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EDA wants a new 3 Sisters contract | News, Sports, Jobs

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Representatives of the Three Sisters Project, Deanna Lahre, Janie Hanson and Don Lipps in discussion with the EDA.

An action-packed Blue Earth Economic Development Authority (EDA) board meeting on Thursday, October 14 focused on one topic – the fate of Rural Renaissance’s Three Sisters project.

After receiving an update from project creator Janie Hanson at a regular meeting on October 4, Blue Earth City Council left the status of the project to the discretion of the EDA.

EDA has already expressed frustration with the status of the project.

“As a board of directors, we were tense and our ears were just tickled with information on progress, but no visible progress was made, and none of the requirements were met,” Board member Lissia Laehn said in written correspondence.

At this meeting, the main objective of the EDA was to determine whether the initial terms of the development agreement with the Three Sisters project have been adequately met and, if not, whether they will grant the organization a additional time to complete the agreement.

Deanna Lahre, a member of the Rural Renaissance Project and a Hanson partner, has made a few requests to the EDA and City Council in light of the expiration of the project’s extended deadline of September 30.

Lahre asked both groups “Approve that the terms of the development agreement have been met to the satisfaction of the EDA and the Council”.

A further request from Lahre was that the advice “Approve that ownership (of the Three Sisters Project) may be transferred from the Rural Renaissance non-profit project in its sole discretion to the private owner (s).” “ 

Before agreeing on terms, the EDA sought clarification from the Three Sisters project representatives in attendance: Lahre, Hanson, business consultant Don Lipps and Three Sisters project manager Nathan Wright, who attended. via Zoom.

EDA board chair Peggy Olson first asked why approval was being sought to transfer ownership to private owners.

Hanson replied, “There is great concern about some of the funding. The options that are attractive right now require someone to own the property. We are a non-profit organization.

Hanson was unwilling to provide the specific names of the parties interested in the property.

EDA board member Bill Rosenau expressed concern about this, noting, “You cannot seek financing until you have finalized your ownership group. “

Hanson replied, “We don’t want to finalize a property group yet, because we don’t know if the city will take over the buildings. “

Another central concern expressed by the EDA was funding for the Three Sisters project.

Rosenau said, “One of the things that frustrates me is that we talked about fundraising at the last meeting. You were going to deliver a letter to city council on funding. But here we are, and you have no funding. 

Hanson explained, “We weren’t able to get funding until we got the application package together. We have a final one now, we’re just going to make sure we have the final cost. “ 

Rosenau replied, “I’m afraid you said you didn’t even have your property lined up for this. The first step is to obtain financing. 

He added, “You didn’t even get started until you finalized your ownership group. Do you have a date when this will be done? “ 

Hanson risked a 90-day estimate, but was unwilling to commit to a specific date.

However, Hanson was prepared to share the expected composition of the financial package she is pursuing.

“It will be a mixture of equity investment and bank financing”, she explained. “We are in discussions with the lenders, and there is a Shareholder Value Added Loan (VAS) program available for this type of thing.”

Hanson was not currently willing to share documentation on this with the board. “We are not comfortable sharing this on a public forum”, she said. “He has our business model.”

Lack of communication was a final item that EDA wanted to choose with representatives of the Three Sisters Project.

“In addressing this today, I thought we were going to take over these buildings because of the lack of communication” Mayor Rick Scholtes admitted. “We have given you a six month extension, and now we are considering another, and nowhere in the process has there been any communication.” 

The Board of Directors were somewhat appeased by an update provided by Project Manager Wright. He was successful in allaying some of the council’s concerns regarding the progress of construction on the project.

Wright first clarified Three Sisters’ decision to contract with Knutson Construction, a large construction company that operates out of the Twin Cities.

“It is important that Knutson is a bigger company”, Wright explained. “They have the ability to bring people together for a project like this. “

Wright added, “My role is to work with the Knutson contractor and find suppliers to speed things up. When you are working on something with bigger financial projects, things get stuck with bureaucracy. “ 

Wright also addressed project delays that frustrated EDA and city council.

“The problem is, when we bid, the whole project was facing labor shortages, especially plumbers.” Wright said. “It’s also difficult to find supplies and order supplies. “

Rosenau inquired about the condition of the HVAC equipment in the buildings.

“The equipment has been paid for and purchased with regard to the HVAC”,Wright responded. “The oven and the oil have been ordered. The problem was the RTs (roof units). They are very difficult to find. They should be by the end of the month. 

Wright responded to concerns about the lack of permit applications seen at City Hall.

“I understand your concern, but also, with regard to permits, we do not want to withdraw a permit too far in advance”,Wright said. “We want to make sure we are ready to go before we withdraw a permit so that we don’t waste anybody’s time.” 

“I understand that we have exceeded the deadlines, and it is regrettable”,Wright concluded. “I wish I never had to miss a deadline. We all do our best in the industry. 

Overall, the EDA was grateful to receive Wright’s update. “The information Nathan (Wright) provided was excellent”,said Scholtès. “I got more information in the last 15 minutes than in the last two years. It’s frustrating.”

Scholtès continued, “Whether we take these buildings back or move forward, this is the kind of communication we want to see. “

The board of directors met behind closed doors to discuss the terms they were prepared to offer to representatives of the Three Sisters project.

“The proposal we are proposing would be a 60-day extension to provide us with information”,Scholtes announced after the closed session.

“We are going to want to see all the invoices that you have acquired that show that all the equipment has been acquired throughout the process”said Scholtès. “We want to see the list of ownership groups. Names and percentage of ownership.

He concluded, “We also want to see a letter of commitment to fund the bank. If all this is respected, we will sign the buildings. If it is not followed, you will release us from all claims against the City of Blue Earth and from all claims against the EDA. “ 

Hanson replied, “One thing that gives me pause is the letter of commitment from the bank. It is beyond our control for the processes as to the exact closing date. “

Rosenau said, “You need funding for this project. I think within 60-90 days you should be able to receive a letter of commitment from them.

The EDA agreed to a compromise with Hanson, offering terms that require a commitment of half a million dollars from the bank.

“On top of that, you have to show what your role is”Scholtes added.

Hanson has agreed to review these terms and revisit the deal at the next EDA meeting. City administrator Mary Kennedy will work with city attorney David Frundt to draft the documentation ahead of this meeting.

“We changed this whole deal. It should be very easy for you guys to meet you ”,Scholtes concludes. “If you don’t do that, we’re asking for a full version of everything. “ 

The motion to proceed under those terms is carried.

The EDA also addressed the following agenda items on Thursday morning:

• Presentation of the October Business Spotlight Award to Gartzke’s Floral and Gifts. Sarah Zabel, who bought the business with her husband, Kevin Zabel, in February, was on hand to accept the award.

“It is going very well”Zabel shared. “It’s just a whole new level of activity. Every day is different. I appreciate it very much. 

• Hearing for updates regarding the search for a replacement for local veterinarian Dr Bob Bogan after his retirement. EDA specialist Amy Schaefer said Bogan had narrowed down applications to two candidates for the post.

“It looks like we will have a new person at the clinic in January”,Shaefer said.“We keep our fingers crossed, everything is going well. “