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05-27-2005 EDAMHutchinson EDA Board of Directors Minutes of Meeting Friday, May 27, 2005 at 7:00 a.m. Members present in bold print: Members: Tim Ulrich Steve Jansick Jim Haugen Duane Hoversten Casey Stotts Mike McGraw Staff: Miles Seppelt, EDA Executive Director Crystal Foust, EDA Intern Erin Eberdt, EDA Intern L Tim Ulrich called the meeting to order at 7:03 a.m. II. Approve Agenda No action III. Review and Approve Meeting Minutes a. Review minutes from April 22nd EDA Board Meeting. Don Walser M/S /P: Jansick/Haugen to approve minutes from EDA Board as written. Passed unanimously. b. Review minutes of May 9th Special EDA Board Meeting. M/S /P: Haugen/Stotts to approve the minutes from the May 91h Special EDA meeting as written. Passed unanimously. c. Review minutes from April 20th Finance Team Meeting. M/S /P: Jansick/McGraw to approve the minutes from the April 20th Finance Team Meeting as written. Pass unanimously. IV. Review April Financial Statements — Miles Seppelt gave the following report: • Pg. 1 is the balance sheet for EDA Operations listing the cash available as $83,855. 1 $5,256.25 has been collected because a business has transferred property during the 2/3 -1/3 land -write down program. This will be reflected under operations in the May financial statement. • Pg. 2 and 3 is the statement of April revenues and expenditures. Every line item is within the budget. Wages are the only activity for the expenditures. The only income for the month is from rent generated from the Wetherell property. This month the EDA has paid the annual membership fee to Community Venture Network for marketing. • Pg. 4 EDA currently has a balance of $147,314 for cash available. The cash available reflects $7,500 recovered from Allied Mechanicals. • Pg. 5 Currently for the Downtown Loan Fund, the cash available is $481,391. This number reflects the total unencumbered balance. $163,837 has been dispersed in loans and $12,205 in grants this year. M /S /P: McGraw/Haugen to approve the April Financial Statements as presented. Passed unanimously V. Directors Report Miles Seppelt gave the following updates: A. State Theater: The carpet will be laid today (May 27th) and the McMonagle's will be moving in on June 1st. The rest of the project is close to being finished. B. Liquor Hutch: Construction is scheduled for Tuesday, May 31St. The contractor, Shinglebee Builders is ready and a preconstruction meeting has taken place. The contractor anticipates being done by September 30th. Details still need to be worked out with Nash Finch. C. Rix Corner Redevelopment: A bank has not approved the financing yet. The developer has submitted a packet to three other banks. The builders and architects have meet with the planning department and city staff. The project needs financing in place to move ahead. D. Hutchinson Hotel: The Chamber has moved in. There is still 2,500 square feet of space available. June 9th the Chamber will host Business After Hours. The open house of the entire Hotel will be sometime in July. E. Downtown Streetscape Project: Bids came back on Friday (May 20th). The apparent low - bidder is EAI Environmental Associates from Wilmer was approximately $250,000 lower than the projected cost. The references are being checked currently. There will be a special City Council meeting on Tuesday, May 31St at 5:00pm to present information and call for an assessment public hearing on June 14th. The City Council will make final approval and construction could begin at the end of July. F. Wetherell Industrial Project: Mr. Seppelt has gone out to contractors to get quotes to scrape off topsoil on the south side of the Wetherell property. He has received two quotes and is waiting on two more. Additional fill will come from various public improvement projects in the city as needed. The quotes will be discussed next meeting. G. Cenex consolidation project: Mr. Seppelt spoke with an individual at Cenex. Further discussion continues to take place at the Cenex Board meetings. H. New business recruitment: A manufacturing company has agreed to expand in the City of Hutchinson and are interested in the north 10.85 acres of the Wetherell Property. All of the plans will be discussed in the remainder of this year and construction will begin next spring. I. Mid West TaeKwonDo- The City Council has agreed to sell the land (approx 15,000 square feet) south of ShopKo. The building is being proposed to be split between the TaeKwonDo and a dance studio. ShopKo has right of first refusal and 30 days to exercise this right. The density of TaeKwonDo will bring in about 250 -300 kids to the downtown. VI. Grant & Loan Applications None VIL Hutchinson Hotel- Sale of Kock Jewelry Mr. Seppelt has received a letter from Tom Daggett of Hutchinson Properties, LLC expressing their exploration to sell the Kock Jewelry portion of the Hutchinson Hotel project. Mr. Daggett has expressed some concern about the current financing through the HCDC and the guidelines set forth under the commercial rehabilitation loan program. The Loan Rule states, "The downtown loan program can provide fund ranging from $3,000 up to $65,000 per lot for up to two lots, or 10% of the total project cost, whichever is greater, with a maximum of $130,000 being available for an particular project." Finance Team has reviewed