EDA Agenda 09-28-1999
.
1.
2.
3.
4.
.
5.
6.
AGENDA
MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
Tuesday, September 28, 1999 ~ 7:00 p.m.
City Hall
MEMBERS: Chair Ron Hoglund, Vice Chair Barb Schwientek, Assist Treasurer Ken Maus,
Clint Herbst, Roger Carlson, Bill Demeules, and Daffin Lahr.
STAFF:
Treasurer Rick Wolfsteller, Executive Director Ollie Koropchak, and Recorder
Lori Kraemer.
GUEST:
Jay Eller, Twin City Die Castings Company.
Pam Campbell, DAT.
Call to Order.
Consideration to approve the August 31, 1999 ED A minutes.
Consideration of adding agenda items.
Consideration to review the preliminary GMEF loan application from Twin City Die
Castings Company for compliance with the EDA Business Subsidy Criteria.
Consideration to approve or deny GMEF No. 017 for Twin City Die Castings Company.
Consideration to review the returned request for proposals relative to cost estimates for
preparation of design concepts and approval to fund through DMRF.
7. Consideration to approve extending the use of the remaining balance of the DMRF
through year-ending, December 31, 2000.
8. Consideration to approve funding the acquisition and improvement costs associated with
the 7-foot walkway through the EDA.
9. Consideration of Executive Director's Report.
10. Other Business.
11. Adjournment.
.
.
.
.
EDA Agenda - 9/28/99
4.
Consideration to review the oreliminarv GMEF loan aoolication from Twin City Die
Castings Comoanv for compliance with the EDA Business Subsidy Criteria.
A. Reference and Background:
GMEF Loan Request: See Attachment A.
$100,000 Machinery and Equipment Loan.
Project Summary:
Jay Eller, Marketing Manager, at Twin City Die Castings Company will be at the EDA
meeting. Jay will be the plant manager ofthe facility in Monticello. Previously, the
company owners Jim Harmon and Steve Harmon visited Monticello.
Twin City Die Castings Company (TCDC) is an 80-year old manufacturer of cast metal
parts headquartered in Minneapolis, MN. Between its headquarters and its Watertown,
SD facilities, TCDC employs approximately 300 people and generates annual sales in
excess of $40 million per year.
TCDC is proposing the establishment of a Magnesium Casting division in Monticello.
Although a relatively new process, TCDC anticipates that it will be able to provide cast
parts at a very competitive level in this fast growing market. Magnesium castings are
becoming increasingly in demand as the automotive industry seeks to utilize lighter, high
quality parts in its efforts to improve fuel economy. While raw materials are more
expensive than aluminum, the company will achieve better efficiency with magnesium,
thereby achieving acceptable margins.
TCDC site location in Monticello is a six-acre parcel lying south of Chelsea Road and
immediately west of the new high school entrance road. The Phase Ia construction project
consists of an approximate 36,000 sq ft office/manufacturing facility with occupancy
scheduled for June 2000 and the Phase Ib construction project consists of approximately a
16,000 sq ft addition with occupancy for June 2002. Total employment of89 jobs at an
average wage of $17. 06 per hour plus a benefit value of $5.4 7 per hour. The company
anticipates this facility in the future to consist of a total of 80,000 sq ft.
Uses and Sources
In order to save time, please see Attachment B which is the estimated uses and sources
statements as prepared by Lenny Kirscht who is packaging the application for the
Minnesota Investment Fund. You will notice, there are individual uses and sources for the
real estate financing and the machinery and equipment financing. The GMRF will be a
1
EDA Agenda - 9/28/99
.
part of the machinery and equipment financial package and the GMEF will be in a shared
second-position with the Minnesota Investment Fund behind the industrial revenue bonds.
Also attached is a list of the equipment for purchase.
Please review the application for compliance with the EDA-GMEF Business Subsidy
Criteria.
GREATER MONTICELLO ENTERPRISE FUND GUIDELINES
PUBLIC PURPOSE CRITERIA: Must comply with four or more of the criteria listed
below, criteria #1 being mandatory.
1.
Job Goal:
89 new full-time jobs to the City of Monticello within two years of
the benefit date.
Wage Goal:
At least 80 of the new jobs must be at a rate equal to or
greater than $8.24, excluding benefits, for individuals over
the age of 20 during the term of the assistance.
.
Annual reports are required until termination date. Failure to meet job and wage
goals require partial or full payment ofthe assistance plus interest.
See Attachment C - Job and wage-level goals.
2. Increases the community tax base: The construction of the Phase la 36,000 sq
ft manufacturing/warehousing space
($1,018,000 EMV) is estimated to increase
the tax base by $43,643 annually.
The construction of the Phase Ib 16,000 sq
ft manufacturing space ($468,810 EMV) is
estimated to increase the tax base by $20,988
annually.
3.
Factors:
To assist a new manufacturing business to expand their
manufacturing operations.
Other factors for consideration but not limited to: Nature of
business (manufacturing), present availability of service and
product (similar to Remmele Engineering), potential adverse
environmental effects (none), and compatibility to the
comprehensive plan and zoning policy (yes, expansion tip-up
panel).
.
2
.
EDA Agenda - 9/28/99
4.
Used as a secondary source to supplement conventional financing:
The GMEF will be the third source of funding with the bonds and MN
Investment Fund for the equipment financing. The total project including
real estate will utilize conventional financing, SBA, and TIF.
5. Used as gap financing: Used as gap financing (Letter forward coming from
Lender) and as an incentive to encourage expansion
development.
6. Used to assist other funds: In addition to the GMEF, other funds obtained are
SBA, Bonds, MN Investment Fund, TIF, and equity.
GREATER MONTICELLO ENTERPRISE FUND POLICIES
I. BUSINESS ELIGIBILITY:
Industrial business: Yes.
.
Located within city limits:
Yes, Zoned I-lA.
Credit worthy existing business:
F or determination by Lenny Kirscht, Park
National Bank. (Letter to be provided at
meeting. )
$10,000 loan per each job created. $10,000 X 89 = $890,000.
$5,000 per every $20,000 increase in property market valuation, whichever is
higher. $1,486,810 divided by $20,000 = 74 X $5,000 = $371,702.
