HomeMy WebLinkAboutMar_21st_2023_EDACITY OF ST. JOSEPH
www.cityofstjoseph.com
75 Callaway Street East | Saint Joseph, Minnesota 56374
Email: cityoffices@cityofstjoseph.com | Phone: 320.363.7201 | Fax 320.363.0342
St. Joseph Economic Development Authority Tuesday, March 21st, 2023 12:00 PM 75 Callaway St E (St. Joseph City Hall) ** The meeting will also be offered remotely via Zoom**
1.Call to order
2. Public Comments
3. Approve Agenda
4. Consent Agendaa. Minutes – Requested Action: Approve the minutes of February 21st, 2023
b. Financial Report – None - will be presented in April
5.CSBSJU Student Project
6.RLF Policy
7. Boutique hotel update
8.JR Mobile update
9.General Business/Development update
10.Board Member Announcements
11. Adjourn
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Board Member Larry Hosch will be
attending meeting via Zoom and be
located at:
75 Rev. Dr. Martin Luther King Jr Blvd.
St. Paul, MN 55155
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February 21st, 2023 Page 1 of 1
Pursuant to due call and notice thereof, the St. Joseph Economic Development Authority met on Tuesday, February 21st, 2023 at 12:00 PM. Members Present: Board Members Rick Schultz, Joe Bye, Kevin Kluesner, Dale Wick, Larry Hosch Members Absent: None City Representatives Present: Community Development Director Nate Keller, Interim City Administrator Jeff O’Neil
Schultz called the St. Joseph Economic Development Authority meeting to order at 12:01 PM Public Comments Joe Walz asked about the bonding request and status.
Agenda Approval: Wick made a motion to approve the agenda as presented; seconded by Bye and passed unanimously by those present.
Consent Agenda: Wick made a motion to approve the consent agenda as follows; seconded by Kluesner and passed unanimously by those present. a. Minutes - Approve the minutes of January 17th, 2023.b.Financial Report – None
BFA Grant – Wiger 103 1st Ave NW Ms. Wiger is remodeling property at 103 1st Ave NW. Property was used as a residence and is now in process of being converted into office space. Grant would help with front porch (lighting, railing) and new siding.
Kluesner made a motion to approve the grant request in the amount to not exceed $2,000 match; seconded by Wick and passed unanimously by those present.
Economic Dev. Goals – Comprehensive Plan Keller presented an overview of all the Economic Development goals/strategies within the Comprehensive Plan and progress on each. A few comments were made by Board members.
Boutique hotel Around five developers have reached out in the past 6-10 months. Most just wanted to know about progress, idea, and status. All seem interested in being involved. Keller has continued to have conversations with key property owner. A couple of the developers have local ties.
JR Mobile Update
Court hearing was on Feb. 6th. Owner did not show up. Judge granted the city’s request. Once the Court order is delivered it will be two options for the owner. First option is to complete repairs within 60 days and obtain permits within 10 or demo building within 30 days and obtain permits within 10 days. Keller has been in conversation with attorney and its possible owner may ask City to demo the building end of April.
General Business/Development updates Keller gave an overview of: GSDC event on Feb. 16th, recent purchase of Sunset, Joetown Apts, CVB Strategic Plan discussion, Bill tracking at the Legislature, RLF application from Jolie Olie’s, City Administrator position, CLC plat in the Industrial Park, intended Leave of Absence Keller will be taking.
Board Member Announcements Wick expressed some concerns on Open meeting regulations. Keller will follow-up and clarify with Wick.
Adjourn: Bye made a motion to adjourn the meeting at 1:04 PM, seconded by Kluesner and passed unanimously by those present.
Nate Keller Community Development Director
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EDA Agenda Items 5-8
MEETING DATE:
AGENDA ITEM:
March 21st, 2023
5-8
PREVIOUS BOARD ACTION: 5 - None
6 - None 7- updates provided past several months8 – updates provided past several months
BACKGROUND INFORMATION: 5 – CSBSJU Student Proposal Staff met with a student from CSBSJU who reached out in regards to interest in doing an Impact study on programs the city offers. Staff have asked the student to attend EDA to provide background on the project. In discussions student is planning to look at the Revolving Loan Program. Study will help evaluate the impact of the program, and how it may be improved or enhanced.
