EDA Agenda 04-24-1990AGENDA
it MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
Va Tuesday, April 24, 1990 - 7:OOAM
City Hall
MEMBERS: President Ron Hoglund, Vice President Barb Schvientek,
Assistant Treasurer Bob Mosford, Fran Fair, Warren
Smith, Harvey Kendall, and Al Larson.
STAFF: EDA Treasurer Rick Wolfsteller and EDA Executive Director
011ie Koropchak.
1. CALL TO ORDER.
2. CONSIDERATION TO APPROVE THE APRIL 3, 1990 AND APRIL 4, 1990
EDA MINUTES.
3. CONSIDERATION TO APPROVE EDA COMMISSIONERS EXPIRATION
OF TERMS.
4. CONSIDERATION TO REVIEW AND/OR ADJUST GMEF LOAN APPLICATION
PROCEDURE.
5. CONSIDERATION OF ANY FOLLOW-UP TO THE TAPPER'S INC GMF.F LOAN.
it 6. OTHER BUSINESS.
7. ADJOURNMENT.
L
MINUTES
MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
Ar A Wednesday, April 4, 1990 - 7:OOAM
City Hall
MEMBERS PRESENT: President Ron Hoglund, Vice President Barb
Schwientek, Harvey Kendall, Warren Smith,
Fran Fair, and Al Larson.
MEMBERS ABSENT: Assistant Treasurer Bob Mosford.
STAFF PRESENT: EDA Treasurer Rick Wolfsteller and EDA Executive
Director 011ie Koropchak.
GUEST PRESENT: Bill Tapper, Tapper Inc.
Lance Hartkopf, Tapper Inc.
Bob Heck, Business Development Services, Inc.
Kevin Doty, Wright County State Bank
1. CALL TO ORDER.
President Ron Hoglund call the EDA meeting to order at 7:00 AM.
2. CONSIDERATION TO HEAR PROJECT BACKGROUND INFORMATION.
®' Koropchak reported this project started fall of 1989.
Genereux finished cabinets for the Grimsmo home, visited
city hall, and the IDC Promotional Committee visited the
Genereux St. Michael facility. The company having received
Information of Monticello and toured the industrial sites,
Business Development Services, Inc. were contacted to
prepare a financial proposal for Cenereux and Westlund
Distributing. The original financial proposal included
a Small Business Developemnt loan, TIF, GMF.F, and equity.
However, upon denial for funding by the SMD1. board, the
alternative funding for Small Business Admintstrution Loan
was applied for. The TIF Plan and District No. 1-9 has
been approved by the Planning Commission, HRA, and the
City Council.
The project includes an approximate 27,000 sq ft concrete
office, manufacturing facility for Genereux Fine Wood Products
and Wastlund Distributing. Purchase agreement for Lot 4,
Block 2. DIP of approximately 7.2 acres. Total employment
50, 15-25 new jobs.
The Development Agreement line not been drafted by Holmes 6
Graven at this time nor has the Building inspector received
the site plans, building plans, drainage or landscaping plans.
The SBA Omni Board has approved the funding which then
9008 to the SBA Board for final npproval.
EDA Minutes - 4/4/90
Page 2
is'
It 3. CONSIDERATION TO HEAR COMPANY HISTORY AND BUSINESS PLANS.
Bill Tapper told the EDA that he and his wife, Barbara, did
a market analysis of the cabinet industry in 1983 and
determined the a opportunity existed to create a franchisable
business system for the custom cabinet industry. In 1984
Tapper's Inc. was formed and in turn they purchased Genereux
Fine Wood Products, a small custom cabinet manufacturing
company in St. Michael. Three years after they formed
Westlund Distributing, a cabinet hardware distribution
company.
Long term goals for Tapper's Inc. is to become the Super
Valu of the cabinet business. Meaning they would manufacture
and distribute complex decorative component parts, and provide
management services to a nation wide network of independent
franchises. Plans include expansion of the facility up to
100,000 sq ft.
4. CONSIDERATION TO HEAR LOAN REOUEST COMPARED TO GMEF GUIDELINES.
Koropehak presented a comparison summary to the EDA members
(see attached) and pointed out the two conflicts with GMEF Guidelines were
request for 71 interest rate and 20 year term.
