EDA Agenda 07-21-1992f AGENDA
®" MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
Tuesday, July 21, 1992 - 7:00 PM
City Hall
MEMBERS: Chairperson Ron Hoglund, Vice Chairperson Barb
Schwientek, Assistant Treasurer Bob Mosford, Brad Fyle,
Clint Herbst, Harvey Kendall, and Al Larson.
STAFF: Treasurer Rick Wolfsteller, Executive Director 011ie
Koropchak, and Jeff O'Neill.
GUEST: Brad and Mary Barger, Suburban Machine & Manufacturing,
Inc.
Jerry Schoen, Aroplax Corporation.
1. CALL TO ORDER.
2. CONSIDERATION TO APPROVE THE APRIL 28, 1992 EDA MINUTES,
3. CONSIDERATION TO REVIEW A PRELIMINARY AND FORMAL GMEF
APPLICATION FOR SUBURBAN MACHINE & MANUFACTURING, INC. (SMM).
6. CONSIDERATION TO APPROVE OR DISAPPROVE GMEF LOAN NO. 006 FOR
SMM.
5. CONSIDERATION TO REVIEW A PRELIMINARY AND FORMAL GMEF
APPLICATION FOR AROPLAX CORPORATION.
6. CONSIDERATION TO APPROVE OR DISAPPROVE GMEF LOAN NO. 005 FOR
AROPLAX CORPORATION.
7. CONSIDERATION TO MEET ON TUESDAY, JULY 28, 1992, THE REGULAR
QUARTERLY EDA MEETING DATE.
8. OTHER BUSINESS.
9. ADJOURNMENT.
14
MINUTES
MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
Tuesday, April 28, 1992 - 7:00 PM
City Hall
MEMBERS PRESENT: Chairperson Ron Hoglund, Bob Mosford, Harvey
Kendall, and Al Larson.
MEMBERS ABSENT: Barb Schwientek, Brad Pyle, and Clint Herbst.
STAFF PRESENT: 011ie Koropchak.
STAFF ABSENT: Rick Wolfsteller and Jeff O'Neill.
1. CALL TO ORDER.
Chairperson Hoglund called the EDA meeting to order at 7:02
PM.
2. CONSIDERATION TO APPROVE THE FEBRUARY 5. 1992 EDA MINUTES.
Bob Mosford made a motion to approve the February 5, 1992 EDA
minutes, seconded by Al Larson. With no corrections or
additions the minutes were unanimously approved as written.
3. CONSIDERATION TO REVIEW AROPLAX LETTER OF INTENT AND PREVIOUS
APPROVED LOAN TERMS.
The EDA members reviewed the executed Letter of Intent for
Aroplax Corporation, noting the proposed changes in dollars
and fund sources. The EDA inquired of the number of jobs with
the Aroplax project, original application was for 27, 16
existing and 11 to be created.
Koropchak noted the Letter of Intent is a commitment to a
Monticello location from Aroplax and outlines the proposed
funding sources which have not been approved. The State's
Economic Recovery Fund Grant is a grant to the City of
Monticello and loaned to the company. Depending upon State or
Federal fund availability will the City of Monticello retain
one-half or full loan payback. The original preliminary
State request was for $200,000; however, as the use is only
for "gap" financing all other funding sources must to be
sought first. Thereafter was the Central Minnesota Initiative
Fund preliminary application submitted with a request for
S100,000, the preliminary approval from the Board was reduced
to $30,000; therefore, the request from the State is $170,000.
The GMEF fund request has increased from $30,000 to $55,000 to
$85,000. The first increase was to compete with the Brooklyn
C Page 1
EDA MINUTES
APRIL 28, 1992
Park financial proposal and the second increase is due to Mr.
Schoen's feeling his original projected numbers were under -
budget. As was indicated in the enclosed letter, any cost
overruns would be reduced proportionally from the GMEF.
The EDA asked about the probability for funding approval.
Koropchak noted if the CMIF Board gives final approval to the
requested $30,000, it will be the first industrial loan
approved within Wright County. The question of new jobs
created has been raised by the State and with Aroplax's
restructured plans an additional five to ten jobs will be
created. Also, State funds can not be used for job
replacement from one state community to another; however,
Aroplax initially considered vacant buildings in Wisconsin
(incentive to retain) and they can't expand at their current
facility due to the inability to raise their ceiling height
necessary to meet the height of new production machinery
(relocation necessary). BDS, Inc. feels very confident with
obtaining funding approval.
6. CONSIDERATION TO REVIEW FOR RECOMMENDATION AN AMENDMENT TO THE
GMEF GUIDELI14ES: A NON-PERFORMANCE PROVISION.
At the February EDA meeting, members were informed of the
proposed Increase in GMEF dollars, $30,000 to $55,000, for
Aroplax financial package. The original loan was approved by
the EDA on June 26, 1991 with no closing or fund disbursement
to -date, some ten months later. Staff was then directed to
research the city's dollar amount invested Into the Aroplax
project and to research provision options to amend the GMEF
Guidelines with regards to the length of time between the date
of GMEF loan approval by the EDA and the date of loan
closing/fund disbursement If or when the approved loan should
become null and void. Since the guidelines did not address
non-performance, the EUA wished to make an amendment
recommendation to City Council for consideration prior to any
request for action by Aroplax.
Koropchak noted that she spoke to a local bank lender, BDS.
Inc., and city administration for suggestions and input. The
EDA briefly diocussed the length options of 90, 120, or 180
days. Koropchak further noted that with closer monitoring of
other funding source approvals, the 120 days seemed
reasonable. Harvey Kendall made a motion to amend the GMEF
Guidelines: NON-PERFORMANCE An approved GMEF loan shbll be
null and void if funds are not drawn upon or disbursed within
one -hundred (120) days from date of EDA loan approval. Said
motion to be recommended to City Council for consideration to
Page 2
EUA MINUTES
j APRIL 28, 1992
amend. The motion was seconded by Bob Mosford and without
further discussion the motion passed unanimously. Upon
Council approval, Aroplax would need to submit a new GMEF
application for $85,000.
As outlined in the agenda supplement, Koropchak reported a
dollar investment by the Housing and Redevelopment Authority
for Aroplax Tax Increment Finance District No. 1-12, $3,850,
BDS for TIF plan preparation; $50, County for TIF
Certification; and $808.82, legal fees for Development
Contract preparation. Engineering fees of $69.75 and
financial packaging fees of $3,937.03 to BDS for a total of
$8,715.60.
5. CONSIDERATION OF PROSPECTIVE GMEF LOANS:
The following two companies are potential candidates for
GMEFs.
a) Modern Molding, Inc. - This company seriously considered
a New Richmond, Wisconsin location. As the company
decided against Wisconsin due the distance and the
potential lose of employees, BDS, Inc. was able to
suggest a Monticello location. A financial package was
prepared and submitted to the company, after numerous
conversations, the company's decision was of a Buffalo
location. Monticello asked if the pot were sweetened,
would they reconsider and look at Monticello. On April
6th, two company representatives and the IDC prospect
committee toured Monticello in the morning and afternoon.
The luncheon meeting included Mr. Pat Pelstring who
presented alternatives to the original financial package.
The two gentlemen were impressed with Monticello and
plans are for a company site location decision around May
1st.
This Long Lake plastics injection molding company with
tool and die making currently employs 21 and would add on
an additional 5-8 within three years. Project size of
20,000 sq ft (3,000 office and 17,000 manufacturing) pre-
stress concrete facility on five acres. BDS, Inc.
considers company financial statements as sound and
strong.
Fund sources include TIF of $80,000 and GMEF of $70,000,
total project costs are $779,000.
