EDA Minutes 03-30-1993MINUTES
MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
Tuesday, March 30, 1993 - 7:00 p.m.
City Hall
MEMBERS PRESENT: Chairperson Ron Hoglund, Barb Schwientek,
Clint Herbst, Patty Olsen, Harvey Kendall, and
Al Larson.
MEMBERS ABSENT: Bob Mosford.
STAFF PRESENT: 011ie Koropchak.
STAFF ABSENT: Rick Wolfsteller and Jeff O'Neill.
GUEST: Jim Beyl, Custom Canopy.
1. CALL TO ORDER.
Chairperson Hoglund called the EDA meeting to order at 7:00
p.m.
2. CONSIDERATION TO APPROVE THE JANUARY 27, 1993 EDA MINUTES.
Barb Schwientek made a motion to approve the January 27, 1993
EDA minutes. The motion was seconded by Harvey Kendall and
with no corrections or additions, the minutes were approved as
written.
3. CONSIDERATION TO REVIEW A PRELIMINARY AND FORMAL GMEF
APPLICATION FOR STEPHEN P. AND JOAN M. BIRKELAND. JR. dba.
CUSTOM CANOPY.
Mr. Jim Beyl, marketing manager for Custom Canopy, told EDA
members that the company was started 8 years prior by its
owner, Stephen Birkeland, Jr., who was a steel builder.
Today, 99% of their business deals with gas stations, the
company has 16 distributors, their market concentration Is
Minnesota and the Dakotas, and company annual sales have grown
from $350,000 to $2.5 million last year. Future annual sales
projection is $6.6 million. Major accounts are Murphy and
Holiday 011 with the potential of obtaining the Cenex account.
The company's future plane are to expand market areas, market
to car dealers, and to develop a side business of flooding
Indoor ice arenas. The company's two competitors are in
Wisconsin and Ohio. The company has a turn -key operation
which designs, manufactures, and installs the canopies. They
own one flat-bed and three trucks. The relocation expansion
in Monticello will triple their manufacturing and office space
and future plana call for the potential of an additional
expansion in 2-3 years. The company employs six erectors, and
three shop and one office personnel 1n addition to Mr.
EDA MINUTES
MARCH 30, 1993
Birkeland and himself. Currently, full-time employment is at
six and seasonal personnel work 9.5 months a year. The
company plans to open accounts with local hardwares and gas
stations which totals approximately $20,000/$30,000 in annual
business.
Koropchak pointed out the initial GMEF request of $100,000 on
the enclosed preliminary application form and then proceeded
to review the enclosed Birkeland formal application for
compliance with the public purpose criteria and policies.
Recommendation was to approve a $42,500 GMEF loan at a 4.5
fixed interest rate, amortized over 20 years with balloon
payment in five years. On March 30, 1993, First Bank's
reference rate was 6.0% and the Wall Street prime rate was
6.0%. As of March 26, Mr. Pat Dwyer, Bank of Elk River,
reported he was recommending the bank board approve 70% of the
appraised building and land value of $440,000, or a $308,000
loan at a 2% over prime flowing rate (current 8.0%) for 15
years. The amended leverage ratio from the enclosed agen(l"
Information would read the bank is at 81.7% of the proje...
funding, the GMEF at 11.3%, and equity at 7.0% (or 62.5 % of
the GMEF) which complies with policy. An additional
L amendment, the number of full-time and seasonal jobs at 37.5
hpw combines to an equivalence of 11.75 full-time which
complies with policy. Additonally, the EDA was provided with
a copy of the land purchase agreement, site map, letter of
bank approval, and executed Release of Information form.
With no further questions of Mr. Jim Beyl or Koropchak, the
EDA moved -on to agenda item ? 4.
CONSIDERATION TO APPROVE OR DISAPPROVE GMEF LOAN NO. 006 FOR
STEPHEN P. AND JOAN M BIRKELAND. JR. dba, CUSTOM CANOPY.
