2011 Economic Development Authority Minutes

CITY OF SAINT PETER, MINNESOTA
ECONOMIC DEVELOPMENT AUTHORITY
REGUALR MEETING MINUTES – DECEMBER 22, 2011
Saint Peter Community Center – Governors Room


Call to Order

The meeting of the Saint Peter Economic Development Authority was called to order by President Mike Favre at approximately 12:00 p.m.  Roll call was taken with Favre, John Kvamme, Bob Southworth, Marilyn Rundell, James Dunn and Ken Eichman in attendance, Jay Hansen arrived at 12:07 p.m.  City staff present were Community Development Director Russ Wille, Administrative Secretary Cindy Moulton, and City Administrator Todd Prafke. 

Approval of Agenda

A motion was made by Eichmann, seconded by Dunn to approve the agenda as presented by staff.  All voting in favor, the motion carried.

Approval of Minutes

A motion was made by Kvamme, seconded by Rundell to approve the minutes of the October 27, 2011 EDA meeting.  With all voting aye, the motion carried.

Brian Grey (dba Volk Electric) – Extension of Balloon

Wille stated that the City provided two revolving loans to Brian Grey (dba Volk Electric) in 1999.  He indicated that balloon payments were due on November 1, 2009 at which time Grey requested a 24 month extension.  Wille said the extension was granted and that the balloon payments were due November, 2011 at which time Grey indicated he was unable to honor the balloon payments as due.

Wille stated that in April, 2011, First National Bank filed suit in district court seeking a judgment against Grey.  He said the bank also sought receivership of the secured assets.  On September 30, 2011 the appointment of the receiver resulted in the closure of the electrical contracting business.

Wille said Grey intended to honor his debts to the City and has asked for a 24 month extension of the balloon payments that were due on November 1, 2011.  Wille stated that at the time the packet was assembled he assumed that Grey had reorganized and relocated the operations of his electric contracting business.  Since that time, Wille was informed that Grey does not own Volk Plumbing & Heating but is an employee of the business. 

Wille suggested that the EDA table Grey’s request to determine Greys affiliation with Volk Electric and how Volk intended to pay the loans back.  City Attorney Brandt was under the opinion that if the EDA extended the loan, that Grey’s wife, Peggy Grey should also sign the note.  Wille stated that Grey had been current on all of his loan obligations to the City prior to First National Banks action.  His payment history with the City was exceptional and Wille indicated no late or missing payments over the proceeding 10 years.

Wille added that the City was currently withholding payment to Volk Electric (for work provided at Jefferson Fields) and applying it towards his outstanding revolving loan balance.   

Members discussed other options.  Wille indicated that Grey was doing everything he could to avoid personal bankruptcy.  Members felt there was no advantage for the City to force Grey into bankruptcy.

Hansen suggested that once loans mature that the EDA require updated financial statements if it is not already a policy.  

A motion was made by Eichmann, seconded by Kvamme to table the request.  Members Eichmann, Kvamme, Dunn, Rundell and Southworth voting aye, Members Hansen and Favre abstaining.  The motion carried.

Reports

City Administrator Prafke updated the EDA on Midwest Theater Corporation foreclosure. 

Fostering Professional Development - Cynthia Zarbano has acquired 603 North Minnesota property on a Contract for Deed.  Wille stated she would be making a request to the EDA for permanent financing.

Wille reported that Beaudry Creative (Envision) has a balloon payment due in February and would be requesting a 2 year extension on the balloon payment.

MNDOT along with other surrounding cities are conducting a Commute Analysis to consider creating a commuter bus line in the surrounding area.

Greater Mankato Growth - Wille reported that the ad created by GMG for St. Peter will appear in the Connect Magazine along with other publications.

Wille reported that Exceed Packaging would be resuming their Revolving Loan payments in January, 2012.

Wille stated Jerry Lunderberg was delinquent on his revolving loan.  Lunderbeg has been contacted via  phone and mailed bills with no avail.  Wille indicated Prafke would make contact with Lunderberg..

Adjourn

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



CITY OF SAINT PETER, MINNESOTA
ECONOMIC DEVELOPMENT AUTHORITY
REGUALR MEETING MINUTES – OCTOBER 27, 2011
Saint Peter Community Center – Governors Room


Call to Order

The meeting of the Saint Peter Economic Development Authority was called to order by Member Jay Hansen at approximately 12:01 p.m.  Roll call was taken with Hansen, John Kvamme, Bob Southworth, Marilyn Rundell, and Ken Eichman in attendance, James Dunn arrived at 12:03 p.m.  Mike Favre was absent.  City staff present were Community Development Director Russ Wille and Administrative Secretary Cindy Moulton.  Visitor present was Kevin Bores, owner of 103 South Minnesota (Dominos Pizza property).

Approval of Agenda

A motion was made by Kvamme, seconded by Southworth to approve the agenda as presented by staff.  All voting in favor, the motion carried.

Approval of Minutes

A motion was made by Rundell, seconded by Kvamme to approve the minutes of the September 22, 2011 EDA meeting.  With all voting aye, the motion carried.

Kevin Bores – Requested Modification of Terms

Wille reviewed the history of Kevin Bores revolving loan.  He indicated that in 1999 the City provided a $60,000 revolving loan to Patricia and Kevin Bores to partially finance the development of the Dominos Pizza property.  A balloon payment was due in 2009 at which time the EDA extended the balloon payment to October, 2011 at the request of Bores.  Wille stated that Bores has filed for protection under the Bankruptcy Code.  During the bankruptcy proceedings Bores continued to make payments and the repayment of the loan is current. 

Wille stated that Kevin Bores has requested modifying the terms of his revolving loan to extend the loan repayment date.  Wille explained that Bores is not in the position to obtain additional bank financing to honor the October, 2011 balloon payment due to bankruptcy.  He stated that Bores sought to refinance the Dominos development loan utilizing the primary lender but the lender denied the request due to the recent bankruptcy. 

Wille recommended the loan be re-amortized on a new five year schedule at a 6% interest rate with monthly payments of $323.43 through November 2016 at which time the note would be retired. 

A motion was made by Southworth, seconded by Eichmann to introduce Resolution No. 2011- 10 , entitled, “A Resolution Recommending Modification Of Loan Terms For A Revolving Loan Previously Provided To Kevin & Patricia Bores”.  Members Eichmann, Southworth,  Dunn, Kvamme and Rundelll voting aye, Member Hansen abstaining, the Resolution was passed and adopted.

Brick Zen Mortar – Subordination Request

Wille stated that he has been working with Paul Tanis of Brick Zen Mortar to prepare for the closing of his $8,473 façade renovation loan.  He indicated the primary funding is being provided via conventional loan from Nicollet County Bank.

Wille stated that in 2007 the City provided a $60,000 revolving loan to partially finance improvements to the Danby Building .  Due to the insufficient equity in the Danby Building at that time, the City obtained a “blanket” mortgage against the Danby Building and the two adjoining buildings also owned by Brick Zen Mortar. 

Wille said that at this time, given the blanket mortgage, NCB is not able to adequately secure their new project financing.  NCB and Brick Zen Mortar have requested that the City subordinate its mortgage position on the Danby Building to allow NCB to obtain a first mortgage on the property.

Wille recommended that the $60,000 mortgage in favor of the City be subordinated to a new $77,000 loan provided by NCB.  Wille stated there is $228,000 debt against the building.  After renovation the building would be appraised at an estimated value of $440,000.

A motion was made by Southworth, seconded by Kvamme to introduce Resolution No. 2011- 11 , entitled, “Resolution Recommending The Subordination Of City Mortgage To A Mortgage To Be Provided By Nicollet County Bank To Facilitate The Renovation of The Danby Buildling (324 South Minnesota Avenue)”.  Members Southworth, Kvamme, Rundelll and Eichmann voting aye, Member Hansen and Dunn abstaining, the Resolution was passed and adopted.

