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8. EDSR 12-10-2007Item # 8. MEMORANDUM TO: Economic Development Authority FROM: Catherine Mehelich, Director of Economic Development DATE: December 10, 2007 SUBJECT: Discuss 2008 EDA Goals and Projects Attachments Staff report dated December 3, 2007 re: HRA Goals and Projects for 2008 2004-2007 Economic Development Strategic Plan 2007-2009 Strategic Industrial Marketing Plan -Strategies and Tactics Issues for Discussion As you are aware the Economic Development Division provides staff support for both the HRA and EDA. A copy of the HRA's preliminary list of goals and projects for 2008 is attached. The City Council is holding a planning session to discuss Community Development priorities on January 14, 2008 and may wish to defer feedback on the following preliminary list of goals and projects until after that discussion: 2007 Projects • Initiated market study and land use plan for the development of Gateway Business Park • Provided financial assistance for Metal Craft Machine's relocation and expansion project • Initiated restaurant recruitment strategy • Updated inventory of industrial, and commercial, properties for sale/lease 2008 Proposed EDA Goals and Projects • Consider update of attached Economic Development Strategic Plan to provide a framework for the EDA and HRA to work within and focuses staff energies on those priority areas important to the economic health of the City. • Implement strategy for the marketing and development of Gateway Business Park • Initiate discussions to identify locations, phasing and financing strategy for expanding city's inventory of industrial and commercial land for future development (e.g. gravel mining area). Discuss F,DA Goals and Projects for 2008 December 10, 2007 IJDA Meeting Page 2 of 2 Ongoing Initiatives • Market for sale and development of remaining lots in Northstar Business Park to users who will maximize the buildable area of the lots. • Implement attached strategies identified within the Strategic Industrial Marketing Plan, with an emphasis on broker/developer relations and website features. • Continue marketing efforts to recruit restaurants and retail development. • Maintain updated inventory of commercial/industrial properties for sale or lease. • Provide business retention and expansions services and promote use of the micro-loan program to existing manufacturers, while marketing for new business recruitment. City of El ver MEMORANDUM TO: Housing & Redevelopment Authority FROM: Catherine Mehelich, Director of Economic Development DATE: December 3, 2007 SUBJECT: Discuss HRA Goals and Projects for 2008 Attachments • City Council Meeting Minutes -November 13, 2007 Issues for Discussion Staff requests the HRA's feedback and direction on the priority goals and projects for 2008. The attached minutes from the November 13, 2007 City Council meeting indicates the input that Councilmember Motin recently received with regard to direction on HRA projects. Following is a preliminary list of goals and projects for HRA discussion: 2007 HRA Projects • Initiated strategic planning process for a comprehensive Downtown Redevelopment Plan. • Provided consistent communications to the public during the construction of the MetroPlains Downtown Revitalization project and related projects downtown, including coordination of Downtown Parking Focus Group and recommendations. 2008 Proposed HRA Goals and Projects • Coordinate completion of an Elk River Housing Market Study to be used to identify issues and gaps in current and future housing inventory. • Explore need and partnership opportunities for housing rehabilitation programs. • Explore need and partnership opportunities for a selective housing redevelopment program (voluntary acquisition/removal and replacement of blighted homes). • Resume planning process for the comprehensive Downtown Redevelopment Plan (following completion of Highway 10 Geometrics Study) d ~. ~, ~. ~~~.~ O ~r d" O O 0 ~- O O N ~ N ~ N ~ ~ . ,-~ ~ ~ ~--I L [,~ ~ V 0 ~ ~~ ~ O > ~ ~ +~ O z - `~ a °~ ~ -~ ~ ~- ~ ...~ ~~ .Q; o a? ~ -~ Q .~ L~ Q Q ~ ~ ~ o Y ~ _ U ~ . ~o N U ~ L ~~ ~g N V L L -~--~ ~V ~ ~- O U ~ ~ ~ o ~ ~ ~ U ~ ~ N _ ~ o ~ ~ m Q O ~ ~ ~ ~ Q ~ ~ o ~ rn w I rn ~ -~ ~ O a~ N L f6 ~ ~ ~ . •> ~L V . ~ V ~ , m 'i O ' ~ ~~-+ ~ ~ ~ ~ Q ~ n i Q ~ ~ z I .