EDA MINUTES - February 25, 2016

Date: 
February 25, 2016

 

CITY OF SAINT PETER, MINNESOTA
ECONOMIC DEVELOPMENT AUTHORITY
REGULAR MEETING MINUTES – February 25, 2016
Saint Peter Community Center – Saint Peter Room

Call to Order:

The regular meeting of the Saint Peter Economic Development Authority (EDA) was called to order at 12:12 pm by Vice President Marilyn Rundell.  EDA members Rundell, Cory Abels, Jerry Pfeifer, and John Kvamme were in attendance with James Dunn arriving at 12:35 pm and members Bob Southworth and Jay Hansen absent. Community Development Director Wille and Administrative Secretary Cindy Moulton were also in attendance. 

Agenda:

Motion by Kvamme, second by Abels to approve the meeting agenda as presented.  All voted in favor of the motion, the motion carried.

Minutes:

Motion by Kvamme, second by Abels to approve the minutes of the regular January 28, 2016 meeting of the EDA as prepared and presented.  All voted in favor, the motion carried.

Historic Preservation/Accessibility Enhancement RLF Guidelines

Wille reviewed amendments made to the guidelines of the Historic Preservation/Accessibility Enhancement Loan Program as suggested by the EDA.

At the October, 2015 meeting, the EDA recommended the maximum loan amount under the Historic Enhancement/Accessibility Enhancement Loan Program be raised to $25,000 or 90% of the identified project costs.  It was also suggested that Wille prepare a procedure to consider partial loan forgiveness to encourage utilization of the loan program.

A second draft was completed with the recommendations from the EDA and reviewed at the January, 2016 meeting.  Wille reviewed his proposal for loan recipients demonstrating a “perfect” repayment history.   His proposal included partial loan forgiveness of up to 50% of the note for loans under $10,000 and for loans in excess of $10,000, the note would be forgiven once the unpaid balance of the note be reduced to $5,000. At that time, members agreed that in order to qualify for partial loan forgiveness, the loans would never be determined to be in default based upon the terms of the applicable promissory note. Wille indicated that terms of default contained in promissory notes may vary.  He said the City Council would need to take action to determine if the loan was in default.

Pfeifer didn’t feel the EDA should forgive 50% of the borrower’s loan up to $10,000 or $5,000 with loans up to $25,000.  He felt it would create hard feelings with previous loan recipients.  He added that loans up to $25,000 with 0% interest should be sufficient.

Wille said that the loan forgiveness would only apply to those buildings in the Heritage Preservation District (HPC).

Members recommended the following changes to the guidelines:  2) “ELIGIBILITY” 2.2 these loans may be used for any interior or exterior renovations of the building/structure…4) “LOAN SECURITY” - Additionally, loans provided to purchase, construct, renovate or improve real estate shall be insured for its full replacement cost and the EDA shall be designated as a loss payee of the insurance policy. 11)  “RELEASE OF FUNDS” 11.1 delete “shall”.

Kvamme explained Saint Peter’s downtown is on the National Register of Historic Places.  He felt the citizens should help with the burden of restoring these historic assets.  He didn’t feel $5,000 was a lot of money and it would help ease the burden on building owners.

Abels said he was very much in favor of the project. 

Pfeifer indicated that he had a problem with the financing.

EDA Revolving Loan Program Guidelines

Pfeifer said as a rule of thumb, the revolving loans should only cover 25% of the total loan.  He felt that if the EDA is loaning more money than the banks, they are in direct competition with them.  He also felt the EDA should not be subordinating to the banks. He said that if a business is liquidated by the bank, the City should receive 25%.

Abels said the banks would not work with someone like that and are bound by both federal banking regulations and his bank’s lending policies. 

Pfeifer stated the borrower should not do business with those banks.

Abels excused himself at 12:34 pm.

Dunn arrived at 12:35 pm.

Wille reviewed the final draft of the Revolving Loan Program Guidelines.  The following changes were made:  3) “PROJECT ELIGIBILITY” 3.1 (c) construct upper story, 4) “LOAN AMOUNT” 4.2 For those loans secured by a mortgage, the aggregate amount of… & 4.5 Borrowers may seek multiple balloon payment extensions.  However, each extension must be considered as per the conditions of this policy and upon provision of the required financial disclosures from the borrower.  7) “TIMING OF PROJECT EXPENSES” 7.1 In the absence of lien waivers provided by each contractor, subcontractor and or vendor, building construction may not commence until all the required project financing is secured, loan documents are executed and the loan is collateralized as per the City Councils resolution of loan approval and 111). “RELEASE” 11.2 e.  Any release of a borrower from the obligation of the loan shall be considered by the EDA which will make a non-binding recommendation to the City Council for their consideration and official action.

Reports:

River Rock Bakery & Kitchen, LLC- The loan closing was last week.

Hey Diddle Diddle Daycare, LLC- The daycare is projected to open in April.  The loan closing will take place in March.

Community Core Partners, LLC- The windows have not been installed to date.  The loan closing will take place after the project is completed.

Building Better Neighborhoods- Discussions continue on the proposed new subdivision.  Lot prices will be established.  Wille indicated that the EDA will be asked to finance the spec homes and once the homes sell, the money would roll over to construct additional spec homes.  The EDA will not be making a profit on this endeavor.

Chippewa/Exceed Packaging – Wille reported that MS & GS Revolving Loan will balloon this fall.  He stated that Mark Steele has contacted him for the payoff amount.  Wille also indicated that Exceed and Chippewa are delinquent on their Revolving Loan Fund payments.  Wille has encouraged Exceed to pay off their loan which has a balance of approximately $1,800.

Broadway Streetscape – Wille announced that the Broadway Avenue streetscape will not coincide with the 99 bridge repair.  Wille said ATP funding may be available for the streetscape in 2020.   Proposed parking changes that would take place in front of Jake’s Pizza and The Pulse is a major concern. 

JOBZ Reports – Final Submissions- Wille reported that JOBZ programs expires on December 31, 2015.  Wille said reports need to be filed for EI Microcircuits and Chippewa/Exceed.

Chad Guentzel – Anytime Fitness – Chad Guentzel made his balloon payment for his revolving loan early.

Pfeifer indicated that he would be out of town from March 12 – 28, 2016.

Adjourn:

With no further business before the EDA, a motion was made by Pfeifer, seconded by Dunn to adjourn.  The meeting adjourned at 12:49 pm