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02-09-1998 EDA MIN e MEETING OF THE ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY HELD AT THE ELK RIVER CITY HALL MONDAY, FEBRUARY 9, 1998 Members Present: President Duitsman, Commissioners Dwyer, Holmgren, Farber, Gongoll, Thompson, and Bender Members Absent: None Staff Present: Paul Steinman, Executive Director; Sandra Thackeray, City Clerk; Pat Klaers, City Administrator; Lori Johnson, Assistant City Administrator; Dave Sellergren, City Attomey; Dave MacGillivray, Bond Consultant; Terry Maurer, City Engineer 1. Call Meetina 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 Duitsman. 2. Consider Aaenda e COMMISSIONER FARBER MOVED TO APPROVE THE FEBRUARY 9, 1998, EDA AGENDA. COMMISSIONER HOLMGREN SECONDED THE MOTION. THE MOTION CARRIED 7-0. 3. Consider Consent Aaenda COMMISSIONER GONGOLL MOVED TO APPROVE THE CONSENT AGENDA AS FOLLOWS: 3.1. JANUARY 12, 1998, ANNUAL MEETING MINUTES - APPROVED 3.2. FEBRUARY 2, 1998, WORKSESSION MEETING MINUTES - APPROVED 3.3. CHECK REGISTER - APPROVED COMMISSIONER DWYER SECONDED THE MOTION. THE MOTION CARRIED 7-0. 4. Open Mike No one appeared for this item. 5. Tax Increment Financina Plan for Tax Increment Financina District No. 18 (Morrell) e Executive Director Paul Steinman updated the EDA on its previous discussion of February 2, 1998, regarding the Morrell request for tax increment financing. He indicated that the EDA consented to increase the tax increment funds to $350,000 adding an up front payment of $50,000 for clean up of the old site, with the balance of $300,000 to be on a pay-as-you-go basis. Paul Steinman indicated that following the February 2 decision of the EDA, the Morrell's have submitted a different request. The new request consists of $300,000 up front at Economic Development Authority Minutes February 9. 1998 Page 2 e the time the new building is occupied, to be used for soil corrections on the new property, and $50,000 over the life of the T1F District. President Duitsman indicated that he supports the previous decision of the EDA made on February 2. Commissioner Gongoll indicated that he would support splitting the $300,000, giving the Morrells $150,000 up front and the balance of $150,000 on a pay-as- you-go basis. Terry Morrell reviewed the different components of the project which consisted of clean up of the old site, soil corrections and building completion at the new site, and improvements required by the city. He requested the EDA to consider the Morrell's proposal of $300,000 up front and $50,000 on a pay-as-you-go basis. Commissioner Holmgren indicated he supported Commissioner Gongoll's proposal. Commissioner Bender indicated he supported the Authority's decision on February 2. e COMMISSIONER BENDER MOVED THAT NO CHANGE BE MADE FROM THE FEBRUARY 2 DECISION OF THE EDA WHICH CONSISTED OF INCREASING THE TAX INCREMENT FUNDS TO $350,000 WITH AN UP FRONT PAYMENT OF $50,000 FOR CLEAN UP OF THE OLD SITE AND THE BALANCE OF $300,000 TO BE ON A PAY-AS-YOU-GO BASIS. PRESIDENT DUITSMAN SECONDED THE MOTION. Commissioner Farber indicated that he concurred with Commissioners Gongoll and Holmgren in splitting the $300,000. He further stated he does not feel a pay- as-you-go basis would help the Morrells and would rather see the entire $300,000 paid up front. Commissioner Dwyer indicated that he would abstain from the vote as he is an officer and stockholder of the bank as potential lender. Commissioner Dwyer stated that the situation is unique in that the Morrells have to clean up the old site prior to moving to the new site. He indicated that due to this fact he could consider deviating from the pay-as-you-go method of providing assistance. Commissioner Thompson indicated that he made the original proposal of giving the Morrells $50,000 up front for the purpose of cleaning up the old site. He stated that the Morrells have made it evident that there are other obstacles they are facing such as soil and water corrections at the new site. He indicated that he would be willing to compromise by offering the Morrells $300,000 with $150,000 up front. President Duitsman called for the vote. e THE MOTION FAILED 2-4-1. President Duitsman and Commissioner Bender voted aye. Commissioners Holmgren, Thompson, GongolL and Farber voted nay. Commissioner Dwyer abstained. Economic Development Authority Minutes February 9. 