The Giant Welcome Center and Museum is pictured above. The Blue Earth EDA is discussing missing payments from the Chamber and what actions to take.
After not being able to hold their September meeting at the usual date and time of the second Thursday of the month at 7:30 a.m., due to a lack of a quorum, the Blue Earth Economic Development Authority (EDA) held their meeting on Monday, Sept. 16, at noon.
The primary discussion centered on a report by city administrator Mary Kennedy on a meeting of an EDA subcommittee.
That subcommittee, composed of Kennedy, Dan Ristau and Bill Rosenau, was formed to study the lease agreement between the EDA and the Blue Earth Chamber of Commerce.
That lease, created in December of 2018, was for the Chamber to lease the then newly constructed Giant Welcome Center from the city of Blue Earth and the EDA.
While the Chamber has been paying the rent payment of $1,206 per month, the lease agreement also includes the Chamber paying for the property taxes on the building and the building insurance, and that has not been paid.
The property tax and building insurance has been paid by the EDA since 2018.
Chamber board members, who were not at Monday’s EDA meeting, have previously stated that they were unaware of the any payments and had not received any bill from the city or the EDA for them.
The subcommittee report presented to the EDA by Kennedy showed the Chamber owes the EDA $39,252 in property tax reimbursements for 2019-2024 and $16,572 in property insurance reimbursement for the same years.
That totals $55,824.
The subcommittee studied a lease amendment proposal and the report stated two items.
One, the EDA does not have an obligation to forgive the amount that the Chamber owes in additional rent, and if doing so it could cause the EDA financial limitations of its own.
And two, the relationship between the EDA and the Chamber is important and having a successful Chamber of Commerce in the community is valuable and important to the economic development activities in Blue Earth.
The subcommittee came up with four recommendations for choices of how to proceed.
One was that beginning in 2029 and through the end of the lease, the Chamber will pay the additional rent (property taxes and property insurance each year, in addition to the monthly lease payment. The EDA would extend the lease for an unknown number of months to make up for the past unpaid property tax and insurance.
A second option would be that the Chamber be considered to be in default of the lease and the EDA take action to collect all additional rent owed, either with or without interest.
The third option would be to consider the Chamber to be in default and work with the Chamber and CVB (Convention and Visitors Bureau) boards to consider an alternative model of operation of the Giant Welcome Center with EDA involvement.
The fourth and final option that the subcommittee presented was to re-write the lease completely with new terms, conditions and rental rates.
The full EDA board discussed the various options at some length.
“Option A (the first option) looks like the best,” said EDA board member Lissia Laehn. “We need the Chamber, and I am not sure if the Chamber or the CVB has enough funds to pay this back amount owed.”
Kennedy said she was told the Chamber had a negative operating budget for this year.
Jarod Mathiason, a new member of the EDA board, said perhaps the EDA could help the Chamber with a new business plan.
“How long have they had a negative operating budget,” he asked. No one answered his question. He added that it is not good practice to loan money to a business in default.
In the end, the EDA board passed a motion to table any action at this time on the issue.
Laehn, who made the motion, pointed out that the two council representatives to the EDA board, mayor Rick Scholtes and council member Dan Ristau, were unable to be at the meeting on Monday.
“I think it is important to get the council’s input on this situation,” Laehn said.
In other business at the meeting, the EDA board:
• Approved two Commercial Business Improvement Forgivable Loans to Blue Earth Custom Embroidery for wall repair in the amount of $5,000 (total project cost $13,995) and Huntington’s Barbers for seal coating the parking lot in the amount of $1,272, half the cost of the project.
• Accepted a bid from Moore’s Construction for snow removal at the Ag Center.
• Accepted the resignation of EDA board member Jamie Jones.
• Received an update on the Blue Earth Welcoming Community Bonfire which will be on Saturday, Sept. 21, at Putnam Park.
• Approved paying for EDA specialist Amy Schaefer’s Blue Earth Kiwanis Club dues.