EDA Minutes - March 26, 2015

Date: 
March 26, 2015

 

CITY OF SAINT PETER, MINNESOTA
Economic Development Authority
MEETING MINUTES – March 26, 2015
Saint Peter Community Center – Governors Room

 

 Call to Order

A regular meeting of the Saint Peter Economic Development Authority was called to order by Vice President Marilyn Rundell at approximately 12:00 p.m.  Roll call was taken with Rundell, Chuck Zieman, John Kvamme, Cory Abels, and James Dunn, in attendance.  Absent were members Bob Southworth and Jay Hansen.  Also in attendance were Community Development Director Russ Wille, Administrative Secretary Cindy Moulton, Preston Smith representing Mary’s Flowers, Casey West and Brad DeVos representing St. Peter Community Childcare. 

Approval of Agenda

A motion was made by Abels, seconded by Kvamme to approve the agenda with the addition of extra reports.   All voting in favor of the amended agenda, the motion carried.

Unfinished Business – None

New Business

Mary’s Flowers – Balloon Extension

Wille stated that on March 4, 2015 Mary and Preston Smith made a request to extend their revolving loan balloon payment due date.  Mary indicated that they were unable to honor the scheduled balloon payment due on April 1, 2015.  They asked for a sixty month extension.

The balance of the note after the March 1, 2015 payment has been calculated to be $29,884.83.  The Smith’s have provided prompt payment of the note as per the terms of the 2010 promissory note.

Kvamme asked if it was out of character for the EDA to extend a note to 5 years since an extension has typically been 2 years.  Wille said the loan was considered real estate.

Zieman stated there was not a letter in the packet from Nicollet County Bank stating they could not refinance the Smith’s loan.  Wille said he, Preston Smith and Jay Hansen met and discussed the matter.  Zieman requested that a letter from Nicollet County Bank be obtained and placed in Smith’s file.  Wille will obtain the letter from Hansen.

Members requested that the interest rate be included in the Resolution.      

A motion was made by Abels, seconded by Dunn to introduce RESOLUTION No. 15-05 entitled, “A Resolution Recommending Modification Of Loan Terms For A Revolving Loan Previously Provided To Mary & Preston Smith (Mary’s Flowers)” with the addition of the interest rate added to the resolution.  With no further discussion and upon roll call, all voted in favor, the Resolution was passed and adopted.

St. Peter Community Childcare Center – Balloon Payment Extension

The City Council approved an interest free revolving loan in the amount of $35,000 to the St. Peter Community Childcare Center (SPCCC).  Wille said that the note was established at $100 for the first 24 months and the monthly payments thereafter would be $200 per month.

Wille stated that the note was to be repaid via balloon payment on February 1, 2013, was extended by the City Council to be repaid April 1, 2014 and once again extended to be repaid in full on April 1, 2015.  At this time, SPCCC is unable to repay the debt or access additional funding from the primary lender.  The SPCCC board has requested an addition 24 month extension. 

Wille indicated that the note is subject to a Security Agreement pledging all furnishings, fixtures and equipment as collateral.  SPCCC has submitted an updated roster of fixtures, furnishings and equipment subject to the security instrument.  Wille stated that if an extension is granted the City Attorney’s office will be asked to renew the UCC filing with the Minnesota Secretary of State.  

Wille said that although enrollment has increased (currently 54 children and room for 70 & waiting list for infants), the daycare continues to struggle with their financial situation.  SPCCC is delinquent on their lease payments to the City of Saint Peter but remain current on their EDA loan payments.   

West indicated that they have been rebuilding the daycare for two years.  He said there has been a high collection rate from families that were delinquent on their payments.  He also said the new director is watching the finances more closely.

Zieman suggested increasing the rent to $300 per month to expedite their payoff.  West and DeVos said that should not be a problem.

There has been some discussion between SPCCC and the City regarding renting more space at a reduced rate at the Community Center.  Kvamme asked what SPCCC would do with the mobile classroom.  DeVos said they would seek to find a buyer for the structure.     

A motion was made by Zieman, seconded by Dunn to introduce RESOLUTION No. 15-06 entitled, “Resolution Recommending The Extension Of A Balloon Payment For A Revolving Loan Previously Provided To The Saint Peter Community Childcare Center” with the deletion of WHEREAS, SPCCC would continue to make $200 per month payments on the note during the extension; and add #2 under NOW, THEREFORE, The SPCCC will make monthly payments of $300 per month on the note.  With no further discussion and upon roll call, all voted in favor of the amended resolution, the Resolution was passed and adopted.

