Loading...
HomeMy WebLinkAbout08-25-09Members Absent: Smith, Erickson. 1. Call Meeting to Order City of Lakeville Economic Development Commission Meeting Minutes August 25, 2009 Marion Conference Room, City Hall Members Present: Comms. Matasosky, Tushie, Vlasak, Starfield, Schubert, Emond, Brantly, Longie, Ex- officio member Mayor Holly Dahl, Ex- officio member City Administrator Steve Mielke, Ex-officio member Chamber of Commerce Executive Director Todd Bornhauser. Others Present: Adam Kienberger, Economic Development Specialist. Vice Chair Tushie called the meeting to order at 5:05 p.m. in the Marion Conference Room of City Hall, 20195 Holyoke Avenue, Lakeville, Minnesota. 2. Approve June 30, 2009 Meeting Minutes Motion 09.07 Comms. Schubert/Longie moved to approve the minutes of the June 30, 2009 meeting as presented. Motion carried unanimously. 3. Review of Results of Recent Business Retention Visits Adam Kienberger gave a report on the business visits with Con Agra and Advanced Wireless. Mr. Kienberger reviewed the EDC memo and noted that the Con Agra visit was conducted by Comm. Longie and Mayor Dahl, and the Advanced Wireless visit was conducted by Comm. Brantly and Dave Olson. Mr. Kienberger stated that Con Agra had many positive things to say about Lakeville and added that they likely see their operations continuing here for the foreseeable future. Comm. Longie added that the intersection of Hamburg Avenue and Lakeville Boulevard is a concern of several businesses in the industrial park. There have been several accidents at this intersection and the City should look at making this a four -way stop. Economic Development Commission Meeting Minutes August 25, 2009 Mr. Kienberger responded that the concern will be forwarded to the City's public works and engineering department for review. Advanced Wireless indicated that they are very satisfied with having their business located in Lakeville. They were asked whether the current tax climate was inhibiting their growth and they indicated that it was not a major factor. They indicated that the current private lending climate was much more of an issue and concern. Advanced Wireless did request contact information for a number of agencies which staff provided. No other additional follow -up was requested. Comm. Brantly stated that they had a very good visit with Advanced Wireless. The business has transitioned into being very research intensive and is likely to grow. He added that Mr. Olson is following up with Advanced Wireless on some business financing options for this potential growth. 4. Review and Provide Recommendation on Proposed Business Subsidy for Genesis Poly Recycling Mr. Kienberger reviewed the EDC memo regarding Genesis Poly Recycling and provided the group with some history on the company and the nature of their request. A summary of the proposal is outlined below: The company was formerly operated as AGSI in Savage and ceased operations there in 2008. Management from AGSI is relaunching the company and is working on securing financing for their operations. Genesis has as the main component of their business plan to recycle materials such as agricultural, horticultural, mixed post consumer and food industry plastics. The end product of this recycling process is recycled plastic pellets that can be sold to businesses that utilize this type of material in their manufacturing process. Genesis is also exploring options that would result in them manufacturing their own plastic finished products. Staff has been in contact with Genesis Poly Recycling, the Minnesota Department of Employment and Economic Development (DEED), USDA, MPCA, and US Bank to help facilitate this business locating in Lakeville. Genesis is currently in lease negotiations with First Industrial to lease the new 285,000 square foot spec building that was constructed in First Park Lakeville located at the intersection of Dodd Blvd. and County Road 70. In our discussions with DEED, they have indicated that Genesis Poly Recycling is a candidate for the Minnesota Investment Fund (MIF) program for up to a $500,000 low interest loan. The MIF program is setup as a grant/loan to the City Economic Development Commission Meeting Minutes August 25, 2009 which in turn makes a loan to the business. The City becomes the conduit for the loan funds from the State to the business. This is the same program that the City utilized for New Morning Windows in 1995. Comm. Tushie asked what we currently use the money for that was generated by the New Morning Windows MIF loan. Mr. Kienberger responded that most of the money is currently designated as a revolving loan fund. He added that due to the amount currently available in the fund, it tends to be cost prohibitive to make a loan unless the loan fund is built up to an amount where it can become cost effective to make a business loan. The EDC discussed the obligations the City would have to repay the loan to DEED in the event that the business was not successful and was unable to repay the loan. The EDC expressed concern over the fact that the City would be obligated to pay back the loan in the event of default. While DEED has never collected repayment through default from a local government, the EDC expressed concern that the current economic situation may cause this practice to change. Mr. Kienberger added that prior to any agreements being considered, DEED will review the application from the City as provided by the business and will review the business plan, financing, and risk associated with the loan. Mr. Kienberger further added that the recommendation being asked of the EDC is to approve application to DEED MIF program. Further evaluation and analysis will occur during the application period with a public hearing and approval from the City Council needed prior to any agreements being formulated. Comm. Tushie asked if there is a limit on how many MIF projects or MIF dollars a City can apply for within a calendar year; would the City be limiting the existing businesses that may be eligible for this program from applying this year. Mr. Kienberger stated that he would contact DEED and provide an answer at a future EDC meeting. He added that the amount of MIF money available from DEED is in a constant state of flux as the program is funded by loan repayments. There is no guarantee if a viable project were to come along in the future, that MIF money would even be available due to this funding mechanism. Comm. Tushie stated that depending on the restrictions of the program, he would put a higher priority on money going to an existing Lakeville business looking to expand, followed by an existing business looking to relocate to Lakeville, and thirdly to a business startup. 3 Economic Development Commission Meeting Minutes August 25, 2009 Chair Matasosky noted that this is the challenge with business startups, and it is often tricky for them to secure financing due the concerns outlined by the EDC. Chair Matasosky added that he can support an application to DEED, but is concerned about the risk that may be assumed by the City in the case the business defaults on the loan. The EDC expressed support for the project and application with the understanding that further review and information is required prior to any financial commitments being made. Motion 09.08 Comms. Tushie /Emond moved to recommend to the City Council approving the application applying to the Minnesota Department of Employment and Economic Development for up to $500,000 in Minnesota Investment Fund dollars for Genesis Poly Recycling contingent upon further review of the business by both the City and the State of Minnesota. Motion carried unanimously. 5. Director's Report Mr. Kienberger reviewed the Director's Report and provided an update on building permit activity through the end of July. Steve Mielke noted that the decrease in growth this year is having an impact on the budget. At the City's peak growth period in 2004, we had 904 residential building permits. In budgeting for the 2009 budget we had anticipated 150 residential building permits, and lowered that projection to 100 in the spring of 2009. The City is currently projecting 100 residential building permits in 2010 as well. Decreases in revenue along with current tax laws are having a negative impact on the City due to Lakeville's decrease in growth. The tax laws also negatively affected Lakeville during times of high growth. Chair Matasosky added that eventually the City will start to see some devaluation of properties occur due to the decrease in growth. Mr. Mielke responded that devaluation is already occurring this year. For the first time the City's net tax capacity is going down. Mr. Kienberger reviewed the rest of the Director's Report and noted that the next EDC meeting will be on September 29, 2009. 4 Economic Development Commission Meeting Minutes August 25, 2009 6. Adjourn The meeting was adjourned at 5:55 p.m. Respectfully submitted by: Attested to: Adam Kienber• r, R. T. Brantly, Secretary Economic Development Specialist 5