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HomeMy WebLinkAbout2009 [11] Nov 18CITY OF ST. JOSEPH ECONOMIC DEVELOPMENT AURTHORITY Meeting Minutes — Wednesday, November 18, 2009 Present: EDA Board Members Carolyn Yaggie- Heinen, Ken Jacobson, Al Rassier, Tom Skahen, and Dale Wick. Absent: None. Also present: S. Paul Petrek ( Stonehouse), Bill Nelson ( Stonehouse), Tim Nelson ( Stonehouse), Dorian Davidson (DM Building), Dean Wick ( Outsource Architecture), and EDA Director Cynthia Smith - Strack. Chairperson Wick called the November 18, 2009 regular meeting of the St. Joseph EDA to order at 3:03 p.m. Agenda. Chairperson Wick introduced the agenda. Wick suggested moving item 5(a) BFA Application and RLF consideration for Stonehouse Operations up to item 2(a) to accommodate meeting guests. Strack requested item 5(e) be added to the agenda as Disbursement of BFA Grant to Prego Properties LLC, d.b.a. The Local Blend. Moved by Skahen and seconded by Heinen to approve the agenda with the aforementioned changes. Motion carried 5-0. BFA Application /RLF: Stonehouse Operations Chairperson Wick introduced the agenda item. Strack noted guests at the EDA meeting representing the Stonehouse Restaurant included: Paul Petrek, Bill Nelson, Tim Nelson, Dean Wick, and Dorian Davidson. Strack noted she had repeated conversations since the EDA packet was delivered to board members. Those conversations were with Charlie Reichert, Paul Petrek, and Bill Nelson regarding need to resubmit BFA Application and RLF Application for the Stonehouse Restaurant and Eatery to reference a proposed remodeling and expansion project rather than the installation /replacement of a sign on the site. Strack noted a revised application for the RLF program was submitted but incomplete. A revised BFA application had not been submitted. For the RLF application to be complete Strack noted a need for submittal of additional information including number of jobs being created as a result of the remodel /expansion, proposed security /collateral, historic and pro forma financial statements for the company, financial statements from company officers if personal guarantee proposed, lender information, and project sources /uses of funds proposed. Strack noted the revised RLF application requests $30,000 at three percent interest for a term of seven years. The audited balance of the RLF as of December 31, 2008 is $52,648 with a current estimated balance of $54,313.58. The EDA has previously committed to a loan in the amount of $24,000. Strack introduced the project representatives and requested additional background information for the EDA. Bill Nelson requested Dean Wick review the proposed project. Dean Wick from Outsource Architecture noted the proposed project included addition of a southern entry and remodeling to accommodate a banquet hall which would be accessed from the existing entry on the northeast side of the building. The building footprint would be increased by 672 square feet; seating by 61 spaces. Existing landscaping will be altered slightly due to the additional entry. Davidson noted the projected cost of remodeling is $250,000; timeline is to begin remodel following the holiday season. Strack requested clarification as to the number of employees currently versus those projected post remodel. Petrek stated a total of ten new full time positions and 15 part time positions will result from the remodeling /expansion. Strack requested input regarding proposed security, collateral for the loan expressing a preference for a second position on real estate. Bill Nelson stated a second position was difficult for several reasons including the cost of an appraisal for the property, disagreements in the methodology of any appraisal during turbulent times for restaurant properties, and the desire of the Developers to reserve a second position on the mortgage for a larger secondary lender. Nelson indicated a preference for an unsecured loan. Strack indicated the potential for issuance of a loan without security was very low and she would not recommend the EDA consider such a position. Strack further noted the EDA has requested personal guarantees from corporate officers in addition to a promissory note. EDA members echoed a need for security in conjunction with any loan. Skahen questioned what kind of financial information would be needed from the Developers. Strack indicated that depended on type of collateral proposed but at a minimum would likely include historical and proformas for the restaurant and personal financial statements for those providing personal guarantees. Strack further noted that financial information would be considered proprietary and only shared with the RLF review subcommittee. Wick asked the EDA for direction on the agenda item. Strack noted the EDA had two apparent options, the first to send the RLF application to the review subcommittee provided a complete application and financial information was submitted prior to convening the subcommittee or table action on the matter to a future meeting following submittal of a complete application. Motion by Skahen, second by Heinen to direct subcommittee review of the RLF application from