EDA Agenda 11-13-2001
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AGENDA
MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
Tuesday, November 13,2001 - 4:00 p.m.
City Hall- 505 Walnut Street - Academy Room
MEMBERS: Chair Bill Demeules, Vice Chair Barb Schwientek, Assist Treasurer Ken Maus,
Clint Herbst, Roger Carlson, Ron Hoglund, and Oarrin Lahr.
STAFF:
Treasurer Rick Wolfsteller, Executive Director Ollie Koropchak, Recorder Lori
Kraemer.
1. Call to order.
2. Consideration to approve the October 17,2001 FDA minutes.
3. Consideration of adding or removing agenda items.
4. Consideration to approve the Subordination Agreement between Firstar Bank, N.A. and
the Monticello EDA. (Blue Chip)
5.
Consideration of Executive Director's Report.
6. Other Business.
7. Adjournment.
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MINUTES
MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
Wednesday, October 17, 2001 - 4:00 p.m.
City Hall- 505 Walnut Street - Academy Room
Members Present:
Chair Bill Demeules, Assistant Treasurer Ken Maus, Clint Herbst, Ron
Hoglund and Darrin Lahr.
Members Absent:
Roger Carlson and Barb Schwientek,
Staff Present:
Executive Director Ollie Koropchak. Treasurer Rick Wolfsteller and
Recorder Lori Kraemer.
Guests:
DA T Chair Pam Campbell
Block 35 Business Owners Karen Snyder and Nancy McCarty
1. Call to order.
Chair Demueles called the meeting to order at 4 PM.
2.
Consideration to approve the AUQ.ust 2 L 2001 EDA minutes.
A MOTION WAS MADE BY RON HOGLAND TO APPROVE THE MINUTES OF
THE AUGUST 21, 2001 EDA MEETING. CLINT HERBST SECONDED THE
MOTION. tvlotion carried unanimously.
3. Consideration of adding or removing agenda items.
Ollie Koropchak added discussion regarding amending the EDA guidelines as well as an
update regarding the Wright County Partnership.
4.
Consideration of an update for revitalization of Block 35.
Ollie Koropchak, Executive Director, provided the staff report advising the status of the
alley catch basin and alley easement, advising that the City had been unable to find any
record of recorded alley easements. The only reference found was a letter dated January
1978. Legal descriptions don't identify easements; however, individual abstracts would
note recorded easements. It's been a general understanding between the property owners
and the city that this area was recorded as an easement for the purpose of a public alley to
be maintained by the city. The Public Works was not interested in removing snow from
private property. The alley and public parking lot will be plowed simultaneously and as
EDA Minutes - 10/17/01
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quickly as possible. John Simola, Public Works Director, advised Koropchak that the
City should obtain written easements from the property owners.
b) Estimated costs to correct alley drainage.
Based on the drainage concerns raised by the property owners at the last EDA meeting,
Koropchak requested the Public Works Department take a look at the area. Public Works
Director John Simola reported that there is one catch basin located to the easterly side of
Block 35 alley and the depth of the catch basin is approximately 2.85 feet which perhaps
indicates the catch basin freezes creating the lack of drainage. The storm sewer line on
Walnut Street is about 15/16 feet deep. Upon request. Simola prepared a cost estimate to
correct the problem: Remove and replace the concrete alley at a lower elevation to
improve drainage (drop 6 to 8 inches), and remove the existing catch basin and install t"vo
catch basins at a lower level (drop to 5 to 7 feet). Simola's estimate is $48,817 which
does not include engineering costs nor the cost to slope the private surface to match the
new alley elevation.
Karen Snyder. business owner. stated that drainage may not be a problem if the alley was
plowed in a timely manner and asked if they could try that first before putting in new
catch basins.
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c) Review cost estimates previously provided by Planner Grittman.
At the July meeting, Planner Grittman presented two cost estimates for parking and trash
improvements. One estimate with no concrete sidewalk and curb ($50.000) and another
estimate with concrete sidewalk and curb ($75,000). The EDA offered financial
assistance in the amount of 75% to 100% of the cost to develop. At the August meeting.
a third concept to provide two rowS of parking divided by the alley to accommodate the
request of the property owners for convenient. back-door parking was agreed upon
bet\veen the EDA and property owners. Grittman was to review this with Public Works
and they did discuss this briet1y at site review.