®,. 5. CONSIDERATION TO HEAR TAPPER, INC. FINANCIAL PRESENTATION.
Bob Heck reported the company showed good sales of 1.6
million and inorder to proceed with their business plans
the company need to move to allow expansion as they are
landlocked at their present leased facilities In St. Michael.
Mr. Heck recommended this to be a good little project for
the first EDA loan as it meets the GMEF guidelines. Mr.
Heck recommended the EDA adjust their loan term to meet
SRA requirement of 20 years as follows: The adjustment
meets SBA's 101 total project subordinated 20 year debt
term. Total project of $895.000 times 101 equals required
subordinated debt of $89,000 less equity or TIF of $77,500
equals GMEF loan portion of $12,000 (balloon at 7 years).
The interest rate will be 81 which is 21 below Minneapolis
prime. As of April, 3, 1990. Minneapolis prime is 101
per First Bank Minneapolis. Loan amortized over 20 years.
Kevin Doty, Wright County State Bank, reported he had
visited the facility in St. Michael and definitely agreed
with their need to expand. .Ha is willing to share any
company Information the bank haslabove what the EDA
Executive Director has received, however, suggested a
Intercredit Agreement ba drafted between the EDA,
Tnpper's Inc. and the bank. The bank has Issued a commitment
letter subject to numerous conditions which will be revised
to coordinate with the SBA loan. lie informed the EDA
of his suggestion to Rick Wolfstaller and 011ie Koropchak
for the bank to sorvico the loan et $20 per month. He
EDA Minutes - 4/4/90
Page 3
Q'
informed the EDA that real estate is held by Bill and Barb
Tapper and the M&E .is held by Tapper's. Inc. therefore a
combination loan agreement might be drafted. He noted that
the existing lease of $31,000 was figured into the projections
under rental expense. The financials were unaudited however
had no problems with them after meeting with the CPA firm
and the state. An appraisal by Jack Maxwell disclosed a
value of $1,000,000 for land and building and $1.146,000
for land, building and equipment. Kevin Doty recommended
to the EDA that Tapper's Inc. is a credit worthy business.
Afterfurther questions and discussion by the EDA members and
the EDA Executive Directors, President Ron Hoglund called
for a motion to approve or deny GMEF funds to Tapper's Inc.
EDA Commissioner Warren Smith made a motion to approve a
$100,000 GMEF loan request for Tapper's Inc., because the
company's financial statements, as analyzed by Kevin Doty of
Wright County State Bank, determined Tapper's Inc., to be
a credit worthy business. Secondly, the GMEF guidelines
state all loans must comply with four or more of the six
public purpose criteria (creation of jobs a must). Said
loan meets public purposes:
®}
1. Credit worthy business that creates new jobs (estimated
between 15-20).
2. Credit worthy business that increases the community tax
base (estimated annual taxes of $27,000).
3. Assistance to an existing Industrial business expanding
and relocating their operation to Monticello.
4. Provides gap funding.
5. Provides 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.
Thirdly, the loan complies with GMEF policies. This a $100,000
Companion Direct Loan, which Is in a third subordinated position
to the primary lenders, Wright County State Bank and Small
Business Administration, on real property development and machinery
and equipment. The real estate and M 6 9 is amortized over 20
years with balloon payment in seven (7) years. Interest rate is
H.
The loan fee to the developer is to be waived, and Wright County
State Bank will service the GMEF loan for a service charge of
$20.00 per month. EDA ataff is responsible for loan payment
collection. The service charge will be deducted from the GMEF
accumulated interest.
EDA Minutes - 4/4/90
Page 4
An Intercreditor agreement between the developer, the lending
institution, and the EDA shall be drafted and executed in addition
to the Authorization Releasing Information form.
The motion was seconded by Harvey Kendall and without further
discussion was carried unanimously.
Rick Wolfsteller, Kevin Doty, and 011ie Koropchak will meet
Thursday, April 5, 1990, with Attorney Tom Hayes to discuss
preparation of the necessary loan documents.
The City Council will be advised of the EDA loan approval at
Council meeting, April 9. 1990.
6. OTHER BUSINESS.
None.
7. ADJOURNMENT.
President Ron Hoglund adjourned the EDA meeting.
