EDA Minutes 07-12-2017MINUTES
REGULAR MEETING - ECONOMIC DEVELOPMENT AUTHORITY (EDA)
Wednesday, July 12th, 2017 — 6:00 p.m.
Mississippi Room, Monticello Community Center
Commissioners Present: Bill Demeules, Bill Tapper, Steve Johnson, Tracy Hinz, Jon
Morphew, Jim Davidson
Commissioners Absent: Lloyd Hilgart
Staff. Jim Thares, Angela Schumann, Jacob Thunander
1. Call to Order
Bill Demeules called the Regular Meeting of the EDA to order at 6:00 p.in.
2. Roll Call
3. Consideration of additional agenda items
Bill Demueles requested the addition of a Conflict of Interest Disclosure.
Steve Johnson explained that this was a repetition of disclosure that was read into the
record February, 2015. Due to Johnson's involvement with the Small Area Study, he read
the Conflict of Interest Disclosure and asked that the signed copy be attached to the
minutes.
4. Consent Agenda
BILL TAPPER MOVED TO APPROVE THE CONSENT AGENDA. TRACY HINZ
SECONDED THE MOTION.
Bill Demeules asked that Item D. - Consideration of approving payment to Cuningham
Group - be removed from the consent agenda. BILL TAPPER AMENDED HIS
MOTION TO APPROVE THE CONSENT AGENDA WITH THE EXCLUSION OF
ITEM D. TRACY HINZ SECONDED THE MOTION. MOTION CARRIED, 6-0.
a. Consideration of approving Workshop Mtg. Minutes — June 14th, 2017
Recommendation: Approved the Workshop Meeting Minutes — June 14th, 2017.
b. Consideration of approving Regular Mtg. Minutes — June 141h, 2017
Recommendation: Approved the Regular Meeting Minutes — June 14th, 2017.
c. Consideration of approving Special Mtg. Minutes — June 2111, 2017
Recommendation: Approved the Special Meeting Minutes — June 21 St, 2017.
d. Consideration of approving payment to Cuningham Group
-Item was removed from the Consent Agenda-
e. Consideration of approving payment of bills
Recommendation: Approve the payment of bills through June, 2017.
4A. Consideration of items removed from the Consent Agenda for Discussion
d. Consideration of approving payment to Cuningham Group
Bill Demeules asked if the payment to the Cuningham Group was the final bill.
Jim Thares stated that it was the second payment, and a final payment of $5,000
would be due at a future date.
Thares stated that the contract was for $50,000. That the first bill was $20,000 and
the second bill was for $25,000.
BILL DEMEULES MOVED TO APPROVE PAYMENT FOR $25,000 TO
CUNINGHAM GROUP. BILL TAPPER SECONDED THE MOTION.
MOTION CARRIED, 6-0.
Regular Agenda
4. Consideration of Amendment to GMEF Loan Guidelines
Jim Thares indicated that the item was reviewed at June 14'x' and June 21' EDA meeting.
The staff report indicated reducing the equity from ten percent to a range of five to ten
percent with a corresponding adjustment to the interest rate. The interest rate for someone
that applies with ten percent equity would remain at two percent below prime interest
rate. A lower equity would be at one percent below prime interest rate.
Steve Johnson asked if the interest rate would be the rate at the time of approval or
dispersal. Thares confirmed at approval.
TRACY HINZ MOVED TO MODIFY THE GMEF LOAN GUIDELINES AS
PRESENTED. JIM DAVIDSON SECONDED THE MOTION. MOTION CARRIED, 6-
0.
5. Consideration of GMEF Loan to Rustech Micro Brewery
Jim Thares explained that the staff report provided a background of the company. He
introduced the business owners — Penny and Bill Burt. Thares stated that they met all of
the application requirements for the GMEF loan.
Bill Burt, Rustech Brewing, explained his interest in starting a brewery in Monticello. He
stated that he would be renting out of the Flicker Building and should have a capacity for
45 people. He stated that a fundraiser was underway, with a goal of opening in February
or March 2018.
