EDA - Febraury 22, 2018

February 22, 2018


Economic Development Authority
Saint Peter Community Center – Governors Room

Call to Order    
The meeting of the Saint Peter Economic Development Authority (EDA) was called to order by President James Dunn at approximately 12:00 p.m.  Roll call was taken with Dunn, John Kvamme, Cory Abels, Brad DeVos, Ed Johnson and Mike Favre in attendance. Member Jay Hansen was absent.  City staff present were Community Development Director Russ Wille and Finance Director Paula O’Connell.  Shannon Sweeney (David Drown & Assoc.) and Mayor Zieman were also present for the meeting.

Approval of Agenda 
Motion by Abels to approve the agenda with the addition of the approval of meeting minutes from the November 30, 2017 meeting.  Johnson seconded the motion.   With all voting in favor the motion was carried and the agenda approved as amended.

Approval of Meeting Minutes   
Motion by Johnson, second by Abels to approve the minutes of the November 30, 2017 meeting of the EDA as presented.  All voted in favor of the motion and the minutes were approved as presented.

Motion by Johnson, seconded by Abels to approve the minutes of the January 25, 2018 meeting of the EDA as presented.  All voted in favor of the motion and the minutes were approved as presented.

River’s Edge Hospital Expansion – Lease Revenue Bonds  
Shannon Sweeney of David Drown & Associates appeared before the EDA on behalf of the City Council and River’s Edge Hospital regarding the planned expansion of the River’s Edge Hospital building and operations in the North Industrial Park.

Mr. Sweeney explained that the EDA is being asked to serve as a conduit for the refinancing of the 2008B Hospital Revenue Bonds that financed the construction of the Medical Office Building on the River’s Edge Hospital campus. 

The EDA’s issuance of a Lease Revenue Bond in the amount of approximately $2,185,000 would result in net interest savings on the life of the bonds of about $300,000.  The EDA’s issuance would also remove covenants of the 2008B bonds that required certain debt coverage ratios and other limitations.

Mr. Kvamme explained that the bond issuance would be similar to the bonds issued to partially finance the construction of the Community Center.  Like the Community Center bonding, the lease revenues paid by the tenant (City of Saint Peter) will be used to make the scheduled bond payments.

Sweeney indicated that issuance of the bonds would require that the EDA conduct a public hearing to solicit citizen input regarding the proposed bonding.  A resolution has been prepared that would call for a March 22, 2018 public hearing at 12:00 p.m. in the Governors Room of the Community Center.

Mr. Favre noted that Sweeney’s written correspondence to the EDA refers to “net interest savings approaching” $300,000 can likely be achieved.  Sweeney replied that the final savings will be determined when the bonds are issued and the interest rate at that particular time.  The current bonds are at 6% interest and the new bonds are projected to be as low as 3.5%.  Sweeney suggested that the municipal finance professionally believe that the interest rates have stabilized following adoption of the recent federal tax bill.

Kvamme asked if the Revolving Loan Fund(s) could be tapped to partially finance the hospital expansion.  He also suggested that such a scenario would reduce the amount of the bond issuance and avoid certain costs of issuance.

Sweeney discouraged utilizing loan funds suggesting that revolving loan funds are hard to assemble and in the case of the City of Saint Peter required disaster such as the 1998 tornado or Minnesota River flooding.  He suggested that in his experience working throughout Minnesota that Saint Peter is in an enviable position by having access to such discretionary, liquid funds.

DeVos also noted that he would not support utilizing the revolving loan funds in lieu of a bond.  He would not want to miss out on an opportunity due to insufficient funding within the loan program.  

Abels concurred with DeVos adding that he thought the revolving loan funds should be used for financing private business growth.  Given that River’s Edge is a non-profit arm of the city government he thought the bonding was most appropriate.

Motion by Johnson, second by Abels to introduce Resolution 18-02 entitled, “Resolution Calling Public Hearing On The Proposed Establishment Of Economic Development District No. 1.”  With all members voting aye, the Resolution was passed and adopted.

Wille noted that the loan made to The Pulse is due and payable at this time via scheduled balloon payment.  Rachel More has attempted to refinance with Nicollet County Bank to pay off the EDA loan.  The bank has provided correspondence indicating that they are unable to provide the requested financing.

As such Ms. More will be requesting a second twenty-four month extension of the scheduled balloon payment.  This matter will be included on the March, 2018 EDA agenda.

Wille reported that he and Ali Joens of the Southwest Minnesota Housing Partnership had met with Saint Peter based realtors to explain the Traverse Green Realtor Referral Agreement proposed by the EDA and City of Saint Peter.  The realtors assembled were reluctant to execute a written agreement and suggested that the referral fee be offered in the absence of an agreement as in Nicollet Meadows and Washington Terrace.  Wille intends to consult with City Administrator Prafke to formulate a plan to move forward with a referral fee.

Wille informed the EDA that the City Council has accepted the Final Plat of Ninas Subdivision on the north side of town off of Old Minnesota Avenue.  Makenda, LLC has indicated that they intend to construct a 60 unit Best Western Plus lodging facility as soon as weather conditions allow.

Wille reported that the City and Southwest Minnesota Housing Partnership staffed a Traverse Green Subdivision informational booth at the River Hill’s Mall Home Show February 16 – 18.  He was encouraged by the public response and suggested that a few sales may result to the efforts.

Wille noted that the City did not provide a response to the Project Gingerbread request for proposals solicited by the Minnesota Department of Employment and Economic Development.  An appropriately sized parcel of land in the North Industrial Park could not be assembled without the cooperation of an adjoining land owner.  The very short response window did not allow enough time to negotiate the required acquisition.

With no other business on the agenda Johnson moved to adjourn the February, 2018 meeting of the EDA.  The motion was seconded by DeVos.  With no further discussion the motion was passed unanimously and the meeting was adjourned at approximately 12:38 p.m.