Criteria: $100,000.
II. FINANCING METHOD:
Companion Direct Loan:
All such loans may be subordinated to the primary
lender(s) if requested by the primary lender(s). The
GMEF is leveraged and the lower interest rate of the
GMEF lowers the effective interest rate on the entire
project.
.
Criteria: The GMEF take a shared second-position with the Minnesota Investment
Fund behind the Bonds on the machinery and equipment.
3
.
EDA Agenda - 9/28/99
III.
USES OF PROCEEDS:
Machinery and equipment.
IV. TERMS AND CONDITIONS:
Loan Size: Maximum not to exceed 50% of the remaining revolving loan fund
balance. Approximate balance September 27, 1999, $404,227.66
Request: $100,000. Criteria: $100,000. Remaining balance
thereafter, $304,227.66.
Leveraging: Minimum 60% private/public non-GMEF. Maximum 30% GMEF.
Minimum 10% equity of GMEF loan.
State Bonds
MN Investment Fund
GMEF
Equity
TOTAL
$4,550,000 (82%)
$ 500,000 (9%)
$ 100,000 (2%)
$ 392,000 (7%)[>10%EDA]
$5,542,000 (100%)
.
Loan Term: Personal property term not to exceed life of equipment (generally
5-7 years).
Criteria: Term seven years.
Interest Rate: Fixed rate not less than 2% below Minneapolis prime rate. Prime
rate per National Bank (First Bank) of Minneapolis on date of ED A
loan approval. Prime rate September 28, 1999 is %.
Criteria: Minimum
% fixed rate.
Loan Fee:
Minimum 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 cost. EDA retains the right to
reduce or waive loan fee or portion of loan fee.
Criteria: Minimum fee of $200, due and payable not later than October 16,
1999.
Prepayment Policy: No penalty for prepayment.
.
4
.
EDA Agenda - 9/28/99
Deferral of Payments: 1. Approval ofthe EDA membership by majority vote.
2. Extend the balloon if unable to refinance,
verification letter from 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 guaranteed loans:
Not applicable.
Assumability ofloan: None.
Business equity requirements:
Subject to type of loan; Board of Directors
will determine case by case, analysis under
normal lending guidelines.
Collateral:
Machinery and equipment liens (except equipment exempt from
bankruptcy) and personal and/or corporate guarantees (requires
unlimited personal guarantees) as per the GMEF attorney.
.
Non-performance:
An approved GMEF loan shall be null and void if funds are
not drawn upon or disbursed within 180 days from date of
EDA approval.
September 28, 1999 EDA approval - loan becomes null and void March 28,
2000.
Non-performance extension: Not applicable.
Legal Fee:
Responsibility of the GMEF applicant.
B. Recommendation:
Recommendation is to review this information prior to the EDA meeting for discussion
and potential questions. Jay Eller will be present at the EDA meeting. Consideration to
approve or deny GMEF Loan No. 017 is the next agenda item.
C. Supportin~ Data:
Preliminary GMEF application, job and wage-level goals, uses and sources, equipment list,
and executed waivers.
.
5
.
.
.
GREATER MONTICELLO ENTERPRISE ,_ ~_. _ ...
250 EAST BROADWAY A*6 '-'Y"~
MONTICELLO, MINNESOTA A
PRELIMINARY APPLICATION FOR LOAN
APPLICANT: '~A\.\ Err cYL
FIRM OR TRADE NAME:--.JW;I"-I r:-k. fLE CAS+'\'~ 5. (1('\
BUSINESS ADDRESS: to 7() s.e \ ;?~!'..9.. A\J ~
CITY/STATE: m"I\.J~c..Af2oL'c.... m f'J ZIP CODE: 5"5 t.J/4
TELEPHONE: (BUS.) '-"C)J. b...{... - 3(~ll (HOME) foI2-Q3s- [0/ b'S
DATE ESTABLISHED: ) q J'1 EMPLOYER I.D.#
_SOLE PROPRIETOR .><. CORPORATION _PARTNERSHIP
MANAGEMENT
OWNERSHIP % e>
t..fq%
<-t Cl
~
PROJECT LOCATION: O~0 Cht-:;.(:;c.p.. ?cAd
~NEW LOCATION
mOl\Jtc:::..= lIo mtJ.
EXISTING BUSINESS
TOTAL PROJECT COST ESTIMATE: $
{.;. ~tJCj (70[1
,
PROPOSED USES:
REOUEST:
AMOUNT OF LOAN $ 106 , G 0 'D
MA TURITY & TERMS
REQUESTED
APPLICANT'S EQUITY
LOAN PURPOSE
LAND $ ~ 16(~
EXISTING BUILDING
CONSTRUCTION ~ ~
MACHINERY CAPITAL -9 D
WORKING CAPITAL
OTHER
TOTAL USES: $
PROPOSED BEGINNING DATE:
ESTIMA TED COMPLETION DATE:
~ ["L 'Ern beg
..) LLn E
IC1"4
t)C'('">o
TITLE TO
PROJECT ASSETS TO BE HELD BY:
PARTICIPATING LENDER: 1W;,.o
(Name)
:s 1+ / ( ~ @JvA'1'A - 15 CLI'5 VL
(Contact P rson)
X OPERATING ENTITY
C,.t" ~Jcn'=\:' rn .~.J s. f()0
(Address) / , . I 6
<f1::f9: &,Ip {- 0-3 cxC,
(Telephone #)
ALTER EGO
PRESENT # OF F. T. EMPLOYEES;d C("'> PROJECTED # OF F. T. EMPLOYEES(within 2 years) ~ ~O
PROJECTED AVERAGE WAGE PER HOUR: Sf /1, 0 C::,
APPLICANT SIGNATURE:
.
.
.
SEP-21-1999 10:51
PARK NATIONAL BANK
TWIN CITY DIE CASTING
EQUIPMENT FINANCING
USES OF FUNDS
.Buhler
Furnace.