Herbst added that maybe for this year the owners should try plowing the alley and see if
that alleviates the drainage problem. Koropchak noted that Simola was not interested in
starting to clear snow from private parking areas. even though the City owns a portion of
the alley. and the business owners are stating they are willing to take care of the plowing
as long as the City removes the snow from the parking lot which is City owned. Karen
Snyder stated that she did get some bids already and will talk to the other business
owners.
Ken Maus stated possibly asking Simola to trade off the hours of plowing for hauling.
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EDA Minutes - 1011710 I
Wolfsteller noted that there is probably more hours involved in hauling the snow than in
plowing. Herbst stated possibly the snow could be stored in the empty lot for this year
and when it's full, the City could come in and haul it out. When it's full, it could also be
piled in the City's parking lot and hauled away.
There was also a consensus that the businesses did not want the alley torn up at the same
time that Broadway was torn up. They would prefer to handle the snow plowing this
year. Snyder also commented that in talking to her renters they were not interested in
hauling the garbage any further out to a dumpster as they would not want to leave the
business unattended, although it was stated that most businesses do this at the end of
business hours.
Ron Hoglund stated that perhaps John Simola should be contacted for further options.
Rick Wolfsteller added that perhaps the businesses could contract a private party to plow
and haul, and they bill the City for the percentage of what is City owned. At this time
they will pile the snow in the empty lot as they have been doing in the past until it is
sold.
It was the consensus of the members and the business owners present to take no action on
the parking/trash improvements until 2002 when the Broadway project is completed.
Karen Snyder will contact the other business owners and discuss contracting a private
party to plow and remove snow from the private property and alley, billing the City for a
portion of the cost.
5.
Consideration of Executive Director's Report.
Koropchak provided the executive director's report, adding that Redwing Foods is
possibly leasing space in Big Lake.
All EDA loans are current.
6. Other Business
Amendinu: the EDA Guidelines
Koropehak provided a copy and the current guidelines noting that the EDA had talked
previously about extending the boundaries and adding language such as "upon review,
case by case, unique situation" etc., stating the EDA could consider adding additional
blocks. Per the EDA attorney, this can be done. Lahr stated that they may not want to
change the guidelines at this time but to wait until someone approaches the EDA. It was
the consensus to stay with the current guidelines, but encourage anyone to present a plan
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EDA Minutes - 10/17/01
to the DA T and EDA. Ken Maus also stated there should be some distinction between
routine maintenance and upgrading a building.
Wril;!ht Countv Partnership
Koropchak provided information regarding the Minnesota Community Capital Fund,
a soon-to-be non profit organization offering local communities an opportunity to
participate in innovative new development financing resources. Koropchak and Lahr
provided a brief description of how this program works, stating they provide the initial
loan and stating that this is an alternate financing vehicle. Members were encouraged to
read the information and to note the resource as an additional funding option for the
EDA.
7. Adjournment.
A MOTION WAS MADE BY CLINT HERBST TO ADJOURN THE MEETING AT
5:15 PM. MOTION SECONDED BY RON HOGLUND. Motion carried.
Recorder
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~DA A~cnda - 11/13/01
4.
Consideration to approve the Subordination A2:reement between Firstar Bank. N.A.
and the Monticello EDA.
A. Reference and background:
Back in 1995, the EDA approved GMEF No. 010 for Blue Chip dba Vector Tool in the
amount of $50,000. The total real estate project cost was $426,000 and the funding
sources included the Lender at $263,000, GMEF at $50,000, Central Minnesota Initiative
fund (CMIF) at $50,000, and equity at $63,000. Earlier this year, the EDA extended the
GMEr balloon date and the interest rate was adjusted to 20A) below prime which was
actually an increase.
Because the balloon payment of the CMIF is due, Blue Chip is refinancing. The lender
amount refinanced is $326,000 and the GMEf will be in second position behind the
lender. The lender is looking to close on November 15, 2001.
Attached is a lined-copy of the Subordination Agreement fiJr approval. The agreement
was reviewed by EDA Attorney Dan Cireensweig. Payback of the GMEF loan is current.
B.
Alternative Action:
1. A motion to approve the Subordination Agreement between Firstar Bank, N.A.
and the Monticello EDA.
2. A motion to deny approval of the Subordination Agreement between Firstar Bank,
N.A. and the Monticello EDA.
3. A motion to table any action.
C. Recommendation:
Alternative No.1.
D. Supporting Data.
Copy of the Subordination Agreement.