this proposal and generated questions. The area of the lot is 11,083 square feet, which is equivalent to four properties on Main Street. Floors two and three may be remodeled in the next 3 -5 years. The EDA needs to look at the whole scope of the project. The Finance Team wanted to justify the rules in the loan guidelines. Mr. Jansick pointed out the EDA should not exceed 100% of the appraised value of the Hotel. The EDA Board took action to support the sale of Kock Jewelry and will report to the Finance Team at the next meeting on June 15tH M/S/P: McGraw /Haugen to support the motion of Hutchinson Hotel to sell the portion occupied by Kock Jewelry. VIII. Proposal from Small Business Development Center: Mr. Seppelt began with a summary of the proposal from Small Business Development Center: The Small Business Development Center (SBDC) is currently located at Ridgewater and has their intake center there. The relationship between the college and SBDC is not what it was in the past; therefore the SBDC is looking to relocate. The proposal is to combine the intake function in the EDA department. EDA staff would be the point of contact for the Small Business Development Center. The EDA would be responsible for: a. Receiving phone calls from SBDC clients (being the contact point) b. Client in— processing C. Coordinating between clients, counselors, and the SBDC regional office d. Distributing information packets e. Setting up occasional meeting between clients & counselors (coordinating conference rooms, etc) The SBDC is partially funded by DEED and the Department of Commerce and would like to get local funding as well. All the office assistance by the Ridgewater staff was in -kind donation. The EDA Board agreed to table the decision for more information. M/S/P: Haugen /Jansick support the motion to defer decisions until the meeting on June 24, 2005. IX. Presentation on JOBZ— Crystal Foust A total of 10 Job Opportunity Building Zones (JOBZ) encompassing over 29,000 acres in 235 sub zone communities have been created for the duration of 12 years beginning Januay1, 2004. JOBZ is a program designed to simulate economic development activity in Minnesota with the exception of the 7- county metro area. These tax -free zones provide incentives to businesses to start-up, expand, or relocate to a specific designated area. The incentives include: a. Exemption from corporate franchise tax b. Exemption from income tax for operators and investors c. Exemption from sales tax on business purchases d. Exemption from capital gains tax e. Exemption from property tax (with exceptions) f. Job creation credit Businesses become qualified for JOBZ through the execution of a local Business Subsidy Agreement. This agreement includes performance requirements such as number of jobs to be created, wages and benefits paid, and capital investment. Because the City of Hutchinson was not part of the initial allocation of JOBZ acres, city staff must undergo a Sub Zone Modification process, which involves a series of steps. Modifications will be considered if there is a qualified business anticipated to locate onto the requested parcels. A manufacturing company is looking to expand in Hutchinson and would like to use the JOBZ incentives. ❑ Step l: Adopt a JOBZ Business Subsidy Policy (addendum to existing Subsidy Policy) ❑ Step 2: Request information from City of Marshall and City of Tracy (see modification process) ❑ Step 3: Gather information from City of Hutchinson Need: ❑ Number of acres to be added ❑ PIN # of parcels added ❑ Location and legal description of parcels added ❑ Map showing current and future zoning of new parcel, location, access to infrastructure ❑ Step 4: Adopt three resolutions from city, county, and school district to approve the inclusion of the new acreage as JOBZ designation ❑ Step 5: Need information regarding the business locating on the site 4 ❑ Name and description of the business ❑ Number of new jobs- needs to be a 20% increase or a minimum of 5 new jobs, which ever is greater within the first year of relocation ❑ Brief description of the development goals for the site showing the immediacy of need for inclusion of the site in the Sub zone. All of the information is then sent to the Commissioner of DEED (Department of Employment and Economic Development) for approval. It usually takes 30 -60 days to get a formal approval by the Commissioner of DEED. After the approval, the City will establish a Business Subsidy Agreement between the city and the business. The business is monitored by the Southwest Regional Zone Administrator to ensure compliance with terms agreed upon in the Subsidy Agreement. X. Chamber Update Mr. Jansick gave the following report: The Chamber is restructuring and joining with the CVB. The boards will be combined in June for a 23 member board with 7 executive board members. Both will have their own financials. It will become one basic entity. The executive board positions and the people who serve on them will be switched around. There will be a separate task force created but details are not yet worked out. There will be an open house on June 9th. Dairy Days will be June 3ra XI. Other Business Erin Eberdt will be the new EDA Intern until December. XII. Next meeting June 24, 2005, 7 am. XIII. Adjourn The meeting adjourned at 8:15 am. Respectfully submitted, Erin Eberdt EDA Intern