EDA MINUTES - OCTOBER 26, 2017

Date: 
October 26, 2017

 

CITY OF SAINT PETER, MINNESOTA
Economic Development Authority
REGULAR MEETING MINUTES
October 26, 2017
Saint Peter Community Center – Saint Peter Room

 

Call to Order

The meeting was called to order at 12:00 p.m. by President Bob Southworth. 

EDA members Southworth, John Kvamme, Jerry Pfeifer, Cory Abels, and Marilyn Rundell were in attendance.  Members James Dunn and Jay Hansen were unable to attend as scheduled.  Community Development Director Russ Wille and Administrative Secretary Cindy Moulton were in attendance.  Visitors present were Arlo Lehtinen, AmeriInn, Mike Favre, Ed Lee, Chamber of Commerce, and Chad DeBlieck, St. Peter Ambassadors.

Approval of Agenda

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

Approval of Minutes

Motion by Kvamme, seconded by Rundell to approve the minutes of the September 6, 2017 meeting as prepared and presented.  All voting in favor the motion was carried and the minutes were approved.

Revolving Loan Segregation

The Minnesota Department of Employment and Economic Development (DEED) has been working with Minnesota communities and economic development authorities to ensure that the loan dollars are being utilized according to the applicable state and federal rules.

Wille reported that the current revolving loan fund guidelines meet the State guidelines.  He indicated that the reuse of Federal funds is regulated by rules adopted by the Department of Housing and Urban Development (HUD). 

He said that the initial information provided by DEED did not identify any Federal dollars within the Saint Peter revolving loan funds.  Wille said that the City received CDBG funds in the 1990’s for a mall project which never developed.  Wille indicated that he is waiting for confirmation from DEED that the CDBG funds have been released from the Federal requirements and that the money can be borrowed under the current revolving loan guidelines adopted by the City Council.

Revolving loan funds determined to be from a “local” source can be used to accomplish any of the EDA activities authorized by State Statute.  These local funds would have the greatest flexibility for reuse and relending.

DEED has identified that $235,000 of our revolving loan funds were provided by the (MIF) Minnesota Investment Fund program and are considered to be State funds.  These funds must be administered and borrowed in conformance with the guidelines recently adopted by the Council.

Wille stated that if the City of Saint Peter would return 20% of its MIF funds, (plus interest) to DEED, the remaining 80% of the funds could be used for any “lawful purpose”.  Wille added that if that is the case, and it is determined that the Federal regulations are not applicable, the entire revolving loan fund(s) of the City of Saint Peter would be unencumbered by the DEED or HUD regulations.  If the City wished to return the 20%, a decision would need to be made by June 30, 2018.

Wille added that the City received CDBG funds in 1989 to finance the renovation of 20 homes and 29 commercial properties.  These loan were forgivable and there was no program income from this project to refund.

In the early 1990’s the City also received CDBG funds to construct a downtown mall.  The project was discontinued by the developer and the funds were returned to DEED.  Parking Lot #5 is the only remnant of the project.

After the City’s internal review and numerous discussions with DEED staff, it appears that there is no CDBG program income within the Revolving Loan Fund which would necessitate relending subject to the federal rules. 

City Administrator Todd Prafke, Finance Director Paula O’Connell and Wille will consider the matter and recommend a course of action to the EDA.

 Lodging Market Study

Patek Hospitality Consultants has completed Phase II of the Lodging Market Study.  The study recommended that Saint Peter was in need of a development of up to sixty (60) additional hotel rooms.  It also suggested that the hotel provide for limited services such as; a complimentary breakfast, meeting rooms, pool, exercise equipment, high-speed internet and guest laundry.

The study included a financial analysis of a new sixty (60) unit hotel.  The anticipated financial performance suggests that the property would have a stabilization period of three (3) years.

Wille said that the Lodging Market Study will be posted on the city’s website and referenced on the established website.  A postcard mailing announcing the availability of the Phase II study will be mailed to area banks, hoteliers and commercial realtors. Wille said he also intends to reach out to the four hotel brands which had expressed preliminary interest to the findings of the first phase of the study.

Abels said that nowhere in the study were AirB&B’s mentioned.  He was concerned that Patek was not looking into the future.  He also felt Patek was making assumptions. Wille indicated he had discussed Airb&b with Patek.  Patek suggested that Airb&b’s have very limited exposure in Saint Peter and would have a negligible impact and would have a negligible impact on the existing lodging market.

Abels asked if the project should be marketed with so many holes in the study.  He felt that Patek should have asked for vacancy rates from existing hotels/motels.

Wille indicated that he was directed to reach out to potential developers.

Southworth suggested that the EDA caution the City Council that it could hurt the current industry.  He highly discouraged marketing to hotels.

Pfeifer felt that the study should be available to potential developers.  He said that those with money will look into the project.  He added that the project didn’t necessarily need to be marketed. 

Abels said we want more businesses but also want our existing businesses to strive.

Rundell agreed with the statements and suggested that the study be available in non-marketing ways.

Mike Favre said he appreciates the comments.

Arlo Lehtinen commented that the study had holes as well as good points.  He indicated that he only averages a 62% occupancy rate the last 5 years.  He stated that there were only 121 days that the hotel was over 75% occupied.  He felt that both of the properties would suffer if a new hotel was brought in.

Wille thanked Lehtinen for providing information to the EDA.  He also noted that Lehtinen is highly respected in the hotel business.

Ed Lee also said he appreciates the comments.

Reports

Traverse Green – The City has yet to sell any of their spec homes in Traverse Green Subdivision. The homes continue to be marketed.  SWMHP has sold 2 of 3 spec homes and is currently constructing 3 additional homes.  Wille indicated that there has been discussion whether to have realtors involved in selling the properties.

Adjournment

With no further business, a motion was made by Pfeifer, seconded by Abels to adjourn.  All voted in favor and the meeting was adjourned at approximately 12:41 p.m.