06-28-2017 EDAM
EDA Board Meeting
Main Conference Room – City Center
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11:30 AM Wednesday, June 28, 2017
____________________________________________________________________________
Members present in bold.
MEETING MINUTES
Members
Mike Cannon Corey Stearns Daron Vanderheiden Chad Czmowski
Mary Christensen Mike McGraw Jonny Block
Staff
Miles Seppelt, EDA Director
Matt Jaunich, City Administrator
Andy Reid, Finance Director
Economic Development Authority
Financial Summary as of May 31, 2017
Operations
I. Call to Order
Cash Available $97,380
Reserved $56,736
EDA President McGraw called the
Unreserved $34,189
meeting to order at 11:32 AM.
Economic Development Loan Fund
Cash Available $439,107
II. Approve Agenda – no action.
Loan 1 Balance $14,071
Loan 2 Balance $14,298
Downtown Revolving Loan Fund
III. Review Minutes
Cash Available $419,915
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Loans Receivable $506,137
A. May 17 Finance Team Meeting
Capital Assets $201,329
Total Assets $1,111,203
M/S/P: Czmowski, Block to
MIF Loan Fund
approve the minutes as written.
Cash Available $220,391
Passed unanimously.
Loan Receivable $72,477
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Enterprise Center Fund
B. May 24 EDA Board Meeting
Cash Available $701,827
Expenditures (Architect & Ebert Construction) $0
M/S/P: Block, Czmowski to
SHOPKO TIF District (TIF 4-5)
approve the minutes as written.
Cash Available $247,692
Passed unanimously.
Interfund Loan Receivables $297,103
Expenditures $0
MEDICAL CLINIC TIF District (TIF 4-16)
IV. Review of May EDA Financial
Interfund Loan Payable $288,958
Statements
Finance Director Andy Reid reviewed the EDA financials for the benefit of the Board.
The EDA has received its first half tax revenue in the amount of $85,782. This will be reflected on
next month’s financial report.
M/S/P: Stearns, Christensen to approve the financial report as presented. Passed unanimously.
V. Director’s Report
A. Marketing Plan Report:
o Facebook updates = 20, Twitter activity = 20, Website updates = 0
o Social media effort has 217 likes on Facebook and 63 followers on Twitter.
B. Old Medical Clinic Redevelopment – staff has not had time to work on it.
C. Incubator Grant Reimbursement = $210,341 (27.5%)
D. Skilled Workforce Development Plan: Funds collected = $844,525 (69.6%)
VI. The Company
Staff provided a detailed update on a prospect that is considering purchase of the HTI
manufacturing facility.
Discussion followed.
VII. Consideration of Tax Abatement Policy
The Board discussed how and under what conditions Tax Abatement could be used as a tool to
further economic development in Hutchinson.
The following parameters were discussed:
Tax abatement would be used only where no other economic development tools (such as tax
increment financing) would work.
The city would never abate existing property taxes – only the increase in property tax revenue
brought about by a project could be considered for abatement.
Tax abatement would be used only on a “pay-as-you-go” basis – the city would never bond for
a tax abatement and be reimbursed later.
The EDA and City Council will set limits in terms of duration and or amount of the abatement (it
would never be an open-ended amount).
The term of the abatement would be up to the limit of 15 years set by Minnesota Statute so as
to provide the City with maximum flexibility in using this economic development tool.
The City would reimburse itself from the first available tax abatement for any expenses incurred
in establishing the tax abatement.
Further discussion.
M/S/P: Block, Cannon to approve the Tax Abatement Policy as presented. Passed unanimously.
VIII. Hutchinson Enterprise Center
Staff provided an update on construction progress.
The shell of the building should be going up in the next 10-14 days.
Building is on schedule to be completed by mid-October.
Proposed rent and projected cash flows were discussed.
Rent is proposed to be $3.84 per square foot.
o $1.84 of that is to cover property taxes on the building.
o $2.00 goes to the EDA so that the Economic Development Loan Fund can be
reimbursed and a building maintenance fund established.
Staff related that the two prospective tenant companies have requested if any EDA
assistance would be possible for leasehold improvements, given that at the option of the
EDA, those improvements would stay with the building when the tenant moves out.
Parameters for a forgivable loan were discussed:
Loans to be used for leasehold improvements in the Hutchinson Enterprise Center.
Eligible loan amounts would be determined on a formula basis of $2.875 per square
foot of space leased by the company.
o Up to $23,000 for Laser Dynamics (8,000 sf)
o Up to $14,375 for Innovative Foam (5,000 sf)
Loans would be forgiven if the company buys or builds its own building within the City
of Hutchinson at the end of its time in the Hutchinson Enterprise Center.
Loans would carry an interest rate of 0% and payments deferred until the company
moves out of the Hutchinson Enterprise Center.
Loans would be made from the Economic Development Loan Fund.
The EDA Finance Team had discussed the idea and were recommending approval.
Further discussion.
M/S/P: McGraw, Stearns to authorize the forgivable loan program with the parameters as
discussed. Passed unanimously.
IX. Grant & Loan Program Applications – None
X. Other Business
A. Zella’s Invoice $1,610.40
(sales tax removed)
Staff finally was able to obtain the invoice for the Manufacturer TigerPath partner
event held at Zella’s back in early February.
The invoice was significantly higher than what had been discussed with Zella’s
management. $1,000 had been budgeted for the event.
M/S/P: Block, Christensen to approve payment of the invoice. Passed unanimously.
B. Paul Wright
County Commissioner Paul Wright has expressed an interest in attending future EDA Board
meetings.
Discussion followed.
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XI. Set Next Meeting – 11:30 AM Wednesday, July 26, 2017.
XII. Adjourn
M/S/P: Block, Czmowski to adjourn the meeting at 1:00 PM. Passed unanimously.
Respectfully Submitted,
Miles R. Seppelt
Economic Development Director