July 11, 2012 Albert Lea Post Authority Minutes
July 11, 2012
ALBERT LEA PORT AUTHORITY
MINUTES
July 11, 2012
Wedgewood Cove Golf Club
1. CALL TO ORDER & NOTATION OF ROLL
The Regular Meeting of the Albert Lea Port Authority was called to order on Wednesday, January 4, 2012 at 7:35 a.m. by President Vern Rasmussen. Roll was noted by the Board Secretary.
COMMISSIONERS PRESENT: Vern Rasmussen, Jr., Al Brooks, Mike Moore, Keith Fligge, Jerry Ehn and Nancy Skophammer
COMMISSIONERS ABSENT: Ellen Kehr
EX-OFFICIO MEMBERS PRESENT: Chad Adams, City of Albert Lea representative; and Mike Lee, Freeborn County representative
EX-OFFICIO MEMBERS ABSENT: Randy Kehr, business community representative
STAFF MEMBERS PRESENT: Dan Dorman, Executive Director; Ryan Nolander, Assistant Director; and Julie Dandrea, Board Secretary
STAFF MEMBERS ABSENT: None
GUESTS: Rebecca Gisel, Alliant Energy; Chuck Paczkowski and Greg Steil
2. APPROVAL OF MINUTES FROM JUNE 6, 2012 REGULAR MEETING
The minutes from the June 6, 2012 meeting were reviewed. Commissioner Ehn made a motion to approve the minutes as presented, seconded by Commissioner Fligge. President Rasmussen asked for any discussion and hearing none, the motion carried 6 in favor; 0 opposed.
3. RESOLUTION PA-12-11 AUTHORIZING PAYMENT OF CLAIMS
The claims were presented for review. Executive Director Dorman noted the large payment to Johnson Heating and A/C is for the refrigeration upgrade in the Ring Can (South-Bldg #1) space leased by Ventura. The project went smoothly. The payment to Alliant is the annual payment on the Aleda Park loan and is almost paid off. Commissioner Moore motioned to accept the claims as presented in the amount of $105,667.65 seconded by Commissioner Brooks. The motion carried 6 in favor; 0 opposed.
4. PUBLIC HEARING RE: SALE OF SOUTH-BLDG #4 TO INTERSTATE MOLDING
Before the public hearing, Executive Director Dorman addressed the issue. Interstate Molding purchased two buildings on contract for deed in the Jobs Industrial Park. One was assumed through Diesel Specialties and this contract was paid off last year. The other contract is due within the next two years. They want to expand one of the buildings which sits partially on both lots; however, city ordinance won’t allow it. Interstate Molding has the title to one lot, the Port has the other. The easiest solution is to convert the contract to a note and they take ownership. The payment and terms would stay the same. At this time, President Rasmussen opened the public hearing and asked three times for any public input and hearing none, the public hearing was closed.
5. RESOLUTION PA-12-12 APPROVING SALE OF SOUTH-BLDG. #4, AND CONVERSION OF INTERSTATE MOLDING CONTRACT FOR DEED TO A NOTE PAYABLE
Commissioner Fligge moved to go forward with Resolution PA-12-12 as written understanding the explanation Executive Director Dorman provided. Commissioner Skophammer seconded it and the motion passed 6 in favor; 0 opposed.
6. REVIEW PROPOSED 2013 BUDGET
The proposed Port Authority budget for 2013 was handed out. It must be given to the city in the timeframe according to state statute. No great changes were made. It will be fine-tuned next month. Vision Technologies may go month-to-month when their contract ends August 1st. By 2013, Zumbro River Brands may lease more space in the ALEDA spec building. Commissioner Fligge asked what happens to ZRB if another company wants to lease or buy the building. The building has flexibility and could be divided in half or subleased. The sale of fixed assets is the main variable within the budget. At this time approval is not asked for, but will be at the August meeting.
7. EXECUTIVE DIRECTOR’S REPORT
ZRB & Vision Processing Technology Leases – This was briefly talked about previously. It appears that ZRB will be staying and Vision may go month-to-month which would increase their lease.
