Minutes

of the

Regular Meeting Of

DETROIT LAKES DEVELOPMENT AUTHORITY

Tuesday, June 14, 2005

4:30 PM

Conference Room

 City Administration Building

 

MEMBERS PRESENT:     Dixie Johnson, Tom Klyve, Jim Anderson, Mark Hagen

                                Tim Olson

 

MEMBERS ABSENT:      Greg Hildenbrand & Matt Brenk             

 

OTHERS PRESENT:       Larry Remmen, Nancy Wichmann, Richard Grabow, Mike Stearns, Arlen Kangas

 

I.       Call To Order:

          Chairman Dixie Johnson called the meeting of the Detroit Lakes Development Authority to order at 4:30 PM in the Public Utilities Conference Room of the City Administration Building, 1025 Roosevelt Avenue on Tuesday, June 14th 2005. All members of  the Authority having been duly notified of the meeting and the business to be transacted.

 

II.     Minutes:

        A motion was made by Commissioner Jim Anderson, seconded by Commissioner Tom Klyve and carried unanimously to approve the minutes of the regular  meeting held May 24, 2005 as presented.

 

III.    Financials:

A.      None

 

IV.    Old Business:

A.      None

 

V.      New Business:

A.      Consideration to the request of MMCDC relative to the use of $2,000,000 in QZAB Debt Service Funds for a loan at 7%

          Larry Remmen received an application from MMCDC relative to the use of $2,000,000. QZAB dept service funds to provide a loan, along with a letter from Arlen Kangas, MMCDC, explaining how MMCDC intends to secure the loan and participation agreement with Midwest Bank.  Larry explained that we would be buying a $2,000,000 participation in a $2,625,000 loan with Midwest Bank. He also stated it was not clear if MMCDC would guarantee the loan. 

 

        The Authority discussed whether their participation should be during construction or after.  Mike Stearns, Midwest Bank, indicated they have another source of funding for the construction portion of the loan. 

 

        Lou Guzek, City Finance Director, reported that the Development Authority had an agreement with Bremer Bank relative to the fees off of the $2,000,000.  Bremer would like to still count the $2,000,000. in to their portfolio.  They want to keep this amount on their books and collect servicing fees of approximately $8,000 per year over 9 years or $72,000.  Lou stated that the increased interest earnings would be $354,000 to $426,000 depending on the Bremer Bank fees.

 

        Commissioner Jim Anderson recommends a representative negotiate with Bremer Bank on the fees on the QZAB’s.  He also felt the Authority should get involved with the loan at buy out and not during construction.

       

        Arlen Kangas reported MMCDC would not guarantee the loan.  It would not be prudent since it would be a contingent liability without any assets or means of repayment. 

 

        Mike Stearns, Midwest Bank reported that both personal and corporate guarantees are in place.

 

        The Authority agreed that Lou Guzek should meet with Jeff Grabow, Bremer Bank, prior to the Authority taking action on this issue.  Action was deferred until the June 28th meeting.

 

B.      CONSIDERATION TO THE HUMANE SOCIETY PROPERTY

        Larry Remmen reported that Dan Hagen, Humane Society representative, contacted him with reference to grant applications for Humane Society.  Some of the grants require proof of property ownership.  If the Humane Society does not raise the required money to construct a facility in a specific period of time, as stated in the Authority agreement, the property will be turned back to the City and the County.  It was agreed Larry Remmen will write a letter to the Humane Society with reference to the donated land from the City and County, along with a detailed legal description to be utilized in their grant application process. 

 

C.      UPDATE ON TAX INCREMENT FINANCING

        Larry Remmen reported the regular tax increment financing funds are below our self imposed 10% limit; however, tax increment financing for housing is at 3% which is 80,000 over our 2% limit. The combination of the two sources is at the limit.  Larry Remmen felt that potential manufacturers would be requesting JOBZ funding versus tax increment financing.

 

D.      OTHER

        Larry Remmen reported that Marine Innovations of Frazee is running out of space and would like to expand their business.  The IDC has assisted them with funding in the past.  The City of Perham has been in contact with Marine Innovations with an offer of land.  Larry Remmen reported since the City, County and IDC have discussed construction of another spec building; perhaps Marine Innovations would be interested in leasing a 13,000 SF building in a long term lease with incentives. Commissioner Mark Hagen volunteered to visit with Marine Innovations along with         the Mayor.  The Authority agreed they would like to request financial statements from this company.

 

VI.    Adjournment

        There being no further business to bring before the Board, the meeting was adjourned.

 

                                                                Signed

 

  

                                                                Larry Remmen

                                                                Community Development Director