Tritni
Conlpressors
Automobile
CNC Mschinel)'
Soft COI1:IICQQ.tinKen~)I
TOTAL
SOURCES OF FlJN.DS
$~tl otMN Bona ~~osr~
MN Invtltrnent Fund
Mondo.Uo intftpri.. Fu~
Equity Capital
TOTAL
COLLATERAL COVERAGE
Estimated FF&.E (Full VaJl.lc)
Less: Bond Procoed:i
Total Excess Collateral.
L TV for Bond Program
s
$
ESTIMATED DEBT SERVICE
State Of MN Bond Program
:MN InvestmtntFund '{~ ~./o
Monticello Enterprise Fund t,Ot. " "tr' 00.1.4.
Equity Capital
"SSC3l
6125912764 P.03/04
2,872.000,00
1.056.000,00
352.000.00
S8,OOO.00
34.000.00
920~OOO.OO
2S0!OOO~OO
5,542,000.00
4.SS0.000.00
500.000.00
100.000.00
. . 3~2,.OOQ.OQ.
5,542,000.00
5,542.000,00
4,550,000.00
992.000.00
82%
S2.24S.00
4,828.00
1,460.00
TOTAL
ANNUAL
58,533.00
702,396.00
.
.
SEP-21-1999 10:51
PRRK NRTIONRL BRNK
6125912764 P.04/04
I
I
TOT(:jL p.e4
.':"r::~"".;/~~
, " ..;;
,..-
ll,~
0;;;
!i:;'!
F-l-
CD ~
ji3 l..n
i;s ,
is
Q;J
.. >-
1l,! 1:
~
:::JO 0
.c.
llJ
i t>>
V1 l!
i a:I
~ -.... .... ~
a::
Ql
u ~
i~ I~
:!s
I~ B l"oo
~ -.
c ..... j
~ CD ~ t4
5E 8,
. ~
"ii~ tI\
.H;!. - :>.
i~ -' .::s
CS .B
~I t
:fo .l
III ~ ~ Vl lJ'3 ~ 0 I..n ~ ~ ~ ~ 0-
~ Q
~: ~ 0- ("'E, 1)1 ~
>oS ~ tri ':;,t=
"31 ~ ~ -.....9 In -::I'-' ~ f"""' ......
~~
!i ~ c "::) c C (.Ii \n j~
(0 0 ['tj gj .
~ (') ~ ~ l:l <i \r1 - cJtlO
a::i J") f'(j ..
-:;r: ~ . ~'
~l!l ~ r' M t"1 -: ~ 11)0
~ a "- - - - - ..c
0- .......
%3 .S!
UlI
~'. .c
.a
c;; ; S
~~ ~
- ~ ~ tn >D ~ ~
*Z (SO! ~ ...... c1 ti -
~ as.
I~ t- -
~ \..
-:::.&. ~ IU -~ I--
~ ~ ~ ~ l) ~
~ J .~ ~ ' . ~ ",11"'"
w ~ ~
~ 1 CJ /i
~ Ol ~ :;; ~
F ~ 1 ....... :s.L. .... .~
z a ~ '4 .J ~ ~
0 ~ ~ ~ .~
E \lJ '"
~ E ~
fB 1- C$ ~ c::
~
a. I
~J
~ -fj
p ~ U3
j ,~~
,) ~,~
, -:F~
~ \) 0 _
.,., ~
", ~ = :z
y.... .... 0 0
~:.= l-
E (- g OJ
:; .... z
,'11. dJ.Si ~
1'0 5e a::
1i me. w
C z.... a..
mm -
1nZ"
IV ~
'~i j
CD'~ m
ar u
.~ ~
~ ~
.;a m
.c
o
"'?
ec
i
w
.
'E
lU
J;;
~
~
J
Co
~
-
~
~
8
,00 'd
SDNI1SV~ 31G A11~ NIM1
OS,S vv9 1S9:131
i Ji
t'- ,5 CD '! m
c:: .s c:; l'Il
ti c~,g
5.l ~QJCD
= ~!:::!
.f ;si
b u j ell:)
~ ~ --~i
c-!; :~~
ia .c:aQ)~
~~ -tLC
~. (gw:l
.,gB E~8
~i 1'i~
i~ !,.~
:1:2 Ii i ~=
C E. _ c:
:g ~ G:I;Q '::
f -f W !if ,QI :I
c.. 03:15~
e 3CDCD"
-1;,,~;:l1)
j:ll51!li':
~fB~li;
r.,...:lS-
j j~~l
'z;]!~:I!l;~
-='-'.!!:go:
;5.~ ~ $:J: e
: i]i fct:i
l1)>Ol'll8eQi
1i.2"b ~--
ie-Eli]!'; ~
a;C .s:8~
~!t~ Ql'~
H-~j~H
ied:QlQ
'CI Co c
!I,I~r;:;",l:l)
'lD CII~~~
c:>o _~gf
B~ liif.!!!
ti icC6
'_ jl;
'-' lIl...'<;::
.5 ~::::I~
a; oS l1)
J::I '" ~.c::a
.,g ,Sib!
. ~ :::! --1i
~ 6 j.!.fi
o..~ g,CIIS
. I 'I~ ~
e ~ j! G:l
8 t;ll :a
->0 15lD.c
~ ~Elll
.8 .II!
~ ~ foe
"" ! :a ~
~ D.c..
~
\ ~
~
\5
f
u
~
"'C
Ii
l1)
.5
~
I::
Ii
j
.5
I
I
II)
-=
i~
'":E;w
C CJ
Cl .eo-
';:;effi
~ II) g:
~uEl::
Q) 0
I:) ~
-
90:01 (l~d)66 ,01- 'd3S
--
MONTICELLO
AUTHORIZATION RELEASING INFORMATION
TO: Twin Citv Federal Attn: Sally Anaya
Name of Financial Institution
801 Marquette Ave
Street
I~i nneapo 1 is
City
Minnesota
State
55414
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: Twi n Citv Di e Casti ngs Co.
Developer's name(s)
1070 SE 33rd Avenue Minneapolis, MN. 55414
Developer's address
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: ~ ~
{/!.A'v,AMA
u 1C,C,'j
, "
))111
-"
orized Signature
.
One copy for each principal of a
partnership or corporation as
well as the entity itself.
