July 6, 2011 Albert Lea Post Authority Minutes
July 6, 2011
ALBERT LEA PORT AUTHORITY
MINUTES
July 6, 2011
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, July 6, 2011 at 7:30 a.m. by President Vern Rasmussen. Roll was noted by the Board Secretary.
COMMISSIONERS PRESENT: Jerry Ehn, Ellen Kehr, Vern Rasmussen, Jr., Al Brooks, Keith Fligge, (Mike Moore and Nancy Skophammer were train delayed and arrived after item 3)
COMMISSIONERS ABSENT: None
EX-OFFICIO MEMBERS PRESENT: Chad Adams, City Manager 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; Julie Dandrea, Board Secretary
STAFF MEMBERS ABSENT: None
GUESTS: Greg Steil
2. APPROVAL OF MINUTES FROM JUNE 1, 2011 MEETING
The minutes from the June 1, 2011 meeting were reviewed. Commissioner Fligge made a motion to approve the minutes as presented, seconded by Commissioner Kehr. The motion carried 5 in favor; 0 opposed.
3. RESOLUTION PA-11-10 AUTHORIZING PAYMENT OF CLAIMS
The claims were presented for review. Executive Director Dorman pointed out the $20,000.00 is an annual interest-free loan payment to Alliant Energy for the Habben Park that was transferred to the ALEDA Park when we sold our land to Larson Manufacturing. Commissioner Brooks motioned to accept the claims as presented in the amount of $27,698.17, seconded by Commissioner Ehn. President Rasmussen asked if there were any other questions and hearing none, the motion carried 5 in favor; 0 opposed.
4. MCHS PROJECT UPDATE
There are several boards within Mayo the project must go through to be approved. It’s hopeful that by the first quarter of 2012 it will be ready to go out for bid.
5. REVIEW PROPOSED 2012 BUDGET
The proposed 2012 budget was handed out and Executive Director Dorman gave a brief summary. Under rentals on the real estate fund, it was assumed that ZRB will rent a portion of the new spec building, the middle section of the Ring Can building will be rented for half the year, and that Carpenter will renew their lease that expires 12/31/11. If ZRB takes possession after July 1st, they will not pay property tax until 2013. July 1st is the deadline for property tax to be paid for the following year; otherwise it will be tax exempt when there isn’t tenant. The budget will need to be approved at next month’s board meeting and then submitted to the city council for a council board meeting in September.
6. EXECUTIVE DIRECTOR’S REPORT
•Vision Processing Tech – This is the company from Litchfield who previously was interested in the new spec building, but instead located in Owatonna. They now need warehouse space so they won’t be a large job creator. They looked at the Ring Can building and liked it. We will supply them with more information and quoted them the price of $2.75 triple net which is the market price for that size space in Albert Lea.
•Ventura Foods – They are renting the north side of the Ring Can building and Executive Director Dorman and Assistant Director Nolander met with Ray Roberts, who is now the manager of Ventura. Their lease is up in 2012 and we would want a longer lease before we would make any capital improvements. We plan to put new, stronger language in future leases to clarify what is triple net.
•DOT visit – Chris Shoff passed along a DOT contact who is an expert in rail transportation. He met with Dan and Sue Miller and looked at the rail here. He thought the Blazing Star Landing would be an incredible rail location because of the two rail lines located there. He also liked W. 9th Street. Regarding Glenville, he previously didn’t know what infrastructure was located there and was very impressed with this site. He noted there were two nice sites south of the Soy-mor facility. He suggested we request the state do a corridor study. He also suggested the Blazing Star might be a good location for an intermodel yard; however, Commissioner Moore added a reload center would be more attainable because freight requires large yards; whereas, a reload center takes much less room using only a few trucks at a time.
•Gametec – They will move out at the end of July. This property has two buildings. We built the warehouse for them in 2001 and it’s in good shape. As soon as we get a lease secured with ZRB, we plan to take bids for the roof on the original Gametec building. The outside wall will get painted also.
•Carpenter lease – The lease expires 12/31/11 and the old rate was $1.50/sq ft and currently it’s $1.80. Executive Director Dorman said we will recommend increasing them to $2.00/sq ft. They have asked about buying the building in the past.
•Renewable Energy Group – This company from Ames originally built the Soy-Mor facility. They have new technology which enables them to use not only soybeans, but meat waste to make fuel and they have access to capital to make the plant viable again. The stock exchange from Soy-mor to REG has already been approved by their shareholders. They have requested to get back into the JOBZ program. DEED was unable to do anything before the state shutdown. ALEDA is poised to help in any way possible.
7. EX-OFFICIO UPDATE
Freeborn County
•Mike Lee said with the state shutdown the county is poised to lay off 35 people from various departments.
•The county passed a resolution to assign an assumption agreement on a loan with Soy-mor if a new company takes it over.
•The county approved an outside recreating area for the detention center.
City of Albert Lea
•Chad is getting acclimated to the city and staff and continuing to look for a city finance director.
