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07-09-1990 EDA MIN . . . MEETING OF THE ECONOMIC DEVELOPMENT AUTHORITY HELD AT ELK RIVER CITY HALL MONDAY, JULY 9, 1990 Members Present: Chairman Tralle, Commissioners Schuldt, Holmgren, Kropuenske, Dobel, Dwyer and Gongoll Members Absent: None Staff Present: Pat Klaers, Executive Director; Lori Johnson, Finance Director; Sandra Thackeray, City Clerk; Tim Keane, City Attorney; Mike Mulrooney, Economic Development Consultant 1. Call Meetin~ to Order Pursuant to due call and notice thereof, the meeting of the Elk River Economic Development Authority was called to order at 7:05 p.m. by Chairman Tralle. 2. Consider 7/9/90 EDA A~enda COMMISSIONER HOLMGREN MOVED TO APPROVE THE 7/9/90 EDA AGENDA AS SUBMITTED. COMMISSIONER KROPUENSKE SECONDED THE MOTION. THE MOTION CARRIED 7-0. 3. Consider 6/11/90 EDA Minutes COMMISSIONER KROPUENSKE MOVED TO APPROVE THE 6/11/90 EDA MINUTES. COMMISSIONER HOLMGREN SECONDED THE MOTION. THE MOTION CARRIED 6-0-1- Commissioner Dobel abstained. 4. Dental Clinic TIF Plan Review Executi ve Director, Pat Klaers, indicated that the representatives of this project were not present. He further stated that the Building Official has confirmed that the site and structure meet the findings of fact for a TIF redevelopment plan. The Executive Director informed the EDA that the TIF project will consist of a five year time frame and that the City will not lose local government aid funds because of this TIF redevelopment project. He stated that the plan will be available and distributed at the end of the week (July 13, 1990). The City Attorney indicated that the Building Official had found significant code and structure deficiencies in the residential home on the lot. He indicated that the applicant is requesting TIF in the amount of $60,000, which is an amount needed to make the property feasible for building. He stated that the City and the EDA are encouraging the redevelopment of this site and further that it is in the City's redevelopment plan for the downtown area. Economic Development Minutes July 9, 1990 Page 2 . COMMISSIONER GONGOLL MOVED TO AUTHORIZE THE CITY TO FINALIZE THE TAX INCREMENT FINANCING PLAN FOR THE DENTAL CLINIC, TO NOTIFY THE COUNTY AND SCHOOL DISTRICT SO THAT THE THIRTY DAY TIME PERIOD CAN BEGIN, AND TO SET A TIF #8 PUBLIC HEARING DATE FOR AUGUST 13, 1990. COMMISSIONER DOBEL SECONDED THE MOTION. THE MOTION CARRIED 7-0. 5. Downtown Fire Site Presentation and Discussion/Jim Trucker. Accent Real Estate Company. Ltd. Don Heinzman indicated that Elmer Anderson has requested a transcript of this portion of the EDA meeting due to the fact that he could not attend the meeting because he was hospitalized. . Mr. Trucker addressed the EDA and indicated that he had been requested to provide the City with building options and associated costs regarding the hole in the ground site located at 605 Main Street. Mr. Trucker indicated that he looked at the project as three separate issuesj one being complete construction including three floors and the foundationj another being the foundation costj and the third being the option of filling in the site and terracing it for a park. Mr. Trucker indicated that according to information from a soils report by Braun Engineering, the soil has poor compaction and further that there may be contaminated soil 14.5 to 15 feet below the surface. He indicated that soils information received from a report by Braun Engineering indicated that there was a heavy petroleum odor approximately 14 feet below the existing floor slab in the southeast corner of the hole in the ground site. Mr. Trucker stated that the total cost for the foundation, which would include earth work, concrete, masonry, pre cast and structural steel, would be approximately $182,500. He stated that this would be the cost to get the area ready for building. Mr. Trucker then discussed with the EDA the complete construction of the site which includes three floors and the foundation. He stated that the pricing of the construction part of this project was based on earth work, concrete, masonry, aluminum windows and entrances, drywall, roofing, ceramic tile, etc. He stated that he based the price on a tenant being able to move into the building and that the cost for this construction would be about $1,050,000. Mr. Trucker then discussed with the EDA the cost involved to make the area into a park. He stated that based on his best estimate of earth work, concrete, and utility cutoffs, the total cost for making the site into a park area would be approximately $103,000. . The EDA discussed the fact that prior to anything being done, soil correction work may have to be completed. The EDA discussed who the responsibili ty would fall on regarding the contaminated soil. Mike Mulrooney stated that the value of the property will be affected by the contaminants and the soil conditions and the type of building to be buil