Monticello City Hall, 250 E. Broadway, PO Box 1147, Monticello, MN 55362-9245. (612) 295-2711 . Fax: (612) 295-4404
Office of Public Works, 909 Golf Course Rd., Monticello, MN 55362 . (612) 295-3170 . Fax: (612) 27 I -3272
MONTICELLO
AUTHORIZATION RELEASING INFORMATION
TO: Twin City Federal Attn: Sally Anava
Name of Financial Institution -
801 Marquette Ave
Street
Ivii nneapo 1 is
City
jVli nnesota
State
55414
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: Twi n City Di e Castings Co.
Developer's name(s)
1070 SE 33rd Avenue Minneapolis, MN. 55414
Developer's address
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
the entire term of
Dated: (~J
shall be valid
the loan.
U J'l'lc')
./
~ J) ./jt
f orized Signature
.
One copy for each principal of a
partnership or corporation as
well as the entity itself.
Monticello City Hall, 250 E. Broadway, PO Box 1147, Monticello, MN 55362-9245 . (612) 295-2711. Fax: (612) 295-4404
Office of Public Works, 909 Golf Course Rd., Monticello, MN 55362. (612) 295-3170. Fax: (612) 271-3272
--
MONTICELLO
AUTHORIZATION RELEASING INFORMATION
TO: Twin City Federal Attn: Sally Anava
Name of Financial Institution
801 Marquette Ave
Street
Minneapolis,
City
Minnesota
State
55414
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: Twin City Die Castings Co.
Developer's name(s)
1070 SE 33rd Ave Minneapolis, MN. 55414
Developer's address
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: alv~
2.[
)
'4, r;
y
Signature
.
One copy for each principal of a
partnership or corporation as
well as the entity itself.
Monticello City Hall, 250 E. Broadway, PO Box 1147, Monticello, MN 55362-9245 · (612) 295-2711 . Fax: (612) 295-4404
Office of Public Works, 909 Golf Course Rd., Monticello, MN 55362 · (612) 295-3170' Fax: (612) 271-3272
.
.
.
EDA Agenda - 9/28/99
5.
Consideration to approve or deny GMEF No. 017 for Twin City Die Castings Company.
A. Reference and Background:
After review and discussion of the preliminary application from Twin City Die Castings
Company, the EDA is asked to consider approval or denial of the request for a $100,000
GMEF loan. Lenny Kirscht has submitted to the EDA Office a copy of the requested
financial statements per the EDA final application with other company data forthcoming.
Additionally, Mr. Kirscht will submit a letter determining the financial credibility ofthe
Twin City Die Castings Company.
For your information - The Minnesota Investment Fund is a grant to the City of
Monticello from the Minnesota Department of Trade and Economic Development. The
City will loan the $500,000 grant to TCDC, the EDA will retain the full principal and
interest payback on the loan for future projects which increase the state and local tax base
and job and wage-levels. It is anticipated the State will award the $500,000. The City
negotiates the terms and conditions with the company. Amortization 10 years and perhaps
a 3% to 4% fixed interest rate. This is great for our revolving loan fund program.
First, the EDA needs to determine if this GMEF loan application from TCDC will
encourage economic development. Secondly, the EDA must determine if the proposed
construction real estate project and the acquisition of personal property application
comply with the EDA Business Subsidy Criteria - GMEF Guidelines. Lastly, the EDA
must determine the amount and terms of the loan for approval.
The City Council will consider ratification of the EDA's action for compliance of the
EDA-GMEF Business Subsidy Criteria on October 11, 1999, and will approve ofthe
Subsidy Agreement for GMEF No. 017 between the EDA and TCDC on October 25,
1999. If approved, the GMEF will be disbursed at the closing date yet to be determined.
It is recommended, the approved dollars be disbursed from the UDAG and GMEF funds.
This will then close-out the UDAG fund.
B. Alternative Action:
1. A motion to approve GMEF Loan No. 017 for Twin City Die Casting Company, a
Minnesota corporation, in the amount of$100,000 with terms and conditions as
recommended. Collateral, guarantees, and other condition requirements to be
determined and prepared by the GMEF attorney. The GMEF loan approval
subject to lender, SBA, and State commitments, verification of company financial
credit ability, and Council ratification of ED A action.
2.
A motion to deny GMEF Loan No. 017 for Twin City Die Castings Company.
1
EDA Agenda - 9/28/99
.
3.
A motion to table any action.
C. Recommendation:
Recommendation is for Alternative No.1 with terms and conditions as recommended per
the criteria, with the exception of the interest rate which is set based on the said date
prime rate. This is a great company and perhaps the company name will create other
spin-on business. Please review the EDA Fund balances under the Executive Director's
report. Also note the potential request from Systemic Refrigeration for $100,000 and
from The Pressures On for $75,000. Approval subject to lender, SBA, and State
commitments and Council approval.
D. Supporting Data:
None.
.
.
2
.
.
.
EDA Agenda - 9/28/99
6.
Consideration to review the returned request for proposals relative to cost estimates for
preparation of design concepts and approval to fund throullh DMRF.
A. Reference and Background:
REQUEST FOR PROPOSALS
At the EDA meeting of August 31, the commissioners directed Pam Campbell, DA T
Chair, to prepare a letter to architects soliciting request for proposals. The proposal to
include costs for preparing design concepts for facade improvements to three identified
buildings and to six identified buildings. The intent of the EDA was to obtain cost
estimates prior to EDA's consideration to fund the costs to prepare the designed concepts.
The building owners have been reluctance to invest dollars for architectural design options
only to find ifmay be cost prohibitive to complete. And DAT members feel unqualified~
yet, they recognize pictures are worth a thousand words. Design concepts would be a
great asset as a marketing tool to promote the downtown revitalization facade
improvement program.
At a DAT meeting following the last EDA meeting, the DAT members elected to add to
the RFP a third option which includes the cost for preparing design concepts for facade
improvements to an entire block of buildings. The RFPs are due back on Monday,
September 27~ therefore, the returned RFPs will be submitted at the EDA meeting for
your review to accept or deny and/or defer to DAT for consideration.
