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HomeMy WebLinkAbout3.1 9-27-2022 EDA Special Meeting Minutes CITY OF COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY ____________________________________________________________________ MINUTES Economic Development Authority (EDA) Special Meeting September 27, 2022 Pursuant to due call and notice thereof, a Special Meeting of the Economic Development Authority was held on the 27th day of September, 2022, at 7:30 a.m. CALL TO ORDER The meeting was called to order at 7:30 a.m. by EDA President Bailey. ROLL CALL Assistant Mann called the roll: EDA President Bailey-Here; EDA Vice President Dennis-Here; EDA Member Carey-Here; EDA Member Krohn- Here; EDA Member Thiewes-Here Members Present: Myron Bailey, EDA President Steve Dennis, EDA Vice President Chris Carey, EDA Member Joe Krohn, EDA Member Eric Thiewes, EDA Member Members Absent: Dan Myers, EDA Member Sandi Scott, EDA Member Staff Present: Jennifer Levitt, City Administrator Jaime Mann, Assistant to the City Administrator Others Present: None. APPROVAL OF MINUTES 3.1 Approval of August 22, 2022, EDA Meeting Minutes EDA Vice President Dennis made a motion to approve the August 22, 2022, EDA Meeting Minutes. Motion was seconded by EDA Member Krohn. Motion passed unanimously (5-to-0 vote). BUSINESS ITEMS 4.1 Second Amendment to the Purchase Agreement - Thai Garden Assistant Mann gave an update on the 0.54 acres at 7470 East Point Douglas Road South, for which Thai Garden has a Purchase Agreement for just over $188,000 with the EDA. The EDA has already approved the LOI, the Purchase Agreement, and the First Amendment to the Purchase Agreement. Now we’re looking at doing a Second Amendment to the Purchase Agreement, as they need a little bit more time. The Planning Application was approved by the Planning Commission and the City Council, so they’re ready to go on that. Their lender reached out to us because they are applying for a Small Business Administration (SBA) loan, and with petroleum storage previously being on the site, they are required to do a Phase 1 review of the property, which will add a little bit more time to their due diligence period. The lender asked if we could offer them an extension, so we’re looking at offering them an additional 60 days to complete their Phase 1 review of the property. With that, Thai Garden has agreed to deposit an additional $5,000 in earnest money into the escrow account with DCA Title. Assistant Mann stated she’d be happy to answer any questions from the EDA Members. EDA Vice President Dennis stated he thought perhaps we should maybe discuss the additional $5,000 earnest money; he didn’t know if that was quite enough at this point. We want to see this project get done, but with the current business climate and number of companies wanting to come to Cottage Grove, we probably could have had something else done. He thought maybe we should look at increasing the earnest money to more than $5,000. EDA President Bailey asked what earnest money amount we received for the First Amendment. Assistant Mann replied with the Purchase Agreement, they deposited $20,000. With the First Amendment to the Purchase Agreement, they deposited another $10,000, so we currently have $30,000 on the property. EDA President Bailey stated so with this $5,000, it would be a total of $35,000; Assistant Mann confirmed that, on a purchase price of just over $188,000. Administrator Levitt stated typically when we have a sale in our Business Park, with an expenditure of a purchase of over $1 million, we’d have approximately a $35,000 escrow. So, proportionately, from the $188,000 to now $35,000 escrow, it is quite significant compared to what we’d typically collect in earnest money in an industrial setting. EDA President Bailey asked if this project should fall through, if the earnest money was nonrefundable; Administrator Levitt replied that’s correct. The money is nonrefundable for the next 60 days; at that point, the EDA retains the money. EDA Vice President Dennis stated he just brought it up for discussion, and if others feel that’s reasonable, he certainly wouldn’t stand in the way of it. Previously, he and EDA President Bailey had discussed that $10,000 would match the First Amendment escrow, but he’d like to have more discussion with the EDA Board. Should the project happen, they get all of the money back; that’s not the issue as we want the project to succeed. Projects are being delayed, so he hoped the additional escrow would make it a little clearer. EDA President Bailey asked for input from the other EDA Members. EDA Member Krohn stated the reason for this extension was explained, but asked if there was concern about any more future delays. It’s another extension, and he just wondered if there’s something they might be aware of, or any reasons that they’d have to ask for yet another extension. Assistant Mann replied as far as she knew, this would be the final Amendment to the Purchase Agreement. We were set to close with them this week, before the Phase 1 review was required, so she didn’t foresee any other delays, although she also didn’t expect this one. Economic Development Authority - Special Meeting Minutes September 27, 2022 Page 2 of 3 EDA Member Carey stated he’s just trying to put himself in the shoes of the business owner at this point. It sounds like they moved from St. Paul to Cottage Grove, they reside here, and everyone was excited about that. It sounds to him like it’s no fault of theirs that this is taking longer; it’s between the SBA and/or the lender. When he built his building, he thought they had to do an environmental study, and these are things that a new business owner or building owner learns have to be done. They rely on the expertise of lenders and whoever is guiding them through this process. He would hate to punish them more. He was quite surprised to learn that we’ll have $35,000 in escrow on a $188,000 purchase; that’s a lot of