January 28, 2016


Call to Order:

The regular meeting of the Saint Peter Economic Development Authority (EDA) was called to order at 12:00 p.m. by Economic Development Director Russ Wille.  EDA members Bob Southworth, Cory Abels, Jay Hansen, Jerry Pfeifer, Marilyn Rundell, John Kvamme were in attendance with James Dunn arriving at 12:11 pm  Community Development Director Wille and Administrative Secretary Cindy Moulton were also in attendance.  Visitors present were Attorney Paul Tanis and Christine Rasmussen (River Rock Bakery & Kitchen, LLC).

Election of Officers:

A motion was made by Abels, seconded by Rundell to nominate Southworth as President.  Rundell moved that nominations close.  All members voting aye, the motion carried.  A motion was made by Abels, seconded by Hansen to nominate Rundell as Vice President.  All members voting aye, the motion carried.  Wille explained that the Treasurer position is held by the City Finance Director and the Executive Secretary position by the City Administrator.   A motion was made by Kvamme, seconded by Abels to appoint the City Finance Director as Treasurer.   All members voting aye, the motion carried.  A motion was made by Hansen, seconded by Rundell to appoint the Community Development Director as Secretary.  All members voting aye, the motion carried.


Motion by Hansen, seconded by Abels to approve the meeting agenda with the change of Old Business moving ahead of New Business.  All voted in favor of the motion.  The motion carried.


Motion by Kvamme, seconded by Abels to approve the minutes of the Special January 11, 2016 meeting of the EDA as prepared and presented.  All voted in favor, the motion carried.

River Rock Bakery & Kitchen, LLC- Revolving Loan Application

Christine Rasmussen has been the Head Chef at River Rock Coffee since 2010.  In anticipation of purchasing River Rock’s Coffee’s Bakery and catering, Rasmussen has incorporated as River Rock Bakery & Kitchen, LLC.

Owner of River Rock Coffee, Tamika Bertram, and Rasmussen have negotiated the sale of the bakery and catering functions of the coffee shop.  Bertram will continue to own and operate River Rock Coffee.  In order for Rasmussen to successfully complete the transaction, a total of $211,000 is necessary.

A subcommittee made up of Southworth and Hansen reviewed Rasmussen’s Revolving Loan Fund application and personal financials.  They indicated they were concerned that the original structure of the loan provided insufficient collateralization of the proposed EDA financing.  It was suggested that Bertram needed to carry of a portion of the debt and assume much of the financial risk of financing “blue sky” assets (catering contracts, recipes and operating expenses).

Willie stated that Bertram and Rasmussen have negotiated a contract sale of the assets.  Bertram has agreed to loan Rasmussen $130,000 (61.6%) of the $211,000 identified need.  

Additional financing has been secured from First National Bank (FNB) in the amount of $20,000.  The loan will be secured by a blanket security agreement.  The bank will file a UCC establishing a priority position on the fixtures, furnishings, equipment, inventory, accounts receivable and general intangibles of River Rock Bakery & Kitchen, LLC.

The subcommittee recommended that the EDA provide a $40,000 (18.9% of the identified project costs) Revolving Loan.  Additional recommendations included; the EDA file a UCC which would be a second collateral position behind FNB, a subordinate mortgage be recorded against the residential property owned by Rasmussen and her spouse and the note be personally guaranteed by Rasmussen and her spouse. 

It was discussed whether the EDA should consider a life insurance policy payable to the EDA insuring the life of the borrower.   Southworth felt it was necessary if something were to happen to the borrower.  Wille said if the EDA should require life insurance, it should be at least equal to the outstanding principal balance of the River Rock Bakery & Kitchen LLC and the City should be listed as a loss payee.

Wille added that Bertram’s security position would be subordinate to both FNB and the EDA.  Bertram has agreed to such subordination.

Hansen asked Rasmussen if the business would be strictly wholesale.  Rasmussen indicated it would but that she is considering selling prepared “take and bake” pizza on Wednesday’s.    

Wille stated that wholesale products will be sold to the St. Peter Co-op along with additional Co-ops, at the St. Peter Farmers Market in Saint Peter and Mankato, as well as additional customers which Rasmussen has obtained.