Enderes Tool – They are in the tax forfeiture process for nonpayment of real estate taxes. At the recommendation of our city attorney, we are working with Mr. Bubul of Kennedy & Graven who is experienced in this area. A local business would like to acquire the assets. There are also IRS tax liens on property. The bank is in second place behind the IRS. We’ve asked the attorney to verify that the IRS liens go away at auction. The proper notification process has to happen. The property will go to auction unless the Port takes action beforehand. There are two parcels – the front piece with the building and the piece behind which has rail access. A resolution drafted by Kennedy and Graven to notify the county that the Port is interested in the parcels was included in the board packets. If no local government body intervenes, it goes to auction the first week in August. A six month clock starts if we indicate interest to the county. The Port Authority has stronger powers than the city in this matter and can buy the property for a nominal fee. Executive Director Dorman said a phase one environmental study on the building parcel would be needed. If there is contamination the Port would not want to take possession and be responsible for its cleanup. Indicating interest does not mean the Port will purchase the property; however, we may have to assume the maintenance on the property during the six month period. There would be more time if it went to auction and no one bought it, but there’s the risk someone else would buy it, with the taxes eliminated and the process starts all over. Director Fligge asked if the resolution passes does it take the property off the auction for six months and if it’s possible for anyone to step in during that time to buy the property. No one can buy the property during that time with the exception of the original owner who could get it back if the delinquent real estate taxes were paid in full and the county board approved them going back into operation. Director Ehn commented it appears the main risk involved is the maintenance. Director Moore asked what happens if we find major problems in the six-month period. Dorman believes the property would be deeded back to state, then to the city if the Port decided they didn’t want to follow through with the purchase. Director Ehn asked if the Port can start working deals on the equipment during the six-month time period. The longer the business stays down the harder it will be to get operable again. The interested party’s intent is to move the equipment to another building. President Rasmussen asked who would get the rent from the building if rented out. Dorman was unsure of the answer. Anyone who may have interest in buying at the auction could still work with the Port to purchase it. In order to work with the back rail piece, the front piece with the building would have to be owned. Most of the value is in the land, not the building.
Knights Inn – This property has two parcels. The expense in this property is the demolition. President Rasmussen said from a community perspective acquisition would be good, but the demolition expense for the Port could be a burden. A question was asked if it fits the mission of the Port Authority. Director Moore said the property is poised for redevelopment and that’s why the Port has the authority to intervene. President Rasmussen asked what the environmental study would cost for the Enderes and Knights Inn properties. Executive Director Dorman estimated $2,000 and, subsequently, may call for a Phase 2 study at which time a decision would be made on whether to proceed. Phase 2 consists of soil borings and monitoring.
Church Offset Loan – The loan for a piece of new equipment has been approved by the city council. They could possibly get a low interest USDA loan, but may not want to wait. Freeborn Mower Cooperative may be an additional loan source if they’re interested. The new equipment will create new jobs and retain others.
8. RESOLUTION PA-12-13 AUTHORIZING ACQUISITION OF CERTAIN TAX-FORFEITED PARCELS (Enderes Tool and Knights Inn)
Director Moore moved for the adoption of Resolution PA-12-13 as presented including all four parcels discussed, seconded by Director Ehn. The motion passed 6 in favor; 0 opposed. Executive Director Dorman said he will move forward to get bids for the environmental studies.
9. EX-OFFICIO UPDATE
Freeborn County – Mike Lee, County Representative
The county received the 180-day extension from the railroad to work on acquiring funds for the trail to Hartland. Director Moore feels the rest of the line north is for sale as it’s not being used much. This would be a great opportunity for Hartland if the trail could reach there.
The county has decided to stay in the DHS re-design. Olmstead County has opted out as currently set-up. Maybe now it will be a regional re-design. Director Brooks asked if reasons counties opted out was because of money and the ability to operate. Mike believes the larger counties will go together regionally. Mike also said the state will step in within two years if decisions are not made.
The county has ratified all four union contracts.
They are starting workshops for the preliminary 2013 budget.
The Lynch Livestock vote for Hayward is set for next week. There is a lot of strong opposition; worries about disease and contamination.
City of Albert Lea – Chad Adams, City Representative
The RFQ for the Bank/Jacbobsen buildings has been distributed to a number of developers from a list provided by Springsted and Assoc. In August, the city will start narrowing down the list to one to work with exclusively. The first floor will be left retail/service with the upper floors to be residential; however, we will remain open to other ideas. The back space will be open for public meetings. If no plans are submitted, the city will have to go to Plan B or C.
The City is still reviewing recommendations from the fire study. Recommendations will then be made to the city council on leadership of the department as either a full time fire chief or a safety director and whether to reinstate a five-person crew or go to a four-person crew. Chad noted the article he wrote in the Tribune today on how to structure and fund the fire department. The city is not really considered going to an all-volunteer fire department.
A finance officer from the city of Faribault has been hired and begins on July 23.
Work has begun on the 2013 budget and they are not anticipating losing any government aid which enables more stability in planning.
Bridge Avenue continues to be a priority, particularly Hammer Road to I-90, but continuing south as well. They have until 2013 to submit for federal funds which will be available in 2017. The city had a good meeting with the county on this and sharing services.
The city is looking at other housing parcels for tax forfeiture; primarily in the Jefferson/Madison Avenue areas which could someday be redeveloped into multi-family use while staying consistent with the city’s comprehensive plan.
