Loading...
3.1. EDSR 01-31-2017 City of Meeting of the Elk River EDA Finance Committee luver Held at the Elk River City Hall Tuesday, September 29, 2016 Members Present: Larry Toth, Ryan Hardin,Dan Tveite,Jennifer Wagner, and Chad Vitzthum Members Absent: Nate Ovall Staff Present: Amanda Othoudt,Economic Development Director and Colleen Eddy, Economic Development Specialist Also Present: Annie Deckert,Decklan Group;Brian Hill,Apex;Dan Weber, Sherburne County;Mikaela Huot, Springsted Inc 1. Call Meeting to Order Pursuant to due call and notice thereof, the meeting of the Elk River Finance Committee was called to order at 7:37 a.m. 2. Consider Agenda Motion by Wagner and seconded by Vitzthum to approve the agenda. Motion carried 5-0. 3.0 Consent Agenda Motion by Toth and seconded by Hardin to approve the consent agenda. Motion carried 5-0. 4.1 APEX Embroidery Forgivable Loan Application Ms. Othoudt presented the staff report and reviewed the score sheet. Members discussed the number of jobs the loan would create and asked if there was any city owned land that would work for this business. Ms. Othoudt reported that there was very limited city property available at this time. Motion by Vitzthum and seconded by Wagner to approve the forgivable loan request. Motion carried 5-0. 4.2 APEX Embroidery Tax Abatement Application Ms. Othoudt presented the staff report. Mikaela Huot from Springsted presented the "but for" analysis. Members discussed various items regarding the local market rates, abatement usually supports bigger projects, and the number of jobs being created among other things. Ms. Huot illustrated that the lease rates identified in the application determine the ability to support the debt service on the project and whether gap financing will be necessary for the project. Ms. Huot stated that by adjusting the lease rate from $5 to $6 per square foot for this project would be equal to approximately what the abatement revenues will be, combined city and county. If that rate is not achievable, then the abatement would be necessary. Mr. Vitzthum stated that at$5 per square foot it shows that the gap financing is necessary,if we sensitize it to $6 per square foot,it shows that gap financing wouldn't be necessary,based on the same assumptions and if the forgivable loan was not in the picture, the gap would be necessary. Ms. Huot stated that without the forgivable loan, the abatement revenues alone wouldn't be sufficient enough to support the increased mortgage. Mr. Vitzthum stated that the forgivable loan is an important factor in the viability of the project. Ms. Huot illustrated another way they look at sources and uses is to determine if the applicant increased the amount of equity,how would it impact the return to them. Ms. Huot stated that looking at the upfront sources and uses of the financing, specifically the debt and equity put into the project, can the applicant increase the amount of equity of the project, through other revenues and how would that impact the return to them. Mr. Vitzthum indicated that it really comes down to the lease rate that the current market can support. Mr. Tviete highlighted the lease revenues that at$6 the but for test isn't met, at $5 it probably is. Members reviewed local lease rates in the area based on comps in the area. Ms. Huot also stated that she looked at how else could they leverage funds, and additional equity and if they have it and if it,would it provide a reasonable return on that equity. Ms. Huot What is that threshold and is it achievable Ms. Wagner asked whether the county would support the project. Dan Weber spoke on behalf of Sherburne County,who is in support of the abatement request. Dan Weber, calculated the blended rate valued the warehouse space at$4.50 - $4.75. Office at$8.00 per foot. Come up with a blended rate of$5.25 -$5.50 a square foot. At least one of these abatements will need to be utilized to make this project work. Mr. Vitzthum asked Ms. Huot to put$5.50 into her spreadsheet to determine what happens to the viability of the project. Mr. Tviete and Ms. Wagner indicated their support the project. Ms. Wagner asked Ms. Othoudt why we scored the project"moderate" for spin off development. Ms. Othoudt stated that the moderate rating was