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11-22-2002 EDAMHutchinson EDA Board of Directors Minutes of Meeting Friday, November 22, 2002 Members present in bold print Members: Tim Ulrich Bob Windel Jim Haugen Don Walser Jeff Haag Duane Hoversten Keith Fischer Vi Mayer Guests: Ken Merrill Marc Sebora Staff: Lisa McClure, EDA Intern Miles Seppelt, EDA Director 1. Tim Ulrich called the meeting to order at 7:00 a.m. 2. Introduction of Miles Seppelt Miles introduced himself as the new EDA Director. 3. Consideration of minutes from October 25, 2002 meeting. A motion was made by Don Walser to approve the minutes from the October 25, 2002 meeting. Jeff Haag seconded the motion. Tim Ulrich asked for discussion. The motion passed. 4. Review and approval of Finance Team minutes from November 13, 2002 A motion was made by Duane Hoversten to approve the minutes from the November 13, 2002 meeting. Jim Haugen seconded the motion. Tim Ulrich asked for discussion. Motion passed. 5. Review Financial Statements Ken Merrill went over the October financial statements. He stated that on page one the balance sheet shows $31,104 in cash. On page two, revenue is being generated from rents collected. In November Ken will make a transfer in the amount of $120,000. In December or January money will be transferred to cover the 2002 payments to HKGi, the 2001 transfers have already been made. On page three there is a deficit of $13,443, this will be a positive number after the transfers. On page four, the Economic Development Loan Fund shows $256,571 in cash. Allied Mechanical is continuing to make payments on their loan. One page five, the Downtown Loan Program there is $488,586 in cash. Loan repayments totals $75,130. The money to transfer in will be taken from this fund to pay for HKGi payments. Bob Windel asked if HKGi is sending the EDA a monthly bill or a bill as needed. Ken stated they bill the EDA as services are rendered. The remaining balance will cover printing costs. Keith Fischer asked about the Crow River Press loan. This was closed out but Ken is showing they did not make the final payment. He is continuing to work on this issue. Don Walser asked if the council has approved the budget yet? Ken stated it would go through review process one last time on Tuesday, November 26 at the workshop and then to the first council meeting in December for approval. He does not think there will be any problem with this budget. A motion was made by Bob Windel to approve the financial statements for October 2002. Keith Fischer seconded the motion. Tim Ulrich asked for discussion. The motion passed. 6. Delinquent Loans Lisa McClure handed out a report to the board with the delinquent loans. Lisa stated that Labat, Jensen, and Hoseck have paid since the report was printed. At this time Lamprecht, Reiter, Barton and Schutt are 60 days late and Lang and Jones are 30 days late. The payment coupons should help to alleviate this problem, if they would use them. Lisa also stated she would be sending out delinquent notices on December 1. 7. Payment Coupons and Account Statements Lisa stated she has sent out payment coupons and statements to all loan recipients and have asked them to use the coupons when they are making their monthly payment. She also mentioned she has received lots of positive feedback from people about the coupons. 8. Peterson Subordination Agreement Lisa stated she had been in contact with Renee at Citizens Bank to work out the details of Richard Peterson's subordination agreement. He has three loans with the EDA. He is receiving a loan from Citizens in the amount of $90,000. Citizens Bank has asked the EDA to subordinate the first loan (From 1993) to the new Citizens loan. Lisa is waiting to record the mortgages for his two new loans until after Citizens has recorded their loans. At which time, the EDA will subordinate to Citizens Bank. Keith Fischer made a motion to approve the agreement upon notification from Citizens Bank to have the agreement signed for Mr. Peterson. Duane Hoversten seconded the motion. Tim Ulrich asked for discussion. Motion carried. Jeff Haag and Tim Ulrich abstained from voting. 9. Industrial Park update Marc Sebora was at the meeting to update the committee about the condemnation process of the Hackbarth property. It is 19.5 acres. The City Council will have a resolution brought before them to go forward with the process at their next meeting. Duane Hoversten asked if there had been any contact with the Hackbarth family? Marc said he has been in contact with their attorney and he said they would accept the petition. Tim Ulrich asked if Julie would be able to draw up a map of the Wetheral and Hackbarth properties, which would all be city property. Ken Merrill asked how far the boundary extends? Does it extend all the way to the West? Tim said it extends a little past the right -of -way. He asked if there is an interest in acquiring additional property. The board said yes, if there is enough money. Marc Sebora stated the EDA has the option of purchasing more property but they will need more money. Duane Hoversten said he spoke with Frank Fay who said that he would sell more than the 20 acres. Jeff Haag asked about a road easement. Tim said that there is $475,000 in the fund to be split between downtown projects and industrial park projects. 