Reports

Midwest Theater Corp. – Bankruptcy  -   Odyssey Entertainment has not executed the lease with the City on the equipment. 

Volk Electric – Bankruptcy  - A receiver has been appointed as per First National Banks request.  Grey was current with his revolving loan payments up until October.  Both loans balloon in November, 2011.

Internal Administrative Audit – There are 58 active loan files.  Wille noted that the audit revealed limited instances were security instruments had been improperly recorded or expired.  File deficiencies have been remedied.  Future loan closings will be coordinated with the City Attorney’s Office to ensure the appropriate recording and on-going maintenance of loan files.  It was suggested that title opinions be done pre and post loan.

Verizon -   Rob Alexander will be opening a new store next week in the Four Seasons Mall.

Nielsen Property -  There was a potential buyer for the Nielsen property.  They were interested in developing a strip mall but were unable to find an anchor.

Budget Mart – The property was purchased as an investment.  Wille informed the architect of the gateway regulations.

Property North of Holiday Station  - November 16, 2011 Wille will be meeting with a potential developer of the property north of the Holiday Station.

Dranttel Property   - Wille and City Administrator Todd Prafke will be meeting with Butch Dranttel regarding an option on Dranttel’s property north of the North Industrial Park.

Trail Meetings -  Wille continues to attend MNDOT meetings – Bike Trail Advocacy Group.

Adjourn

A motion was made by Southworth, seconded by Dunn to adjourn.  All n favor of the motion, the meeting adjourned at 12:44 p.m.


CITY OF SAINT PETER, MINNESOTA
ECONOMIC DEVELOPMENT AUTHORITY
REGUALR MEETING MINUTES – September 22, 2011
Saint Peter Community Center – Governors Room


Call to Order

The meeting of the Saint Peter Economic Development Authority was called to order by Member John Kvamme at approximately 12:02 p.m.  Roll call was taken with Kvamme, Bob Southworth, Marilyn Rundell, and Jay Hansen in attendance, Ken Eichmann, Mike Favre and James Dunn were absent.  City staff present were Community Development Director Russ Wille and Administrative Secretary Cindy Moulton.  Visitor present was Paul Tanis.

Approval of Agenda

A motion was made by Hansen, seconded by Rundell to approve the agenda as presented by staff.  All voting in favor, the motion carried.

Approval of Minutes

A motion was made by Southworth, seconded by Hansen to approve the minutes of the August 25, 2011 EDA meeting.  With all voting aye, the motion carried.

Danby Building, LLC – Façade Enhancement RLF

Wille stated that Riley-Tanis & Associates will be relocating their law practice to the ground floor of the Danby Building (324 South Minnesota).

The owners of the building are proposing a comprehensive renovation of the Minnesota Avenue façade of the building to prepare for the relocation.  Wille indicated that the HPC has already approved the renovation as to the building materials, color palette, scale and signage.

The total cost of the façade renovation is $16,946.  The Façade Enhancement Loan Program provides for renovation financing of 50% of the remodeling costs or $15,000 whichever is greater.  Wille recommended that the Resolution be amended to approve $8,473 for the project versus $7,500 as there was a misunderstanding of the maximum amount the EDA could loan.

Wille said the loan will be interest free and amortized on a five year schedule.  He also stated the loan will be secured by the execution of a promissory note and personal guarantee.  Wille said that once the project is completed, bills would be submitted for a draw down on the account.

A motion was made by Southworth, seconded by Rundell to introduce Resolution No. 2011- 09 as amended, entitled, “Resolution Recommending That The City Council Provide a $8,473 Façade Renovation Revolving Loan To Danby Building, LLC To Partially Finance The Renovation/Refurbishing Of The Building Located At 324 South Minnesota Avenue” .  Members Southworth, Kvamme and Rundelll voting aye, Member Hansen abstaining, the Resolution was passed and adopted.

Reports
Midwest Theater Corp. – Bankruptcy  -  The City has not heard whether Nicollet County Bank has recorded the Sheriffs Certificate of the Foreclosure Sale.

1st National Bank vs Volk Electric -  Wille reported there has not been a settlement made.  Grey continues to pay his Revolving Loans.  The bank is expected to ask the court to appoint a receiver to dispose of secured assets.

Cynthia Zarbano – Cynthia Zarbano purchased the property located at 603 North Minnesota Avenue Contract for Deed.  Wille stated that once the balloon payment of the contract is due, Zarbano may re-approach the EDA to help provide permanent financing 

Patrick Stang – PJ’s Pizza -  Patrick Stang has a 20 days to appeal the decision made by the Conciliation Court.  The City has received a judgement in the amount of $5,710.09.

Sioux Trails – Wille stated that Sioux Trails has closed on the purchase of the last lot in the cul-de-sac in the North Industrial Park.

ORI (Counseling Services of Southern Minnesota) – Wille announced that ORI has entered into a purchase agreement with MacKenzie Agency for their building located at 116 South Third Street.  MacKenzie Agency will being to market their building located at 221 Park Row.

Door Engineering – Wille reported that Door Engineering has received approval from the courts to vacate the rental property in Kasota (owned by Carl Olson) in December 2012.  Wille indicated that Door Engineering may be interested in relocating to the North Industrial Park.  Wille will put them in touch with potential developers who would lease to Door Engineering.    

EI Microcircuits – EI Microcircuits purchase option on the two adjoining lots to their property (1 lot to the south and 1 lot to the east) has expired.  They are contemplating the outright purchase of the two adjoining properties.

Greater Mankato Growth  - Wille recommended that the City renew their membership with Greater Mankato Growth.  Hansen remarked that St. Peter’s information is “hit & miss” in the material provided.  The report did not include GAC’s sporting events, or St. Peter’s health care available, etc.  Wille said he would mention that at their next meeting.

Mayo Building – Wille stated that the Mayo Building is a contributing building in the National Register Historic District.  He indicated that Erin Gatchell purchased the property with the intent of demolishing the building and reconstructing another. Gatchell hired a structural engineer to assess the existing building.  The engineer report recommended that Gatchell secure the building and immediate area as the building is quite unstable.  EDA Members expressed their concern with the adjacent property (to the north) that contains rental units.  They feel the units are substandard with broken windows and torn screens, and that the young kids that live there have too much access to the Gatchell property which could result in injury.  Members asked Wille to speak with the Building Department staff regarding the shape of the 4 Season rental property.
  
Jakes Pizza – Contractors are in the process of installing a 6” watermain into 119 West Broadway, which will be leased by Jakes Pizza.  Jakes plans to open in December.

Holiday Celebration – Wille announced that there will not be a holiday celebration this November.  He said Julee Johnson (Julee’s Jewelry) and Scott Dobie (Nutter’s) are forming an additional group to the Chamber to plan promotional events for downtown Saint Peter.

Wille stated that he has been contacted by a bridal boutique, Pet Shop, and Verizon for rental and retail space.

Adjourn

A motion was made by Southworth, seconded by Hansen to adjourn.  All n favor of the motion, the meeting adjourned at 1:00 p.m.


CITY OF SAINT PETER, MINNESOTA
ECONOMIC DEVELOPMENT AUTHORITY
REGUALR MEETING MINUTES – AUGUST 25, 2011
Saint Peter Community Center – Governors Room


Call to Order

The meeting of the Saint Peter Economic Development Authority was called to order by President Mike Favre at approximately 12:00 p.m.  Roll call was taken with Favre, John Kvamme, Bob Southworth, Marilyn Rundell, James Dunn (12:02) and Ken Eichmann (12:02) in attendance, Jay Hansen was absent.  City staff present were Community Development Director Russ Wille and Administrative Secretary Cindy Moulton. 

Approval of Agenda

A motion was made by Southworth, seconded by Rundell to approve the agenda as presented by staff.  All voting in favor, the motion carried.

Approval of Minutes

A motion was made by Kvamme, seconded by Southworth to approve the minutes of the July 28, 2011 EDA meeting.  With all voting aye, the motion carried.