because there are no current projects in the pipeline for that area. Mr. Vitzthum asked Ms. Huot about the spreadsheet. Ms Huot stated that if we based the rent on $5.50 a square foot,without abatement,it will still fail,with partial abatement;it should support the debt service. Partial abatement assuming 50/50 between city and county, or because the amounts are pretty close,partial assistance could be either from the city or the county. Mr. Tviete stated that we can't assume that the county will approve the abatement. Motion by Toth and seconded by Hardin to approve up to 12 year property tax abatement for SBH Properties, LLC. Motion carried 5-0. After the motion was made, further discussion was had by the committee, about the possibility to shorten the abatement term if the county were to approve the abatement. 4.3 EDA Microloan Policy Review Moved to next meeting. 5.1 Announcements 5.1 Ethanol Technology Verbal Update Ms. Othoudt stated that Judge Sheridan has been assigned to the case. 5.2 Resignation letter from Paul Motin Ms. Othoudt reported that Paul Motin has moved out of the Elk River area which leaves an open seat on the EDA Finance Committee. There is an active search to replace the legal representation to the board. 6. Adjournment There being no further business Chair Tveite moved to adjourn the meeting at 8:50 a.m. Minutes prepared byAmanda Othoudt . Tina Allard, City Clerk Amanda Othoudt, Economic Development Director City of Meeting of the Elk River EDA Finance Committee luver Held at the Elk River City Hall Tuesday,November 29, 2016 Members Present: Larry Toth,Ryan Hardin,Dan Tveite,Jennifer Wagner,Nate Ovall, and Chad Vitzthum Members Absent: None Staff Present: Amanda Othoudt,Economic Development Director and Colleen Eddy, Economic Development Specialist Also Present: Annie Deckert,Decklan Group; Dave from Heritage Millwork Inc. 1. Call Meeting to Order Pursuant to due call and notice thereof, the meeting of the Elk River Finance Committee was called to order at 7:35 a.m. 2. Consider Agenda Motion by Wagner and seconded by Toth to approve the agenda. Motion carried 6- 0. 3.0 Consent Agenda Member Wagner stated she would like to see the September 29, 2016 meeting minutes revised to better reflect the discussion during the September 29, 2016 meeting. Motion to approve the September 29, 2016 meeting minutes was moved to the January 31, 2017 meeting 4.1 Heritage Millwork Industrial Incentive Microloan Application Member Vitzhum abstained from the discussion and vote as he is the applicant's loan officer. Ms. Othoudt presented the staff report. Members discussed the terms of the loan, the SBA guidelines,number of)obs being created,is it an equipment loan vs. real estate loan, etc. Motion by Wagner and seconded by Ovall to approve the request in accordance with the terms of the EDA's policy (10 year Am, 5 Year Balloon) and holding a 3rd lien position on the equipment in addition to requiring the applicant to provide personal and corporate guarantees. Motion carried 5-0. Vitzhum abstained from the vote. An alternate Motion was made by Ovall and seconded by Toth to recommend approval of the loan request in accordance with the SBA terms specifically for this loan (5 year Am, 5 Year Balloon), if needed, provided that the SBA does not approve an exception to their policy, allowing the SBA to hold a subordinate position to the EDA on the loan request. Motion carried 5-0. Vitzhum abstained from the vote. 4.2 EDA Microloan Policy Review Ms. Othoudt reviewed the policy. Members discussed a variety of changes they would like to see. Staff will revise as needed. The Job Incentive Policy will be reviewed at the next EDA Finance Committee meeting. 5.1 Announcements 5.1 Ethanol Technology Verbal Update Ms. Othoudt stated that there has been progress made on the case. She is waiting to hear from the Judge regarding a hearing date. Members asked what the cost has been associated with resolving this case. Ms. Othoudt stated she will put some numbers together and report back to the board at the January meeting. 6. Adjournment There being no further business Chair Tveite moved to adjourn the meeting at 9:10 a.m. Minutes prepared by Colleen Eddy. Tina Allard, City Clerk Amanda Othoudt, Economic Development Director