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HomeMy WebLinkAbout1988-03-11 Economic Development Commission SummaryKENAI ECONOMIC DEVELOPMENT COMMISSION - MINUTES MARCH 11, 1988 - 7:00 PM KENAI CITY HALL CHAIRMAN VINCE O'REILLY PRESIDING 1. ROLL CALL Present- EDC - Vince O'Reilly, Jim Carter (arrived late), Darren Bond, Bob Scott, Barry Thomson, Penny Dyer Harbor - Tommy Thompson Absent: EDC - Jim Elson Visitors- City Manager Brighton, Borough Resource Development Officer Stan Stedman 2. MINUTES, MARCH 3, 1988 a. Commissioner Bond. Page 3, paragraph 3, base is $1.5 Million, total is $1.8 Million. b. Chairman O'Reilly. He complimented Planning Secy. Loper on coming to the meeting at short notice and for the excellent minutes. Minutes were approved as amended. COMMISSIONER CARTER ARRIVED: 7: 10 PM. 3. RESOURCE DEVELOPMENT COUNCIL SEMINAR, FEB. 26 & 27 MOTI ON: Commissioner Bond moved, seconded by Commissioner B. Thomson, to direct Administration to purchase a transcript of the proceedings for $20. Motion passed by unanimous consent. 4. INDUSTRIAL PARK PROPOSAL Chairman O'Reilly. He referred to a letter from Seafoods from Alaska, requesting additional funding from the City for a primary processing plant and custom/secondary processing. The Harbor Comm. was looking at 32 acres of Coyle property in 1982. Mayor Williams recently spoke to the Coyles, they are asking for $500,000, and said they wanted to wait till they got back to Alaska before they discussed it further. Commissioner B. Thomson said we have to focus on the freezer, but if the building is built, make sure it is able to expand. Commissioner Bond suggested sending a letter to Seafoods from Alaska stating it is too late to get into the EDA time frame. Commissioner Scott asked if anyone had looked at the financial stability KENAI ECONOMIC DEVELOPMENT COMMISSION MARCH 11, 1988 PAGE 2 of the company. Commissioner Bond noted he had a conflict of interest in this. S. Stedman distributed information on the company and added they have a stock analysis. Chairman O'Reilly noted EDC is only advisory, Council will make the decision. He noted he sits on the Board of Salamatof Seafoods. He spoke to Mr. Irvin (Seafoods from Alaska), he had no concern. S. Stedman reviewed - They are a new company. The capital they have obtained during stock offer - a good share has gone back to the product and marketing. They cannot show strength from what is in the bank and capital investments and assets. Their strength is in where they are heading, enthusiasm in value promotion and customers they have. They do not have many years of background, no substantial fixed assets. Chairman O'Reilly added, they have value-added processing, they have penetrated some markets that have not been taken advantage of locally. They may have found a unique nitch in their stock offer. There is no way the public can participate in seafood processing directly. ThOse fish processors are a small part of giant companies. This gives the people a chance to invest in fish processing. They should be credited for their marketing capabilities. Their plant is not old, it is like shares in an advertising agency. Commissioner Scott noted the City is putting up 1/6 of the value of the plant, how much assets does the company have? Commissioner B. Thomson replied the City is getting its assets for 50% of what it will cost because of grants. The leverage to get the asset is the company that will give us the lease. If they leave, the lease is worth nothing. The worst case is the City has an asset we have to find something to do with. An empty building with a freezer that is removable that cost us 50% of what it would cost us privately. We should separate Seafoods from Alaska from this to the extent of their ability to produce. Commissioner Bond said it is wrong to look at it as Seafoods from Alaska and what we can do for them. Seafoods is providing us with a means to start development of the harbor. EDA is helping us by its willingness to give us the grant. Chairman O'Reilly said you could not trigger $900,000 EDA funding and $200,000 State funding unless there was bait like Seafoods from Alaska. Commissioner Carter noted you could not trigger EDA if it was not job related. Commissioner Dyer asked if Seafoods from Alaska was insistent on the addition. Commission B. Thomson replied no, it was just an idea. Commissioner Bond said when you start talking about a processing plant you have to look at financial statements. We do not have time for that. Mr. Stedman said he spoke to Mr. Irvin. They are seeking the cold storage, they just thought this was good. Chairman O'Reilly asked Commissioner T. Thompson if the Harbor Comm. had KENAI ECONOMIC DEVELOPMENT COMMISSION MARCH 11, 1988 PAGE 3 thought of creating these types of things. Commissioner T. Thompson replied no, they dealt with dock and feasibility of a