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09-11-1995 EDA MIN MEETING OF THE ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY HELD AT THE ELK RIVER CITY HAll SEPTEMBER 11, 1995 Members Present: President Gongoll, Commissioners Dwyer, Scheel, Duitsman, Holmgren, Farber Members Absent: Commissioner Bender Staff Present: Bill Rubin, Executive Director; Pat Klaers, City Administrator; Michelle Dwyer, Recording Secretary 1. 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 6:00 p.m. by President Gongoll. 2. Consider September 11, 1995, EDA Agenda The following items were added to the agenda: 11.1 Presentation and update from ECM Publishers, Inc. regarding their proposed acquisition and renovation of the former County Administration Building. 11.2 Discuss a request from Elk River Motel Properties to extend its EDA loan. 11.3 Chamber of Commerce annual business meeting on September 19, 1995. COMMISSIONER DUITSMAN MOVED TO APPROVE THE SEPTEMBER 11, 1995, EDA AGENDA AS AMENDED. COMMISSIONER HOLMGREN SECONDED THE MOTION. MOTION CARRIED 6-0. 3. Consider EDA Consent Agenda COMMISSIONER HOLMGREN MOVED TO APPROVE THE CONSENT AGENDA AS FOLLOWS: 4.1 AUGUST 8,1995 EDAMINUTES 7.0 EDA CHECK REGISTER COMMISSIONER FARBER SECONDED THE MOTION. MOTION CARRIED 6-0. 5. Open Mike No one appeared for this item. Economic Development Authority Meeting September 11, 1995 Page 2 6. Consider September EDA Rnancial Statement Assistant City Administrator, Lori Johnson submitted the statement of financial activity for the period ending August 31, 1995. As of that date, the micro-loan had a cash balance of $111,708, which also takes into consideration the $50,000 loan made to Custom Cutter Grinding. As of August 31, 1995 the block grant micro-loan fund had a cash balance of $42,883. The cash balance of the EDA due to a repayment of funds from the youth hockey association, was $50.701. 10. Review and Comment on a Conditional Use Permit Requested by School District No. 728 (Lot 8, Block 1, Elk River Industrial Park) President Gongoll stated that he will act as a facilitator but will abstain from any decisions on this issue, due to his involvement with the school board. Bill Rubin informed the EDA that District 728 has applied for a conditional use permit and would construct a 21,000 square foot maintenance facility on Lot 8, Block 1, Elk River Industrial Park. Commissioner Dwyer had concerns that landscaping should cover the dock doors. Commissioner Duitsman supported the use of berming. Bill Rubin informed the EDA that the dock is considered a depressed dock, so there is a minimal opportunity for a vehicle to be there for any long period of time. However, sufficient berming in the front yard is needed. The site plan also indicated a storage yard near the rear portion of the lot. The School District considers this an element that will be undertaken in the future. Outside storage is permitted in industrial areas as long as it is screened. The consensus was to authorized Bill Rubin, Executive Director, to communicate concerns and comments of the Economic Development Authority to the Planning Commission's public hearing on September 26, 1995 and to the City Council on October 2, 1995. 11. Other Business 11.1 Presentation and Update from ECM Publishers, Inc. Pat Klaers, City Administrator, introduced Jeff Athmann, President, and Bob Cole, Marketing Manager, of ECM Publishers, Inc.. ECM Publishers, Inc. is proposing the acquisition and renovation of the former County Administration Building at U. S. Highway 10 and King Ave. Jeff Athmann, and Bob Cole explained ECM's goals and needs for building and parking. The current need is 16,000 square feet; future needs would require a 30,000 square foot facility, .and possibly, 45,000 square feet. At some point ECM would need 60,000 square feet. Economic Development Authority Meeting September 11, 1995 Page 3 ECM Publishers, Inc. would like to know what the City of Elk River and its EDA can offer in the way of incentives to assist with this project. They have three main concerns: 1) customers, 2) employees and their commute, 3) financing and cost. Other considerations include quality of life, crime factor and the arts. ECM is also considering a site it owns in Coon Rapids, Minnesota. The cost and factors are similar between the two cities. Commissioner Holmgren inquired about how many jobs this would bring to Elk River. Jeff Athmann stated that initially approximately 35 to 40 employees would be headquartered in the facility. David Loch, Sherburne County Administrator, supports the acquisition and renovation of the County Administration Building and would recommend to the County Board that it extend ECM's option agreement which expires on September 18, 1995. Commissioner Dwyer assured ECM Publishers, Inc. that Elk River would like the company here. Commissioner Holmgren stated downtown has our attention right now. Commissioner Duitsman went on record for a supplemental grant for the renovation of the Sherburne County Administration building. 