7
,l Page 3
EDA MINUTES
APRIL 28, 1942
b) A -Q Thermo Process, Inc. - This contact from Mr. Bill
King and Lenny Kirscht of Community Venture Networking
and BDS, Inc., respectively, is a start-up company. The
four owners have a combined sixty years of experience in
metal heat -treating process. Blast furnaces are used in
the process which are said not to be dirty. The owners
would Invest $100,000+ equity with other funds from the
CMIF, SBA 7a, and GMEF. The total project dollars are
estimated at one million. Pians are to lease a 15,000-
20,000 sq ft facility with high ceilings or a pit for
solvents. Anticipated skilled labor of 12-15 for year
one and 20-25 in second year. Mr. King said communities
of Crookston and Marshall are very interested; however,
he feels a closer proximity to the metro would be a
company advantage. The Shingobee proposal was marketed
noting the initial request for no start-ups. At this
time, the EDA has not reviewed or approved a start-up
company application for funding; however, guidelines do
allow to approve such. The EDA was in agreement with
Koropchak that no harm done to invite the individuals for
a meeting with representatives of the EDA, HRA, and IDC.
5. OTHER BUSINESS.
None.
ADJOURNMENT.
Al Larson made a motion to adjourn and Harvey Kendall
seconded the motion. The EDA meeting adjourned at 7:30
PM.
QQ4 \'1 W-) o�
011ie Koropchak, EDA Executive Secretary
t Page 4
EDA AGENDA
JULY 21, 1992
3. Consideration to review a oreliminary and formal GMEF
aunlication for Suburban Machine & Manufacturino, Inc. (SMM).
Brad and Mary Barger, Suburban Machine & Manufacturing, Inc.,
will be present at the EDA meeting.
A. Reference and Background.
GMEF LOAN REQUEST:
$50,000.00 at 4.5% over 20 years for construction.
PROJECT SUMMARY:
Suburban Machine & Manufacturing, Inc. (SMM) , a Minnesota
corporation found in 1980, provides job shop machining
services, in-house engineering, and research and development
functions to a variety of customers nationwide. In addition,
the company manufactures and markets its own unique
proprietary products using hydraulic and fluid power that are
sold nationwide and in Canada.
SMM currently leases its facility from Bradley D. and Mary E.
Barger. Recently, SMM has outgrown its current facility in
Rogers, Minnesota, and has investigated possible expansion of
the facility to accommondate Increasing production and
equipment needs. It has been determined that expansion of the
facility would also require significant renovation to the roof
structure of the existing facility. The cost associated with
these renovations and expansion make the project prohibitive.
The Barger's have received an acceptable purchase offer for
the Rogers facility, and as a result, are considering
relocation to Monticello, the community in which they reside.
Because of the direct access to I-94, the availability of a
strong workforce, and the availability of fully improved
Industrial property, the Barger's have committed to locating
In Monticello and have executed a purchase agreement on a
three acre parcel of the Farm Credit Service property.
The Barger's will be constructing an 11,000 aq ft facility,
Including an 8,000 sq It manufacturing area and a 3,000 eq ft
office area with a 3,000 aq ft mazzanine. The facility will
accommodate SMM's growth needs and will also provide for
future expansion. Site location is three acres to the east of
the Remmele Addition, Oakwood Industrial Park, and to the
north of Chelsea Road.
Page 1
EDA AGENDA
JUt.Y 21, 1992
Existing full-time employment is 15 with projections of an
additional 8 full-time within two years. Wages range from
$10.00 to $13.00 per hour.
The uses of funds for this project are estimated as follows:
Uses of Funds
Land and Improvements $ 50,000
Building (11,000 sq ft @ $ 2Vsf) *275,000
TOTAL USES OF FUNDS $325,000
Sources of Funds
Equity (TIF) - Land and Improvements $ 50,000
Firstar Bank (ARM, 20 Yrs, 1st REM) $175,000
GMEF (4.5%, 20 Years, 2nd REM) $ 50,000
CMIF (6%, 20 Years, 2nd REM) � 50.000
TOTAL SOURCES OF FUNDS $325,000
Assuming the adjustable rate mortgage averages 10 percent over
the term of the financing, the associated monthly and annual
debt service costs are as follows:
Monthly D/S Annual DJS
Bank
$1,689
$20,268
GMEF
$ 316
$ 3,792
CMIF
$ 358
$ 4,296
TOTALS
$2,3G3
$28,356
This project would be structured as a participation between
Firstar Bank, the GMEF, and the City of Monticello. The
Barger's would document their expenses associated with
construction of the facility and "draw -down" funds
accordingly. The loans would be secured by the real estnte,
guarantees, and an assignment of the lease.
This project lo scheduled to be completed to allow for
complete occupancy by November 1, 1992.
Page 2
EDA AGENDA
JULY 21, 1992
GREATER MONTICELLO ENTERPRISE FUND (GMEF) GUIDELINES
PUBLIC PURPOSE CRITERIA: Must comply with four or more of the
criteria listed below, criteria U1
being mandatory.
1. Creates new jobs: 15 immediate new (37.5 hpw) jobs, 8
additional (37.5 hpw) jobs within
two years.
2. Increases the community tax base: Annual Estimated
Market Value,
$300,000 or Annual
Estimated Tax
Capacity Value,
$12,G00.
3. Factors: Assist existing industrial business to
relocate and expand their operations.
The company's business environment meets the
City's industrial objectives: nature of
business, service and product, no adverse
environmental effects, the comprehensive plan
and zoning policy.
d. Used as a secondary source to supplement conventional
financing: Approximately 54% of the total financial
package is financed by a lending
institution (Firstar Metro, Plymouth).
The GMEF will share second position with
the Central Minnesota Initiative Fund
(CMIF) on the real estate mortgage.
5. Used as gap financing: Used as gap financing (see item
p 6 below) and as an incentive
to encourage economic
development.
6. Used to assist other funds: Other sources of funds
uoad in addition to the
GMEF are the Central
Minnesota Initiative Fund
(CMIF), TIF, and the
bank.
Page 3
EDA AGENDA
JULY 21, 1992
GREATER MONTICELLO ENTERPRISE FUND POLICIES
I. BUSINESS ELIGIBILITY:
Industrial business: Yes.
Located within city limits: Yes, Zoned BC/I1.
Credit worthy existing business: Yes, BDS, Inc. report.
$10,000 loan per each job created, or $5,000 per every
$20,000 in property market valuation, whichever highest:
S230,000 or $75,000, respectively.
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.
III. USE OF PROCEEDS:
�:- Real property development.
Iv. TERMS AND CONDITIONS:
Loan Size: 1992 beginning GMEF
Balance, $200,000. Loan request,
$50,000. Remaining GMEF balance,
$150,000.
Leveraging: Firstar Metro $175,000 (54%)
Minimum 60% CMIF S 50,000 (15%)
Maximun 30% GMEF $ 50,000 (15%)
Minimum 10% TIE (Equity) $ 50,000 (15%)
(100%)
Loan Term: Real estate pruperty maximum of 5 -year
maturity amortized up to 30 years.
Balloon payment at 5 years. (Request and
recommendation for 10 20 year
amortization with ballon payment in five
years).
Page
EUA AGENDA
JULY 21. 1992
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. (7-16-92, 6.0%)
(Request and recommendation is for 4.5%).
Loan Fee: Minimum fee of $200 but not to exceed
1.5% of the total loan project ($750).
Fees are to be documented and no
duplication of fees between the lending
institution and the GMEF. Recommendation
is a $750.00 loan fee.
Prepayment 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.
Interest limitation on guaranteed loans:
Subject to security and/or reviewal by EDA.
Assumab111ty of Loan: None.
Business Equity Requirements:
Subject to type of loan; Board of Directors will
determine cane by case, analysis under normal
lending guidelines. Equity percentage of total
project Is 15% (TIF). Equity percentage of GMEF to
100%. (Within the loot month the company acquired
two new pieces of equipment for a total cost of
$116,000, financing for the equipment was through
their bank, SBA 7(a), and oquity; the equipment
financing is not part of this financial package).
