10-17-2016 EDA MIN City 111(1. ., El Meeting of the Elk River
River Economic Development Authority
Held at the Elk River City Hall
Monday, October 17, 2016
Members Present: President Tveite, Commissioners Burandt,Ovall,Westgaard, Olsen,
and Wagner
Members Absent: Commissioner Provo
Staff Present: Economic Development Director Amanda Othoudt and Recording
Secretary Jennifer Johnson
I. Call Meeting to Order
Pursuant to due call and notice thereof, the meeting of the Elk River Economic
Development Authority was called to order at 5:30 p.m. by President Tveite.
2. Consider 10/17/2016 Agenda
Ms. Othoudt handed out a staff report and requested President Tveite add the item
to the consent agenda as item 3.5 Indy Lube,Inc.,Satisfaction Agreement.
Moved by Commissioner Westgaard and seconded by Commissioner Olsen to
approve the October 17,2016, agenda,with the addition of item 3.5 as outlined
above.
Motion carried 6-0.
3. Consider Consent Agenda
Commissioner Ovall requested a change to the September 19,2016,EDA minutes to
item 6.1 Updated Tax Abatement Policy and Application. He requested clarification
to the sentence"She stated staff is looking at reviewing microloans, tax abatements,
and tax increment in-house"and suggested the following, "She stated staff is looking
at continuing to use Springsted for tax abatements and tax increment finances,but to
internally review microloans."
Moved by Commissioner Wagner and seconded by Commissioner Westgaard
to approve the following consent agenda:
3.1 September 19,2016,EDA Minutes,with the change to the minutes as
noted above.
3.2 Check register as outlined in the staff report.
3.3 Balance sheet as outlined in the staff report.
3.4 Revenue expenditures as outlined in the staff report.
Economic Development Authority Minutes Page 2
October 17,2016
3.5 Satisfaction Agreement for Indy Lube,Inc., as outlined in the staff
report.
Motion carried 6-0.
4. Open Forum
No one appeared for Open Forum.
5. Public Hearings
There were no public hearing items scheduled for this agenda.
6.1 Amendment to Loan Documents between Patriot Converting, Inc.
and the Economic Development Authority of the City of Elk River
Ms. Othoudt presented the staff report.
Moved by Commissioner Wagner and seconded by Commissioner Westgaard
to approve Resolution 16-05 approving a first amendment to the loan
agreement and related documents for Patriot Converting, Inc., as outlined in
the staff report.
Motion carried 6-0.
6.2 Forgivable Loan Application from Apex Embroidery & Design, Inc.
Ms. Othoudt presented the staff report and handed out a revised resolution to the
Authority. She explained the changes to the revised resolution included a change in
the security of the loan from equipment to using the mortgage.
Commissioner Ovall indicated he would abstain from voting due to a conflict of
interest.
President Tveite stated he prefers the mortgage used as security instead of equipment
and felt it was a great use of funds from the EDA's forgivable loan balance.
Moved by Commissioner Westgaard and seconded by Commissioner
Olsen to approve Resolution 16-06 approving a $200,000 forgivable
loan for Apex Embroidery Design, Inc., as outlined in the staff report.
Motion carried 5-0 with Commissioner Ovall abstaining.
F O V E B E I 1 Y
NATURE
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October 17,2016
6.3 SBH Properties, LLC (Apex Embroidery & Design, Inc.) Property Tax
Abatement Request
Ms. Othoudt presented the staff report. She indicated Mikayla Huot from Springsted
was in audience as well as applicant. She stated Dan Weber was also present
representing Sherburne County.
President Tveite discussed one area of the Finance Committee's lengthy discussion
regarding the difficulty of making a decision on an assumption of what a legitimate
rental rate would be, due to the lack of comparables for industrial versus office lease
rates.
Commissioner Wagner agreed and further discussed the challenges of the Finance
Committee discussions after receiving the initial assessment from Springsted. She felt
this project is a good fit for Elk River,noting its proposal to produce 25 new jobs in
2 years,but struggled with determining a blended lease rate using comparables from
the St. Cloud market area. She ultimately is in support of approving the full
abatement request of$87,167 for 12 years.
Ms. Othoudt stated the blended rate calculated of$4.75 SF industrial and$6.25 SF
office for a blended lease rate of$5.50 SF was conservative and was based on the
rates received from comparables in Sherburne County provided by Mr.Weber.
President Tveite stated from his perspective an additional two years to ensure a
company is going to be successful would be a fairly small investment in the grand
scheme of things and wouldn't be worth the risk of losing a potential great tenant in
the city. He also stated the County hasn't approved this project as of yet and the
Bank of Elk River still needs to provide final approval.
Mr.Weber indicated he would be recommending the next day, October 18,to the
Sherburne County Board of Commissioners approval of the tax abatement and tax
abatement financing.
Commissioner Wagner motioned and Commissioner Westgaard
seconded to approve a 12 year pay-as-you-go property tax abatement
for a maximum amount of$85,164 to SBH Properties, LLC, doing
business as Apex Embroidery & Design, Inc. as outlined in the staff
report.
Motion carried 5-0 with Commissioner Oval! abstaining.
6.4 Directors Report
Ms. Othoudt presented the staff report.
0 1 E I E I I T
NATURE
Economic Development Authority Minutes Page 4
October 17,2016
7. Announcements - none.
8. Adjournment
There being no further business, Chair Tveite adjourned the meeting of the Elk
River Economic Development Authority at 5:59 p.m.
Minutes prepared by Jennifer Johnson.
Dan Tveite, EDA ' esident
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Tina Allan, • Clerk
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