Cynthia Zarbano (dba Fostering Professional Development, Inc.) – RLF Reconsideration

Wille reviewed Cynthia Zarbano’s revolving loan request.  He indicated that the EDA and City Council approved a revolving loan to partially finance Zarbano’s acquisition of 603 North Minnesota Avenue.  He stated that Zarbano intended to use the property as the home of Fostering Professional Development (FPD).

Wille said that the City Council approved Cynthia Zarbano’s revolving loan request in the amount of $58,950 contingent upon receipt of an appraisal establishing a minimum value of $250,000.  Wille reported that Forsythe Appraisals, LLC established a value of only $220,000.  He also stated that the primary lender U.S.A.A. has withdrawn their funding as they wanted to see a six month performance before coming involved.. 

Wille said that Zarbano planned on asking the seller if they would consider selling on a Contract for Deed.  He also stated that Zarbano planned on approaching local lenders.

Reports

Nicollet County Bank has received relief from an automatic stay from the bankruptcy court.    Wille stated that the county has had an engineer look at the theater building. 

Wille reported that he did not have any more information on First National Bank vs Volk Electric.  The assumption is they were going to mediation.

Kevin Bores, owner of the Dominos property, bankruptcy is moving forward.  Wille reported that Bores continues to make his revolving loan payments.

Wille stated that Sioux Trails Mental Health has submitted a site plan and a building design for their new facility in the North Industrial Park.

Wille is working with Jari USA to purchase the Ritt Street building.

Adjourn

A motion was made by Favre, seconded by Eichmann to adjourn.  All n favor of the motion, the meeting adjourned at 12:12 p.m.


CITY OF SAINT PETER, MINNESOTA
ECONOMIC DEVELOPMENT AUTHORITY
MEETING MINUTES – July 28, 2011
Saint Peter Community Center – Governors Room


The regular meeting of the Saint Peter Economic Development Authority met in regular session on Thursday, July 28, 2011.  The meeting was called to order at 12:00 p.m.  Roll call was taken with EDA members John Kvamme, Ken Eichmann, James Dunn, and Mike Favre in attendance.  EDA members Jay Hansen, Marilyn Rundell and Bob Southworth were unable to attend.  Community Development Director Russ Wille was also in attendance.

Approval of Agenda

Motion by Kvamme to approve the agenda as presented.  Seconded by Eichmann.  All voting in favor, motion carried, agenda approved.

Approval of Minutes

Motion by Kvamme, seconded by Favre to approve the minutes of the June 30, 2011 EDA meeting as presented.  With no further discussion or noted corrections, motion carried, the minutes of the June 20, 2011 meeting were approved as presented.

Midwest Theatre Corp.

Wille noted that Nicollet County Bank’s foreclosure on the theater real estate continues.  Wille noted that he has meet with the Building & Grounds Committee of the Nicollet County Board to discuss their potential interest in obtaining ownership of the theater site.  Acquiring the site would complete the County’s assembly of the entire two block Courthouse complex.

The City and County will cooperate to determine whether the building could be readily altered to add a second floor mezzanine for the addition of new office space.  The County has asked the City for any engineering documents related to the building as well as copies of the building ‘blue prints”.

First National Bank vs Volk Plumbing & Heating, et al

Judge Krehbiel has set a trial date for December 30, 2011.  She has also ordered that the parties enter into mediation in an attempt to avert the trial.  It has been suggested that Jim Turk of Blethen, Gage & Krause serve as the appointed mediator.

Exceed Packaging / Chippewa Packaging

The continued operations of both Exceed Packaging and Chippewa Packaging are threatened by the inability of the operations to generate sufficient cash flows.  Both companies have negatively been affected by delays or suspensions of packaging contracts.

Between Exceed Packaging and Chippewa Packaging, there are three outstanding loans of $100,000 each.  The outstanding principal of the three loans total $200,742.

The companies have hired Abdo, Eick & Meyers to assist with maintaining financial reports and to plan for the financial needs of the company.  Representatives of Abdo, Eick & Meyers have recommended that the Companies seek a deferment of loan payments through the balance of 2011.  The Abdo, Eick & Meyer’s analysis suggest that suspension of loan payments would provide an additional $22,000 per month to finance the cash flow needs through the balance of the year.  It is suggested and expected that regular monthly loan payments would resume in January, 2012.

A motion was made by Eichmann, seconded by Favre to introduce Resolution No.  2011-07 entitled, “RESOLUTION RECOMMENDING MODIFICATION OF THE TERMS OF THE REVOLVING LOAN PREVIOUSLY PROVIDED TO EXCEED PACKAGING AND THE TWO REVOLVING LOANS PROVIDED TO CHIPPEWA PACKAGING, INC.”.  With no further discussion, all voted in favor the Resolution was passed and adopted.

Cynthia Zarbano (dba Fostering Professional Development):

Cynthia Zarbano has made application for a revolving loan to partially finance the acquisition of real estate located at 603 North Minnesota Avenue.  Upon completion of the purchase, the property is to be used as an office facility for Fostering Professional Development (FPD) which is owned by Ms. Zarbano.    FPD provides continuing educational seminars for nurses and other health care professionals.

Wille noted that the purchase price of the property has been established at $250,000 by the executed purchase agreement.  The Nicollet County Assessor has assigned a value of $245,000 to the property for taxation purposes.  The primary lender has ordered an appraisal of the property which will be made available to the EDA upon its completion.

Ms. Zarbano has made application to U.S.A.A. for a first mortgage in the amount of $187,095 to finance the real estate purchase.  With the ability to provide $10,000 towards the purchase, Ms. Zarbano has requested a $58,905 revolving loan from the EDA to finance the balance of the purchase.

The Community Development Director has prepared a resolution recommending City Council approval of the loan.  The $58,905 loan would be established at a 3% rate of interest and secured by a mortgage subordinate to the first mortgage to be held by U.S.A.A.  The loan would also be secured by a personal guarantee executed by Ms. Zarbano.  The loan is proposed to be amortized on a 20 year schedule but due after 36 months via balloon payment.  The expedited balloon is supported by the cash position of the business at the conclusion of the 36th month of operations. 

After review of the submitted business plan and financial projections, a motion was made by Eichmann, seconded by Dunn to introduce Resolution No. 2011-08 entitled, “RESOLUTION RECOMMENDING APPROVAL OF A $58,905 REVOLVING LOAN TO CYNTHIA ZARBANO (dba FOSTERING PROFESSIONAL DEVELOPMENT, INC.) TO PARTIALL FINANCE THE ACQUISITION OF THE REAL PROPERTY AT 603 NORTH MINNESOTA AVENUE”.  Members Eichmann, Dunn and Kvamme voted in favor of the motion, Favre abstained, the Resolution was passed and adopted.

Adjournment

With no further business to conduct, motion by Eichmann at adjourn the meeting of the EDA at approximately 12:40 p.m.  Seconded by Dunn, meeting adjourned. 

 

CITY OF SAINT PETER, MINNESOTA
ECONOMIC DEVELOPMENT AUTHORITY
MEETING MINUTES – June 30, 2011


The regular meeting of the Saint Peter Economic Development Authority was held on Thursday, June 30, 2011 in the Governors Room at the Saint Peter Community Center.  President Mike Favre called the meeting to order at 12:00 p.m.  Roll call was taken with EDA members Favre, John Kvamme, Jay Hansen, James Dunn, and Bob Southworth in attendance.  EDA members Ken Eichmann and Marilyn Rundell were absent.  Others in attendance included Community Development Director Russ Wille, Administrative Secretary Cindy Moulton and City Administrator Todd Prafke.

APPROVE AGENDA:

A motion by Hansen, seconded by Southworth approve the meeting agenda as presented.  All voted in favor of the motion, motion carried.

APPROVE MEETING MINUTES:

A motion by Kvamme, seconded by Hansen to approve the minutes of the May 26, 2011 regular meeting as presented.  All members voting aye, the minutes were approved.

