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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 2 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, 3 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. El 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. 5 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 6 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.