011ie Koropchak
EDA Secretary
MINUTES
MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
AF Tuesday, April 3, 1990 - 7:00 AM
City Hall
MEMBERS PRESENT: Ron Hoglund, Warren Smith, Fran Fait, Al Larson,
Harvey Kendall, and Barb Schvientek.
MEMBERS ABSENT: Bob Mosford.
STAFF PRESENT: Rick Wolfsteller and 011ie Koropchak.
1. CALL TO ORDER.
Koropchak called the EDA meeting to order at 7:03 AM.
2. CONSIDERATION TO APPROVE THE MAY 16, 1989 EDA MINUTES.
Ron Hoglund made a motion to approve the May 16, 1989
EDA minutes, seconded by Warren Smith, the minutes stand approved
as written. Approval 6-0.
3. CONSIDERATION TO ADOPT AN ORGANIZATION RESOLUTION OF THE BOARD
OF COMMISSIONERS OF THE ECONOMIC DEVELOPMENT AUTHORITY iN AND
FOR THE CITY OF MONTICELLO. MINNESOTA AND APPOINTING OFFICERS.
Koropchak opened the floor to accept nomination for EDA
President. Al Larson made a motion to nominate Ron Hoglund
as EDA President, Harvey Kendall called to cease nominations
and seconded the motion. Motion carried unnnimouoly.
Fran Fair made a motion to nominate 011ie Koropchak. Economic
Development Director, as EDA Executive Director and secretary,
seconded by Barb Schvientek. The motion carried unanimously.
Warren Smith made a motion adopting EDA Resolution 89-1.
an Organizational Resolution of the Board of Commissioners
of the Economic Development Authority to and for the City
of Monticello, Minnesota and appointing officers: President.
Ron Hoglund; Vice President, Barb Schvientek; Secretary,
011ie Koropchok; Treasurer, Rick Wolfatelle r, and Assistant
Treasurer, Bob Morford. The motion was seconded by
Harvey Kendall and with no further dlocussion the motion carried unanimously.
4. CONSIDERATION TO REVIEW AND TO ADOPT A RESOLUTION APPROVING
THE EDA BYLAWS.
The EDA reviewed the drafted Bylaws and determined the regular
quarterly meetings would be hold the 4th Tuesday of January,
April, July, and October, at 7:00 AM. The annual meeting will
' be hold in conjunction with the regular January meeting.
A quorum is constituted with the presence of four commissioners
and any resolution, election, or other formal action of the
Authority shall be adopted upon the affirmative veto of a
EDA Minutes 4/3/90
6 Page 2
4. CONTINUED.
majority of the Authority membership.
President Ron Hoglund called for a motion. Warren Smith
made a motion to adopt EDA Resolution 89-3, Be it resolved
by the Commissioners of the Economic Development Authority
in and for the City of Monticello. Minnesota, Wright County,
to adopt the attached bylaws. The motion was seconded by
Al Larson, and with no further discussion the motion carried
unanimously.
5. CONSIDERATION TO ADOPT A RESOLUTION APPROVING A JOINT POWERS
AGREEMENT AND AUTHORIZING AND DIRECTING THE PRESIDENT AND
SECRETARY TO EXECUTE SAME.
The Joint Powers Agreement between the City of Monticello,
the Monticello Housing and Redevelopment Authority, and the
Economic Development Authority was reviewed at the May 16,
1989 meeting, however, was not adopted because of lack of
EDA organization and officers.
Harvey Kendall made a motion to adopt EDA Resolution 89-2.
a resolution approving the joint powers agreement and
Q. authorizing and directing the president and secretary
to execute same. Barb Schwfentek seconded the motion,
and with no further discussion the motion carried
unanimously.
6. OTHER BUSINESS.
Koropchak provided the Commissioners with copies of the EDA
Authorization releasing information form, the formal EDA
application or checklist form, and the EDA Greater Monticello
Enterprise Fund Loan approval form. The EDA briefly discussed
the floormat for Wednesdny's EDA meeting (presentation of
Topper's Inc application).
7. ADJOURNMENT.
Warren Smith made a motion to adjourn the EUA meeting.
seconded by Hervey Kendall. President Ron Hoglund
called the meeting adjourned.