~ ~ ~ ~ ~ ~ ~ ~ O 4 -- ~ ~ ~ ~ ~ Ll.. ~ ~ V ~ fa ~ ~ ~ ~ ~L O "~ ~ ~ o O N • • • .fa u .. • • • • • I~ ....~ O N X O ~ c~ ~ ~ ~ - ~ ~ O ~ v L ~ .~ ~ ~ O (Q ~ O - ~ C ~ O ~ ~ ~ fa 0 ~ ~ ~ O ~ ~ ~ ~ (n 4-- ~ 4- '~"~ ~ ~` ~ (n "O ~(~ O L ~ C ~ ~ > ~ L ~ ~ O _ .~J O ~ ~ ~(n N `~ .+~ O ~3 •~ ~ .~ ^, ^~,^ V/ ~~ Q V / ca -~-~ O ~ v ca .,-.~ ~ ~ O O __ . ~ ~ O +-~ V ~ ~ ~ a--~ ~ ~ ~-. ~ O O > ~ ~ O ~ ~ ~ Q ~ _ ~ ~ ~ ~ ~ Q O ~ ~ ~ U ~ ~ N L _ ~j ~ ~ .- C ~ > ~ a ~` ^, VJ r ~ ~ ~ ~ ~ ~ ~ (~ ~ ~' O L U L ~ ~ ~ -f--: ``` ~ ~ ? -y - , '~ ~ ~ ~ U o ~ p uw ~ ~ [~ •- -~ ~ L v ~ O ~ . ~ ~ 0 Q~ 0 ~ • ~ Q ~ ~ ~ ~ L • -{..~ (~ ~ • 4-- ~ X ~ _ •~ ~ ~ (~ Q ~ a--~ ~ > C ~ ~ a = V ~ ~. ~ - i ~ ~ O ~ ~ ~ V Q ~ ~ ~ X ~ _ ~ ~ Q. 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C ~ ~ Q O o~ L ~~ -a o N 'p ~in ~ E O > ~ (6 ~ ~ ~ ~ ~ U + ~ O > a~ U .Q ~ c ° °~ v c ~ c ns ~ ~ ~ O O L ~ ' ,r ° O ~- ~ r. O O m L ~ ~ ;~ m ~ N ~ c ~ m ~, Q ~ L f~ ~ L ~ N .. O Q U O ~ L ~ `V O V f4 ~ ~ ~ `-, L i ~ ~ ~ ~ ~ ~ ~ ~ ~ M cn ~ ~. ~ .~ ~ ~ N o o~ ' N ~- ~ -~ C ~ = - to +-' • ~ ~ Q +-' C ~ O N U W U° ° ~ ~ ° W WL U U Strategies-and Tactics How can Elk River achieve its new and expanded industrial development marketing objectives? We recommend these strategies: 1. Broaden the primary target market to include medium to large light industrial manufacturers as well as small to medium users, and place more emphasis on assisting existing manufacturers 2. Increase the intensity of marketing efforts targeting industrial brokers, owner's representatives and site selectors because of their influence and market knowledge 3. Leverage the competitive advantage provided by Northstar Commuter Rail and additional differentiated community assets 4. Leverage the fact that two Fortune 50 firms recently selected Elk River for new facilities, which adds credibility and suggests that the City is ready to take industrial development to a higher level 5. Continue to employ about the same mix of marketing tools that the City has used in the past, but with greater emphasis on public relations and events 6. Facilitate the preparation and marketing of the new Gateway Business Center 7. Conduct acity-wide market study to determine the location, size and phasing of additional industrial land inventory Strategy #1: Broaden the Primary Target Market One of the City's top industrial development priorities is to attract projects that will create good- quality jobs and add significant market value to the tax base. Elk River has succeeded in doing exactly that during the past four years. A dozen small to medium sized light industrial manufacturers have relocated to or expanded in the community, bringing good-paying jobs and facilities that add to the tax base. Thus, the consensus is that the City should continue to build on that impressive record of success. However, as Elk River continues to grow and mature as a community, so should its industrial marketing efforts, according to many of the people with whom we spoke. Several strategic options were suggested and considered. But the majority seemed to agree that, if the City is going to "aim higher," the primary markets to be targeted should include: ^ Small to medium light industrial manufacturers ^ Medium to large light industrial manufacturers ^ Existing manufacturers In essence, the consensus was that Elk River should continue to target small to medium light industrial manufacturers, expand its marketing to target medium to large light industrial manufacturers, and increase its focus on existing manufacturers. Broadening the City's marketing efforts in this way should allow Elk River to attract industrial development projects that increase the quantity and quality of jobs while adding significant market value to the tax base. In targeting small to medium light industrial manufacturers during the past four years, the Elk River Economic Development Division has done an effective job of implementing the Key Account and Lead Generation Strategies outlined in the 2002-2004 Action Plan. As recommended, all industrial 10 inquiries have been managed effectively, and EDA members, local business leaders and other partners have been enlisted to aid in sales efforts. It was also recommended in the 2002-2004 Action Plan that the number of Key Accounts (10 as of August 2002) be expanded annually, and that has been accomplished. The number of key accounts currently stands at 57. A broader list of 