EDA REGULAR MEETING MINUTES – October 23, 2014

Date: 
October 23, 2014

CITY OF SAINT PETER, MINNESOTA
Economic Development Authority
REGULAR MEETING MINUTES – October 23, 2014
Saint Peter Community Center – Governors Room


Call to Order

The meeting of the Saint Peter Economic Development Authority was called to order by President Bob Southworth at approximately 12:00 p.m.  Roll call was taken with Southworth, James Dunn, Cory Abels, Chuck Zieman , Marilyn Rundell, and John Kvamme present.  Absent was member Jay Hansen.  City staff present was Community Development Director Russ Wille and Administrative Secretary Cindy Moulton.  Guest present was Julie Larson.

Approval of Agenda

A motion was made by Abels, seconded by Dunn to approve the agenda.   All voting in favor of the agenda, the motion carried.

Approval of Minutes

A motion was made by Rundell, seconded by Abels, to approve the Minutes of the August 28, 2014 meeting.  All voting aye, the motion carried.

Inspire Boutique – Loan Alteration

Wille stated that the City EDA provided a revolving loan to Julie Larson to partially finance the $78,663 start-up cost to open the Bridal Boutique.  Larson has been consistent paying her loan on the due date.  Following the receipt of the October 1st payment, the balance of the note is $30,254.13.

The EDA note was amortized on a 10 year schedule with a balloon payment due in five years.  The note is secured by a personal guarantee and a first security position on the fixtures, furniture, equipment, accounts receivable and inventory of the boutique.  

Hometown Bank provided additional start-up financing.  The bank’s $47,000 loan established interest only payments and is secured by a second mortgage on Larson’s former residence in New Ulm.

Larson was renting 204 South Minnesota from John Elbert and is now in the process of purchasing the building on a contract-for-deed from him.  Larson is experiencing a change in her marital status.  Attempts are being undertaken to allow a settlement of joint assets while allowing Inspire Bridal to remain profitable and operational.

Wille consulted with Larson and Hometown Bank and it was in their best interest to amend the terms of the loan.  Wille said that upon refinancing of the private residence, Larson would pay off all but $17,000 of the Hometown Bank note secured by the mortgage.  Under this scenario, the Bank would no longer have the option to secure the note via mortgage.  Hometown Bank would request that the City subordinate its first security position to a new $17,000 note provided by the bank.

Larson has also requested that the $30,254.13 balance of her EDA note be amortized on a new 10 year schedule.  This action would also establish a 5 year balloon and the note would then be due and payable in full on November 1, 2019.

Wille indicated that the financial records of Inspire Bridal Boutique has been operating profitably.  Sales are in line with the three year projections.  Wille said the review of the roster of fixtures, furnishing, equipment and inventory suggests the EDA note would remain adequately collateralized if the first position is relinquished to Hometown Bank.

Abels suggested that once the house is refinanced, the money should go toward the revolving loan fund and the Hometown Bank should have the higher amount invested because the EDA has the second mortgage.  Wille stated the bank is only willing to finance up to $17,500.

Wille recommended the terms of the loan be amended as requested by Julie Larson and Hometown Bank.  He also recommended to waive the origination fee.

A motion was made by Zieman, seconded by Abels to introduce Resolution No. 12, entitled, “Resolution Recommending An Amendment To The Terms Of A Revolving Loan Previously Provided To Julie Larson (dba Inspire Bridal Boutique”.  Members Zieman, Dunn, Abels, Rundell and Kvamme voting aye, member Southworth abstaining.  The Resolution was passed and adopted.

REPORTS

DEED  Loan Operation – Wille reported that DEED will be auditing cities that have been loaned money by DEED to make sure the funds are distributed correctly.

Mom & Pops -  Mom & Pops has been demolished and the property fenced in.

Parking Lot 5 – There has not been a purchase agreement signed.  The potential developer(s) is/are interested in having commercial on the first floor of the building and the top three floors as apartments.

430 Ritt Street – Wille announced that there has been an interest in two local companies merging.

Jaari -  Wille reported that Jaari continues to have some of their possessions on the east side of the building.  Wille indicated that a notice will be mailed to them.

Exceed/Chippewa – Wille stated that Exceed/Chippewa is interested in leasing additional space.  He also said that there is a brewing company that that has outgrown their facility and may be interested in leasing in St. Peter.

Housing Study -  The City has commissioned a new Housing Study. 

Shopko Area – There is a possibility that strip mall may be locating by the Shopko area. 

Roundabout Properties  -  Wille stated that the City has purchased the property they need from Holiday, McDonalds and Northern Conn-Ag but they have yet to make an agreement with Carquest.  Condemnation may be an option.

McDonalds -  McDonalds may be rebuilding in the future as they decided not to during the highway project.

Road Construction Project -  Wille announced there may be challenges to finish the project on time.

Adjournment
A motion was made by Abels,  seconded by Dunn to adjourn.  All in favor of the motion, the meeting adjourned at 12:26 pm.