money to put down and putting at risk if this were to fall through. His personal opinion is they have enough skin in the game at this point, but it’s certainly frustrating that it’s taking this long. Hopefully, we can get it across the finish line with this last extension. EDA Member Thiewes asked about the SBA loan; with the rising interest rates, if it will be a problem to secure a loan. He asked what the typical process is with the SBA. Assistant Mann replied that she was not 100% certain about that process. She noted she’d asked Thai Garden to be here today, but they were unable to attend. She can certainly double check with their lender on the SBA process. EDA President Bailey stated his take on it would be okay, as $35,000 on a $188,000 purchase is probably a decent amount. He knows there’s another end user restaurant who’s already spent approximately $80,000 on their building, and they’re running into some issues; he brought that up because they’re not going to walk away either. Obviously, Thai Garden had to put money into the design and construction, so there’s probably more cost in the building and our earnest money that we’ve received than the cost of the property. He’d say let’s just make sure that this is the last extension and that there isn’t an interest for us to extend it again. He absolutely wants them to open so we can have another restaurant run by a local family. As EDA Vice President Dennis mentioned, sometimes these things take a long time; to that point, it could just be the SBA said you have to do these things. Rising interest rates mentioned by EDA Member Thiewes are causing issues with others in our Business Park, and it’s taking longer to get financing secured. EDA Member Carey added they have to pay for that environmental study, and that is thousands of dollars; previously, someone had petroleum on that site, so it’s another out-of-pocket expense they’re incurring to make sure there’s no adverse environmental impact. Recommendation: By motion: 1) Approve Resolution 2022-011 authorizing the Second Amendment to the Purchase Agreement between the City of Cottage Grove and Hang, LLC. 2) Authorize the EDA President and City Administrator to execute the Second Amendment to the Purchase Agreement with Hang, LLC for the sale of 0.54 acres for development purposes. EDA Member Thiewes made a motion to Approve Resolution 2022-011 authorizing the Second Amendment to the Purchase Agreement between the City of Cottage Grove and Hang, LLC. Motion was seconded by EDA Vice President Dennis. Motion passed unanimously (5-to-0 vote). EDA Member Carey made a motion to authorize the EDA President and City Administrator to execute the Second Amendment to the Purchase Agreement with Hang, LLC for the sale of 0.54 acres for development purposes. Motion was seconded by EDA Member Krohn. Motion passed unanimously (5-to-0 vote). EDA President Bailey asked Assistant Mann if she would please keep the EDA updated when they have a closing date with Thai Garden, as there will not be an EDA meeting in October; Assistant Mann replied that she would do so. PUBLIC HEARINGS - None. OTHER BUSINESS 6.1 EDA Calendar EDA President Bailey mentioned that each of the EDA Members had received a calendar. He mentioned that there is a Business Over Breakfast event at River Oaks Golf Course this coming Thursday, September 29. It sounds like we’ll have a really nice turnout for that, which is good. 6.2 EDA Comments EDA Vice President Dennis mentioned MNCAR is coming up, which is our local version of the ICSC. He’s assuming we’ll all be there again, which EDA President Bailey confirmed. EDA President Bailey shared that this past week, he and Public Works Director/City Engineer Ryan Burfeind had the opportunity to fly to Washington, D.C., to meet with all of our legislators in the House and Senate to explain some road projects on which we need Federal support. The two specific projects discussed were: 1) Funding to complete the reconstruction of 80th Street from Ideal Avenue to Highway 61, as that’s the last stretch to be completed. 2) Extension of 100th Street from Jamaica Avenue to Highway 61, which also involves the bridge and a railroad bridge. He thanked Director Burfeind for coming along with Washington County Board Members. He stated he got the chance to tout our projects, not just to the legislative groups for Cottage Grove, but also for the State of Minnesota. His thought process on that was at some point they’re all going to have to vote on it, so it’s better that they’re all aware of these projects in Cottage Grove to gain their support. Nothing is guaranteed, but the 80th Street project is in the Appropriations Bill that has passed the House and is now in the Senate. We applied for a Rural Grant, which looks really good, and is supported by Senator Tina Smith. While we were in Washington, D.C., we were able to get Senator Amy Klobuchar to also sign onto that with a letter of support. We’ll keep our fingers crossed. Our staff is doing a great job of going after some additional funding sources, some of which we were previously unaware. There’s a lot of money out there for road projects, so our goal is to tap some Federal funds to take the onus off our local taxpayers. It was the first time we’ve done this, and he highly recommends we do this again; it’s similar to ICSC in Las Vegas, just getting people to know who we are, and then they start recognizing that we’re committed to making projects happen in the City of Cottage Grove. It’s not just on the road project side, but also on the commercial/residential/industrial side at ICSC. 6.3 Response to Previous EDA Comments - None. 7 WORKSHOP - None. 8 ADJOURNMENT EDA Member Carey made a motion to adjourn. Motion was seconded by EDA Member Thiewes. The meeting adjourned at 7:47 a.m. (5-to-0 vote). Economic Development Authority - Special Meeting Minutes September 27, 2022 Page 3 of 3 Respectfully submitted, Jaime Mann Assistant to the City Administrator /jag