524 contacts includes those Key Accounts plus several hundred additional prospects, most of which were identified by renting lists from Minnesota Technology. As we look ahead to 2007-2009, we suggest these tactics: ^ Define the parameters far "small to medium" and "medium to large," enabling the City to more easily identify and obtain additional prospect names to include in its marketing efforts ^ Reexamine the Key Account and other prospect lists to determine whether they sufficiently include the City's expanded target: medium to large light industrial manufacturers ^ If they do not, obtain contact information for additional medium to large prospects To place more emphasis on assisting existing manufacturers, we recommend these tactics: ^ Continue to provide -and possibly expand -programs that benefit existing manufacturers, such as financing and training programs, and work to increase participation in those programs ^ Continue to host and enhance the annual Manufacturing Week recognition event ^ More strongly communicate the City's commitment to existing manufacturers by such things as adding a dedicated "Tools for Existing Businesses" link to the Economic Development Division home page on the City's Web site, and increasing the frequency of Economic Development Division marketing and communications contacts with existing manufacturers Strategy #2: Increase Marketing Efforts Targeting Industrial Brokers As stated above, the secondary target market of industrial brokers and owner's reps/site selectors is an important and influential group. They are knowledgeable about sites and requirements, and influential in client decisions. This is especially true regarding medium to large light industrial users - a market we hope to more effectively target. But it is difficult to reach and build relationships with brokers, and they have little or no incentive to promote a city unless they have property listings in the community. Although the EDA Marketing Committee and City Staff had little enthusiasm for the idea of hiring brokers directly to market City-owned land, they recognize their influence and information value, especially for medium to large light industrial users. Thus the City should develop more effective strategies for gaining the attention and support of the broker community. We suggest these tactics: ^ Identify the five to 10 most knowledgeable and influential industrial brokers working in the Northwest Metro ^ Ensure that those brokers are part of the CitS~'s Key Account list ^ Continue to follow through on the established Key Account strategy, including being responsive to broker inquiries, networking with them periodically and maintaining ongoing contact ^ Continue to compensate brokers for bringing users to City-owned industrial sites 11 Having said that, it should be noted that Northstar is not a sustainable source of competitive advantage over all of the City's competitors. Elk River will have a station, but so will Big Lake and Anoka. But it is a competitive advantage over nearly all competitors. So it should be emphasized. Additional Differentiation Opportunities Elk River has been known as Energy City since 1997 when the Minnesota Environmental Initiative chose it from more than 30 other applying communities to act as a geographical focal point for the demonstration of efficient and renewable energy products, services and technologies. Builders, utility companies, government agencies and businesses have implemented several projects, including Energy Houses I, II and III. The Downtown Revitalization Project will also bring nearly 22,000 s9uare feet of commercial space, 67 for-sale housing units, 32 rental housing units and 154 below-grade parking stalls to the downtown area as part of the Bluffs of Elk River and Jackson Place projects. As with Northstar, there is an opportunity to make the Energy City Program and Downtown Revitalization Project more prominent in the City's industrial development marketing materials. Although these projects might not have a direct impact on industrial development, they reinforce a general perception of Elk River as a vital, progressive community. Strategy #4: Leverage the fact that two Fortune 50 firms recently selected Elk River for new facilities, which adds credibility and suggests that the City is ready to take industrial development to a higher level Two Fortune 50 firms recently selected Elk River for major projects. As was noted during the Aug. . 