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EDA Minutes 10-30-1990p MINUTES p MONTICELLC ECONOMIC DEVELOPMENT AUTHORITY l Tuesday, October 30, 1990 - 7:00 AM City Hall MEMBERS PRESENT: Chairperson Ron Hoglund, Barb Schwientek, Bob Mosford, Fran Fair, Warren Smith, Al Larson, and Harvey Kendall. STAFF PRESENT: Rick Wolfstelter and 011ie Koropchak. 1. CALL TO ORDER. Chairperson Ron Hoglund called the EDA meeting to order at 7:00 AM. 2. APPROVAL OF THE SEPTEMBER a$, 1990 EDA MINUTES. Fran Fair made a motion to approve the September 1g, 1990 EDA minutes, seconded by Al Larson, without further discussion the minutes were approved as written. 3. CONSIDERATION TO REVIEW AND DISCUSS THE GMEF PUBLIC PURPOSE CRITERIA AND GUIDELINES. Enclosed with the EDA agenda as supporting data were copies of the original purpose for the creation of the revolving loan fund, City Council agenda and minutes, and the approved GMEF Guidelines as written by the original committee, reviewed by Attorney Hayes, reviewed and accepted by the IDC, and reviewed and adopted by the City Council. After adoption of the EDA organization the guidelines were reviewed by the EDA members in May, 1989. Invited but unable to attend this EDA meeting were the original members who wrote the guidelines; Dale Lungwltz, Linda Mielke, Don Smith, and Jeff O'Neill. With background information having been discussed, the EDA members proceeded to review, discuss, and adjust the GMEF Public Purpose Criteria and Guidelines. The EDA noted that the purpose of the GMEF is to encourage economic development by supplementing conventional financing sources available to existing and new businesses. Additionally, all loan must comply with four or more of the public purpose criterias, of which, criteria ®1 is mandatory. To comply with the Council's request to clarify the definition of what constitutes creation of a full-time versus part-time job, the EDA considered two options for adjustment. One, a total of 40 hours per week would constitute one full-time job, and second, C Bob Mosford suggested in consistency with today's norm, 37.5 hours would constitute one full-time job. Bob Mosford made a motion that one job be equivalent to a total of 37.5 hours ver week. The motion was seconded by Barb Schwientek and without further discussion passed unanimously. EDA Minutes 10/30/90 Page 2 3. CONTINUED. The EDA members agreed no adjustment was necessary for Criteria P2. To provide loans for credit worthy businesses that would increase the community tax base. Criteria 83. To assist new or existing industrial or non- competitive commercial businesses to improve or expand their operations. Loans will not be provided for businesses in direct competition with existing businesses within the City of MonLlcello. Bob Mosford recalled to the EDA members that at the time the EUA members reviewed the GMEF guidelines in May of 1989, the EDA recognized the gray area of this criteria and recognized the potential of a future tough decision. The EDA agreed with the City Council that the main thrust of the loan program should be oriented toward industrial development, however, on the other hand didn't see a benefit of restrictive guidelines which would allow no flexibility for funding. The EDA members interpret the GMEF Guidelines as guidelines to follow and not as hard -carved policy and based on common sense prefer to evaluate each GMEF application for approval on the basis of project merit and project benefit (� provided to the community and it's people. Therefore, the EDA made no recommendation to adjust criteria ®3. The EDA felt the Muller Theatre loan approval was for a project which both benefits the community and it's people as the project increasedthe aesthetic value of downtown, retained a downtown business, and supports the Streetscape Project. (See EDA minutes of 9/28/90 for full approved loan criteria.) Criteria 04. To provide loans to be used as secondary source of financing that is intended to supplement conventional financing (bank financing). The EDA agreed no adjustment was nec^_ssary of this criteria. Criteria 95. To provide loans in situations In which a funding gap exists. The EDA recognized that in no way could the EDA verify a company's actual gap funding, however, also acknowledged the original intent of the revolving loan was to create an incentive for industrial businesses to locate within Monticello. This tool was intended to maintain Monticello as a competitive city for industrial recruitment, in addition, as a retention and expansion tool for existing businesses. The Tapper's loan was part of a financial package developed by Business Development Services and in the case of the Muller Theatre loan, the developer did reduce the cost by going out for bids on three different occasions, a theatre doesn't C meet the SBA or State program criterias and TIF wasn't applied because a district couldn't be established under current TIF criteria. The loan application requested no funds for demolition which would indicate funds to eliminate blight. The EDA considered the blight issue as EDA Minutes 10/30/90 Page 3 3. CONTINUED. they approved the loan based on the total project development benefits to the community and it's people as the total project development increased the aesthetic value of downtown. Therefore, the EDA agreed no recommendation was necesary to adjust criteria 95. Criteria ®6. To provide funds for economic development that could be used to assist in obtaining other funds such as Small Business Administration loans, federal and state grants, etc. The EDA members agreed no recommendation was necessary to adjust critieria 06. The EDA continued to review the GREF Guidelines and based upun the data presented the members on the attorney's fees for the Tapper's loan of approximately $1,300 and the banks service fee of $20.00 per month on the loan, the EDA agreed to recommend an adjustment. Bob Mosford made a motion to adjust the loan fee on page 3 to read: Minimum fee of $200 but not to exceed 1_51 (replaced 11) of the total loan project. The motion was seconded by Warren Smith and without further discussion passed unanimously. CThe EDA discussed the bank's fee of $20.00 a month and what services were being provided for the charge. Administrator Wolfsteller expressed his viewpoint that for the services being rendered compared to the fee charged over the length of the loan, the city staff has the knowledge to accomplish the same service. Warren Smith reminded EDA members that the approval to have the bank service the loan was made to eliminate additional duties to city staff. Bob Mosford made a motion recommending Administrator Wolfsteller negotiate an agreement between the city and the bank which would maintain the bank's service of the two loans at no cost as the GMEF policy enhances the banks policies and is a benefit to both parties and the community. The motion was seconded by Al Larson and without further discussion the motion passed unanimously. In reference to the recommended adjust to the loan fee of not to exceed 1151 of the total loan project, Bob Mosford also made a motion to adjust item 7, on page 6, to include: the City Attorney shall review and/or prepare all contracts. This adjustment to clarify the attorney's role with the GMEF loan closing. The motion was seconded by Warren Smith and without further discussion passed unanimously. C The EDA briefly discussed the need to establish a policy which would allow a penalty if designed amount of jobs weren't satisfied. The EDA at this time doesn't see the need to create restrictive policies, however, suggested that periodical accountablity of job creation be made within a reasonable time of completed project and be reported EDA Minutes 10/30/90 Page 4 3. CONTINUED. to the EDA as well as the current loan payment static. Consideration of any necessary action will be discussed if the need arises. The EDA agreed that the definition of new ]obs included any new job created in Monticello due to an expansion or relocation. 4. OTHER BUSINESS. Harvey Kendall made a motion for the UDAG repayments to the City from Fulfillment Systems, Inc. be transferred into the EDA account to assure adequate future funds for the GMEF. Al Larson seconded the motion and without further discussion the motion passed unanimously. The EDA expressed some potential resistance from the City Council to transfer additional Liquor Store monies to replenish the EDA funds. Current remaining balance of the EDA fund is $62,000 Which allows a maximun of $31,000 available for loan approval. Fran Fair made a recommendation that new council members receive education in the area of the EDA functions and policies by either Rick Wolfsteller or 011ie Koropchak. EDA members agreed with the recommendation. 5. ADJOURNMENT. By consensus of the EDA members, the EUA meeting adjourned at 8:20 AM. C 0-4q;' 011ie Koropchak EDA Executive Secretary C