EDA Agenda 04-20-2004
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AGENDA
MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
Tuesday, April 20, 2004 - 4:00 p.m.
City Hall - Academy Room
MEMBERS: Chair Bill Demeules, Vice Chair Barb Schwientck, Roger Carlson, Robbie Smith, Clint
Herbst, Ron Hoglund, and Darrin Lahr.
STAFF:
Treasurer Rick Wolfsteller, Executive Director Ollie Koropchak, Recorder Angela
Schumann.
GUESTS:
Mike PudiI, President, and/or Paul Sheely, Vice President, WSI Industries, Inc.
Call to Order.
Consideration to approve the January 27,2004 EDA minutes.
Consideration of adding or removing agenda items.
Consideration to review for discussion the preliminary GMEF application from WSllndustries,
Inc.
Public Hearing - Consideration to approve or deny GMEF Loan No. 023, a business subsidy,
for WSI Industries, Inc.
6. Executive Director's Report.
7. Other Business.
8. Adjournment.
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MI NUTES
MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
Tuesday, January 27th, 2004- 4:00 p.m.
Academy Room
Members Present:
Chair Bill Demeules, Roger Carlson, Clint Herhst, Assistant Trcasurer
Ron IlogIund, Darrin Lahr, Robbie Smith
Absent:
Barb Schwientek
Staff Present:
Executive Director Ollie Koropchak, Treasurer Rick Wolfsteller, Public
Works Director John Simola, and Recorder Angela Schumann
Guests:
Property owners Alan Loch, Dar Flatten, Karen Schneider, Pam Campbell
- DA T, Shiela Stumpf - Proposcd DA T, Marie Flicker - Chamber of
Commerce
1. Call to Order.
Chair Demueles called the mccting to order at 4:00 p.m. and dcclared a quorum.
2.
Consideration to approvc Octohcr 29, 2003 EDA minutes.
A MOTION WAS MADE BY HOGLUND TO APPROVE THE MINUTES OF THE
OCTOBER 2i'\ 2003 EDA MEETING. SMITH SECONDED THE MOTION.
HERBST ABSTAINED DUE TO ABSENCE AT SAID MEETING. MOTION
CARRIED.
3. Consideration of adding or removing items from thc agenda.
None.
4. Consideration to hear from land owners of Block 35 and to determine ifproposed design
conccpt meets EDA criteria.
Al Loch spoke on behalf on Block 35 landowncrs, providing an update on activity since
the last mceting of the EDA. All EDA members receivcd copies of the information
prcsented at the July mecting fiJr referencc, including critcria. Thcre were questions at
the October meeting regarding whether Block 35 landowners could meet the EDA's
criteria and what the next stcps in thc process would bc.
Loch has facilitated mcctings with landowners rcgarding the project and meeting the
critcria. Loch indicated that landowners were committed to the proposed design,
although they would like clarification on some the rcquired criteria.
EDA Minutes - 01/27/04
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All property owners have committed to improving building facades via the addition of
awnings. Fred Patch has reviewed the fayade improvements as has found nothing out-of..
like.. This requirement rcpresents the largest sharc of criteria commitment. Loch noted
that the maintenance agreement requires unrestricted parking space, coordinated trash and
snowplowing services, improved landscaping, as well as an agreement recorded against
all properties. Loch indicated that property owners can meet snowplowing and common
trash requircments. He reported that landscaping has not been discussed due to lack of a
final design plan.
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Loch rcquested that the EDA define unrestrictcd parking. He stated that there are pre-
existing parking agreements with renters. Koropchak noted that the utilization of public
dollars to improve the allcy and plaza may require that private parking be open to public
(non-restrictive). Lahr indicated that this condition is negotiable. There may bc an option
to incorporate pre-existing rental contracts. Karcn Schncider indicated that there is a
great deal of concern over giving up private space due to current parking limitations. The
EDA did note the recommended plan prepared by Steve Grittman would increase the
amount of parking; there are currently only 29 parking spaces available on the site.
Koropchak indicated that definition could be made between parking and loading zones in
order to retain specified private spaces. Schneider feels that properties need ahility to
claim a certain amount of private spaces for feasibility of the project. No dedicated
parking may be a hardship. Chair Demueles asked property owners if that condition were
removed. did they have any other problems meeting criteria? The property owners
present indicated not. Loch proposed a compromise of "designated loading areas". Chair
Demueles asked if the HRA has set a precedent for public/private parking on Block 36'1
Lahr suggested that perhaps there may he a diner-ent allocation of funds.
Loch also questioned what was meant by the agreement being recorded against each
property. Koropchak statcd that the recording is intcnded to reinforce upholding ofthe
maintenance agreement. Recording agai nst the property allows the agreement to carry
over to each renter and property owner. Loch inquired about the guarantee requirement
for the low-interest loan agreement with EDA. Koropchak noted that the EDA may
consider a low..interest loan for fa<;ade improvements, with special consideration given to
corner block properties. If a loan is given, a guarantee is required.
[,och noted that Craig Simonson has drafted a contract, acknowledging that all work will
be done at the same time. Loch inquired what the next step in the process would be. Is
financing available? Koropchak indicated that information on improvement costs is still
needed from property owners and that the EDA still needs to determine funding
considerations: public/private ratio and public purpose.
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Loch and property owners also discussed the roof water and drainage issue. Schluender
Construction has been asked to evaluate properties and provide and estimate. John Simola
will also work with properties to provide other recommendations. Schneider inquired
whether the improvements would adjust the public/private funding ratio. Koropchak
stated that it most likely would.
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EDA Minutes - 01/27/04
Chair Demueles outlined thc next steps in the process:
· Steve Grittman will prepare a final site plan (to scale) incorporating parking
recommendations/adjustments, agreed-upon building fayade improvements and
landscaping detail.
. Property owners to provide building fayade improvement costs.
. Property owners to review plan with DA T to gain approval on structure and materials.
. City Administrator Wolfsteller indicated that the EDA should determine a ratio of
public to private investment, and adjust ratio accordingly in terms of parking
considerations.
. A formal, binding agreement will be put together upon plan finalization and will need
to be presented to the EDA. EDA to provide direction on length of contract. If the
City is to provide funding, the commitment needs to be long term, meet criteria while
still providing f1exibility, and bind all current and new property owners. In the casc
of redevelopmcnt, pro-ratcd amount that needs to be paid back to the city over the
contract period.
. A covenant may require all property owncrs to agrce to replace and maintain
improvements. Loch inquired whether landscaping would be included in agreement?
Pam Campbell indicated that it will be addressed in DA T. Property owners will only
be required to maintain the landscaping recommcnded by DAT. Landscaping
requirements may not be as significant as large trees, etc.
Loch indicated that property owners to move forward on the above items within the next
month and will have proposal and plan ready t(H April meeting.
Koropchak noted that the EDA must consider the following question: if public funding is
used, were desired fayade improvements achieved?
5. Consideration of a request from Aroplax Corporation to extend the balloon payment date
for GMEF No. 16.
Korpochak provided the staff report, stating that Aroplax Corporation has inquired about
extending balloon payment purely as an incentive in 2004. Currently, the loan would
require refinancing in December. Koropchak statcd that current EDA bylaws do not
allow for extensions.
llerhst expressed his opinion that the extension may be an opp0J1unity for the city to
demonstrate interest in promoting a pro..business climate. Herbst noted that current EDA
fund levels may allow the extension. He noted that if the City spends money to get new
business it should also make efforts to retain them. Koropchak indicated that Aroplax did
not specify an extension length. Lahr inquired what the current interest rate on the loan
is. Koropchak stated that the current rate is 6.25% interest rate. Lahr asked if the
principal is needed for another project at this point? Koropchak noted that current cash
now is good. Lahr noted that if the City extends the loan life, it will continue to earn
interest. I lerbst suggested extending the loan period one time pending fund availability
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EDA Minutes - 01/27/04
and that the current loan is in good standing. Lahr asked whether another loan program is
available to Aroplax. Koropchack stated there is not and that an extension would require
changing the bylaws. The FDA briefly discussed making the extension callable.
FDA directed staff to explore any legal ramifications of the extension and bylaw change.
Report on this item at the next meeting and communicate with Aroplex on EDA' s
consideration of the matter.
Members agreed to table to next meeting.
6. Executive Director's Report.
Koropchak outlined the JOBZ program, a newly designated tax-free zone program, noting
that it may impact where businesses chose to locate/start their new company. Koropchak
indicated that the program will affect the City's marketing strategy.
H- Window Building has a user/renter and thcre is possible interest in the Remmele
building from a production company. Wolfsteller indicated that a new busincss in the
Remmele building would not be assessed for the interchange project as it is too far away
from interchange for assessment. None of the City's eurrent models go that far in
assessments.
7.
Other Husiness.
The Tuesday, April 27, 2004 EDA Annual Meeting was noted.
8. Adjournment.
A MOTION WAS MADE TO ADJOURN AT 5:45 PM BY LAHR, SECONDED BY
SMITH. MOTION CARRIED.
Angela Schumann, Recorder
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EDA Agenda - 04/20/04
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Consideration to review for discussion the preliminarv GMEF application from WSI
Industries, Inc.
A. Reference and Backl!round:
GMEF Loan Application: See Attachment A.
Request is for a $350,000 real property acquisition and development loan.
Project Summary:
WSI Industries, Inc. is a public held company. Thc company does precision machining and
assemblies specializing in avionics and aerospace, computer, defensc, powcr systems, medical,
etc. Corporate awards and recognition include Rockwell Collins, IBM, BFG Aerospace,
Polaris Industries, and Raytheon.
WSI was established in 1950. Taurus Numcric Tool, a Division of WSI, currcntly resides and
leases space in Osseo, MN. WSI has a Purchase Agreement on the vacant manufacturing
building located at 213 Chelsea Road (former 49,000 sq ft Remmele building.) The company
has out~grown its facility in Osseo and plans to move into thc Monticello facility over the next
six months. The closing date is anticipated the first week in May. See Attachment B.
Projected job and wage goals. See Attachment C. Letter of Commitment from Dan Poppe,
Excel Bank.
Mike Pudil is President, CEO and Paul Sheely is Vice President, CFO. Mr. Pudil has ties to
Monticello as he was Vice President of Remmele Engineering when Remmele builtin
Monticcllo around 1990. So he's familiar with the building as well as myself and many ofthc
manufacturing owners of Monticello. He served on the Board of Directors for UMC and
resigned when he became President of WSI.
