EDA MEETING MINUTES AUGUST 27, 2015

Date: 
August 27, 2015

CITY OF SAINT PETER, MINNESOTA
Economic Development Authority
REGULAR MEETING MINUTES – August 27, 2015
Saint Peter Community Center – Governors Room

Call to Order:

The regular August, 2015 meeting of the Saint Peter Economic Development Authority (EDA) was called to order at 12:03 p.m. by President Bob Southworth.

EDA members Southworth, Cory Abels, Jay Hansen, James Dunn, Marilyn Rundell, and Chuck Zieman, in attendance, member John Kvamme was absent. Community Development Director Russ Wille and Administrative Secretary Cindy Moulton was also in attendance.

Agenda:

Motion by Abels, seconded by Dunn to approve the meeting agenda as prepared.  All voted in favor of the motion.  Motion carried.

Minutes:

Motion by Hansen, seconded by Zieman to approve the minutes of the July 23, 2015 meeting of the EDA as prepared and presented.  All voted in favor, the motion carried.

Community Core Partners, LLC – Façade Renovation Loan Request

Community Core Partners, LLC (CCP) is in the process of purchasing 216/218 South Minnesota Avenue.  They have submitted a Façade Renovation Revolving Loan request in the amount of $25,000.  The monies would be used to replace the windows on the 2nd and 3rd floor.

Wille reported that the Heritage Preservation Commission (HPC) approved the replacement windows at their August 25, 2015 meeting.  Wille explained that since the façade renovation plans were approved by the HPC, it is up to the EDA to review the application and determine whether or not to approve or deny the loan request.

Wille stated that there are fourteen windows to be replaced on the upper floors of the property.  The quote provided by the vendor is $1,858.00 per window. The entire window replacement, including labor, totals $26,012.00.

The Façade Renovation program provides loans at a 0% interest rate and are amortized over five years.  The loan would be secured by a repayment agreement (promissory note), mortgage and personal guarantee.

Wille said the original Façade Renovation programs was established in 1999.  At that time loans were limited to $10,000 per property.  Wille indicated that since that time, the City Council has suggested that the maximum loan amount be increased to provide a greater incentive for property owners to make vital investments in their properties.  An amendment to the loan policies is pending. 

Wille recommended the loan be approved with a repayment amount of $416.17 per month over five years at 0% interest.  He also stated there is no origination fee associated with the Façade Renovation Loans.

Discussion followed.

Hansen asked whether the loan would have personal guarantees.  Wille said the owners with 25% or more will be required to provide a personal guarantee.

Dave Schooff said the partners of Community Core Partners, LLC has very strong financials.  He stated that the LLC wanted to use the Façade Renovation Program that is offered to businesses in the Heritage Preservation District.

Abels said he appreciated the investment in the Saint Peter Community.  He asked if the City would have the second mortgage.  Abels stated he did not want to penalized Schooff, however the EDA would need to mitigate why they were going above the policy. 

Wille answered that City would have the second mortgage.

Zieman stated he did not want to stray from the guidelines midstream.

Dunn explained that he was not comfortable approving the Façade Renovation request prior to the policy change at the City Council level.

Hansen suggested that the Façade Renovation Guidelines be reviewed at the next City Council workshop.

A motion was made by Abel, seconded by Hansen to introduce Resolution No. 15-10 entitled, “A Resolution Recommending Approval Of $25,000 Façade Renovation Revolving Loan To Community Core Partners, LLC To Finance The Replacement of 2nd and 3rd Floor Windows At 216/218 South Minnesota Avenue”.  Members Zieman, Abels, Hansen, Southworth, and Rundell voting aye, Member Dunn voting nay.  The Resolution was passed and adopted.

Revolving Loan Fund Guidelines

Discussion was held regarding the regular revolving loan fund guidelines. 

Members would like Section 3.5 reviewed as well as 4.3.  Some Members felt that the City Council should put the guidelines in place and the EDA enforce them.

Wille reported that some members of the Ciity Council suggested setting the minimum wage/benefit level at a rate above the 110% of the federal poverty level.  The concern was raised that at 110%, workers could not afford rent levels charged at the subsidized housing developments.

Ultimately, the EDA made no recommendation regarding the appropriate wage/benefit level.  Rather, the EDA members present suggested that the wage/benefit level would be a policy decision of the City Council.

Wille suggested combining the Facade Renovation Loans into the regular revolvling loans.  As such, Facade Renovation Revolving Loan applicants would be required to submit business financial reports for review.  They would also be required to submit a personal financial statement. 

Hansen stated that the original Façade Renovation loans do not require financials.  He questions how the value of the personal guarantee would be determined in the absence of personal financial statements.  Hansen is uncomfortable in making a recommendation to fund a renovation loan when he has no method of determining if the personal guarantee is of sufficient value.

Hunter Hardwood – Review Repayment Agreement

Wille stated the City loaned Greg & Neysa Schettler d.b.a. Hunter Hardwood a total of $69,748 to partially finance the construction of 220 Dodd Avenue and to assist in the expansion and remodeling of the same building.

Wille indicated that when the housing market collapsed, the business closed and First National Bank auctioned the assets of Hunter Hardwood.  At the request of First National Bank, the City accepted a onetime payment of $3,000 to relinquish its subordinate mortgage.

Greg and Neysa Schettler negotiated a repayment agreement with the City of Saint Peter in an attempt of avoiding personal bankruptcy.  The agreement combined the balances of the two delinquent notes into a single note.  The interest rate charged to the loan was reset at 0% and monthly payments set at $50.

In the agreement, the Schettlers also agreed to extend the time in which the City could file a Summons & Complaint to compel repayment.  Wille said the timeline was extended to October 1, 2015.

Wille stated that the Schettlers have abided by all of the terms of repayment.

Wille said he would contact Schettlers and inquire if the payment can be significantly increased with the current interest rate remaining at 0%.

Reports:

Stormwater Ponds – The City is dealing with one seller.

Parking Lot #5 – The City Council requested that Wille assemble a RFP and interview interested developers. 

KFC - The KFC located on the north end of town has closed.  Wille felt that it was attributed to the access off of Hwy 169.

Exceed & Chippewa – Wille reported that Exceed and Chippewa are trying to refinance.  He indicated that this was confirmed by the lenders.

Adjourn:

With no further business before the EDA, a motion was made by Abels, seconded by Dunn to adjourn.  The meeting adjourned at 12:39 p.m.