Bill Tapper asked for more information about the location. Burt stated that they would
only be renting the southwest section of the building and that it will be repainted. Interest
in food trucks was discussed. Tapper also asked about outdoor seating. Burt responded
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that there was limited space outdoors and initially they would start with just indoor
seating. He explained in the future he may want to obtain a permit to occasionally have
outdoor seating on weekends.
Steve Johnson asked if adequate parking served the site. Burt explained that there are
roughly fourteen to sixteen spots shared with the other tenant. Johnson asked for the code
requirements for parking. Angela Schumann indicated that a Conditional Use Permit was
submitted and would be reviewed by the Planning Commission. Schumann further added
that they have their own parking along with the public parking lot. Tapper asked for
clarification on the use of the public parking lot. Schumann stated that for parking to be
calculated, the City determines how much of the available land could be used for parking
on site. The applicant could also provide public parking on their site for a reduction in
their costs. The last option, if they don't meet the parking requirement, they could pay
into a parking lot fund, which provides a revenue source to buy or improve other public
parking lots.
Jon Morphew asked Burt of his previous experience working in breweries. Burt replied
that he helped install the tank and process monitoring electronic equipment in the
production space at the Lupulin Brewing facility in Big Lake. Morphew asked if there
were any concerns with market saturation with the microbrewery concept. Burt indicated
that he did not have any concerns.
Tapper asked if the chiropractic office was staying. Burt confinned it was staying.
Tracy Hinz expressed appreciation for the project and the excitement the community has
for a microbrewery.
Morphew asked how the fundraising efforts were going. Burt indicated that they started
off slow, but expect it to take off soon. Tapper asked if the fundraising efforts would help
with the equity requirements. Burt stated that he has received $12,000 - $14,000 and
some of the equity funds would be from his own contributions. Tapper asked if he was
underestimating the cost of the project. Burt indicated that his budget was pretty accurate
and he comfortable with the set budget. Tapper asked if there was a contingency if the
costs went over budget. Burt explained the only item that might be higher in price would
be the construction build out. He would work with the supplying businesses to
compromise on the costs of equipment.
Demeules asked how much brewing could occur for a micro -brewery before moving to
the next level. Burt indicated that he plans to stick with a five barrel system. The first
year, beer would be brewed two times a week. He would like to move to canning in the
future.
Morphew asked about any space constraints. Burt indicated that a portable canner could
be used on Mondays and Tuesdays when the brewery was closed. Morphew asked if he
would be the brew master. Burt indicated that he would start brewing most of the beer,
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but would look to hire someone in the second year.
Johnson explained that GMEF loan is subordinate to primary financing and asked if the
primary financing had been set up. Burt explained he received a loan commitment letter
from Bank Vista in St. Cloud. Johnson asked if he anticipated enough profit to be able to
grow. Burt stated that he could brew more to increase revenues.
Tapper asked if Burt would consider asking for more funds from the GMEF loan fund.
Demeules asked if the equipment would be purchased or leased. Burt explained that it
would be purchased.
Johnson asked what interest rate would be charged. Thares indicated the equity amount is
currently at nine percent so that would indicate an interest rate of 1 percent below prime
rate which is currently at 4.25 percent. Johnson sought confirmation that the loan terms
consist of a 20 year amortization schedule and a 10th year balloon payment. Thares
confirmed and added that the loan amount was for $45,000 and that their overall project
costs are $335,000. The Bank Vista first position loan would be for $260,000.
Tracy Hinz asked if staff could work with the Burts to maximizing their capacity for what
they could use with the GMEF. Thares stated that was doable.
Morphew stated it made more sense to go with either five percent or ten percent equity as
the interest rate would be the same. Thares stated that he would discuss with Bert.
BILL TAPPER MOVED TO ADOPT RESOLUTION #2017-002 APPROVING A
GMEF LOAN FOR RUSTECH, LLC (MICROBREWERY AND TAP ROOM)
CONTINGENT ON DISCUSSION BETWEEN STAFF AND BURTS FOR FINAL
AMOUNT OF THE LOAN, CITY APPROVALS AS REQUIRED ALONG WITH THE
APPROVAL OF A LICENSE FROM THE APPROPRIATE FEDERAL AND STATE
AUTHORITIES. STEVE JOHNSON SECONDED THE MOTION. MOTION
CARRIED, 6-0.