The FDA should review the preliminary application for compliance with the EDA~GMEF
Business Subsidy Criteria.
ESTIMATED PROJECT COSTS:
Real Estate Acquisition
TOTAL
$1,900,000
$1,900,000
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EDA Agenda - 04/20/04
GREATER MONTICELLO ENTERPRISE FUND GUIDELINES
PUBLIC PURPOSE CRITERIA: Must comply with four or more of the criteria listed below,
criteria #1 bcing mandatory.
1.
Job Goal:
46 full-time jobs to the City of Monticcllo within two years of the
benefit datc.
Wage Goal: At least 90% of the ncwjobs must pay a wage of the higher of$9.00
per hour, or at least 160% of the federal minimum wage, cxclusive of
benefits, for individuals over the age of 20 during the term of the
assistancc. See Attaehmcnt B.
Annual reports are requircd until termination date. Failurc to meet job and wage goals require
partial or full payment of the assistance plus interest.
2. Increascs thc community tax base: Occupics a vacant building and retains the
$1,914,000 - 2004 Estimatcd Market Value.
3.
Factors:
'fa assist a new manufacturing business to expand thcir operations.
Other factors for consideration but no limited to: Naturc of business
(manufacturing), potential adversc environmental cffcct (none), and
compatibility to thc comprehensive plan and zoning policy (ycs,
acccptable in 1-1 zone.)
4. Used as a sccondary source to supplement conventional financing.
The GMEF is a secondary source of financing for the real estate.
5. Used as gap financing Used to encouragc growth and job creation within Monticello.
6. Used to assist other funds: Primary convcntionallender.
GREATER MONTICELLO ENTERPRISE FUND POLICIES
I. BUSINESS ELIGIBILITY
Industrial business:
Yes.
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IV.
EDA Agenda - 04/20/04
Located within city limits: Yes, Zoned I-I.
Credit worthy existing business:
Yes, Sce Exhibit C.
$10,000 loan per each job created. $10,000 X 46 = $460,000.
Or $5,000 per every $20,000 increase in property market valuation, whichever is higher.
Criteria: $460,000
II. FINANCING METHOD:
Companion Oireet Loan:
All such loans may be subordinated to the primary lender if
requested by the primary lender. The GMEF is leveraged and
the lower interest rate of the GMEF lowers the effective interest
rate on the entire project.
Criteria: The GMEF takes a second position on the real estate mortgage.
III.
USES OF PROCEEDS:
Real property acquisition and development.
TERMS AND CONDITIONS:
Loan Size: Maximum not to exceed 50% of the remaining revolving loan fund balance.
Cash balance as of April I ,2004, estimated $750,000. Request: $350,000.
Criteria: $375,000. Recommended: $350,000. Remaining balance
thereafter, $400,000.
Leveraging: Minimum 60% private/public non-GMEF
Maximum 30% public (GMEF)
Minimum 10% equity of ED A loan
Proposed
Lender
GMEF
Eq ui ty
TO"rAL
$1,360,000 (71.5%)
$ 350,000 (18.4%)
$ 190,000 (10%) (54% to EDA)
$1,900,000 (99.9%)
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EDA Agenda - 04/20/04
Loan Term; Real estate property maximum of 5-year maturity amortized up to 30 years.
Balloon payment at 5 years.
Recommended: Amortization consistent with lender, 25 years. Balloon payment in
year 5.
Interest Rate; Fixed rate not less than 2% below Minneapolis prime rate. Prime rate per
National Bank of Minneapolis on date of EDA loan approval. Prime rate April
20, 2004. _'
Recommendation at meeting:
fixed rate.
Loan Fee:
Minimlilll fee of $200 but not to exceed 1.5% of the total loan project. Paid by
applicant to the EDA within five working days after City Council approval of
GMEF loan. Non-refundable. Loan fee may be incorporated into project
costs. EDA retains the right to reduce or waive loan fee or portion of loan fee.
Options:
Minimum fee of $200 or not to exceed 1.5% of GMEF loan ($5,250),
due and payable not later than April 30, 2004.
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Recommended:
Minimum fee of $200, due and payable not later than April 30,
2004.
Prcpayment Policy: No penalty for prepayment.
Deferral of Payments; 1. Approval of the EDA membership by majority vote.
2. Extend the balloon if unable to refinance, verification letter trom two
lending institutions subject to Board approval.
Late Payment Policy: Failure to pay principal or interest when due may result in the loan being
immediately called.
Interest limitation on guarantced 10anWot applicable.
Assumability of loan; Nonc.
Business equity requircments:Subject to type of loan; Board of Directors will determine case
by case, analysis under normal lending guidelines.
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EDA Agenda - 04/20/04
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Collateral:
Personal and/or corporate guarantees (requires unlimited personal guarantees)
as per the GMEF attorney.
As this is a public held company, no personal guarantees will be
requested.
NC)I1-performance:
An approved GMEF loan shall be null and void iffunds are not drawn
upon or disbursed within 180 days from datc of EDA approval.
April 20, 2004 EDA approval - loan becomes null and void October 20, 2004.
Non-performance extension: Not applicable.
Legal Fees: Responsibility of the GMEF applicant.
B. Recommendation:
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Recommendation is to review this information prior to thc EDA meeting for discussion
and potential questions. Consideration to approve or deny GMEF Loan No. 023 is the
next agenda item.
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Supporting Data:
Preliminary GMEF application, job and wage-level goals, Excel Bank Letter of
Commitment, and a portion of the Jinancials. Annual Report Fiscal 2003 (2002 and
2003) and quarterly February 2004 available at EDA meeting. Also on file is a copy of
the Purchase Agreement, Article of Incorporation, Certificate of (rood Standing.
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GREATER MONTICELLO ENTERPRISE FUND
505 wALNUT SlREET, SUITE 1
MONTICELLO, MINNESOTA
PRELIMINARY APPliCATION FOR LOAN
APPLICANT: \IJ S~ :rN D\) S,....\t!5.s. $.~ c:..
FIRM OR TRADE NAME:
BUSINESS ADDRESS: 1'8\'5>\ ~~~ ..0
CITY/STATE: D'Sseo /fI\N ZIP CODE: 5~3(.q
TELEPHONE: (BUS) '7&"....,nt .....,'SO& (HOME)
DATE EST ABLlSHED: I CfSO EMPLOYER IDN "'" - Ow'? I (.f:) 7
SOLE PROPRIETOR -2L CORPORATION _ PARTNERSHIP
MANAGEMENT
NAME
M \...:.~ - AJ^''P/
.p~ .s~...L..,'1"
TITLE {.
N.e$ GIII.O
\J P/ i:.I=O
OWNERSHIP %
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PROJECT LOCATION: .z,,, C'ieL-~.e.c> Mo..a,.,c.FI' 0
)C NEW LOCA nON )( EXISTING BUSINESS
TOTAL PROJECT COST ESTIMATE: S I, qoo I 000
PROPOSED USES: REOUEST:
AMOUNT OF LOAN $ ~ ClIClO
MATURITY & TERMS
REQUESTED 5 VI( ~...a
APPLICANT'S EQtnTY ..1)-c:er ~~
LOAN PURPOSE At -.pl. IT. o,..a 0 F
LAND
EXISTING BUILDING
CONSTRUCTION
MACHINERY CAPITAL
WORKING CAPITAL
OTHER
TOTAL USES: $ \ '1or:? COD
PROPOSED BEGINNING DATE: ~t$lo'"
ESTIMATED COMPLETION DATE: ' 61S/o'"
I
TITLE TO
PROJECT ASSETS TO BE HELD BY: 15- OPERATING ENTIT"'y"- ALTER EGO
PARTICIPATING LENDER: e)(~i. &ANa-::.. $0 So""TH $''''1"#+ SI M,NA.l6'IP<<Js '" 1J
l> (Name) (Address) ,
ftttJ PoEfe- ~ :t38 -2P~'7
(Contact Person) (Telephone #)
'PRESENT # OF'IT EMPLOYEES ~lt? PROJECTED # OF FT EMPLOYEES (within 2 years) 50
PROJECTED AVERAGE WAGE PER HOUR: ,,,. Q:)
ADDITIONAL PROJECT INFORMATION:
APPLICANT SIGNATURE: iiI?
DATE SIGNED: :J /ZlljO,,/
-PJ O. .s.g
vJS;s:. ~O\1 S"1<<, ';'5 _
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03/29/2004 15:19 7534284300
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DEVELOPMENT SERVICES
Economic Development Director
Phone:
Fax:
Email:
(763) 271-3208
(763) 295-4404
011 ie. koroncbakri/:c i. mOil lice tlo-Illll _ us
CITY OF MONTICELLO, MINNESOTA
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JOB AND WAGE LEVEL - EXISTING JOBS
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Please indicate number of current employees at each level and indicate the corresponding benefit level.
Number of Jobs
Hourly Wa'i!..e
Level
Hourly Value
of V oluntarv
Benefits ($) <:&..S1'"t""'i\oT&.1:))
Full-time
Part-time
(Exc\. benefits)
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Less than $7.00
$7.00 to $7.99
$8.00 to $9.99
$10.00 to $1 1.99
)
II
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$]2.00 to $13.99
fI ,. So
$ 3. C,b
" 3. "8
, :1. 7(0
oI~~
., "'I. OC>
$14.00 to $15.99
$16.00 to $17.99
$18.00 [0 $19.99
$20.00 to $21.99
$22.00 and higher
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JOBSWAGE.2004
Monticello City Hall, 505 Walnut Street, Suite I, Monticello, MN 55362-8831 . (763) 295-2711 . Fax: (763) 295-4404
Office of Public Works, 909 Golf Course Rd., Monticello, MN 55362. (763) 295-3170. Fax: (763) 271-3272
A p r, 14. 2004 11: 18 AM
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EXCEL BANK MINNESOTA
No. 2079 P. 9/22
Coverage Analysis based on market rents:
Office 12.000 sf @ $6.00 psf (net)
Manufacturing 37,000 sf @ $3.00 psf (net)
Market Rents
DSR (20 yr amort.l5.2%)
DSCR
~ $ 72,000
;'ll $111.000
$183,000
$123.000
1.49x
Proiect Analvsis
WSllndustries, Inc. currenUy leases their production facility located in Osseo. Minnesota that houses its
production and Is also its headquarters. The facility is approximately 28.000 square feet and is leased until
February 2004 with an option to renew for an additional year. The Company has renewed the lease for
another year, to February 2005, This will allow them to continue production and gradually move into the
new facility. They are scheduled to close on the new facility May 1, 2004. Monthly rent Is approximately
$9,600 plus operating expenses and taxes. In addition, the company also leases a storage facility under an
operating lease that expires in July 2004. with monthly rent of $2,013. The company will not renew the
lease on the storage facility when it expires In July.
