03-10-2003 EDA MINMEETING OF THE ELK RIVER
ECONOMIC DEVELOPMENT AUTHORITY
HELD AT THE ELK RIVER CITY HALL
MONDAY, MARCH 10, 2003
Members Present: President Gongoll, Commissioners, Kuester, Tveite and Motin
Members Absent Commissioners Dwyer, Koenig and Klinzing
Staff Present: Director of Economic Development Catherine Mehelich, Ciry
Administrator Pat HIaers, and City Clerk Sandra Peine
1. Call Meeting_To Order
Pursuant to due call and notice thereof, the meeting of the Economic Development
Authority was called to order at 5:30 p.m. by President Gongoll.
2. Consider 3/10/03 Agenda
COMMISSIONER MOTIN MOVED TO APPROVE THE MARCH 10,
2003, EDA AGENDA. COMMISSIONER TVEITE SECONDED THE
MOTION. THE MOTION CARRIED 4-0.
3. Consider Consent Agenda
COMMISSIONER TVEITE MOVED TO APPROVE THE CONSENT
AGENDA.
3.1. FEBRUARY 10, 2003 EDA MINUTES
3.2. CHECK REGISTER
3.3. REVENUE/EXPENDITURE REPORT
3.4. BALANCE SHEET
COMMISSIONER KUESTER SECONDED THE MOTION. THE
MOTION CARRIED 4-0.
4. Olen iVlike
No one appeared for open mike.
5. Strategic Industrial Marketing Activities Update
Director of Economic Development Catherine Mehelich reviewed the information
in the staff report regarding strategic industrial marketing activities.
Economic Development Authority Minutes
March 10, 2003
6. Spoxtech Expansion Project
Page 2
Catherine iVlehelich repotted that staff has been working with local manufacturer,
Spoxtech, Inc. on the company's proposed expansion project. Spoxtech, Inc. wishes
to expand operations with the addition of a 20,000 s.f. building and new equipment
purchases.
Catherine noted that the City Council recently authorized staff to proceed with an
application to the Minnesota Department of Trade and Economic Development
(DYED) Investment Fund fox a grant in the amount of $200,000 to assist with a loan
for Sportech, Inc. Catherine presented the proposed financing terms to the ED?~.
COMMISSIONER TVEITE MOVED TO RECOMMEND THE
FOLLOWING LOAN TERMS TO THE CITY COUNCIL FOR THE
PURPOSE OF PROVIDING A LOAN TO SPORTECH, INC. WITH
FUNDS FROM THE MN INVESTMENT FUND GRANT:
• LOAN AMOUNT: $200,000
• LOAN PURPOSE: EQUIPMENT FINANCING
• TERM: 7-YEAR AMORTIZATION
• INTEREST RATE: 2%
• SECURITY: 1sT LIEN POSITION ON NEW EQUIPMENT.
COMMISSIONER MOTIN SECONDED THE MOTION. THE MOTION
CARRIED 4-0.
Catherine iViehelich reviewed information pertaining to a memo she distributed in
regard to establishing a Local Development Organization fox the Sportech expansion
grant application. Catherine explained that the use of the DYED federal funds
requites the City to meet federal program requirements, including job creation For
LMI land Environmental Reviews. She explained that the City could bypass the
requirements by requesting authorization from DYED to transfer federal Small
Cities funds to a Local Development Organization such as the EDA or HRi1.
COMMISSIONER MOTIN MOVED TO RECOMMEND THAT THE
CITY COUNCIL REQUEST AUTHORITY FROM DYED TO
DESIGNATE THE ELK RIVER ECONOMIC DEVELOPMENT
AUTHORITY IN THE CITY OF ELK RIVER AS A LOCAL
DEVELOPMENT ORGANIZATION AND AUTHORIZE THE EDA TO
RECEIVE THE REPAYMENTS FROM THE MN INVESTMENT FUND
SCDP SET-ASIDE LOAN TO SPORTECH, INC. COMMISSIONER
TVEITE SECONDED THE MOTION. THE MOTION CARRIED 4-0.
Economic Development Authority Minutes Page 3
March 10, 2003
Consider Micro Loan <lpplicadon - L2ke Assault Custom Boats
Catherine Mehelich indicated that the Finance Committee reviewed the blicxo Loan
application submitted by Lake Assault Custom Boats. Lake Assault Custom Boats is
a start up manufacturer of custom fishing boats. The company has identified a very
targeted market of elite fisherman. She indicated that the company has requested a
$50,000 Supplemental Micro Loan which will be used to purchase machinery and
equipment. Catherine noted that the Finance Committee unanimously recommended
that the EDA consider awarding the loan.
