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04-11-2005 EDA MINMEETING OF THE ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY HELD AT THE ELK RIVER CITY HALL MONDAY, APRIL I I, 2005 Members Present: President Gongoll, Commissioners Dwyer, Farber, Gumphrey, Motin and Tveite Members Absent: Commissioner Klinzing Staff Present: Director of Economic Development Catherine Mehelich, Assistant Director of Economic Development Heidi Steinmetz, Director of Planning Michele McPherson, and Recording Secretary Debbie Huebner 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 Agenda MOVED BY COMMISSIONER MOTIN AND SECONDED BY COMMISSIONER FARBER TO APPROVE THE APRIL 11, 2005 EDA AGENDA. MOTION CARRIED 7-0. 3. Consider Consent Agenda MOVED BY COMMISSIONER TVEITE AND SECONDED BY COMMISSIONER FARBER TO APPROVE THE CONSENT AGENDA AS FOLLOWS: 3.1. MARCH 14, 2005 MINUTES 3.2. CHECK REGISTER 3.3. BALANCE SHEET 3.4. REVENUE/EXPENDITURE REPORT MOTION CARRIED 7-0. 4. en Mike No one appeared for open mike. 5. EDA Brown Pr~erry Development Update Director of Economic Development Catherine Mehelich reviewed the progress to date regarding development of the EDA Brown property. She noted that on Apri14, 2005 the City Council adopted a resolution ordering a preliminary feasibility report for the proposed protect and antictpates that the report will be presented to the EDA and Council next month. Economic Development Authority Minutes April 11, 2005 Page 2 Ms. Mehelich stated that staff and Ehlers met with the two developers to discuss their proposals. The developers were encouraged to submit additional information regarding how thee-proposal would benefit the EDA, development of the park through a master developer concept, and to further redefine concepts for the use of the park. Staff will continue to meet with the developers over the next month. A report will be available for the May EDA meeting. President Gongoll asked if staff felt a workshop meeting was necessary for this issue. Ms. Mehelich stated no, not at this time. Commissioner Dwyer noted that he would be absent for the May EDA meeting. 6. Consider Micro Loan Poli Waiver -Bad er Ventures LLC Gradient Technolo Ms. Mehelich provided background on Badger Ventures, LLC (Gradient Technology) Micro Loan. She explained that a section of the Participation and Subordination Agreement is inconsistent with a requirement in the EDA's recently amended Micro Loan Policy. Staff requests that the EDA consider waiver of the following policy provision in this case: "The participation agreement shall include the provision that if the bon-ower defaults on the loan, the EDA will collect all further payments during the default based on a pro-rata basis with the participating bank, excluding the distribution of proceeds resulting from the foreclosure on collateral." Ms. Mehelich stated that since the participation loan is structured in which tax rebate payments would be dedicated to the payment of the micro loan, the proposed loan structure is inconsistent with the policy. In this case that structure appears to provide the EDA adequate protection that its portion of the loan will have a sufficient source of revenue to cause it to be repaid. Tom McNair, Bank of Elk River -Stated he was present to answer any questions the Commission may have. President Gongoll asked if this policy waiver was only for this particular case, and whether or not the policy needs to be revised. Ms. Mehelich stated that the waiver was only being requested for Badger Ventures due to the relationship of the tax rebate assistance which is not normally the case on micro loans, and that she did not see a need to revise the policy at this time. MOTION BY COMMISSIONER TVEITE AND SECONDED BY COMMISSIONER FARBER TO APPROVE A WAIVER FROM THE DESCRIBED PROVISION OF THE MICRO LOAN POLICY FOR THE BADGER VENTURES, LLC MICRO LOAN. MOTION CARRIED 6-0. Consider Call of Micro Loan - Dis la Solutions Inc. Assistant Director of Economic Development Heidi Steinmetz provided background information on Display Solutions, Inc.'s $50,000 Micro Loan which was approved in 2004. She reviewed the status and the terms of the loan. Ms. Steinmetz explained that due to mcreased business, Display Solutions is in need of leasing 20,000 - 30,000 square feet of space, which is not currently available in Elk River and they will need to find space outside of the City. Display Solutions would like to maintain the current terms of their loan, which Economic Development Authority Minutes April 11, 2005 Page 3 is 3 percent interest, a 10-year amortization, and a balloon payment due in May of 2007. She noted that both the Micro Loan Policy and Subsidy Agreement state that the loan must be repaid if the company relocates outside of Elk River. Ms. Steinmetz provided three options for the EDA to consider regazding the Display Solutions request. Commissioner Motin stated he wished to disclose that Display Solutions was a client of his, but that he has no financial interest in the company. The Commission concurred that this did not constitute a conflict of interest. Commissioner Dwyer stated that the fact that there is no space available in Elk River for Display Solutions to expand creates a special circumstance. Bob Michalek, Display Solutions -Explained that the company has been awarded several large contracts that force him to look for a larger space, and that he was not able to find space in Elk River. He stated that a 2 -3 year lease is required for most of the properties he has checked. Mr. Michalek indicated that his goal is to come back to Elk River, as a number of his employees live here. President Gongoll stated that would be the EDA's goal, also. Commissioner Dwyer stated that the interest rate to a market rate of prime plus one. Commissioner Tveite stated that he felt if Display Solutions returns to Elk River