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Growth Fund Committee
Tuesday, October 18, 2005, 4:00 p.m.
Room A101 – City Hall

Chairman Christensen called the meeting to order.

Roll Call:

Present were: Gerald Hamerlik, Eliot Glassheim, Jon Ramsey, and Doug Christensen
Absent: Terry Smith
Also present were: Connie Mangan, John Schmisek, Jonathan Fu, Peggy Kurtz, Keith Lund, Greg Hoover, Jim Melland, and Hal Gershman

Approval of Minutes (9/19/05):

Jon Ramsey moved and Eliot Glassheim seconded to approve the minutes of 9-19-05. Voting “aye”: Gerald Hamerlik, Eliot Glassheim, Jon Ramsey, and Doug Christensen . Voting “nay”: None. MOTION CARRIED.

Loan Write-Offs:

Keith Lund discussed the memo from Connie Mangan summarizing the status of the loan portfolio. He stated we are asking for authorization to write-off 35 loans which are not collectible due to discharge of bankruptcy. Keith added that the Growth Fund Committee has the authority to authorize the write-offs. Keith stated, if we are restructuring a loan and the balance is over $100,000, it goes to the JDA. Gerald Hamerlik moved and Jon Ramsey seconded to write-off the 35 loans detailed in the October 11, 2005, memo. Voting “aye”: Gerald Hamerlik, Eliot Glassheim, Jon Ramsey, and Doug Christensen. Voting “nay”: None. MOTION CARRIED.

Doug asked about the business assistance loans and Connie summarized the loans and stated that there had been no action on these since 2003. She has returned them to the City Attorney’s office to see if he had any insight whether any of them are collectible. She reported that the City Attorney has sent out letters for collection and we have some correspondence from several businesses’ attorneys saying they will set up repayment plans. Connie reported that all of the companies are out of business except Slapshot, which has been sold; and two other owners are deceased. Keith stated we engaged the City Attorney’s office two months ago and he will follow up with that action. Connie said she has visited with most of the defaulted or delinquent businesses. Doug said that staff should tell the City Attorney to send letters to settle up or go to litigation. Connie stated she is asking them to bring in a personal financial statement and other pertinent information. Mr. Hamerlik said that the GF Committee Chair and UD can decide anything under $100,000; and the GF Committee can make the decision if the amount is over $100,000; but he felt action should be decided on a case-by-case basis rather than a standard letter to all. Keith reported that, so far, everyone has responded except about 3-4 businesses (Kats, New Paint and Lead, and Rainbow Graphics). Doug said staff should take these three to the City Attorney to take to court and litigate. Eliot asked staff to let the Committee know about any restructuring and to give another report in a couple of months. Doug stated there is a 6-year statute of limitations. Connie said, if they come in to restructure and then still don’t pay, she would then send them to the City Attorney. Doug stated we should have them sign new agreements to cancel out the statute of limitations, and to send to the City Attorney if even one payment is missed. Connie informed the Committee that she sends a late notice after 15 days and then calls the business after 30 days. Doug stated he would like to visit with Greg and Connie about this and felt we need to get tougher. We have already forgiven 40% of the loan amount. Hal agreed, stating we should get a timeline from the City Attorney so the process doesn’t get dragged out. Connie felt the problem wasn’t in sending the letters out, but in the follow up. Greg asked if he should set up a meeting and Doug replied not at this time and told staff to proceed.

Monthly Report – September 2005:

Keith distributed and reviewed the September report. The available cash balance was discussed. Keith reported that we would end the year with $2.3 million in fund 2163. He stated we would also be reporting to EDA on how we will spend the RLF balance. Hal asked about the restrictions on the EDA money and Keith stated it was a 4% floor, company must be located in GF County, must be used for working capital or equipment purchase, and cannot exceed a 20-year term. As interest rates go higher, this will be a more attractive program to use. Doug asked about receivables that are supposed to be paid between now and year-end. Keith stated the transfer for administration has already been made as well as Police Dept. expenditures for special events. We do not pay debt service out of 2163 so there are no obligations. Also, the costs for the City Special Events program are disbursed out of this fund. Doug asked for an e-mail update regarding the actual cash balance expected at end of the year. Jim informed the Committee that EERC had been approved for the Centers for Excellence program, so the commitment we already made for $500,000 will be drawn. Hal said we have $5 million cash in all three funds (2163, 5996, and EDA). Doug stated the Council could discuss what to do with the available cash. Jim informed the Committee that we have received another request from Northwood for $100,000 and he is working on two local manufacturing expansions using the PACE program, plus another Centers for Excellence project, which could be a major investment. Doug stated these could be paid for out of next year’s money.

Greg asked John Schmisek, since this is sales tax money, if we were able to do some improvements or extensions of infrastructure on 48th Street in the Industrial Park. John replied we probably could since this could be considered as an economic development function. Hal stated he is glad to see that the EDC is being a good steward of these funds and not loaning it out just because it’s there. Eliot stated he was glad to see that we have extra money in case we wanted to fund entrepreneurship or seed money programs.

Project Update:

Jim stated there was no project update other than the projects he discussed earlier. Doug stated he would like to know how many contacts we’ve made in Winnipeg and Jim replied he would get that information.

Other Business:

Greg reported that Howard Swanson submitted an amendment to the City Code that would clarify the JDA’s powers and authority having to do with disposal of real property, issuing bonds and notes, leasing, and any other powers necessary to carry out their purpose.

Adjournment:

As there was no further business, Doug adjourned the meeting.

Respectfully submitted,


Peggy Kurtz
Urban Development


Doug Christensen
Chair