Midwest Theatre Corp.

City Administrator Prafke addressed the EDA and stated that he has not had any direct communication with Nicollet County Bank regarding the theatre bankruptcy.  Prafke stated he has spoken to Nicollet County Administrator Bob Podhradsky regarding their interest in obtaining the theater property.  Prafke said the County has not scheduled a building committee meeting to discuss the issue.

Prafke said he has had some discussion with Odyssey Entertainment.  At the present time they are leasing the building from Nicollet County Bank and continue to operate. 

Prafke reported that the City and St. Peter Development Corporation purchased the fixtures, furniture and equipment from a Milford, Iowa bank.  The City contributed $5,000 and the Development Corporation $12,500 towards the purchase.  Prafke stated that he has proposed a lease to Odyssey Entertainment for their use of the fixtures, furniture and equipment.
 
Kvamme asked who would be responsible to pay the property taxes.  Prafke thought the bank may be responsible.

Volk Electric

Wille reported that the litigation initiated by First National Bank against Volk Electric is going slowly.  He stated that the League of Minnesota Cities (LMC) responded to the litigation on behalf of the City.  Prafke stated the LMC is defending the City.

Jari, USA – Roof Replacement

Wille reported that Niemeyer Construction has completed the roof repair at 430 Ritt Street and it has been inspected.

Bores – Bankruptcy (Real Estate of Dominos Property)

Wille stated that he has not received any additional correspondence on Kevin Bores Bankruptcy.  Wille indicated that he submitted the City’s claim on March 29, 2011.

Anytime Fitness

Wille stated that Chad Guentzel, owner of Anytime Fitness, has submitted a revolving loan request for an additional $34,200 in order to relocate and expand the fitness franchise to the former St. Peter Ford site, which has been purchased by Mike Hennek. 

Wille said the expansion would include additional elliptical trainers, treadmills and other strengthening machines.  Additional shower facility would be provided and the facility would be fully handicap accessible.

Wille said that Hennek would undertake the remodeling and reconstruction of the showroom into a fitness center.  He indicated that Guentzel would be financing the lighting, flooring, signage and security system which would bee installed prior to the full relocation.

Wille stated that relocation and expansion costs would be approximately $95,218.  Guentzel has requested $58,200 from Nicollet County Bank (has been approved), $34,200 from the City and plans to contribute $2,818 of his own funds.

Wille reviewed the project financing since its inception to present.  He stated that at the present time, the City of Saint Peter note is secured by a second lien position on the entire roster of fixtures, furnishings, and equipment.  He said the news funds would be collateralized in a similar manner, however the City would obtain a priority lien position on two of the new treadmills to be purchased from Life Fitness.  The City would have a second lien position on the balance of the fixtures, furnishings and equipment, while Nicollet County Bank would assume the priority lien position. 

Wille added that the EDA loan history established by Guentzel has been spotless.         

A motion was made by Kvamme, seconded by Southworth to introduce Resolution No. 2011-06 entitled, “A Resolution Recommending Approval Of An Additional $34,200 Revolving Loan To Chad Guentzel To Partially Finance The Relocation Of The Anytime Fitness Franchise In Saint Peter”.  Members Southworth, Favre and Kvamme voting aye, Members Hansen and Dunn abstaining, the Resolution was passed and adopted.

REPORTS:

Exceed/Chippewa Packaging –  Exceed/Chippewa Packaging has requested a deferral on their revolving loans and are going to make a presentation at the City Council Workshop on June 18th @ 5:30.  EDA members were invited to attend.

EDA Survey -   The City has received very little response from the revolving loan recipients.

2010 Census – Discussion was held regarding the census results.

ADJOURN:

With no further business to conduct, a motion was made by Hansen to adjourn.  The motion was seconded by Dunn.  With no further discussion, the motion was passed. Meeting adjourned.


CITY OF SAINT PETER, MINNESOTA
ECONOMIC DEVELOPMENT AUTHORITY
MEETING MINUTES – May 26, 2011
Saint Peter Community Center – Governors Room

The regular meeting of the Saint Peter Economic Development Authority met in regular session on Thursday, May 26, 2011.  The meeting was called to order at 12:30 p.m.  Roll call was taken with EDA members John Kvamme, Ken Eichmann, Jay Hansen, James Dunn, Bob Southworth and Marilyn Rundell in attendance.  EDA member Mike Favre was unable to attend and was absent.  Other in attendance included Community Development Director Russ Wille and Jill Klinger, New Enterprise & Emerging Business Director of Greater Mankato Growth.


APPROVE AGENDA:

A motion by Hansen, seconded by Kvamme to approve the meeting agenda as presented.  All voted in favor of the motion, motion carried.


APPROVE MEETING MINUTES:

A motion by Hanson to approve the minutes of the April 28, 2011 regular meeting and May 5, 2011 special meeting of the EDA as presented.  The motion was seconded by Kvamme.  Kvamme noted a typographical, grammatical correction to the April 28, 2011 minutes.  Both Hansen and Kvamme endorsed the correction which was incorporated into the motion to approve.  With not further discussion or noted corrections, the motion was carried.


MIDWEST THEATRE CORP. BANRUPTCY:

Community Development Director Wille noted that the City Council has authorized the purchase of the fixtures, furnishing and equipment of the St. Peter Cinema 5 operations.  The City and St. Peter Development Corporation (SPDC) jointly purchased the FF&E from United Community Bank of Milford, IA at a price of $17,500.  The SPDC contributed $12,500 towards the purchase with the City of Saint Peter providing the balance of the financing.  A Shared Asset Agreement has been developed between the City and SPDC to address the disposition of the equipment via sale to a third party.  The agreement also addresses the distribution of equipment lease proceeds between the City and SPDC.


At this time, Nicollet County Bank has initiated foreclosure proceedings on the real estate.  The City Administrator and Community Development Director will work to find an alternative theater operator or alternative use of the facilities.


FIRST NATIONAL BANK vs VOLK ELECTRIC, ET AL:

The Community Development Director distributed copies of the original complaint.  As a subordinate mortgage holder, the City is a party to the litigation.  The EDA was also provided with a copy of the City’s response to the litigation.  The City’s response to the litigation, prepared by the legal staff of the League of Minnesota Cities Insurance Trust, was reviewed by City Attorney Jim Brandt.


Wille indicated that legal counsel will continue to monitor the litigation and further reports will be provided to the EDA as they develop.


430 RITT STREET – SHED ROOF REPLACEMENT:

Wille reported that the 12’x14’ shed at the 430 Ritt Street property is in dire need of repair.  The existing roof structure is leaking and structurally deficient.  The Community Development Director asked Building Official Dean Busse to prepare a materials list to replace the substandard roof with a new structure.  The materials have been quoted by St. Peter Lumber at a price of $913.05.


Three St. Peter contractors were asked to prepare and submit quotes to provide for the labor necessary to replace the shed roof structure.  Two contractors submitted labor quotes.  The two quotes were as follows:


            Niemeyer Construction, Inc.:                               $ 735.00


            H&S Construction of St. Peter, LLC:                    1,775.00


Hansen questioned whether the EDA should create a designated account from which to pay for building maintenance and repair.  The Community Development Director explained that the Finance Department will pay for the repairs from the rental proceeds paid to the EDA by Jari, USA.  Finance Director O’Connell has not indicated the need for a designated repair account.


A motion was made by Kvamme, seconded by Eichmann to introduce  Resolution No. 2011-05 entitled, “RESOLUTION OBTAINING THE SERVICES OF NIEMEYER CONSTRUCTION, INC. TO REPLACE THE SHED ROOF AT 430 RITT STREET AT A TOTAL PRICE NOT TO EXCEED $1,648.05”.  With no further discussion, a roll call vote was taken.  The motion passed unanimously.


REPORTS:


Wille indicated that the sale of the building south of the Four Seasons Mall is expected to be purchased by a Mankato based developer.  The buyer may ultimately request that the HPC grant the authority to demolish the existing structure and replace the building with new construction which would be sympathetic to the architecture of the historic district.