harbor. They did not think they would have the land. City Manager Brighton said some time ago there was talk about becoming involved with a cold storage in Kenai, but they wanted it at the airport. Since that time a lot of cold storage plants have added to their facilities. Whitney Fidalgo has expressed an interest in leasing space for cold storage. EDC, Harbor Comm., Council and the Borough have reviewed this· There is a possibility we can have fifty cents on the dollar. We cannot have manufacturing here. Council is looking at this giving us 20 new jobs. He can understand the concern from the fish processing standpoint. They feel it will cost them five cents per lb. per fish for the dock. Mr. Stedman said Seafoods from Alaska purchased 2-1/2 million lbs. last year, processed 1/2 and sold the rest headed and gutted. There will be a dramatic increase in the process for secondary market. We don't think this will happen this year, as far as competition with other processors. He added, Mayor Williams asked that EDC figure costs excluding land because if we cannot negotiate down from $600,000, we will immediately condemn the property and we will pay value. It is assessed at $156,000. Commissioner.~Bond said you. cannot come up with a figure without the land. Chairman O'Reilly noted at the end of ten years the City has 31 acres of land, a cold storage building, roads and utilities. Commissioner Bond noted we are using four acres for the facility, the remaining 27 could be for other uses. An industrial park is more marketable. Commissioner Dyer asked, how long does Seafoods from Alaska want to commit to? Mr. Stedman replied, 20 years. EDA said no, that would take away from the public asset. They wanted five years. EDA has been reluctant about purchasing property. They said if the area became part of a master plan and is part of an industrial park, the land could be factored in. City Manager Brighton asked Commissioner Scott, what are the possibilities if we had 30 acres, we might find someone interested in boat repair or fish supply house with a laid out, planned industrial park? Commissioner Scott replied, regarding a fish supply house. Other than boat hardware, there are 8 fishermen that deal with this. Regarding boat repair, he has been trying to get someone to work on just his boats. It is only 45 days per year. City Manager Brighton said there is a possibility of dry dock storage. Commissioner T. Thompson said the Harbor Comm. feels these kinds of ideas have been discussed. There is a demand for boat storage and repair shop, but there is no place to put them. City Manager Brighton asked Commissioner Scott, do you cold storage fish in KENAI ECONOMIC DEVELOPMENT COMMISSION MARCH 11, 1988 PAGE 4 Seattle? Answer - no. Mr. Brighton asked if others do. Answer - yes. Mr. Brighton asked if there was any reason to go to Seattle. Commissioner Scott replied no, the Japanese all come to Seattle and can look at every fish in the country, they would only see local fish here. Chairman O'Reilly noted if we were dealing with a large company with financial clout it would be different. It may take 5-10 years and we will commit much dollars. The financial capability may not match the long term needed. COMMISSIONER T. THOMPSON LEFT: 8:30 PM. The Commission then discussed the recommendation to Council for the Cold Storage facility. Chairman O'Reilly will prepare for submittal to Council at March 16 meeting. (CLERK'S NOTE- Completed report attached to minutes) 5. Next meeting- April 7, HEA, 7-00 PM 6. S. Stedman reported an economic development seminar in Anchorage April 6 through 8, put on by UAJ. They will bring one person down here. It'will cost $195. 7. Chairman O'Reilly said Kenai Borou~h Finance Director Kinney wants to cooperate with the data bank. 8. City Manager Brighton said a bill has been introduced in the Senate for $50,000 for formation of economic development groups. S. Stedman explained it is only regional. 9. ADJOURNMENT- Meeting adjourned at 9-15 PM. /Janet Whelan ~ City Clerk · ECONOMIC DEVELOPMENT COMMISSION March 11, 1988- 7:00 P.M. City Council Chambers Vincent O'Reilly Chairman EDC Process of Developing Recommendation to Council Concerning Seafoods from Alaska Proposal This Process Will Establish Poli.c~ II Overall Sequence A. EDC develops recommendation to Council B. Council consideration, change and acceptance or rejection C. Council instruction to Administration to negotiate agreement with Seafoods from Alaska with EDC available as advisor D. Council approval of agreement III EDC Sequence A. Review results of survey concerning need for project B. Review materials and information offered by proposer C. Identify elements of City involvment- 1. Municipal services water, sewer, land, roads 2. Funding sources, quantity and timing, who bears risk, rental formula 3. Operation of Facility city, leased out