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08-28-1989 EDA MIN MEETING OF THE ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY HELD AT THE ELK RIVER CITY HALL MONDAY. AUGUST 28. 1989 ~. Members Present: Commissioners Tralle. Schuldt. Dobel. Kropuenske and Holmgren Members Absent: None Staff Present: Pat Klaers. City Administrator; Dick Fursman. Economic Development Coordinator; Lori Johnson. Finance Director; Peter Beck. City Attorney; Mike Mulrooney. Economic Development Consultant 1. Pursuant to due call and notice thereof. the meeting of the Economic Development Authority was called to order at 9:55 p.m. 2. Consider 8/28/89 EDA Agenda COUNCILMlMBER SCHULDT MOVED TO APPROVE COUNCILMlMBER HOLMGREN SECONDED THE MOTION. THE 8/28/89 EDA AGENDA. THE MOTION CARRIED 5-0. 3. Consider 7/31/89 EDA Minutes / COMMISSIONER HOLMGREN MOVED TO APPROVE THE 7/31/89 EDA MINUTES. COMMI SSIONER DOBEL SECONDED THE MOTION. THE MOTION CARRIED 5-0. 4. Review Jenne Property Appraisal ~ Dick Fursman. Economic Development Coordinator. stated that the City had received the market value appraisal for the Jenne property located at 661- 665 Main Street. Elk River. Mr. Fursman stated that the appraisal report gave a market value for the property of $75.000. COMMISSIONER KROPUENSKE MOVED TO ACCEPT THE REPORT FROM SHENOHON AND ASSOCIATES. WHICH GIVES A MARKET VALUE APPRAISAL OF $75.000 FOR PROPERTY LOCATED AT 661-665 MAIN STREET. COMMISSIONER SCHULDT SECONDED THE MOTION. THE MOTION CARRIED 5-0. 5. Discuss Minimum Price for Jenne Property Dick Fursman indicated that at a previous EDA meeting. the EDA had agreed to take steps to purchase the property located at 661-665 Main Street if the property was not sold by February 1. 1990. He indicated that one of the steps necessary prior to purchasing the property was to obtain an appraisal for the property to help the City determine an appropriate price. He indicated that the appraisal figures came in lower than what was anticipated. Mr. Fursman indicated that he felt it was appropriate to accept the $75.000 a minimum price to pay for the site in its current condition. Mr. Fursman also indicated that there were some additional costs incurred at the site which could have added value to the property and could be an appropriate expense for the City. He indicated that the additional costs were as follows: ~ Demolition and Clean-up Gas line moved Surveys Soil Testing Total Additional Cost $24.175 1.283 5.465 8.617 $39.540 Page 2 Economic Development Authority Minutes August 28, 1989 . Commissioner Tra11e questioned whether the demolition and clean-up cost of $24,175 was covered by insurance. Dick Fursman indicated that he had contacted the property owners and they had indicated they had not received an insurance payment for this cost. Commissioner Tra11e indicated that he did not feel this cost should be part of the tax burden of the City of Elk Riverif the City purchases the property. He indicated that if this is a normal policy to pick up the demolition and clean-up cost, then he would be willing to pay for this cost. However, if it is not a normal policy, he did not feel it would be fair to the citizens to pay this cost. Commissioner Tra11e stated that he would not feel comfortable setting a minimum price for the site until he had an answer on whether or not the demolition and clean-up was not covered by insurance due to either neglect from the property owner or from the property owner buying less expensive insurance coverage. Dick Fursman indicated that the owners of the property were under the impression that the demolition and clean-up of this site would be taken care of by TIF. He indicated that this would be the case if the property owners rebuilt in the same location. . It was the concensus of the EDA that a decision regarding the price of the property be considered at the September 11, 1989, EDA meeting, after which time the Commission will have received information regarding insurance coverage for the demolition and clean-up of the site. 6. Riverfront Development Update Dick Fursman informed the EDA that a second meeting of the Riverfront Redevelopment Group was held. He indicated that the Riverfront Redevelopment Group consists of property owners from the old hardware site to Nadeau's Cleaning. Mr. Fursman updated the EDA on the meeting. He indicated that the Group has decided it would like to use the experience and manpower of the Downtown Development Association to help plan and direct the process. He indicated that another meeting is planned for September 3. and that he would keep the Council posted on any further developments. 