Pam Campbell, DAT, will add comments to the discussion on the returned RFPs.
APPROVAL TO FUND
After review of the returned RFPs, the EDA should discuss their level-of-interest to fund
the architect's proposed fees for preparing the design concepts and secondly, whether to
consider funding three, six, or an entire block of buildings. If it's your desire to fund the
fees, it is suggested the expenditure be earmarked from the EDA-DMRF as this fund is
not tied to job creation or the business subsidy criteria. The balance of the DMRF is
$174,078.08.
B.
Alternative Action:
1.
A motion to accept the request for proposal from
subject to review by DAT and to fund the preparation of design concepts for
facade improvements to number of buildings or an entire block of
buildings.
1
.
EDA Agenda - 9/28/99
2.
A motion to deny acceptance of the request for proposals.
3. A motion of other alternatives.
4. A motion to table any action.
C. Recommendation.
Without the returned RFPs, no recommendation is given. However, it is recommended if
the EDA elects to fund the costs to prepare the design concepts, the expenditure be from
the DMRF.
D. Supporting Data:
Copy ofRFP mailed.
.
.
2
.
.
.
DESIGN ADVISORY TEAM
C/O OLLIE KOROPCHAK
MONTICELW CIlY BALL
250 EAST BROADWAY
MONTICELLO MN SS362
September 8, 1999
Bob Claybaugh
c/o Claybaugh Preservation Architecture Inc.
361 West Government Street
Taylors Falls Mn 55084
Dear Bob,
As you know the City of Monticello has a facade rehabilitation program to encourage
property owners to reveal some of their building's original integrity. In the last two years, eight
facade improvements have been completed and the results have been noticeable and appreciated.
In order to sustain this momentum the Economic Development Authority (EDA) has asked
me to solicit proposals from you and others.
We would appreciate your giving us the cost to prepare concept drawings for specific
buildings to furnish the property owner a vision of a finished product. (A picture is worth a thousand
words.) Many property owners are interested, but are unwilling to invest in the cost of a concept
drawing for a project that may not come to fruition.
Secondly, we would like an approximate cost range for each of the rehab projects. We realize
the cost depends on the quality of materials, soundness of the building, and the availability of
contractors. We understand the range may vary greatly..
Enclosed are current and historic pictures of each building. If necessary, I can also provide
building dimensions, copies of Sanborn maps and an alterations history.
You will note I have divided this proposal into three potential parts. The EDA has expressed
a willingness to fund concept drawings for three buildings. If the price is not too expensive, they may
be willing to fund six. I have taken the liberty to include an entire block, just to see ifthere is a price
advantage for a larger project.
Please remit your proposal to the Design Advisory Team at the address above. Or you may
fax them to City Hall at 612-295-4404. We would like to receive them by 4:30 September 27, 1999.
If you have any questions please call me at 612-878-2507 or Ollie Koropchak at 612.271.3208.
Sincerely,
Pam Campbell
Design Advisory Team Chair
(o-A
.
Three buildings:
Cent-Com / Domino's
Vacuum Cleaner Shop / Masonic Hall
Monticello Liquors / Zoo Lounge
Six Buildings:
Three listed above plus
A.E. Michaels Decorating Center
Rear entrance of Mercantile Antiques
Infill construction for Dominos Pizza
. Block #35 Pine Street to Walnut Street, South Side
.
Cent-Com / Domino's
Monticello Carpets I Karen's Custom Draperies
County Travel Store
Infill new construction for Domino's
Agosto Law Office
Stella's Cafe
Salon Exceptionalle now State Bank of Elk River
(Loch Jeweler's is completely rehabilitated)
Vacuum Cleaner Shop / Masonic Lodge
Dino's Deli I former I.O.O.F hall
Concept Drawing
Preparation
Cost Range
or Rehab
{p-tJ
.
.
.
EDA Agenda - 9/28/99
7.
Consideration to approve extending the use of the remaining balance of the DMRF
through year -ending. December 31. 2000.
A. Reference and Background:
The consideration to approve or deny extending the use of the remaining balance of the
DMRF was tabled and carried forward from the EDA meeting of August 31, 1999. The
EDA elected to solicit the request for proposals first. The DMRF program began in July
1997 and to date the total amount disbursed is $25, 921.92 which includes $1,000 for
seminar costs and $24,921.92 for six facade improvements. Last year, the EDA extended
the use ofthe DMRF through December 31, 1999.
One ofDAT's goals for year 2000 is to market the revitalization program through the use
of design concepts prepared by an architect, this in hopes of raising the interest-level of
property owners. Other options discussed by DAT was to extend the funding boundaries
within the DMRF Guidelines.
B. Alternative Action:
1.
Motion to approve extending the use of the remaining balance of the DMRF
through year-ending December 31, 2000.
2. Motion to deny extending the use of the remaining balance of the DMRF.
3. Motion to table any action.
C. Recommendation:
Recommendation is Alternative NO.1.
D. Supporting Data:
None.
.
.
.
EDA Agenda - 9/28/99
8.
Consideration to approve funding the acquisition and improvement costs associated with
the 7-foot walkwav through the EDA.
A. Reference and Background:
At the EDA meeting in August, DAT requested the EDA consider requesting the City
Council budget approximately $20,000 for the acquisition ofa 7-foot walkway and for
construction of the walkway improvements. With the current discussion by Council to cut
budget requests of city departments, the commissioners did not endorse requesting
$20,000 from the City for Budget Year 2000. Instead, the commissioners directed
Koropchak to check if the EDA could legally fund the walkway acquisition and
improvements.
In addition, Koropchak would approach the HRA to fund the walkway acquisition and
improvements at their September meeting, since redevelopment is one of their objectives.
The question posed the HRA was <CIs the HRA interested in putting the walkway
acquisition and improvement expenditure of approximately $20,000 in their Year 2000
Budget?" The response was ''No, not at this time."
Koropchak did check with legal counsel and they have no problem with the EDA
expending dollars from the DMRF as these were funds designated for revitalization of
downtown.