Mike Hennek has closed on the purchase of the former St. Peter Ford site at the intersection of Highway 169 (Minnesota Avenue) and Dodd Avenue.  Mr. Hennek intends to establish a certified bus inspection and repair business at the site.  Anytime Fitness will also relocate to the former Ford showroom space.


The second annual bond payment for the purchase of the 430 Ritt Street property is due June 1, 2011.  The Finance Director will provide for the payment as per the bond / loan documents.


MN/DOT has announced that three local projects will be undertaken via the flood mitigation funding provided by the legislature.  The southbound lanes of Highway 169 will be raised out of the flood plane north of St. Peter.  An improvement of Highway 169 from Union Street north to Dodd Avenue will be completed to ensure that Highway 169 can remain partially open during times of heavy flooding.  Finally, the Highway 22 bridge approach will be raised to allow for the roadway to remain open during heavy flows.


Sioux Trails Mental Health Center has executed an option to purchase Lot 7, Block 1, North Industrial Park at the $1.05 / square foot advertised price.  The six month option was purchased for $500.


The City Administrator’s office is conduction a survey of EDA loan recipients.  The intent of the survey is to determine the impact of the loan funds on development and job creation.  The results will be presented to the EDA once the analysis is complete.


Wille noted that the owners of Green Valley Mobile Home park are significantly delinquent on their water bill due to the City.  The Finance Department has provided notice that water service to the park will be discontinued on June 21, 2011 for lack of payment.  Each mobile home within the park has been individually notified.  It is likely that the residents of the park will obtain the services of a community action agency to establish an escrow account from which water billing may be paid.


City Councilman / EDA member Kvamme noted that fellow Councilman Jerry Pfeifer has expressed concerns regarding the EDA collateralization of the revolving loans.  Mr. Pfeifer has indicated that he is of the opinion that the EDA should not accept subordinate mortgages or other collateralization to secure EDA loans.  He has suggested that the participating bank obtain a first mortgage and that the EDA obtain a first lien position on fixtures, furnishing and equipment.  He has also asked that all EDA loan actions be submitted to the City Council at a scheduled workshop before proceeding to a regular meeting of the City Council.  Jay Hansen indicated that the EDA’s collateralization of loans is very similar to the processes followed by the Small Business Administration, Region Nine Development Commission and other governmental or quasi-governmental lenders.  No member of the EDA shared an opinion that the collateralization process is in need to reconsideration.  Members did express a concern that the request for City Council workshop consideration would impede the loan process and unnecessarily delay the approval of good projects.


BUSIINESS ACCELATOR DEMONSTRATION:

Ms Jill Klinger of Greater Mankato Growth (GMG) provided a demonstration tutorial on the Business Accelerator product developed by GMG.  The Business Accelerator is a prospect referral and tracking software developed to assist in directing entrepreneurs to the business planning services available in the region. 


ADJOURN:


With no further business to conduct, a motion was made by Hansen to adjourn.  The motion was seconded by Dunn.  With no further discussion, the motion was passed. Meeting adjourned.







CITY OF SAINT PETER, MINNESOTA
ECONOMIC DEVELOPMENT AUTHORITY
SPECIAL MEETING MINUTES – May 5, 2011
Saint Peter Community Center – Governors Room


Call to Order

The meeting of the Saint Peter Economic Development Authority was called to order by President Mike Favre at approximately 12:00 p.m.  Roll call was taken with Favre, John Kvamme, Jay Hansen, Bob Southworth, James Dunn and Ken Eichmann in attendance, Marilyn Rundell was absent.  City staff present were Community Development Director Russ Wille and Administrative Secretary Cindy Moulton.  Visitor present was Shelly Germschied, Operating Chief Manager of REST, LLC.


Approval of Agenda

A motion was made by Eichmann, seconded by Southworth to approve the agenda as presented by staff.  All voting in favor, the motion carried.


REST, LLC – Revolving Loan Request

Wille stated that a March, 2011 City Council meeting, the Council approved a $125,000 loan request for REST, LLC to partially finance the construction of their new facility in the North Industrial Park.  Wille indicated that the construction bids came in above what Brunton Architects had anticipated.  He said that REST, LLC removed a number of items from the project in an attempt to lower the total cost.  The final project cost came to $790,030 which is a $34,000 increase above the initial projection.  Wille stated that REST, LLC has requested additional funds ($20,000) from Hometown Bank (original requested $565,000) and an additional $15,000 from the EDA (original requested $125,000).     


Wille indicated that he spoke with the architects and they assured him that there were no deductions to the exterior of the building.  Wille said the City Council would not need to review that portion of the project again.

                                  

A motion was made by Eichmann, seconded by Dunn to introduce Resolution No. 2011 – 04 entitled, “A Resolution Recommending Approval Of A $140,000 Revolving Loan To REST, LLC To Partially Finance The Acquisition And Development Of Tract “A” Of Registered Land Survey #56”.  Members Kvamme, Dunn, Favre, Hansen and Eichmann voting aye, Member Southworth abstaining, the Resolution was passed and adopted.


Reports

Mike Hennek has purchased the former Saint Peter Ford building locate off of  Dodd Road.  He plans to open a bus inspection and certified repair shop.  Anytime Fitness will also be relocating to this site and will be renting the showroom space.


Sioux Trails has signed a purchase option on a lot in the North Industrial Park.


Northwest Title Agency, Inc. is opening their business in the Carnegie Library located at 429 South Minnesota. 


There is a business interested in the former St. Peter Food Coop building located at 119 West Broadway.


PJ’s Pizza is closed.  City staff has made several attempts and has been unable to locate Patrick Stang, owner of PJ’s.  Stang owes the EDA $5,629.48 for his Construction Mitigation Loan.    


Adjourn

A motion was made by Southworth, seconded by Hansen to adjourn.  All n favor of the motion, the meeting adjourned at 12:17 p.m.



CITY OF SAINT PETER, MINNESOTA
ECONOMIC DEVELOPMENT AUTHORITY
REGULAR MEETING MINUTES – April 28, 2011
Saint Peter Community Center – Governors Room


Call to Order

The meeting of the Saint Peter Economic Development Authority was called to order by Member John Kvamme at approximately 12:00 p.m.  Roll call was taken with Kvamme, Jay Hansen, Marilyn Rundell and Ken Eichmann in attendance; Bob Southworth, James Dunn and Mike Favre were absent.  City staff present were; Community Development Director Russ Wille, City Administrator Todd Prafke, City Attorney James Brandt and Administrative Secretary Cindy Moulton. 


Approval of Agenda

A motion was made by Hansen, seconded by Rundell to approve the agenda as presented by staff.  All voting in favor, the motion carried.


Approval of Minutes

A motion was made by Eichmann, seconded by Hansen to approve the minutes of the March 24, 2011 meeting of the EDA with the addition of “Kevin Bores (Dominos Pizza Real Estate Owner).  All members voting aye, motion carried.


First National Bank vs. Volk Electric

Wille stated that First National Bank has initiated legal action against Volk Electric because owner Brian Grey was unable to honor a balloon payment due to FNB.  Wille said that the City of St. Peter is a party to this suit as a subordinate mortgage holder.


Wille indicated that Grey is up-to-date with all of his financial obligations to the City of Saint Peter.  Brian Grey informed Wille that he is attempting to negotiate the matter with FNB. 


City Attorney James Brandt is working with legal counsel from the League of Minnesota Cities.  Wille stated that Grey has two balloon payments due to the City on December 1, 2011 of approximately $33,000.


The attorneys will prepare the appropriate response to the litigation.  Copies of the response will be provided to the EDA when available.


Midwest Theatre Corporation (CINEMA 1) – Bankruptcy


Wille indicated that he has been in contact with a few theater owners and they have expressed some interest.  He said they are interested in the current financials for Cinema V to which Wille does not have access.


