CITY OF PELICAN RAPIDS COUNCIL MINUTES 12-16-97
Pelican Rapids Public Library Meeting Room
The City Council of the City of Pelican Rapids met in a continued session on Tuesday, 12-16-97, at 11:30 a.m., in the Pelican Rapids Public.
Present: Mayor Wayne Runningen, Council Members Paulette Nettestad, David Gottenborg, and Denise Magnusson.
Absent: George Hanson
Also present: Administrative Assistant Richard A. Jenson, Deputy Clerk Treasurer Glenys Ehlert, and City Attorney Scott Dirks.
Meeting reconvened by Mayor Wayne Runningen.
City Attorney Scott Dirks discussed lease option for Glendale Machine for purchase of Spec. Building in Industrial Park. Glendale will pay $25,000 down and take benefits of 0% interest loan of $200,000. Contract will be with Economic Development Authority since EDA has loan from Rural Utilities Services through Lake Region Electric Cooperative. Total sale price is $225,000 with special assessments to be paid with real estate taxes by Glendale. Down payment of $25,000 would go to general fund to reimburse for City for architects and other expenses.
Kevin Moug of Mid-States, parent company of Glendale Machine, has been working with numbers on this project. City will not get tax increment from new building due to fact that when property goes from non-taxable to taxable the assessor will assess property on day lease is signed. The building already exists so no increment on building can be captured. Glendale plans building improvements of $350,000 to $400,000 to finish structure. For example the assessor could put value at $550,000 and the increment would be generated on $350,000 for $9,000 - $12,000 in 1999.
Need $10,000 per year for interest payments to Glendale Machine on old building. Payment dates would be 10-1-98 and 4-1-99. The interest rate is proposed to be 7.8% on $125,000.
West Central Turkeys is generating an extra $7,000 to $9,000 increments in Dev. Dist. 85. Administrative costs of $30,000 could be pulled from Dev. Dist. 85.
There is $54,000 in general fund from Dev. Dist. 78 - High Rise which was defeased. Could be used through a loan to Dev. Dist 85.
City will purchase old Glendale building.
Walt Hartman and Bob Dieke recommend that Tax Increment Financing monies remain in City rather than transfer to Economic Development Authority. For old Glendale building, payments could be $3,500 to $7,200 or interest only with right to prepay principal at any time or a balloon payment at end of term.
Need to draw final versions of agreement with Glendale. Need development agreement with Glendale that they promise to put in building improvements of at least $300,000 to generate the tax increment. Following items will be ready for 12-30-97 EDA and Council meetings.
1. Purchase agreement for new Glendale building with EDA.
2. Purchase agreement for old Gendale building with City.
3. Development agreement with EDA on new building.
4. Borrow down payment from West Central Loan Pool.
Meeting adjourned at 12:00 noon.