12-08-2014 JFC MIN
Meeting of the Elk River EDA Finance Committee
Held at the Elk River City Hall
Monday, December 8, 2014
Members Present: Cliff Lundberg, Paul Motin, Nate Ovall, Larry Toth, Dan Tveite
Chad Vitzthum arrived at 7:45 a.m.
Members Absent: None
Staff Present: Interim Economic Development Director Jeremy Barnhart
Also Present: Springsted Consultant Mikaela Huot
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 7:30 a.m.
2. Consider Agenda
Motion by Motin and seconded by Toth to approve the December 8, 2014 Finance
Committee agenda. Motion carried 6-0.
3.1 Consent Agenda
Motion by Toth and seconded by Motin to approve the Consent Agenda.
Motion carried 6-0.
4.1 Coin-Tainer Jobs Incentive Microloan Request
Mr. Barnhart introduced the Coin-Tainer project, which includes a request for a microloan.
Ms. Huot reviewed Coin-Tainer’s application, eligibility, terms and conditions outlined in the
agreement. She also discussed eligible costs.
Positive net worth – records limited (page 4 of the staff report).
Member Lundberg – stated he generally supports the application, but had a mechanics
question. He stated he was uncomfortable with a loan to the owner, but the job creation
responsibility to another entity. He also had concerns with the contract for deed, and would
like to see the rental agreement.
Member Vitzthum – Co-borrower agreements, wants to see lease agreement.
Member Lundberg – suggested that an Attornment agreement be completed, at least.
Dave Walters, representing Coin-Tainer and Stonesthrow, stated that next week they expect
to be complete with rebuild of processes. The contract for deed holder will agree to 6
months, right of redemption foreclosure. He noted that existing tenants have 5-7 year
leases.
Member Tveite – questioned if Coin-Tainer has a 5-year lease? Mr. Walters agreed.
Member Toth – Questioned if these terms are written down. Special conditions – 6 months
foreclosure, is that written? Mr. Walters – that can be incorporated in contract for deed.
Same thing – contract for deed = sellers mortgage. Member Lundberg disagreed; want the
EDA to see the actual transfer documents. Mr. Walters stated that can happen.
Motion by Member Lundberg to recommend approval of the request by Coin-Tainer
for a Jobs Incentive Microloan with the following terms:
5-year lease Stonesthrow to Coin-Tainer, $200,000 advance. Payments to
facilitate repayment
Guarantee Stonesthrow and Coin-Tainer major principals
Language protects lease holder
Extend foreclosure period (6 months)
Payment schedule should be based on 5 year amortization, 5-year balloon.
The motion failed for lack of a second.
Member Lundberg stated he was uncomfortable with a 20-year amortization. Member
Tveite stated that he wants to avoid changing the policy and that he disagreed with Member
Lundberg on this issue, but was in agreement with the loan to Stonesthrow.
Member Motin – stated he preferred to have a discussion without the applicant present. Mr.
Walters stepped out at this time.
Member Motin – Supports the loan, wants to avoid looking unfriendly to businesses. Tying
both owners is satisfactory, does not seem to be a bad risk.
Member Ovall – Does not like “triangle transactions”. Pledge of unencumbered property
and other assets creates challenges in collecting.
Discussion
Member Ovall –Comfortable with the loan. Borrower should be Real Estate Holding
company. A guarantee from Coin-Tainer president as well as owners is necessary. City
nd
should be 2 mortgagee.
Moved by Member Ovall and seconded by Member Vitzthum to recommend
approval of the request by Coin-Tainer for a Jobs Incentive Microloan with the
following terms:
1. Critical both parties are responsible (loan, job criteria)
2. Lease continuity
3. Must be signed by seller
4. City in second position with option to take over Contract for deed
5. 20-year amortization
6. 6-month notice on default
Motion carried 6-0.
5. Announcements - None
6. Adjournment
There being no further business Member Tveite moved to adjourn the meeting.
The meeting adjourned at 8:46 a.m.
Minutes prepared by Jeremy Barnhart.
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Tina Allard, City Clerk
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Jeremy Barnhart, Interim Economic Development Director