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11-15-1993 EDA MIN e e e MEETING OF THE ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY HELD AT THE ELK RIVER CITY HALL MONDAY, NOVEMBER 15, 1993 Members Present: President Gongoll, Commissioners Dwyer, Scheel, Holmgren, Dietz, and Farber Members Absent: Commissioner Duitsman Staff Present: Pat Klaers, Executive Director; Sandra Thackeray, City Clerk; Bill Rubin, Economic Development Coordinator; Peter Beck, City Attorney 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 5:30 p.m. by President Gongo11. 2. Consider 10/11/93 and 10/25/93 EDA Minutes COMMISSIONER SCHEEL MOVED TO APPROVE THE 10/11/93 AND 10/25/93 EDA MINUTES. COMMISSIONER FARBER SECONDED THE MOTION. THE MOTION CARRIED 6-0. 3. Financial Update Bill Rubin reviewed the Financial Update and indicated that all loans are current. 4. Consider Mortgage Subordination Agreement Indy Lube Loan Economic Development Coordinator Bill Rubin stated that on October 29, 1993, the EDA funded its portion of the Indy Lube loan. Bill Rubin informed the EDA that Indy Lube's primary lender, Security Bank Minnesota, desire that the Elk River EDA execute a Subordination Agreement subordinating the EDA's interest to the bank mortgage. COMMISSIONER DWYER AGREEMENT ON THE SECONDED THE MOTION. MOVED TO AUTHORIZE A MORTGAGE SUBORDINATION INDY LUBE FINANCING PROJECT. COMMISSIONER HOLMGREN THE MOTION CARRIED 6-0. 5. Consider a Loan Request from Felix and Jeanne Eggert (Woodsmen Quality Products, Inc.) Economic Development Coordinator Bill Rubin informed the EDA that Theofil and Jeanne Eggert, owners of Woodsmen Quality Products, Inc., have requested a Micro Loan in the amount of $18,750.00. The loan will be used by the applicants to leverage primary financing and equity for the construction of a 2,952 square foot cabinet shop to be located on Lot 1, Block 1, Meadowvale Commercial Park. Bill Rubin stated that the EDA Finance Committee voted to recommend approval of an $18,750 micro loan which would be secured by a second Elk River EDA Meeting November 15, 1993 Page 2 e real estate mortgage, a Promissory Note, and a Guaranty of Mortgage. He further indicated that the loan will be repaid over fifteen years beginning with an interest rate of six percent (the current prime rate). COMMISSIONER FARBER MOVED TO APPROVE A LOAN FROM THE EDA MICRO LOAN FUND TO THEOFIL AND JEANNE EGGERT (WOODSMEN QUALITY PRODUCTS, INC.) IN THEI AMOUNT OF $18,750. COMMISSIONER HOLMGREN SECONDED THE MOTION. THE MOTION CARRIED 6-0. 6. Consider a Recommendation by the Business Park Task Force to Establish a Negotiating Team Commissioner Dwyer stated that the Business Park Task Force is recommending the creation of a Negotiating Team who would be charged with developing strategies for ongoing discussions with the owners of land suitable for business/industrial parks. He stated that the Task Force members selected to be part of the Negotiating Team include: Hank Duitsman, Dick Gongoll, Carol Mills, and Pat Dwyer. He further indicated that another committee has been established to determine the availability of grants and loans and is comprised of John Oliver, Ed Cunnington, and Jeff Gongoll. e COMMISSIONER GONGOLL MOVED TO APPROVE THE ESTABLISHMENT OF A NEGOTIATING TEAM COMMITTEE CONSISTING OF HANK DUITSMAN, DICK GONGOLL, CAROL MILLS, AND PAT DWYER, WHOSE PURPOSE WOULD BE TO DEVELOP STRATEGIES FOR THE ONGOING DISCUSSIONS WITH OWNERS OF LAND SUITABLE FOR BUSINESS/INDUSTRIAL PARKS. COMMISSIONER HOLMGREN SECONDED THE MOTION. THE MOTION CARRIED 6-0. 9. Prospect Status Report Economic Development Coordinator Bill Rubin reviewed the Prospect Status Report which was sent under separate cover. 