Loading...
11-05-2013 JFC MIN • ElkMeeting of the Elk River EDA Finance Committee River Held at the Elk River City Hall Tuesday, November 5, 2013 Members Present: Daniel Tveite,Cliff Lundberg,Paul Motin,and Larry Toth Members Absent: Nate Ovall, and Chad Vitzhum Staff Present: Economic Development Director Brian Beeman,Economic Development Marketing Intern Chanda Knoof, and City Attorney Andrea McDowell Poehler I. Call Meeting to Order Pursuant to due call and notice thereof, the meeting of the Elk River Finance committee was called to order at 7:30 a.m. by Brian Beeman. 2.1 Ethanol Technology Default Director Beeman reviewed the terms and conditions of Ethanol Technology's approved Micro Loan in August 2008. The loan was structured as a Participation Loan with First National Bank of Elk River. First National Bank of Elk River received their last payment on February 25, 2010. Ethanol Technology defaulted and III went bankrupt shortly thereafter. Staff is requesting for committee approval to forward the City attorney's written resolution to the EDA to approve closing out the account by the end of 2013. Committee member Motin asked if Ethanol Technology principles filed bankruptcy. It was assumed but not known if they had, further research was suggested. Committee member Tveite asked if the City could write the loan off and then go after the personal guarantee. City attorney McDowell-Poehler suggested if the action was to pursue collection on the personal guarantee the City should wait to write the default loan off. Committee member Tveite felt a search should be made to see where their personal guarantee stands before recommending further action, committee member Lundberg agreed. Moved by committee member Tveite seconded by Toth to table a decision till more research was made and discussions continue next week. Motion carried 4-0. 2.2 Bank of Elk River Default Director Beeman presented background regarding the tax abatement that was received by The Bank of Elk River for the construction of approximately 20,000 Ill square feet of expansion.Job goals were outlined in the Business Subsidy Agreement between the City and The Bank of Elk River. These job goals fall under the Business City Finance Committee Minutes Page 2 November 5,2013 Subsidy Law,Minnesota Statutes, Section 1161993 through 116J.995. It has been determined with the cooperation from the State DEED office,EDD staff,and their • attorney, that these job goals have not been met. Committee members had concern that The Bank of Elk River job creation numbers were not consistent or clear.There was understanding that the downturn in the economy during this time should be considered. Committee members Motin and Tveite felt good faith had been shown on the side of the city with the two extensions given.They felt that making an exception could set precedence for future borrowers in the same situation.The state of Minnesota is also under the understanding that the maximum amount of extensions have been issued. Committee member Lundberg inquired as to what was the total amount of Downtown District employees documented since 2006. Did they ever employ over 63. Is there a way to see if this number has ever been reached? This number could not be confirmed at this time. Lundberg stated he would like to suspend further abatement until The Bank of Elk River had time to research past payrolls,report goals, and know if the high water mark was ever reached. He also questioned if they would be responsible for the City attorney fees. Committee members agreed that to direct further action the"high water mark" must be known. Moved by committee member Motin and seconded by Toth to recommend EDA suspend future tax abatement payments,have the bank pay all attorney fees, and to direct staff to find the "high water mark" for The Bank of Elk River-Main Street Branch's employment (i.e.,the total employment at that branch location,whether • retained jobs or new jobs) during the period from the date of the Business Subsidy Agreement to current to determine to what extent the subsidy already paid to the Bank may need to be repaid. Motion carried 4-0. 2.3 Update Energy Efficiency Microloan Brian Beeman presented changes to the microloan policy Recommendations were discussed at a prior Finance Committee meeting. These included: • Non-profits should be included • Microloan dollars should not be used for working capital • Energy efficiency should be defined as improvements rebatable by Elk River Municipal Utilities (ERMU) or the utility provider for the property if not ERMU. • At least 50%of microloan funds should be spent on energy efficiency improvements for energy efficiency loans • A map should be provided comparing the current downtown district to the downtown area as defined by the Mississippi Connections Redevelopment Framework. Discussion ensued concerning the clarity of the map outlining the Mississippi Connections Redevelopment area. Suggestions were made to include a descriptive 4110 narrative and include street names for clear understanding. .i n t B # f INATURE City Finance Committee Minutes Page 3 November 5,2013 • Commission member Motin recommended rewording;Business must be a for-profit corporation,partnership, or sole proprietorship. Non-profit organizations will also be considered. To read;unless otherwise stated,businesses must be for profit corporations,partnerships, or sole proprietorship; all other changes were agreed upon. A motion was not made at this time. Director Beeman stated that he was looking for direction on these changes and the development of the fourth microloan. 2.4 Fourth Microloan Policy Director Beeman explained that the money the City of Elk River received from DEED is required by the State to have a policy written before the city can use the funds. The State is requiring that the city first, develop a draft policy for the funds. The State will review the draft policy and if approved, the city can adopt the new policy. Ideas were asked for. Filling the Gap that is not covered from other loans • Business start up • Restaurants • Retail • SAC and WAC fees Commission member Motin asked what other cities are doing. Can we find some unique and different ways to utilize the money? Meeting ended with unanimous • feeling that research of other cities should be completed to obtain additional ideas and information. 6. Adjournment There being no further business, Director Beeman adjourned the meeting of the Finance Committee at 8:45 a.m. Minutes prepared by Chanda Knoof. Brian Be an, Econgvik Development Director Tina Allard, City Clerk • illERER R � NATURE