EDA Minutes 04-12-2017MINUTES
REGULAR MEETING - ECONOMIC DEVELOPMENT AUTHORITY (EDA)
Wednesday, April 12th, 2017 — 6:00 p.m.
Mississippi Room, Monticello Community Center
Present: Bill Demeules, Steve Johnson, Jon Morphew, Jim Davidson, and Lloyd Hilgart
Absent: Bill Tapper and Tracy Hinz
Staff: Jim Thares, Angela Schumann, and Jacob Thunander
1. Call to Order
Bill Demueles called the regular meeting of the EDA to order at 6:00 p.m.
2. Roll Call
3. Consideration of additional agenda items
None.
4. Consent Agenda
Lloyd Hilgart moved to approve the Consent Agenda excluding Item C. Jim Davidson
seconded the motion. Motion carried, 5-0.
a. Consideration of approving Regular Meeting Minutes — March 8, 2017
Recommendation: Approved the Regular Meeting Minutes of March 8"', 2017.
b. Consideration of approving Change Order #2 for LSI contract with Metco,
Inc.
Recommendation: Approved authorization of additional $130.00 to the contract
amount with METCO.
c. Consideration of approving payment of bills
Recommendation: ITEM WAS REMOVED FROM THE CONSENT AGENDA.
d. Consideration of Accepting LSI Report for Block 34 —130 East Broadway
Avenue
Recommendation: Approved to accept the Limited Site Investigation (LSI) Report
performed by METCO related to Leak #20142 on EDA owned property in Block
34.
e. Consideration of Farm Lease with Tom and Matt Spike
Recommendation: Approved to authorize the EDA Executive Director and
President to execute the Farm Lease agreement for Outlot F, Otter Creek Crossing
as drafted.
f. Consideration of modifying terms of contributing $5,000 in funding to
downtown (Block 34) art proiect
Recommendation: Approved to authorize a contribution of $5,000 toward the
development of an art sculpture improvement at the southeast intersection of TH
25/CSAH 75 and to accept the donation of the artwork and acknowledge the
$3,000 contribution of the Ellison family to the sculpture.
4A. Consideration of items removed from the Consent Agenda for discussion
c. Consideration of approving payment of bills
Steve Johnson asked for clarification of the payment to WSB for $3,700. Jim
Thares stated that invoice was a part of the monthly consulting contract plus
additional work completed for the Shred -n -Go proposal.
STEVE JOHNSON MOVED TO APPROVE PAYMENT OF BILLS
THROUGH MARCH, 2017. JIM DAVIDSON SECONDED THE MOTION.
MOTION CARRIED, 5-0.
5. Consideration of Shred -N -Go Concept Development in Otter Creek Business Park
Jim Thares introduced Mark Suppes, owner of Shred -N -Go to explain a concept stage
proposal in Otter Creek Business Park.
Suppes reviewed the business subsidy application that he submitted to the EDA.
Shred -N -Go is interested in a 4.8 acre lot in Otter Creek Business Park and illustrated the
location in Exhibit A of the application. A concept stage site map was also provided to
the EDA in Exhibit B.
Suppes noted that the project would be two phased, starting with a 20,000 square foot,
expandable, pre -cast concrete building for shredding and bailing operations. Phase II
would include expanding the facility by 20,000 square feet to house an autoclave. Phase
II would begin in three years.
Phase I would initially employ seventeen full time staff and one part time staff. The
amount of staff for Phase II would be determined.
Suppes requested two driveways to access the site — for separate truck parking and
employee parking.
The hours of operation would be Monday through Friday from 7 a.m. for drivers and 8
a.m. for office staff and closing at 5 pm. Occasionally, evening trucks would be arriving
past 5 p.m. Suppes stated that on average, one to two trucks per hour would be arriving or
departing to/from the facility.
An estimated market value including the land, building, equipment (such as: plant based
shredder, bailer, and a truck scale) is estimated at a couple million dollars. Phase II would
be an additional 1.9 million dollar project (total market value of four million dollars),
which would include the equipment necessary for an autoclave.
Suppes stated that he was committed to complying with City Ordinances and zoning
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requirements in the I-1 (Light Industrial) Zoning District.
Suppes also provided the EDA with an overview of their business process. He said that
unloading of trucks would occur completely inside the facility, where the material would
be placed onto the floor, sorted by grade, and bailed. Forklifts would then carry the bailed
materials to a loading dock to be sent to paper mills for pulping and processing. Suppes
also mentioned additional shredding services for products such as clothing, uniforms,
medical devices, hard drives, floppy disks, cds, dvds, cassette tapes, and backup tapes.
These devices and equipment go through the same process as paper shredding, but the
materials are then transferred to landfills.