10. Hutch Utilities Marc stated that Hutch Utilities is interested in connecting a pipeline from Trimont to Hutchinson. This would be through the Hackbarth property. His question was should they negotiate with the current owners or with the EDA? Don Walser asked when the city would have title on the property? Marc stated the end of February. The board decided Hutch Utilities should negotiate with the EDA. 11. MPCA Fine Marc stated the fine from the MCPA is resolved. They have the $5,000 and the paperwork submitted and are happy with that as a settlement. 12. Plastic Specialties Loan The minutes from the subcommittee meeting about Plastic Specialties were included in the packet. In July 2002, the assets from the company were transferred to Citizens Bank and Trust. At that time the bank met with creditors and Tom Daggett, at which time they entered in to a 120 -day management agreement. Daggett made an offer of $1,250,000 to purchase the companies in November 2002; the total estimated assets were $1,650,000 at that time. The real estate was not included. There will be a $400,000 shortfall in trying to pay back the creditors. Citizens Bank is in first position and will lose approximately $250,000; MidMinnesota is second in line and will lose approximately $70,000; the City of Hutchinson is third in line and will lose $60,000. The original loan was taken from the Economic Loan Fund. Tim Ulrich stated there is $750,000 lost to unsecured creditors and in family loans. The Bruns' were relieved of their personal guarantees due to their cooperation in handling this matter. The EDA board needs to make a recommendation to the City Council to acknowledge the loss of the loan and to write it off. Daggett has not closed on the deal, Tim though it should happen next week (November 25 -27). Citizens Bank will pay the IRS lien along with Daggett, they will split the cost. The lien is $40,000, each will pay $20,000. On the building and land, Southwest Minnesota assisted in financing the building, they will get some of the money back, and Daggett will be paying rent on the building. The banks also helped with that part, they would lose money on that portion too. The EDA contributed with a 2/3 land write down. Duane Hoversten made a motion to recognize the loss of $60,000 for the loan to Plastic Specialties; the loan is now null and void. Don Walser seconded the motion. Motion carried. Tim Ulrich and Jeff Haag abstained from voting. Duane Hoversten made a motion to continue on with the original arrangement for the 2/3 land write down, Daggett has three -9 month leases, after that time, the issues will be reviewed. Bob Windel seconded the motion. Motion carried. Tim Ulrich and Jeff Haag abstained from voting. 13. Staffing Tim Ulrich mentioned that Lisa McClure's time with the EDA is almost over. December 13 is the last day Lisa will be at the City. Tim Ulrich has spoken with Matt McMillan of the Downtown Association and Brenda Ewing about extending Lisa's time with the EDA. At this time she is looking for permanent employment. Tim Ulrich asked the board about what direction they would like to take? Lisa McClure could stay until January 31, 2003, if she does not find a job sooner. The Downtown Master Plan should be finished up by the end of January. Miles Seppelt suggested keeping Lisa on with the EDA until January 31 and having another intern start February 3, 2003. The board decided that Lisa will stay at the City of Hutchinson until January 31 or she finds a permanent job and a new intern will begin February 3 or sooner, should Lisa be finished. 14. Chamber Report Vi Mayer was at the meeting to give the Chamber report. He stated that the Community Leadership seminar would be here again in 2003. It is sponsored by Southwest Minnesota and the Chamber and will be held in April. Annual meeting is set for January 30,2003. In July Hutchinson will host the MS Tram, Bike Across America. There will be 1,000 riders and 300 support people. The Annual Retreat was held November 21 and everything went well. They continue to plan for 2003. The Kelley Inn is now running the AmericInn. 15. Website Miles would like to rework the EDA website, once he gets settled in a bit. He wants to restructure and add new information. At the December meeting, Miles will begin giving the directors report. 16. New Business Duane Hoversten stated he would be writing McLeod County to lobby for a county EDA Director. He will be writing them a letter and would like the EDA to assist in this process. Miles and Duane will work together to write this letter and get the process moving. 17. Next meeting The next board meeting is December 20, 2002 at 7:00 a.m. 18. Adjourn A motion was made and seconded to adjourn. The meeting was adjourned at 8:20 a.m. Respectfully submitted, Lisa McClure, EDA Intern