when space becomes available, the EDA would be open to lowering the rate. MOTION BY COMMISSIONER TVEITE AND SECONDED BY COMMISSIONER GUMPHREY TO MODIFY THE TERMS OF THE MICRO LOAN FOR DISPLAY SOLUTIONS TO REQUIRE AN INTEREST RATE ON THE LOAN OF PRIME PLUS ONE. THE MOTION CARRIED 6-0. g. Consider Earl Release of Sublease for Business Incubator Tenant - La Two Technolo Corporation Ms. Steinmetz provided background information regarding LapTwo Technology Corporation's Business Incubator lease and product development. She explained that LapTwo has "graduated" from the Incubator and recently moved its operations to market rate rental space in Elk River. Staff requests that LapTwo be released of is current Incubator sublease with two conditions: 1) that LapTwo must be curent on cash rent payments through April 11, 2005; and 2) that the company submit legally acceptable stock offering certificates as noted in the staff report to the Commission dated April 11, 2005. Rob Henrungsgard, LapTwo Technology Corporation -Reviewed products developed by LapTwo including AdDireceor, HII'PA-Filter, and WarmSpot. He explained how Topnotch Computer Services evolved and its success. He noted that LapTwo moved to the commercial space on March 21, 2005. Conunissioner Dwyer stated that he did not see a problem with Mr. Henningsgazd's request to be released from the Incubator Sublease, since the intent of the program is for businesses to eventually move into market rate space within the City. President Gongoll asked if LapTwo was current on their rent. Ms. Steinmetz stated yes, that LapTwo is paid through the end of April. Mr. Henningsgazd stated that he is working on Economic Development Authority Minutes April 11, 2005 Page 4 ------------------------------------------ the stock certificates and that generating the stock certificates requires legal counsel and is currently being worked on. MOTION BY COMMISSIONER FARBER AND SECONDED BY COMMISSIONER GUMPHREY TO RELEASE LAPTWO FROM ITS CURRENT SUBLEASE WITH FOLLOWING CONDITION: LAPTWO MUST SUBMIT LEGALLY ACCEPTABLE STOCK OFFERING CERTIFICATES COVERING THE PERIOD OF SEPTEMBER 22, 2003 THROUGH APRIL 11, 2005. THE CERTIFICATES WILL SATISFY THE STOCK OFFERING PORTION OF RENT FOR THE DURATION OF LAPTWO'S TIME AS AN INCUBATOR TENANT. THE MOTION CARRIED 6-0. Consider Rezonin Pro e on Meadowvale Road from Li t Industrial to Residential Director of Planning Michele McPherson reviewed a proposal by Richard Straus of M.S. LLC. to rezone the properties a 1870 Meadowvale Road and 12669 Meadowvale Road to R4 Multiple Family Restdential, for a work force housing project. She reviewed the location, size, zoning, and existing uses for each of the sites. The property located at 12669 is currently zoned Light Industrial and the property at 1870 Meadowvale Road is zoned Multi- FamilyResidential. Ms. McPherson stated that rezoning the property to R4 would allow a density of up to 8 units per acre. Since the request would impact the City's Light Industrial mventory, the EDA is asked to provide direction to staff. Richard Strauss, Residential Director of M.S. LLC -Stated that he is a resident of Elk River and a home builder. He stated that he was aware of the City's interest in creating affordable housing and felt a project on this site would benefit the community. Commissioner Dwyer stated that the EDA has concerns regarding the limited Business Park/Light Industrial inventory left in the City. He felt that the residential property would be better suited for Light Industrial. Commissioner Farber stated that Meadowvale Road is a substandard road and until it is upgraded, it would not holdup to additional residential traffic. President Gongoll concurred. Commissioner Motin stated that there is a need for Light Industrial-zoned property and felt this site was a prime piece of Light Industrial. He noted that as member of the HRA, he did not want to discourage Mr. Strauss from looking for a more suitable site for a workforce housing project. President Gongoll concurred that workforce housing is needed in Elk River but that he also would rather see a project located somewhere else. Mr. Strauss stated that he would look for alternative locations. He asked that he be able to meet with the EDA again if he had more information to present to them. President Gongoll stated that depending upon the type of information, Mr. Strauss may need to meet with the HRA or City Council. Ms. McPherson stated that the issue will be brought back to the EDA if Mr. Suauss decided to proceed with a formal application for rezoning. Economic Development Authority Minutes April 11, 2005 Page 5 ------------------------------------------ 10. Other Business NorthStar Corridor Update President Gongoll noted that Governor Pawlenty signed the bonding bill which included the Northstar Commuter Rail funding on April 11, 2005. Visit to SofrPac Commissioner Motin stated that as a result of their visit to SoftPac, they learned that SofrPak is experiencing growth in a number of products and distribution. Ms. Mehelich noted that they have also added new equipment. Ms. Mehelich noted that SofrPac is numutg 3 shifrs S days a week, and that a representative of SoftPac indicated that one-third of their employees are from Elk River, one-third from the area to the east of Elk River, and one-third from other surrounding communities. The Pines Town Office Park Commissioner Motin stated that he noticed six of the office condominiums at The Pines Town Office Park are being auctioned and asked if any of the Comtnissioners were aware of why they were being auctioned. No other infotmation was available on this issue. 11. Adjournment There being no other business, President Gongoll closed adjourned the meeting. The meeting of the Elk River Economic Development Authority adjourned at 6:25 p.m. Submitted by: ~~~ ~.. Joan Schmidt City Clerk