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05-15-1989 EDA MIN . MEETING OF THE ECONOMIC DEVELOPMENT AUTHORITY HELD AT THE ELK RIVER PUBLIC LIBRARY MONDAY. MAY 15. 1989 MEMBERS PRESENT: Commissioners Tralle. Holmgren. Schuldt. Dobel. and Kropuenske MEMBERS ABSENT: None STAFF PRESENT: Patrick Klaers. City Administrator; Richard Fursman. Economic Development Coordinator; Tim Keane. City Attorney; and Mike Mulrooney. Economic Development Consultant 1. Pursuant to due call and notice thereof. the meeting of the Economic Development Authority was called to order by Commissioner Tralle at 6:30 p.m. Commissioner Tralle indicated that this was a continued meeting from May 8. 1989. . Dick Fursman. Economic Development Coordinator. indicated to the Council that the Hotel-Conference Center issues were presented at the May 8. 1989. EDA meeting. One of the issues was the sprinkling of buildings. Sprinkling would require that municipal sewer and water be brought to the site. Mr. Fursman indicated that it has been determined that any building serving liquor does have to be sprinkled. Therefore. the Conference Center would require sprinkling. however. the Hotel would not. Mr. Fursman also indicated that another issue that was discussed at the last EDA meeting concerned water and sewer going to the east side of the City. He stated that the developers are faced with a time line in order to meet loan application deadlines and they need a decision regarding assessment costs for municipal water and sewer to their site. Mr. Fursman stated that the City feels uncomfortable in giving a set figure on the assessments. as they are uncertain as to where the remaining necessary funds would come from. Mr. Fursman reviewed with the EDA certain options that would be available for both the developer and the EDA to consider. The options considered were as follows: 1. Estimate the utilities assessments at $70.000 for the entire site with the following contingencies: . a. That TIF #4 provides enough increment to pay for sewer and water through nonassessable areas. b. That the developers front the cost of a feasibility study to determine the actual appropriate level of assessment if their SBA Loan is approved. c. That the developers agree to adjust their share of the assessment if necessary. according to the feasibility study or discontinue the plans development. d. That the City may determine that the extension of sewer and water to the eastern side of Elk River is not in the best interest of the City based on probable returns on the investment. Therefore. the City may abate any initiative to extend sewer and water to that area. Page 2 . Economic Development Authority Minutes May 15. 1989 2. Drop the Conference Center from the proposal and eliminate the need for sewer and water. 3. Postpone the project until next April 1990 when the utilities question will have more time to be resolved. Mike Leary stated that the City needs to develop the eastern section of Elk River and questioned why then does the City expect the developers of the Hotel-Conference Center to pay for the feasibility study. Pat K1aers. City Administrator. indicated that the eastern area is not in the sewer and water district. He stated that sewer and water is planned for the western area of the City. He indicated that the only reason that sewer and water to the east end of the City is being considered is because of the Hotel-Conference Center request for service. . Discussion pursued regarding who paid for the feasibility costs for the western area of the City. The City Administrator indicated that the City front ended most of the cost. Commissioner Holmgren suggested that the City front end the cost to the eastern end of the City also. The City Administrator explained that the eastern end and the western end feasibility studies are two different matters. He indicated that there was less risk factor in the feasibility study going to the west and further that this was proposed and planned for by the Growth Management Plan Task Force. Commissioner Tra11e indicated that the City is trying to protect the tax payers and that they are not in a position to offer the use of Tax Increment Financing funds from TIF #4 at this time. Rob VanValkenburg stated to the Commission that he feels the Conference Center is needed and makes for a better project with it included. He further indicated that there is only a certain amount of money that can be put into a project. such as the Hotel and Conference Center. Mr. VanValkenburg stated that they would try to rework the numbers to include the $70.000 - $100.000 sewer and water cost. but indicated that it just may not work out. COMMISSIONER HOLMGREN MOVED TO APPROVE DEVELOPMENT OPTION #1. AND THAT THB OPTION INCLUDETHB FOURCONTINGENCIES~ A THROUGH D. AND FURTHER THAT THB $70.000 UTILITY ESTIMATE IS' SOLELY FOR THE' PURPOSE OF THE CONVENIENCE OF THB LOAN" APPLICATION AND THAT ,THERE IS NO MUTUAL OBLIGATION OR ANY RELIANCE BASED ON THIS ASSESSMENT FIGURE..AND THAT THERE BE NO OBLIGATION OR RESPONSIBILITY' .ON THE. ,CITY' SPART. COMMISSIONER KROPUENSKE SECONDED THE MOTION. THE MOTION CARRIED 5-0. " COMMISSIONER DOBEL MOVED TO HOLMGREN SECONDED THE MOTION. CONTINUE THE EDA MEETING. THE MOTION CARRIED 5-0. COMMISSIONER . The City Council meeting took place at 7:15 p.m. Commissioner Tra11e reopened the meeting of the Economic Development Authority at 9:30 p.m. . . . Page 3 Economic Development Authority Minutes May 15, 1989 5. Revolving Loan Fund Mr. Fursman updated the Council on a Revolving Loan Fund. He indicated that the Finance Committee has met and reviewed the Revolving Loan Fund. It was the consensus of the Council that they would review the Revolving Loan Fund and come back with a decision for approval at the next meeting. 