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03-05-1990 EDA MIN e MEETING OF THE ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY HELD AT ELK RIVER CITY HALL MONDAY, MARCH 5, 1990 MEMBERS PRESENT: Chairman Tralle, Commissioners Schuldt, Holmgren, Gongoll, Dwyer, and Kropuenske MEMBERS ABSENT: Commissioner Dobel STAFF PRESENT: Mike Mulrooney, Economic Development Consultant; Tim Keane, City Attorney; Dick Fursman, Economic Development Coordinator; Pat Klaers, Executive Director; Lori Johnson, Finance Director; Russ Anderson, Fire Chief; and Sandy Thackeray, City Clerk 1. Pursuant to due call and notice thereof, the meeting of the Elk River Economic Development Authority was called to order by Chairman Tralle at 7:00 p.m. 2. Consider EDA A~enda e Item 5.1 - Block A was added to the agenda COMMISSIONER SCHULDT MOVED TO APPROVE THE EDA AGENDA AS AMENDED. COMMISSIONER HOLMGREN SECONDED THE MOTION. THE MOTION CARRIED 7-0. 3.A. AmericInn Motel/Sprinkler System Dick Fursman, Economic Development Coordinator, stated that Mike Leary and Dave Cremons were present to discuss the cost of the sprinkling system which is being required by the State Fire Marshal in order to obtain the state permit to occupy their hotel. Mr. Cremons indicated that the motel Architect informed him that if the City could give some assurance to the Fire Marshal that municipal water would arrive at the site within a certain time period, it could save them $20,000 on a sprinkling system because they could put in an interim system. Mr. Cremons indicated that the cost of a full sprinkling system would be $47,500. Mr. Cremons also indicated that as soon as they can assure the construction contractor that they will pay for system, the contractor would be able to start on Wednesday. This would put their opening date sometime in late June instead of their originally planned May 31 opening. Chairman Tralle stated that the City could not guarantee any sewer and water going to the east. He indicated that the RDF matter has been tied up in the Legislature. It Mr. Cremons indicated that if the City cannot guarantee this, they would have to look at other alternatives to offset the $47,500 cost. Economic Develoment Authority Minutes March 5, 1990 Page 2 e Mr. Cremons indicated that if the developers can receive City financial assistance for the sprinkling system, they will meet the requirement of the State for installing the system. 3.B. City Assistance for AmericInn Motel Mr. Cremons indicated that the cost of the sprinkling system was an unanticipated cost and that all of the developer's funds and equity have already been put into the project. He indicated to the EDA that the developers do not have the $47,500 in order to install the sprinkling system. He stated that he sees four financial areas to investigate: 1) a modification to the existing TIF plan in order get more funds; 2) excess increment from existing TIF Districts; 3) Revolving Loan funds; and 4) the developer's own funds. Mr. Cremons indicated that if the City offered the developers money through the Revolving Loan Fund, then the developers would personally guarantee the Revolving Loan for protection of the City. Tim Keane, City Attorney, stated that the EDA should decide what level of participation the City is willing to accept in order to facilitate this additional cost and he indicated that he would suggest that modification to the TIF plan would be the City's last resort. e The EDA discussed the pro's and con's for the four options. Chairman Tralle indicated that the EDA must first decide how much money they want to use to participate in this project. He suggested that the EDA consider 50% City assistance and the developer be required to pay 50%. Commissioner Kropuenske indicated that he would like to see the City assist the project but would rather not alter the existing TIF plan. Mr. Cremons indicated that the developers do not have the additional 50% of the $47,500 to put towards the sprinkling system. Commissioner Schuldt indicated that he would be in favor of altering