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HomeMy WebLinkAbout2000 [05] May 11Offaeial Minutes- EDA Board Pursuant to due call and notice thereof, theEconomie Development Authority for the City of St. Joseph met in special session on Thursday, May 11, 2000 at 10:00 a.m. in the St. Joseph City Hall. Members Present: Chair Kenneth J. Hiemenz. Board Members Mike Deutz, Ross Rieke, Bruce Gohman, and Ken Twit. EDA Director Chad A. Carlson. Others Present: Monte Eastvold, Duran and Moody Lease with Option to Purchase Agreement: Monte Eastvold, Duran and Moody, highlighted the details of the Lease with Option to Purchase Agreement between the St. Joseph Economic Development Authority and the City of St. Joseph. The term of the lease is 15 years, running through year 2015. Twit questioned at the end of the lease how the building will be purchased by the City of St. Joseph. Eastvold stated that tke standard practicers th have a small monetary amount paid to the EBA by the City to execute the purchase (i.e. $1.00). Twit questioned what and when the exhibits will be incorporated into the agreement. Eastvold stated that the exhibits would be placed into the document once the final document is prepared by Duran and Moody. Eastvold explained the contents of the following exhibits: Exhibit A: The project description will be prepared once a final decision is made by the City regarding the scope of remodeling. The statement will be as simple as the remodeling of the bank facility for City Administration and Police Department. Exhibit B: The schedule of payments will reflect the same payment terms of the bonds issued by the EDA. The City will make payments to the EDA according to the schedule of payments in this agreement. Again, this could not be inserted until the bond issuance has been completed. Exhibit C: This exhibit is simply states the purchase price schedule during the term of the lease and insurance coverage by the City to make the payments until the purchase of the facility is made. Exhibit D: This exhibit states that the individuals executing the agreement on behalf of the EDA and the City are certified officials of both parties. An independent notary of the City verifies the .parties involved. Eastvold further explained that the prepayment and purchase options in the agreement begin in 2007. The remaining blank items throughout the document will be complete after the EDA's acceptance of the lease agreement today. Carlson stated tFlat he has sent a copy of the lease agreement to John Scherer for his information. Scherer stated that it would be in the best interest of the City if he is familiar with the contents of the agreement in the event the public questions the agreement. Scherer stated that he would not change the contents of the agreement and will prepare a response to the documents for the record. Eastvold added that Briggs and 1Vlorgan has extensive experience in the project revenue bonding process and is essentially acting as legal counsel for the EDA and the City for this agreement Twit moved to approve the Lease with Option to Purchase Agreement between the St. Joseph Economic Development Authority and the City of St. Joseph for the City Administration and Police Department facility; Seconded by Rieke. The motion was approve by thefollowing vote: Ayes: Gohman, Deutz, I~iemenz, Twit and Rieke Nays: None Motion Carried Ground Lease Agreement: Eastvold stated that for redevelopment projects, a-gourd lease agreement must be executed to cover the ground the facility is located. The lease agreement previous}y approved covers only the facility and the ground lease covers the property Briggs and Morganr Bond_['^n__ __~en c 1, ara telling us that this. is a State Statute requirement and must be followed in order to complete the project. Gohman moved to approve the Ground Lease Agreement between the St. Joseph Economic Development Authority and the City of St. Joseph for the property on which the City Administration and Police Department facility will be located; Seconded by Deutz. Discussion: Deutz stated that in the private sector a split lease arrangement such as this is typically done for tax purposes. Does this agreement provide a tax advantage to the City by using a split agreement? Could the City take some cash on hand to pay for a portion of the remodeling, thereby having less tax impact to the residents? Eastvold stated that there is no real economic benefit to the City by arranging two separate lease agreements. Again, State Statute requires twv separate leases.- The City could have used other funding sources to write down the amount of the bond. However, those funds have been earmarked for other projects throughout the City. Those funds would have to be replaced somehow and there would be no advantage to doing that. Twit explained that all the City's funds are scheduled for use for other pending projects. Two-thirds of the City's reserves are already allocated to upcoming projects andone-third is an operating reserve in the event the City needs those funds. The operating reserve amount is established poli4y by the City Council. Essentially, there are ~ funds available for this project unless the City decides not to complete upcoming projects. Eastvold added that growth in tax base and other revenues could be used after 2007 to pay o„~'the lease and purchase the facility. Howeverr if levy Zimits still existr the City's ability to levy agrrinst that growth may be limited The motion wad approve by the following vote: Ayes: Getman, Deutz, Iliemenz, Twit aad Rieke Nays: None Motion Carried Bond Issuance• Eastvold presented the St. Joseph Economic Development Authority with the proposed project revenue bond proposal fqr the new City Administration and Police Department facility. Eastvold briefly review the Official Statement document that will be presented the bond buyers. Eastvold further detailed the specifics of the bond statement including the underwriters discount, capitalized interest, call option, tax impact analysis amt the annual payments is be made by the EDA Therevenue source_fot the EDA will be the City's collection of taxes from the residents and business owners of St. Joseph. Eastvold further quantified that the tax impact to the residents and business where calculated with conservative. growth projections of 1%. Eastvold presented the Bond Resolution necessary to issue the bonds in the market place in accordance to the rateand-terms discussed. Juran and Moody wi}} set the rate of the bond prior to sale. The resolution authorizes the EDA to sell the bonds. Deutz moved to approve the Authorizing Resolution to issue $960,000 in Project Revenue-Bonds for the City Administration and Police Department facility; Seconded by Twit. The motion was approve by the fallowing vote: Ayes: Gohman, Deutz, Hiemenz, Twit andRiekc Nays: None Motion Carried Sale Contract• Eastvold presented the EDA with the final document to execute the sale of the Public Project Revenue Bonds. 'The Contract of Negotiable Bond Sale will allow Juran and Moody to purchase the $960,000 Public Project Revenue Bonds according the term and rate as identified in the contract and in turn sell the bonds on the market. Gohman moved .approve the Contract of Negotiable Bond. Sale with Juran and Moody; .Seconded by Rieke. The motion was approve by the following vote: Ayes: Gohman, Deutz, Hiemenz, Twit and Rieke Nays: None Motion Carried Eastvold stated that he anticipates the closing date of the sale during the first week of June. Upcoming Events and Conferences: Carlson informed the EDA Board of the following_events aze scheduled_for June. Carlson_informecl the Board that he would be attending the EDAM Summer Conference held in Brainerd at Madder's Resort. The conference ~s an excellent networking and training opportunity. • TIF Conference-June 7'~ • EDA Board Meeting -June 14'~ • League of MN Cities -June 13`~ - 16~' • EDAM Summer Conference -June 28~` - 30~' Deutz questioned if Carlson budgeted for the conference and funds were available. Carlson stated that funds were budgeted for the EDAM and DTED conferences, with additional funds for other training sessions throughout the year. There are funds available for both major conferences. Carlson further stated that the League of Minnesota Cities conference is held in St. Cloud this year. He may attend some of the sessions, but doesn't intend to register for. the conference. due to the.. fact thatthere is not much on the agenda regarding community or economic development. Adjourn The EDA Boar adjourned by consensus at 11:00 a.m. ~~~ ~ G' _ Chad A. Carlson Economic Development Director