The company plans to relocate its headquarters and production facility to the proposed location. The new
facility Is located in Monticello, MN.
Property Data:
Property Address:
Sources and Uses of Funds
Option 1 (Bank financing only)
Sources:
Bank Loan
Cash Equity (20%)
Total Sources
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Year Bui~:
Total Square Feet:
Lot Size:
Parking:
Location:
213 Chelsea Road
Monticello. MN
1990 with addition in 1996
Office 12,000 sf
Production 37.000 sf
Total 49,000 sf
9.4 acres
Asphalt lot, lighted, space for approximately 150 vehicles
Excellent exposure and aceess to 1-94 via Highway 25 exit
$1.520.000
380.000
$1,900.000
Uses:
Purchase Price $1,900,000
T etal Uses
$1,900,000
Option 2 (Bank financing and subordinate financing from the City of Monticello)
Sources: Uses:
Bank Loan (1S1 REM) $1,360,000 Purchase prtce $1.900,000
City Monticello (2nd REM) 350.000
Cash Equity (10%) 190,000
Total Sources $1,900,000 Total Uses $1.900,000
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Guarantor Analvsis
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Apr. 14. 200411:18AM
EXCEL BANK MINNESOTA
No. 2079 p, 10/22
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Overall Risk Analvsis
The company has been in business for over fifty years and has survived both macro and micro challenges
over time.
Strengths
- Strong proactive manaaement
Long time in business
Strong balance sheet, leverage 0.60x with $900M In liquidity as FYE 8-31.03; and for the 6-month period
ending 2-29.04 leverage is O.54x with $1.2M In liquidity.
Improved profitability. The company was able to return to profitability during FY 2003 as a resutt of
improved margins and exiting low margin business.
Strong coverage ratios as of: 6-months endinQ
FYI: 8-31-03 2-29-04
EBITDA/lnterest Expense 10.45x 16.16x
EBITDAlCML TO 1.76x 5,1 Ox (annualIZed ESITDA)
Total DebtlEBITDA 1.38x 1.63x (annllIIIzedEBITDA)
- Sufficient historical and pnrforma cash flow to support the companies existing debt service requirements
and the proposed mortgage. Six.month annualized EBITDA, less annualized dividends. provides a 1.58x
coverage; pro-forma 2004 EBITDA provides a 1.21 x coverage (this includes the borrower carrying both
facilities during FY 2004); and pro-fonna 2005 EBITDA provides for a 3.29x coverage (this includes six-
months of carrying both facilities until the old lease expires in February 2005).
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Weaknesses and MitigatolS
_ Concentrations within industry segments and with individual customers (Polaris Industries (73%) and
Rockwell Collins (10%)). Payment risk is mitigated by the financial strength of both customers. Polaris
has reported sales growth for the nine-month period ending 9-30-03 on the two product lines (A TV and
Victory motorcycle) in which WSI manufactures parts for. Polaris has been in business for almost 50
years and Rockwell for 70 years. The loss of revenue risk, associated with the concentrations, in the
event Poiaris or Rockwell took their business elsewhere is mitigated, for the RVeR. by the asset-based
loan stNcture. This risk Is mitigated for both the RVeR and the term debt by the recent new business
awarded to the company by Polaris (S4.5MM in revenue for FY 2005), and the concentration with
Rockwell decreasing to 5% In FY 2004 and 6:4% In FY 2005,
Non-recourse facility
Company will be carrying two facilities (Osseo and Monticello) until February 2005. Mitigated by the
company's pro fonna cash flow which shows sufficient cash flow to service both debt service
requirements on the new facility and lease payments on the existing facility. Six-month annualized
EBITDA, less annuailzed dividends, provides a 1.58x coverage; pro-forma 2004 EBITDA provides a
1.21x coverage (this includes the borrower carrying both facilities during FY 2004); and pro-fonna 2005
EBITDA provides for a 3.29x coverage (this Includes six-months of carrying both facilities until the old
lease expires in February 2005).
Outstandina Documentation or Recortina Excectlons
None
Leaa' Counsel
Todd Iliff
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Participation
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A p r. 14. 2004 11: 19 AM
EXCEL BANK MINNESOTA
No.2079 P. 11/22
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Analvst Recommendation
Relationshio Manaaer Recommendation
",/ ~ n"i L(. i '/. .-1
II resident
Chances} Additional Reauirements:
Attachments:
-Historical Financial Statement Spreads
.profQnna Financial Statement Spreads
-WSI Jndustries, Inc Credit Display dated 12.11..Q3
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AUTHORIZATION RELEASING INFORMATION
TO:
EExt' PI- &N \:::-
Name of Financial Institution
So So~n+ ~J X11-t ..:s't
Street
(VI /NiVeJtf/ot.-I 5
City
#ltJ
State
~..yo Z-
Zip
.
I hereby authorize any person to furnish to the Monticello Economic
Development Authority, 250 East Broadway, PO Box 1147, Monticello,
Minnesota 55362, any and all financial records, reports,
statements, or other documentation or information in their
possession regarding: wss:. ~~~'t$.S :p..1L
Developer's name(s)
\ g lS \ "TE'?J211Of1.L- I<.b
Developer's address
o sseo /V1 tJ . 95;.J1.9
Upon presentation of this authorization or an exact copy thereof,
you are directed to permit the personal review, copying, or
photostating of such records, information, and evidence and provide
same to the Monticello Economic Development Authority.
I, the undersigned, acknowledge the said above information may
become public.
This authorization shall be valid
the entire term of the loan.
Dated: S/.ar(ort
A>~. Wu: :;tNDvS,.ctce..s :::I)Jc:::.... /'
~ [J0l'
.
One copy for each principal of a
partnership or corporation as
well as the entity itself.
Monticello City Hall, 505 Walnut Street, Suite 1, Monticello, MN 55362.8831. (763) 295-2711 · Fax: (763) 295-4404
Office of Public Works, 909 Golf Course Rd., Monticello, MN 55362. (763) 295-3170' Fax: (763) 271-3272
~
"Excellence in Machining, Assembly & Manufacturing Technologies. . . Since 1950"
TAURUS DIVI.S.ION
Supplier of the Year
Certified Supplier
Certified Supplier
STAR Program Supplier
Qualified Supplier
From Taurus' beginning in 1977, we have built our business
and reputation on producing high quality parts and
assemblies, delivered on time, for a competitive price.
We Specialize in the Following Distinct Industries
. Avionics & Aerospace
. Computer
. Defense
. Marine
. Medical
. Power Systems
. Radar & Microwave Components
. Specialized Equipment
Corporate Awards & Recognition
~l Rockwell Collins
IBM
_ BFG Aerospace
fi'-r-1 Polaris Industries
Raytheon
Overview of Tier One support & Services
. Design, Prototype, Pre-production & Production
. Tooling & Fixture Design and Build
. Batch, Repetitive Batch & Continuous Run Production
. Stand Alone Machines, Flexible Cells, Dedicated Cells
& High Speed FMS System
. Continuous Process Optimization for Production Work
Repetitive Work Stored "On Line" & Processed
by a Robotically Accessed Pallet Rack System
Servicing a Row of High Speed Machining
Centers
. Repetitive Set-up Virtually Eliminated
. Flexible Scheduling
. "lights Out" Manufacturing
High Speed Spindles
. High Removal Rates
. Economical "Hog Outs"
. Superior Thin Wall Quality
.
~,
..~
@
INDUSTRIES
www.wsiindustries.com TAURUS NlJMER1C TOOL 18151 Territorial Road. Osseo, MN 55369 · TEL: (763) 428-4308 · FAX: (763) 428-4300
@2002 WSI Industries. All Rights Reserved. All Trademarks are property of their respective companies. Printed in the USA.
" AVIONICS, AEROSPACE & DEFENSE
"Excellence in Machining, Assembly & Manufacturing Technologies. . . Since 1950"
-. !~~!!~~o ~~!s!~~tense Matkets
Capabilities
· High Speed FMS System Provides Flexible Scheduling
and Virtually No Set-up for Repetitive Work
· Dedicated & Flexible Machining Cells
· Thin Walls & Deep Cavities
. Complex "Hog Outs"
. Prototype "Hog Outs"
· "Cockpit" Quality Aviation & Military Finishes
· Surface Finish- Cosmetics, Aesthetics & Functionality
. Assembly Operations
WSI has been working in the avionics, aerospace & defense industries for
almost 50 years.
State-of-the-art equipment and manufacturing processes tailored to the
requirements of the aerospace, avionics & defense markets, ensure we are
able to manufacture parts in the optimum manner. This allows us to provide
the highest quality part, delivered on time, for a competitive price.
-
I
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--
@
INDUSTRIES
www.wsiindustrieS.com TAURUS NUMERIC TOOL 18151 Territorial Road · Osseo, MN 55369. TEL: (763) 428-4308 · FAX: (763) 428-4300
i(!2002 WSI Industries. All Rights Reserved. All Trademarks are property of their respective cornp,mies. Printed In the lJSA.
EQUIPMENT, FACil:.,ITIES & CAPABILITIES
/ '
"Excellence in Machining, Assembly & Manufacturing Technologies. . . Since 1950"
· cat TAURUS DIVISION
18 Horizontal Machining Centers
(1) Toyoda FH630 HMC (2) Mod Seiki MH40 HMC
(4) Toyoda FA450111 (1) Mazak H400N HMC
(4) Toyoda FH45 HMC (2) Okuma & Howa Millac 4H HMC
(2) Mazak HTC400 HMC (1) Niigata PN40 HMC
(1) Matsuura HMC600
High Speed Flexible Manufacturing System (FMS)
Mazak FMS With 3 High Speed HMC's and Robotically Accessed Pallet System
.