Collateral: Liens on real property 1n project
(mortgage deed). Second mortgage lien of
050,000.
Lions on real property in business
(mortgage deed).
Liens on real property held personally
(subject to Board of Director - homestead
exempt).
Page 5
EDA AGENDA
JULY 21, 1992
Machinery and equipment liens (except
equipment exempt from bankruptcy).
Personal and/or corporate guarantees
(requires unlimited personal guarantees).
Corporate guarantee and assigment of
lease,.
To be determined.
Non -Performance: This approved GMEF loan shall become
null and void if funds are not drawn
upon or disbursed within 120 days
from the date of EDA approval (July
21, 1992). Null and void November
21, 1992.
B. Recommendation:
Recommendation le to review the enclosed information
prior to the EDA meeting for discussion, and to ask
questions of Brad and Hary Barger.
C. Supportinq Data:
a
1. Copy of the preliminary GMEF application from Brad and
Mary Barger.
2. Copy of the Site Location Commitment Letter.
3. Copy of the Site Location Map and Site Description.
4. Copy of the Land Purchase Agreement.
g, Copy of BDS, Inc. Financial Credit Analyois.
Forthcoming:
1. Copy of the Purchase Agreement for the Rogers, Minnesota
property.
2. Copy of the Bank Commitment Letter.
3. Copy of the Estimated Building Costs.
4. Copy of the Corporate Resolution,
8. Copy of the Articled of Incorporation/By-Laws.
g, Executed Authorization Releases.
QPage 6
GREATER MONTICELLO ENTERPRISE
250 EAST BROADWAY
MONTICELLO, MINNESOTA
PRELIMINARY APPLICATION FOP. LOAN
APPLICANT: T Ck-d f11> i �I hlrClQl'
.FIRM OR TRADE NAME: i� IY\rir'',� l r, C 1"i"1=+t . mod -
BUSINESS
nrBUSINESS ADDRESS: W'j)`N
las St:eet) (Cit7Js State) (Zip Cote)
TELEPHONE: BUSINESS N12) ROME UQ) 29 a 7 1.
DA^E ESTABLISHED: mac, \(jK0 EMPLOYER I.D.
SOLE PPOPRIE"IOR N CORPORATION PART:IEPSRT_P
MANAGEMe)T
NAME TITLE OWNERSHIP b
P2 rctc\Ic,_; Z� eS,Av,-A \\x-00
iYlcl i� IA. t5nrar( tiar,,_ (lcr,c„\c1.
.J
PROJECT LOCATION: N10✓� � t C(' 110 Tln )
NEW BUSINESS EXISTING BUSINESS
TOTAL PROJECT COST ESTIMATE: $ :3^n'S . DOn
PROPOSED USES: REQUEST:
LAND S 5acev AMOUNT OF LOAN 6C e,00
EXISTING BUILDING MATURITY 6 TERMS
CONSTRUCTION LI'1.5 000 REQUESTEDy.S%. p 1
MACHINERY CAPITAL APPLICANT'S J
WORKING CAPITAL EQUITY 5l+lyv
OTBER LOAN PURPOSE !'_- ;,.�h,•.�
TOTAL USES $ -;.a.. voo
PROPOSED BECINNINC DATE: awn --or 1%. %QQz
ESTIMATED CCMPLETION DATE: Plr�-r1� '21 1UQ7.
TITLE TO
PROJECT ASSETS TO BE HELD BY: _ OPERATINC ENTITY _ AL7m EGO
PARTICIPATING LrTCER: r,!1—Cc, IfcS' -1 ni N11111:.di% 41f,
(Name) (ACCrees)
C-�u tl�acl l?1' r1d ao sem?-cI10i )
(Contact Pecaon) (Telepnone,0)
PRESENT 1 OF EMPLOYEES: IS PROJECTED 1 OF ES9LOYEES a
Q' ADDITIONAL PROJECT INFORMATION:
APPLICANT SIGNATURE: �///lam �(�� .-�/C� /DATE SIC,)ED:
Suburban
Machine & Manufacturing, Inc.
14005 Northdale Boulevard a Rogers, MN 55374 a (612) 426-2997
June 15, 1992
Ms. 011ie Koropchak
City of Monticello
250 East Broadway
PO Box 1147
Monticello, MN 55362-9245
Dear 011ie:
Brad and I would like to thank you for the information you have provided us over
the past few weeks. 1 am pleased to confirm our decision to relocate our company,
Suburban Machine 8 Manufacturing, Inc., to the City of Monticello.
It is our intention to move into a new building between October 15 to 31, 1992.
Of course, this will depend on the public hearings, planning & zoning meetings, the
permits needed, and the builders schedules. Also, this move is depend upon
securing the financing needed to build a new facility in Monticello. However, because
we have a buyer for our current building, 1 do not foresee this as an obstacle.
We thoroughly enjoyed meeting you and Lenny Kirscht, and look forward to
joining the business community of Monticello in the near future.
Sincerely yours,
Mary A. Barger
Secretary -Treasurer
CC: Brad Barger
Leonard Kirscht
Manufatfuraf of the Mouforo Mind@, and IM Luoo Mindor
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DEQ 5V TA ILOA
June 25, 1992
APPROXIMATE LAND LOCATION DESCRIPTION OF SUBURBAN MACHINE AND
MANUFACTURING:
3 acres of land located in Lot 10 of AUDITOR'S SUBDIVISION NO.
1, according to the recorded map thereof, being in the Northwest
Quarter of the Northwest Quarter of Section 13, Township 121,
Range 25, Wright County, Minnesota lying easterly of REMMELE
ADDITION according to the recorded plat thereof, lying southwest
of Interstate No. 94 and lying northeasterly of the northerly
right of way of Chelsea Road.
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PURCHASE OFFER AGREEMENT I rrernwc.o..
affl=esota) Tirr+,fis &4 I.C.
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wbedmr one or move.
OFFFR/AGREEbU Pt . (tend white sip d soy by Buyer ddb doeumem mmtit ces Buyees oIItrm pmrbu. ItSsAv accepts by dsdcB, bownc,
b thereafter eonnlaac a Parehaas Agreement blodly boo Buyer ad Selly.
ILA BAJLNM1' MONEY AND PROPERTY. B.)v bcmnith rtmin a 41100 u eamea merry and in put payment of the Parehm
Price hrr the hd mI4 Property to be purchww by Buyer ham Sellar., .
Ll Rd Property: The teal property located P Gr/R/GHT r'AaW. Mlamscta. described a tbilow
(or chow the deed to Seller U dl(Rteat at moa precim):
`J01�� L F S LOG,ytD IJ [c c GiirsifiK•r Of /Q£.wr.n9Ets'
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L2 Mhos! Rights. B,dudlop thmftm and mepLy and rowlu to SeBv in mlaersl and royalty dynes loamm cam and tWes hedeahrs
reserved or e=pted of tanrd by Its Federal land Bak of Seim Pad prior to tautly 22.19M if any. with auch asemcau tot Ingress, spas,
and use of surbea a may be 4eidesal or ndoovwy to user of such slots. The forepioy acclualm, exorpdon and n urvailm " Include,
but sot be IWIed tk all all. Bar, hydmcarbona sal and other mWah of whamoever a mea lyisf in or under due abowdecribed laoda and
�.e
all royally Isteretts a to oil, gas and other minerals pmdoad and wed thertdtam. It is espresaly understood ten the div w8f antics no eusany
as to the extent of W onmWp of mina's, or as m W tide theraa
1.3 Personal Ptopc ty. Personal property is Included only it and to the acus listed hem:
') 20 PR1CL Thn of %.h. P%5 wW be a . -SCO o— fiend Byer will pay It by: (a) the she" coral money:
plus (b) L2myM' a`Qddltioeal suis q dalnl: ad (e). U clauses (q and (b) do da aoaar Ne tool Puke, dr rsaulnlry
i M balance will be paid pursuant to a Cannot for Dead u be sipmd a dmiall In dame and comm this aero u On aatdaad 8"It A (cached
only it there will be a Comes An Deed) except dor all btala will be corroded and options selected to a rsaom camistm with this
ABnemm m. rtes payment pmvWty, ons of ssuch Cowan wildbe as PoBws:
20 CONDMON OF PROPERTY AND TTnM TYPB OF DEM
S,l Condition of Peopafty. Buyer hes Ingected du Property an will buy It Ys b- rslytry on Buytes ore bupeetlan ad lovadpttloa rather
than ar y atimmem or representation made by any employm or WA of Seller. Bayer undmos ds and urea that Sellar does sot In any way
varraat or Buuaaaa arrytNrdS cissa: the Property u lu usocbred Bantus, appurtenances, a atsrihaes. csrh aa, bda raw Ibalmd m: too, eraµ
atrar-Im. epolpmem. ecu, wells. well won dumtlty on Quatlty, tdumbl % Ve* systema, tOlM bases. ASCE any bac, or ata or Ihderal
foversmeot propam ellollwo of emFtemeass.