8. Public hearing to Consider a Tax Increment Financing Plan for TIF District No. 13 (TL Feedinq Systems, Inc., Expansion) Bill Rubin provided an overview of the TIF request. TL Feeding has requested tax increment financing in the amount of $150,000. TL Feeding is proposing to construct a 30,000 square foot office and manufacturing facility done in phases of 15,000 square feet that will be located on a 3.0 acre lot along Business Center Drive in the Elk River Business Center (Business Park). The project's finished market value (land and building) is estimated at $625,000. It will take six years of collecting increments in order for the City to be repaid. TL Feeding Systems seeks $150,000 in tax increment financing assistance to support its proposed facility. Tax increment funds would be used to "write down" the cost of the land, and for general site development and site preparation costs associated with this project. The EDA is proposing a pay-as- you-go TIF district. As the new facility begins generating taxes, the city rebates the new property taxes back to TL Feeding Systems twice a year - in July and in December. As with the Neos TIF Plan, a consequence of creating a new TIF District is that of a state aid/HACA reduction. Because an "Economic Developme[1t TIF District" would be created for TL Feeding Systems, the state aid/HACA reduction occurs the first year an increment is generated, and, the reduction is the most significant. President Gongoll opened the public hearing. Economic Development Authority Meeting September 11, 1995 Page 4 Pat Pelstring of Public Resource Group, Inc. stated AI Larson, TL Feeding Systems, is concerned about the land price. tWo Larson plans to invest $100,000 and another $100,00-$150,000 in the project. TL Feeding requires approximately 7,500 square feet of office showroom and will lease the balance to another tenant or tenants. Bill Rubin stated this transaction needs the cooperation of the City and its EDA, property owner and expanding company, because of a long term benefit for the community, jobs, tax base, etc. If an agreement is not reached, the EDA needs to identify another site for TL Feeding, Inc. . Bill Rubin outlined changes to the TIF budget including a new section on LGA/HACA reductions. Because of the high acquisition price of a 3-acre site, Bill Rubin suggested that the TIF plan budget be increased to reflect a land price of $1.25 per square foot. If TL Feeding Systems acquires the lot for less, no budget amendment is needed. If the TIF budget is not overstated and the acquisition price is higher than the existing TIF budget, a plan amendment is needed. This takes 45 to 60 days to complete. In addition, he outlined the TIF policy relating to maximum TIF grants not to exceed 15% of a project's finished market value. Bill Rubin suggested that the EDA recommend to the City Council that it waive the 15% maximum grant for this project as it is the first industrial user in the Business Park. President Gongoll stated the consensus is we can do within reason is to benefit everyone. to move forward, whatever Commissioner Duitsman asked about TL Feeding's equity contribution to this project. Bill Rubin stated that the TIF application indicated a $100,000 equity contribution plus TL Feeding will incur the cost of acquiring the site, estimated at $150,000, or more, for a total contribution of $250,000. According to the application, the project is estimated at $850,000. The public hearing was closed at 7:30 p.m.. COMMISSIONER FARBER MOVED TO ADOPT RESOLUTION NO. 95-4 AND TO HAVE THE EXECUTIVE DIRECTOR MAKE REVISIONS TO THE BUDGET AND TO INCLUDE A NEW SECTION TO THE TIF PLAN BY ADDING THAT THE CITY ACCEPTS THE OPPORTUNITY TO MAKE THE QUALIFYING LOCAL CONTRIBUTION IN LIEU OF A LGAjHACA REDUCTION. COMMISSIONER HOLMGREN SECONDED THE MOTION. MOTION CARRIED 6-0 COMMISSIONER DWYER MOVED TO RECOMMEND THAT THE CITY COUNCIL WAIVE THE 15% MAXIMUM TlF GRANT FOR THIS PROJECT. COMMISSIONER HOLMGREN SECONDED THE MOTION. MOTION CARRIED 6-0. 9. Review Concept Plans for Mssissippi Riverfront Pathway Proiect Bill Rubin reviewed plans for the Mssissippi Riverfront Pathway. On October 2, 1995 there will be two public hearings: the HRA will conduct its hearing at 5:00 p.m. and the City Council hearing is at 7:00 p.m.. Economic Development Authority Meeting September 11, 1995 Page 5 11. Other Business 11.2 Discuss a request from Elk River Motel Properties to extend its EDA loan. Elk River Motel Properties, Inc. (Americlnn) requested that the EDA extend their loan. The loan has a balloon payment of $24,068.30 on October 1, 1995. Elk River Motel Properties are proposing improvements to the motel and cash on hand is needed for it. Commissioner Dwyer suggested to change the rate as the same as a new micro- loan and the EDA should not accept the October 1 st payment until the loan restructuring is completed. Bill Rubin will have the authority to review the financials. COMMISSIONER DWYER MOVED TO EXTEND ELK RIVER MOTEL PROPERTIES, INC. EDA LOAN WITH A BALLOON NOT TO EXCEED TWO YEARS AND A NEW INTEREST RATE AT PRIME (8.75%) AND THE EXECUTIVE DIRECTOR IS AUTHORIZED TO NEGOTIATE THE TERMS. COMMISSIONER HOLMGREN SECONDED THE MOTION. MOTION CARRIED 6-0. 11.3 Chamber of Commerce Annual Business Meeting on September 19, 1995. Bill Rubin, reminded the Economic Development Authority of the Chamber of Commerce annual meeting with a 5:30 social hour, 6:30 dinner and, 7:30 program and live auction. The price is $20 per person. 12. Adiournment There being no further business, COMMISSIONER HOLMGREN MOVED TO ADJOURN THE MEETING. COMMISSIONER FARBER SECONDED THE MOTION. THE MOTION CARRIED 6-0. The meeting of the EDA adjourned at 7:50 p.m.. Respectfully submitted, )JJ.QhQllL~ Michelle Dwyer Recording Secretary