22 Vertical Machining Centers & Lathes
(2) Hwacheon Sirius-2 H S VMC (2) Fadal VMC6030
(4) 25,000 RPM Micro Drilling (4) Fadal VMC4020 VMC
(1) Okuma Howa Millac 4VA VMC (1) Mod Seiki MVJr
(2) Chiron FZ12W (2) Bridgeport CNC Mill
(2) Toyoda FV45 VMC (1) Methods Slant Jr
(1) Miyano BND34 82, Bar Feed
Capabilities
Materials: Aluminum, brass, stainless steel & performance plastics.
Quantities: Prototype (including limited dimension drawings), batch,
repetitive batch & production
Expertise: Avionics, aerospace, defense, microwave/radar & medical.
Hogouts & castings.
Assembly: Electro-mechanical & cryogenic.
Enaineerinq: design, tooling, fixturing & process optimization.
Size: Machining cube: 1" to 3' cube.
-
Quality Assurance
(5) Brown & Sharp CMM (2) Sheffield RS30 CMM DCC
(1) Mitutoyo CV500 w/Automatic Contour Measuring
Engineering & Manufacturing Software
PRO-E MasterCam CAD KEY E Business-Vantage
.
--
INDUSTRIES
www.wsiindustries.com TAURUS NUMERIC TOOL 18151 Territorial Road. 08880, MN 55369. TEL: (763) 428-4308. FAX: (763) 428-4300
1CJ200? WSI Industries. All Rights Reserved. All Trademarks are property of their respective companies. Printed In the USA.
.
SHAREHOLDER LETTER
WSI Industries FY2003 Annual Report
To Our Shareholders:
Two years ago we embarked on a radical strategic initiative to change the direction of WSI Industries,
At that time we had three goals in mind; 1. To achieve profitability on a consistent basis. 2. To reduce our
debt Structure and improve our financial condition. 3. To focus our efforts on the Taurus Numeric Tool
Division which would provide a solid base for long term growth.
Today, a little less than 2 years after we restructured the Company and changed it's,direction, we are
pleased to report on our accomplishments.
· Sales increased 28% over fiscal 2002 at the Taurus Division.
· Profitable results were generated for a fifth consecutive quarter.
· Gross Margin of 19.3% for fiscal 2003 was the highest in over 10 years.
· Our Financial Condition has improved:
Long-Term Debt reduced to $648,000 versus $4,111,000 of2 years ago.
Debt to Equity ratio is down to 9% - its lowest level in almost 20 years.
Net working capital at the end of fiscal 2003 was at $2,139,000 as compared to $1,179,000
at the end of fiscal 2002. This improvement was due in large measure to the Company
generating $1,100,000 in cash in fiscal 2003, and using those funds to pay down debt.
Current assets to current liabilities ratio improved to 2.89 to 1.0.
Inventory was reduced by 21 % resulting in an annualized inventory turn of 13 times.
.
A further sign of WSI's strength and improved business outlook came this past June as the Board of
Directors voted to reestablish the Company's dividend program - a program that had been dormant since
1991. Since June 2003, the Company has paid 2 quarterly dividends at an annualized rate of $.15 per
share. It will be our objective to reward our shareholders with cash dividends as well as increasing share
appreciation, while at the same time maintaining our strong fmancial position.
Our initiatives have resulted in a stronger WSI. Today, we have the fmancial wherewithal to provide
an opportunity for continued growth. Our actions have enabled us to focus all of WSI's resources on our
Taurus Division whose sales grew 28% in FY 2003 despite the continued softness in the aerospace and
avionics markets. Our vision going forward consists of a strategy of diversi:fYing our cUstomer base while
also expanding our manufacturing capabilities to meet the increasingly global requirements of our
business. We will accomplish this by placing a renewed emphasis on fmding customers in industries that
are compatible with our core competencies. We will also continue to concentrate on improving our
operations and fmding the most cost effective method of sourcing.
Our strength comes from our employees who pride themselves on their dedication to serving the needs
of our customers with innovative manufacturing process solutions. Without the commitment that our
employees have, the positive results achieved would not have been possible. Once again, it has been
demonstrated that our strongest asset is our organization consisting of excellent employees. Thank you!
We look forward to a successful future and appreciate the continued support of our shareholders and
valued customers.
.
Sincerely, '" d
~-,~
President & Chief Executive Officer
~"
'WSI INDUSTRIES, INC.
.
ANNUAL REPORT ON FORM 10-K
YEAR ENDED AUGUST 31,2003
INFORMATION REQUIRED IN REPORT
PART I
Item 1. Business
WSI Industries, Inc. (the "Company") makes its periodic and current reports available free of
charge as soon as reasonably practicable after such material is electronically filed with, or furnished to,
the Securities and Exchange Commission at www.wsci.com.
Overview
The Company was incorporated in Minnesota in 1950 for the purpose of performing precision contract
machining for the aerospace, communication, and industrial markets. The maj or portion of Company
revenues are derived from machining work for the aerospace/avionics industry and recreational vehicles
markets.
On February 15, 1999, the Company purchased Taurus Numeric Tool, Inc. ("Taurus"). Taurus is a
precision contract machining company that sells primarily to the recreational vehicle and aerospace and
avionics markets..
. On August 6, 1999, the Compauy purchased Bowman Tool & Machiniug, Inc. ("Bowman"). Bowman is
a precision contract machining company serving the agriculture and construction industries. On February
22,2002, the Company completed the asset sale of Bowman Tool & Machining, Inc. to an affiliate of the
prior owner.
Contract manufacturing constitutes the Company's entire business.
Products and Services
The Company manufactures metal components in medium to high volumes requiring tolerances as close
as one ten-thousandth (.0001) of an inch. These components are manufactured in accordance with
customer specifications using materials generally purchased by the Company, but occasionally supplied
by the customer.
Sales and Marketing
.
The major markets served by the Company have changed in the past several years because of the
Company's decision to sell the Bowman division in fiscal 2002 and concentrate its focus on its Taurus
operation. Sales to the agricultural industry were 36% and 21 % of total Company sales in fiscal years
2001 and 2002, respectively. Sales to the recreational vehicle market totaled 12%, 37% and 74% in
fiscal 2001, 2002 and 2003 respectively. Sales to the aerospace/avionics/defense markets totaled 19%,
17% and 15% in fiscal 2001, 2002 and 2003, respectively. Sales to the construction/power systems
market totaled 19% and 10% in fiscal 2001 and 2002, respectively. With the sale of Bowman Tool assets
described above, the Company is no longer in the agriculture or construction/power systems markets.
2
-~~\,,:
.
The Company has a reputation as a dependable supplier capable of meeting stringent specifications to
produce quality components at high production rates. The Company has demonstrated an ability to
develop sophisticated manufacturing processes and controls essential to produce precision and reliability
in its products.
Seasonality
Seasonal patterns in the Company's business are reflections of the Company's customers seasonal
patterns since the Company's business is that of a provider of manufacturing services.
Customers
Sales in excess of 10 percent of fiscal 2003 consolidated sales were made to Polaris Industries, Inc. and
related entities in the amount of $8,034,000 or 74% of Company revenues.
Backlog
.
Approximate dollar backlog at October 15,2003, August 25,2002 and August 26,2001 was $1,899,000,
$2,634,000 and $13,108,000 respectively. Backlog is not deemed to be any more significant for the
Company than for other companies engaged in similar businesses. The above backlog amounts are
believed to be firm, and no appreciable amount of the backlog as of October 15,2003 is scheduled for
delivery later than during the current fiscal year. The October 15, 2003 backlog date and the end of year
August dates for 2002 and 2001 are believed to be comparable. Backlog continues to decrease from year
to year as customer order schedules are tighter. The decrease in the level of backlog is not indicative of
future yearly sale increases or decreases. In addition a significant portion of the decrease from 2001 to
2002 relates to the sale of the Bowman Tool assets, and the business that they corresponded to, as
described in the overview section above.
Competition
Although there are a large number of companies engaged in machining, the Company believes the
number of entities with the technical capability and capacity for producing products of the class and in
the volumes manufactured by the Company is relatively smaIl. Competition is primarily based on
product quality, service, timely delivery, and price.
Research and Development; Intellectual Property
No material amount has been spent on company-sponsored research and development activities. Patents
and trademarks are not deemed significant to the Company.
Employees
At August 31, 2003, the Company had 40 employees, none of whom were subject to a union contract.
We consider our relationship with our employees to be good.
Foreign and Domestic Operations and Export Sales
. The Company has no operations in any foreign country. In 2003,2002 and 20tH, sales to companies in
Mexico amounted to $693,000, $1,686,000 and $2,623,000, respectively.
3
Item 2. Properties
.
The Company leases a production facility located in Osseo, Minnesota that houses its production and is
also its headquarters. The facility is approximately 28,000 square feet and is leased until February 2004
with an option to renew for an additional year. Monthly rent is approximately $9,600 plus operating
expenses and taxes.
The Company considers its manufacturing equipment, facilities, and other physical properties to be
suitable and adequate to meet the requirements of its business.
Item 3. Legal Proceedings
The Company is not a party to any material legal proceedings, other than ordinary routine litigation
incidental to its business.
Item 4. Submission of Matters to a Vote of Security Holders
None.
PART IT
Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters
The common stock of the Company is traded on the Nasdaq SmallCap Market System under the symbol
"WSCI. "
.
As of November 10,2003 there were 521 shareholders of record of the Company's common stock.
The following table sets forth, for the periods indicated, the high and low closing sales price information
for our common stock as reported by the Nasdaq Smal1Cap Market.
Stock Price
High Low
FISCAL 2003:
First quarter
Second quarter
Third quarter
Fourth quarter
$ 1.58
1.30
1.24
3.00
$ .60
.90
.99
1.15
FISCAL 2002:
First quarter
Second quarter
Third quarter
Fourth quarter
$ 2.90
1.94
2.20
1.50
$ 1.00
.90
1.25
1.00
The Company announced a quarterly dividend program in June 2003 of$.0375 per share. The first
. dividend was paid August 8, 2003. A second dividend of$.0375 per share was paid November 14,2003.