7. King and Lowell Block Development Dick Fursman informed the EDA that all the property owners between the Streets of King and Lowell along the north side of Main Street are interested in a redevelopment project which would combine all the properties and lead to the construction of a professional building which would be occupied by the Title Company, Kuhn Properties, Dr. Sommers and the Dental Office of Drs. Nyberg and Jarmo1uk. A developer of these types of projects, Karka1a from St. Louis Park, has made a presentation to this group and more discussions are planned. He indicated that no commitments have been made at this time and that he will keep the EDA posted on any further updates. . Page 3 Economic Development Authority Minutes August 28. 1989 . 9a. Update/TIF Dick Fursman informed the EDA that Dick Moore of Mork Clinic. has presented the City with a check for $5.000 which will start the process of the TIF Redevelopment Plan for the Mork site. City Attorney. Peter Beck. indicated that the TIF plan should be drawn up and ready for distribution to the County and School Board within approximately two weeks. COMMISSIONER HOLMGREN MOVED TO ADOPT RESOLUTION 89-1. AUTHORIZING STAFF TO PREPARE AND DI STRIBUTE TO THE COUNTY AND SCHOOL BOARD AN AMENDMENT TO THE ECONOMIC DEVELOPMENT PROGRAM FOR ECONOMIC DEVELOPMENT DISTRICT NO.1 AND A TAX INCIlEMBN'1' FINANCING PLAN FOR PROPOSED REDEVELOPMENT TAX INCREMENT FINANCING DISTRICT NO. 6 FOR THE MORK CLINIC PROJECT. COMMISSIONER KROPUENSKE SECONDED THE MOTION. THE MOTION CARRIED 5-0. 9b. Mork C1inic/G.O. Bonds . Dick Fursman. Economic Development Coordinator. indicated that Dick Moore of Mork Clinic has expressed interest in G.O. Bond financing for the proposed new clinic. He indicated that the City has the authority to bond for the purpose of making loans for economic dev10pment or redevelopment. Commissioner Tra11e indicated that the City should investigate whether they wish to get into this type of financing and also that they should be aware of the precedence which may be set for other possible projects. Dick Fursman stated that the City is in a position to make money off of the loan and that this is one way to generate some income for the economic development office and. save the tax paying residents some money. He indicated that he felt it was worth the effort on the City's part to proceed with this type of financing. He indicated that the down side of the G.O. financing would be if the borrowers did not come through and payoff the loan. the City would have a building that is not paid for and they would be responsible for payment of the building. Mike Mulrooney stated that another alternative would be private placement loan. He stated that this is a good alternative although it would require equity on the borrowers part. Commissioner Schuldt questioned what detrimental affect a no vote would have on this request. Dick Fursman stated that it could slow down the proj ect. Commissioner Kropuenske questioned how the EDA would pick and choose when to use a G.O. Bond for certain projects in the future. He stated that he likes the idea of private placement because the City would not be setting a precedence in any way. . Discussion was held on the affect this type of financing would have on the City's bond rating. Lori Johnson. Finance Director. indicated that this could possibly have an affect on the bond rating according to the City's financial consultant. Commissioner Dobe1 stated that he would be opposed to allowing G.O. financing because the borrowers could default on . . . Page 4 Economic Development Authority Minutes August 28. 1989 the loan and thereby the City would be responsible and he did not feel this was fair to the general public. Dick Fursman stated to the Commission that this would be a good test of the G.O. Bond financing with Mork Clinic as they are a company that has other financing options available and are therefore a solid company. He indicated he would not start or use this program on a project that could not receive financing from any other source. COMMISSIONER HOLMGREN MOVED TO DENY THE REQUEST FROM MORK CLINIC TO USE G.O. BONDS FOR THE PERMANENT FINANCING OF THE PROPOSED NEW MORK CLINIC. COMMISSIONER DOBEL SECONDED THE MOTION. Commissioner Kropuenske stated that he would abstain from the vote as he works for one of the lending institutions in Elk River. THE MOTION CARlUED 4-0-1. 10. Other Business COMMISSIONER HOLMGREN MOVED TO CALL AN EDA MEETING ON SEPTEMBER 11. 1989. AT 5:45 P.M.. TO BE HELD AT THE ELK RIVER CITY HALL. COMMISSIONER DOBEL SECONDED THE MOTION. THE MOTION CARlUED 5-0. 11. Adjournment There being no further business. COMMISSIONER SCHULDT MOVED TO ADJOURN THE EDA MEETING. COMMISSIONER KROPUENSKE SECONDED THE MOTION. THE MOTION CARRIED 5-0. The meeting of the Elk River Economic Development Authority adjourned at 11:30 p.m. RSjfSctf.U1.1YSubmi.t.ted. ~.j? dla'~#~&7~<I'. SandyTb;kkeray City Clerk