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SlJBORDINATION AGREEMENT
(Mortgage to Mortgage)
THIS SUBORDINATION AGREEMENT (this "Agreement"), made and entered into as of
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CktobcrNovember __,2001, by and between FIRST AR BANK, N. A., f/k/a FIRST AR BANK OF
MINNESOTA, NATIONAL ASSOCIATION, a national banking association ("Firstar"), and
MONTICELLO Ii.:CONOMIC DEVELOPMENT AlJTHORITY, a public body corporate and politic
under the laws of the State of Minnesota ("Subordinated Lender").
WITNESSETH:
WHEREAS, Subordinated I ,ender is the owner and holder ofa Mortgage, Security Agreement and Fixture
Financing Statclnent (the "Subordinated Mortgage"), dated November 21, 1995, from BLUE CHIP
DEVELOPMENT COMPANY. LLP, a Minnesota gt->-tl:t-rttl-limited liability partnership ("Mortgagor")
to Subordinated Lender, filed for record in the Office of the County Recorder of Wright County,
Minnesota, on November 28, 1995, as Document No. 5X3744, as amended bv that certain First
Amendment to Combination Third Mort -'a Te Securit A Treement and Fixture Financin T Statement dated
November 29, 2000, between MortQ,iuwr and Subordinated Lender, Ii led for record in the Office of the
County Recorder ofWriQ,ht County, Minnesota, on January 4, 200 L as Document No. 728953, pertaining
to the premises ("Subject Premises") situated in Wright County, Minnesota, legally described on Exhibit
^ attached hereto; and
WHEREAS, Firstar is the owner and holder of a Mortgage, Security Agreement and Fixture Financing
Statement (the "Firstar Mortgage"), dated November 21, 1995 from Mortgagor to Firstar, fi led for record
in the Office of the County Recorder of Wright County, Minnesota, on November 28, 1995, as Document
No. 583740 pertaining to the Subject Premises; and
WHEREAS, Firstar is the owner and holder of an Assignment Leases and Rents (the "Firstar
Assignment"), dated November 21, 1995 from Mortgagor to Firstar, tiled for record in the Office of the
County Recorder of Wright County, Minnesota on November 28, 1995, as Document No. 583741
pertaining to the Subject Premises; and
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WHEREAS. Mortgagor desires to borrower from Firstar the sum of_ _ __ _ Dollars
($_____) (the "Additional Advance") and to extend the maturity date of the Mortgage; and
WHEREAS, to secure the Additional Advance and to extend the maturity date of the Mortgage, Firstar
and Mortgagor entered into that certain Amendment to Mortgage and Assignment of Rents dated
Oe;tobcrNovember ___, 2001, and filed in the Office of the County Recorder of Wright County,
Minnesotaon___2001.asDocumentsNo._ __ _ _ Jthe"FirstarArncndmcnt"):
and
WHEREAS. it is the desire ofthe parties hereto to confirm that the lien ofthe Subordinated Mortgage and
all of the provisions thereofis subordinated to the liens of the Firstar Mortgage and the Firstar Assignment
as amended by the firstar Amendment, and all of the provisions thereof.
NOW, THEREFORE, in consideration of the premises and of the sum of One Dollar ($1.00) each to the
other in hand paid, receipt of which is hereby acknowledged. and for other good and valuable
consideration. the parties hereto agree as follows:
1.
Subordination. The Subordinated Mortgage, the lien thereof. and the rightsofSubordinatedLender
thereunder. are hereby subjected and subordinated and shall remain in all respects and for all
purposes, subject. subordinate and junior to the Firstar Mortgage and the Firstar Assignment as
amended by the firstar Amendment. and the liens thereof. The subordination effected hereby shall
cxtend to any and all advances heretofore or hereafter Inade pursuant to the terms of the Firstar
Mortgage. as amended by the Firstar Amendment. It shall also extend to any amendment.
modification. extension. replacement or renewal of the Firstar Mortgage and thc Firstar
Assignment, exccpt to any future amendments, modifications. extensions or renewals. other than
thc firstar Amendment. which increase the principal amount secured by the Firstar Mortgage and
the Firstar Assignment.
2. Miscellaneous. This Agreement may be amended only by an agreement in writing signed by all
of the parties hereto. This Agreement shall bind and inure to the benefit of the parties hereto. their
respective heirs. personal representatives, successors and assigns. This Agreement shall be
govcrned by and construed in accordance with the laws of the State of Minnesota.
IN WITNESS WHEREOF. each of the parties hcreto has caused this Subordination Agreement to be
duly executed as of the day and year first above written.