011ie Koropchak
EDA Secretary
CMEF GUIDELINE ANALYSIS
on behalf of
Q' TAPPER, INC.
a
PUBLIC PURPOSE SATISFIED:
1. Credit worthy business that creates new Jobs. Increase of 15 to 25 jobs.
2. Credit worthy business that increases the community tax base. Estimated
annual taxes of $Z3r599 Y A'1-eoo
3. Assistance to an existing industrial business expanding and relocating
their operation to Monticello.
4. Provides gap funding.
5. Provides 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.
BUSINESS ELIGIBILITY:
1. Industrial business.
2. Business located within the City of Monticello.
3. Credit worthy existing business.
4. $10,000 loan per each job created.
FINANCING METHOD:
Companion Direct Lonn - Loans are subordinated to the primary
lender if requested by the primary lender.
USE OF PROCEEDS:
1. Real Property Development
2. Mnchlncry 6 Equipment
TERMS AND CONDITIONS:
1. Loan sire - $100,000.00 501 of existing revolving loan fund
bnlnnce. $200,000
2. Levernge - Wright County State Bank - $358,750 401
SBA Lonn $358,750 401
CMEF $100,000 11.31 (301)
TIF $ 77.500 8.71 (Equity 101 of
$895.000 CMEF Lonn 177.51))
3. Lonn Term - NOTE: RLF Loan request 20 years, according to SHA
S.O.P., any subordianted debt must have a maturity
aqunl to or greater than the 504 debenture.
M 6 11 (CMEF not to exceed life of equipment 5-7 years).
Real Estate (CMEF maximum of five year maturity amortized
up to 30 years. Balloon payment a 5 years)
(1)
Q
Q
0
CMEF GUIDELINE ANALYSIS
Tapper, Inc.
Page 2
4. Inc. Rate - Fixed rate but not less than 22 below Minneapolis
Prime. Date approved by EDA, First Nat'l Bank, Mpls.
4/3/90 10% Request 7% Loan 8%
5. Loan Fee - Minimum fee of $200 but no to exceed 1% of total
loan project. ($1,000)
Wright County is willing to service the loan at
approximately $20 per month and the City collect
the payments.
6. Business Equity Requirements - Subject to type of loan, Board of
Directors will determine case by case,
analysis under normal lending guidelines
7. Collateral - Real Estate Third mortgage lien of $100,000 3rd position
M b E Security Agreement on M&E acquired 3rd position
by loan
M 6 E Security Agreement on existing M 6 E
(First Bank Plymouth)
M 6 F. Corporate Guarantee
Real Estate PersunnI Guarantee
Real Estate Assignment of Rent Cuarnntre 1st position
M 6 E Collaterized Guarantee
pq EDA COMMISSIONERS AND
EXPIRATION OF TERM
V
1. Fran Fair
December
31,
1990
2. Warren Smith
December
31,
1990
3. Harvey Kendnll
December
31,
1991
4• Al Larsnn
December
31,
1992
5. Barb Srbwiontek
December
31,
1993
6. Bob Mosford
December
31,
1994
1• Ron Hoaluad
December
31,
1995
r,
TAPPER, INC.
GREATER MONTICELLO ENTERPRISE FUND
Is ECO140MIC DEVELOPMENT AUTHORITY
® IN AND FOR THE
CITY OF MONTI.CELLO
Preliminary Loan Application approval April 4, 1990
Loan terms negotiated and agreed upon between Bob Heck, BDS, Inc, the
lending institution, and the EDA Executive Director and the EDA Board.
Formal loan application and financial statements analyzed by the
lending institution XNdXXKXd1XXXKKKRK Kevin Doty, Wright Couaty State Bank
EDA Executive Director
Formnl loan documents reviewed by,city staff yes
Building permit approval or construction commltment ves
to be drafted
Loan documents 6aVj0LMK by the City Attorney ves
Economic Development Authority npprovaL or disapproval:
Loan Number ('MFF 1.onn No. 001 Loan approved Yea
Borrower Tapper'. Lac-
Address 4121 McIver Ave NE, St, Michael PD1 Loan disapproved
Loan Amount $100.000.00 55376
® Rate 8% Date Anril 4. 1990
Terms 20 voar amortization,
Balloon payment at 7 year.