At this time, Mr. Grassl has not agreed to sell a 7-foot strip. However, it was my
understanding in a previous meeting between Wolfsteller, Grassl, and myself, we had
verbally agreed to a selling price of $6 per square foot. Mr. Grassl suggested the
walkway jog on to the Brad Larson property allowing greater use ofthe rear of his lot.
Thereafter, Mr. Larson and I met and Mr. Larson agreed to the concept and the $6 per
square foot price. Based on those acquisition prices, it was estimated the cost to acquire
the strip plus survey and closing costs to be approximately $10,000 and another $10,000
for walkway improvements and lighting.
Does the EDA want to budget the expenditure of $20,000 for acquisition and construction
of improvements for a 7-foot walkway along West Broadway subject to a willing seller for
Year 2000?
B. Alternative Action:
1. A motion to approve funding the acquisition and improvement costs for a 7-foot
walkway along West Broadway in the amount of approximately $20,000 from the
DMRF assuming a willing seller(s) in year 2000.
.
EDA Agenda - 9/28/99
2.
A motion of no interest to fund the acquisition and improvement costs for a 7-foot
walkway along West Broadway.
3. A motion to table any action.
C. Recommendation:
Alternative No.1 is consistent with the Comprehensive Plan; however, keep in mind this
will reduce the DMRF by approximately $20,000. More importantly, will the City assume
the responsibility of the snow removal and future repairs or maintenance?
D. Supporting Data:
None.
.
.
2
.
.
.
9.
EDA Agenda - 9/28/99
Consideration of Executive Director's Report.
a)
EDA-GMEF Business Subsidy Criteria - Enclosed is a copy of the criteria as
approved by the EDA at the last meeting with the amended changes under
Definition of Public Purpose, l.(b) and IV. TERMS AND CONDITIONS, LATE
PAYMENT POLICY. Language for the late payment policy was drafted by the
EDA Attorney at the suggestion of the EDA.
GMEF Loan No. 016 - On September 13, the Council ratified the EDA's approval
finding GMEF Loan No. 016 for Aroplax was consistent with the GMEF Subsidy
Criteria. On September 27, the Council will approve the Business Subsidy
Agreement between the EDA and Aroplax as per the new statutory requirements.
Loan closing to follow thereafter. The GMEF loan fee of $200 has been collected.
City Budget 2000 Process - Although the Council approved a maximum increase
of 5% of the levy, it is not the intent of the Council to actually maximize that
increase. No further budget decisions at this time.
GMEF Loan No. 014 - At the suggestion of the EDA, I contacted the local lender
on this project. It appeared they were unaware that the property taxes were not
paid. The lender followed through and did talk to the company relative to the
seriousness of non-payment of property taxes. A second letter was addressed to
Lake Tool, Inc. from the HRA with copies to the lender stating the lIRA at their
October 6 meeting will consider employing an attorney relative to defaulting on the
contract. The company is now current with GMEF payments.
Acquisition of industrial land - City Staff and Council are proceeding with
discussions with Goeman group and Chadwick. Estimated infrastructure costs are
being obtained from city engineer. With inconsistency between the Comprehensive
Plan and MOAA Plan, perhaps the Gold Nugget parcel is another option for future
industrial development.
PROSPECTS - The Prospect Team will visit Systematic Refrigeration on Tuesday,
September 28. This manufacturing company is looking to relocate and expand.
Initial building size 50,000 sq ft with potential to expand to 120,000 sq ft. 42 jobs
currently, anticipate a total employment of80 in ten years. Wage-levels yet to be
determined. Ramsey, Albertville, and Monticello are the three site options under
consideration. Potential user ofGMEFs.
Design and assembly of high-pressured coolants for industrial use - Start-up
company. Has business plan completed. Looking to lease 5,000 sq ft from Brad
Barger. Seeking financing. Potential user of GMEFs. 12 jobs by November,
2000. $10-12 per hour w/o benefits.
EDA fund balance - Enclosed is a current accounting of the EDA fund balance
after disbursal of the $100,000 to Aroplax. This important as you consider
previous agenda items.
Industrial Banquet - The Industrial Fundraiser Banquet will be held Tuesday,
October 26 at the Monte Club. Tickets will be mailed out the week of September
b)
c)
d)
e)
t)
g)
h)
I
.
EDA Agenda - 9/28/99
27 by the Chamber. If you need tickets, please call Brenda, 295-2700, at the
Chamber Office.
.
.
2
MONTICELLO
ECONOMIC DEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF MONTICELLO, MINNESOTA
Business Subsidy Criteria
Public Hearing and Adoption the ...1..!...- day of Augus t
, 1999.
1. PURPOSE
1:01 The purpose of this document is to establish the Economic Development Authority's
criteria for granting of business subsidies, as defined in Minnesota Statutes 1161.993,
Subdivision 3, for private development. This criteria shall be used as a guide in processing
and reviewing applications requesting business subsidies.
.
1:02 The criteria set forth in this document are guidelines only. The Economic Development
Authority reserves the right in its discretion to approve business subsides that vary from
the criteria stated herein if the Economic Development Authority determines that the
subsidy nevertheless serves a public purpose.
1: 03 The Economic Development Authority may amend the business subsidy criteria at any
time. Amendments to these criteria are subject to public hearing requirements pursuant to
Minnesota Statutes, Sections 1161.993 through 116J.994.
2. STATUTORY LIMITATIONS
2:01 In accordance with the Business Subsidy Criteria, Business Subsidy requests must comply
with applicable State Statutes. The Economic Development Authority ability to grant
business subsidies is governed by the limitations established in Minnesota Statutes
1161. 993 through 1161. 994.
3. PUBLIC POLICY REQUIREMENT
3:01 All business subsides must meet a public purpose other than increasing the tax base. Job
retention may only be used as a public purpose in cases where job loss is imminent and
demonstrable.
.
I
q ft---l
Monticello City Hall, 250 E. Broadway, PO Box 1147, Monticello, MN 55362-9245. (612) 295-2711. Fax: (612) 295-4404
Office of Public Works, 909 Golf Course Rd., Monticello, MN 55362 . (612) 295-3170 . Fax: (612) 271-3272
.
.
.
EDA Business Subsidy Criteria
4.