t on the property. Discussion was held by the EDA regarding the City's responsibility in purchasing the property with the knowledge that the property may be contaminated. Commissioner Kropuenske stated that any loan institution would be very cautious, and perhaps unwilling, to loan money until the contamination is taken care of. Economic Development Minutes July 9, 1990 Page 3 . Gary Santwire stated that the owners of the property would have a hard time finding a buyer until a letter of no action is received from the MPCA. Further discussion was held regarding the fact that the City of Elk River was not previously informed about the contaminated soil. Mr. Dan Anderson informed the Council that he is representing Irma Jenne, the owner of the property, and indicated that she may be unaware that the soil is contaminated. Chairman Tralle stated that Mrs. Jenne should be made aware of the conditions of the soil. The EDA discussed the responsibility factor of addressing this issue. Commissioner Holmgren stated that he felt it would be in the best interest of the EDA to have the EDA pay for the additional testing required to determine the amount of contamination. Commissioner Schuldt questioned whether the City would have the authority to assess the owner for the testing of the soils. Chairman Tralle suggested that staff meet with the property owners and work out some type of arrangement regarding the soils issue. He indicated that it would be in the best interest of the City for the EDA to work together with the owners of the property. It was the consensus of the EDA to work with the owner of the property to correct the soils condition and further to contact the MPCA to see what action is necessary. It was further the consensus of the EDA to direct the staff to contact the City environmental consultant (Liesch and Associates) regarding this problem. . COMMISSIONER KROPUENSKE MOVED TO WITHDRAW THE PURCHASE OFFER ON THE HOLE IN THE GROUND PROPERTY BASED UPON THE PRESENTED FACTS OF POSSIBLE SOIL CONTAMINATION. COMMISSIONER OOBEL SECONDED THE MOTION. THE MOTION CARRIED 7-0. COMMISSIONER OOBEL MOVED TO ACCEPT THE DEVELOPMENT SITE COST STUDY FROM MR. TRUCKER OF ACCENT REAL ESTATE COMPANY, LTD. COMMISSIONER HOLMGREN SECONDED THE MOTION. THE MOTION CARRIED 7-0. 6. Custom Cutter Grindin~ . Mike Mulrooney, Economic Development Consultant, informed the EDA that Custom Cutter Grinding has requested assistance from the City to locate their company in the Elk River Industrial Park. He stated that the business is currently located in Ramsey and employs 6 people. Mr. Mulrooney indicated that Custom Cutter Grinding has requested City assistance to locate 5,000 square feet of space to lease or buy. He further indicated that after research, the City has determined that space is not available to meet the company's needs, and as a result of this, discussions with the company have focused on the construction of a new building in the Industrial Park. He indicated that former EDA Coordinator, Dick Fursman, had discussed the possibility of the company constructing a larger facility which they could occupy and lease to other tenants. Mr. Mulrooney indicated that Custom Cutter Grinding has shown an interest in this approach depending upon the degree of involvement by the City. Economic Development Minutes July 9, 1990 Page 4 . It was the consensus of the EDA to direct staff to continue discussions wi th Custom Cutter Grinding and to explore the capabilities to follow through on this type of project. The EDA recessed at 8:30 p.m. and reconvened at 8:45 p.m. 7. Economic Development Coordinator Position Chairman Tralle stated that due to the resignation of Dick Fursman, the City is in a need to fill the position of Economic Development Coordinator. The Executive Director indicated that the Council would make the final decision regarding the hiring of an EDA Coordinator due to the vast majority of the money for the position being funded by the General Fund Budget. Commissioner Schuldt questioned the how the cuts in state funding would affect the hiring of an Economic Development Coordinator and further questioned whether TIF law changes would slow down the work load of the EDA Coordinator. The Executive Director indicated that the marketing plan, direct mail campaign, Star Cities Program, Business Retension work, and the Revolving Loan Program would provide a large work-load for an Economic Development Coordinator. Chairman Tralle stated that the City should fill the position as soon as possible. He stated that the City will not stop growing and that the City made a commitment in the past to get the position off the ground and they should stick to that committment. . COMMISSIONER KROPUENSKE MOVED TO RECOMMEND TO THE CITY COUNCIL TO PROCEED WITH THE NECESSARY ARRANGEMENTS NEEDED TO HIRE AN ECONOMIC DEVELOPMENT COORDINATOR FOR THE CITY TO REPLACE DICK FURSMAN. COMMISSIONER GONGOLL SECONDED THE MOTION. THE MOTION CARRIED 7-0. Commissioner Gongoll requested to be on the 'interview panel. 