28 EDA Marketing Committee meeting, that speaks volumes about how Elk River is regarded by corporate users and site selectors. It boosts the City's credibility as a viable location for more than just small to medium light industrial development. Even if future projects aren't on a similar level, these prestigious projects will undoubtedly lend credibility during the sales and marketing process with any prospective user. Unfortunately, the sensitive nature of these projects limits the City's ability to leverage these successes at this time. However, the scope of these projects is certain to bring them to the attention of other interested parties -certainly the well-informed broker community, and possibly corporate users. There has also already been limited media coverage of these projects, and the names of the companies involved will be (or have already been) mentioned in City and County meeting proceedings and other documents. Thus they are public information. And, of course, anyone driving along Highway 10 can't help but notice the enormous facility currently being built -and the second one is expected to be even larger. So while the users are understandably sensitive about publicizing these projects, the projects are public information and will probably soon be almost common knowledge. Even so, given the sensitivity of these projects, we recommend that City officials communicate their intentions with the users before mentioning those projects in any marketing efforts. 13 Although it seems unlikely that these users would ever want these projects prominently featured in broad advertising or publicity efforts, perhaps they would be open to more limited, low-key efforts, such as project case studies included in marketing packets or targeted direct mail efforts. At worst, these projects can surely be mentioned in verbal communications with prospective users. Strategy #5: Continue to employ about the same mix of marketing tools, but with greater emphasis on public relations and events During the past four years, the Elk River Economic Development Division has pursued an integrated marketing communications strategy employing all components of the marketing mix: advertising, direct mail, public relations, events, Web site and personal selling/relationship building. As recommended by the 2002-2004 Action Plan, the City has increased its investment in direct mail and public relations. 2004 2005 2006 2007 Advertise $28,500 $28,500 $34,200 $20,000 Public Relations $17,000 $19,500 $24,000 $25,000 Other Marketin $2,500 $8,600 $18,100 $5,600 Total $53,500 $56,600 $76,300 $50,600 (I'he 2006 budget was disproportionately higher due to the $10,000 cost of Northstar Business Park signage, $5,000 for the Technical Assistance Grant Partnership Program with Minnesota Technology and other one-time costs.) Perhaps most notably, the Progress Partner Dispatch newsletter was redesigned, expanded and renamed News from the Hub_ (Please see Appendix H for an example of the News from the Hub newsletter.) In addition to the relaunched News from the Hub newsletter -which can also be considered a form of direct mail and PR -several project case studies have been written, which have been used online and as a part of hard copy marketing materials. The owner of one business that recently decided to relocate in Elk River said a project case study he read on the City's Web site was the biggest reason he decided to consider Elk River. Several news releases were also written and distributed, and valuable positive publicity was obtained in local media, including the Minneapolis-St. Paul Star Tribune, Minneapolis-St. Paul Business Journal, Minnesota Real Estate Journal, Elk River Star News and other publications. Public relations is an inexpensive and highly credible form of marketing. With the recent economic development successes in Elk River, there is plenty of "good news" to be shared. (Please see Appendix I for examples of public relations efforts and results.) The Ciry has also improved and expanded the amount of economic development information available online because it has become common practice for a city's Web site to be the first point of contact for economic development inquiries. 