Rasmussen said that she has secured a lease at River Rock Coffee.  She said that she is in the process of negotiating a lease at another site.  In order to meet the State Building Code the site would need some electrical and plumbing upgrades.  The cost of the upgrades would be above and beyond the $211,000.   

Although Pfeifer said that River Rock Bakery & Kitchen, LLC would be a tremendous asset to the community, he felt that the banks should provide more funds to those requesting revolving loans.  He didn’t feel the EDA should always take the second security position when they sometimes provide the majority of the loan.  He stated that revolving loans were to be used as bridge loans.

Members explained that the loan request is within the confines of the revolving loan guidelines.  The City Council has the authority to approve a loan outside of the guidelines.  Abels said that the EDA has taken the subordinate security position and mortgage on a vast majority of the revolving loans provided.

A motion was made by Kvamme, seconded by Rundell to introduce Resolution No. 2016-02 entitled, “A Resolution Recommending Approval Of A $40,000 Revolving Loan To River Rock Bakery & Kitchen LLC To Partially Finance The Start-Up Of A Commercial Bakery And Catering Business” with the addition of stipulation #10,  “Christine Rasmussen shall maintain an insurance policy on her life, in an amount at least equal to the outstanding principal balance of the River Rock Bakery & Kitchen, LLC loan, designating the City of Saint Peter as beneficiary. Members Rundell, Kvamme, Hansen, Southworth, and Dunn voting aye, Member Pfeifer voting nay, and Member Abels abstaining, the Resolution was passed and adopted.

Historic/ADA Revolving Loan Fund

Wille reviewed the changes to the Historic/ADA Loan Program Guidelines that were suggested by EDA members at their October meeting. Wille implemented those changes into the draft copy of the loan program.

Members discussed the forgiveness of 50% of loans under $10,000 and $5,000 forgiveness of loans $10,000 and over, once the unpaid balance is reduced to $5,000 or less. Kvamme asked what the definition of “perfect” was in relation to loan repayment history.  Kvamme felt it was overkill to require that every loan payment be made as due and in the amount specified in the promissory note and that a single delinquency would disqualify the borrower from benefiting from the loan forgiveness protocol.

Discussion continued regarding loan forgiveness.  Kvamme requested that Wille rework 8.1, under Loan Forgiveness to reflect that borrowers of $10,000 or more would automatically qualify for the $5,000 forgiveness.

Wille asked if the EDA wanted to require loan applicant’s to submit their personal financials in order to obtain a loan.     Kvamme asked why personal financial statements would be needed with small loans.  He stated this is overkill and burdensome.  Abels disagreed.  Southworth added that if personal financials were not required, it would be hard to deny an applicant a loan.

Kvamme asked if $5,000 were forgiven, would the borrower have a tax obligation.  Wille said that he would consult with a CPA.


Hey Diddle Diddle Daycare – Loan Closing:   The loan will be closing in approximately a month.

Community Core Partners – Loan Closing:  The loan closing will take place after the windows have been installed and the project has been completed.

Building Better Neighborhoods: Wille updated the EDA on the progress of the property acquisition from the school district and the steps that need to be taken to market the subdivision. 

Wille informed the EDA that the City has been asked to undertake construction of spec homes.  Hansen asked if the City would be competing with private developers.  Wille said that the subdivision targets people that may not otherwise be able to afford a home.  Wille stated that RFP’s for the 12 acres adjacent to the City development will be available to private developers once the engineering is completed.    

Stormwater Ponds: The City has completed the purchase of the Dahlgren and Cunningham properties in order to construct a stormwater detention pond on the property.

St. Julien/Old Minnesota:   The City will be moving forward with acquiring the land on the northwest corner of St. Julien and Old Minnesota Avenue which will be part of the round-about project.  The round-about will be constructed at some time in the future as traffic levels would dictate.

Municipal Parking Lot #5:  Wille indicated he has two developers interested in purchasing Parking Lot 5 for development.  He stated that the developers would need an anchor tenant for a project to succeed.

2016 Scheduled Balloon Payments:  Wille reported that Exceed Packaging, MS & GS Enterprises, Autotronics and Danby Building, LLC have balloon payments scheduled for 2016.


With no further business before the EDA, a motion was made by Abels, seconded by Hansen to adjourn.  The meeting adjourned at 1:03 pm