4
:~-
WSIINDUSTRIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED AUGUST 31, 2003, AUGUST 25, 2002 AND AUGUST 26, 2001
2003
2002
2001
Net sales (Note 9) $ 10,792,650 $ 12,948,068 $ 20,877,181
Cost of products sold 8.703.970 11.347 .924 17.022.938
Gross margin 2,088,680 1,600,144 3,854,243
Selling and administrative expense 1,511,458 1,750,883 4,228,849
Loss (gain) on sale of equipment and building 9,972 (123,279)
Fair market value impairment of equipment 150,859
Loss on sale of subsidiary assets 2,505,919
Interest and other income (87,984) (27,838) (32,945)
Interest expense 123.343 363.063 820.949
.- 1.556.789 4.592.027 5.044,433
.,
Income (loss) before income taxes 531,891 (2,991,883) (1,190,190)
Income tax expense (benefit) (Note 7) 178.522 (2.179.119) 3.000
Net income (loss) $ 353.362 $ (812.764) $ (1.193.190)
Basic earnings (loss) per share $ .14 ~ (.33) $ ( .48)
Diluted earnings (loss) per share ~ .14 $ (.33) $ C481
Weighted average number of common
shares outstanding 2.473.535 2.465.229 2.465.229
Weighted average number dilutive
common shares outstanding 2.485 961 2 465.229 2.465 229
See notes to consolidated [mancia1 statements.
.
18
.
Part L Financial Information
Item I. Financial Statements
WSI INDUSTRIES, INC
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
February 29, August 31,
Assets ~ 2003
( unaudited)
Current Assets:
Cash and cash equivalents $ 1,185,188 $ 891,218
Accounts receivable 1,272,207 1,530,811
Inventories 680,553 606,262
Prepaid and other current assets 55,037 75,747
Deferred tax assets 169.387 169.387
Total Current Assets 3,362,372 3.273.425
Property, Plant and Equipment - Net 1.464,044 1. 718,599
Deferred tax assets 1. 750.290 1.813.270
Intangible assets, net 2.368.452 2.368.452
. $ 8.945.158 U.173.74~
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Trade accounts payable
Accrued compensation and employee withholdings
Miscellaneous accrued expenses
Current portion of long-term debt
Total Current Liabilities
$ 444,764 $ 403,277
291,985 384,857
145,215 150,289
203,551 195,720
1.085.515 1.134.143
544.236 648.008
Long term debt, net of current portion
Stockholders' Equity:
Common stock, par value $.10 a share; authorized
10,000,000 shares; issued and outstanding
2,553,629 shares and 2,551,129, respectively
Capital in excess of par value
Retained earnings
Total Stockholders' Equity
255,363
1,829,84 I
5.230.203
7.315.407
$..8.945.158
255,113
1,826,901
5.309.581
7.391.595
$...9.173.746
See notes to condensed consolidated financial statements
.
3
- WSI INDUSTRIES, INC.
AND SUBSIDIARIES
- CONDENSED CONSOLIDATED STATEMENTS OF OPERA nONS
(Unaudited)
13 weeks ended 26 weeks ended
February 29, February 23, February 29, February 23,
2004 2003 2004 2003
Net sales $ 2,615,666 $ 2,359,109 $ 5,421,727 $ 4,793,402
Cost of products sold 2,207.463 1.947.275 4,602.867 3,920.105
Gross margin 408,203 411,834 818,860 873,297
Selling and administrative expense 340,788 310,382 658,677 689,251
Interest and other income (30,334) (43,375) (45,779) (62,349)
Interest and other expense 15,043 38,701 31 ,026 79.683
Earnings from operations
before income taxes 82,706 106,126 174,936 166,712
Income tax expense 27.116 38,200 62,977 60,135
Net earnings $ 55.590 $- 67.926, L._U 1.959 $ 1 06.)1~
.....
-.-.. Basic earnings per share .$ .02 L.._. .03 ~....~,04 $ .04
Diluted earnings per share $ .02 $ .03 $ .._..M $ .04
Cash dividend per share $ .017..5. $ $ .075 $
Weighted average number of
common shares 2.552.008 2.465.229 -.---25 51. 5 69 2.-465.22.2
Weighted average number of
common and dilutive potential
common shares 2.62~8..81 2..12.5.229 2.628.038 2.465.229
See notes to condensed consolidated financial statements.
.
4
Apr. 14. 200411:16AM
EXCEL BANK MINNESOTA
No. 2079 P. 2/22
.
COMMERCIAL REAL ESTATE
Date: April 14, 2004
.Relationship Manager: Natalia Armitage
o-J,~
C.
Customer Name:
Address:
WSllndustrles, Inc.
18151 Territorial Road
Osseo, MN 55369
;f' Risk Rating; 4A
Purpose of Presentation: -Approve a new $1,520M eRE loan for acquisition financing on a 49,000 sf
Industrial building located at 213 Chelsea Road, Monticello, MN
-Amend financial covenants
-Cross default proposed facility w~h existing Revolving Credit facility
Relationship: Existing customer
Customer since: December 4, 2002
Project Location: 213 Chelsea Road
Monticello, MN
..,
PropOsed Credit
Borrower: WSllndustries, Inc.
Amount Option 1: 51,520,000
Option 2: $1,360,000 (The company ;s currentiy wor1<lng with the City of Monticello to
provide up to S350M, 3.25%, CRE loan secured by a 2nd REM on the subject property. In
the event that the City of Monticello's 2nd REM financing Is provIded, the Borrower's equity
in the project will be reduced from 20% to 10% and the Bank's loan amount will be
reducecl from 80% of the purchase price to 72% of the purchase price)
Loan Type: Ballooning commercial real estate term loan
Term: 10 years
Advance Formula: The lesser of i} 80% of the appraised value; or ii} 80% or the purchase price
Cash Investment: Option 1: $380,000. (20% of purchase price)
Option 2: $190.000. (10% of purchase price if the City of Monticello provides low interest
rate subordinate financing described above)
Amortization: 25 years
Payment Requirement: Monthly payment will be a fixed principal and interest payment based on the loan
rate and a 25 year amortization.
JI Interest Rate: The 5-year US Treasury CMI index + 2.50% fixed for 5 years (currently at 5.20%) and re-
priced at the then 5-year US Treasury CMI index + 2.50% for an addnional5 years.
0.50% (S8,400)
First real estate mortgage and assignment of leases and rents on land and improvements
located at 213 Chelsea Roael. Monticello. MN.
N/a (Publicly traded company) "
Acquisition financing on a 49,000 sf industrial building located at 213 Chelsea Ro~d,
Monticello, MN. The borrower IS outgrown their existing facility in Osseo, MN. They plan
to rslocate their headquarters and production operations to the proposed facility in
Monticello, MN.
Fee:
Security:
.
Guaranty:
Purpose:
.
I
I
i
1
;
I
I
Apr. 14. 200411:16AM
EXCEL BANK MINNESOTA
No. 2079 P. 3/22
.
Current Proposed Proposed Net
commitment change commitment ParticiDations commItment
WSI Industrlll. Inc.
Proposed eRE loan $-().. $1.520.000 $1.520,000 $-O~ $1,520.000
Une of Credit (Note #200350) $1,000,000 ~- $1.000.000 $-0- $1 000000
ACH EXDosure (#201990\ $125.000 $-0- $125,000 $125,000
Total $1125.000 $1,520.000 $2,645,000 $-0- $2 645 000
Related Loans
Nons $-0- $-0- $-0- $-0- $.0-
Subiect to LLL" $1,000000 $1.520000 $2,520 000 $-0- $2,520,000
*ACH Exposure is not included in LLL
Deposit Account Information:
Acccunt#
200360
200370
200410
TOTAL
Account Type
Checking
Checking
Savings
YTD Averace Collect Balances
$ 393,248.
$ 16,809.
$1.097,216.
51.507,273.
General Conditions:
Appraisal;
To be completed by J. Scott Renne
Environmental:
Phase I to be completed by Peer Environmental
To be provided by Title Company satisfactory to the bank insuring the
bank's priority lien position
.
Title:
Inspection:
Cash Investment:
Officer site visit
Lease Requirement:
Option 1: $380,000. (20% of purchase price)
Option 2: $190.000. (10% of purchase price if the City of Monticello
provides the subordinate finanCing)
Nla. OWner occupied building
-Interest and principal to be billed monthly
-Corporate accounts to be maintained at Excel Bank
1 % on annual principal reductions in excess of 10%.
Annual audited financial statements (within 90 days) and monthly
interim financial statements (within 30 days)
Special Conditions:
Pre-payment Penalty:
Reporting:
.
2
.
A p r. 14. 2004 11: 16 AM
EXCEL BANK MINNESOTA
No. 2079 P. 4/22
Covenants:
With the building acquisition. we will add a minimum DSCR to the existing covenants. In addition, we will
need to amend three of the exisijng covenants (Debt/TNW, Current Ratio and CAPEX) as outlined below to
allow for the building acquisition.
Covenant Measured: Existina Prooosecl Actual Actual Proforma Proforma
Covenant Covenant ~ 2/29104 8131/04 8131105
l1ncludi/19 ~:~~
BJdi Acal
Min.NW Quarterly S6,650M S6,650M $7,392M $7,315M S7,012M $7.299M
Debt/TNW Quarterly <1.0x < 1.75x .60x .54x 1.47x 1.24.1
Current Quarterly ~ 1.901 ~ 1.751 2.671 3.10x 2.07x 2.48x
Ratio
Maximum Annually ~ S750M 5 S850M $161M 140M S850M $124M
CAPEX'"
Min OSCR Annually Nla > 1.0Ox 1.39x 2.4Ox 1.21x 3.29x
(FYE '04)
~ 1.25x
(FYE 'D51
thereafter))
"'CAPEX covenant is net of 2004 building acquisKlon
.In addition to the financial covenants outlined above, the proposed facility will be cross defaulted with the
Borrower's revolving credit facility (Note #200350).
. Definitions:
1) Net Worth - as defined in the Loan Agreement Is the aggregate of capital and surplus of the Borrower, all
determined in accordance with generally accepted accounting principles.
2) Tangible Net Worth - as defined in the Loan Agreement is net worth less any intangible assets including
patents. trademarks. trade names, copyrights. licenses, goodwill. and deferred charges.
3) Debt Service Coverage Ratio (OSeR) . defined as EBITDA less Distributions/P&1.
)j'
.
Reoavment Sources:
Prima/y: Cash flow from operations
Secondary: Refinance by another lender
Tertiary: Uquidation of collateral
Risk Ratine Rationale
A "4A" risk rating Is appropriate based on the following:
. Considerably improved financial posltlon of the Company, The Company has returned to profitability,
reduced debt substantially and improved financial ratios as of FYE 2003.
. Strong balance sheet. leveraged at 0.60x at FYE 8.31.03 and 0.54x at the sixth-month interim period
ending 2.29-04.