14 To maximize the value of the marketing budget, eve strongly recommend these tactics: ^ Devote even more of the marketing budget to public relations efforts, including new and updated case studies ^ Research and write new and updated case studies for all recent projects ^ Establish a regular schedule (at least six per year) of news release distribution and media relations ^ Continue quarterly publication of the News from the ~'ub newsletter ^ Reevaluate the messaging, design strategy and media selection strategy of the advertising ^ Continue to maintain, update and expand the content and other resources available online Strategy #6: Facilitate the preparation and marketing of the new Gateway Business Center Strategy #7: Conduct aCity-wide Market Study to Determine the Locations, Size and Phasing of Additional Industrial Land Inventory These two strategies go hand in hand. As noted earlier, there's little value in doing industrial development marketing if the City doesn't have land available. So, with respect to the dwindling inventory of land ready for industrial development in Elk River, we recommend these strategies: ^ Move forward expeditiously to make the new Gateway Business Park available for development ^ Conduct a market study to determine the location, size and phasing of additional industrial land inventory "I'he Gateway property will provide ashort-term solution to the problem of the City's lack of available land for industrial development. Gateway may also provide an opportunity for some commercial development, and the appropriate mix should be supported by a market study. However, the Gateway property totals only about 60 acres, and its development potential is limited by wetlands and a gas line that passes through the property. Meanwhile, larger -and in some ways, more desirable -tracts of land have recently become available for industrial development in competing areas, including Otsego (129 acres), Monticello {120 acres) and Big Lake (50 acres). There is also the potential for Rogers/Hassan Township to make more land available for industrial development. In light of this situation, the EDA Marketing Committee and City Staff agree that the City must also address the long-term need for additional industrial land. We strongly concur with City Staff's recommendation that the City conduct a market study to determine the location, size and phasing of additional industrial land inventory. Please see Appendices C and D for copies of the EDA Marketing Committee meeting minutes. 15 Elk~~`_~ ver MEMORANDUM TO: Economic Development Authority FROM: Catherine Mehelich, Director of Economic Development DATE: December 10, 2007 SUBJECT: Information Articles Attachments "Thunder Alley default shakes loan lenders", Princeton Union Eagle, October 26, 2007. • "Suburbs singing restaurant bleus", Star Tribune, November 14, 2007. EDA Commissioner Dwyer requested that staff provide the EDA a copy of the attached articles as information. Princeton Union Eagle -Thunder Alley default shakes loan lenders Page 1 of 4 Friday, October 26, 2007 'live search... Ho€ne News Sports Community Obituaries About Us Search Classifieds Reader's Stories Thunder Alley default shakes loan lenders ~ By Joel Stottrup The thunder has long subsided from the building with the curiously bad paint job off old Smith System Road in Princeton ever since the Thunder Alley Indoor Speedway closed its doors last year. Now the weeds are getting ever taller alongside the building and the doors are locked. But aside from the tall weeds and unsightly appearance of this building-that sits across from Fairview Northland Regional Medical Center-it has also left some lessons far local and regional governments on loaning money. The lessons came from the owner of the Thunder Alley Indoor Speedway business, Renee Stoddard; who only repaid $6,482 of the $135,000 loan the city gave her to help fill in the financing for the business. Plus the East Central Regional Development Commission, made up of a group of East Central Minnesota (ECRDC) cities including Princeton, lent Thunder Alley about $125,000 and she only repaid about $7,000 of that, according to ECRDC Executive Director Bob Voss. That's a loss of more than $246,000 in government money, not counting default on the private financing she received. Jay Blake, the current city economic development director, who wasn't in his job when Stoddard approached the city in 2004, said the