6. Community Reinvestment Fund Mr. Fursman indicated that the Community Reinvestment Fund is an organization which pools loans from around the State and sells them at a discount in the form of a bond. He stated that the City of Elk River has been invited to sell the A11too1 loan in June, which would allow the City to put $100,000 into the Revolving Loan Fund immediately as opposed to collecting it in increments of $2,500 each month. He indicated that this would allow the City to build the reserves in the Revolving Loan Fund quickly. Mr. Fursman also indicated that the Department of Trade and Economic Development is making new demands on the use of their grant monies which would cut signifiant1y into the amount of money available from the sale. Mr. Fursman indicated through taking loans A11too1 loan. an option to this type of sale would be at local institutions collateralized by the that out It was the consensus of the Economic Development Authority to review this matter and bring it back to the next EDA meeting with a recommendation. 7. TIF Policy/Application Mr. Fursman indicated that the City Tax Increment Financing policy has been updated to appropriately reflect law changes and unwritten policy modifications. He indicated that the biggest change in the policy is the application with the fee of $5,000. He stated that the $5,000 would be required as a non refundable upfront fee for administrative expenses. COMMISSIONER HOLMGREN MOVED TO ADOPT THE TAX INCREMENT FINANCING POLICY CONTINGENT UPON THE CITY ATTORNEY APPROVING THE POLICY. COMMISSIONER KROPUENSKE SECONDED THE MOTION. pursued regarding the $5,000 fee and whether or not the fee refunded if the project does not go through. Mike Mulrooney that several other cities that have the fee involved in their refund a portion of the fee if the project does not go Discussion should be suggested TIF policy through. COMMI SSIONER HOLMGREN MOVED TO ADD TO THE ABOVE MOTION, THAT ANY UNUSED PORTION OF THE TIF FEE FOR A PROJECT THAT DOES NOT GO THROUGH COMPLETION BE REFUNDED TO APPLICANT. COMMISSIONER KROPUENSKE SECONDED THE MOTION. THE MOTION AS AMENDED CARRIED 5-0. . . . Page 4 Economic Development Authority Minutes May 15, 1989 8. Revised Committee Structure Mr. Fursman indicated that he is requesting the EDA to consider rev1s1ng the committee structure. He stated it is difficult to keep four committees together and is proposing that there be two committees, a Financial Committee and a Strategic Planning and Development Committee. He felt that two committees would be kept more involved than four. COMMI SSIONER KROPUENSKE MOVED TO APPROVE THE NEW COMMITTEE STRUCTURE WITH A FINANCIAL COMMITTEE OF FIVE MEMBERS AND A STRATEGIC PLANNING AND DEVELOPMENT COMMITTEE CONSISTING OF NINE MEMBERS. COMMISSIONER DOBEL SECONDED THE MOTION. Commissioner Schuldt indicated that he had reservations about the structure, and questioned whether some of the members listed on the committees are interested in working on the proposed committees. Commissioner Holmgren indicated he felt that it would be only fair to first contact the people listed under the committees to see if they are interested in serving. THE MOTION CARRIED 5-0. 3. Hotel Update The Commission at this time reviewed the Hotel-Conference Center situation. Mr. Fursman indicated that the developers will now determine whether or not the $70,000 for utilities will fit into their break even point. He stated that if the utility costs kill the project, then the EDA will have to determine at what point utilities make or break a project and at what level the City gets involved in the utilities. The Commission discussed what would happen in the eastern development if utilities are not extended to the eastern portion of the City. Mike Mulrooney indicated that it would definitely effect the type of growth in that area and that it would eliminate any industry or establishments that would require the use of utilities. The Commission discussed the extension of utilities to the western end of the City versus going to the eastern end of the City. Commissioner Holmgren voiced his concern regarding the risk factors in bringing utilities to the west. The City Administrator indicated that he felt there were risk factors going east or west. However, going to the west created less of a risk than going to the east, as going west was planned through the Growth Management Plan Task Force and the area is currently less developed. 9. Mork Update Mr. Fursman updated the Commission on Mork Clinic's progress. He stated a closing date for the site has been scheduled for May 25, 1989. . . . Page 5 Economic Development Authority Minutes May 15, 1989 10. The Use of G.O. Bonds for Financing EDA Mr. Fursman stated that he would like the Commission to consider the idea of using G.O. Bonds to help capitalize the EDA. He stated that there would be some obvious risks associated with the use of G.O. Bonds, but that there were also many positive aspects behind this approach. He stated that by using G.O. Bonds on "top of the line" projects, the EDA could become self-supporting. The Commission discussed the possibility of using G.O. Bonds. The question was raised as to where the EDA would draw the line and who would determine which projects are acceptable risks and which are not. Discussion also pursued on the fact that the City would be competing in the private sector. It was the consensus of the EDA that Mr. Fursman further explore this idea, as there are a lot of issues that must be looked into, and that he bring his findings back to the EDA. 12. Adjournment There being no further business, COMMISSIONER DOBEL MOVED TO ADJOURN THE MEETING. COMMISSIONER HOLMGREN SECONDED THE MOTION. THE MOTION CARRIED 5-0. The meeting of Elk River Economic Development Authority adjourned at 10:45 p.m. Respectfully submitted, a~ Th~ Sandy Thackeray Deputy City Clerk