EDA Agenda 10-28-1992AGENDA
MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
Wednesday, October 28, 1992 - 7:00 p.m.
City Hall
MEMBERS: Chairperson Ron Hoglund, Vice Chairperson Barb
S.hwientek, Assistant Treasurer Bob Mosford, Brad Fyle,
Clint Herbst, Harvey Kendall, and Al Larson.
STAFF: Treasurer Rick Wolfsteller, Jeff O'Neill, and Executive
Director 011ie Koropchak.
1. CALL TO ORDER.
2. CONSIDERATION TO APPROVE THE JULY 21, 1992 EDA MINUTES.
3. CONSIDERATION TO RATIFY EARLY DISBURSEMENT OF GMEF LOAN NO.
006.
6. CONSIDERATION TO REVIEW EDA LEGAL FEES ASSOCIATED WITH GMEF
LOANS.
5. CONSIDERATION TO DEFINE FUNDABLE COSTS UNDER THE GMEF USE OF
PROrFEDS.
6. CONSIDERATION TO DISCUSS 1993 GMEF BUDGET.
7. OTHER BUSINESS.
B. ADJOURNMENT.
C
MINUTES
MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
Tuesday, July 21, 1992 - 7:00 p.m.
City Hall
MEMBERS PRESENT: Chairperson Ron Hoglund, Vice Chairperson Barb
Schwientek, Brad Fyle, Clint Herbst, and Al
Larson.
MEMBERS ABSENT: Assist Treasurer Bob Mosford and Harvey
Kendall.
STAFF PRESENT: Executive Director 011ie Koropchak.
STAFF ABSENT: Treasurer Rick Wolfsteller and Jeff O'Neill.
GUEST PRESENT: Bradley Barger, Suburban Machine &
Manufacturing, Inc.
Jerry and Steve Schoen, Aroplax Corporation.
1. CALL TO ORDER.
Chairperson Hoglund called the EDA meeting to order at 7:00
p.m.
2. CONSIDERATION TO APPROVE THE APRIL 28, 1992 EDA MINUTES.
Al Larson made a motion to approve the April 28, 1992 EDA
minutes, seconded by Ron Hoglund. With no corrections or
additions, the minutes were approved as written.
3. CONSIDERATION TO REVIEW A PRELIMINARY AND FORMAL CMEF
APPLICATION FOR SUBU1111AN MACHINE & MANUFACTURING, INC. ISMM).
Koropchak reviewed the enclosed agenda supplement data
(preliminary and formal application) for compliance with the
GMEF public purpose criteria and policies. Mr. Barger was
present to answer questions of the EDA members. FirSter Bank -
Plymouth Branch is the lender participant and the approximate
land acquisition Is 3.60 acres.
4. CONSIDERATION TO APPROVE OR DISAPPROVE GMEF LOAN NO. 004 FOR
SMM,
After the EDA determined that the SMM application met all six
of the G148F public purpose criteria and the general policies,
Barb Schwientek made a motion to approve GMEF Loan No. 004 for
Bradley D. and Mary A. Barger, Suburban Machine &
Manufacturing, Inc. The motion was seconded by A] Larson and
without further discussion or comment the motion passed
unanimously. The loan was approved for the requested amount
EDA MINUTES
JULY 21, 1992
of $50,000 at 4.5% interest rate amortized over 20 years with
balloon payment in five years for real property development.
Loan fee was set at $750. TIF of $50,000 was accepted as
equity which is 100% of the GMEF because company equity was
Ingested into financing new equipment (equipment is not
financed in this package). Minimum collateral of a second
mortgage lien on real estate, corporate guarantee, and
assigment of lease, and other condition requirements as so
determined and prepared by the City Attorney. The loan
approval was subject to total project funding, final plat
approval, project compliance with the city zoning and
ordinance, and execution of the Private Development Contract
prior to Council approval of TIF District No. 1-14. GMEF Loan
No. 004 becomes null and void November 21, 1992 if funds are
not disbursed.
The approved loan will be submitted to the City Council to
review for violations of the GMEF Guidelines on July 27, 1992.
Upon Council ratification, the remaining GMEF balance will be
$150,000.
5. CONSIDERATION TO REVIEW A PRELIMINARY AND FORMAL GMEF
APPLICATION FOR AROPLAK CORPORATION.
Koropchak reviewed the enclosed agenda supplement data
(preliminary and formal application) for compliance with the
GMEF public purpose criteria and policies. The EDA reviewed
the up-to-date report of City's dollars into the Aroplax
project. Jerry Schoen and son, Steve, were present to answer
questions of the EDA members. Mr. Schoen informed the CUA
that the bank closing would be delayed by four weeks because
of the need for a certified appraisal. With Marquette Dank -
Now Hope acceptance of an appraisal by Mr. Jack Maxwell, the
EDA assured Mr. Schoen the appraisal could be completed much
faster. With land surveys and soil borings being completed,
Fab Con products need to be ordered to keep the project on
line, reported Mr. Schoen. Additionally, he reported that
Aroplax's market has branched into Europe via a water
purification product.
