiterated the written Executive Director's Report and added that the Special
Legislation Bill to extend the 5-year activity rule from June 30, 1997, to June 30, 2007,
for Downtown TIF District No. 1-22 received opposition from four local individuals.
Prior to the scheduled introduction of the Bill to the Senate Tax Committee, today (April
2), Rep. Anderson and Senator Ourada received four phone calls each in opposition. Two
of the f()llr people in opposition, Pat Sawatzke and Keith Kjellberg were at the Capitol
and claimed the Bill was being driven by a proposed Block 52 redevelopment project of
which they object to the preliminary concept. Rep. Anderson and Senator Ourada
assumed the Bill was supported by the business community and noted for the City to
clean up their act. Senator Ourada did allow the bill to be introduced at the Senate Tax
Committee. Koropchak's testimony was well received by the Committee. The Chamber
Director. at the direction of liRA Lobbyist John Choi. submitted letters of support from
the Chamber Board of Directors. Koropchak continued noting the Bill allows the HRA
additional time to complete pending and other redevelopment projects within the
Downtown District carrying out the goals and objectives of the Central Monticello
Redevelopment Project No.1 and the Revitalizing Monticello's Downtown and
Riverfront Plan (Comprehensive Plan). Additionally, the Bill allows the liRA the
flexibility to use the pay-as-you-go finance method (less risky) as well as the up-hont
finance method, the flexibility to increase the amount of the temporary bonds when
refinanced if determined necessary. the l1exibi lity to issue tax exempt bonds fiJr public
inlprovements if determined necessary, and docs not request extending the 25-year life of
the district. The Special Legislation Bill is not being driven by any specific
redevelopment project.
Koropchak also noted approved GMEF Loan No. 021 in the amount of $55,000 to
Tappers Inc. is scheduled to close prior to April 18,2003.
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7.
Other Business.
EDA Annual Meeting - Tuesday, April 22,2003,4:00 p.m.
8. Adiournment.
EDA Minutes - 4/2/03
Roger Carlson made a motion to adjourn the EDA meeting. Clint Herbst second the
motion and with no.fiJrther business, the EDA meeting adjourned at 5:00 p.m.
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Ollie Koropchak, Recorder
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