Real Property Development and Machinery 6 Equipment
A motion was made by EUA member Warren Smith to (approve -
disapprove) CHEF in the amount of $100,000.00
dollars and cents to developer Tapper's Inc.
thio 4th day of April 1990 Seconded by EDA
member Hnrvev Kendall
YEAS: Warren Smith, Harvey Kendall, NAYS: None
Fran Fair, Al Larson, Barb
Schwientek, and Ron Hoglund.
ABSENT: Bob Morford
GML'F disbursed July 13 1990 by Check No. 30057
$88,000
William R and Barbara R Rick Wulfetuller EDA Treasurer
Tapper and Wright County Stnto (lank
City Council may reverse an EDA loan decision within twenty-one days
of EDA approval.
ACCEPTANCE OF TERMS
1 (We) hereby•accopt the terms aod_aaudL*4vnm stated above no approved
by Lila Economic Development Authority in and for the City of Monticello.
Dated:
TAPPER, INC.
LAND: 7.5 acres in Oakwood Industrial Park
Preliminary purchase agreement for $74,000
BUILDING: 27,000 square foot concrete building
(3.000 sq ft is office space)
(2,000 sq ft is Westlund warehouse)
(22,000 aq ft is Genereux manufacturing)
M b E: Finishing Equipment $28,064
Panel Saw and Material Lift $69,029
Edge Bander $39,862
Door Manufacturing Equipment $13,045
TOTAL $150,000
TIF (Equity)
$77,500
5667,500
$150,000
MONTICELLO EDA CHECKLIST FOR Tanner's Inc. Uo%n Ci'e�0-
1-3-.,. -Bo-,lb
'?S-'yt,-q p
Preliminary GMEF Loan Application. r
Formal GMEF Loan
Application -- Business Information:
3 .-It,-9 o
History and Description of business.
Resumes of principals and senior man gZnt. r10
llU�...
Financial Information:
•`Z(,-9 0
Personal financial statements -- all principals with
20 percent ownership or more and/or guarantors.
si a.1.1.d
�G1�,\QYn.Yt.rq �e. 40
r�
CIO
Business financial statements current within 60 days --
operating statement and balance sheet.
Aging of existing accounts receivable and payables.
3 •1l.- CkO
Schedule of existing debt.
D
Operating projections for two yenrs. 1Z &q
Np --A- , - e
Project Information:
-� '':z
_ho
Purchase Agreement.
3 -'lb •'\'o
Cost estimates with supporting documentation. V-)
_b0
\QM
Project Appraisal. `+:11 c—
Collateral Listings.
Bunineno benefit analysis -- job crearton/efficiency.
etc. e L o r..� 0 ZN— %."A-.
Lender commitment lectern or commitment agraament between
lending Ins U tutton and the EDA.
Prior to Lunn Closing:
Certificate of Good Standing (verifies existence).
Corporation Resolution (who is nuthorized to borrow).
-1 V -q�t>
Articles of lncorporntlon/Ify Laws (listing of do's %d doi t)
Ficitioun Name Stntamont.
Equity deposti verificntion.
v
Applicablo permits and/or licennos.
Lenso Agreements
MonticelLo EDA Checklist for Tapper's Inc.
Page 2
UCC I Filings: State (M&E) Date of Filings continuations
UCC 11 Filings: County (Fixtures)
Evidence of insurance -- life and property.
Preliminary title report.
Certification of current status on employment i
compensation, workman's compensation, and state
and federal tax withholdings.
Partnership Agreement.
Q Personal Guaranty(s)
. 1O Authorization Releasing Information.
Loan Agreement.
Subordination Agreement.
a
The EDA reserves the right to request additional information if so
determined.
.3'e"D �..
4
OPTIONAL REQUIREMENTS
a
it
Business Information:
'j "� �• 9 0 Business and marketing plan.
n� Franchise Agreement.
C. '46AW-.
Financial Information:
Month -by -month cash flow.
Source of equity capital.
Personal/business federal and state tax returns.
1-y— Proforma balance sheet.
Project Information:
City, state, fedeal review by
Plane and specifications -- city site plan review.
11
D