l2 Cosd"A. for Tl W.
12.1 Mulselablllty and %klTmty. Radar has so oclpatlon m rard% noway or umm mubaala this amaP with mWm to WW
JUL-16-'92 THU 12:51 ID:BC- IIP:. TEL 10:786-9034 dBrS Fq3
Suburban _Machine & Manufacturing
CREDIT ANALYSIS
17/31L44 12/31/31 4[30[42 Min
Debt/Worth 91:1 1.31:1 .73:1 2.24:1
Wonting Capital $25,248 $74,363 $86,319 $80,308
(CA -CL)
Current Ratio 1.25:1 1.63:1 1.77:1 1.68:1
(CA1CL)
12/31/90 12J31L41 4C14L4Z"
DtyslRee. 36 340 42
pgys/Im. 41 41 31
Days/Payable 33 27 26
Days Accrual 6 7 8
• Reflects dlaeantinuation of factoring.
•• Based on Annualized Income Statement. Will vary baud on actual revenues.
swum
This analysis reflects the now building construction project as a balance shat transaction,
however, the Bergen will be the actual developers of the property.
-no proforma income statement should renect little or no change to net profits as a result
of this project. The net rent, property tax provbiom, and related udUry expense should
vary only alightly. In addition, there are various discretionary expenses such as 'bonus'
programs that could be available to assist cash flow if necessary.
EDA AGENDA
JULY 21, 1992
r_
4. Consideration to approve or disapprove GMEF Loan No. 004 for
Sm.
A. Reference and Backqround:
Following discussion of the preliminary and formal GMEF
application for Suburban Machine & Manufacturing, Inc.,
applicants being Brad and Mary Barger: the EDA is asked to
consider approval or disapproval for the requested $50,000
GMEF Loan. The applicants requested terms of 4.5% interest
rate with amortization over 20 years.
First, the EDA needs to determine if the GMEF loan application
from SMM will encourage economic development, and that the
proposed SMM project and application complies with the GMEF
public purpose criteria and policies.
Secondly, with the assumption the project application complies
with the public purpose criteria and policies, the EUA must
determine the loan interest rate, term, fee, equity,
collateral, and other conditions.
B. Alternative Action:
i'
1. A motion to approve GMEF Loan No. 004 for Suburban
Machine & Manufacturing, Inc., Bradley D. and Mary E.
Barger. Loan terms as requested: $S0,000 for real
property development at 4.5% interest rate amortized over
20 years with balloon payment in five years.
2. A motion to approve GMEF Loan No. 005 for Suburban
Machine & Manufacturing, Inc., Bradley D. and Mary E.
Barger. Loan amount and terms not as requested by
applicants but as determined by the EDA.
3. A motion to dioapprove GMEF Loan No. 004 for Suburban
Machine & Manufacturing, Inc., Bradley D. and Mary E.
Barger.
C. Staff Recommendation:
Staff recommends Alternative Action No. 1 with fee, equity,
and collateral requirements as determined by the EDA, other
condition requirements as determined by the City Attorney and
approval subject to total project funding approval, final plat
approval, City ordinance and zoning compliance, and execution
of Private Development Contract.
EDA AGENDA
? J11f.Y 21, 1992
V_
C
Supportinq Data:
Copy of the GMEF Approval Form.
Copy of the EUA Checklist.
Page 2
APPROVAL OF
GREATER MONTICELLO ENTERPRISE FUNDS
BY
ECONOMIC DEVELPMENT AUTHORITY
IN AND FOR THE CITY OF MONTICELLO, MINNESOTA
Preliminary Loan Application Approval
Loan terms negotiated and agreed upon
betweeen the developer, the lending
institution, and the EDA Executive Director
Formal Loan Application and Financial
Statements analyzed by the lending
institution, BDS, Inc. or city staff.
Building and Site Plan Preliminary and/or
Final Review. TIF PH, 8/10/92
JULY 21, 1992
JUNE 25, 1992
BDS, INC.
FINAL PLAT REVIEW, 8/10/92, CC
BLDG/SITE REVIEW PRIOR TO 8/10P
GARY ANDERSON AND OSM
Building Permit approval or construction
commitment.
Loan documents reviewed and/or prepared
by the City Attorney.
ECONOMIC DEVELOPMENT AUTHORITY APPROVAL OR DISAPPROVAL:
LOAN NUMBER GMF.F LOAN NO. 001, LOAN APPROVED
BORROWER BRADLEY D. AND MARY E. BARGER
ADDRESS 105 MISSISSIPPI DRIVE, MONTICELULOAN DISAPPROVED
LOAN AMOUNT
RATE DATE
TERMS
FEE
A motion was made by EDA Commissioner to
(approve - disapprove) Greater Monticello Enterprise Funds in the
amount of dollars
and cents to developer
this day of Seconded
by EDA Commissioner
YEAS: NAYS:
GMEF disbursed 19 _ by Check No.
EDA Treasurer
T CITY COUNCIL MAY REVERSE AN EDA LOAN DECISION WITHIN TWENTY-ONE
r DAYS OF EDA APPROVAL.
GMEF Approval
Page 2
ACCEPTANCE OF TERMS
T (We) hereby accept the terms stated above as approved by the
Economic Development Authority in and for the City of Monticello.
DATED:
MONTICELLO EDA CHECKLIST FOR BRADLEY D. AND MARY E. BARGER
SUBURBAN Y.ACHIKE F. MANUFACTURING, INC.
L. - '-- S -S -,'JPreliminary GMEF Loan Application.
Formal GMEF Loan Application -- Business Information:
History and Description of business.
Resumes of principals and senior management.
Financial Information:
Personal financial statements -- all principals with
20 percent ownership or more and/or guarantors.
,t. Business financial statements current within 60 days --
° operating statement and balance sheet.
Aging of existing accounts receivable and payables.
Schedule of existing debt.
v,JL,.• Operating projections for two years.
Project Information:
Purchase Agreement.
Cost estimates with supporting documentation.
Project Appraisal.
Collateral Listings.
Business benefit analysis -- job creation/efficiency,
etc.
Lender commitment letters or commitment agreement between
lending institution and the EDA.
Prior to Loan Closing:
Certificate of Good Standing (verifies existence).
Corporation Resolution (who is authorized to borrow).
„J-1 Articles of Incorporation/By Laws (listing of do's and don't).
Ficitious Name Statement.
Equity daposti verification.
Applicable permits and/or licensas.
Lease Agreements
Monticello EDA Checklist for BRADLEY D. AND MARY E. BARGER
r page 2 auou KoAN r Lniiic o eu%ur—TURING, INC.