the TIF. He stated that the only reason the EDA has looked negatively on this is because of the County's negative attitude towards TIF. Commissioner Holmgren suggested that the City finance 50% through the Revolving Loan and that City finance the remainder of the 50% through some other means. Commissioner Kropuenske indicated that he had problem with setting a precedent by putting out 100% of the funds necessary for the developer. He indicated that he would like to see the developer pay a portion of the funds. Commissioner Kropuenske further stated that he would agree with Commissioner Holmgrens 50-50 proposal, however, he would like to see the developer pay a small portion of this. Mr. Cremons stated that he would commit 5,000 towards the $47,500, so as not to set a precedent. e COMMISSIONER HOLMGREN MOVED THAT THE CITY PAY 90% OF THE COST TO INSTALL THE SPRINKLING SYSTEM AND THAT THIS AMOUNT NOT EXCEED $42,500 WITH THE CITY STAFF TO STRUCTURE THE SOURCES OF FUNDS IN THE FOLLOWING ORDER: 1) EXISTING TIF EXCESS PROCEEDS; 2) REVOLVING LOAN; 3) AMENDMENT TO THE TIF PLAN AND THAT IF A PLAN MODIFICATION IS NECESSARY TO PREPARE THEN MODIFICATION AND NOTIFICATION TO THE COUNTY AND SCHOOL DISTRICT AND FURTHER THAT ANY SAVINGS ON CONSTRUCTION COSTS WILL BE Economic Develoment Authority Minutes March 5, 1990 Page 3 e PAID TO THE CITY TO RETIRE THE LOAN DEBT AND FURTHER THAT ANY LOAN MECHANISM IS SECURED BY THE DEVELOPERS GUARANTEES. THE MOTION CARRIED 5-0-1. Commissioner Gongoll abstained. 4. Americo Revolvin~ Loan Dick Fursman, Economic Development Coordinator stated that Ben Schaffer of Americo has secured a small private loan for his automotive after-market manufacturing facility. He indicated that the EDA on December 18, 1989, made available up to $25,000 in loan monies to be used to assist Americo in locating in this City. Mr. Fursman indicated that since that time, Americo has received a private loan for $6,000 and is requesting that the City match the loan of $6,000. He indicated that the money would be used to purchase raw materials so orders for the fiberglass products can be filled. Mr. Fursman further indicated that the $6,000 would be a loan for a two year period with interest to be set by the Federal discount rate. COMMISSIONER SCHULDT MOVED TO GRANT A LOAN OF $6,000 TO AMERICa TO THE EDA'S REVOLVING LOAN FUND. COMMISSIONER KROPUENSKE SECONDED THE MOTION. Discussion was held regarding steps the EDA tak~s to assure that the money is being spent for the products requested and that the loan would be guaranteed. e MOTION CARRIED 4-0-2. Commissioners Dwyer and Gongoll abstained. The Executive Director stated that the process by which Americo received a revolving loan form the EDA is not typical and that most requests for loan funds will first be reviewed by the EDA Finance Committee. 5.1. Block A Development Mr. Fursman indicated that Elmer Anderson was contacted by staff and invited to a meeting to discuss his interests in Erma Jenne's vacant si te. He stated that the meeting has been planned for Wednesday and questioned what steps the EDA would like the staff to take at this point. Mr. Fursman indicated that Mr. Anderson is interested in Erma Jenne's site and Security Financial is interested in Mr. Anderson's site and he further indicated that Mr. Anderson is coming to the City in order to see what the City has to offer. Commissioner Holmgren questioned whether TIF funds would be used for this site. Mr. Fursman indicated that, more than likely, this would be the case. After a discussion regarding this subject, it was the consensus of the EDA to have staff and available EDA members to meet with Mr. Anderson and discuss the matter. e 6. Adjournment There being no further business, COMMISSIONER SCHULDT MOVED TO ADJOURN THE EDA MEETING. COMMISSIONER HOLMGREN SECONDED THE MOTION. THE MOTION CARRIED 6-0. - w It Economic Develoment Authority Minutes March 5, 1990 Page 4 The meeting of the Elk River Economic Development Authority adjourned at 8:55 p.m. Respectfully submitted, j) /7 l ~ J ~~::k~~#7 City Clerk /