city's loan was through its Economic Development Authority. The city EDA and the ECRDC loans add up to what is called gap financing. It serves to fill the gap between what a private lender would provide-First National Bank of Elk River in this case-and what the business required. The ending to the Thunder Alley business where the owner defaulted on the loans, government and private and where the property was foreclosed, is actually one of the things that most government officials don't like to talk about. Here tax money was lent out to help a business and the loans went bad. A story in the Sept. 16, 2004, Union-Eagle talked about Stoddard seeking the government gap financing and how she had hoped by that time, in 2004, to be up and operating Thunder Alley. She talked about plans to have not only two go-kart tracks, a paintball combat range and a mini golf course, but also eating facilities and a conference center. The go-kart tracks did materialize and later the paintball range was up and going. But her plans to have all kinds of commercial and industrial groups from the Twin Cities coming up to use the facility for conferences and recreation didn't turn out. She had told the Union-Eagle that she had operated a go-kart track in a former K- Mart building in Brooklyn Center between sometime in 2000 and February 2004. She said she thought she would be able to draw many of the clients she had there, up to Princeton. A story in the June 16, 2005, Union-Eagle told of Thunder Alley up and running in the building at that time. The building was once the Smith System factory until its closing sorne years earlier. Poll Question What do you think of the referendum for Princeton schools? -_'~ I will vote to support it. -_ , I will vote against it. _'~ I don't plan on voting. Vote Results Princeton Union Eagle P.O. Box 278 Princeton, MN 55371 Telephone: 763- 389-1222 Fax:763-389-1728 Contacts ECM Publishers, Inc. Nometown5ource Mille t..racs County Times Isanti County News Star News Capitol Roundup Qpi~r pH pia h V.Fk f,l~ J ..f t GJdSS~treels I ..~'~ r a '"" ~j ~ • } c qq~~ 4Q 7W'3o7'p~ t~ N r ,~ it ~ ~I S~~~!~ ~`~jj~r '~, _' ~r, ~_;xt~-;x i , .., ~ ,, : z. t,°, by 1 ~ MV^.. d ~(~~~ -'^}~ t '~' ^X~ i ,~ tnc~ R.y c J AUTO PART 1253G 314th Ave HW Prirueton, lAN 35311 ~`~i~-~3.~ ~~l ~ ~~ all-s~arautapa rts-4 om http://unioneagle.com/index.php?option=com content&task=view&id=415&Itemid=l 10/26/2007 Princeton Union Eagle -Thunder Alley default shakes loan lenders Page 3 of 4 But Blake did agree that there are lessons from the Thunder Alley loan defaults Loan-request analyzers can be more specific on what equipment that loan money goes to and they can be "much more aware of the [property put up For] collateral," Blake allowed. Government makes good decisions, but also makes bad decisions, Blake added. Jackson was asked where the money comes from to replenish what was lost in the defaulted EDA loan from the city. It means a loss of funds for the revolving loan fund to help businesses, Jackson answered. He also explained that the money that was used to make the loan came out of money repaid from loans the city made, using UDAG money. The UDAGs, or federal grants of such large amounts as $400,000 like the city received to redevelop part of the downtown into two shopping malls, were a phenomenon of mainly the 1980s that have since expired. Voss, head of the ECRDC, based in Mora, confessed that the non-payment of $118,000 of the $125,000 that the ECRDC lent to Thunder Alley, "took a pretty good bite out of our revolving loan fund." Then Voss added, "Our revolving loan fund is only a little over $400,000 to begin with." But Voss and Blake were at the same time philosophical that despite the default with Thunder Alley, both the city of Princeton and the ECRDC have had many more loan ventures on the successful side. One particularly successful one has been the lending to Glenn Metalcraft in Princeton, Voss said. He went on to say that the ECRDC board has a lot of good representatives from the city of Princeton, naming Mayor Jeremy Riddle, Jack Edmonds, who is a Mille Lacs County commissioner and Linda Evans, who is involved in bringing arts events to the east central region. There is also Barbara Welty from Kathio Township in Mille Lacs who is an asset, Voss said. Blake pointed to the city recently getting a metal works firm called Anoco