6. Consideration of Purchase Agreement for vacant parcel located at 220 West
Broadway
Jim Thares explained the owner of Red Rooster Properties noticed the pocket parks
concept in the Small Area Study. He thought that the EDA would like to acquire the
parcel. The parcel is .10 acres and it has grass planted on it with nine parking spaces on
the south side of the lot. The offer price was $34,500, which is the taxable market value.
BILL TAPPER MOVED TO APPROVE RESOLUTION 2017-2 AUTHORIZING THE
PURCHASE OF THE VACANT PARCEL OF LAND LOCATED AT 220 WEST
BROADWAY STREET. JIM DAVIDSON SECONDED THE MOTION. MOTION
CARRIED, 6-0.
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7. Consideration of 2018 Ad Valorem Tax Levy target discussion
Jim Thares stated that the EDA's first levy was in 2016. The allowed levy was $280,000
and the EDA levied the full amount. In 2017, the allowed levy jumped to $302,000
because there was growth in the taxable rate. The levy pays for things including costs of
staffing, financial advisors, marketing, memberships, postage, and utility bills. The levy
is the bulk of the financing for the EDA. The maximum levy amount for 2018, based on
2017 taxable valuation, is $323,000.
Tracy Hinz stated that if there was a specific project that the levy could go towards, then
she could understand levying for the maximum amount. Thares responded that he would
like to do more aggressive marketing and implementation of the Small Area Study.
Tapper suggested building up the funds, even if there isn't an immediate project that
needs funding. Steve Johnson stated his desire to levy for the maximum amount as
projects may come up, such as the purchase of parcels such as 220 West Broadway.
Demueles noted that the EDA levy funds are flexible and able to be spent on anything
within the city limits. Jim Davidson stated that the costs of everything raises about three
percent a year.
BILL TAPPER MOVED TO LEVY FOR THE MAXIMUM AMOUNT OF $323,000
FOR THE HRA LEVY. STEVE JOHNSON SECONDED THE MOTION. MOTION
CARRIED, 5-1 WITH TRACY HINZ VOTING IN OPPOSITION.
8. Director's Report
Jim Thares pointed out that per the MPCA correspondence, the LSI work on Block 34 —
130 East Broadway has been closed and no further action needs occur. Staff are
awaiting the reimbursement from the MN Petrofund.
Thares also reviewed the active prospects including: Shred -N -Go, a DEED Prospect,
Project Novus, Project #6580, and multiple housing and commercial developers.
Thares asked the EDA for their consideration of a meeting next week to consider a real
estate offer. Bill Demueles stated appreciation for the LSI work that was completed at
130 East Broadway.
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9. Adjourn
BILL TAPPER MOVED TO ADJOURN THE MEETING AT 6:45 P.M. TRACY HINZ
SECONDED THE MOTION. MOTION CARRIED, 6-0.
Recorder: Jacob Thunander
Approved: August 9, 2017
Attest:
Ji T ares, Economic Development Director
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Conflict -of -Interest Certification and Disclosure Form
Name: Steven C. Johnson
Position: EDA Commissioner
Date: 7-12-17
By signing this form below, I certify that:
I have received a copy Minnesota Statute 469.098 Conflict -Of -Interest
2. I have read and understand the policy;
3. I agree to comply with the policy;
Please describe below any relationships, transactions, positions you hold
(volunteer or otherwise), or circumstances that you believe could contribute to an actual
or possible conflict of interest between the EDA and your personal interests, financial or
otherwise:
1. I own commercial property on Block 52 in the downtown area of Monticello,
MN.
2. A potential conflict may arise with ownership of downtown commercial
property (Block 52) and my responsibilities in regards to my position of
commissioner on the Monticello EDA.
3. I will refrain from any official discussion, decisions, votes or any matter
before the EDA that would have financial implications regarding my holdings
on Block 52 in downtown Monticello.
4. When addressing by any means potential development or financial matters
regarding Block 52, I will be representing in whole or in part, my own
interests in this block as a private citizen and not any public interests of the
City of Monticello or the Monticello EDA.
I hereby certify that the information set forth above is true and complete to the
best of my knowledge.
Signature.