Suppes explained the process for recycling medical waste, which would occur in the
Phase II of the project. He said that medical waste is sent to the facility in secured
containers and processed by an autoclave. Suppes noted there would be no noxious odors,
smoke, or fumes. Again, all operations and processes would occur inside, except the use
of a truck scale and overnight parking of trucks in the lot.
Suppes stated that he met with Minnesota Pollution Control Agency (MPGA) and was
told processing of medical waste requires a registration permit (MPGA), wastewater
permit (City of Monticello), and a transporter permit (U.S. Department of Transportation
and Minnesota Department of Public Safety).
Suppes identified how the increment assistance would be used and why it was necessary
to undertake the project. He noted that the City of Monticello would set up a TIF district
that would help to recover the costs of developing the parcel. Suppes stated that Shred -N -
Go preferred that the EDA sell the land for a dollar as a part of the overall development
plan. Shred -N -Go would then pay all other development fees including SAC and WAC.
Suppes noted that TIF funds would not be given to Shred -N -Go for any purpose or
reimbursement. According to Suppes, the advantage to the proposal is that they company
would not need to supply upfront funds for land acquisition. He also mentioned that the
value of the business would easily support tax increments that would reimburse the EDA
for the land.
Suppes stated that they currently employ twenty people, with seventeen people reporting
to the proposed Monticello location and the remaining 3 staying at the Duluth facility.
Jobs include General Manager (one at $120,000+/year), drivers (seven at $40-
50,000/year), collector (one at $28,000), sales (four at $40-80,000/year), customer service
(one at $38,000+/year), accounting and administration (two at $38,000+/year), and
owner/Suppes (the remaining profit). A warehouse manager would be added to the
Monticello site at $45,000/year. More employees are expected as the company
diversifies. Suppes stated that for every $125,000 of revenue, an additional employee is
necessary.
He noted Shred -n -Go supplies services to a wide variety of customers including
government agencies, healthcare facilities, legal and financial entities. Suppes stated that
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there is not one customer that is greater than three percent of their business sales, which
provides his business with financial stability and revenue growth. He also said that the
company receives an additional revenue stream by including the sale of shredded paper to
mills.
Suppes indicated that a few of his current employees live in the south metro and would
not commute to Monticello. He expected turnover in the driver pool and applicants from
around the Monticello area to fill these positions. Suppes reiterated that he expected
business and employee growth.
He stated that support services in Monticello would also be needed including diesel fuel,
truck maintenance and repairs, building maintenance, and office supplies.
Suppes then discussed the construction and finances associated with the project. RJ Ryan
Construction would be the builders for this project. He noted that Anchor Bank — Eden
Prairie was comfortable financing the project assuming that 10 percent of the costs were
put down. Suppes added that his business would hire an architect for the project and
would share renderings of the site when available.
He stated that currently Shred -n -Go operates in St. Cloud, Edina, and Duluth. The
purpose of the Monticello facility is to consolidate the St. Cloud and Edina locations into
one facility. Onsite shredding would allow for a larger variety of products to be shredded.
A plant based facility would also allow them to bail paper, which would recapture the
processing fee currently paid to recyclers. Financial statements were also provided to the
EDA.
Bill Demueles asked if the trailers would be all enclosed vans. Suppes confirmed.
Demueles asked if they would be used for storage. Suppes indicated the paper is bailed
and then loaded onto the vans. Once the vans are full, a paper broker is called to pick up
the full van and leave an empty van. There would always be vans at the dock.
Steve Johnson noted that the plan indicates exponential growth over the next twenty
years for the business. Johnson asked what Suppes had in place so that the business didn't
outgrow its capital. Suppes indicated that is why he is requesting the land at one dollar.
Suppes also stated that he has no interest in partners or selling the business at this point.
The only volatility to his business is paper prices which accounts for fifteen to twenty-
five percent of the company's annual revenue and is not enough to harm the business.
Suppes confirmed his comfort with the growth rate of the business.
6. Consideration of Stormwater Management Plan for Otter Creek Business Park
Shibani Bisson, City Engineer gave a brief presentation summarizing the City's
Stormwater Management Plan.
Bisson began her presentation by discussing the 2006 Water Resource Management Plan.
She stated that the goals of the plan were taken from State Statute 103B.201, that requires
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the metro area cities to develop a stormwater comprehensive management plan.
Bisson provided history about Atlas 14 by stating the City authorized the stormwater
management plan in 2016 during the Dahlheimer expansion project. At that time,
Dahlheimer requested routing their stormwater into the existing pond adjacent to
Karlsburger Foods. With that request, the new Atlas 14 stormwater management
requirements were utilized to measure the amount of rainfall in order to create sufficient
stormwater ponds. The new standards reflect increased rainfall intensities resulting in the
need for larger ponds. City Staff then discussed the overall affect Atlas 14 would have on
Otter Creek Business Park and the Chadwick and Bowers parcels.
