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06-14-2004 EDA MINMEETING OF THE ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY HELD AT THE ELK RIVER CITY HALL MONDAY, JUNE 14, 2004 Members Present: President Gongoll, Commissioners Koenig, Dwyer, Klinzing (arrived at 5:35), Kuester, Tveite and Motin Members Absent: None Staff Present: Director of Economic Development Catherine Mehelich, Assistant Director of Economic Development Heidi Steinmetz, City Administrator Pat Klaers, and City Clerk Joan Schmidt Call Meetine 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 Agenda President Gongoll added to the agenda the discussion of relocation of ABRA Auto Body. MOVED BY COMMISSIONER MOTIN AND SECONDED BY COMMISSIONER TVEITE TO APPROVE THE JUNE 14, 2004 EDA AGENDA AS AMENDED. MOTION CARRIED 6-0. Consider Consent Agenda MOVED BY COMMISSIONER MOTIN AND SECONDED BY COMMISSIONER KOENIG TO APPROVE THE CONSENT AGENDA AS FOLLOWS: 3.1. MARCH 31, 2004 SPECIAL MINUTES 3.2. MAY 5, 2004 SPECIAL MINUTES 3.3. MAY 10, 2004 REGULAR MINUTES 3.4. CHECK REGISTER 3.5. BALANCE SHEET 3.6. REVENUE/EXPENDITURE REPORT MOTION CARRIED 6-0. Commissioner Klinzing arrived at this time. 4. Open Mike Economic Development Authority Minutes June 14, 2004 No one appeared for open mike. Page 2 5. Strate is Industrial Marketine Activities Reyort Assistant Director of Economic Development Heidi Steinmetz provided an update of strategic industrial marketing activities. She stated that case studies were put together for Orluck Industries and SoftPac Industries which will be used as marketing tools. She stated that staff and Commissioner Tveite attended a Business Retention & Expansion visit at Great River Energy. Commissioner Tveite stated that Great River Energy is landlocked with growth at 5 percent a year, currently adding employees, looking for other space (heavy industrial) within the city, and wishes to be kept up-to-date on current development activities m Elk River. One area they are interested in is the corner of Main Street and Highway 169. He felt Great River Energy staff was very impressed and grateful that this visit had occurred. Staff will keep in touch with them to continue to help with their expansion needs. Ms. Steinmetz stated that Circuit Check purchased Marketech, which will be relocating to Maple Grove. Tenants are needed for the former Marketech building located in Elk River. She stated that MN Fabrication & Machine's would be staying in Elk River but they wish to sell their building and lease from a new owner. She brought the commissioners attention to the five informational handouts distributed at the meeting. Director of Economic Development Catherine Mehelich reviewed the draft Contract For Initial Sale and Development between Elk River Business Park, LLC, and the EDA, and an outline from Ehlers & Associates, Inc. listing development agreement points. She stated that with the exception of items 1-3 the remaining points are considered in the draft contract. Commissioner Dwyer asked how the price for Exhibit C would be determined Ms. Mehelich replied that for each landowner pricing might be different however a base market value price of the land has been established at $1.25 per square foot. This does not include additions of any special assessments and park dedication fees. Discussion occurred regarding Commissioner Motin's concerns of the langu(b)ge in the contract page 2, 4(a) the use of the words "most expeditious way" and in 4 shall review and approve". He felt this would obligate the EDA. He also questioned the language in 5(b) and 5(a)(ii) and suggested adding, "Company must meet requirements of City's Business Subsidies Policy". Ms. Mehelich stated that is the purpose for putting the types of buildings and size wanted into this contract and it will be limited to manufacturing and production projects. The landowner has the option to not request any assistance for projects known not to qualify under city agreements. She stated the additional language could be added but that the business subsidies reference is built into the financing policies and programs. She stated that she would check on Page 3 Economic Development Authority Minutes June 14, 2004 the representations and warranties addendum that is mentioned in the Purchase Agreement. Ms. Mehelich stated that staff is working with a bulk conveyor system manufacturing company. They currently employ seven and are looking to add another 16 jobs. There has been some land use challenges with the various privately owned business parks. The company has very long truck-trailer systems that could utilize the enure requirement/limitation that is allowed by MnDOT, which is 72 feet long. The intersections near the city-owned business park property located off of 171" and Hwy 10/169 (Cargill) are buik to accommodate these long trucks. The Cargill site has approximately 60 acres and this company would need 2-3 acres and would manufacture conveyors. Staff wished to have EDA feedback before proceeding further on opening the city-owned land for industrial development. Commissioner Klinzing inquired as to the timeline. Ms. Mehelich replied that the goal of the owner was to be in operation by April 1, 2005. Ninety days would be needed to process the application. She stated the Cargill site would be available within 2 to 3 months and would be a good location for this project. Commissioner Klinzing stated to keep in mind that approximately 20 acres will be taken out of this piece of property if the maintenance facility would be built for the commuter rail system. She felt this company would be a good fit for that property and feels very positive about this company. (,, Economic Develc Strategic Plan Report Director of Economic Development Catherine Mehelich provided an update on the Economic Development Strategic Plan. She discussed 2004-07 priority issues and the timetable for review and adoption of the Economic Development Strategic Plan by the EDA, HRA and City Cotmcil. 