Storehouse Restaurant contingent upon the submittal of a complete application prior to loan review. Motion approved 5:0. EDA members available to the serve on the review subcommittee include Heinen, Wick, and Skahen. Discussion then turned to the BFA application submitted by Stonehouse Properties, LLC. Strack noted the application included in the packet referenced placement of a new sign but subsequent discussion with the Developers revealed a remodeling project was planned in addition to replacement of a sign. Strack noted the remodeling /expansion would likely qualify for the BFA grant whereas the sign was clearly not a stand -alone qualifier. Strack indicated the Developers plan to resubmit the BFA application but have not yet done so. Motion Jacobson, second Skahen to approve the BFA application contingent upon the submittal of a complete application referencing the remodeling /expansion project as discussed in conjunction with the RLF application. Motion approved 5:0. Approval of Minutes. Chairperson Wick introduced the minutes from the October 28, 2009 regular EDA meeting. Motion by Heinen, second by Wick to approve the minutes from the October 28, 2009 regular meeting as presented. Motion carried 5-0. EDA Accounts Payable. Wick introduced the topic. Wick noted accounts payable for the month which totaled $2,611.40. Motion by Jacobson, second by Rassier to approve the EDA accounts payable for the month of October 2009 in the amount of $2,611.40. Motion carried 5-0. Financial Report. Wick introduced the agenda item and noted the October 2009 year to date Treasurer's Report was included in the packet. EDA Minutes — November 18, 2009 2 Motion Rassier with a second by Heinen to approve the financial reports as presented. Motion carried 5- 0. RLF Application Prego Properties, LLC d.b.a. The Local Blend Chairperson Wick introduced the agenda item. Strack stated the EDA had received an application for the RLF Program from Jeff and Stacie Engholm Owners of Prego Properties, LLC. dba The Local Blend. A copy of the application was included in the EDA packet for information. At the previous meeting the EDA authorized review of the application by a subcommittee. Pursuant to the EDA action the application and supportive materials including profit/loss statements and projections have been received and reviewed by the RLF subcommittee (Finance Director Lori Bartlett, EDA Member Jacobson, EDA Member Skahen, a Representative from the Applicant's Financial Institution, Doug Danielson, and EDA Director Strack). The subcommittee recommends approval of a loan in the amount of $24,000 for a term of either five or seven years at a rate of two percent (for five years) or three percent (for seven year term). The Applicants have subsequently requested a term of seven years at three percent. The loan will be secured by a second mortgage on the subject property and a personal guarantee from the company owners. There is adequate equity in the existing property to secure the loan at a loan to value ratio of less than .9:1. Staff have drafted loan documents including a loan agreement, promissory note, mortgage, and personal guaranty for review by the City Attorney. A recommendation by the EDA to the City Council is kindly requested. Motion Heinen, second Wick to recommend the City Council approve a loan to Prego Properties LLC from the Revolving Loan Fund in the amount of $24,000 for a term of seven years at a rate of three percent secured by a second mortgage on the property at 19 West Minnesota Street and a personal guaranty from the Applicants. Motion carried 5:0. EDA Marketing Position Chairperson Wick introduced the topic and referenced two sample job descriptions that were being distributed to EDA members. Wick noted the City Council was continuing to review the 2010 budget and capital improvement program. Wick stated the City Council had agreed in principle to seek additional marketing outreach efforts by the EDA effective immediately. Wick stated the EDA was being asked to comment on what the EDA marketing staff person's duties should entail using the sample job descriptions as a starting point. Rassier stated the City Council felt a need to reach out to existing and potential business owners to fill space available in St. Joseph and to increase new business activity. The Council favors the creation of a part time marketing position of approximately 20 hours per week (2 'h to 3 days per week) to accomplish such a goal. Skahen inquired as to what would happen to the existing contract for professional services. Wick stated the contract would be cancelled. Rassier noted a clause in the current agreement for professional services which allows for a sixty day transition period between the professional services contract and staff addition. Heinen inquired as to who would conduct other duties completed at this time by the professional services contract. Rassier indicated the marketing staff person would complete activities currently administered under the professional services contract and perform additional marketing outreach, apply for grants, update marketing materials, met with development leads, pursue advertising deals, and update the