8. Marketin~ Pro~ram Mike Mulrooney indicated that Dick Fursman had presented the five components of the marketing program to the EDA at previous meetings. Mr. Mulrooney reviewed the elements with the EDA which consisted of publicity, advertising, personal selling, sales promotion, and networking. He indicated that he felt the EDA should be able to continue with the first three elements of this program and that the last two elements, being sales promotion and networking, should be put on hold until the City hires an Economic Development Coordinator. . Mr. Mulrooney indicated that he has been in contact with Don Heinzman, Editor of the Elk River Star News, regarding the EDA Newsletter. He indicated that three issues would be distributed per year and they would be mailed to selected prospects and certain people in the Elk Ri ver business community. He indicated that he will be making a presentation to the EDA at a future meeting regarding the EDA Newsletter. He further indicated that it is his goal to have the first newsletter mailed during September. Economic Development Minutes July 9, 1990 Page 5 . Mr. Mulrooney informed the EDA that he has been working with Scott Martin of UPA to put together an Industrial Park Profile. He indicated that UPA will print the Industrial Park Profile with no cost to the community. It was the consensus of the EDA to authorize staff to continue with the first three elements (publicity, advertising, and personal selling) of the Marketing Program and to hold off on the last two elements (sales promotion and networking) until an EDA Coordinator is hired. 9. Roma Tool . Mike Mulrooney stated that a few years ago the State provided financing through the City to Roma Tool to keep the company operating in Elk River. He indicated that the City had received a grant from the Minnesota Department of Trade and Economic Development in the amount of $500, ood. He stated that the terms of the grant allowed the City to keep $100,000 of the principal and any interest made on the grant money and the remaining $400,000 had to be returned to the State. Mr. Mulrooney indicated that Roma Tool has recently requested that the City forgive the entire amount of the debt because the company currently has a negative net worth which is prohibiting them from obtaining business. Mr. Mulrooney stated that he feels if the EDA agrees to forgive the loan it may set a precedent for future EDA projects. He further indicated that if the City is to obtain future grants for other projects from the State, every effort should be made to ensure that the full amount of the grant is paid back to the State. Mr. Mulrooney suggested that the City be allowed to explore options for recovering the money. He suggested a possibility of taking an equity position in the company. The City Attorney informed the EDA that the City may at some time be held liable by the State for the grant payback. COMMISSIONER SCHULDT MOVED TO NOT FORGIVE THE $400,000 LOAN TO ROMA TOOL AND FURTHER TO DIRECT THE CITY TO CONTINUE TO WORK WITH ROMA TOOL IN TERMS OF PAYING BACK THE GRANT MONEY LOANED TO THEM BY THE CITY. COMMISSIONER HOLMGREN SECONDED THE MOTION. THE MOTION CARRIED 6-0-l. Commissioner Kropuenske abstained due to a conflict of interest. 10. Distinctive Door Desi~ns Mike Mulrooney indicated that Distinctive Door Designs has requested assistance from the City for a land write-down in the McChesney Industrial Park. He indicated that he has been in contact with the company and that they have stated their interest in locating in the McChesney Park. Mr. Mulrooney indicated that the project has been put on hold, pending review of the project by the company lenders. . . . . Economic Development Minutes July 9, 1990 Page 6 Chairman Tralle stated that the parcel of property in the McChesney Industrial Park may be a sui table site for Custom Cutter Grinding. Mike Mulrooney indicated that he would like to encourage Distinctive Door Designs to locate in the park rather than Custom Cutter Grinding due to the fact that Distinctive Door Designs is more compatible to existing businesses in the park. He further indicated that he will discuss this option with Custom Cutter Grinding. 11. Other Business There was no other business at this meeting. 12.1 1991 EDA Budget The Executive Director informed the EDA that due to the Truth in Taxation law, the budget time period will be moved up. He indicated that the budget information will be submitted to the EDA at the next meeting and that the budget proposal will be similar to last year. 13. Adjournment There being no further business, COMMISSIONER HOLMGREN MOVED TO ADJOURN THE MEETING. COMMISSIONER DOBEL SECONDED THE MOTION. THE MOTION CARRIED 7-0. The meeting of the Elk River Economic Development Authority adjourned at 9:50 p.m. Respectfully submitted, /~/~~ Sandy Thackeray City Clerk