BUSINESS SUBSIDY APPROVAL CRITERIA
4:01
All new projects approved by the Economic Development Authority should meet the
following minimum approval criteria. However, it should not be presumed that a project
meeting these criteria will automatically be approved. Meeting these criteria creates no
contractual right on the part of any potential developer or the Economic Development
Authority.
4:02
The project must be in accord with the Comprehensive Plan and Zoning Ordinance, or
required changes to the plan and ordinances must be under active consideration by the
City at, the time of approval.
4:03
Prior to approval of a business subsidies financing plan and when deemed appropriate by
the Economic Development Authority, the developer shall provide any required market
and financial feasibility studies, appraisals, soil boring, information provided to private
lenders for the project, and other information or data as requested.
4:04
A recipient of a business subsidy must make a commitment to continue operations at the
site where the subsidy is used for a least five years after the benefit date.
4:05 Recipients of any business subsidy will be required to meet wage and job goals determined
by the Economic Development Authority on a case-by-case basis, giving consideration to
the nature of the development, the purpose of the subsidy, local economic conditions, and
situational circumstances.
5. GREATER MONTICELLO ENTERPRISE FUND PROJECT EVALUATION
CRITERIA
5:01 The Economic Development Authority will utilize the Greater Monticello Enterprise Fund
to support the community's long-term economic goals.
5:02 Each Greater Monticello Enterprise Fund subsidy will be analyzed and evaluated by the
Economic Development Authority. Each project shall be measured against the general
criteria in Sections 1 through 4 and the specific criteria in this Section 5 applicable to the
Greater Monticello Enterprise Fund subsidies.
5:03 Following are the evaluation criteria that will be used by the Economic Development
Authority.
2
qp,' d
.
.
.
EDA Business Subsidy Criteria
GREATER MONTICELLO ENTERPRISE FUND GUIDELINES
CITY OF MONTICELLO
250 EAST BROADWAY
MONTICELLO, MINNESOTA 55362
(612) 295-2711
INTRODUCTION
The purpose of the Greater Monticello Enterprise Fund (GMEF) is to encourage economic
development by supplementing conventional financing sources available to existing and new
businesses. Through this program administered by the Economic Development Authority and
participating lending institution( s), loans are made to businesses to help them meet a portion of their
financing needs. All loans must serve a public purpose by complying with four or more of the
criteria noted in the next section. In all cases, it is mandatory that criteria # 1 be satisfied, which
requires the creation of new jobs. It is the responsibility of the EDA to assure that loans meet the
public purpose standard and comply with all other GMEF policies as defined in this document.
Along with establishing the definition of public purpose, this document is designed to outline the
process involved in obtaining GMEF financing.
DEFINITION OF PUBLIC PURPOSE
1. To provide loans for credit worthy businesses that create new jobs.
(a)
One job is equivalent to a total of 37.5 hours per week.
(b) At least 90% of the jobs to pay a rate equal to or greater than 160% of the federal
minimum wage, exclusive of benefits, for individuals over the age of20 during the
term of the assistance. Annual written reports are required until termination date.
Failure to meet the job and wage level goals require partial or full repayment of
the assistance with interest.
2. To provide loans for credit worthy businesses that would increase the community tax base.
3. To assist new or existing industrial or commercial businesses to improve or expand their
operations. Considerations for loans shall take into account factors including, but not limited
to, the nature and extent of the business, the product or service involved, the present
availability of the product or service within the city of Monticello, the compatibility of the
proposed business as it relates to the comprehensive plan and existing zoning policies, and
the potential for adverse environmental effects of the business, if any.
4. To provide loans to be used as a secondary source of financing that is intended to supplement
conventional financing (bank financing).
5.
To provide loans in situations in which a funding gap exists.
6. To provide funds for economic development that could be used to assist in obtaining other
funds such as Small Business Administration loans, federal and state grants, etc.
KARENIOFFICEIPOLlCIESIGMEF: 8/31/99
3
.
I.
EDA Business Subsidy Criteria
THE GREATER MONTICELLO ENTERPRISES
REVOL VING LOAN FUND POLICIES
BUSINESS ELIGIBILITY
*
*
*
*
*
Industrial businesses
Non-competitive commercial businesses which enhance the community
Businesses located within the city of Monticello
Credit worthy existing businesses
Non-credit worthy start-up businesses with worthy feasibility studies (Deny all
historical non-credit worthy businesses)
$10,000 loan per each job created, or $5,000 per every $20,000 increase in property
market valuation, or $5,000 per every $20,000 increase in personal property used for
business purposes, whichever is higher.
*
II. FINANCING METHOD
* COMPANION
DIRECT LOAN - Example: Equity 20%, RLF 30%, and bank 50%.
(All such loans may be subordinated to the primary
lender(s) if requested by the primary lender(s). The
RLF loan is leveraged and the lower interest rate of
. the RLF lowers the effective interest rate on the entire
project.)
* PARTICIPATION LOAN- RLF buys a portion of the loan (the RLF is not in a
subordinate position, no collateral is required by the
RLF, and the loan provides a lower interest rate).
* GUARANTEE LOANS - RLF guarantees a portion of the bank loan. (Personal
and real estate guarantees handled separately.)
III. USE OF PROCEEDS
*
*
*
.
Real property acquisition and development
Real property rehabilitation (expansion or improvements)
Machinery and equipment
KARENIOFFICEIPOLlCIESIGMEF: 8/31/99
4
EDA Business Subsidy Criteria
. IV. TERMS AND CONDITIONS
* LOAN SIZE- Minimum 01'$5,000 and maximum not to exceed 50% of the
remaining revolving loan fund balance; for example, if the
remaining revolving loan fund balance is $50,000, the
maximum loan issuance is $25,000.
* LEVERAGING - Minimum 60% private/public non-GMEF
Maximum 30% public (GMEF)
Minimum 10% equity EDA loan
* LOAN TERM - Personal property term not to exceed life of equipment
(generally 5-7 years). Real estate property maximum of 5-
year maturity amortized up to 30 years. Balloon payment at
5 years.
* INTEREST RATE - Fixed rate not less than 2% below Minneapolis prime rate.