The specific requirements including rate control, volume control, water quality, other
(site design considerations, etc.), and developer submittals were reviewed by Bisson. She
stated that the report was created to demonstrate how stormwater should be managed in
Otter Creek Business Park. Bisson stated that the City has implemented a checklist that
streamlines this process.
Bisson stated that the bulk of the study included developing a stormwater model that took
into account the existing land area and impervious surface. It also looked at how existing
sites developed, impacts on the current ponds, and additional required pond construction.
She also stated that when the proposed stormwater management ponds are sited based on
topography and developable land so that they located in the most appropriate locations.
Bisson gave an overview of the new ponds that would be required. She noted that the
Karlsburger pond would need to be increased by approximately 2.8 acres due to the
expansion of Dahlheimer. Bisson stated that the construction of a pond on the Chadwick
and Bower properties would need to occur with development. In addition, the
construction of a 2.2 acre "Pond A" to the east of the Dahlheimer site, would need to
occur. Another pond of 1.8 acres "Pond D" would be constructed on undevelopable land
between the St. Henry's cemetery and a wetland. Bisson also mentioned that infiltration
basins would be required on each site if those sites generated more than 1 acre of new
impervious surfaces. Alternative solutions are available if groundwater is too high or
infiltration is not possible. She reiterated that the locations of the ponds could change, but
the objective was to graphically provide information about the size of the ponds.
Bisson then discussed the approximate area required for stormwater management,
identified in the plan. She discussed the area requirements for City Lot A, Lot E, and Lot
G.
Bisson stated the City has implemented a regional ponding approach for Otter Creek
Business Park as well as other areas of the city to ensure that each land parcel does not
have an individual pond.
A next step to the plan would be developing a cost per pond construction so that the City
could understand what they should charge for base trunk fees or alternative ponding fees.
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Bisson noted that a base trunk fee considers trunk or larger main pipe infrastructure
improvements and lift stations. The alternative ponding fee applies to developments that
do not or cannot provide their own ponding. Bisson stated that City Staff had discussions
on who would pay for ponds located in Otter Creek Business Park and believes with the
fee schedule in place, it would be the EDA as they are acting as the Park developer.
Steve Johnson commented that this program appeared to limit the amount of developable
land because of the amount of space required for new ponding requirements. Johnson
also expressed concern for the decrease in property value and increased cost of ponding
and trunk fees. Bisson stated that she thought those costs were considered in the $2.41
market value rate. She also added that because of the new Atlas 14 requirements, they are
seeing that ponds need to be larger. Bisson stated that the purpose of the study was to
determine how much land would be necessary for ponding. Thares noted that if the EDA
wanted to recover some of their costs in constructing the ponds that they could consider
adding that cost to the price of the land. Johnson also asked if the City could expand
regional ponding near Karlsburger Foods onto private property. Bisson confirmed that
there is a drainage and utility easement which would allow the expansion to occur.
Demueles asked if the ponds could be built deeper with a goal of reducing land area for
ponds. Bisson stated the model identified in the plan determined a certain acreage that
accommodated for the assumed runoff and that the location and size of the ponds could
change. Bisson also added that the ponding in Otter Creek Business Park is limited
because of the high water elevation.
Jon Morphew asked if Atlas 14 is a requirement. Bisson stated that it is a new standard
that any stormwater professional would use.
Johnson asked if these requirements have been communicated to private developers.
Bisson stated as developers approach the City, the new requirements are provided to
them.
Earth Evans, WSB-Water Resource Department stated that WSB has been working with
over 30 communities to update their ponding requirements to reflect Atlas 14. Evans
stated that in Monticello, the 100 year rainfall event rose from 5.8 inches to almost 6.8
inches. She noted that this has a significant impact on current and future infrastructure.
Evans stated that MnDOT, watershed districts, and many cities have updated their rules
to require ponding per the Atlas 14 criteria.
Demeules was concerned with the EDA accepting the report because of the amount of
land that would be consumed by ponding and stressed keeping as much developable land
as possible. Johnson also echoed these concerns and requested looking into having deeper
ponds.
Bisson stated that it was not a final design and instead was a schematic to demonstrate the
amount of land needed for ponding. The City attempted to maximize the developable
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land in the drawings. Bisson also reiterated that the location of the ponds could change
and that it was dependent on specific development proposals. Evans stated that they could
also provide total volume of ponding required to meet the Atlas 14 criteria.
Demueles noted that the proposed Shred -n -Go property has just under 150,000 square
feet for building and parking on that property. Bisson stated that the developable area
needed for that site plan was accommodated in the overall stormwater management plan.