G. CONSIDERATION TO APPROVE OR DI3AI5PROVF. GMI'.F LOAN NO. 005 FOR
AIRUPLAX CORPORATION.
The EDA determined that the Aroplax application met all six of
the GMEF public purpose criteria, however, the requested
$85,000 loan does not comply with the GMEF Loan Size policy:
"Minimum of $5,000 and maximum not to exceed 50% of the
remaining revolving loan fund balance." Remaining GMEF
Page 2
EDA MINUTES
JULY 21, 1992
balance is $150,000. Koropchak suggested that the EDA
consider requesting City Council to transfer $20,000 from the
Liquor Fund thereby securing a GMEF balance of $170,000 which
would allow the requested loan to be incompliance with the
GMEF Loan Size policy. More importantly, this transfer would
indicate to the State of Minnesota strong local -support of the
Aroplax project and would add credibility to the submitted
State application through documentation of the GMEF Maximum
Loan Size Policy, thereby substantiating the need for the
requested $170,000 of State dollars. The first $100,000
principal and interest payback of the State's $170,000 Grant
Is retained by City for the EDA revolving fund, this a good
Investment. Barb Schwientek made a motion requesting City
Council consider transferring $20,000 from the Liquor Fund to
the GMEF account for the reasons outlined above. The motion
was seconded by Al Larson and without further discussion or
comment the motion passed unanimously.
Based upon the assumption that City Council would authorize
transferral of the $20,000 into the GMEF account for
Pale 3
compliance of policy, Al Larson made a motion to approve GMEF
Loan No. 005 for Jerald J. and Mary E. Schoen, Aroplax
Corporation. The motion was seconded by Barb Schwientik and
without further discussion or comment the motion passed
unanimously. The loan was approved for the requested amount
of $85,000 at 6% interest rate over seven years. Of the
$85,000 loan, $55,000 is for equipment and $30,000 is for
overrun/contingency of fixed assets. Loan fee was set at
$1,275. Company equity accepted at $75,000 would be 88% of
the GMEF, or a combined company/TIF equity accepted at
$143,000 would be 170% of the GMEF. The GMEF to share first
position with the Central Minnesota Initiatve Fund and the
State's Economic Recovery Grant Fund on the equipment, and to
share first or third position on fixed asset
overrun/contingency. The $55,000 is to be disbursed upon
certification of purchase and/or payment of the equipment, the
$30,000 overrun/contingency is to be disbursed upon
certification of completion/purchase and payment of fixed
assets. Collateral, guarantees, and other condition
requirements as so determined and prepared by the City
Attorney. The loan approval was subject to total project
funding approval, project compliance with the city zoning and
ordinances, execution of the Private Development Contract
prior to Monday, July 27, 1992, and transfer of $20,000 to the
GMEF account. GMEF Loan No. 005 becomes null and void
November 21, 1992 if funds are not disbursed.
Pale 3
EDA MINUTES
JULY 21, 1992
The approved loan will be submitted to the City Council to
review for violations of the GMEF Guidelines on July 27, 1992.
Upon Council ratification, the remaining GMEF balance will be
$85,000.
7. CONSIDERATION TO MEET ON TUESDAY, JULY 28, 1992, THE REGULAR
QUARTERLY EDA MEETING DATE.
By consensus of the EDA members, the regular July 28 meeting
was cancelled. Unless the need for a loan application review
or approval, the next EDA meeting will be held in October.
8. OTHER BUSINESS.
Koropchak reported that Modern Molding, Inc. decided to locate
In Delano. Industrial property became available which
originally was not accessible.
Secondly, Koropchak reported that Q-A Thermal representatives,
Bill King, Kevin Doty, Tom Golewski, and herself met to
discuss the need for a $50,000 line -of -credit in addition to
the $100.000 equity. The $150,000 would serve as the four to
six month interim financing necessary between the acquisition
of the exclusive heat-treat.tng license and the completion of
a facility with operational equipment. Acquistion of the
license is a key issue as it captures an established market in
the Upper Midwest. Acquisition Is expected August 1. The
City and Mr. Golewski marketed the Shingobee/TIF Preplan.
Later, another meeting with Mr. Golew:aki, his technical
personnel, and company representatives further outlined the
specifics of the building. Kevin Doty has again met with the
company representatives to further define the timelines and
financial commitments associated with the license acquisition
and the need for additional financial information.
Maureen Steinwall continues to be interested in Monticello as
a site location for their relocation and expansion. Project
development expected in '93 or '96.
9. ADJOURNMENT.
By consensus of the EDA, the meeting adjourned at 8:65 p.m.