•Police Chief Winkels is the interim Fire Chief after Paul Stieler retired this month.
•Continuing to work on preparing the 2012 budget and the impact if LGA cuts occur. There is a workshop scheduled for August.
•Last year there were 13 single family building permits and to date there has only been one. There have been more remodel permits, however.
Chamber of Commerce – None
8. COMMISSIONER ITEMS – None
9. RECESS
Commissioner Ehn made a motion to recess the meeting, seconded by Commissioner Moore. The motion carried 7 in favor, 0 opposed. The meeting recessed at 8:40 a.m. and will resume at 10:00 a.m.
The Port Authority meeting re-opened at 10:10 a.m. and the following people joined the retreat meeting:
ALBDC Board: President Dick Kary, Terry Leas, Paul Sparks, Mike Moore, Steve Waldhoff and Dick Westurn.
ALBDC Board members absent: John Hareid, Dave Lundak and Daniel Otten
GUESTS: Al Arends
Governor Mark Dayton planned to attend the retreat meeting; however, with the government shutdown it wasn’t possible. Executive Director Dorman instead discussed the state’s total spending comparison shown on a budget debate handout. Much discussion followed. Steve Waldhoff said not only state cuts, but federal cuts as well affect the health and human services sector.
1. REVIEW FINANCIALS & PROPERTY
Property – An overview of the properties was handed out showing the strengths and weaknesses. ALEDA is in a strong financial position and has weathered the economic slowdown well. The Port Authority provides tremendous value to the taxpayers without annual support. In addition, the Port was able to build and pay for the new industrial park with cash reserves. This was compared to the Austin Port Authority which required the City to provide land and pay for the infrastructure. Steve Waldhoff asked which ALEDA site would be suitable for a commercial laundry and Dorman suggested either the ALEDA Industrial Park site or Habben lots.
Hopefully, the Soy-Mor plant will be reopening as previously discussed and this could lead to more development in the Glenville corridor.
The Plaza site is a good piece of property and sewer could be brought in if needed for a large user. West 9th Street was given to us and is currently rented out as farmland. The Ring Can building could use a roof replacement. Ventura is renting the refrigerated space of the Ring building. The Gametec building is in excellent shape in the newer section and the old section needs a new roof.
The Carpenter building was the first one built in Northaire and is a nice asset. The ALEDA spec building was built on the low side of the market and is expected to be partially rented by Zumbro River Brands soon. We cannot compete for jobs with other cities without having available space.
Under-informed people ask, “Why is the old Farmland site still empty and why don’t they do something?” However, the property is not costing the City anything. Walgreens wanted only a portion of it and they came in anyway. The City should seek the highest and best use for the property. This site could have been the home for a company like Select Foods. But since there was no compelling reason to put them on this site, City residents were better served having them build in the NorthAire Park. This allows the Blazing Star site to be open for other better and higher uses
Financials – Executive Director Dorman gave an update of where we are so far this year. Port revenue is ahead of projections from a one-time payment from the city reimbursing accounting services. Under real estate, the sale of assets was the largest number budgeted from the past. The city makes adjustments in December on depreciation of assets so this number was figured manually. At last month’s board meeting, the auditor said she was surprised the Port has weathered so well in the downturn and our asset base was in good condition even if all the tenants moved out. Most Port Authorities pass small property tax levies for operational costs; however, this board has never voted to pass a levy.
Greater Job revenues are looking better after refinancing the MCB contract. The ALBDC revenue is up because the county gave us the first half of their annual contribution and utilities are lower during the summer. Greater Jobs and ALBDC are accounted for separately, but the combined page shows where Greater Jobs and the ALBDC are in total. President Rasmussen asked if there were any questions and hearing none, Executive Director Dorman moved on to item 2
2. USDA GRANT/BUSINESS PLAN
a. Review Loans
1) ALBDC Business Plan Recognition Loan – This program started as a business plan writing competition similar to a plan used in Iowa. A handout was given out showing the programs, the loan amounts and companies participating.
2) Greater Jobs USDA Loan – This is a newer program that started with a $75,000 grant. To be eligible a company must fit within parameters and be starting, expanding or retaining jobs. Three loans have been made and the dollars are currently used up. The loan repayments stay with Greater Jobs and are not paid back to the USDA.
b. Should we apply for an Additional Grant – Now we would have to match the funds given from USDA. We could make another loan with $25,000 cash on hand. The ALBDC board will take a look at this program. Steve Waldhoff asked if any loan programs could be used for downtown redevelopment. Staff will look for such opportunities. Vern Rasmussen asked if there were any other comments. The group consensus was that it would be a good idea to use $25,000 to make another loan or use as matching dollars for another USDA program.
c. Should ALEDA pursue USDA IRP – The latest program from USDA is an Intermediary Re-lending Program. Information outlining this program was attached to the retreat agenda. It has a quarterly application. The loan comes from the USDA to ALEDA for 30 years with a 1% amortization. The downside is that if we make a bad loan in this program, we must still pay the USDA back. If we had an application in mind, it would make more sense to apply to the program. Jerry Ehn asked how long it takes to get into the program and it’s a quick turn-around since its quarterly. The ALBDC would be the intermediary. There are some restrictions. The consensus was that if a project becomes available, we will send in an application. If any member hears of any project that might make sense for this program, let Dan or Ryan know.