6 – Revolving Loan Fund Policy Staff would like discussion on the existing policy. Staff is not presenting any changes at this time but during review of policy with Finance Team brief discussion was had on the interest rate language. Any
changes suggested would not impact the current applicant who has submitted a RLF application.
7 – Boutique hotel
Verbal update will be provided
8 – JR Mobile update Council granted a one month extension for the demolition of structure. Extension gives owner until end of April versus end of March. More information will be provided at meeting.
BUDGET/FISCAL IMPACT: No cost for any of the agenda items
ATTACHMENTS: RLF policy
REQUESTED BOARD ACTION:
No formal actions requested just discussion and input.
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City of St. Joseph – Revolving Loan Fund Guidelines 1/10/2018 Page 1
ST. JOSEPH ECONOMIC DEVELOPMENT AUTHORITY REVOLVING LOAN PROGRAM
BACKGROUND
The City of St. Joseph Economic Development Revolving Loan Fund program was originated by the state-funded Minnesota Investment Fund (MIF) program awarded through the Department of Employment & Economic Development (DEED) to the City of St. Joseph. The Revolving Loan Fund (RLF) is administered by the Economic Development Authority of the City of St. Joseph (EDA). Reuse of the RLF
funds is guided by this policy and state policies in Minnesota Statute §116J.8731 and the Minnesota
Business Subsidy Law (Minnesota Statutes §116J.993 and §116J.994).
POLICY STATEMENT The RLF program is available to businesses in consideration of meeting the one or more objectives of the EDA. The EDA will make considerations for RLF loans on a case by case basis recognizing the importance and benefits to the community from all perspectives including economic diversity, maintaining viable tax base, expanding existing business and industry, and enhancing and retaining employment opportunities. Because it is not always possible to anticipate every type of project that may present desirable community building or preservation goals and objectives, the City Council retains the right in its discretion to approve projects and subsidies that may vary from the written principles and objectives of the EDA.
PURPOSE AND GOALS The overall goal for the St. Joseph Economic Development Authority’s (EDA’s) Revolving Loan Program is to stimulate St. Joseph’s economy by providing low interest loans, giving priority to small and medium sized businesses. Revolving loan funds are to be used for business start-ups, expansion, and retentions where jobs are created or retained. This may be accomplished by the following means:
1.Creation or retention of permanent private sector jobs as measured by the wages, skills, and/oreducation associated with those jobs;
2.Investment in technology and equipment that increase productivity and provides for higherwages;
3.The project can demonstrate that investment of public dollars induces private funds to the localeconomy;
4.Stimulation or leverage of private investment to ensure economic renewal and competitiveness;
5.Increase in local tax base;
6.Businesses receiving revolving loan assistance must pay each employee total compensation,including benefits not mandated by law, that on an annualized bases is equal to at least 110% ofthe federal poverty levy for a family of four;
7.Businesses requesting assistance in the downtown business district will be given priority for loanfunding and may include façade grants as established by the EDA;
8.Improvement of employment and economic opportunity for citizens in the region to create areasonable standard of living; and
9.Stimulation of productivity growth through improved manufacturing or new technologies.
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City of St. Joseph – Revolving Loan Fund Guidelines 1/10/2018 Page 2
ADMINISTRATION The St. Joseph EDA and City Council are the policymaking and loan approval bodies for the Revolving Loan Program. The EDA is responsible for revising guidelines and recommending loan approval to the City Council. The City Council is responsible for authorizing loan. EDA staff and their assigns will be responsible for day to day administration, working with applicants on proposed projects, collecting data, performing pre-loan analysis, overseeing loan processing, preparing agreements and monitoring projects
progress.
ELIGIBLE APPLICANTS Eligible applicants include most industrial businesses, commercial businesses and technological service businesses. Participants must be located in the City of St. Joseph city limits.
The following types of property are not eligible:
•Tax delinquent
•Special Assessment delinquent
•Property in litigation
•Property in condemnation or receivership
•Tax exempt properties
•Exclusively residential buildings
•Businesses with going concern issues
ELIGIBLE LOAN ACTIVITIES 1.Loan funds may be used for acquisition of land and/or buildings(s), rehabilitation of building(s),reconstruction, new construction, site improvements, utilities or infrastructure, and purchase ofindustrial equipment in connection with starting a new business or expanding an existingbusiness.
