04-06-2007 EDAMEDA Board Meeting
Minutes of Meeting
Friday, April 6t" 2007
Members present in bold print:
Members:
Tim Ulrich Steve Jansick
Duane Hoversten Casey Stotts
Staff:
Miles Seppelt, EDA Director
Brian Warzecha, EDA Assistant
Ken Merrill, City Finance Director
I. Call to Order
Jim Haugen Diane Gordon
Mike McGraw
EDA President Tim Ulrich called the meeting to order at 7:05 AM.
II. Approve Agenda
No action.
III. Review & Approve Meeting Minutes
A. February 23rd EDA Board meeting
M /S /P: Stotts, Hoversten to approve the minutes of the February 23rd, 2007 meeting
of the EDA Board as written. Passed unanimously.
B. February 7t" joint meeting with City Council
M /S /P: Haugen, Hoversten to approve the minutes of the February 7t", 2007 joint
meeting with City Council. Passed unanimously.
IV. Review of EDA February Financial Statements — Ken Merrill
City Finance Director Ken Merrill reviewed the EDA's financial statements for the
benefit of the Board of Directors. Highlights included:
• There is a total of $257,887 in cash available in the operations budget.
• We've received $500 in rental revenue for the month from the Wetherell
Property.
• Expenditures for the month are just the typical items. Salaries for EDA staff
are the largest component.
• We have a total of $126,479 in cash available in the Economic Development
Loan Fund. There is one loan outstanding with a balance of $26,569 and this
loan is performing as required.
� In the DOxvntOxvn Loan Fund we have $817.808 in C8Sh available with
$619.705 in mortgages held. All loans are performing satisfactorily.
M/S/P: Stotts, Gordon tO accept the February Financial report as presented. Passed
Unanimously
V. Director's Report
EDA staff made the following report:
• Cornerstone Commons — We've closed On our $13O.00Oloan. |n talking with one
Of the owners Of the building it |OOkS like the BBQ restaurant is aiming for an
opening date Of June 1st
• Cenex—VVe are planning b3dO8site evaluation Ofthe CenexOn Wednesday the
11"'b] begin the Phase || Environmental work.
• Warrior Manufacturing — the new facility is coming along — they are hoping to
begin production On June 1 st .
• Farmer's Market Pavilion —we are meeting with the architects On Tuesday (the
1O m )b3 review their initial Site plans and elevations.
V1- Business Recruitment —"Customer Elation" (Call Center)
Customer B8hOn is 8 call Center operation that provides OutSOurCed customer
services for companies. The company has about 50 clients with the most notable
being C[)STC[). The average contract with their clients is about $100.000.
Currently, the COrnp8ny has two |OC8tiOnS. The HQ is located in B|OOrningb]n MN
and smaller C8|| Center is located in Foley MN. The total employment Of the
company iS near 1OO people and growing.
Customer E|8hOn Representatives contacted E[}/\ Staff b3 See if Hutchinson xvOu|d
be suitable place for their company to expand. They are looking to obtain 8 building
with 20.000 Sq ft. The new C8|| center would add 15-20 new jobs immediately and
there would be 8 possibility of 200 new jobs within 2 years. Their typical C8|| center
reps. make about $1O-$1O.5O8nhour.
The proposed Site for the C8|| Center would be 8CrOSS the road from Warrior
Manufacturing On the Wetherell Property. The C8|| center would be located On 3.8
acres On the Eastern Side of the property. TO save On future development COStG. Mr.
Ulrich thought we should develop the entire Site at once. This xvOu|d require the
VVethere||'StO move off Of the property.
Seppe|t explained funding for this project could happen several xv8yS. FirSt, this
project could utilize the E[}/\ revenue bond. This xvOu|d allow for 8 |Oxver interest and
lease rate. Second, E[}A staff could write 8 prOpOS8| for the yN|F grant at O%. If we
would receive the feder8|S dO||8nG the E[}A would keep this money forever. Fin8||y,
the proposed Site would make the business eligible for J{]BZtax breaks.
Board members thought that Customer E|8hOnS has very solid fin8nCi8|S and the
company would be 8 solid asset to Hutchinson.
M/S/P: StOtts, Gordon tO approve the concept plan & proposed financial package for
the Customer Elation call center. Passed unanimously.
VII. Business Expansion — Nordic Components
Nordic Components, a supplier of precision — machined aluminum parts, has
contacted EDA staff about expanding their business. It would work well for them to
partner with the EDA on a 30,000 sq ft spec building. Nordic Components would
initially buy 10,000 — 15,000 sq ft of building space from the EDA. This would cover
1/3 to' /2 of the building cost. The other 10,000 — 15,000 sq ft of the building would
be used for future business or Nordic Components would have the option to buy this
space in the future.
The next step in this project is to get a letter of intent from Nordic Components. At
this point EDA staff can begin to research building details (cost), establish a TIF
District, and create a development agreement.
Mr. Ulrich was concerned that if other businesses were to locate in this building
Nordic Components may not be able to expand in the future.
Discussion followed.
M /S /P: Haugen, Hoversten to approve in concept the plan for the Nordic
Components / EDA spec building. Passed unanimously.