The City Administrator and City Attorney are negotiating the acquisition of the fixtures, furnishings and equipment of the theater operations.  The FF&E is currently owned by United Community Bank (UCB) of Milford, Iowa.  UCB has offered to sell the FF&E to the City for a price of $17,500. 


The Administrator is working with the Saint Peter Development Corp. (SPDC) to jointly purchase the FF&E.  The SPDC has tentatively agreed to provide $12,500 of the $17,500 purchase price with the City of Saint Peter funding the balance of the purchase.  A Shared Asset Agreement would be drafted between the SPDC and City to address the lease and/or sale of the shared assets.


The City Administrator noted that Nicollet County Bank has not initiated foreclosure on the theater real estate.  Once the bank begins foreclosure, the City will work with the Nicollet County Bank to seek an alternative buyer for the foreclosed property.  Ideally, another theater operator would chose to purchase the property to enter into the Saint Peter market.  If another theater operator cannot be found, the City will attempt to find an alternative use of the property.


The City Attorney, City Administrator and I will keep the EDA abreast of any new developments as they arise.         


Reports

PJ’s Pizza has closed.  The City has been unable to find an address or phone number in order to contact owner Patrick Stang.


The City has not closed on the revolving loan with REST, LLC.  Bids for their new construction were higher than anticipated.  They are trying to make adjustments to the interior of building in order to make budget.  Wille stated that he informed REST, LLC if the exterior of the building or landscaping changed significantly, the changes would need prior approval by the City Council.


The REDA Economic Development Summit will be held on May 5th. Hansen and Eichmann indicated that they may attend.


Bowlero Lanes has closed due to foreclosure. 


Mike Hennek is purchasing the former St. Peter Ford building located at 100 Dodd Road.  He plans to open a bus repair and inspection center for Blue Bird and Thomas busses.   Anytime Fitness will also be relocating and occupying a portion of the building.  The St. Peter School District may also occupy a portion of the building and use it for a classroom.  


The St. Peter Food Coop is operating at their new location.


Wille stated that a screen printing business is interested in relocating to St.Peter.  They have been looking at Geldner’s property located at 101 Pine Street.


Wille reported that Northwest Title Agency is locating in the Carnegie Library.


Wille said he presented the Executive Director of Sioux Trails Mental Health an option on Lot 7, Block 1 in the North Industrial Park.  


Wille reported that he responded to the Kevin Bores bankruptcy notice.


Wille stated that a wedding decorating and planning business is seeking a historic space downtown to open their business.  Wille directed them to the former Tangled Skein building located at 217 Park Row.


Wille said he submitted the EI Microcircuits and Exceed/Chippewa Packaging JOBZ reports to DEED. 


Adjourn

A motion was made by Rundell, seconded by Eichmann to adjourn.  All in favor of the motion, the meeting adjourned at 12:36 p.m.


CITY OF SAINT PETER, MINNESOTA
ECONOMIC DEVELOPMENT AUTHORITY
REGULAR MEETING MINUTES – March 24, 2011
Saint Peter Community Center – Governors Room


Call to Order

The meeting of the Saint Peter Economic Development Authority was called to order by President Mike Favre at approximately 12:00 p.m.  Roll call was taken with Mike Favre, John Kvamme, Jay Hansen, Bob Southworth, Marilyn Rundell and James Dunn in attendance, Ken Eichmann was absent.  City staff present were; Community Development Director Russ Wille, City Administrator Todd Prafke and Administrative Secretary Cindy Moulton.  Visitor present was Bidget Blaido, owner of 4 the Team.


Approval of Agenda

A motion was made by Kvamme, seconded by Hansen to approve the agenda as presented by staff.  All voting in favor, the motion carried.


Approval of Minutes

A motion was made by Southworth, seconded by Dunn to approve the minutes of the February 24, 2011 meeting of the EDA with the correction of the date to indicate February 24, 2011 instead of 2001.  All members voting aye, motion carried.


4 the Team – Revolving Loan Request

Wille reported that Bridget Blaido has made application seeking a $30,000 revolving loan to partially finance the acquisition of equipment, machinery, inventory and furnishings related to the start up of 4 the Team, LLC and the relocation of Labels, Badges and Signs, LLC to Saint Peter.  4 the Team LLC would focus on four basic services including; screen printing, embroidery, sublimation and engraving.  The apparel to be screen printed, embroidered or sublimated would also be stocked and sold by the company. 


Ms. Blaido has also applied for additional funding in the amount of $65,500 from Hometown Bank (home equity line of credit), and will supply $5,000 in cash to successfully complete the location and business start-up. Given that the Hometown Bank financing is in the form of a home equity line of credit secured by the Blaido residence, the EDA revolving loan is proposed to be collateralized by a UCC filing against the fixtures, furnishings, equipment, machinery and accounts receivable of the 4 the Team, LLC.


Wille recommended that the EDA approve a $20,000 revolving loan to Blaido, Inc., with the note secured by a UCC filing against the fixtures, furnishings, equipment, machinery and accounts receivable of both of the Blaido, Inc. businesses (Labels, Badges and Signs, LLC as well as 4 the Team LLC).  He also recommended the note would be provided at an interested rate of 3%, amortized over five years.


A motion was made by Kvamme, seconded by Dunn to introduce Resolution No. 2011-03 entitled, “A RESOLUTION RECOMMENDING APPROVAL OF A $20,000 REVOLVING LOAN TO BLAIDO, INC. TO PARTIALLY FINANCE THE RELOCATION OF THE BLAIDO, INC. OPERATIONS TO 219 PARK ROW”. Members Hansen, Favre, Dunn, Kvamme and Rundell voting aye, member Southworth indicated that he must abstain due to the participation of his employer in financing the project, the Resolution was passed and adopted.

 

Midwest Theatre Corporation (CINEMA 1) – Bankruptcy


City Administrator Prafke has been involved in discussions with Nicollet County Bank and Riley-Tanis law firm regarding the potential foreclosure of St. Peter Cinema 5.


At this time it appears that Nicollet County Bank will initiate foreclosure on the property due to the delinquent mortgage.  There is a proposal from Odyssey Entertainment to lease the real estate from Nicollet County Bank and operate a theater while the property is in transition.


The Iowa bank which has secured the fixtures, furnishings and equipment (FFE) has proposed to sell the existing FFE to the City of Saint Peter for $20,000.  City Administrator Prafke and City Attorney Brandt are attempting to negotiate the acquisition of the equipment at an alterative (lower) price.


The City of Saint Peter will continue to assess their position as the subordinate mortgage holder and the cost / benefit of redeeming the mortgage to take possession of the property or to facilitate a sale to a third party.



Kevin Bores (Real Estate Owner of Domino’s Pizza) Bankruptcy

Wille reported that Kevin Bores has filed bankruptcy.  He indicated that the City has received a Proof Of Claim form from the United States Bankruptcy Court that needs to be completed and returned.


Reports

The City has received the March rent from Jari USA.  He stated the company is outgrowing the Ritt Street property as MRCI is leasing a portion of the building from Jari USA.


Rest, LLC will be closing on their Revolving Loan in the near future.


Wille reported that the Theatre and PJ’s Pizza are the only two businesses that have not made a payment on their Construction Mitigation Micro-Loan.


Warren Friesen, 409 North Minnesota Avenue obtained a Conditional Use Permit in order to operate a Bed & Breakfast at his home.


An open house will be held on Thursday, March 31, 2011 from 5:30 to view plans for the Washington Link project.


Wille stated that First National Bank shared a Loan Administration Checklist with him.  He invited Nicollet County Bank and Hometown Bank to share theirs as well.  Wille indicated he would compile items from each of the checklists that pertained to revolving loans and use that as a checklist.

  

The EDA cash flow projections will be e-mailed to members next week.


JOBZ reports have been prepared and submitted.


EI Microcircuits has expanded in Mankato.