3. PROGRAM OF WORK
Strengths and Weaknesses – Executive Director Dorman reviewed the Program of Work. This document will serve as a guideline to use and update as needed. There has been a form of it used in the past. A lot of the information came from the Target Market Study done a few years ago. At times we lose out on some opportunities because we’re too far from Minneapolis or to other states due to issues we have no control over – taxes, permitting, etc. We competed well with the JOBZ program, but are unable to compete with Iowa’s programs now that JOBZ is nearing its end. Dorman expressed to the board the need to bring nonfactual information back to the board meetings and get good information out to dispel negative local attitude which continues to be an ongoing issue going back to the Target Market Study.
Alliant is holding a meeting in our conference room in a couple of weeks and the board is invited to attend. Their proposed increase was higher than some companies’ property taxes. Executive Director Dorman testified to that effect at the rate case hearing in St. Paul. There seems to be as much as 10% difference between Alliant and Freeborn Mower’s rates.
A Property Tax Calculator handout showing Albert Lea, Austin and Owatonna was given out highlighting the years 2003 and 2010. There is a much wider difference in 2010 on the same valued property tax amount between Albert Lea and the other two cities. Albert Lea used to be fairly competitive with Austin, but is not currently. The best way to solve our tax increases is to grow our way out by expanding our tax base.
It’s important to keep the message out about ALEDA and how it is funded. Dorman invited the members to bring back items that should be addressed, added or augmented to the Program of Work.
Strategies – Executive Director Dorman moved on to reviewing strategies. The latest buzz word in economic development is “shovel-ready” and we are. Again, we are hopeful the state will provide a program to replace the JOBZ program which has been very successful in our area.
4. WHAT IS ALEDA’S ROLE?
a. Downtown – Steve Waldhoff expressed his appreciation of the collaborated efforts between MCHS, the city and ALEDA, who all want to see this project happen. This would bring 200-250 employees downtown and would become the anchor for redevelopment there. Steve suggested a team be put together to develop a marketing plan to grow the community from the center out and to introduce green technology to demonstrate how older buildings can go green. Vern Rasmussen said the city is looking at the streetscape project and also needs to address the aging infrastructure. Vern would like to see the downtown become a destination and connect the two lakes to use as assets. Mike Moore raised the question of how to get resistant property owners downtown to invest in their buildings. It is hoped that if the medical center renovates the bank building, there may be renewed vigor among owners. Chad Adams has some expertise in this area. Vern asked what is or is there a role for ALEDA downtown? Recently, ALEDA looked at buying a building for investment; however, traditionally, ALEDA has pertained to industry and the Chamber of Commerce and city handle retail development. It may be more effective for building owners to hear the success story on renovating their properties from their peers rather than listening to a government entity. It was suggested a package be put together of available programs and given to the business owners. Terry Leas suggested going back to fundamentals. What principle could this group help with? He suggested the ALEDA group could help businesses with writing a business plan, revolving loans and facade project. Many of our programs are not geared for retail though. Al Brooks suggested more marketing help as opposed to financial help. Dorman said other communities have a strong downtown organization that Albert Lea doesn’t have. Steve Waldhoff suggested creating a vision for downtown owners. Vern Rasmussen said this has been done by Waddick Architects. The city has talked with HRA about the possibility of taking out some buildings and putting in apartments, vacating certain streets for green space, etc.
b. Blazing Star Landing – The city is not feeling the urgency to do anything on the development of this property. It’s not economically feasible now. Ellen Kehr said dredging will take place using Legacy Grant money. Chad Adams said the city will decide what direction to take for the next 3-5 years on this site at their August retreat and then meet with ALEDA. Dorman feels doing nothing right now is not a bad thing and it’s not costing anything. Capital is needed to go along with vision. Dan will give Chad ideas on different uses for this site. (Ellen Kehr left at 1:00.)
c. Other – Steve Waldhoff would like to see a regional commercial laundry on the above site or another location that could serve the health care community. It could be a cooperative laundry with investors. ALEDA could help explore this option. Keith Fligge would like to see a legislative bill written for either a new or revised JOBZ program and asked if ALEDA could be part of that. Dorman said there is already a bill being worked on and he will ask Rich Murray to speak about it at one of our board meetings.
5. ADJOURNMENT
Keith Fligge made a motion to adjourn the meeting, seconded by Jerry Ehn and the motion carried 6 in favor; 0 opposed. The meeting adjourned at 1:08 p.m.
Filed and attested July 6, 2011.
_____________________________ __________________________
President Board Secretary