Metal Services, and a firm that builds food processing and manufacturing equipment called Tucs to come to Princeton, as examples of promising ventures. The city is also helping a firm called Biomatrix move from a 3,000 sq. ft. building in rural Princeton to expand inside the 15,000 sq. ft, former Bell Canoe building in the city's industrial park, Blake added. It will take time for the ECRDC's loan fund to recover from the Thunder Alley default, Voss said, but he said the Thunder Alley case has also taught the ECRDC board something. It is an "opportunity to look at the size of the loans we make and types of uses the loans go to," Voss said. The Thunder Alley venture, Voss added, was more of atourism-oriented business. "We hope," he said, to make better and more "educated decisions. "We learned from it. It would be ridiculous not to try to learn from these experiences. We're marching ahead." ECRDC staff members still have not determined what all went wrong with the Thunder Alley business, Voss added. Bill and Sue Dunkley are the owners now of the former Thunder Alley building. Calls from the Union-Eagle to the Dunkley telephone number have gone unanswered. But Mike Youso, administrator of Fairview Northland Regional Medical Center that sits across from the former Thunder Alley, confirmed that the Dunkleys have contacted him to talk about ideas for the property. http://unioneagle.com/index.php?option=com_content&task=view&id=415 &Itemid=l 10/26/2007 Princeton Union Eagle -Thunder Alley default shakes loan lenders Page 2 of 4 A year and a half later, in December 2006, the city received the news that Thunder Alley was no longer open to the public. City council member Lee Steinbrecher, whose business is commercial painting, admits that when he saw how the paint job on the Thunder Alley building ended a number of yards from a front corner of the building, he got to worrying about Thunder Alley's future. City staff members contacted the city attorney for recommendations on collecting on the city's defaulted loan to Thunder Alley. The bad news was that the amount of money Thunder Alley owed the bank in Elk River exceeded the value of the building and contents so there was nothing left for second or third mortgage holders. The bank got first dibs on recovering any loss. Voss told the Union-Eagle on Monday that the ECRDC and the city were second mortgage holders in the project. Princeton City Administrator Mark Karnowski, when asked if it was wise to have lent for the project in the first place, said that city staff members were looking at getting diversified types of business. The Thunder Alley default was the second of two big loan losses for the city within about a three decade period, according to city finance officer Steve Jackson. The first big default was when the ownership of George Mall (later renamed Princeton Mall) that had borrowed $325,000 from the city, only paid about $25,000 of that back. The loan money had come from a $400,000 federal Urban Development Action Grant (UDAG) to the city. While the approximately $300,000 in lost UDAG money was not city taxes, it was still tax money that accrued out of the federal taxes people pay through deductions from their paychecks. The questions, the lessons When Blake was asked about the default, he responded that the questions are valid. The city's "EDA made the best decision possible at the time," he said. "It's not fair to criticize these decisions. You can always go back and say, 'You should have done this and you should have done that."' City staff members are disappointed the Thunder Alley business didn't work out, Blake said, and then added that the city continues to move forward to try to improve its economy. But is there a lesson for dealing with future lending requests? "We need to continue to draw on the experts to analyze business plans," Blake responded. Blake said that people who seek loans for businesses are required to submit business plans. '"I see business plans, a lot of start ups, a lot of projects that are clearly not thought out," Blake continued. The city still has to continue relying on EDA people to analyze such plans and "since I've come here, I've enlisted the help of the Initiative Fund," Blake said. The Initiative Fund (IF) has a revolving loan fund, just as does the ECRDC and the IF has a "superb staff of business loan underwriters," Blake