Creation Technologies currently has 86 employees, down 6 from last year.  In order to meet their goal they will need to add 6 employees plus an additional 24 new employees by June, 2012.


Adjourn

A motion was made by Favre, seconded by Southworth to adjourn.  All n favor of the motion, the meeting adjourned at 12:55 p.m.





CITY OF SAINT PETER, MINNESOTA
ECONOMIC DEVELOPMENT AUTHORITY
REGULAR MEETING MINUTES – February 24, 2011
Saint Peter Community Center – Governors Room


Call to Order

The meeting of the Saint Peter Economic Development Authority was called to order by President Mike Favre at approximately 12:00 p.m.  Roll call was taken with Mike Favre, John Kvamme, Jay Hansen, Ken Eichmann, Bob Southworth, Marilyn Rundell and James Dunn in attendance.  City staff present were; Community Development Director Russ Wille, City Attorney Jim Brandt and City Administrator Todd Prafke.  Shelley Germscheid and Mark Ehlers were in attendance representing REST, LLC.


Approval of Agenda

Motion by Eichmann to approve the agenda as presented by staff.  Seconded by Hansen, all voting in favor, motion carried.


Approval of Minutes

Motion by Kvamme to approve the minutes of the January 27, 2011 meeting of the EDA as presented by staff.  Motion seconded by Hansen, all voting in favor, motion carried.


Motion by Rundell, seconded by Dunn to approve the minutes of the February 7, 2011 special meeting of the EDA as presented by staff.  All voting in favor, motion carried.


REST, LLC – Loan Request


The Community Development Director reported that REST, LLC has made application seeking a $125,000 revolving loan to partially finance the acquisition of property within the North Industrial Park. 


REST, LLC has been formed by six (6) of the clinicians employed by Counseling Services of Southern Minnesota.  REST, LLC has been organized for the sole purposes of developing and owning an office / clinic facility which will be leased exclusively to Counseling Services of Southern Minnesota (CSSM).


CSSM began operations in 1997.  In 1998, as a result of the March tornado event, CSSM relocated to leased space on the Regional Treatment Center campus.  In 2002, CSSM successfully relocated to their current location at the intersection of 3rd Street and Park Row.  In 2002, in anticipation of the relocation, employees of CSSM organized as ORI, LLC to own the office / clinic facility which was then leased to CSSM.


The Economic Development Authority participated in partially financing the acquisition of the existing CSSM location.  The note was honored by ORI, LLC and repaid in full according to the terms and condition of the loan. 


The total cost of constructing the new office / clinic facility in the North Industrial Park has been determined by be $755,030.  This includes the purchase of the real estate as well as the materials and labor to finance the construction.


Hometown Bank has committed to providing a $565,000 conventional loan.  The owner of REST, LLC have each agreed to commit $100,000 towards the successful completion of the purchase and construction.  REST, LLC has previously paid engineering and architectural retainers in the amount of $5,030.


REST, LLC has requested a $125,000 revolving loan to finance the balance of the construction costs.  They have requested that the note bear interest at a rate of 3%.  It is proposed that the repayment would be established based upon a 20 year amortization but that he note be repaid in full at the conclusion of the fifth year.  The note would be collateralized by a mortgage which would be subordinate to the first mortgage to be held by Hometown Bank.  The six owners of REST, LLC would also provide personal guarantees of the note.


The Community Development Director noted that spouses of the owners of ORI, LLC were not requested to execute personal guarantees to collateralize the 2002 EDA note.  The Director would suggest that the new loan, if approved, be collateralized in the same manner without guarantees signed by spouses.  Hansen asked if this was consistent with the EDA policy and noted that the Hendrickson Organ loan was ultimately withdrawn due to Hendrickson’s insistence that his wife be excluded from the guarantee.


Wille noted that the decision not to require spouse guarantees is consistent with the action taken in 2002.  Given that there are six owners of REST, LLC, it was suggested that the guarantee from the spouses would be unnecessary. 


A motion was made by Favre, seconded by Eichmann to introduce Resolution No. 2011-02 entitled, “RESOLUTION RECOMMENDING APPROVAL OF A $125,000 REVOLVING LOAN TO REST, LLC TO PARTIALLY FINANCE THE ACQUISITION AND DEVELOPMENT OF TRACT “A” OF REGISTERED LAND SUREVEY”. With no further discussion, the vote was called.  EDA member Bob Southworth indicated that he must abstain due to the participation of his employer in financing the project.  All other members voted in favor of the resolution, the resolution was passed and adopted.


Midwest Theatre Corporation (CINEMA 1) – Bankruptcy


Midwest Theatre Corporation filed for protection under Chapter 11 of the U.S. Bankruptcy code in September, 2010.  Cinema 1 has joined the parent company in the bankruptcy proceedings.


In 2006, a $40,000 revolving loan was provided to Cinema 2, LLC to partially finance the acquisition of the theater real estate assets.  This note is secured by a mortgage which is subordinate to the first mortgage held by Nicollet County Bank.  The note is due in full on June 1, 2011 via balloon payment.  The balance of this note is $40,000.  It was determined that Cinema 2 “quit claimed” the property to Cinema 1 without the City’s consent or knowledge.


In 2008, an $85,597.68 revolving loan Midwest Theatre Corporation was approved to refinance the fixture, furnishings and equipment note that was help by First Farmer’s and Merchants Bank of Le Sueur.  The note was established at a 3% interest rate and due via balloon payment on May 1, 2011.  The balance of this note was $75,452.13 at the time of filing.  The note was to be secured via UCC filing against the fixtures, furnishings and equipment at the St. Peter theater location.


In 2009, a $6,000 loan was made to Midwest Theaters Corporation through the Construction Mitigation Micro-Loan Program which resulted from the closing and reconstruction of Highway #169 in the Central Business District.  The micro loan is unsecured.


Wille noted that he has worked with City Attorney Brandt’s office to prepare and submit the correspondence to the Bankruptcy Court regarding the debt to the City and EDA.  During the assembly of the necessary loan documentation, it was determined that the UCC filing collateralizing the Midwest Theatre Corporation had not been filed at the time that the loan was closed.


As part of the bankruptcy proceedings, United Banker’s Bank (UBB) has received an $8.1 million judgment against Midwest Theatres Corporation, Cinema 1, Steven Tripp and Brian Sieve.  Given that the EDA’s security had not been recorded in an expeditious manner, the UBB judgment has been place in a priority position.  Hansen indicated that there is another lender, presumably from Iowa, which also supersededs the EDA security position on the FF&E..  City Attorney Brandt was asked to verify the EDA’s security position in light of the Bankruptcy Courts judgment to the benefit of UBB.


City Administrator Prafke stated that he and the Community Development Director are working with City Attorney Brandt’s office to establish a loan administration protocol.  A system of checks and balances involving both the City Attorney and Community Development office will be developed to ensure that the administrative details of the loan program are accomplished and that all documents collateralizing EDA loans are filed in a timely manner.


Mr. Prafke also indicated that the City Administrator, City Attorney and Community Development offices will undertake and administrative audit of the revolving loan program.  This process will involve a check of all active loan files and a comparison against the City Council resolutions approving loans.


Wille reported that on Thursday, February 24, 2011, the Community Development Director, City Attorney, Finance Director and City Administrator Prafke met with representatives of Nicollet County Bank.  The bank was represented by President Sam Gault Jr., Doug Miller and legal counsel Mike Riley.  Mr. Riley explained that Midwest Theatre Corporation is not receiving the cooperation of the other lenders as they attempt to reorganize under Chapter 11.  As such, Midwest Theatre is expected to convert the Bankruptcy filing to Chapter 7 which would result in the business being dissolved and its assets converted to the benefit of the lenders.


If the filing is converted to Chapter 7, Nicollet County Bank would be expected to begin foreclosure proceedings as the holder of the first mortgage.  The balance of the bank note was reported to be $432,178.  UBB or any other secured party would be unable to retrieve the fixtures, furnishings and equipment until the foreclosure is completed.