. Good liquidity and wort<ing capital position with $900M in cash at FYE 8-31.03 and $1.2MM at the sixth.
month interim period ending 2-29--04.
. Strong collateral margin wfth no outstandlngs on the line of credtt for the past 12 months
- The company's management is experienced. proactlve and dynamic and has taken appropriate steps to
reposition the company to face the challenges of an economy in recession as well as risks associated with
concentrations - within industry segments and with individual customers - as are typically found In the
borrower's business
- The facility is non-recourse
3
.
.
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Apr. 14. 200411:17AM
EXCEL BANK MINNESOTA
No. 2079 P. 5/22
. Lack of consistent earnings and cash flow coverage of debt service prohibit a 3 rating at this time.
. Customer concentration with Polaris (73%) and Rockwell (10%).
_ Sufficient historical and pro-forma cash flow to support the companies existing dabt sarviea requirements
and the proposed mortgage. . Six-month annualized EBITDA, less annualized dividends, provides a 1.58x
coverage; pro-forma 2004 EBITDA provides a 1.21x coverage (this includes the borrower canying both
facilities during FY 2004): and pro-forma 2005 EBITDA provides for a 3.29x coverage (this includes six.
months of canying both facilities until the old lease expires in February 2005).
.
Policy Comoliance
Exceptions to POlicy: None
Exceptions to Guidelines: 1) LTV exceeds the guideline maximum of 75%. Mitigated by the property being
owner occupied and the Company showing sufficient historical and proforma
cash flow to service the prapOliied debt at 80% L TV. Proforma 2004 E81TDA of
$737M provides a DSCR of 1.21 x (including both facilities) based on the
companies existing debt service requirements and the proposed mortgage
amortized over 20 yeats (although the bank is proposing a 25 year amortization).
pro-forma FY 2005 EBITDA of $1,902M provides for a DSCR of 3.29x coverage
(includes 6.months of carrying both facilities)
.
EBITDA
Less: Dividends
Cash Available for DS
Annualized 6-month
period endlnlJ
FebrualV 29.2004
$1,000M
( 382M)
$ 818M
Pro-forma
~
$ 737M
( 383M)
$ 354M
Debt Service Requirements:
Proposed mortgage (20 yr amort /5.2%) P&I $ 123M
Existing CML T 196M
Interest 72M
TotalDSR $ 391M
$ 31M (3 mos)
196M
66M
$ 293M
1.21x
DSCR
1.58x
Pro-fonna
2005
$1,902M
( 400Ml
$1,502M
$ 123M
268M
66M
$ 457M
3.29x
2) Proposed pricing and fee do not meet guidelines for a 4A credit. Excel Bank
matched a competitive offer In order to get the deal.
LTV: ~80%
CREDIT ANALYSIS
erooertv OwnershiD and Manaaement
The proposed facility will be 100% owner occupied by WSllndsutries, Inc.
WSllndustries, Inc. perfonns precision contract machining for the aerospace. communications and
industrial markeis. The major portion of the company's revenues is derived from machining work for the
aerospace/avionics industry and recreational vehicles markets. The common stock of the Company is
traded on the NASDAO Small Cap Market System under the symbol WSCr. As of March 30, 2004 the stock
was trading at $2.60 with a 52-week high of $3.49 and a 52-week low of $0.99. Market capitalization is
. reported at $6.64 million. The stock is thinly traded with nominal activity.
4
Apr. 14. 200411:17AM
EXCEL BANK MINNESOTA
No. 2079 p, 6/22
.
Management:
Chairman: George J. Martin
President CEO & Director: Michael J. Pudil
VP Treasurer and Assistant Secy.; Paul D. Sheely
Secretary: Gerald e. Magnuson
George J. Martin (65) has seNed as the Chairman of the Board since July 1993. ~rior to that, he served as
the company's CEO from December 1983 to January 1985. Mr. Martin was the President, CEO and
Chairman of PowCon. Inc., a manufacturer of electronic welding systems from 1987 to October 1995 where
he now serves as an independent consultant.
Michael J. Pudll. (54) has been the President CEO and Director of the company since November 1993. Prior
to that Mr. Pudil worked for Remmele Engineering, Inc. ("Remmele") for 9 years. Remmele is a contract
manufacturer primarily involved in machining metal. Mr. Pudil served as the General Manager and VP and
General Manager of the Production Division.
Paul D. Sheely (43) joined the company in 1998 as VP of Finance. From 1996.1998 he served as the CFO
of Grasbey Medical. Inc., a medical device manufacturer of volumetric infusion pumps.
Gerald E. Magnuson (72) has served as the Secretary since 1961 and as a Director from 1962 to 2001. He
is a retired partner of the law firm of Lindquist & Vennum P.L.L,P., Minneapolis, MN.
Leas. AnalYSis
N/a. WSllndustries, Inc. will occupy 100% of the building.
. Summary Financial Results - WSllndustries, Inc.:
(OOO's) 1999 2000 ZQQ1 2002 2003
Revenue $21,550 '$32,157 2$20,877 3$12,948 3$10.793
EBITDA $2,299 4$3,545 5$2,046 6$1,153 7$1.296
EBITDA Margin 10.67% 11.02% 9.80% 8.90% 12.01%
Net Income $261 $639 ($1,193) ($813) $453
Bank Debt $9.882 $7.949 $3.430 $1,025 $844
Total Debt $16,261 $14,486 $8,586 $2,860 51.782
TNW $2,507 $2,627 $1 An $2,375 $2,965
DebtfTNW 6.49x 5.51x 5.81x 1.20x 0.61x
EBITDA I Interest Expense 4.78x 3.55x 2.49x 3.18x 10.45x
EBITDA I DS 1.05x 2.87x 0.70x 1.57x 1.76x
.
1The 49% increase in revenues was due primarily to a full year of operations of the Taurus Numeric Tools.
Inc. ("Taurus") and Bowman Tool & Machining, Inc. ("Bowman"). Taurus is a precision contract machining
company serving the aerospace and avionics industry. Bowman is a contract machining company serving
the construction industry. Taurus was acquired on February 15, 1999 and Bowman was acquired on August
6, 1999. Bowman has since been sold in response to Deere & CO,'s ("Deere") decision to move its
construction equipment manufacturing faciilty to Mexico.
Xfhe decline in revenues is due to Deere's decision to consign raw materials for Its manufacturing program.
This change reduced revenues by 113. Economy related factors were responsible for the remaining
contraction In revenues.
3 The decline in revenues is due the Bowman sale in FebNary 2002 and thus the inclusion of only a half.
year Bowman sales in 2002 operations versus a full year In 2001 and versus .0- Bowman sales in 2003
versus half-year Bowman sales In 2002.
~
s
A p r. 14, 2004 11: 17 AM
EXCEL BANK MINNESOTA
No. 2079 P. 7/22
.
jExcludes a $396M gain on sale of assets. $353M gain from elimination of pension plan and $248M In
severance costs.
$Excludes 5123M gain on sale of assets and $151 M due to fair market value impairment of equipment
6Excludes 52,506M lOSS on sale of assets (Bowman sale)
7Excludes 51 OM loss on sale of assets
Interim Results:
Net sales were $2,616,000 for the quarter ending FebMJary 29.2004. an increase of 11% or $257,000 from
the same period of the prior year. Year to date sales in flscal2004 were 55,422,000 compared to
$4,793,000 in the prior year. The increase in sales for the quarter, as well as the six months. came from an
increase in sales to the Company's recreational vehicle market
Gross margin decreased to 16% for the quarter ending February 29, 2004 versus 17% in the year ago
period. The slight decrease in gross margin is attributable to higher levels of productlon supply and repair
expenses. Year to date gross margins were 15% and 18% for the six-month periods ending February
29,2004 and February 23,2003.
.
Selling and administrative expense of $341,000 for the quarter ending February 29, 2004 was $30,000
higher than in the prior year period due to higher professional service costs, Yearto date selling and
administrative expense of 5659,000 was 530.000 lower than the comparable prior year period. Selling and
administrative expense for the six~month period ending February 23. 2003 was negatively affected by
$60,000 of costs associated with a proxy contest that the Company was involved In. The proxy contest was
resolved with all costs incurred by the end of the first quarter of fiscal 2003
Interest expense in the second quarter of fiscal 2004 was $15,000, which was 524,000 less than the second
quarter of fiscal 2003 amount of $39,000. The decrease Is attributable to reduced levels of debt for the
Company -long-term debt at February 29, 2004 was $748,000 compared to 51,213,000 at February 23,
2003. Year to date interest expense is also down for the same reason.
The Company recorded income tax expense at an effective tax rate of 33% and 36% for the quarter and six
months ended February 29, 2004. For the quarter and six months ended February 23, 2003, the Company
recorded Income tax expense of 36%.
Liquidity and Capital Resources
On February 29, 2004, working capital was 52,277,000 compared to $2,139.000 at August 31, 2003. The
ratio of current assets to current Iiabilltit$ at February 29, 2004 was 3.10 to 1.0 compared to 2.89 to 1,0 at
August 31,2003. The Company's cash balance increased $294,000 during the first six months primarily
from collections of accounts receivable.
The Company renewed its $1,000.000 revolving credit facility with the bank. Interest on the new agreement
is at the bank's prime rate. No amounts have been borrowed sInce the closing of the original agreement in
December 2002.
.
On each of November 13, 2003 and February 6, 2004, the Company paid quarterty dividends of $.0375 per
share. The dividend payments for the 2004 fiscal year have totaled 5191,000.
It is the Company's belief that its intemally generated funds, as well as its line of credit, will be sufficient to
enable the Company to meet its working capital requirements during fiscal 2004.
6
.
.
.
A p r. 14. 2004 11: 18 AM
EXCEL BANK MINNESOTA
No. 2079 P. 8/22
Pro Formas
The borrower has provided pro fonna 1inancial statements for FYE 8-31-04 and FYE 8-31-05 which include
the proposed building acquisItion.
Fiscal year 2004 pro fonnas result in a break-even year on 511,204M in annual revenue. POlaris represents
80% of pro forma revenue (AN's at 45% and motorcycles at 55%) and Rockwell represents approximately
5% of pro fonna revenue. Included In 2004 pro forma revenue is approximately $900M in a new Polaris
part the company has taken on, the crankcase project. FY 2004 expenses include the relocation expense to
the new facility. FY '04 includes $311M of expense related to relocation and the costs of owning neasing 2
buildings at the same time, resulting in the ~reak-even year. However, the direct operations are profitable In
2004 excluding the relocations items.