.'IRST ARBANK, N. A., F/K/A FIRST AR BANK
OF MINNESOT A,NA TIONALASSOCIA TION
(a national banking association)
By:________________
Gary D. Taverna
Its: Vice President
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MONTICELLO ECONOMIC DEVELOPMENT
AUTHORITY, a public body corporate and politic
under the laws of the State of Minnesota
By:_____________
Its:
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By:____________
Its:
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STATE OF MINNESOTA)
) ss.
COUNTY OF HI~~NNEPIN )
The {(wegoing instrument was acknowledged before me this_ __ day of
.._..__________November, 2001, by Gary D. Taverna, as Vice President of FIRST AR BANK, N. A.,
F/K/A/ FIRST AR BANK OF MINNESOTA, NATIONAL ASSOCIATION, a national banking
association. on behalf of the association.
.-..,,,.--,,-,,,-,.,,-,,,,,"-.'--'.'-
Notary Public
STATI~ OF MINNESOTA)
) ss.
COlJNTY OF )
The foregoing instrument was acknowledged before me this __ day of
____November. 2001. by ______ and by ______ as
and of MONTICELLO ECONOMIC DEVELOPMENT
_.....",--,."._..,- --. ._-_.,--,.'.'-
AUTHORITY, a public body corporate and politic under the laws of the State of Minnesota , on behalf
of the authority.
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Notary Public
This instrument was drafted by:
Leonard, O'Hrien. Wilford. Spencer & Gale, Ltd.
100 South fifth Street, Suite 1200
Minneapolis, Minnesota 55402
. C:'WINDOWS',TFMI"Slalic Cllp\ or Illue Chip [leI e(op",ent Subordination Agreement (Blad,lined).\\pd
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EXHIBIT A
LEGAL DESCRIPTION
Lot 5, Block 3, Oakwood Industrial Park, except the East 160.00 feet thereof, according to the recorded
plat thereof in Wright County, Minnesota.
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Council Agenda - 11/13101
Consideration of Executive Director's Report.
a) Grassl property - As you recall Bill Grassl appeared he fore the HRA in Octo her.
However, with a lack of quorum no action was taken relative to the commissioner's
interest to purchase the West Broadway parcel. Mr. Grassl indicated he had an interested
buyer. I contacted M r. Grassl to see if he again wanted to appear before the lIRA in
November. lie was not interested and said he may develop the lot.
b) Amoco site - I talked with Brad Johnson on November 7 and he informed all was
going well, costs are in-line, lease to be signed with restaurant this week or next and
scheduled meeting with property owners for agreement on parking development. Was
very positive and thought the building would be demolished prior to the March 31,2001
deadlinc.
c) Right Choice - Having not heard a response from the owner, Emmet Hanratty, I
contacted LandCor, Inc., Chad Weeks. on November 5 for an update and data to assist
with marketing the 63,000 sq ft huilding, 4 acres. Asking price about $3.4 million.
Offers encouraged. The company leases 33.000 sq ft in Maple Grove and its
headquarters occupy the first-Hoor of a office building in Osseo. Very few employees
remain at the Monticello flcility. Landcor has had one inquiry.
d) H- Window - Company from Plymouth still interested in the building. Taking a wait
and see approach. Can utilize 30.000 sq n. of the total 62,000 sq ft. Looking for other
tenants. Inquired as to DSL providers in Monticello. Secondly, I will he following up
with the company from I lamel the first of the year as their decision to re-Iocate is subject
to the willingness of the existing community to provide necessary infrastructure.
e) Fay-Mar building - No update hom Ron Musich.
f) The EDMA and IRTI buildings are under construction in the industrial park.
g) BRE update: Wiha Tools is expanding by 16,000 sq ft. Xcel Energy Service f~lcility
along Dundas Road is expanding by 5,800 sq ft. Another manufacturing company has
taken a wait and see approach to expand.
h) fulfillment Systems, Inc. (FSI) - Jack Peach is building a 62,000 sq it warehouse and
processing center in Dasset. In conversation with Mr. Peach, hc advised me he would not
expand in Wright County or Monticello again due to regulations. Dassel is in Meeker
County. He also informed me that when they out-grow their headquarter facility in
Monticello, they willlcave Monticello.
i) Red Wing foods - I talked with Gene Chase this week, they are leasing the bcility
vacated by FSI in Big Lake for assembling their gift baskets fiJr Byerly's, etc. If the City
and Mr. Peach can come to an agreement, Red Wing Foods is interested in purchasing the
bui kling.