7. Public Hearing Tax Increment Financing District No. 12 EDA Main Street Redevelopment Project Economic Development Coordinator Bill Rubin provided the EDA with an overview of the TIF District No. 12 project. He stated that Kurt Kjellberg of Kjellberg's Carpet and Interiors is requesting tax increment financing assistance in the amount of $165,000 to support the proposed construction of a 12,000 square foot retail facility. Bill Rubin indicated that the EDA will likely place a tax increment note through a lending institution which will fund the site preparation costs along with capitalized interest, cost of issuance fees, etc. The privately placed note would total approximately $195,000 and would be recovered with interest over a ten to eleven year period during which time the EDA and City collects the new property taxes from the retail project. Bill Rubin stated that the TIF assistance to Kjellberg would be used exclusively for site preparation costs. e Chris Bulow, project developer, stated that he does not have a full package put together for EDA review at this time. He informed the EDA Elk River EDA Meeting November 15, 1993 Page 3 e that he has Kjellberg's financial statements of the last four years available for review. President Gongoll opened the public hearing. There being no comments for or against the matter, President Gongoll closed the public hearing. Bill Rubin suggested that the EDA consider extending the TIF District a couple more years to capture the money the City spent for the land acquisition. Commissioner also would be $70,000 by Commissioners concept. Scheel indicated she would be in favor of the TIF Plan and in favor of recovery of the land cost of approximately extending the TIF Plan another two or three years. Holmgren and Dwyer indicated they also agreed with the Commissioner Dietz stated that he has been weighing the TIF Plan against the option of making the land into a park. He stated that the City will not gain anything in the eleven years it is collecting the taxes from the TIF District as the taxes will be used to repay the bonds. He further indicated that this is a business that will not employ a lot of people. e Bill Rubin indicated that this would be a project that the community would be proud of and after fifteen years the City would be gaining revenue. He indicated that if it is a park the City will spend additional money to develop it and to make the site construction ready. Chris Bulow stated that it would cost the City approximately $110,000 to $120,000 to prepare the site for a park. He further indicated that Kjellberg's would create three or four new jobs. COMMISSIONER DWYER MOVED TO ADOPT EDA RESOLUTION 93-5, A RESOLUTION FOR THE ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF ELK RIVER, MINNESOTA RELATING TO THE ESTABLISHMENT OF TAX INCREMENT FINANCING DISTRICT NO. 12 AND THE ADOPTION AND APPROVAL OF THE TAX INCREMENT FINANCING PLAN RELATING THERETO LOCATED WITHIN DEVELOPMENT DISTRICT NO.1. COMMISSIONER GONGOLL SECONDED THE MOTION. THE MOTION CARRIED 4-2. Commissioners Farber and Dietz opposed. 8. Public Hearing Proposed Sale of the EDA Main Street Redevelopment Site to Kurt Kjellberg/Kjellberg's Carpet and Interiors e Economic Development Coordinator Bill Rubin stated that State law requires an Economic Development Authority to conduct a public hearing on the proposed sale of property owned by an EDA. Bill Rubin explained that this public hearing is to approve the sale of the Main Street Redevelopment Site to Kjellberg's Carpet and Interiors. Bill Rubin further indicated that as previously discussed, the EDA has agreed to extend the TIF District another three years in order to recapture the the money the City paid for the land. He stated that a combination of second mortgage and collection of TIF in those three years will enable the City to recover its acquisition costs. e e e Elk River EDA Meeting November 15, 1993 Page 4 President Gongo1l opened the public hearing. There being no one for or against the matter, President Gongoll closed the public hearing. COMMISSIONER DWYER MOVED TO APPROVE THE SALE OF THE MAIN STREET REDEVELOPMENT SITE TO KURT KJELLBERG/KJELLBERG'S CARPET AND INTERIOR SUBJECT TO THE TERMS AND CONDITIONS OF A CONTRACT FOR PRIVATE DEVELOPMENT AND EXECUTION OF AN ASSESSMENT AGREEMENT AND SUBJECT TO CITY COUNCIL APPROVAL OF THE KJELLBERG TIF REQUEST. PRESIDENT GONGOLL SECONDED THE MOTION. THE MOTION CARRIED 4-2. Commissioners Farber and Dietz opposed. 10. Adjournment There being no further business, COMMISSIONER SCHEEL THE MEETING. COMMISSIONER DWYER SECONDED THE CARRIED 6-0. MOVED MOTION. TO ADJOURN THE MOTION The meeting of the Elk River City Council adjourned at 6:03 p.m. Respectfully submitted, ~.,' p- d. ~ Sandra A. Thackeray City Clerk