Owner of the Company, Jerry Ackerton, presented information about the company.
COMMISSIONER MOTIN MOVED TO APPROVE THE APPLICATION
FOR LAKE ASSAULT CUSTOM BOARS FORA $50,000
SUPPLEMENTAL MICRO LOAN CONTINGENT UPON THE
FOLLOWING TERMS BEING MET:
• PERSONAL GUARANTEE FROM OWNER AND WIFE
• ADDITIONAL FINANCING SOURCES SECURED
• SECURED BY 1sT LIEN POSITION ON EQUIPMENT
• TERM: 10-YEAR AMORITZATION
• 3-YEAR BALLOON PAYMENT @ 3.25%
• STRUCTURED AS PARTICIPATION LOAN WITH BANK
• CREATION OF 3 FULL-TIME JOBS @ NO LESS THAN
$17.00/HOUR WITHIN 2 YEARS.
COMMISSIONER TVEITE SECONDED THE MOTION. THE MOTION
CARRIED 4-0.
8. Preliminary- Repoct and Discussion on An2lysis of Industrial Paxk Options
Catherine Mehelich indicated that staff has been directed by the EDA to explore the
following options relating to industrial land development:
Alternative strategies for working with private landowners of business park
properties; and
Strategy for development of the EDA's pxoperry located off of Twin Lakes
Road
Catherine explained that the reason fox exploring the options is that the City is at a
competitive disadvantage with its business park property because it does not own the
land directly which causes the siting process to take longer. Catherine indicated that
following a joint worksession with the Plannutg Cotnmission held in February it was
suggested that EDA/Council persons meet one-on-one with private landowners to
confirm staffs understanding of the pricing, availability and mazket.
Economic Development Authority Minutes
March 10, 2003
Page 4
Commissioner Tveite indicated that he met with the developers of Cascade
Industrial Paxk and Elk River Business Paxk. Cotnxnissionex Tveite indicated that the
developer of Cascade Industrial Park stated that he is not been in a position to
market the industrial park due to the roads not being developed at this time. He
noted that the developer did feel that he would be successful in Erlling the property
with industrial clients due to the lack of industrial land in the City.
Commissioner Tveite indicated that the developer of the Elk River Business Park
Property noted that the lack of outside storage in the business park area is a deterrent
in attracting clients.
Mayor Klinzing was not present to report on hex meeting with Stewart Wilson of the
Elk Path Business Center.
Sid Inman of Ehlers & Associates presented the preliminary findings on the analysis
of the two options. blr. Inman indicated that the purpose of the analysis is to try to
come up with an understanding of the market place so Elk River can understand
where they are in compazison to everyone else. blr. Inman indicated that whether the
City wants to pursue development of private or public land, the City should be ready
to offer some types of incentives. Mx. Inman indicated that city owned parks come
with higher risks to the city but also establishes a "level playing field" between the
city and neighboring communities. The next step in the process is to ask developers
Ryan Companies and Opus NW to provide a typical pxoforma showing what the
market can afford to pay for adevelopment-ready industrial site in the northwest
metro. Mr. Inman stated that he will return in a few months to report on the analysis.
Chair Gongoll stated that there is no hurry- in coming to a conclusion regarding this
issue especially due to the current state of the economy. It was [he consensus of the
EDA to direct Mr. Inman to proceed with the proposed analysis. Commissioner
Morin requested that Mr. Inman also provide additional information on the concept
of a master developer.
Catherine Mehehch spoke about the risks that the City takes by not doing anything.
She indicated that the City risks the loss of its industrial base of which the city has
strived to enhance by the adoption of the Strategic Industrial Marketing Plan. She
further noted her frustration of not being able to compete with surrounding
communities for light industrial businesses and the fact that the City cannot
accommodate expansion of its own companies, both issues due to a lack of
appropriately sized and priced industrial lots.
9. Other Business
There was no other business.
10. Adjournment
Economic Development Authority Minutes
March 10, 2003
Page 5
There being no other business, PRESIDENT GONGOLL ADJOURNED
THE MEETING AT 6:25 P.M.
c~i-.-sP~•w Q ~~~~-P
Sandra Peine
Citv Clexk