2. Land and building must be privately owned, taxable property and proposed for commercial and/orindustrial activities.
3. If building(s) are being purchased or rehabilitated with funds from the Revolving Loan Fundany/all building code violations must be remedied. The project must comply with the St. JosephCity Code including standards relating to land use.
4.Revolving loan fund assistance can be for no more than one-half of the cost of the project forprojects in excess of $40,000 in value. Projects estimated at $40,000 or less may be exemptedfrom this standard at the sole discretion of the Council and EDA. The maximum loan amountshall not exceed $40,000 and at no time will deplete available funds below $500.
5.Project must meet the public purpose which may include, but not limited to, increasing the taxbase. Job retention may only be used as a public purpose in cases where job loss is specific anddemonstrable.
INELIGIBLE LOAN ACTIVITIES 1.Ineligible activities include the operation or expansion of a casino, sports facility when the
principal tenant is a professional sports team or any firm engaged in retailing merchandise,housing projects, sexually-oriented business, and operating expenses.
2.Tax exempt organizations are not allowed to borrow revolving loan funds.
3.Loans may not be used for refinancing existing indebtedness or projects begun prior to loanapplication.
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City of St. Joseph – Revolving Loan Fund Guidelines 1/10/2018 Page 3
APPROVAL CRITERIA The grant or loan shall be based on the following criteria:
1.A gap in project financing is demonstrated.
2.Business applicants must be organized as a proprietorship, partnership, LLC, or a corporation.
3.The business must locate, remodel or expand within the corporate limits of the City of St. Joseph.
4. The project will result in the creation or retention of existing jobs.
5.The project will result in an increase in tax base.
6.The project can demonstrate the investment of public dollars induces private funds.
7.The project can demonstrate an excessive public infrastructure or improvement cost beyond the
means of the affected community and private participants in the project.
8.The project provides higher wage levels to the community or will add value to current workforceskills;
9.Assistance is necessary to create new or retain existing businesses; and
10.Job/wage goals must be consistent with the Minnesota State Business Subsidy Law.
LOAN TERMS/CONDITIONS Financial assistance from the Revolving Loan Program is designed to make projects economically feasible. Loan terms and conditions are determined by the information submitted in the loan application. The following are the loan conditions:
1.Loan Amount – Maximum loan amount is 90% of the available RLF balances but shall at no timeexceed the gap demonstrated in project funding. At no time shall a loan exceed $40,000 for anindividual project or deplete the available funds below $500. Applications will be considered on afirst come, first basis based on when complete applications are received.
2.Interest Rate – The interest rate shall be set at the time of issuance and dependent upon
qualifications. The interest rate shall not exceed current average lending rates for similar loansfor the type of project proposed. The City of St. Joseph considers the length of the loan,collateral, job creation, wages and other factors when determining the final interest rate. At notime will the interest rate exceed 3%.
3.Term – Machinery/equipment: up to seven years. Land/buildings: up to ten years. Terms for otherpurposes will be flexible, but at no time longer than ten years. Loans may be paid off early atanytime without penalties. All balances will be due if the loan recipient sells or transfers any partof his/her interest in the property or fails to meet the guidelines established, unless the sale ortransfer is approved by the EDA. Upon completion of the loan agreement, the Finance Directorwill submit a loan completion certificate to the loan recipient within 30 days of the final payment.
4.Electronic Payments – Automatic electronic payments are required for all loans established afterDecember 31, 2017.
5.Equity – There shall be minimum ten (10) percent equity (cash or fixed assets) investment of totalproject costs required of all applicants requesting loan amounts greater than $10,000. It is theintention of the EDA to secure each loan wit a first or second mortgage on real estate or a UCCfiling on equipment, inventory and/or receivables, and may include personal assets andguarantees.
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City of St. Joseph – Revolving Loan Fund Guidelines 1/10/2018 Page 4
6. Fair Market Value – The fair market value of the subsidy to the loan recipient will be the fair value determined on the benefit date. 7. Security – The business owner (those persons having 20% or more ownership in the business) will be required to provide personal guarantees for the loan amount. The guarantees will be
recorded against the property at Stearns County within 120 days of RLF awards. Securities may include collateral on the equipment being financed, mortgage on a building, a line of credit from another lender, or a parent company guarantee. 8. Benefit Date – The date benefits are disbursed from the City of St. Joseph to the loan recipient.