website. Heinen suggested removing 'marketing' from the job title in favor of the title of "Community Development Director" as included in the sample job descriptions. Wick inquired as to whether or not EDA members were stating more than just a marketing position was needed. EDA member affirmed the statement. Rassier stated the City Council felt strongly that economic development efforts needed to try harder and do something more to fill more businesses and get more people into town while reducing costs. Heinen EDA Minutes - November 18, 2009 3 inquired as to whether it was realistic to attract a staff member who met desired qualifications, who would serve more hours per week for less than the existing professional services contract. Rassier noted the job market at this time seemed favorable as evidenced by a report from the City Administrator. Skahen stated a qualified part-time applicant could be difficult to find. Rassier stated the ideal candidate would be a retired business owner looking for part-time employment. Wick asked EDA members what duties other than marketing should be included in the job description. Heinen suggested grant writing, attendance at board meetings, and representation of the EDA at official functions. Heinen asked Strack for input on the job description. Strack encouraged EDA members to think about specific outcomes desired prior to creating a job description. If specific, measureable outcomes were desired the job description and posting should reflect those outcomes so as to be fair to applicants as well as furthering the City's desires. Skahen suggested the position would be more effective if it was a full -time permanent position and expressed a desire to be sure to gain something from the change. Rassier stated that what the City Council wants to do is to lower the cost of staff for the EDA while improving economic development efforts. Wick stated that if the part-time staff person provided more office hours per week then the EDA would get more for their money. The discussion concluded by Wick reaffirming the EDA thought the part-time staff job description should be expanded to include more than marketing duties. SCSU Study Wick introduced the agenda topic. Strack noted that although the final study was expected to be complete by today's meeting date, Dr. Edwards was awaiting receipt of additional details and to review revised data with graduate students in charge of the project. Strack stated that as such no action was required. Disbursement of BFA Grant to The Local Blend Chairperson Wick introduced the agenda item and referenced an invoice for the project that was being distributed. Motion Wick, Second Heinen to approve BFA Disbursement for The Local Blend project. Motion approved 5:0. Board Member Announcements Rassier noted he had attended the ribbon cutting at Coborn's Superstore earlier in the day. Rassier stated Chris Coborn and Dan Coborn thanked the EDA, the Planning Commission, and the City Council for working with the company from proposal through grand opening. Jacobson distributed a memo to the EDA and requested the language included in the memo be placed in the minutes for the meeting verbatim as follows. I enjoy working with all the members and staff of the EDA, and believe 1, as a committee member, have always acted respectful and in the best interest of the city on all the matters that have come before me. I understand there will be disagreements among us and that is acceptable as long as those reactions do not become disreputable. Some recent events have left me concern that the city is neglecting to notice or failing to admit the hostile environment that is developing and the demeaning, verbal harassment that is occurring as a result of opposed votes between committee members. 1 have decided that unless the city adopts and efficiently administers a set of moral and ethical rules for all city employees and committee members to follow, I will resign from my position with the EDA. Thank you for your time regarding my concern. 1 will be looking forward to the city's response to this matter in written form no later than December 18, 2009. EDA Minutes - November 18, 2009 4 The EDA board discussed the memo and questioned Jacobson as to details included in the memo Motion Wick, second Skahen to recommend the City Council investigate whether or not written ethics policies or guidelines relating to City commissions, committees, and boards were in place. In the event such policies/guidelines do not exist the EDA recommends such items be established and placed into effect in 2010. The EDA further requests the incident prompting the submittal of the memo be investigated by the City Council. Motion approved 4:0, with Jacobson abstaining. Wick noted he was not at the Coborn's ribbon cutting because he attended a SCAEDP meeting which featured a speaker from Michigan State who addressed economic development in difficult economic times. Wick stated he requested a copy of the presentation from the meeting and wished to provide it to EDA members for review. Adjournment. Meeting adjourned by consensus at 4:45 PM. 4A-4� "ck- Cynthia Smith - Strack EDA Director EDA Minutes - November 18, 2009