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01-14-2008 EDA MINMEETING OF THE ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY HELD AT THE ELK RIVER CITY HALL MONDAY, JANUARY 14, 2008 Members Present: President Gongoll, Commissioners Dwyer, Farber, Klinzing, Motin, Tveite, and Zerwas Members Absent: None Staff Present: Director of Economic Development Catherine Mehelich and City Administrator Lori Johnson 1. Call Meeting To Order Pursuant to due call and notice thereof, the meeting of the Economic Development Authority was called to order at 5:30 p.m. by President Gongoll. 2. Consider Agenda MOVED BY COMMISSIONER KLINZING AND SECONDED BY COMMISSIONER DWYER TO APPROVE THE JANUARY 14, 2008, EDA AGENDA. MOTION CARRIED 7-0. 3. Consider Consent A eg nda MOVED BY COMMISSIONER FARBER AND SECONDED BY COMMISSIONER ZERWAS TO APPROVE THE CONSENT AGENDA AS FOLLOWS: 3.1. DECEMBER 10, 2007 REGULAR MEETING MINUTES 3.2. CHECK REGISTERS 3.3. BALANCE SHEET (NOT AVAILABLE UNTIL MARCH 1 AUDIT COMPLETE) 3.4. REVENUE/EXPENDITURE REPORT (NOT AVAILABLE UNTIL AUDIT COMPLETE) 3.5. DESIGNATING ELK RIVER STAR NEWS AS THE OFFICIAL ECONOMIC DEVELOPMENT AUTHORITY NEWSPAPER FOR 2008 3.6. DESIGNATING THE FOLLOWING BANKS AND INSTITUTIONS AS DEPOSITORIES FOR 2008: ^ FIRST NATIONAL BANK OF ELK RIVER ^ 4M FUND • WELLS FARGO BANK • THE BANK OF ELK RIVER ^ US BANK • RIVERVIEW COMMUNITY BANK ^ TCF BANK 3.7. APPOINTING COMMISSIONER TVEITE TO THE EDA FINANCE AND MARKETING COMMITTEE FOR 2008 AND APPOINTING Economic Development Authority Minutes January 14, 2008 Page 2 COMMISSIONER MOTIN TO THE EDA FINANCE COMMITTEE FOR 2008 3.8. PAY ESTIMATES FOR THE YMCA AS OUTLINED IN THE STAFF REPORT MOTION CARRIED 7-0. 4. Open Mike No one appeared for open mike. 5. Annual Election of Officers MOVED BY COMMISSIONER MOTIN AND SECONDED BY COMMISSIONER DWYER TO ELECT THE FOLLOWING AS OFFICERS FOR 2008: PRESIDENT -JEFF GONGOLL VICE PRESIDENT -PAT DWYER TREASURER -DAN TVEITE SECRETARY - PAUL MOTIN ASSISTANT TREASURER - NICg ZERWAS MOTION CARRIED 7-0. 6. Consider Micro Loan for Waterfall Salon and Da~pa 7. Consider Micro Loan for Nicole's Finishing Touch Salon Director of Economic Development Catherine Mehelich outlined the micro loan requests by Waterfall Salon and Day Spa and Nicole's Finishing Touch Salon. Ms. Mehelich explained that the EDA Finance Committee met and recommended approval for both of the requests with terms as outlined in her staff report. She noted that Waterfall Salon business owner Michael Scheevel and Nicole's Finishing Touch Salon business owner Nicole Fox were in attendance to answer any questions. Commissioner Tveite stated that he believes these requests are good fits for the program. MOVED BY COMMISSIONER TVEITE AND SECONDED BY COMMISSIONER MOTIN TO APPROVE THE REQUEST BY WATERFALL SALON AND DAY SPA WITH THE FOLLOWING TERMS: RATE 3% FIXED TERM 2 YEARS SECURITY PERSONAL GUARANTEE STRUCTURE DIRECT LOAN FROM EDA MOTION CARRIED 7-0. Ms. Mehelich noted that since Nicole's Finishing Touch Salon does not fit the "existing business" criteria, the EDA Finance Committee was asked to consider the business's unique circumstances and hardship as a result of the downtown construction as described in the applicant's letter. Economic Development Authority Minutes January 14, 2008 Page 3 Commissioner Motin stated that the current criteria of the micro loan requires the applicant to have an existing business in downtown by sometime in 2006. He explained that the EDA Finance Committee felt that the applicant is a reasonable exception to the "existing business" criteria of the program due to the delay encountered in establishing her business downtown due to construction timing of the building. MOVED BY COMMISSIONER MOTIN AND SECONDED BY COMMISSIONER KLINZING TO RECOMMEND APPROVAL TO THE CITY COUNCIL OF THE LOAN REQUEST BY NICOLE'S FINISHING TOUCH SALON WITH THE FOLLOWING TERMS: RATE 3% FIXED TERM 2 YEARS SECURITY PERSONAL GUARANTEE STRUCTURE DIRECT LOAN FROM EDA MOTION CARRIED 7-0. It was noted that applications to the Downtown Business Revitalization Micro Loan Program will no longer be considered since the program's application deadline was December 31, 2007. 8. Consider Finance Committee Recommendation on Micro Loan Policy Amendment Ms. Mehelich reported that she has received inquiries about the possibility of amending the micro loan fund polity to consider applications from new downtown businesses to be used towards leasehold improvements and furniture, fixtures, and equipment. She stated that the current Downtown Rehabilitation Financing Program is targeted toward building rehabilitation and restoration of downtown buildings and requires 20% to be used toward building exterior. Ms. Mehelich indicated that the Finance Committee discussed this issue and a list of comments and concerns raised by the Committee is included in the staff report. She stated that the overall consensus was positive and the Committee favored looking into a short term loan program. Commissioner Tveite reported that the Finance Committee discussed this at length. He stated