Tanis Brothers (Subordination Request)

Wille stated that Tanis Brothers, LLC purchased 309 South Minnesota in 2014.  They applied for and received a revolving loan in the amount of $59,012 to partially finance the construction of two apartments on the second floor of the building.

All of the project costs have been incurred.  Due to unanticipated construction costs, the project was completed $14,000 over budget.  Nicollet County Bank has agreed to provide an additional $14,000 loan to Tanis Brothers to cover the cost overrun.

Wille indicated that in order to close the new $14,000 loan with Tanis Brothers, LLC, Nicollet County Bank would required that the City subordinate its mortgage to a new $14,000 mortgage to be filed with the Nicollet County Recorder.

Wille said that if approved the collateralization would be provided in the following order:  1st Mortgage - Nicollet County Bank $130,000, 2nd Mortgage – Nicollet County Bank $14,000 and 3rd Mortgage – City of Saint Peter - $59,012.

Wille stated that the Revolving Loan Guidelines require that the City mortgage be covered by 100% of an appraised value or 125% of the Estimated Market Value established by the Nicollet County Assessor.  Wille stated that a “post-development” appraisal was provided by Appraisal Service which identified a post construction value of $255,000 which would adequately collateral the loan.

Kvamme requested that Wille include the balance of the original note and the interest rate in the background information for the City Council.

Dunn asked if the applicant would still have 10% personal equity in the building.  Wille answered they would if you calculate physical work put into the project.

A motion was made by Zieman, seconded by Dunn to introduce RESOLUTION No. 15-07 entitled, “A Resolution Recommending The Subordination Of The City’s Tanis Brothers, LLC Mortgage To A New $14,000 Loan And Mortgage To Be Provided By Nicollet County Bank”.   With no further discussion and upon roll call, all voted in favor, the Resolution was passed and adopted.

St. Peter Greenhouse Foreclosure

Wille announced that the EDA received notice that Hometown Bank has initiated foreclosure on Gerald and Diane Lunderberg’s property, known as the St. Peter Greenhouse located at 801 North Minnesota Avenue.  A Sheriff’s auction of the property is tentatively scheduled for May 18, 2015 at 1:00 p.m.

Wille indicated that the balance of the note owed to the City is $3,685.38.  He also added that the loan is at 0% interest.

Reports

Wille reported that the City Council authorized the EDA President Bob Southworth and City Administrator Todd Prafke to sign a Purchase Agreement for 430 Ritt Street.  Marv Kottke, owner of Spring Touch, has paid his earnest money down on the property.  Kottke plans to have the roof inspected and if it needs repair will obtain quotes.

Wille said the there is interest in Parking Lot #5.  Brunton Architects has developed plans that consist of four levels.  The bottom level would be considered commercial space and the top three floors residential. 

EI Microcircuits has purchased Lot 4 in the North Industrial Park.  They paid $1.05 per square foot for the lot.

Wille stated that as per State requirements, Saint Peter has to add additional storm water basins in the C-4 District located on the northern end of town.  Wille said it would likely be constructed on the 169 frontage.

Wille announced that the City will proceed with condemnation of the Car Quest property for the construction of the round-about.  Wille said the City is in no hurry as there is no timeline for the project.

Wille notified the EDA that there is not a consensus on the City Council level regarding food trucks. 

Wille said that the Heritage Preservation Commission (HPC) wants the City Council to adopt the International Property Maintenance Code.  The reason for adoption of the code is to hold commercial property owners responsible for keeping their building in good condition in order to prevent demolition of historic assets.  Wille used the Mayo building (214 South Minnesota Avenue) as an example.  An inventory would be taken of all of the buildings within the HPC District.

The Planning and Zoning Commission recommended the Board Appeals & Adjustment approve the unconditional conditional permit for Sam & Abe’s daycare which will be located at 622 Sunrise Drive.  Wille said that a public will be held tonight.

Wille said that a Goal Session will be held on Monday.  He said that staff presents reports to the City Council.  He indicated that the City will discuss the possibility of developing another subdivision similar to Nicollet Meadows and Washington Terrace.  These homes would be entry level homes.  He said that the City would have an analysis done as for the need of this type of subdivision.  He added that the school district encourages the development.

Adjournment

With no further business to conduct a motion was made by Abels, seconded by Dunn to adjourn.  The motion was approved and the meeting was adjourned at approximately 1:03 p.m.