V -
h O Y\eQ-� UCC I Filings: State (Md E) Date of Filings continuations
`fro Y,,e ep UCC II Filings: County (Fixtures)
Evidence of insurance -- life and property.
Preliminary title report.
Certification of current status on employment
compensation, workman's compensation. and state
and federal tax withholdings.
Partnership Agreement.
Personal Guaranty(s)
Authorization Releasing Information.
Loan Agreement.
Subordination Agreement.
L
The EDA reserves the right to request additional information if so
determined.
H
OPTIONAL REQUIREMENTS
Business Information:
Business and marketing plan.
Franchise Agreement.
Financial Information:
.� Month -by -month cash flow.
Source of equity capital.
Personal/business federal and state tax returns.
Proforma balance sheet.
Project Information:
City, state, fedeal review by
Plans and specifications -- city site plan review.
EDA AGENDA
f 7-21-92
5. Consideration to review a orellminary and formal GMEF
aonlication for Aroolax Corporation.
Jerald J. Schoen, Aroplax Corporation, will be present at the
EDA meeting.
A. Reference and Backaround.
GMEF LOAN REQUEST:
$55,000 at 6% over 7 years for equipment.
$30,000 at 6% over 7 years for overrun/contingency.
Total $85,000.
PROJECT SUMMARY:
Aroplax Corporation was started in 1943 by Edward Schoen. In
1979, Edward Schoen's sons, Jerald Schoen and Donald Schoen
purchased the company. Jerald Schoen later purchased Donald's
share of the company in 1989.
The company specializes in cuotom injection molding of plastic
parts and has a strong customer base, doing business in the
!( United States and Europe. Some of the company's major
customers are Goodyear, Ecolab, Wenger Industries and
Medtronic. The company currently runs two shifts and
sometimes runs three if the workload demands. The production
workers are paid between $6 and $17 per hour.
The company is currently located in an 18,000 sq ft facility
In Minneapolis. The company needs a larger, more efficient
facility so that it can purchase additional equipment. Some
pieces of equipment that the company needs to purchase will
not fit into the existing building due to the low coiling
height. The new location will also be a more attractive
location for many of the company's existing employees because
many of them reside in the northwest metro area. The company
1s planning to construct a 19,000 sq ft facility with a 4,000
oq ft mezzanine, for a total of 23,000 aq ft. The building
will be of tilt -up panel construction and located on Lot 3,
Block 2, Oakwood Industrial Park.
Aroplax has developed a product line directed at the water
filtration systems Industry. This niche market has become an
obvious target to the plastics industry. Certain parts
commonly used by the industry are made of metal and by
redesigning the parts and using plastic the cost reduction
makes the product estremely attractive to the comsumer product
industry.
V.
EDA AGENDA
7-21-92
v
The company has completed the design stage and is accepting
orders from a limited customer base on this product at this
time. The company expects to widen its marketing efforts on
this product within the next 90 days. It is forecasting that
an additional $250,000 in revenue will be created in the next
year as a result of this project.
Existing customers have expresssed desires to expand their
business with Aroplax Corporation. The limiting factor has
been the space and availability of larger equipment
specifically 500 and 700 ton presses. The availability of
these two pieces of equipment will open up several product
lines and increase profits. The larger tonnage presses are
not common to many of the shops in the area thus they are not
as price competitive, a larger profit margin is expected on
products manufactured on the new presses. It is expected that
with the new building and with the new presses, approximately
$500,000 in new business from existing customers per year will
be received.
Unlike many injection mold companies, Aroplax actually has its
own internal production stock of various plastic molded parts
which are sold to the automotive industrial and agricultural
industries. These products, manufactured and stocked at the
manufacturing facility, have a larger margin of gross profit.
A marketing effort to go after a broader customer base and the
development of an outside sales force to better promote this
natural avenue of profits is being pursued. It is ant.icpated
that this strategy will gross the company an additional
$300,000 in revenue this next year.
Aroplax currently serves approximately 50-75 customers. That
number is expected in increase due to the growth trends in the
industry and due to the fact that the larger equipment will
enable the company to bid on project that it did not have the
ability to do previously. The company has received requests
both from existing customers and other potential customers for
these products.
Existing full-time employment is 18 with projections of an
additional 17 full-time within two years.
Page 2
EDA AGENDA
7-21-92
Uses of Funds
Land Acquisition
$
70,000
Building Construction
$
550,000
Equipment Acquisition
$
255,000
Soft Costs
$
50,000
Working Capital Needs
$
75,000
Cost Overrun Contingency
$8,472
30.000
TOTAL USES OF FUNDS
$1,030,000
Sources of Funds
Construction
Land, Tax Increment Finance
$
70,000 Y moo
Bank Financing (20 Yrs, 9.5%)
$
300,000
Small Business Administration
(SBA)
504 Loan (20 Yrs, 8.5%)
$
300.000
Subtotal
$
670,000
Equipment
Central Minnesota Initiative
Fund (GMIF)
(10 Yrs, 6%)
$
30,000
Economic Recovery Fund Grant
(ERFG)
17 (10 Yrs, 6%)
$
170,000
Greater Monticello Enterprise
Gund
GMEF (7 Yrs, 6%)
$
85,000•
Subtotal
$
285,000
Work Capital
Aroplax Corporation
@
75.000
TOTAL SOURCES OF FUNDS
$1,030,000
Based upon the above assumptions, it is anticipated that
monthly and annual debt service associated with this structure
would be as follows:
Monthlv DIS Annual D1S
Bank
$2,614
$ 31,360
SBA
$2,396
$ 28,756
ERFG
$1,867
$ 22,640
CMIF
$ 333
$ 3,997
GMEF
$1,242
14,904
TOTAL PAYMENTS
$8,472
$101,673
Pago 3
EUA AGENDA
7-21-92
' $30,000 of the GMEF are to mitigate any cost overruns in
the project and should the project be completed at or
under budget, the GMEF portion of the financing would be
reduced proportionally.
The GMEF will share in a first position with the ERFG and the
CMIF on the equipment. The final CMIF application is
currently before the Initiative Board, and the final ERFG
application will be submitted July 28.
GREATER MONTICEL.LO ENTERPRISE FUND GUIDELINES
PUBLIC PURPOSE CRITERIA: Must comply with four or more of the
criteria listed below, criteria al
being mandatory.
1. Creates new jobs: 18 immediate new (37.5 hwp) jobs, 17
additional (37.5 hwp) jobs within
two years.
2. Increases the community tax base: Annual Estimated
Market Value,
$562,100 or Tax
Capacity Value,
$26,069.
3. Factors: Assist existing industrial business to
relocate and expand their operations.
The company's business environment meets the
City's industrial objectives: nature of
business, service and product, no adverse
environmental effecto, the comprehenoive plan
and zoning policy.
d. Used as a secondary source to supplement conventional
financing: Approximately 29% of the total
financial package 1s financed by a
lending institution (Marquette Bank,
New slope).
5. Used as gap financing: Used as gap financing (see Item
06 below) and as an Incentive
to encourage economic
development and to compete with
the Brooklyn Park financial
proposal.
Page 4
EDA AGENDA
7-21-92
W
6. Used to assist other funds: Other sources of funds
used in addition to the
GMEF are the CMIF, ERGF,
SBA, TIF, and bank.
GREATER MONTICELLO ENTERPRISE FUND POLICIES
I. BUSINESS ELIGIBILITY:
Industrial business: Yes
Located within city limits: Yes, Zoned I-2.
Credit worthly existing business: Yes, BDS, Inc. report.
$10,000 loan per each Job created, or $5,000 per every $20,000
in property market valuation, whichever highest: $350,000 or
$160,000, respectively.
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 of the
entire project.
III. USE OF PROCEEDS:
Machinery and equipment, $55,000.
Project overrun/contingency, $30,000.