1998 Page 3 e COMMISSIONER THOMPSON MOVED THAT TAX INCREMENT FINANCING FOR THE MORRELL PROJECT BE IN THE AMOUNT OF $300.000 WITH $150.000 PAID TO MORRELL UP FRONT AT THE TIME OF OCCUPANCY OF THE NEW FACILITY. AND $150.000 BE PAID ON A PAY-AS-YOU-GO BASIS EQUALLY OVER THE NINE YEAR PERIOD WITH THE STIPULATION THAT THE DEMOLITION AND CLEANING UP OF THE ORIGINAL SITE BE COMPLETED BY THE YEAR 2000 AND FURTHER THAT STAFF BE AUTHORIZED TO NEGOTIATE ALL TERMS OF THE DEVELOPMENT AGREEMENT AND THAT THE DEVELOPMENT AGREEMENT BE BROUGHT BACK TO THE EDA FOR FINAL APPROVAL IN MARCH. COMMISSIONER HOLMGREN SECONDED THE MOTION. THE MOTION CARRIED 5-1-1. President Duitsman opposed. Commissioner Dwyer abstained. COMMISSIONER HOLMGREN MOVED TO ADOPT EDA RESOLUTION 98-1 MODIFYING DEVELOPMENT DISTRICT NO.1 AND ADOPTING THE DEVELOPMENT PROGRAM THEREFOR AND ESTABLISHING WITHIN DEVELOPMENT DISTRICT NO.1. TAX INCREMENT FINANCING DISTRICT NO. 18 AND ADOPTING THE RELATED TAX INCREMENT FINANCING PLAN THEREFOR. COMMISSIONER GONGOLL SECONDED THE MOTION. THE MOTION CARRIED 7-0. Terry Morrell stated that with the assistance the EDA presently voted to offer them. the Morrells will have to look for alternatives on how to move ahead with their plan. He indicated that they will not be able to move from the site. 6. Business Incubator Advisory Board Recommendations e Protectorcare. Inc. - Paul Steinman indicated that the Incubator Advisory Board unanimously supported a recommendation to the EDA to proceed with entering into a sublease with Protectorcare. Paul Steinman reviewed the details of the sublease. Paul Probst. CEO of Protectorcare. gave the EDA details of Protectorcare's product and shared a video presentation with the EDA. COMMISSIONER DWYER MOVED TO APPROVE EXECUTION OF THE SUBLEASE AND MEMORANDUM OF UNDERSTANDING WITH PROTECTORCARE. INC. FOR OCCUPANCY OF THE BUSINESS INCUBATOR FACILITY. COMMISSIONER FARBER SECONDED THE MOTION. THE MOTION CARRIED 7-0. Watermark - Paul Steinman informed the EDA that the Incubator Advisory Board has also met with a company called Watermark. He indicated that it is the recommendation of the Incubator Advisory Board that the EDA and staff continue to work with Watermark and bring them back to the Incubator Advisory Board prior to finalizing a lease arrangement. 7. Associated Builders Presentation of Formal Tax Increment Application for Hohlen Property Paul Steinman informed the EDA that Associated Builders have made a formal tax increment application for the Hohlen property project. Pat Pelstring of Pelstring Capital Corporation gave a short presentation regarding the project. e Anthony Gleekel. Attorney for Associated Builders. informed the EDA that he is officially presenting a formal TIF application for the Hohlen project. He e e e Economic Development Authority Minutes Februarv 9. 1998 Page 4 requested the EDA to call a special worksession due to the complexity of the project. Pat Pelstring gave an overview of the financial issues and application which was submitted. COMMISSIONER GONGOLL MOVED TO CALL A SPECIAL WORKSESSION OF THE EDA ON MARCH 9, 1998, FROM 4:30 TO 6:00 P.M. FOR THE PURPOSE OF DISCUSSING THE TAX INCREMENT APPLICATION FOR THE HOHLEN PROPERTY. COMMISSIONER HOLMGREN SECONDED THE MOTION. THE MOTION CARRIED 7-0. 8. Prosoect ReDort/Activitv UDdates The Prospect Report/Activity Updates will be provided at the March EDA meeting. 9. Other Business EDA Finance Committee Vacancies - Paul Steinman informed the EDA that there are still two vacancies on the EDA Finance Committee. He indicated that these positions should be filled as soon as possible. North Star Die Castina Micro Loan - Paul Steinman informed the EDA that the North Star Die Casting Micro Loan has been completed. The company will be moving into the Roma Tool & Plastics building and hope to be in full operation by April 1. Greaa Karnis Micro Loan - Paul Steinman updated the EDA on the micro loan for Pattinicio's Restaurant requested by Gregg Karnis. He indicated that Mr. Karnis may not be leasing space from Sax and is considering the former Snyder Drug building. He indicated that Mr. Karnis will be requesting a micro loan in the amount of $50,000 to facilitate the project. 10. Adiournment There being no further business, COMMISSIONER THOMPSON MOVED TO ADJOURN. COMMISSIONER FARBER SECONDED THE MOTION. THE MOTION CARRIED 7-0. The meeting of the Elk River EDA was adjourned at 7:15 p.m. Respectfully submitted, ~~ Sandra Thackeray ~p City Clerk