7, consiaer rvnu~ ..tea== a - - --- - (Gradient Technoloeyl Project Ms. Mehelich stated that Badger Ventures, LLC had requested a micro loan and tax rebate assistance but that the EDA and the Council took no action on these requests in April due to several unresolved issues. Ms. Mehelich provided a project description and an analysis of the micro loan and financing terms. Ms. Steinmetz stated that the Finance Committee met twice to review the Micro Loan Fund Policy regarding the criteria for the Industrial Incentive Program. She reviewed the recommendations fro the Finance Committee. MOVED BY COMMISSIONER TVEITE AND SECONDED BY THE APPROVAL O OTHE MICRO LOOANEPO ICOY AM NDMENTS ASL OUTLINED IN MS. STEINMETZ'S STAFF REPORT. MOTION CARRIED 7- 0. Economic Development Authority Minutes June 14, 2004 Page 4 President Gongoll wished to thank the Finance Committee for their review of this policy. Ms. Steinmetz reported on the recommendation from the Finance Committee for the approval of a micro loan to Badger Ventures. MOVED BY COMMISSIONER KLINZING AND SECONDED BY COMMISSIONER TVEITE TO APPROVE THE $100,000 MICRO LOAN TO BADGER VENTURES, LLC WITH THE FOLLOWING TERMS: • Rate -fixed, 2 points below prime with a 3% floor; • Term - IS-year amortization, up to a 5-year balloon payment but not later than balloon on the bank's permanent loan; • Security -Secured by 2"d position on the real estate, personal guarantee from owners and spouses; • Structure -participation loan with The Bank of Elk River; • Job performance agreement - to include 5 new full-time jobs in Elk River with estimated wages ranging from $15-$75.00 per hour within 2 years. MOTION CARRIED 7-0. Ms. Mehelich reported staff's analysis of the resolved issues related to the tax rebate request. MOVED BY COMMISSION KOENIG AND SECONDED BY COMMISSIONER TVEITE TO RECOMMEND TO THE CITY COUNCIL THE APPROVAL OF THE TAX REBATE FINANCING FOR $72,778 ON A PAY-AS-YOU-GO BASIS FOR UP TO TEN YEARS TO BADGER VENTURES, LLC. MOTION CARRIED 7-0. g. Other Business Ms. Mehelich reviewed the distributed handout regarding relocation of ABRA Auto Body to Mulvaney Point Business Park. The Planning Commission had discussed the relocation request at their meeting of May 11, 2004 and felt that a tightly written text amendment to the Business Park ordinance would be the most appropriate choice m order to allow ABRA to relocate within the Mulvaney Point area. Ms. Mehelich stated that she understands from the Director of Planning that she anticipates the draft language to be able to come before the EDA at its July meeting. She requested the EDA's feedback regarding the potential change to the Business Park District ordinance. Commissioner Klinzing stated that she feels this business may not be a fit for that area; that she envisions that area to be an office park; it has been started that way and should continue that way. Commissioner Motion stated that he concurs with that and questions where the Post Office would be relative to the subject parcel. Economic Development Authority Minutes June 14, 2004 Page 5 Ms. Mehelich stated that the future post office would be located directly south of the subject parcel on Lot 1, Block 1. Commissioner Motin stated that he feels this is an office condo area and that an auto body shop would not be the best use of that property. Ms. Mehelich stated that the post office project would include retail sales as well as distribution facility. She stated the ABRA Auto Body building design is of a very high standard. President Gongoll stated that he understands the concern but hopes that we look at the quality of the development and the type of construction that may go on as one of the determining factors. He feels favorable about the project. 9. Updates Ms. Mehelich stated that the HRA received an initial request from Arrow Building Center for redevelopment of their site with removal of five buildings. However, the site did not work well for the company's layout needs. Arrow Building Center may be moving out of the community since the only site to fit their needs would be the Cascade Industrial Park, which is completely sold. This is unfortunate because it involves 15 jobs in the downtown area. The company does have a letter of intent with an existing lumberyard in another community. This prompted the HRA to schedule a work session for a discussion of visioning for the area north Highway 10 downtown for June 30 at 4 p.m. 10. A_diournment There being no other business, the meeting of the Elk River Economic Development Authority adjourned at 6:40 p.m. Joan Schmidt City Clerk