There will be a streetscape open house on Monday where the cost estimates from the engineers will be unveiled.
Chamber of Commerce – no report
10. COMMISSIONER ITEMS –none
11. RECESS & ADJOURNMENT
Commissioner Brooks made a motion to recess the meeting, seconded by Commissioner Skophammer. The motion carried 6 in favor, 0 opposed. The meeting recessed at 8:55 a.m. and re-opened at 10:00 a.m.
After the retreat concluded Director Moore made a motion to adjourn the meeting, seconded by Director Brooks. The motion carried 6 in favor; 0 opposed. The meeting adjourned at 1:00 p.m.
ALEDA/ALBDC BOARD RETREAT
MINUTES
Wednesday, July 11, 2012Wedgewood Cove
The Port Authority meeting re-opened at 10:00 a.m. and the following people joined the retreat meeting:
ALBDC Board: President Dick Kary, John Hareid, Dick Westurn, Daniel Otten (10:08), Mike Moore
ALBDC Board members absent: Steve Waldhoff, Paul Sparks, and Dave Lundak
GUESTS: Chad Adams
President Rasmussen welcomed the ALBDC board and thanked them for coming.
1. REVIEW FINANCIALS & PROPERTY
Financials -Executive Director Dorman gave an overview the ALEDA financials and noted the tenant and building lease spreadsheet that was handed out. He informed the board of the refrigeration and lighting updates done in the Ring Can building. Vision Technologies from Owatonna had a one-year lease in the middle section of this building and may go to a month-to-month or a three-month lease. There has been interest in the Gametec building coming from the state. Both this building and the ALEDA spec building were pitched. The company wants to buy a building. We will get an appraisal done and set a formal price on the Gametec building. The Carpenter building has been leased through 2014. They are the longest-term tenant and do an outstanding job taking care of the building. Zumbro River Brands leases 1/3 of the new spec building. Another interested company, a flax seed production company, would need the whole facility if they were to lease it; however, ZRB has first right of refusal. Interstate Molding, who leases South Building #4, will have their current lease/purchase option to buy turned into a promissory note, as discussed earlier, so they will have title to enable them to expand a building on the property. MCB re-negotiated their loan on North Building #5 with a balloon payment in 2016. Assistant Director Nolander addressed the incubator tenants and rents. Prairie Wind Coffee needed a place to store product in a commercially-licensed facility for their coffee shop downtown. Daisy Blue Naturals downsized into a more affordable and efficient space. Crescent Electric is the anchor tenant and is on their second five-year lease. Negotiations will begin with them next year if they stay in that location. Mrs. Gerry’s and Select Foods are short-term tenants for storage due to expansions in their buildings; however, they understand the need to vacate within 35-40 days if the spaces are rented to a tenant that fits the incubator model.
Property – An Overview of Properties was handed out. The Port Authority owns the incubator and the ALBDC collects the rent. If the Port charged the ALBDC, the ALBDC couldn’t cash flow. Director Fligge asked if any county funding has been committed for next year. Executive Director Dorman didn’t put it in the budget as we are unsure. If the board feels strongly about getting their county’s partnership, it’s time to start talking to the County Commissioners about funding while they’re working on the budget.
The ALEDA Park is shovel-ready. The only weakness is the lack of rail. There have been meetings with Rihm Trucking in building a new facility in the I35-I90 Park, which would be a good fit. This park would not fit a wet industry. Retail could fit. There is still farmland to the north and east if anything large came in. Rough grading is not done. In the Glenville Park, Pro trucking is buying 40 acres west of the Poet plant. There are good sites there. Greater Jobs and Port own the two largest lots left in the Habben Park. Alamco has asked about us selling the West 9th Street property. If we can get agriculture value or a little more that would be satisfactory. The topsoil was moved from the site before it was donated to the Port. Updating the refrigeration space in the Ring Can Building for Ventura was a large capital outlay. A rail spur runs alongside this property. Gametec is a nice building with two sections. Zumbro River may try to cut out outsourcing and do their packaging themselves. At that point, they may lease more of the ALEDA spec building.
The Blazing Star site was briefly discussed. Larson Manufacturing could have located there, but they preferred Habben Park. By not building on the Farmland site, preserved it for something else. Walgreens, who had an interest in the site, also came anyway. There is tremendous rail access there which is owned by two railroads – the CP & the UP, but industrial businesses are more appropriately suited for industrial parks.
President Rasmussen had a suggestion on the Gametec building. Maybe it’s time to offer a business a great deal on this property; otherwise, major renovations will be needed in the next few years.