I) I n conversation with the businesses in the industrial park, the economic down-slide is
being felt by most businesses causing reduction of production hours and some lay-offs.
h) 200,000-250.000 sq ft huilding, 40 to 50 acres - Looking for location between St.
Cloud and Twin Cities. Manufacturer/wholesaler. ISO jobs at average wages of $11 per
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Council Agenda - 11/13/01
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hour within 2 years. 250 additional jobs three to five years. October 22 lead from Wright
County.
i) Four-year knock-down rule - I did meet with County Auditor Doug Gruber and Denise
to submit documentation (evidence of activity) within TIF District No. 1-22. The parcels
with qualifying activity will continue to collect tax increment revenues. The four-year
knock-down rule is effective for taxeS payable 2003.
j) Scattered Housing Project - In the most recent conversation with Shari I-Iarris, CMI-IP,
she has written letters to the four property owners informing them of the plans and
inquired as to their interest to sale. She had heard from one property owner who was very
interested. The fifth parcel is raw land and owned by the City.
k) Paul Ammerman, Xccl Energy - Met with Paul on November 6 and we toured
Monticello and had lunch. Paul is in the Economic Devcloprnent Department at 414
Nicollet Mall.
I) Marketing Brochure - In print. Anticipate $4,0()O from Xccl Energy as partner in
marketing Monticello for industrial development.
m) Chamber Business Expo - Marketing Committee has booth. Will display products
manufactured in Monticello. About 10-12 industries participating. November 11.
n) Attended Minnesota Economic Development Conference Oct 25 and 26. Very good
confercnce, great speakers. An entertaining speaker was Glenn Dorfi1lan, Minnesota
Realtors Association, topic "Docs everyone have to be a homeowner?" May be a
candidate for Industrial Banquet program. lie is a lobbyist. Programs center around
workforce development. technology, affordable housing, and finance.
0) The City of Monticello is in the process of developing and managing their own web
site. The Economic link will market the city of Monticello f(x industrial development.
Staff's e-mail addresses will be changing.
p) The Monticello Housing Study prepared by the Central Minnesota Housing
Partnership is complete and be distributed very soon. It is my intent to invite Lisa and
Shari to Monticello for a presentation. The information should be of value to the council,
planning commission, and liRA.
q) O'Connor property - The liRA gained possession of this property of October 25,2001.
All utilities arc to be capped and removed by November 9 and the HRA will award
demolition and cleanup of the entire area at the lIRA meeting of November 14.
Completion of the demolition/cleanup work by no later than December 7. Site
preparation estimates are being gathered for continued discussion with Ilans Ilagen. The
five appointed commissioners are scheduled to meet December 20 and 21 to hold
hearings concerning the value of the property. This will take place at the City Hall.
1') Mike Cyr is requesting $104,950 of upfront TIF assistance from the liRA. The liRA
and Council approved the preliminary concept for establishment ofa Housing District
based a concept plan of 30 units at a selling price of $169,900. Due to the re-design of
the project as recommended by the city planner consultant, the project was reduced to 26
units. The proforma received showed 26 units at a selling price of $151 ,000 and included
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Council Agenda - 11/13/01
the TIF assistance and no costs for the vacated public streets. This is on the HRA agenda
of November 14. One question: Why the reduction is selling price from $169,900 to
$151.0007
s) The HRA will also hear a presentation by Jim McComb, McComb Group, LLC on
November 14. The Chamber endorsed the Commercial Market Analysis and
Development Potential Evaluation. The request to the HRA is for endorsement and
financial support of the analysis.
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Monticello HRA
505 Walnut Avenue, Suite 1
Monticello, MN 55362
October 10, 2001
MC100-01
GENERAL
?- SO . l..\ \.a c:, e \ . ? \ q~ Invoice # 18825
Professional Services
9/4/01 MTR Loan Amortization
Total Due This Month:
Status of Account:
Current
~.~__..R.
$125.00
30 Days
$0.00
..dJ ~ f\ (c0'~
t:: V Q. D \(f"
Hours Amount
1.00
125.00
1.00 $125.00
60 Days
$0.00
90 Days
$0.00
120+ Days
$0.00
Total
$12500
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PLEASE KEEP WHITE COPY FOR YOUR FILE AND REMIT PINK COPY WITH PA YMENT TO:
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EHLERS
& ASSOCIATES INC
3060 Centre Pointe Drive
Roseville, MN 55113.1105
651.697.8500