Fiscal year 2005 pro formas result in $686M In net profit on S1S,S09M in annual revenue. Polaris
represents 78% of pr forma revenue (A TV's at 50% and motorcycles at 50%) and Rockwell represents
approximately 6.4% of pro forma 2005 revenue. Increased sales are the result of the POlaris crankcase
project which increases to $3.1 MM in revenue In FY 2005 and a new assembly project on the A TV head
with Polaris which accounts for $1.4MM of the 2005 pro forma revenue. The new assembly work for Polaris
is work Polaris used to do themselves upon receipt of the A TV heads from WSI. They have now given the
assembly work to WSI. Includedln FY '05 pro forma expenses is $109M which Is the cost of renijng the old
OsSElO facility until the lease expires.
Pro forma CAPEX totals $2,750M and include the building acquisition at $1.9MM; S50M of closing costs
related to the new building; 2 new pieces of equIpment for the Polaris crankcase project totaling $650M; and
$150M of equipment they may need for the new building.
Coveraqe Analysis
This facility will be an owner occupied building. WSI Industries, Inc. will own and occupy 100% of the
building.
WSllndustries, Inc.:
EBITDA
Less: Dividends
Cash Available for DS
Annualized 6-month
cenoe! endina
Februarv 29. 2004
51,OOOM
( 382M)
S 618M
Pro-fonna
2QQL
$ 737M
( 383M)
$ 354M
Debt ServIce Requirements:
Proposed mortgage (20 yr amort I 5.2%) P&I $ 123M
Existing CML T 196M
Interest 72M
Total DSR $ 391M
$ 31M (3/l101)
196M
66M
$ 293M
DSCR
1.58x
1.21x
7
Pro-forma
m
$1.S02M
( 400M)
$1,502M
S 123M
268M
66M
$ 457M
3.29x
.
.
.
EDA Agenda - 04120/04
5.
Public Hearin2: _ Consideration to aporove or deny GMEF No. 023. a business subsidy.
for WSI Industries. Inc.
A. Reference and Back2:round:
After review and discussion ofthe preliminary application from WSI Industries, Inc., the EDA
Chair should open the public hearing.
PUBLIC HEARrNG
The business subsidy notice appeared in the local newspaper April 15.2004, for compliance of
the Minnesota Statutes 2000, 116J.994: Before granting a business subsidy that exceeds
$100.000 for a local government grantor, the grantor must provide public notice and a hearing
on the subsidy. Please open the public hearing for comments.
The EDA is asked to consider approval or denial of the request for a $350,000 GMEF loan.
The lender, Excel Bank, has provided the Bank's commitment letter and a letter stating WSI is
an existing credit worthy business.
First, the EDA needs to determine if this GMEF loan application from WSI will encourage
economic development. Secondly. the EDA must determine if the preliminary real property
acquisition and development loan application complies with the EDA Business Subsidy Criteria
_ GMEF Guidelines. Lastly, the EDA must determine the amount, terms, and fee of the loan for
approval.
The City Council will consider ratification ofthe EDA's action fiJr compliance of the EDA-
GMEF Business Subsidy Criteria on April 26, 2004. If approved, the GMEF will be disbursed
at the closing date anticipated for the first week in May.
CLOSE PUBLIC HEARING
Prior to closing the public hearing, please publicly identify and summarize the terms orthe
business subsidy for approval to WSI by the Authority: ..-.--
B. Alternative Action:
1. A motion to approve GMEF Loan No. 023 for WSI in the amount of $350,000 with
term and conditions as recommended at the meeting. Collateral, guarantees, and other
EDA Agenda - 04/20104
.
Collateral, guarantees, and other condition requirements to be determined and prepared
by the GMEF attorney. The GMEF loan approval subject to Lender commitment,
credit worthiness letter and Council ratification of ED A action.
2.
A motion to deny GMEF Loan No. 023 for WSI.
3.
A motion to table any action.
c.
Recommendation:
Recommendation is for Alternative No.1 at $350,000 with terms and conditions as
recommended at the meeting. Approval subject to Council ratification of the EDA action. The
suggested amount of $350,000 was recommended by the Economic Development Director and
supported by the City Administrator to encourage a quality manufacturer to acquire a vacant
building, EDA funds available, meets EDA guidelines, and TIF not applicable.
D. Supporting Data:
Public Hearing Notice.
.
.
2
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upon return 01 the documen1s in good condition within ten days after receipt of bids.
Contractors who do not submit bids will receive refund of one half of their
deposit for plans and specifications that are returned within ten days after receipt of
bids.
Subcontractors or suppliers may purchase the entire set of plans and specifica-
tions for a non-refundable cost of $50 plus shipping and handling.
Subcontractors or suppliers who desire Individual plan sheets or speclflca.tions
may purchase copies at the non-refundable cost of reproduction and delivery.
Complete Construction from:
Architects Rege oj Youngquist, Inc.
5217 Wayzata Boulevard
Minneapolis, MN 55416
Plans and Specification
Deposit of $100.00
BID WAIVER
Bids may not be withdrawn within thirty days after the scheduled closing time for
receiving bids. The Independent School District 882, Monticello, Minnesota,
reserves the right to reject any or all bids and to waive any irregularities in bids.
Independent School District No. 882
Monticello, Minnesota
By: Mary M. Micke, Clerk
(April 8, 15,2004)
NDTICE DF PUBLIC HEARING
ECDNOMIC DEVELDPMENT AUTHORITY
IN AND FDR THE CITY OF MONTICELLO'
COUNTY OF WRIGHT
STATE OF MINNESOTA
. NOTICE .IS HEREBY GIVEN that the Economic Development Authority in and for
the City of Monticello, Minnesota, will hold a public hearing on Tuesday, April 20,
2004, at approximateiy 4:00 p.m., at the City Hall, 505 Walnut Street, Academy
Room, Monticello, Minnesota, regarding a proposed business subsidy to be grant-
ed by the Economic Development Authority to WSllndustries, Inc. (the "Recipient")
under Business Minnesota Statutes, Sections 116J.993 through 116J.994. The pro-
posed subsidy involves a low interest rate loan to assist with the real estate acqui-
sition of a manufacturing facility by the Recipient in the City of Monticello. Proposed
amount of the subsidy is $350,000.
Information about the proposed business subsidy is available tor inspection at
City Hall during regular business hours.
All interested persons may appear at the hearing and present their views orally
or in writing.
BY ORDER OF THE ECONOMIC DEVELOPMENT AUTHORITY
-Ollie Koropchak, Executive Director
(April 15, 2004)
MONTICELLO TOWNSHIP
ASSESSMENT NDTICE
NOTICE IS HEREBY GIVEN that the Local Board of Appeal and Equalization of
the TownShip of Monticello of Wright County, Minnesota will meet at the Office of the
Clerk in said Township, at 9:00 a.m., on TueSday, the 27th day of April, 2004 for the
purpose of reviewing and correcting the assessment of said township for the year,
2004. All persons considering themselves aggrieved by said assessment, or who
wish to complain that the property of another is assessed too low, are hereby noti-
fied to appear at said meeting, and show cause of having such assessment cor-
rected.
No complaint that another person is assessed too low will be acted upon until
the person so assessed, or his agent, shall have been notified of such complaint.
Given under my hand this 15th day of March, 2004.
-Darlene Sawatzke, Clerk of the Town of Monticello
(April 15, 22, 2004)
. SILVER CREEK TOWNSHIP
ASSESSMENT NOTICE
NOTICE IS HEREBY GIVEN, that the Local Board of Appeai and Equalization of
the TownShip of Silver Cr€ek of Wright County, Minnesota, will meet at the Office of
the Clerk in said Township, at 1 :00 p.m., on Wednesday, the 28th day of April, 2004
for the purpose of reviewing and correcting the assessment of said township for the
year 2004. All persons considering themselves aggrieved by said assessment, or
who Wish to complain that the property of another is assessed too iow, are hereby
notified to appear at said meeting, and show cause of having such assessment cor-
rected.
No complaint that another person is assessed too low will be acted upon untii
the person so assessed, or his agent, shall have been notified of such complaint.
Given under my hand this 29th day of March, 2004.
-Sandra M. Forsman, Clerk of tile Township of Silver Creek
(April 15, Z2, 2004)
NDTlCE OF HEARING DN IMPRDVEMENT
PRAIRIE RDAD RECDNSTRUCTIDN
PROJECT NO. 2003-02C
TO WHOM IT MAY CONCERN:
Notice is hereby given that the City Council of the City of Monticello will meet in
the council chambers of city hall at 7 p.m. on April 26, 2004 to consider the making
of an improvement on Prairie Road from CSAH 75 to the proposed plat of Timber
Ridge 3rd Addition by the reconstruction of the roadway to an urban roadway sec-
tion with concrete curb and gutter, sidewalk, extension of sanitary sewer and water-
main to serve the Timber Ridge development, storm sewer improvements and other
appurtenant Work pursuant to Minnesota Statutes ~ 429.011 to 429.111. The area
proposed to be assessed for such improvement is the property abutting Prairie
Road and the proposed Timber Ridge development. The estimated cost of thl'
Imnrnv..m..nt I" 1ll71::.., ,,,,,^
Lance Lindstrom from Silver Cree~
TownShip noted that his comments relalec
to agenda item #11 which dqait with th(
proposed MnDOT options for a 1_
94/Highway 10 connection. He stated he
has a signed petition tha1 sets out theil
opposition to MnDOT's proposal. Mayol
Thielen directed that the petition be lefl
with city staff.
5. Consent Agenda
A.Conslderatlon of ratifying new hires
for the liquor store. Recommendlltion:
Approve the new hires as Identified.
B. Approval of beer license for
Montloello Lions for River Fest Celebration.
Recommendation: Approve a temporary
license for the Lions Club for River Fest
activities on July 10-11, 2004.
C. Approve renewal of charitable gam-
bling licenses for Monticello Lions Club.
Recommendation: Adopt a resolution
approving renewal of charitable gambiing
license for. the Monticello Lions Club for
gambling activities at Monticello Country
Club, Hawks Sports Bar and Grill and River
City Lanes.
D. Consideration of authorizing expen-
diture for representatives of Fire
Department to attend a vendors expo.
