Economic Development Authority Minutes - March 23, 2017

Date: 
March 23, 2017

CITY OF SAINT PETER, MINNESOTA
Economic Development Authority
REGULAR MEETING MINUTES
March 23, 2017
Saint Peter Community Center – Saint Peter Room

Call to Order

The meeting was called to order at 12:02 p.m. by President Bob Southworth. 

EDA members Southworth, James Dunn, Cory Abels, John Kvamme and Jay Hansen were in attendance.  Members Marilyn Rundell and Jerry Pfeifer were unable to attend as scheduled.  Community Development Director Russ Wille and Megan Willette (Kaduce Properties, LLC) were also present.

Approval of Agenda

Motion by Abels, seconded by Dunn to approve the meeting agenda as prepared and presented.  With all voting in favor the motion was passed.

Approval of Minutes

Motion by Dunn to approve the minutes of the February 23, 2017 meeting as prepared and presented.  Seconded by Hansen.  All voting in favor the motion was carried and the minutes approved.

Kaduce Properties, LLC

Wille noted that Megan Willette of Kaduce Properties, LLC has applied for a $16,831 revolving loan from the Central Business District / Accessibility Enhancement loan program to partially finance repairs and enhancements to the Mulberry Façade of the 424 South Minnesota Avenue property.

The project would include the repainting of the EIFS exterior as well as the tuck pointing of the remaining brickwork.  A new window opening would be installed and improvements would be made to the foundation to prevent stormwater penetration.  The project has been reviewed and approved by the Heritage Preservation Commission as required by the loan guidelines.

Wille noted that the building is completely handicapped accessible as per the standards of the Americans will Disabilities Act.

The total project has been quoted at a cost of $18,702.  Willette will contribute the 10% match ($1,870.00) from the operating revenues of the real estate. 

Nicollet County has established an estimated market value for taxation purposes of $393,900.00.  There are two mortgages totaling $262,000.00 that have been filed by MinnStar Bank against the 424 S. Minnesota Avenue property.  As such, there is sufficient equity in the property to adequately collateralize the property.

Wille recommended approval of the $16,831 loan as per Willette’s application.  The note would be provided at 0% interest and amortized over a ten (10) year period resulting in monthly payments of $140.26.  The last $5,000 of principle would be forgiven pending an acceptable repayment history as per the loan guidelines.

The loan would be collateralized via subordinate mortgage and personal guarantee executed by Ms. Willette.

Motion by Abels, seconded by Dunn to introduce Resolution No. 2017-03 entitled, “Resolution Recommending Approval Of A $16,831 Central Business District / Accessibility Enhancement Loan To Kaduce Properties, LLC To Partially Finance The Repair And Renovation Of The Mulberry Street Façade Of The 424 South Minnesota Avenue Property”.  With no further discussion, all voted in favor, the Resolution was approved and adopted.

Lodging Study

Wille reported that he and City Administrator Prafke are recommending that the City proceed with Phase II of the lodging study performed by Patek Hospitality.  Wille will ask that the St. Peter Development Corporation join the City in financing the $3,000 cost of Phase II.  The City’s share of the cost would be paid out of the Community Development line item of the general fund.

St. Peter Community Childcare Center (SPCCC)

Wille reported that the City Council considered the EDA recommendation to extend SPCCC’s balloon payment by 24 months and to establish a 3.75% rate of interest effective April 1, 2017.  The City Council did not accept the EDA’s recommendation.

Alternatively, the City Council recommended that SPCCC’s monthly payment be increased to $350 / month and that the note remain interest free.  The SPCCC Board has suggested that they would accept the terms recommended by the City Council.

Noting that SPCCC has received multiple balloon extensions, Abels suggested that the EDA attempt to expedite repayment to successfully retire the note.  He suggested that the EDA’s goal is to get loan recipients off of the EDA rolls to promote participation of a private lender.

Hansen suggested that the balloon review was appropriate and allows the EDA to gauge the ability to turn the loan over to the private financial market.  Some loans may not be commercially viable and the extension process allows the EDA to review the company financials.  Hansen noted that the SPCCC has made substantial progress in repaying their delinquent accounts with other vendors and that their repayment of the EDA loan has been and remains current.

Kvamme stated that the balloon extension review allows the EDA the ability to push recipients to the private lender if the situation allows.  The EDA also has the ability to alter interest rates from time-to-time as deemed appropriate by the EDA.  Kvamme said that given that the SPCCC is non-profit it would be appropriate to maintain the interest free status of the note.

Abels noted that if a recipient requires multiple balloon extensions that should be a “red flag” and cause concerns.  He also noted that the interest rates charged help the EDA cover any losses within the loan accounts.

Southworth stated that he thought the recommendation to establish the 3.75% interest was a matter of fairness.  The EDA has recently funded another daycare provider that is paying the 3.75% interest.  He was of the opinion that as a matter of fairness, the SPCCC note should be charged the same interest as the for-profit operator.

Shell Station

Wille noted that the tax forfeiture auction of the Shell Station will be held on Wednesday, March 29, 2017 at 10:00 a.m. at the Nicollet County Courthouse.  The County has established a minimum price of $96,000.00.  Wille plans to attend the auction on behalf of the City.

Inspire Bridal Boutique

Wille noted that Julie Larson has successfully repaid the revolving loan that she received to partially finance the costs of opening Inspire Bridal Boutique in the historic downtown.  Ms. Larson asked Wille to express her appreciation for the assistance to the membership.

Chippewa Packaging

Wille noted that Chippewa Packaging has fallen behind in repayment of its final EDA loan.  Management has indicated that they are attempting to refinance their private debt.  Once refinanced, the payments should be brought up-to-date.  Wille will monitor the matter and report back to the EDA as appropriate.

Traverse Green

Our partners at the Southwest Minnesota Housing Partnership have sold one of their three spec homes subject to its completion.  SWMHP continues to show and market the EDA spec homes.  There are interested parties attempting to arrange financing to allow for the purchase of a spec home.

Purchase agreements have been signed for the sale of two lots for private development.  Two other purchase agreements are expected to be executed by the end of this week.

Mary’s Flowers

Wille reported that developers are attempting to site a new Dunkin Donuts at the former Mary’s Flowers site.  However, it has been determined that the site is not large enough to accommodate the planned construction.

As such, the developer has acquired an option on the residential property to the north of the closed Mary’s Flowers.  The current owners of that property have petitioned to have their real estate rezoned from Residential / Professional Office to Highway Service Commercial.  If the Council consents to the rezoning, the sale will be finalized and a new site plan submitted for consideration.

Adjourn

With no further business before the EDA, Abels moved to adjourn.  Seconded by Dunn.  All voted in favor and the meeting was adjourned at approximately 12:43 p.m.