said. "My job as a community development director is to make sure the public interest is best served." People looking at the defaulted Thunder Alley venture can "second guess" the decisions to loan money for it, but there could have been multiple factors why it went under, Blake continued. One factor, Blake suggested, were the rising gas prices, causing people to lose interest in driving from the Twin Cities to Princeton to use Thunder Alley as a conference and recreational facility. Blake also stated that Stoddard "lost everything too." http ://unioneagle. com/index.php?option=com_content&task=view&id=415 &Itemid= l 10/26/2007 Princeton Union Eagle -Thunder Alley default shakes loan lenders Page 4 of 4 Youso would only say there are a lot of possible scenarios, explaining that everything at this stage is only speculation and involve conceptual ideas. Karnowski and Blake also say that only ideas are floating around, though they have been discussed at Princeton EDA and planning commission meetings. One idea that Blake says there is a good bet will happen, is to tear down the masonry building that housed Thunder Alley. The city could possibly work with someone to then buy out the two homes west of the location that lie on each side of Smith System Road. Then the road could be rerouted so it would no longer have the hairpin turn that it has where it joins with Old Highway 18, Blake said. [ Beck NEXt > Princeton Union-Eagle ~ P.O. Box 278, Princeton, MN 55371 ~ Telephone: 763-389-1222 ~ Fax: 763-389-1728 http://unioneagle.com/index.php?option=com_content&task=view&id=415 &Itemid=l 10/26/2007 Suburbs singing restaurant bleus Page 1 of 2 StarTr~bulrte~4~n I~1I1~1NEA{~)~I -T. PAL, t~Il:~irS~T Suburbs singing restaurant bleus Copper Bleu restaurant, which cost more than $5 million, opened to critical acclaim in 2005 and quietly closed last month. By _Kevin Duchschere, Star Tribune Last update: November 14, 2007 - 4:50 PM Disappointment -- and some mystery -- surrounds the fate of Copper Bleu, the swank Lakeville restaurant that opened to wide acclaim two years ago and closed with nary a whisper last month. The copper-clad American bistro, designed by atop-flight Chicago restaurant architect, was thought by some to herald a new day in fine dining in the outlying Twin Cities suburbs. Critics raved about the food and the eye-catching building, which owner and local restaurateur Scott Winer said cost more than $5 million. Although the bistro seemed to be busy, especially on the weekends, some in the restaurant world wondered whether there would be business enough for Winer to make good on his investment. Winer didn't return phone calls last week to say why he closed the place and what plans, if any, he has for the site. Steve Mielke, Lakeville's city administrator, said that locals were "sad and disappointed" to learn of Copper Bleu's closing. Winer received no subsidies for the operation, he said. "It's a tough business. The successes are there and so are the failures, but their food was outstanding," Mielke said. Steve Eck, who works for a Minneapolis software company and lives in Lakeville, agreed that the food was good at Copper Bleu but that he and his wife typically went there only on special occasions, because "it was pricier than my budget would allow." One problem with Copper Bleu may have been its proximity to a Cub Foods store and a strip mall, a humdrum vista just outside the restaurant windows. Eck said it seemed a strange location for such a contemporary building. "A wavy roof, interesting shape, covered in copper panels and stone work," he said. "I guess that would be part of my concern -- what are they going to do with such aunique- looking restaurant?" http://www.startribune.com/332/v-print/story/1548458.htm1 11/16/2007 Suburbs singing restaurant bleus Page 2 of 2 Mielke said he has no idea what might be planned for the Copper Bleu site, although he said he hoped it might be reopened again as a restaurant. In the meantime, he said, Lakeville has added two new restaurants that offer fine dining - - Rudy's Redeye Grill, in the Lakeville Holiday Inn, and PorterHouse Steakhouse near Interstate 35 in the city's southwest area. Kevin Duchschere • 612-673-4455 Kevin Duchschere • kduchschere startribune.com ©2007 Star Tribune. All rights reserved. http://www.startribune.com/332/v-print/story/1548458.htm1 11/16/2007