EDA MINUTES - NOVEMBER 23, 2016

Date: 
November 23, 2016

 

CITY OF SAINT PETER, MINNESOTA
Economic Development Authority
REGULAR MEETING MINUTES – November 23, 2016
Saint Peter Community Center – Governors Room 

 

Call to Order:

The regular meeting of the Saint Peter Economic Development Authority (EDA) was called to order at 12:00 pm by President Bob Southworth.  EDA members Southworth, Jerry Pfeifer, Jay Hansen, James Dunn, and John Kvamme were in attendance.  Members Cory Abels and Marilyn Rundell were absent. City Administrator Todd Prafke and Administrative Secretary Cindy Moulton were also in attendance.  Visitor present was Mike Steele of Chippewa Packaging.

Agenda:

A motion was made by Hansen, seconded Dunn to approve the agenda as presented.  All members voting aye, the agenda was approved as presented.

Minutes:

A motion was made by Pfeifer, seconded by Kvamme to approve the Minutes of the October 27, 2016 meeting.  All members voting aye the Minutes were approved. 

Chippewa Packaging – Revolving Loan Extension Request

Chippewa Packaging has submitted a request to extend the balloon payments for their two Revolving Loans for 24 additional months.  The request stated that the business has demonstrated a net profit over the last four years but they remain unable to honor the scheduled balloon payment without experiencing significant cash flow difficulties.  Chippewa attempted to refinance with their primary lender but was denied due to high obligations incurred from the investors resulting in a higher leverage ratio. 

The City and EDA has accommodated prior requests from Chippewa.  It appears as though the extensions have been beneficial to the business as they continue to grow and provide more full time jobs. 

Prafke indicated that the personal financials have been reviewed.

Pfeifer felt that Revolving Loans were not made to consistently extend them.

Kvamme said that Chippewa showed considerable improvement and didn’t feel it would be a problem to extend the loans.

Dunn suggested a 12 month extension in order to monitor the loans more closely.  He felt 2 years was too much time to wait.

Steele addressed the EDA and said that although Chippewa’s sales were down 16%, additional full time employees had been hired and there is no longer a need for temps.  He indicated that the company is in need of 6 additional full time employees.  He added that one of the largest obstacles for Chippewa is finding employees.

Steele said that the average starting wage for the company was $13.50 but that he would like to increase the wage to $15 per hour as the company grows.  Steele reported that employees receive 2 reviews per year at which time they are eligible to receive an increase in wage if the requirements of the job are met. He felt that if the wages were increased, the company would receive more applicants.       

Steele also mentioned that the business is need of additional warehouse space.  Chippewa is currently renting warehouse space in Mankato because of lack of storage space in St. Peter.  They would prefer all of the product be moved to St. Peter to save on costs.  Steele stated that if someone were to build a warehouse in St. Peter, the company would be interested in leasing the space. 

Hansen asked Steele if there was a draw back from extending the loan from 24 months to 12 months.  Steele said it wouldn’t make a difference.

A motion was made by Pfeifer, seconded by Dunn to introduce Resolution No. 2106-13 entitled, “Resolution Recommending That The City Council Modify The Terms Of The Two Revolving Loans Previously Provided To Chippewa Packaging, Inc.” with the loan extension to be changed to 12 months. Members Pfeifer, Southworth, Dunn and Kvamme voting aye, Member Hansen abstaining, the Resolution was passed and adopted. 

Reports

Athletic Facilities Feasibility Study

Southworth reported that Lee Alger has been doing the ground work for an Athletic Facility Feasibility Study to be completed.  Alger spoke to ISG and a quote of $7,500 was given to complete the study.  Alger inquired if the City would contribute to the cost of the study.

Pfeifer recommended that Alger contact athletic associations that would be interested in a facility, and also contact non-profit groups such as the Lions, Rotary, Ambassadors, etc.  Pfeifer suggested that Alger explain what the project entails when soliciting donations. Pfeifer also mentioned that grant funds may be available.

Dunn felt that a contribution for the study was outside the Revolving Loan Fund Guidelines.

Kvamme mentioned that the Revolving Loan Funds are to support economic development within the city.

Dunn recommended approaching the City Council and submitting a request.  Prafke said that the project had been talked about with Alger but that the quote from ISG was not discussed.  Prafke indicated that he and Director of Public Works spoke to Alger regarding the process.

Adjournment

A motion was made by Dunn, seconded by Hansen to adjourn.  The meeting adjourned at 12:33 p.m.