2. PROGRAM OF WORK
Strengths and Weaknesses – Executive Director Dorman reviewed the Program of Work. Albert Lea has lost some major employers over the years, but not from anything the community did. We’ve replaced the jobs over the years with some new and other expanding businesses. In the early 80’s, Northaire opened. It takes a while to fill a new industrial park. Executive Director Dorman asked the board to help get public relations out there when there is an opportunity.
The Thompson property at the Clarks Grove exit was pitched to ITC before they built. We pitch anyone’s properties if appropriate for the customer’s needs. There is a lot of industrial space available right now. Our newest role is in redevelopment. Tax forfeited properties are going to auction in August. The Port has the right to purchase properties for a nominal fee. The Knights Inn would probably be demolished and would make a good tax increment tax financing district. A good example of this is the Green Mill/Country Inn & Suites area which was a 25-year redevelopment TIF. The Enderes’ property has a rear lot with rail access. The tax forfeiture process clears the tax obligations and liens to the buyer. If someone who is undercapitalized buys the properties at auction, we would have to wait another five years for the opportunity again. Both owners were properly notified. This will be a learning experience and maybe there will be other opportunities in the future to partner with the city. The Port Authority is covered under the League of MN Cities insurance pool. We’ll have to find out if we have to insure the buildings during the six month pre-emptive period at which time environmental studies would need to be done to see if we want to proceed with the sale. President Rasmussen thinks ALEDA should align their properties with the city’s website and make sites more attractive with incentives. He said the city is still working on a sewer incentive program and suggested possibly giving rebates to companies. He is hopeful the state will replace the JOBZ program to allow us to be competitive with Iowa.
ALBDC President Dick Kary gave a brief report on SCORE. It was difficult to get to Rochester for all their required meetings and Albert Lea is now merged together with Owatonna, Faribault, and Waseca to become a new chapter called South Central MN Score. In the future, Fairmont, Mankato, & maybe Austin may join us. Executive Director Dorman gave his appreciation to the time Dick puts in as a counseling volunteer. Dave Lundak continues to counsel through SBDC, seeing clients that have may have met with SCORE for advice and need help with financing options.
3. REVIEW OF LOAN FUNDS
a. USDA Fund – This fund originated with a $75,000 grant from the USDA. There are three loans made from this fund currently.
b. Business Plan Recognition Fund – A new loan was just made from these funds to Allure Salon and Spa. The ALBDC makes these small loans, but there is a need for them. This program, created by the ALBDC, local lending institutions, the Albert Lea Chamber of Commerce, Mayo Clinic Health Systems, and the City of Albert Lea nearly 10 years ago, is an economic development tool focused on supporting entrepreneurship in Freeborn County.
c. LDO Fund – These funds can be state or federal dollars. Executive Director Dorman explained how the funds work and their restrictions. The first loan has the restrictions and the repayments do not. AmTech, who is buying the human side of Merrick’s, will be the first loan for this newly-created fund from existing city dollars and new county dollars from MIF.
d. Other – Greater Jobs has also in the past participated in loans with their general fund dollars where appropriate. SAR is a recent example of this type of collaboration.
4. TOPICS: WHAT IS ALEDA’S ROLE? General Comments for City
a. Downtown/Bank Building – This continues to be a challenge. One developer that responded to the city said it was too small of project. He would have given a plan for 30 units but there is only room for possibly 20 and also didn’t like the mixed use. The housing part is easy, retail is harder to develop. The city was not able to find funds for a new elevator. One suggestion was for ALEDA, the Chamber and CVB remodel and move into the second floor; however this could be a million dollar investment with the HVAC and elevator needs and would be considered Plan E. If the Art Center could successfully apply for a grant, they could possibly locate on first floor. We will continue to work with the city on options for this building.
b. Knights Inn – Enderes Tool – This was reviewed previously.
c. Other – President Rasmussen asked the board for input on any other strategies or opportunities ALEDA should work on. Bridge Avenue may curve into Main at Marshall Street. Should ALEDA be involved? In the past, the Port hasn’t been involved at the retail level. Should ALEDA be involved? A lot of discussion followed on involvement by the City and Chad discussed eminent domain. President Rasmussen believes we need to start positioning ourselves to change perception of who we are and how to transform to higher tech category instead of a labor force community. How about a TIF for houses where real estate taxes could be abated for three years to get people to move here? We need to think outside the box. He encouraged the board members to bring ideas to city counselors or county commissioners. If we get people to locate here, then they will build their businesses. Director Skophammer suggested working with Riverland College in ways to get people to want to stay here.
5. ADJOURNMENT
Director Moore made a motion to adjourn the meeting, seconded by Director Brooks. The motion carried 6 in favor; 0 opposed. The meeting adjourned at 1:00 p.m.
Filed and attested July 11, 2012.