VIII. State Theatre TIF District
Mr. Seppelt informed the board that the completed value of the State Theatre is
much higher than initially anticipated, which results in more Tax Increment being
generated. Its original market value was $463,000 and its revised 2007 value is
602,000, which is up 35.9 %. If the TIF District would be restructured around the 2007
market value the owner of the building would be able to capture more dollars through
Tax Increment.
Mr. Merrill thought that Mr. McMonagle had used all of his reimbursements in the
past, which would not make him eligible for any additional reimbursements. Mr.
Seppelt noted that there were additional reimbursable expenditures.
M /S /P: Gordon, Haugen, to proceed with the revision of the State Theatre TIF
District once staff works out the correct procedure. Passed Unanimously
(Mr. Ulrich abstained)
IX. Establish Cenex Redevelopment TIF District
Staff noted that many of the expenses the EDA will be incurring as part of the Cenex
redevelopment project would be reimbursable from future tax increment, if a
redevelopment TIF District is set up in advance of incurring those expenditures.
Items like land acquisition, building demolition, environmental clean -up and soil
corrections would be reimbursable.
The key is to have the redevelopment TIF district set up before those expenses are
incurred. Generally, it takes about 90 days to get a TIF district set up.
M /S /P: Stotts, Gordon to proceed with the establishment of the Cenex
Redevelopment TIF District. Passed Unanimously.
X. RFP for Industrial Park Design (Stritesky Property)
Being there is an infrastructure grant available from DEED, Mr. Seppelt would like to
distribute a request for proposals (RFP) to have a schematic design of the Stritesky
property. The prerequisite of this grant is having a design plan completed. The
proposed study would cover:
• Water & sanitary sewer infrastructure requirements and layout
• Storm water drainage requirements / parameters and layout
• Street alignment(s)
• Lot size & layout
• Projected costs for infrastructure development
• Potential phasing of development
M /S /P: Hoversten, Stotts to prepare an RFP and obtain quotes for this study.
Passed Unanimously
XI. Revision of Downtown Loan Program Rules
Mr. Seppelt said that Steve Gasser has been interested in purchasing the second
floor of the Hutchinson Hotel and it his intention to redevelop it as the new location
for his business, Vivid Image. To save on costs, Mr. Gassner would like to utilize the
Commercial Rehabilitation Loan Program. For this to occur some of the language of
the loan program would have to be altered.
The current language reads, "The downtown loan program can provide funds ranging
from $3,000 to $65,000 per lot for up to two lots, or up to 10% of the total project with
a maximum of $130,000 available for any given project."
The proposed language reads, "The downtown loan program can provide funds
ranging from $3,000 to $65,000 per lot or condominium for up to two lots or
condominiums, or up to 10% of the total project with a maximum of $130,000
available for any given project."
Mr. Seppelt also proposed to change the language of # 8 under Application
Materials. It currently reads, "Required documents must be submitted by the second
Friday of the month to be considered by the Finance Team on the third Thursday of
the month and by the EDA Board of Directors on the fourth Friday of the Month.
The proposed language states, "Required documents must be submitted by the
second Friday of the month to be considered by the Finance Team and EDA Board.
The proposed changes have been carefully reviewed by the EDA Finance Team,
and they are recommending the amendments as proposed.
M /S /P: Stotts, Hoversten to revise the loan program language as proposed. Passed
Unanimously
XII. Proposed development of property adjoining EDA — owned land.
Tabled until the next meeting
XIII. Consideration of proposal to purchase lot just to the north of Allied
Mechanical. Tabled until the next meeting
XIV. Grant & Loan Applications
Sign & Awning Grants
Herbal Pumpkin Patch — Bev Brown $2,000
M /S /P: Stotts, Haugen to approve the grant. Passed unanimously.
XV. Other Business
• City staff has recommended a highway 7 Corridor study for the up coming
project. Also, a limited moratorium will be proposed.
Mr. Ulrich was not in favor of the limited moratorium. He stated that the city
had gone down this route in the past and it was not successful. The EDA
Board would be in favor of a highway 7 corridor but not a moratorium.
M /S /P /: Hoversten, Gordon to support the Highway 7 study, but without a
moratorium.
• Mr. Seppelt noted that cleaning up the Wetherell property may be a fall
project to consider. This would include the demolition of the barn and silos
located there. Mr. Ulrich thought we should wait until the call center commits
to this property before any action is taken. If the EDA goes through with this
the Wetherell's should be notified ASAP.
XVI. Chamber Update
Mark Vaillancourt gave a brief update:
• Joe Constance will speak about Customer Service Excellence on April 18th.
There are 2 sessions 8:OOam - 11:30am and 1:30pm — 5:OOpm. Cost is
$49.00 Chamber and HDA members.
• Preparing for the startup of Music in the Park
• Have been working with the Hutchinson Parks & Recreation Department on
several projects.
XVII. Set Next Meeting
The next meeting will be Friday, April 27th, at 7:00 am in the City Center Main
Conference Room
XVIII. Adjourn
The meeting adjourned at 8:50 AM.
Respectfully Submitted,
Brian Warzecha
Economic Development Director Assistant