IV. TERMS AND CONDITIONS:
Loan Size: Minimum of $5,000 and maximum not to exceed
50% of the reamining GMEF balance. Remaining
GMEF balance after SMM loan approval,
$150,000. Maximum loan amount, $75,000.
Transfer of 1992 Appropriations, $20,000 for a
new GMEF remaining balance, $170,000. Loan
request, $85,000. Remaining GMEF balance,
$85,000.
CPage 5
EDA AGENDA
7-21-92
1
Leveraging: Marquette $300,000 (29%)
SBA $300,000 (29%)
ERGF $170,000 (17%)
Minimum 60% CMIF $ 30,000 ( 3%)
Maximun 30% GMEF $ 85,000 ( 8%)
Equity (TIF) $ 70,000 ( 7%) (82%)
Minimum 10% Equity $ 75,000 ( 7%) (68%)
Loan Term: Personal property term not to exceed life of
equipment (generally 5-7 years). Request and
recommendation is for 7 years.
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.
(7-16-92, 6.0%) Request and recommendation is
for 6.0%. The 6.0% is recommended as an
Indirect way to recover a portion of the
city's packaging cost (see supporting data)
for this project.
Loan Fee: Minimum fee of $200 but not to exceed 1.5% of
the total loan project ($1,275). Fees are to
d be documented and no duplication of fees
between the lending Institution and the GMEF.
Recommendation is a fee of $1,175.
Prepayment 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.
Interest limitation on guaranteed loans:
Subject to security and/or reviewal of FDA.
Assumability of Loan: None.
Business Equity Requirments:
Subject to type of loan; Board of Directors will
determine case by case, analysis under normal lending
guidelines. Equity percentage of total project in 14%
(TIF and Aroplax). Equity percentage of GMEF is 170%
(TIF and Aroplax) or 82% and 881%, respectively.
[age 6
EDA AGENDA
i
7-21-92
V -
Collateral: 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 Director - homestead exempt).
Machinery and equipment liens (except equipment
exempt from bankrupty). Share first position
with ERFG and CMIF, $285,000.
Personal and/or corporate guarantees (requires
unlimited personal guarantees).
To be determined.
Non -Performance: This approved GMEF loan shall become null
and void if funds are not drawn upon or
disbursed within 120 days from the date
of EDA approval (July 21, 1992). Null
and void November 21, 1992.
B. Recommendation:
Recommendation is to review the enclosed information prior to
the EDA meeting for discussion, and to ask questions of Jerald
Schoen.
C. Supportino Data:
1. Copy of the preliminary GMEF application from Jerold Schoen.
2. Copy of the Project Site Map.
3. Copy of the Land Purchase Agreement.
d. Copy of the Site Location Commitment Letter.
5. Copy of UDS, Inc. Financial Credit Analysis.
6. Copy of YTD City Project Coots
Have
1. Copy of the Company's Updated Financial Statements, 3/31/92,
and four year month -by -month income projections.
2. Copy of the Marquette Bank's Commitment letter.
3. Copy of the first draft of the Private Development Contract.
Forthcoming:
1. Copy of the Estimated Building Costs.
2. Copy of the Equipment Costs.
3. Copy of Commitment Lettere for the ERFG and CMIF.
Page 7
GREATER MONTICELLO ENTERPRISE
250 EAST BROADWAY
MONTICELLO, MINNESOTA
PRELIMINARY APPLICATION FOR LOA11
APPLICANT: JERALD J. SCHOEN 1�
FIRM OR TRADE NAME: 1 31t�0 W
BUSINESS ADDRESS: Zai L A L, i l;1JNNp&P(j(jq MN 55405
44 s Street) (City & State33 (Zip Code)
TELEPHONE: BUSINESS 612)374-1722 HOME (612 559-8170
DATE ESTABLISHED: 1943 EMPLOYER I.D. j: 41-OR30617
SOLE PROPRIETOR XX CORPORATION PARTNERSHIP
MANAGEMENT
NAME TITLE OWNERSHIP 6
J. J. SCHOEN PRESIDENT 52.8%
ei. c. �Lnurrr VILL YKtSIDLN) 4J. 24
P. E. SCHOEN VTCE PRF¢IDFN'r 9T
S. J. SCHOEN SF.RFTARY A T FA411RFR 7%
PROJECT LOCATION: MONTICELLO
NEW BUSINESS XX EXISTING BUSINESS
TOTAL PROJECT COST ESTIMATE: $ 1.000,000.00
Vw PROPOSED USES: REQUEST:
LAND $ 70,000.00 AMOUNT OF LOAN $85000.00
EXISTING BUILDING MATURITY A TERMS
CONSTRUCTION 550.000.00 REQUESTED T YR9. g%
MACHINERY CAPITAL 255.000.00 APPLICANT'S
WORXIt)G CAPI'T'AL 75.000.00 EQUITY 751000.00
OTHER so pon no LOAN PURPOSE EXPANSION
TOTAL USES $1, 000
PROPOSED BEGINNING DATE: JULY 15, 1992
ESTIMATED COMPLETION DATE: NOVENIRF:R 1. 1992
TITLE TO
PROJECT ASSETS TO Be HELD BY: OPERATING ENTITY ALTER EGO
PARTICIPATING LENDER: MARQUME NEW HOPE BANK 4301 WINNETKA AVE. NO.
{Y1ams) (Address)
MR. HARVEY DECKER JbI3 535-6100
(Contact Person) (Telephone U
PRESENT i OF EMPLOYEES: 18 PROJECTED I OF EMPLOYEES 35
., ADDITIONAL PROJECT INFORMATION:
AZ;PLICAI:T ==A7."12: DATE SIGNED: �c'17—'•�J—
City of Monticello
TO HIGHWAY 10
Chelsea Area Land Use and Circulation Study
P r p s d -I r a ns pur tat ion
bIll"I'le 11ee Y
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Noaticallo Ma«rm.. May 6. In 92
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MONTICELLO
Z50 East Broadway
P. O. Box 1147
Monticello, MN
55362.9245
Phone: (612) 295-2711
Metro: (612) 333.5739
Fax: (612) 295.4404
}I..w
Irenne:h Ni—
c� c—a
Dan Blontgm
shirl" Andermn
Brad Fite
Ciim Herba
Ad.—-
Rid. lt'oliseeRer
i/ Amu �m Mmnwrmm h
Jdi oxeiu
Nbla U"A.
John Simala
Garr Mdemn
E—t, Dnebmmem
011ie Kompd.1
N
COP?
April 14, 1992
Mr. Jerald Schoen
President
Aroplax Corporation
2318 Chestnut Avenue West
Minneapolis, MN 55404
RE: City of Monticello
LETTER OF INTENT TO PROVIDE ASSISTANCE TO
AROPLAX CORPORATION
Dear Mr Schoen:
The City of Monticello is pleased to have an opportunity to review your
plans for the growth of your company and the potential for locating your
firm in our community. The City of Monticello has had an opportunity
to meet and prepare this Letter of Intent which serves as evidence of our
commitment to seek direct assistance to facilitate your expansion to
Monticello.
As a basis for this Letter of Intent, it is important to review our
understanding of your proposed project, the company's potential and its
growth plans. It is also important to recognize that this Letter of Intent
represents a commitment from the City of Monticello to seek assistance
as outlined within this letter. Although the Committee is directly linked
to the various local agencies, it does not have the ability to grant final
approval for assistance. Direct City assistance will be subject to final
review and approval with the appropriate bodies. In addition, we are
proposing to seek assistance through various regional, statewide and
federal programs.
We have reviewed the likelihood of funding and feel confident that our
proposal is reasonable and obtainable, however, we cannot commit the
funds on behalf of any of these agencies.
Mr. Jerald Schoen
Page 2
It is our understanding that Aroplax Corporation is a plastic injection molding company founded
in 1959. The company has also recently developed products used in the water filtration industry
and is initiating production of these proprietary products.
