Local Development Finance Authority

CITY OF STERLING HEIGHTS LOCAL DEVELOPMENT FINANCE AUTHORITY MINUTES OF THE MEETING May 18, 2011– 5:30 P.M. 40555 Utica Road, Sterling Heights, MI 48313 586-446-2730 City Council Chambers Approved John Lamerato called the meeting to order at 5:35 p.m. Pledge of Allegiance Members present at roll call: Stephan Cassin, David Corba, Lori Doughty, John Lamerato, John Lettang (late), Casey Sobczak, Irene Spanos, David Wilson, Zac Zachary Members absent: Richard Kincaid, Victor Martin (excused) Also in attendance: Denice A. Gerstenberg, Business Development Manager, Al Khavari of Terra-Telesis, Andreas Lindert of Sanza LLC, and John Lopes of Microcide Research Center LLC Motion to Approve the Agenda as amended Moved by Wilson, supported by Sobczak, to approve the agenda as presented. Ayes: All Nays: None Motion carried. Motion to Approve the Minutes of Regular Meeting February 16, 2011 Moved by Cassin, supported by Wilson, to approve the Minutes as presented. Ayes: All Nays: None Motion carried. New Business Ms. Gerstenberg introduced, Jennifer Varney the new City Treasurer, Wayne Blizman of Oakland University, and Jeff Barry of Oakland University, Al Khavari of Terra-Telesis, Andreas Lindert of Sanza LLC, and John Lopes of Microcide Research Center LLC Mr. Lettang questioned who would be reviewing the workers comp insurance. Mr. Carufel, the Cities Risk Manager, addressed the board, that he reviews each applicant prior to the final review of the board. Mr. Wilson questioned if this was a sole proprietor. Mr. Al Khavari, stated he was a sole proprietor at this time. Mr. Wilson questioned if it was the responsibility of the Cities Risk Manager to review the insurance on behalf of the board. Mr. Carufel replied yes, that prior to the tenant moving in he would be reviewing the documents. Mr. Lettang questioned why there is a difference in the Lease Rental square foot Rates. Ms. Gerstenberg replied that the rental rates are negotiated by the recruitment team and based on the ability to pay, and then the fact that the spaces are oddly shaped and not all lease space is usable space. Motion to approve the lease agreement between Terra-Telesis and the Local Development Finance Authority Moved by Sobczak, supported by Spanos to approve the motion Ayes: All Nays: None Motion carried. Motion to approve the lease agreement between Sanza LLC and the Local Development Finance Authority Moved by Lettang, supported by Wilson to approve the motion Ayes: All Nays: None Motion carried. Motion to approve the lease agreement between Microcide Research Center LLC and the Local Development Finance Authority Moved by Wilson, supported by Spanos to approve the motion Ayes: All Nays: None Motion carried. Mr. Clark Andrews gave an extensive review of the EDA Grant, and the timeline that has brought us up to today and reasons for these additional items to be approve today. Mr. Wilson questioned the EDA’s request to review each lease. Mr. Andrews replied that we have an approved standard lease agreement with the EDA that we will be using for all new tenants. Mr. Wilson questioned the liability of the general leases to the LDFA. Ms. Gerstenberg replied that we would not have to go back to the EDA with these lease agreements, if and when the EDA makes changes to the Lease Agreements, then the next round of leases would include those changes, the three leases that were approved tonight are only for one year, so any changes will be incorporated when they expire and/or are renewed. Mr. Wilson noted in Sec E of the Indemnification Agreement, Comerica Bank should be removed. Ms. Doughty with regards to the covenant of use and purpose after the 20 years, does that conflict with Mr. Dammon thoughts if he did want to repurchase this property. Mr. Andrews stated that Mr. Dammon is aware of the changes that the EDA requires. Ms. Doughty questioned what would trigger the EDA to say a violation of the agreement has occurred. Mr. Andrews stated that the EDA’s intention is to restrict the use of public funds for a private use, which the public receives no benefit from. Ms. Doughty questioned if the LDFA board members are liable for the LDFA’s default. Mr. Andrews stated that only the LDFA is responsible, and only the LDFA’s assets or account balances would be used for liability issues, also the LDFA has liability insurance. There is no personal liability to the board members. Mr. Lettang inquired what the $391,000 grant was going to buy. Mr. Andrews stated that the building was designed as a Day Care Center, and the child size bathroom fixtures need to be removed, and that communication lines were not included in the original construction. General modifications to existing plumbing, electrical and communication needed to be done to update the space to usable tenant spaces. Mr. Lettang questioned the flow of funds, do we pay this upfront, and get reimbursed with the grant, and what is the timeline of the project. Mr. Andrews stated that the construction timeline is very short and we expect a September 1, 2011 deadline. Ms. Gerstenberg stated that the grant is a reimbursement grant, and a 60-day construction timeline. The City pays the bills upfront and then the City will request reimbursement from the EDA, most grants are done this way now, once proof of payment has been submitted then funds are released back to the City. Motion to approve Escrow Agreement between Michigan Municipal Risk Management Authority, City of Sterling Heights, and the Local Development Financing Authority (LDFA), Covenant of Purpose, Use and Ownership with Economic Development Administration (EDA), and Indemnification Agreement as amended and subject to final City Approval and EDA Approval Moved by Wilson, supported by Spanos to approve the motion Ayes: All Nays: None Motion carried. Old Business None Board Members Report None Public Comment None Adjournment Moved by Lettang supported by Spanos to adjourn. Ayes: All Nays: None Motion carried. The meeting adjourned at 6:35 p.m. TJ Minutes Approved 7/13/11 John Lettang Secretary