The EDA having determined that the GMEF formal loan
application from Stephen P. and Joan M. Birkeland, Jr.
complied with the GMEF public purpose criteria and policies
and that the project would encourage economic development, a
motion was made for loan approval. Al Larson made the motion
approving GMEF Loan No. 006 for Stephen P. and Joan M.
Birkeland, Jr. The loan amount was set at $42,500 with a 4.5%
fixed interest rate, amortized over 20 years with balloon
payment in five years. The GMEF loan fee of $600 to be
collected and the GMEF approved loan to be disbursed at the
bank closing. The GMEF attorney fees are the responsibility
of the borrower. If the $42,500 loan Is not disbursed by July
30, 1993, GMEF Loan No. 006 becomes null and void.
Collateral, guarantees, and other condition requirements to be
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MARCH 30, 1993
determined and prepared by the GMEF attorney. Patty Olsen
second the motion, and with no further discussion the motion
passed unanimously. Loan approval was subject to total
funding approval, project compliance with the City zoning and
ordinances, and execution of the Private Development Contract
between the HRA and the developers prior to or on Monday,
April 12, 1993. The City Council will review GMEF Loan No.
006 for compliance with the GMEF public purpose criteria and
policies on April 12, 1993 which meets the within 21 -days
guideline. Chairperson Hoglund thanked Mr. Beyl for attending
the EDA meeting.
5. CONSIDERATION TO REVIEW THE STATUS OF THE UDAG AND STATE
ECONOMIC RECOVERY GRANT ACCOUNTS.
Koropchak reviewed the enclosed UDAG and State Economic
Recovery Grant accounts with EDA members. The reports were
generated because of the concerns raised by both the EDA and
the City Council regarding future funding sources for the
GMEF.
The first funding source, the annual UDAG principal and
C interest payback of $27,971.40 began in January, 1988 and runs
through January, 2000. Todate, revenues from loan paybacks
and interest income - investment total $162,780.48.
Disbursements total $85,000 for an ending balance of
$77,780.48. The EDA questioned the 1990 interest income -
Investment of $3,562.62, as it appears to be small in
relationship to the amounts earned in 191 and 192. Koropchak
noted that the ledgers only reflect data which was entered
since purchase of the city's computers. The UDAG payback is
available for GMEF funding if authorization is granted by City
Council.
The second funding source, the annual ERG principal and
Interest payback of $29,801.40 began in December, 1992 and
rune through November, 1999. Todate, revenues from loan
paybacks total $7,450.35. With no interest income -
Investment or disbursements, the ending balance Is $7,450.35.
The first $100,000 of ERG payback is available for GMEF
funding without Council authorization.
The third and original funding source, the Liquor Fund has a
current balance of approximately $280,000 which was earmarked
for the revolving loan fund and completion of the public works
building. This in accordance with a report given by
Administrator Wolfsteller to City Council.
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MARCH 30, 1993
The fourth funding source, Is the GMEF loan paybacke with the
first balloon payment due the Fall of 1995.
Additionally, Koropchak noted of the total $273,000 approved
GMEF loans, 9188,000 was disbursed from the Liquor Fund and
$85,000 from the UDAG Fund. This to clarify the difference
between annual appropriations (meaning funds available) and
actual sources of funds used for disbursements.
Koropchak noted to EDA members that she has been contacted
regarding the potential of three BRE industrial expansions
either in 1993 or 1996, these in addition to new prospects.
Clint Herbst noted that City Council has concern that some of
the industrial businesses may have located in Monticello
without assistance from the GMEF. EDA members recognized that
with loan approvals, other spin-off investments are made into
the community. This Is important, as well as, the increase to
the local fob and tax base.
6. CONSIDERATION OF PROSPECT UPDATES.
Koropchak noted that three mayor industrial companies are
still considering Monticello as a site location.
7. OTHER BUSINESS.
EDA members agreed to cancel the April 27 EDA meeting. Next
meeting will be upon loan approval request or July 27.
whichever is first.
8. ADJOURNMENT.
Al Larson made a motion to adjourn the EDA meeting. Senond by
Barb Schwientek, the meeting adjourned at 8:25 p.m.
011ie Koropchak, Exeeu ive Director
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