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Minutes
Growth Fund Committee Meeting
Thursday, November 14, 2006, 4:00 p.m.
Urban Development Conference Room


Chair Doug Christensen called the meeting to order at 4:10 p.m.

Roll Call:

Present: Eliot Glassheim, Terry Smith, Jon Ramsey, Bob Brooks, and Doug Christensen. Also present: Meredith Richards, Keith Lund, Shawn O’Leary (LM), Blake Seas (LM), Hal Gershman, Greg Hoover, Klaus Thiessen and Peggy Kurtz.

Approval of Minutes (9/14/06):

It was moved by Bob Brooks and seconded by Eliot Glassheim to approve the minutes of the September 14, 2006 meeting. Voting “AYE”: Eliot Glassheim, Terry Smith, Jon Ramsey, Bob Brooks, and Doug Christensen. Voting “NAY”: None. MOTION CARRIED.

Financial Report – September 2006:

Doug asked about the ending balance in 2163 as of October 31st and Greg said that report hadn’t been compiled as of yet. Doug added that the Committee could also get the ending balance from John Schmisek.

GFREDC/LM Glasfiber EDA Loan:

Keith introduced Blake Seas, general manager of LM, and Shawn O’Leary, CFO. Keith said that LM is experiencing unprecedented growth and is starting Phase II of their expansion. What is proposed now is that the EDC secure a $500,000 EDA loan from the Growth Fund to purchase air handling and exhaust equipment and to lease that equipment back to LM. Loan terms would be 40 months at 4%. We will recapture 80% of the $500,000 before their lease ends in 2009. The balance will be recaptured after negotiations of the new lease (in 2009). Keith reported that the EDC Board reviewed and approved this proposal and agreed to incur the debt and sign the loan. Blake Seas said that their volume is doubling in four months. Their projections were to have almost 700 employees by February 2007, but their goal now is to ramp up a little faster and have that many employees by December 2006. They are looking at improving their infrastructure – exhaust systems, indoor air handling equipment, etc., for their employees. They want to be a premier facility so people want to work there. They have a $7 million investment in additional moulds and equipment. They had just submitted their budget and are already changing it because they are booked up (at capacity in orders) and getting calls for more product into 2007 and 2008. Eliot asked if the federal tax break was looking better and Blake said he believed it will be extended with the insecurity of energy. Shawn said their latest customer is Mesa, a Spanish wind turbine energy company that carries a 3-year contract. He added they are trying to get more long-term contracts with customers. Their PTC will expire in 2008. Eliot asked how they stand internationally and Blake said they have come a long way; last year, they were number 5 out of 6 and now they are number 2 (Spain is ahead of them). The market itself is strong; the market share is growing and they are gaining part of that market. They are making improvements in the company worldwide, not just here. Keith asked about the pay scale and Blake said the starting wage has recently been raised to $11/hour. They have also made improvements in their benefit package. Blake said they have become a global player and now have four employees who work globally. Hal asked about the benefit package and Shawn replied they offer BC/BS within the first three months, short term disability, 3 weeks vacation plus 1 week unexcused time-off, 10 holidays, 401K in 6 months (3% match). Blake said they have 7 plant shutdowns a year which means they have 358 workdays out of 365. They also have a tuition reimbursement program.

Keith said the EDC has an ownership interest in the building. The lease payments are made to the Growth Fund which retires the bond debt and the EDA loan. Greg added that we will apply the additional rent to the loan (a 40-month process). Doug asked who owns the building and Keith replied it reverts to the JDA. Doug felt the vacation package is a good benefit. Eliot said we are very happy to have LM here in Grand Forks. Doug said he hoped the message of how LM treats their employees gets out; it’s a 21st century way of thinking. It was moved by Eliot Glassheim and seconded by Jon Ramsey to approve an EDA Revolving Loan Fund loan to the Grand Forks Region Economic Development Corporation on behalf of LM Glasfiber in the amount of $500,000 at 4% interest with a 40-month term. Voting “AYE”: Eliot Glassheim, Terry Smith, Jon Ramsey, Bob Brooks, and Doug Christensen. Voting “NAY”: None. MOTION CARRIED. Keith said this will go to the JDA on Monday, November 20th. They are also trying to arrange a short presentation by LM to the JDA.

Project Update:

Klaus said he had no update at this time. Greg reported that the Centers of Excellence authorized disbursement of the $3.5 million COE grant for REAC. They approved the release of $500,000 immediately and the rest when certain milestones are reached. We have had a request from REAC about how we’re going to disburse the money. Greg said his position is that we release our funds in stages - X number of dollars per $100,000 of COE money that is released, and suggested $15,000 per $100,000 released. Hal asked what our letter said and Greg replied that we would provide the $500,000 grant upon release of the $3.5 million. Hal said, at the beginning we were the first in; now we are the last in. Doug asked if they had sold their bonds yet and Jon replied they had not, adding that they were taking the actual bond documents to the County Commissioners next week. He said that the leases had already been provided to the County. All equity, including the Growth Fund money, has to go in there. The milestones that the COE refers to are actually the bills from the contractor. The funds from the State will be released as REAC submits bill requests. Doug asked if we should advance our money proportionately. Eliot felt we should advance it 1/7th and asked Jon if this would pose a problem. Jon said he felt that would work but couldn’t speak for REAC. Jon said the bonds won’t get sold until the middle to end of December, but they can start construction because of the conventional bank loan. The bonds will be sold on a public basis and they feel comfortable going forward with the State and City money for construction. Doug felt that 1/7th shows good faith. He said we should delay the first draw until the County approves and the bonds are sold or until they get conventional financing. Eliot felt 1/7th is proportional to the State release and asked if they can spend funds before the bonds have been sold. Jon said they can’t start construction without having something to fall back on, so that’s where the conventional financing comes in. It was moved by Eliot Glassheim and seconded by Bob Brooks that our release of funds be proportionate to the COE release and that the first disbursement will not occur until the County sells the bonds or until the conventional financing is secured. Jon Ramsey recused himself from voting. Voting “AYE”: Eliot Glassheim, Terry Smith, Bob Brooks, and Doug Christensen. Voting “NAY”: None. ABSTAINING: Jon Ramsey. MOTION CARRIED.

Adjournment:

As there was no other business, Doug Christensen adjourned the meeting.

Respectfully submitted,


Peggy Kurtz
Urban Development


Doug Christensen
Chair