The company's expansion into Monticello will require an estimated 23,000 square feet. In
addition, the company is also seeking assistance to fund an estimated $255,000 for equipment
acquisition.
The City of Monticello proposes to provide assistance designed to meet the direct needs of the
company. We are proposing the use of various local, federal and statewide financing programs
which will provide long-term, attractively priced financing. We anticipate that the company will
provide a minimum of $75,000 equity for working capital and the appropriate corporate and
personal guarantees.
USES OF FUJM:
Land Acquisition $ 70,000
Building Construction
550,000
W Equipment Acquisition
255,000
Soft Costs
50,000
Working Capital Needs
75,000
Cost Overrun Contingency
'I
TOTAL USES OF FUNDS: $1.030.000
SOURCES OF FUNDS:
1CL14D
Land, Tax Increment Financing $ 70,000
Bank Financing (20 Years, 9.5%) 300,000
SBA 504 Loan (20 Years, 8.5%) 300.000
Subtotal Construction Sources of Funds: $ 670,000
Central Minnesota Initiative Fund (10 Years, 6%) $ 30,000
Economic Recovery Fund Grant (10 Years, 6%) 170,000
Monticello Enterprise Fund (7 Years, 6%) 85.000
Subtotal Equipment Sources of Funds: $ 285,000
/ Working Caoital
�l Aroplax Corporation S 75.000
TOTAL SOURCES OF FUNDS: 51,030,000
N
N
Mr. Jerald Schoen
Page 3
These costs represent estimates at this time, and may be adjusted once the final project costs
have been determined. Based upon these assumptions, however, it is anticipated that monthly
and annual debt service associated with this structure would be as follows:
Source
Monthly
Debt Service
Annual
Debt Service
Bank
$2,614
$ 31,368
Small Business Administration
2,396
28,756
Economic Recovery Grant
1,887
22,648
Central MN Initiative Fund
333
3,997
Monticello Enterprise Fund
1.242
14,904
TOTAL PAYMENTS:
47
$101.673
An overview of the financing programs proposed is as follows:
SBA 504 LOAN PROGRAM
A local development company (LDC) which has been certified by the Small Business
Administration (SBA) can aid in the financing of small business expansions and start-ups. The
LDC, in conjunction with private lenders, can provide long-term, low-interest, fixed rate
financing for up to $750,000 in fixed assets.
CENTRAL MINNFSOTA INITIATIVE FUND
The Central Minnesota Initiative Fund is a private non-profit rural development corporation
committed to providing financial assistance to programs which promote and strengthen central
Minnesota. The fund is one of six in Minnesota seeking to address the needs of rural residents
throughout the state.
The fund is largely supported by the McKnight Foundation and provides financing to businesses
located in the counties of Benton, Cass, Chisago, Crow Wing, Isanti, Kanabec, Mille Lacs,
Morrison, Pine, Sherburne, Steams, Todd, Wadena, and Wright.
Mr. Jerry Schoen
Page 4
Iran Criteria
• Loans are made to "for-profit" frons only, in order to promote economic development
and job creation and to enlarge the tax base.
• Loans are made to small businesses, those with less than 54 million in gross annual sales
and with 50 or fewer employees.
• There are no restrictions regarding type of business --retail, wholesale, franchise, on or
off farm, manufacturing --except that enterprises with political, religious or pornographic
purposes will be ineligible.
• No loans are made where reasonable alternative financing is possible.
• A business is eligible at any stage—start-up, existing, or expanding.
• The enterprise must be located with the 14 -county area, and the owners must reside in
!{ this area.
• Loans can be made for working capital, machinery and equipment, real estate, and
research and development.
• Rates and terms are negotiable between the business and CMIF.
MINNESOTA SMALL CITIES ECONOMIC RECOVERY MUXT
The Minnesota Small Cities Development Program is designed to address critical economic
development needs throughout the State of Minnesota. Currently, the program is administered
by the new Minnesota Department of Trade and Economic Development. Gmnts are awarded
to communities and townships to help them meet local economic development needs by providing
loans to businesses planning expansions.
For purposes of the Minnesota Small Cities Development Program, economic development is
defined as a stimulation of private investment in order to expand, maintain, or start a business.
The desired result of the program is the creation of new jobs or the retention of "endangered"
ones.
This program is designed to assist in providing the necessary incentives to stimulate private
investment, thereby creating and keeping jobs in Minnesota. It is not intended as a substitute
for conventional financing, nor should it be used in place of other specialized programs that may
exist in state or federal agencies. Instead, grants from this program are intended to be used in
sim,tinna in which a funding 'gap" exists and alternative sources of public and private financing
are not adequate.
Mr. Jerry Schoen
I Page 5
It is important to keep in mind that this process will involve a grant to the City of, Monticello
who, in tum, will provide a loan to your company to supplement primary financing.
MONTICELLO REVOLVLIG WAN FUND
The City of Monticello will seek the approval through the Monticello Economic Development
Authority (EDA) for -a $85,000 equipment acquisition loan to assist Aroplax Corporation. the
City of Monticello would propose that the funds be lent to the company over a seven-year time
period.
These programs represent funding which we can seek immediate assistance and receive
reasonable assurance within a relatively short time period of the availability of funding.
The City of Monticello's offer of assistance goes beyond the direct funding. For instance, in
the case of the Minnesota Small Cities Economic Recovery Grant, SBA 504 Loam and Central
Minnesota Initiative Funding, technical assistance will be provided by the City's consultants,
Business Development Services, to facilitate the applications for these programs. It is
anticipated that this will greatly enhance the likelihood of the receipt of approval for these
programs.
CITY AND COMPANY REPMENTNTIONS
The City of Monticello firmly believe in their ability to perform on the financial assistance
programs outlined in this Letter of Intent. The negotiations will be initiated directly by the City.
Nothing herein, however, can be constructed as a binding commitment. The City of Monticello
agrees to assist in the preparation of the appropriate applications. This effort will be initiated
at considerable time and expense on the City's pan.
Aroplax Corporation, upon acceptance of this proposal, agrees as follows:
I. To locate and operate in the Oakwood Industrial Park in the City of Monticello.
To cooperate with representatives of the City and/or its economic development consultant
in providing information in a timely manner necessary to complete applications for
funding as outlined in this proposal.
Sir. Jerald Schoen
�. Page 6
3. Aroplax Corporation agrees that it will not seek alternative locations for financial
assistance for a period of 180 days.
4. Aroplax Corporation agrees that it will r^imburse the City for an amount not to exceed
$5,000 for the preparation of loan applications, should Aroplax Corporation withdraw
from the project.
It is the purpose of this Letter of Intent to provide a framework for which a firm project
financing and facility package can be confirmed. Your consideration of this information is
greatly appreciated the City of Monticello stand ready to move forward with you.
CITY OF I►10NTI LLO
r�VQ�✓1� Dated 11r+1 ia')
Mayo l
Z
d-, Dated 4/21/92
Economic Development Director
Accepted By:
AROPLAX CORPORATION
�i1 �� l�(�F.L C s Dated CI -' �`y
Jertlt] Schoen, Presid4nt
Dated
t
....... - JUL-16-'92 THU 12:50 IU:RDS 11r
DebtMorth
World" Capital
(CA -CL)
Current Ratio
(CAiCL)
Daya/Roc.
Dayvbv.
Dayaftyable
Days/Aoaual
TFL 110:796-903.1 03865 PU2
Aroplax Corporation
CRF.Drr ANALYSIS
4/30/90 4/30/91 3/3382 Prof ffma
132:1 .85:1 .67:1 1.8:1
$412,208 $378,268 $472,900 $457,958
2.4:1
3.6:1
6.3:1 5.4:1
4/30/ 4
51
4/34/41
62
Prafo ma
53
ISO
102
126
27
21
27
42
10
20
S1UUM
Amplax Corporadon, as evidenced by the credit analysis redox, la a very strong company
financially. After the adjustments have been made to reflect this tmnsacdon, the credit
indicators remain exceptionally good compared with industry standards.
