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08-11-2008 EDA MINMEETING OF THE ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY HELD AT THE ELK RIVER CITY HALL MONDAY, AUGUST I I, 2008 Members Present: President Dwyer, Commissioners Farber, Klinzing, Touchette, Zerwas, Motin and Tveite Members Absent: None Staff Present: City Administrator Lori Johnson,Community Development Director Jeff Gongoll, Director of Economic Development Catherine Mehelich, Assistant Director of Economic Development Annie Deckert, Finance Director Tim Simon, and Recording Secretary Jennifer 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 Dwyer. 2. Consider A eg nda MOVED BY COMMISSIONER KLINZING AND SECONDED BY COMMISSIONER TVEITE TO APPROVE THE FOLLOWING CONSENT AGENDA. MOTION CARRIED 7-0. 3. Consider Consent Agenda MOVED BY COMMISSIONER FARBER AND SECONDED BY COMMISSIONER MOTIN TO APPROVE THE FOLLOWING CONSENT AGENDA. 3.1. July 14, 2008 Regular Meeting Minutes 3.2. Check Registers 3.3. Balance Sheet 3.4. Revenue/Expenditure Report 3.5. Pay Estimates (YMCA) MOTION CARRIED 7-0. 4. Open Mike Scott Powell, Elk River Ford, was present to discuss the commercial and industrial land in the Gateway Business Park. He wanted to let the EDA know of his interest in helping the EDA and City develop the commercial portion of the land. He asked to be involved in future planning of this area. President Dwyer stated the EDA would be having a joint meeting with the City Council immediately after this meeting, and asked him to attend. Economic Development Authority Minutes Page 2 August 11, 2008 ----------------------------- 5. At~boint EDA Representative to Energy City Commission President Dwyer proposed that both he and Commissioner Touchette be appointed as EDA representatives to the Energy City Cormission. Between the two of them, they would determine who would attend each meeting. MOVED BY COMMISSIONER KLINZING AND SECONDED BY COMMISSIONER TVEITE TO APPOINT BOTH PAT DWYER AND RON TOUCHETTE AS EDA REPRESENTATNES TO THE ENERGY CITY COMMISSION. MOTION CARRIED 7-0. 6. Consider EDA Micro Loan Applications 6.1. Pomeroy Tool. Inc. Ms. Mehelich presented the staff report. She introduced the current founder, Dick Pomeroy, and Mr. Long Do, who is proposing to purchase Pomeroy Tool, Inc. The loan would go towards the purchase of existing equipment, of which the EDA would obtain a 2nd lien position. MOVED BY COMMISSIONER MOTIN AND SECONDED BY COMMISSIONER TVEITE TO APPROVE THE MICRO LOAN FOR POMEROY TOOL, INC. MOTION CARRIED 7-0. 6.2. Ethanol Technology of Minnesota LLC Ms. Mehelich presented the staff report. She introduced Bart Wells, CEO of ETom, who presented an overview of his business expansion project, and demonstrated an affordable "plug and play" ethanol conversion system for vehicles. Because of the demand for this type of system, he would need to expand his current operation, which would require him to hire seven full time employees. MOVED BY COMMISSIONER TVEITE AND SECONDED BY COMMISSIONER MOTIN TO APPROVE THE MICRO LOAN FOR ETHANOL TECHNOLOGY OF MINNESOTA, LLC. MOTION CARRIED 7-0. Consider Year 2009 EDA Budget and Resolution Regarding EDA Levy and Resolution Regarding YMCA Levy Ms. Mehelich presented the staff report. MOVED BY COMMISSIONER TVEITE AND SECONDED BY COMMISSIONER ZERWAS TO APPROVE THE 2009 EDA BUDGET AS PRESENTED, AND APPROVE RESOLUTION 08-06 ESTABLISHING THE TAX LEVY FOR THE ELB RIVER ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF ELg RIVER, MINNESOTA . MOTION CARRIED 7-0. Mr. Simon presented the staff report. Economic Development Authority Minutes Page 3 August 11, 2008 MOVED BY COMMISSIONER ZERWAS AND SECONDED BY COMMISSIONER MOTIN TO APPROVE THE EDA FUND BALANCE DESIGNATION POLICY. MOTION CARRIED 7-0. Mr. Simon presented the staff report. MOVED BY COMMISSIONER ZERWAS AND SECONDED BY COMMISSIONER gI.INZING TO ADOPT RESOLUTION OS-07 ESTABLISHING THE 2009 REFERENDUM TAX LEVY AS APPROVED BY VOTERS FOR A RECREATIONAL FACILITY TO BE LEASED TO THE YMCA. MOTION CARRIED 7-0. 8. Discuss Entertainment Center Proposal Mr. Gongoll presented the staff report. Also present to answer questions were David Sorenson, Energy Entertainment Enterprises, LLC. Mr. Sorenson gave a brief update on the project. President Dwyer expressed concern with the viability of the project and the lack of investors, lenders, or financial information from Mr. Sorenson. Mr. Sorenson stated they did provide some financial information to Ehlers but they do need to provide their investment group with the City's decision on whether or not we will provide the 14 acre land grant. At this point, he felt Outlot C of the Gateway Business Park was the best location for their project. Commissioner Motin asked why highway frontage was not necessary. Mr. Sorenson stated it would be best to place the building on or near on the high spot of the land, not requiring highway frontage. It will have many components inside the building and around the grounds in order to make it a landmark facility that will attract people from out of town as well as commuter rail riders and local residents. Commissioner Zerwas asked if the project could be built with consideration of a possible $2 million dollar tax abatement. Mr. Sorenson stated he posed a good question and was not sure without additional review. Commissioner Motin asked Mr. Gongoll if the County would offer the same tax abatement amount as the City may consider. Ms. Mehelich stated the County typically follows the City's tax rebate consideration and that they have a ten year polity limit as well as limits regarding the number of retail projects they consider within each city. Commissioner Klinzing stated how she read this request, was that Energy Entertainment Enterprises is requesting the City give them the land needed for the project, waive associated fees in the amount of $977,000, and to provide a tax rebate close to $2 million. She was concerned that the City has not provided this much assistance to any one project in the past. She also stated that typically, the rebate money given is used to pay the City for the land and for the utilities, so the City is actually paid back through the rebate process. Economic Development Authority Minutes Page 4 August 11, 2008 ----------------------------- Commissioner Farber commented that in previous meetings, former Community Development Director Scott Clark discussed providing a land grant and tax abatement. Their