that the balance in the micro loan fund is substantial and it does not do any good if businesses are not coming to Elk River. He stated this could be a way to kick start the downtown or other retail areas. He acknowledged that a majority of the funding should be reserved for industrial clients and that if a change in the program criteria is considered it should be for a short time or a set dollar amount and reevaluated. He noted that the Committee discussed structuring the program differently than the previous micro loan to be more like traditional loans requiring credit worthiness and possibly bank participation. Commissioner Motin explained that he has concerns that the problems downtown may be market driven and that the building owners could offer reduced rent or other concessions to lure businesses in their buildings. He also expressed concerns with favoring the downtown area versus other areas in the city and believes that this may open the door to increased dependence on government assistance. Economic Development Authority Minutes Page 4 January 14, 2008 Gongoll stated that he would be interested in helping out downtown businesses. Commissioner Dwyer indicated that it may be best to have the bank involved in monitoring the funds. He explained that the city would have the capability of buying 100% participation so the loan would be completely City funded but the bank would monitor the loan payments. He stated that he believes the bank would be willing to do this because of the nature of the loans. Commissioner Motin stated that he favors the loans being 100% City funded. Commissioner Klinzing explained that she believes this would be a good program to help the downtown be successful. Ms. Mehelich indicated that she will forward the EDA's comments to the Ciry Council for direction on whether or not they are interested in pursuing this program. She noted that if Council directs staff to proceed it would go back to the EDA Finance Committee to define the details and then back for EDA and Council approval. President Gongoll questioned if the Housing and Redevelopment Authority would be involved in this process. Ms. Mehelich stated that the HRA has representation on the EDA Finance Committee and this representative would be involved in the review. Update on Post Office Property Ms. Mehelich explained that she learned in speaking with a broker that the listing price for the Post Office property significantly exceeds the amount the EDA discussed a couple months ago. She noted that the property will be listed as a normal commercial listing and that depending on the approval process from the Post Office, the property should be listed in the next few weeks. Ms. Mehelich stated that she has been referring interested developers directly to the Post Office. She stated that she is looking for EDA direction on whether or not they are interested in calling another executive session to discuss a possible purchase offer on the property. MOVED BY COMMISSIONER DWYER AND SECONDED BY COMMISSIONER TVEITE TO END THE DELIBERATION ON THE PURCHASE OF THE POST OFFICE PROPERTY LOCATED AT LOT 1, BLOCK 1 MULVANEY POINT IN ELK RIVER. MOTION CARRIED 7-0. Commissioner Motin explained that the EDA held previous discussion on possibly providing assistance through tax increment financing or tax abatement to a potential business. He stated that he would like to have the ability to consider that option in the future. Commissioner Dwyer stated that any business has the ability to apply for tax abatement and each application would be reviewed to see if it fits within the City's policy. Commissioner Motin stated that previous discussions centered on a restaurant which would not meet the criteria for tax abatement. He stated that he would like to leave the option open for consideration in the future. Commissioner Dwyer indicated that he is not interested in changing the City's polity without formally discussing a polity change. President Gongoll concurred. Commissioner Motin stated that the current tax abatement polity would not allow for incentives for restaurants but he would like for discussions to take place regarding a polity modification to allow for some sort of incentive. Comtissioner Tveite stated that this is discussion for a general polity change and should not be specific to this piece of property. Commissioner Motin stated that if the overpass Economic Development Authority Minutes January 14, 2008 Page 5 goes through this property will be a prime area. He noted that the City may not have this situation elsewhere and that he thinks it is something that should be discussed. Commissioner Farber stated that he would not mind looking at incentives individually and as a polity. 10. Other Business President Gongoll reminded the EDA about their joint meeting with the City Council on Tuesday, January 22 to consider YMCA bonds. 11. Adjournment There being no other business, President Gongoll adjourned the meeting of the Elk River Economic Development Authority adjourned at 5:58 p.m. Minutes prepared by Jessica Miller. Tina Allan City Clerk