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EDA tables request to help fund ED director

NEW ULM — The New Ulm Economic Development Authority (EDA) tabled a decision Tuesday to help fund a New Ulm Economic Development Corporation (NUEDC) Executive Director.

The board voted to table a request to help fund the EDC Executive Director with a $50,000 payment until more information was provided by the NUEDC.

The NUEDC executive board is considering candidates for Executive Director. The funding request of $50,000 would cover a portion of the proposed salary and benefits for this position. The position would be contracted for one year and continued employment would be considered upon completion of predetermined objectives.

Board member Andrea Boettger suggested the request be tabled until more information was provided. Board member Les Schultz agreed that the proposal had a lot of missing information. He said this request came out of the blue. There was no information on the position requirements, total salary need, or the hiring process.

Schultz said he was not against this request, but he would need more information before approving the request.

City Manager Chris Dalton said this request would be a return to the NUEDC’s previous status. Brian Tohal had previously served as the NUEDC coordinator, but this position was eliminated three years ago. Tohal’s coordinator position was partially funded by the City of New Ulm for $50,000. However, the city decided to cut this payment in 2017 in favor of hiring a new Assistant City Manager/Economic Development Director.

Chris Dalton was initially hired as the Assistant City Manager/Economic Development Director, but after the resignation of former City Manager Brian Gramentz, Dalton was promoted to City Manager. Audra Shaneman was hired to take over as Assistant City Manager/Economic Development Director, but earlier this year the city council discussed cutting the Assistant City Manager/Economic Development Director position at the end of this year to reduce the city’s budget. In response, Shaneman resigned last month.

Throughout this turnover, NUEDC has had no coordinator or executive director.

Dalton did not disagree with NUEDC’s need for an executive director. He said, “I think they do need someone there to helm and guide that ship.” However, Dalton agreed with Schultz and Boettger that more information was needed before approval of the funding request.

Schultz said with the city recently losing an Economic Development Director, he wanted to know how the NUEDC executive director would work with the city.

EDA Chair and NUEDC member Daniel Braam said through the course of strategic planning, it became clear an executive director was needed for NUEDC because there is no ongoing person to support the activities within it.

Braam assured the EDA board that NUEDC had not decided on a particular person for the executive director.

Boettger said the request to table was not about reluctance to approve a specific person. The concern was about the lack of a job description. She agreed a person might be needed for this position, but wanted more information. Boettger made the motion to table with a second from Schultz.

Schultz said he needed to see the budget proposal for this job and other details before approving $50,000.

The vote to table passed with Braam voting against.

New Ulm receives $47,000 in damages from HUD lawsuit

The EDA is expecting to receive $47,000 in damages following a recent court decision involving Department of Housing and Urban Development (HUD) payments.

The New Ulm EDA entered into a contract with HUD in the early 1980s to administer the Public Housing program. This contract states HUD will fund the program based on an operating fund formula. The formula is calculated based on rental revenue and utility expenses from the prior fiscal year.

Housing Coordinator Heather Bregel explained that following the recession a decade ago, Congress authorized HUD to require agencies with operating reserves above a certain level to utilize their reserve funds in lieu of an operating subsidy.

As a result of the Operating Reserve Offset of 2012, the New Ulm EDA received no operating subsidy funds for that year.

Bregel said New Ulm’s housing authority was one of the lucky agencies with healthy reserve funds and HUD determine New Ulm’s housing program could operate a year without receiving a subsidy. If not for this offset, the New Ulm Public Housing program would have received approximately $58,000 in operating subsidy in 2012.

Other housing authorities were negatively impacted by this decision and in October 2021, a breach of contract lawsuit was filed on behalf of 355 Housing Authority plaintiffs in October 2012, but the New Ulm EDA declined participation in the lawsuit.

The United States Court of Federal Claims (Claims Court) ultimately ruled in favor of the housing authorities, agreeing there was a breach of contract. The housing authorities were awarded $136 million in damages to the plaintiffs.

New Ulm EDA did not participate in the lawsuit and received no damages from the lawsuit.

As a result of this decision by the Claims Court, the New Ulm EDA decided to join a second lawsuit, which was filed on November 15, 2017. After five years of appeals, extensions and COVID-related delay, the case was once again ruled in favor of the housing authorities and New Ulm EDA will receive a prorated amount of $47,000. The EDA paid $1,100 in legal fees for this lawsuit, but this is a net return of $45,900.

Mayor Terry Sveine asked if this $47,000 will be placed in a reserve fund.

Bregel said because this money was given as damages it does not technically qualify as operation funding and the money does not need to go into reserves.

Bregel said once the EDA receives the money, she will return to the board to discuss what could be done with the funds.

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The board approved an agreement with GISIPlanning for the use of a property search tool. The contract is for three years at $5,000 each year.

The tool would allow all available properties in the city that are for lease or sale to be listed for easy reference. The search tool would use geographical software to show the location of the property and in-depth information on the property. A person seeking property to locate a business could use this tool to easily find a site that meets their needs and even find broker information and contact information for the owner.

Dalton said the tool would even provide demographic information for each site listed, including drive times, median hourly wages other important information.

“[It] is a powerful tool in recruiting efforts,” Dalton said “or an established business can look at competition around them.”

Schultz made the motion to approve the agreement. It was unanimously approved by the board.

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The EDA approved a $74,9000 commercial property rehab loan for SpecSys, Inc. The loan would be used to help with roof repairs to the companies building. The terms of the loan are for 10 years at a 2% interest rate.

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