The operating cycle of Aroplax is relatively long at approximately 130 days. However,
thia operadrtg cycle la typical for this type of industry with longer days receivable and
accounts payable of approximately 30 days.
The company has relatively high working capital coverage. In addition, there are various
d1wredonary expenses Including employee profit sharing and other bonuses which could
Q. be available for additional cash flow, if necessary.
APPROVED TIF BUDGET (1991)
Administration $15,000.00
Professional Services $10,000.00
11
PROJECT COSTS
CITY OF MONTICELLO
FOR
AROPLAX CORPORATION
JULY 16, 1992
Business Development
Services, Inc.
1991 YTD
TIF Plan and District
$
3,850.00
Development Contract
$
800.00
Certification Fee
$
50.00
Subtotal
$
4,700.00
Business Development
Services, Inc.
1991 YTD
Financial Packaging
$
2,705.78
1992 YTD
Financial Packaging
$
3,465.00
Subtotal
$
6,170.78
Holmes & Graven
Paul weingarden
1991 YTD
Legal (Development Contract
and Preliminary GMEF
attorney review)
0
808.82
Subtotal
$
808.82
OSM
1991 YTD
Topgraphy Maps
g
69.75
Subtotal
9
69.75
TOTAL PROJECT
COSTS YTD
$11,749.
35
APPROVED TIF BUDGET (1991)
Administration $15,000.00
Professional Services $10,000.00
11
EDA AGENDA
XILY 21, 1992
1
6. Consideration to approve or disapprove GMEF Loan No. 005 for
Aroplax Corporation.
A. Reference and Backqround:
Following discussion of the preliminary and formal GMEF
application for the Aroplax Corporation, applicants being
Jerald J. and Mary E. Schoen; the EDA is asked to consider
approval or disapproval for the rquested $85,000 GMEF. The
applicant requested terms of 6% interest rate amortized over
7 years.
First, the EDA needs to determine if the GMEF loan application
from the Aroplax Corporation will encourage economic
development, and that the proposed Aroplax project and
application complies with the GMEF public purpose and
policies.
Secondly, with the assumption the project application complies
with the public purpose criteria and policies, the EUA must
determine the loan amount, interest rate, term, fee, equity,
collateral, and other conditions.
B. Alternative Action:
1. A motion to approve GMEF Loan No. 005 for the Aroplax
Corporation, Jerald J. and Mary E. Schoen. Loan amount
as requested: $85,000 ($55,000 for equipment and $30,000
for overruns/contingency). Terms as requested: 6.0%
Interest rate amortized over 7 years.
2. A motion to approve GMEF Loan No. 005 for the Aroplax
Corporation, Jerald J. and Mary E. Schoen. Loan amount;
$75,000, maximum loan amount without transfer of
appropriation funds ($55,000 for equipment and $20,000
for overrun/contingency). Terms as requested: 6.0%
interest rate amortized over 7 years.
3. A motion to disapprove GMEF loan No. 005 for the Aroplax
Corporation, Jerald J. and Mary E. Schoen.
Cpage 1
EDA AGENDA
JULY 21, 1992
v_
Staff Recommendation:
Staff recommends Alternative Action No. 1 with fee,
equity, and collateral requirements as determined by the
EDA. Recommendation for other condition requirements as
prepared by the City Attorney to include that the first
$55,000 for equipment be disbursed at the closing date
and the $30,000 overrun/contingency be disbursed upon
certification of completion/purchase and payment. Loan
approval subject to total project funding approval, City
ordinance and zoning compliance, and execution of Private
Development Contract prior to Monday, July 27, 1992.
Sunnortinq Data:
Copy of the GMEF Approval Form.
Copy of the EDA Checklist.
CPage 2
APPROVAL OF
GREATER MONTICELLO ENTERPRISE FUNDS
BY
ECONOMIC DEVELPMENT AUTHORITY
IN AND FOR THE CITY OF MONTICELLO, MINNESOTA
Preliminary Loan Application Approval. J11LY 21, 1992
Loan terms negotiated and agreed upon
betweeen the developer, the lending
institution, and the EDA Executive Director. NOVEMBER 21, 1991
Formal Loan Application and Financial
Statements analyzed by the lending
institution, BDS, Inc. or city staff. BDS, INC.
Building and Site Plan Preliminary and/or
Final Review.
Building Permit approval or construction
commitment.
Loan documents reviewed and/or prepared
by the City Attorney.
ECONOMIC DEVELOPMENT AUTHORITY APPROVAL OR DISAPPROVAL:
LOAN NUMBER GMEF LOAN NO. 005 LOAN APPROVED
BORROWER JERALD J. AND MARY n. SCHOEN. AROPLAX CORPORAi uF
ADDRESS 2JI8 CHESTNUT AVE WL51, MPLS, MNLOAN DISAPPROVED
LOAN AMOUNT 55405
RATE DATE JULY 21, 1992
TERMS
FEE
A motion was made by EDA Commissioner to
(approve - disapprove) Greater Monticello Enterprise Funds in the
amount of dollars
and cents to developer
this day of Seconded
by EDA Commissioner
YEAS: NAYS:
GMEF disbursed 19 _ by Check No.
EDA Treasurer
CITY COUNCIL MAY REVERSE AN EDA LOAN DECISION WITHIN TWENTY-ONE
`- DAYS OF EDA APPROVAL.
GMEF Approval
Page 2
ACCEPTANCE OF TERMS
I (We) hereby accept the terms stated above as approved by the
Economic Development Authority in and for the City of Monticello.
DATED:
;L
MONTICE•LLO EDA CHECKLIST FOR JERALD J. AND MARY E. SCHOEN
AROPLAX CORPORATION
W-- Preliminary GMEF Loan Application.
Formal GMEF Loan Application -- Business Information:
History and Description of business.
Resumes of principals and senior management.
Financial Information:
_ - Personal financial statements -- all principals with
20 percent ownership or more and/or guarantors.
Business financial statements current within 60 days --
operating statement and balance sheet.
Aging of existing accounts receivable and payables.
Schedule of existing debt.
�... Operating projections for two years.
Project Information:
Purchase Agreement.
Cost estimates with supporting documentation.
Project Appraisal.
Collateral Listings.
Business benefit analysis -- job creation/efficioncy,
etc.
Lender commitment letters or commitment agreement between
lending institution and the PDA.
Prior to loan Closing:
— Certificate of Good Standing (verifies existence).
CorporatLon Resolution (who to authorized to borrow).
Articles of Incorporation/By Lave (listing of do's and don't).
Ficitious Name Statement.
Equity dapoeti verification.
Applicable permits and/or licensee.
Lease Agreements
Monticello EDA Checklist for JERALD J. AND MARY E. SCHOEN
Page 2 NKUML wNry KAL1UN
v.
u UCC I Filings: State (MdE) Date of Filings continuations
v._a, UCC II Filings: County (Fixtures)
Evidence of insurance -- life and property.
Preliminary title report.
Certification of current status on employment
compensation, workman's compensation, and state
and federal tax withholdings.
Partnership Agreement.
w ►.7 Personal Guaranty(s)
—Pu,—Authorization Releasing Information.
*A-9 Loan Agreement.
9 Subordination Agreement.
The EDA reserves the right to request additional information if so
determined.
OPTIONAL REQUIREMENTS
s
Business Information:
-.� Business and marketing plan.
Franchise Agreement.
Financial Information:
Month -by -month cash flow.
Source of equity capital.
Personal/business federal and state tax returns.
��✓ Proforma balance sheet.
Project Information:
City, state, fedeal review by
Plans and specifications -- city site plan review.
L