Prime rate per National Bank of Minneapolis on date of ED A
loan approval.
* LOAN FEE - Minimum fee of$200 but not to exceed 1.5% of the total loan
. project. * Fees are to be documented and no duplication of
fees between the lending institution and the RLF. Loan fee
may be incorporated into project cost. EDA retains the right
to reduce or waive loan fee or portion of loan fee.
*Fee to be paid by applicant to the EDA within 5
working days after City Council approval of GMEF
loan. Nonrefundable.
* PREP A YMENT
POLICY - No penalty for prepayment.
* DEFERRAL OF
PAYMENTS - 1. Approval of the EDA membership by majority vote.
2. Extend the balloon if unable to refinance, verification
letter from two lending institutions subject to Board
approval.
* LATE PAYMENT Failure to pay principal or interest when due may
POLICY result in the loan being immediately called.
.
KAREN\OFFICE\POLlCIE$\GMEF: 8/31/99
5
.
.
.
*
INTEREST
LIMITATION ON
GUARANTEED
LOANS-
*
ASSUMABILITY
OF LOAN-
*
BUSINESS EQUITY
REQUIREMENTS -
*
COLLATERAL -
*
NON-PERFORMANCE -
*
NON-PERFORMANCE
EXTENSION -
*
LEGAL FEE -
EDA Business Subsidy Criteria
Subject to security and/or reviewal by EDA.
None.
Subject to type of loan; Board of Directors will
determine case by case, analysis under normal lending
guidelines.
*
Liens on real property in project (mortgage
deed).
Liens on real property in business (mortgage
deed).
Liens on real property held personally (subject
to Board of Directors - homestead exempt).
Machinery and equipment liens (except
equipment exempt from bankruptcy).
Personal and/or corporate guarantees (requires
unlimited personal guarantees).
*
*
*
*
An approved GMEF loan shall be null and void if
funds are not drawn upon or disbursed within 180
days from date of ED A approval.
The l80-day non-performance date can be extended
up to an additional 120 days.
1. A written request is received 30 days prior to
expiration of the 180-day non-performance
date.
2. Approval of the EDA membership by majority
vote.
Responsibility of the GMEF applicant.
The Greater Monticello Enterprise Fund is operated as an equal opportunity program. All applicants
shall have equal access to GMEF funds regardless of race, sex, age, marital status, or other personal
characteristics.
KARENIOFFICEIPOUCIESIGMEF: 8/31/99
6
.
.
.
EDA Business Subsidy Criteria
'"
.J.
If the preliminary loan application is approved, applicant shall complete a formal application.
Formal application shall include a business plan which will include its management
structure, market analysis, and financial statement. Like documentation necessary for
obtaining the bank loan associated with the proposal is acceptable. Attached with each
formal application is a written release of information executed by the loan applicant.
4. City staff will meet with applicant and other participating lender(s) to refine the plan for
financing the proposed enterprise.
5. City staff shall analyze the formal application and financial statements contained therein to
determine if the proposed business and finance plan is viable. Staff may, at its discretion,
accept the findings of a banking institution regarding applicant credit and financial viability
of the project. After analysis is complete, City staff shall submit a written recommendation
to the EDA. A decision regarding the application shall be made by the EDA within 60 days
of the submittal of a completed formal application.
6. The EDA shall have authority to approve or deny loans; however, within 21 days of EDA
approval, the City Council may reverse a decision by the EDA to approve a loan if it is
determined by Council that such loan was issued in violation of GMEF guidelines.
7.
Prior to issuance of an approved loan, the City Attorney shall review and/or prepare all
contracts, legal documents, and intercreditor agreements. After such review is complete, the
City shall issue said loan.
ORIGINAL REVOLVING LOAN FUNDING
"LETTER OF CREDIT" FROM MONTICELLO CITY COUNCIL - $200,000
SOURCE - City Liquor Store Fund
City shall transfer needed loan amount from existing accounts at such time that individual loans are
approved. Revenue created through this program shall be under the control of the EDA and shall
not be transferred to City funds unless the City Council determines that reserves generated are not
necessary for the successful operation of the Authority. If such is the case, such funds must be
transferred to the debt service funds of the City to be used solely to reduce tax levies for bonded
indebtedness of the City (see Section 5 B of the ordinance establishing the Monticello EDA).
REPORTING
1. Staff shall submit quarterly summaries and/or annual report detailing the status of the
Monticello Enterprise Fund.
FUND GUIDELINES MODIFICATION
1.
At a minimum, the EDA shall review the Fund Guidelines on an annual basis. No changes
to the GMEF guidelines shall be instituted without prior approval of the City Council.
KAREN\OFFICEIPOLlCIES\GMEF: 8/31/99
8
.
.
.
EDA Business Subsidy Criteria
LOAN ADMINISTRA nON
1.
City staff shall service City loan, shall monitor City position with regard to the loan, and
shall assure City compliance with intercreditor agreement.
2. All loan documents shall include an intercreditor agreement which must include the
following:
A. Definition of loan default, agreements regarding notification of default.
B. Agreements between lending institution and City regarding reproduction of pertinent
information regarding the loan.
3. All loan documentation shall include agreements between borrower and lenders regarding
release of privacy regarding the status of the loan.
KAREN\OFFICE\POLlCIES\GMEF: 8/31/99
9
.
.
.
EDASOURCESOFFUNDS
BALANCE
GMEF Cash Balance (January 1999)
DMRF Cash Balance (August 1999)
UDAG Cash Balance (assumes Aroplax disbursement)
TOTAL
January 1, 1999 Balance
$373,544.51
$174,078.08
$ 30,683.12
$578,305.71 *
$785,709.65
* This total does not include any revenues (principal or interest paybacks from 1999), only loan
and grant disbursements.
GMEF and UDAG balance available for funding
GMEF No. 017 Twin City Die Castings Company
Potential Other Disbursals
GMEF No. 018 Systematic Refrigeration
GMEF No. 019 The Pressures On
Potential Other Revenues
Minnesota Investment Fund principal plus interest
10 years, 3 % interest rate
$404,227.63
$100,000
$100,000
$ 75,000
$500,000