Demueles said that if the EDA accepted this plan as is, they would need to abide by
what's identified in the plan. Bisson stated that it was more of a stormwater management
`guide', rather than a `plan'. The title could be changed to reflect this.
Johnson asked if there would be flexibility for unexpected developments so that land and
ponds could be adjusted if needed. Bisson reiterated that the plan is flexible and that it
depends on the type of developments that are proposed to the EDA. The plan is not set in
stone, but the Atlas 14 rates are standard.
Schumann asked if the EDA would feel more comfortable if the introduction and the
summary included language indicating flexibility to consider each development proposal
within the context of the report. Demueles stated he preferred that it was a `concept' and
not a plan.
JIM DAVIDSON MOVED TO ACCEPT THE STORMWATER MANAGEMENT
PLAN FOR OTTER CREEK BUSINESS PARK WITH LANGUAGE TO STATE
FLEXIBILITY TO STORMWATER MANAGEMENT PONDS, RATE CONTROL,
WATER QUALITY, AND INFILTRATION TO MEET EACH SITE'S NEED AS
LONG AS THEY ARE FOLLOWING THE REQUIREMENTS OF ATLAS 14. STEVE
JOHNSON SECONDED THE MOTION. MOTION CARRIED, 4-0.
7. Consideration of Update and Reauest for Direction on 349 West Broadway (Fred's
Auto
Jim Thares noted that this property has had several offers and he is still receiving calls
from interested parties. He noted that the `For Sale' sign was taken down. Thares added
that the post office has sent official notice that they will be relocating in March, 2018 or
2019. Staff have discussed the possibility of a larger redevelopment site to include both
Fred's Auto and the post office, which would cover around 38 percent of the block. There
has been some discussions about setting up a TIF renewal and renovation district. Thares
noted the qualifications for the district are easier and that it is a shorter time period.
Jim Davidson expressed concern with leaving the site vacant for another year or two. He
suggested tabling the action for more information and discussion on the current interest in
the site.
Bill Demueles asked about the possible TIF district and if it could be set up this year or if
it would have to wait until after the post office officially vacated. Thares stated that the
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district could be created immediately and after the post office vacated there would be
options to work with a developer to rework the block. The clock would start clicking as
soon as the TIF district was set up, regardless of the timing of the vacation of the post
office building.
Steve Johnson expressed possible developer interest in combining the two parcels for a
larger redevelopment site. He asked if the post office would still be interested in
including this parcel as a `completer' piece to their property. Thares noted that the post
office building owner was initially interested in the Fred's Auto parcel to keep the post
office downtown. Thares noted that the post office would likely use the Fred's Auto
parcel as parking. Johnson suggested letting the post office property owner know about
the option to purchase the site for a larger redevelopment site. Davidson asked if the EDA
would retain the ability to regulate or guide the function on the site as the parking of post
office vehicles is not in the best interest of the City. Thares noted that could be included
in any agreement. Johnson also noted that a right of first refusal could be included in a
development agreement. Thares confirmed. Johnson expressed disapproval for starting a
TIF district prior to the post office vacation.
JIM DAVIDSON MOVED TO TABLE ACTION FOR ADDITIONAL INFORMATION
AND DISCUSSION. STEVE JOHNSON SECONDED THE MOTION.
Further discussion ensued. Thares noted that calls are still coming in from interested
parties and asked how City Staff should handle these requests. Johnson suggested a
closed meeting to discuss real estate offers.
MOTION CARRIED, 4-0.
8. Consideration of Director's Report
Jim Thares noted that he attended the third CEDS meeting to discuss the impact of arts
and tourism in the regional and state economy.
He also stated that the third draft of the housing study was completed by WSB. Staff is
reviewing this draft and will hopefully present the plan during the May EDA meeting.
Thares also noted that the Small Area Study Steering Committee met and an open house
was held on March 30t". He mentioned there was good attendance and feedback. The next
step includes a holding stakeholder meetings, which will include downtown property
owners and key community leaders.
Thares then discussed prospects in the City. Monticello was just notified that the large
international firm has decided to move forward with other south metro locations. The
remaining prospects are Shred -n -Go, a DEED prospect, and Project Novice.
An activities update for the WSB Economic Development Support Contract was attached
to the agenda.
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9. Closed Session — Consideration of recessing to closed session to develop or consider
offers or counter-offers for the purchase or sale of real or personal property
pursuant to Minnesota Statute 13D.05. Subdivision 3(c)(3). PID # 155194000010
10. Adiourn
STEVE JOHNSON MOVED TO ADJOURN THE MEETING AT 7:58 PM. JIM
DAVIDSON SECONDED THE MOTION. MOTION CARRIED, 4-0.
Recorder: Jacob Thunander
Approved: May 10, 2017
Attest: liw�
OMares, Economic Development Director
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