Recommendation: Authorize an expendi-
ture of up to $1,000 for representatives of
the Fire Department to attend the vendors
expo at the FDIC Conference in
Indianapolis.
E. Consideration at authorizing adver-
tisement for bids for a new fire tanker.
Recommendation: Authorize the
Monticello Joint Fire Board to proceed with
advertisement for bids for a new 3,000 gal-
lon tanker truck.
F. Consideration of adopting a resoiu-
tion in support of DNR grant for dock
installation at West Bridge Park.
Recommendation: Approve a resoiution
authorizing the City of Monticello to enter
into an agreement with the DNR for instal-
lation of a fishing pier at West Bridge Park.
G. Review well head protection delin-
eation and consideration of forwarding to
Minnesota Department of Health. (Agenda
Item #12)-Recommendation: Review the
draft report and authorize its submittal to
the Minnesota Department of Health.
ROGER CARLSON MOVED TO
APPROVE THE CONSENT AGENDA WITH
THE ADDITION OF AGENDA ITEM #12 AS
5G. ROBBIE SMITH SECONDED THE
MOTION. MOTION CARRIED UNANi-
MOUSLY.
6. Consideration of items removed from
the consent agenda for discussion.
None.
7. Public Hearing on vacation of
drainage and utility easements for Lots 5 &
6 and 7 & 8, Block 3 of the Meadows 2nd
Addition.
Deputy City Administrator, Jeff O'Neill
explained that as part of a conditional use
permit to allow the construction of two 4
unit structures on these combined lots, the
interior drainage and utility easements on
Lots 5 and 6, and Lot 7 and 8, Block 3. of
the Meadows 2nd Addition were to be
vacated. The City Ilas complied with tile
requirements for posted and published
notice of tile hearing for the easement
vacation.
Mayor Thielen opened tile public hear-
Ing on the easement vacation. Mike
Schneider from Homestead Multi-Family
Development Corporation spoke to. the
Council. He stated that when the adminiS-
trative lot combination was approved in
January, the City required that a develop.
ment agreement be drafted to cover this
development. Mike Schneider stated tile
development agreement spelled out
charges for trunk sanitary sewer, trunl<
water, trunk storm sewer and park and
pathway fees. He questioned whether
these charges were appropriate since
these lots were already platted and would
have paid these charges wilen the plat of
the Meadows 2nd Addition was approved.
He did not feel because platted lots were
combined that there stlOuld be additionai
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EDA Agenda - 04/20104
6.
Executive Director's Report.
a) Job and Wage Level Survey - Forty-two businesses were mailed ajob and wage level form
to complete and return by March 1,2004. Twenty-nine have becn returned after a second
mailing was sent March 24 with a deadline date of April 15. The number of jobs will be used
to update the Monticello Community Profile. The wage levels will be calculated to determinc
dollars available for spending in our community, one economic bcnefit resulting from thc
successful recruitment of industrial and commercial busincsses.
b) Minnesota Business Assistance Forms - Any business who receives assistance from the City,
HM, or EDA must account for jobs committed within the Loan Agreement or Private
Development Contract. This a part of the Minnesota Business Subsidy Law. The reports are
due each April 1. Job creation is reported untilneithcr the jobs are created or until two years
of benefit datc whichever is first. The EDA in April will review a loan to EDMA for non-
compliance of job creation. Completed forms mailed March 22 to MN DEED. '['he year-end
progress report for the State/City Grant then loan to UMC was also completcd and mailed..
c) HRA Annual meeting in April - Landmark Square II TIF assistance approved at $352,500
and Block 52 redevelopmcnt, proposed Walgreen's. Not at meeting, still working on Purchase
Agreements..
I've been invited to the Waverly Planning and Zoning and EDA meeting on April 14 to talk
about the practical application ofTIF. I'll join Dan Greensweig, State Auditor's Office,
previous lIRA attorney.
2003 TIF Report Information and Forms arrived. Must be completed and submitted to State
Auditor's Office by August 1.2004.
d)EDA Annual meeting in April 27 - Block 35 Improvements and other items.
e) Marketing Committee - Chamber Golf Outing is May 20 - gratis invitations were mailed to
75 developers, builders, etc. Survey to local manufacturers to list preferred five industrial
magazincs read is ready to mail right after Council's authorization to purchase land.
t) I ,cads -
March 26 - Meeting with a manufacturing business who is interested in the EDA loan
and Monticello location. (Acquisition of Remmelc building).
March 17 - Visited a Monticello manufacturer looking to expand in fall 2004.
March 24 - Metal fabricator looking to relocate from metro. Wants to lease 10,000
sq ft. Currently 6 jobs. Suggested: Standard Iron and Kaltac. EDA loan for M&E.
March 18 - ll- Window building had an offer which was turned down. Knut Flakk,
Norway, stopped by my office to visit.
March 25 - Toured Monticello with United Propcrtics. Looking for large track ofland
for future Business Park development. Some interest in shared marketing with City on
Chadwick property. He suggested Chelsea Road not run parallel to Interstate,
particularly, if additional car, boat, etc dealers are allowed. He believes this will
EDA Agenda - 04/20/04
.
devalue city property and not suitable for Business Park development. Looked at Gold
Nugget, Pauman, and Osowski. Another meeting scheduled f()f April 14.
17,000 sq ft for Industrial eleaner of eloths - County lead.
Other commercial leads
g) Development ofIndustrial Parks - Jeffrey Peterson, First American Exchange; Chuck Van
Heel, Allied Properties; and Steve Schwanke, RLK. April 16, 11:30, Russell's, St. Michael,
$30.
h) The proposed date of the Industrial Banquet is Tuesday, June 22,2004.
i) Attached is thc job and wage report for the companies with current TIF or loan assistance.
j) Letter of Request for HRA audited or unaudited financial statements.
k) Council tabled action to approve a Purchase Agreement for the Chadwick property because
the Agreement was not finished and Chadwick will agree to 2: 1 ratio for Chelsea Road
improvements if freeway land is commercial. Small Industrial Group, City Attorney, City
Engineer, and staffwill meet April 14. Hopefully back on the Council agenda for April 26.
.
.
2
03/16/04 TOE 15:45 FAX 7632715249
UMC. INC.
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DEVELOPMENT SERVICES
Economic Development Director
Phone;
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Email ;
(763)271-3208
(763) 295-4404
oil iC.koronchnktci':c.:i. mOll til;l;.':lIo. I1m.lIS
MONI1CELW
CITY OF MONTICELLO, MINNESOTA
II
JOB AND WAGE LEVEL - EXISTING JOBS
::J]
Please indicate number of current employees at each level and indicate the corresponding benefit level.
Number of .lobs Hourlv Wage Hourlv Value
Level of Voluntary
Bcnetits (S)
FLlll-timc Part.,.time (Excl. benefits)
. ..(;;;Y '2- Less than $7.00 ^' JA
~- \ $7.0010 $7.99 sO.'7S
----,
~ \ $8.00 to $9.99 "O.QO
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I ._$ $10.00 to $11.99 -2. 2,\
S ;2. $12.00 to $13.99 ":l.t:!>
J'2 g $14.00 to $1 5.99 -'.3 . I~
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r3 ~ $16.00 to $] 7.99 _,yS7
;23 .f1Y I 1 . .)l18.00 to $19.99 ~ 3' ""l
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g- o $20.00 to $21.99
~8' e S22.00 and higher ~S'.:l.S
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Company Name U fV'I C- -=ro'1 c. .
.cmsw AGE-20W
Monticello City Hall, 505 Walnut Street, Suite I, Monticello, MN 55362-8831 · (763) 295-2711 . Fax: (763) 295-4404
Office of Public Works. 909 Golf Course Rd., Monticello, MN 55362. (763) 295-3170. Fax: (763) 271-3272
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MONTICELLO
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~ DEVELOPMENT SERVICES
~.~ ~ ~ ~ Economic Development Director
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S ~ CITY OF MONTICELLO, MINNESOTA
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Phone:
Fax:
Email:
(763) 271-3208
(763) 295-4404
nil ie. kOl"onch akrihi. monticelln.mn.lIs
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JOB AND WAGE LEVEL - EXISTING JOBS
II
Please indicate number of current employees at each level and indicate the corresponding benefit level.
Monticello City Hall, 505 Walnut Street, Suite 1, Monticello, MN 55362-8831' (763) 295-2711 . Fax; (763) 295-4404
A""'_~ ^< Dn1.1:~ \llMlro ana n^lf ('nnw. Rri Mnnti""lln MN :'i:'iln2. (763) 295-3170. Fax: (763) 271-3272
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MONTICELW
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DEVELOPMENT SERVICES
Economic Development Director
Phone:
Fax:
Email:
(763) 271-3208
(763) 295-4404
nil ie.koronchakru:ci. montice !lo. mn. us
CITY OF MONTICELLO, MINNESOTA
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Number of Jobs
Full-time
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7
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Company Name
. JOBSW AGE.2004
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JOB AND WAGE LEVEL - EXISTING JOBS
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Please indicate number of current employees at each level and indicate the corresponding benefit level.
Hourly Wage
Level
Hourly Value
of Voluntary
Benefits (S)
Part-time
(Excl. benefits)
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Less than $7.00
$7.00 to $7.99
$8.00 to $9.99
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$10.00 to $11.99
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3.35
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$12.00 to $13.99
$14.00 to $15.99
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$16.00 to $17.99
$18.00 to $19.99
$20.00 to $2 I .99
$22.00 and higher
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Monticello City Hall, 505 Walnut Street, Suite 1, Monticello, MN 55362-8831 . (763) 295-2711 . Fax; (763) 295-4404
nf'f;^Q ^f P"hl;r Wnrlr< Q()Q nnlf r()l1T~'" ReI.. Monticello. MN 55362. (763) 295-3170' Fax; (763) 271-3272
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DEVELOPMENT SERVICES
Economic Development Director
Phone:
Fax:
Email:
(763) 271-3208
(763) 295-4404
ollie.koropchakta-:ci. monticello. om, us
MONTICELW
CITY OF MONTICELLO, MINNESOTA
II
JOB AND WAGE LEVEL - EXISTING JOBS
II
Please indicate number of current employees at each level and indicate the corresponding benefit level.
Monticello City Hall, 505 Walnut Street, Suite 1, Monticello, MN 55362-8831 . (763) 295-271] . Fax: (763) 295-4404
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