initial request was for a land grant. Land was separate from a tax abatement, and fees would be negotiated. Commissioner Klinzing stated the EDA needs to decide if they would like to provide a land grant. Ms. Johnson stated the City still owns this property and there are costs associated with owning the property, but it is the City's polity to recoup costs associated with the land, through tax abatement. In addition to the existing land costs associated with this property, the City will also experience costs to install the remaining sewer and water, wetland mitigation costs, etc. Mr. Sorenson stated that they would require a land grant, and at least a portion of a tax abatement. Commissioner Tveite stated the project is looking for the land to be granted and the fees to be waived, thereby being an up front incentive. Historically, the City has done apay -as- you-go-type benefit where there would be a reduction in taxes that they would receive over time. Because the land has value, if the City gifts this land, it's considered an incentive and it would have to be accounted for. He expressed concerns with the 20 year, 100% City participation as historically, it's been a 10 year participation. The incentive request includes large numbers without a great deal of specificity involved with them, as well as going outside of what they typically consider. President Dwyer stated there will need to be significant financing obtained, and hasn't seen any letters of intent. He asked if the project is viable and financed. Commissioner Touchette asked if feasibility studies were done to determine if the entities inside of this project were feasible. Mr. Sorenson answered by stating there was initial conversation with Brunswick and Hilton, among others. They've given preliminary approval for the viability of the project. The restaurant will be built by them. As far as the hotel goes, there will be some additional information brought forward on demographics. He asked the City if they want to help them with the land grant and if so, would like a letter stating such. Commissioner Farber asked if Mr. Sorenson could provide financial information and financial backing. Mr. Sorenson felt they could probably do that. Mr. Touchette asked when that would occur. Mr. Sorenson stated due to initial investors backing out in the middle of the project, that they needed to locate secondary investors. He stated the investors would want to know the value of the land, and until the appraisal comes back, he can't give his investors any further information. He would like the City to make a decision on whether or not they are willing to grant them the land. Economic Development Authority Minutes August 11, 2008 Page 5 Commissioner Zerwas stated the appraisal for the property will be private information and not released. He again asked if the project could be done with the possible $2 million dollar tax abatement. Commissioner Klinzing asked that this conversation be continued during the joint meeting between the City Counal and EDA. President Dwyer recessed the EDA meeting at 6:52 p.m. to Uppertown Conference Room. The EDA meeting was reconvened at 6:58 p.m. 9. Retail Trade Analysis Presentation Ms. Deckert presented the staff report, and introduced Claudia Cody, Regional Assistant Extension Professor from University of Minnesota Extension. Ms. Cody distributed the Retail Trade Analysis report to the EDA. She asked them to evaluate the material presented in the report and to consider how the EDA should utilize the information it contains in order to evaluate the health of the City's retail sectors. She suggested a community workshop in the future in order for her to explain all the data in the report. President Dwyer stated the EDA would direct staff to set up a workshop in conjunction with the Chamber of Commerce to discuss the data. President Dwyer requested staff to partner with the Chamber of Commerce to set up a workshop to discuss the data. 10. Other Business Ms. Mehelich announced that Globe University and Minnesota School of Business have decided to locate in Elk River and have secured a purchase agreement for 7 acres of property on Highway 169 & 193rd Avenue, behind Super America and Time Out. The footprint building would be 15,000 square feet and two stories, very similar to their Woodbury, Blaine, and St. Cloud sites. She will keep the EDA informed with the progress of this project. President Dwyer commented on the recent article on CNN Money.com entitled "Where the Jobs Are" which reported Sherburne County as being the 22nd best in the country for job growth. He suggested setting up a link to this article from our website. Discussion continued regarding the request for a land grant and tax abatement by Energy Entertainment Enterprises. President Dwyer determined the EDA was not willing to give a land grant to them. Betsy Rudd, investor in Energy Entertainment Enterprises, addressed the EDA about this project, going over the figures in the but-for analysis. She stated they were looking to find out if incentives would be available from the City. She stated they weren't asking for the land to be granted tonight, but were looking for the City to commit to providing them land and incentives in the future. Commissioner Tveite responded the City does have incentives available, but his concerns were with lack of specific information on investors and financials. He also had concerns with putting more City money into a private project without doing the background work. He would like an appraisal on the land in order to determine the correct value. Economic Development Authority Minutes August 11, 2008 Page 6 Commissioner Motin stated the City needs to figure out what they want in this area before they commit to a viable project. He suggested they talk to the County to see if they would match a tax abatement. Commissioner Zerwas stated the EDA needed to give a decision to Energy Entertainment Enterprises tonight. Commissioner Klinzing asked Ms. Rudd if they had received enough information from the EDA tonight in order to make a decision on whether or not to go forward on the project. Ms. Rudd stated she would like the decision from the EDA to be in writing but she stated she got enough of a feel for the direction they needed to take. 12. Adjournment There being no further business, President Dwyer adjourned the EDA meeting at 7:25 p.m. Minutes pared b Jen ~ er Johnson `Z._ Tina Allard, City Clerk