9. Project Initiation – All loan funds must be expended within six (6) months from the date of the loan approval. An applicant may request a six (6) month extension. Extension approvals are considered by City Council. In addition, no building construction should commence until the required City permits are secured. 10. Loan Fees – A loan origination fee of 1% of the total loan amount is payable at closing. Approved
borrowers are is responsible for all legal fees, document preparation costs, recording and filing fees in addition to the loan origination fee. 11. Project Costs – Borrowers are responsible for submitting final project invoices to the City’s Finance Director within two (2) months of final completion of the project. Third party verification such as invoices, sworn construction statements, lien waivers, detailed receipts, etc. will be
required. Project costs incurred prior to the benefit date are ineligible loan costs. 12. Annual Reporting – Once a formal award is provided, the business is required to complete and submit an Annual Progress Report to the Community Development Director detailing the RLF goals met each April 1st until the loan agreement ends. Failure to meet goals under the loan agreement requires the loan recipient to pay back the assistance plus interest to the City of St.
Joseph. The repayment may be prorated to reflect partial fulfillment of goals. 13. Data Privacy – City staff will adhere to data privacy when reviewing applicants’ business proformas and financial information as specified under the Minnesota Government Data Practices
Act, particularly Minnesota Statute §13.591, Subd. 1 and 2. Information not protected under this
law will become a matter of public record.
14. Conflicts of Interest – A conflict of interest shall be deemed to exist when a decision on a MIF transaction would compromise a duty to another party or if special advantage is deemed to occur.
Potential conflicts of interests will also be considered. Members reviewing or approving a loan request with a conflict of interest will refrain from decision making processes on the loan. 15. Delinquency – Delinquency will be handled in a firm, yet flexible way, with provision for modifying
or restructuring consistent with program objectives and responsible money management. Any modifications of loan terms and conditions must be requested in writing by the recipient and approved by the EDA Director and, if over $3,000 in modifications, the EDA. 16. Loan Default – Defaults will be handled on a case-by-case basis. Specific action will depend on the nature and circumstances, amount and availability of collateral, and costs versus benefit of
liquidating assets or other collateral. Loans are considered to be in default when payments are at least two (2) months past due. 17. Loan Restructuring – RLF loans will only be restructured if the restructuring improves the borrower repayment ability, and normally only where additional security is obtained. Refinancing will not be allowed solely for the purpose of reducing the interest rate due to lower market interest
rates.
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City of St. Joseph – Revolving Loan Fund Guidelines 1/10/2018 Page 5
18.Continuing Operations – The loan recipient must commit to continuing operations in the City of St.Joseph where the loan proceeds were used for at least three (3) years after the benefit date.
The Revolving Loan Program is intended to be flexible and assistance is customized to meet the particular needs of individual projects.
APPLICATION PROCESS The City of St. Joseph shall process and administer each loan in a manner which is usual and customary with regard to other loans under similar circumstances. The basic steps for securing a loan are as follows:
1.Applicant meets with St. Joseph EDA staff to discuss proposed project and loan programguidelines. If project meets program objectives and other eligibility items, then applicantcompletes the attached application which includes:
A. Statement describing nature of business and proposed plans;
B. Project description – purpose of loan and expected benefits. Itemize and provide costestimate for building improvements and/or equipment;
C.Sources/Uses proforma for the project;
D.Complied profit and loss statement for the past two (2) years (if applicable);
E.Personal financial statement(s) (for use in connection with applicant’s equity requirement);
F.Requested IRS forms must be submitted prior to loan closing;
G.Any other pertinent data.
2.A sub-committee comprised of the St. Joseph Finance Director, at least one (1) but not more than
two (2) members of the EDA and the EDA Director shall review the application to determinewhether or not it is complete. The EDA at its sole discretion may require a loan officer or a
member of senior management from an FDIC insured lender join the Loan Review Committee. Ifthe application is determined to be complete, the subcommittee shall formulate a
recommendation to the full EDA concerning the fiscal impact (if any) on the City and theappropriateness of the amount of assistance requested.
3.The St. Joseph EDA will review the application and make a recommendation to the City Council.
Upon approval, a Loan Agreement, amortization schedule and all other necessary documents inconnection with the loan will be prepared by the St. Joseph EDA staff and shall be executed by
the EDA Director. The City/EDA may work with a conventional lender to review thecreditworthiness of the applicant and the loan application.
4.The St. Joseph EDA may deny any project which it deems inappropriate according to the
guidelines established in this document.
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