May 29, 2014 EDA Minutes

Date: 
May 29, 2014

 

CITY OF SAINT PETER, MINNESOTA

Economic Development Authority

REGULAR MEETING MINUTES – May 29

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 12:00p.m.  Roll call was taken with Southworth, Chuck Zieman, Cory Abel, James Dunn in attendance. Member Jay Hansen, Marilyn Rundell, and John Kvamme were absent.  City staff present was Community Development Director Russ Wille and Administrative Secretary Cindy Moulton.  Guests present were Larry and Megan Kaduce and Chamber of Commerce Director Ed Lee.

 Approval of Agenda

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

 Approval of Minutes

 A motion was made by Zieman seconded by Dunn to approve the minutes of the April 24, 2014 EDA meeting.  With all voting aye, the motion carried.

 St. Peter Laundry Company – RL Request

 Larry and Megan Kaduce have submitted a revolving loan application in an amount not to exceed $97,284 to partially finance the rehabilitation and renovation of the structure located at 209 W. Mulberry.

 Kaduce’s intend to develop a self serve laundry in the rear of the building, move RE/MAX to the new location and maintain the existing commercial tenants and offer additional office space for rent. 

 Wille stated the building was purchased for $290,000.  The following financing has been provided;  MinnStar Bank (Mankato) $232,000 - first mortgage recorded, Larry & Megan contributed $58,000 in cash towards the purchase, MinnStar has also provided a line-of-credit in the amount of $30,000 secured by a second mortgage against the development property.

 An Appraisal of the property conducted by Robinson Appraisal & Associates in April, 2014 indicated a valuation of $365,000 before improvements.

 The cost to remodel and equip the structure to accommodate the new laundry has been determined to be $488,683.92.  Merchants Bank (Lakeville) has agreed to provide $366,853 towards the remodel of the building and the purchase of the appliances.  The Kaduces would contribute $24,546 of the identified costs.

 The total project cost including the real estate acquisition, remodeling and appliance purchase is calculated at $778,893.92.

 The applicants have requested a revolving loan not to exceed $97,284.  Wille recommended approval of the revolving loan.  The proposed financing scenario suggests that the EDA funds will partially finance the HVAC, electrical and plumbing improvements for the laundry.  These costs based on bids totaled $79,475.16.

 Wille indicated to ensure sufficient financing the applicants would seek a contingency fund equal to 10% of the anticipated remodeling costs ($17,808.84).  These funds would ensure the completion of the work if unidentified projects costs are incurred.  It is proposed that the EDA finance the contingency fund to be drawn down as required.  If there are no cost overruns, the contingency would not be accessed and the project would be closed in a lesser amount.

 Wille suggested that the loan be secured by a third mortgage on the property in an amount not to exceed the $97,284.  The first mortgage in an amount of $232,000 is held by MinnStar Bank (Mankato).  MinnStar also has recorded a second mortgage in the amount of $30,000.  Given an appraised value of $365,000, the funds would be fully secured by the value of the property. 

 Merchants Bank (Lakeville) would provide $366,853 in project funds which would be secured by a first security position on the fixtures, furnishings and equipment of St. Peter Laundry Company.  The EDA would file a UCC to establish a second security position on the FF&E.  The note would be secured by a promissory note and personal guarantee executed by Larry & Megan Kaduce.

 Wille said the loan would be administered in a manner which would required that the funds are drawn down proportionally to ensure that the owner is contributing a minimum of 10% of the incurred project costs.

 Members were concerned with collateral and the amortization of the loan.  It was recommended that the loan not exceed $79,475.16, the loan be amortized over fifteen years with a balloon payment at the end of 10 years, and that a third mortgage shall be secured against 209 Mulberry.

 A motion was made by Abels, seconded by Zieman, to introduce Resolution No. 2014-07 entitled, “A Resolution Recommending The Approval Of A Revolving Loan In An Amount Not To Exceed $79,475.16 To Larry & Megan Kaduce To Partially Finance The Renovation And Rehabilitation Of A Commercial Structure Located At 209 West Mulberry Street” with the following amendments;  1)  A loan, not to exceed $79,475.16  2) shall be amortized on Fifteen (15) year schedule  4) a third mortgage

 REPORTS

 Job Fair  Chamber Director Ed Lee reported that the Job Fair held on May 7th at Johnson Hall was a success.  He stated that 31 businesses participated and there were approximately 150 job seekers.  He stated that the EDA and Development Corp were going to split the cost of the event which totaled approximately $2,719.  Lee did not hear any negative comments other than it would be nice if Johnson Hall had wi-fi.  Lee has received fourteen surveys back from the businesses that participated.  It was recommended that a job fair be held annually.  Zieman would like to know how many people actually received jobs by attending the Job Fair.

 Housing Study  The 2012 Housing Study is being updated.  The City should receive it around September.  It should determine whether the city is in need of another Nicollet Meadows/Washington Terrace Development.

 Aerospace Manufacturing (RF1)  An Aerospace Manufacturing company has made a preliminary inquiry about available property in  St. Peter.  Wille explained that this is the first step before proposals are submitted.

 Adjournment

A motion was made by Zieman,, seconded by Abels to adjourn.  All in favor of the motion, the meeting adjourned at 12:52 p.m.