Upon the completion of the foreclosure, Nicollet County Bank would be expected to either lease the facilities to an alternative theater operator, market the property for sale or negotiate the sale with a third party such as Nicollet County.  Alternatively, the City could decide to obtain ownership of the real estate assets by paying Nicollet County Bank the balance of the delinquent theater note. 


At this time, the most appropriate course of action would be to wait to see if Midwest Theater Corporation does indeed convert to Chapter 7 bankruptcy.  The City Attorney and Community Development Director will monitor the communications from the Bankruptcy Court to determine when or if the bankruptcy is converted to Chapter 7.  The City Attorney will also conduct of search within the Nicollet County Recorder’s office to determine the layering of FF& E collateral.


Further reporting on the bankruptcy is expected at the March meeting of the EDA.


Sweat Equity, LLC


Wille reported that the City Council did approve the additional $20,000 to Sweat Equity as recommended by the EDA.  He also indicated that Nicollet County Bank has approved a similar loan increase.  The Community Development Director will work with the City Attorney to prepare the loan documents and accomplish closing.


DEED Annual Reporting


Reports on the JOBZ districts must be submitted to the Department of Employment and Economic Development prior to April 1st.  Both E.I. Microcircuits and Exceed / Chippewa Packaging are in the process of reporting their employee numbers to include in the comprehensive reports.  A report on the Creation Technologies and St. Peter Food Coop revolving loans must also be reported as they each exceeded $100,000.


Adjourn

With no further business to conduct, Favre moved adjournment.  The motion was seconded by Eichmann.  All voted in favor of the motion, motion carried.

 

CITY OF SAINT PETER, MINNESOTA
ECONOMIC DEVELOPMENT AUTHORITY
SPECIAL MEETING MINUTES – February 7, 2011
Saint Peter Community Center – Governors Room


The February 7, 2011 special meeting of the Saint Peter Economic Development Authority was called to order by President Mike Favre at 5:10 p.m. as advertised and posted in accordance with statute.

Roll call was taken with Favre, Marilyn Rundell, James Dunn, John Kvamme and Ken Eichmann in attendance.  EDA members Jay Hansen and Bob Southworth were unable to attend and were absent from the meeting.  Community Development Director Russ Wille was also in attendance.

AGENDA

A motion was made by Rundell and seconded by Kvamme to approve the meeting agenda as presented.  All members voted in favor of the motion to approve the agenda.  Motion carried.

430 RITT STREET LEASE

Community Development Director Wille noted that the City Council had approved a lease of the former Creation Technologies building by and between the EDA and Peter Jones.  The lease was contingent upon Jones’ successful acquisition of an existing, local company.  On January 31, 2011, Mr. Jones notified Wille that he was not able to purchase the target company as anticipated.  Jones exercised his option to vacate the lease.

The EDA was subsequently contacted by Al Hertaus, President and CEO of Jari USA.  Hertaus is seeking to relocate the Jari USA operations from Mankato.  Aware that the Jones lease was not to materialize, Mr. Hertaus indicated that he would be willing to enter into a lease substantially similar to the lease negotiated between the EDA and Jones.

Jari USA manufactures attachments and accessories to Kubota tractors.  They also manufacture a self-propelled sickle bar brush mower.

The lease establishes rents at a rate of $3.00 per square foot per year for the first three years of the lease.  If Hertaus exercises the 3 year extension of the lease, the rate would increase to $3.50 per square foot per year.  The lease obligates the tenant to pay utility expenses as well as the cost of maintaining the building, parking lot and grounds.  The EDA would pay real estate taxes and major building repairs not caused by actions of the tenant.  The tenant would maintain a liability insurance policy as well as coverage on the contents of the building.  The EDA would insure the building against peril such as fire or wind damage.

The lease offers Jari USA a right-of-first-refusal should the EDA receive a puchase offer from any third party.  The lease also provides a credit of gross rents paid should Jari USA opt to purchase the building at the price of $1,200,000.

Motion by Favre to recommend that the City Council authorize the EDA President to enter into the three year lease by and between the EDA and Jari USA.  Dunn seconded the motion.  With no further discussion, all voted in favor, motion carried.

ADJOURN

Motion by Dunn, seconded by Rundell to adjourn.  All voted in favor, motion carried.  The meeting was adjourned at approximately 5:20 p.m.



CITY OF SAINT PETER, MINNESOTA
ECONOMIC DEVELOPMENT AUTHORITY
SPECIAL MEETING MINUTES – January 24, 2011
Saint Peter Community Center – Governors Room


The special meeting of the Saint Peter Economic Development Authority was called to order by Community Development Director Russ Wille, at approximately 12:00 p.m.  Roll call was taken with Mike Favre, John Kvamme, Jay Hansen, Ken Eichmann, Bob Southworth, Marilyn Rundell and James Dunn in attendance.  City staff present were; Community Development Director Russ Wille and Administrative Secretary Cindy Moulton.

Approval of Agenda:

A motion was made by Kvamme, seconded by Rundell to approve the agenda.  All voting in favor, motion carried.

Creation Technologies Building – Lease/Purchase Agreement

Wille reviewed the history of the Creation Technologies building located at 430 Ritt Street.  He stated the building was obtained from Creation Technologies in June, 2009 at which time it was leased back to Creation Technologies for 12 months while their new production facility was under construction in the North Industrial Park.  

The building was vacated in June, 2010.   Wille said the EDA listed the property “for sale” after the building was vacated.  He indicated that Jim Halbur of Coldwell Banker Commercial Fisher Group has secured a potential tenant for the building. 

Wille said that he and Halbur had negotiated a 3 year lease of the property to Peter D. Jones.  The intended use of the property is light manufacturing, assembly, shipping, receiving and storage. Jones planned to start out with 4 employees and eventually increase the number.

The three year lease would begin no later than February 1, 2011 and would be renewable for an additional three year period at the option of Jones.  Jones would pay a fixed monthly rent of $9,166 which equates to a rate of $3/square foot/year.  If Jones should renew the lease for an additional 3 years, rents would increase to $10,693 per month.

Jones would be obligated to pay for all utilities provided to the property during the term of the lease.  He would also pay for routine maintenance of the structure as well as maintenance of the grounds and parking areas.  The EDA would be required to provide for the maintenance of the foundation, structure and roof of the building.  The EDA would also be obligated to pay real estate taxes during the lease. 

Wille added that Jones also needed to provide insurance coverage of the contents of the building as well as maintain comprehensive general liability policy indemnifying the City of Saint Peter against any and all claims.  The EDA would be required to maintain an insurance policy against loss or damage by fire or other perils.

Wille also provided three scenarios if Jones decided to purchase the property during the terms of the lease.  Wille stated that if Jones exercises an Option to Purchase, he shall receive a rebate of the total base rent payments previously paid to the Landlord; 1)  Sixty percent (60%) of payments made for the 14 months 2)  Fifty percent (50%) of payments made for months 15 through 27 and 3)  Forty percent (40%) of payments made for months 27 through 36.

Wille stated that Coldwell Banker Commercial Fisher Group would receive a commission of $19,978.56 upon execution of the tree (3) year lease.  He added that if the tenant exercises the option to purchase the building during the lease, Coldwell Banks would be entitled to a 6% commission on the $1.2M sale of the property or $72,000.

Wille recommended that the EDA approve the resolution recommending that the City Council authorize the President of the EDA to entering into a three year lease.

A motion was made by Hansen, seconded by Eichmann to introduce Resolution No. 2011 – 01 entitled, “Resolution Recommending That The City Council Authorize The President of The Saint peter Economic Development Authority To Enter into A Three year Lease Of The 430 Ritt Street Property With Peter D. Jones”.  All members voting aye, the Resolution was passed and adopted.

Adjourn

With no additional business to conduct, a motion was made by Eichmann, seconded by Rundell to adjourn.  All voting in favor, the meeting was adjourned at approximately 12:10 p.m.