011ie Koropchak, Executive Director
Page 4
EDA AGENDA
OCTOBER 28, 1332
CONSIDERATION TO RATIFY EARLY DISBURSEMENT OF GMEF LOAN NO.
004.
REFERENCE AND BACKGROUND.
Prior to early disbursement of GMEF Loan No. 004, the EDA
Executive Director telephoned EDA members for a go-ahead.
Five members gave a go-ahead, one member declined, and one
member was not reached. Upon City Attorney weingarden's
advice, the EDA is asked to make a motion ratifying early
disbursement of GMEF Loan No. 004.
Please so move.
I
EDA AGENDA
OCTOBER 28, 1992
CONSIDERATION TO REVIEW EDA LEGAL. FEES ASSOCIATED WITH GMEF
LOANS.
REFERENCE AND BACKGROUND.
Enclosed you will find a copy of the current legal fees
charged by the City Attorney associated with the Barger
closing. Many of these fees are associated with the request
by the Barger's for early GMEF disbursement and the sign lease
associated with the property title. I have asked Mr.
Weingarden for an itemized statement of the $2,800 billing.
Because the GMEF and State Economic Recovery Grant closing
(equipment:) has not taken place, no legal fee billing has been
received on the Aroplax project.
The EDA should note the amount of the GMEF Loan Fee collected
from the Bargers compared to the accrued current legal
expenditures. Needless -to -say, it is not the FDA's intent to
operate with such Imbalances. The EDA may wish to consider
the following alternatives:
Upon receipt of an itemized statement from Mr.
Weingarden, submit charges to the Bargers for those
legal fees unrelated to a normal GMEF closing,
apply legal fees to the Barger disbursement
account, or assume as is.
The EDA may consider an amendment to the GMEF
Guidelines which would state: The EDA agrees to
pay an nmount not -to -exceed $1,000 for GMEF legal
fees accrupd, thereafter, the borrower fo
responsible. The EDA may consider this as a
replacement of the GMEF loan fee or consider
maintaining both.
The EDA and the HRA may consider the use of the
same attorney for continuity, 11nderstandab111ty.
and cost effect.iveneso.
t
e
BRADLEY D. AND MARY E. BARGER
GREATER MONTICELLO ENTERPRISE FUND CLOSING
Tuesday, October 13, 1992, Early Disbursement
FUND DISBIIRSEMENTS
GMEF LOAN NO. 004 REAL PROPERTY DEVELOPMENT $50,000.00
10-13-92 (Land-AgriBa nk, 10-8-92) $26,250.00
REMAINING BALANCE, 10-23-92 $23,750.00
RECF,IPTS
10-13.92 (GMEF Loan Fee) $ 750.00
TOTAL RECEIPTS, 10••23-92 $ 750.00
EXPENDITURES
8-24-92 (Legal Fees) $ 150.00
10-12-92 (Legal Fees) $ 2,800.00
10-12-92 (Closing Fees) $ 290.00
TOTAL EXPENDITURES. 10-23-92 $ 3,240.00
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OU.POe,m. 7975 August 24, 1992 PATIT A. HWUND
KIM MUM
"I SVND
SONNIS TRONNOS
Rick wol.Cateller
City of Monticollo
250 Eaot Broadway
Monticello, MN 55162
For legal, services rendered during the month of August, 1992
including:
Conr.orences with Jeff regarding Battle Rapids subdiviuion and
review of development agreement; (1.50) e5d'v
Receipt and review of documents from Kramer Title Opinion matter.;
correopondonco to Hick. regarding issue; (0.50) �1;;, y .1.�,I /uI °'%•�
nocelpt and review of correspondenco from client regarding
KJollherg; telephone conf.ernnce and conference with Dick Hurrie,
their attorney; (0.90) 6'^
meeting at HuCl'nlo r.egardinU tax forfeiture propnrtinn; telephone
call to Gills; preparation and drafting of proposed agreement;
telephone convurant1.on with Doul Jennings, Ilunnopin County
Attorney regarding tax forfeiture procndure; telephone conference
with client; (2.50) CPQ. 36yo
Rocoipt and review of Barger and Aaroplax documents; telephone
ennfor.ence with 011ie, Lnnny Kirsch, Banks and CMIF/CHEF
officials; r.nca.ipt and review of purrhnna agreement and sign
Inann; legal roaearch; conference with Joff; conforonco with
011ie; (4.00) yl3 1/DS-/ i S,) 1e e, ISO. jj
TntA1 Legal Foou Dust 9.00 hours at 575.00 per hour a $675.00
Coote:
copy Coats S 15.00
'i'utal Costa
TOTAL. AMOUNT n11F.: $690.00
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PATW A. IOb1AND
OUR RLS no. 7975 70
( ) October 23 , 1992
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Tnunv SUND
011ie Koropchak
BONN®^ION"R'
City of Montice.l.lo
250 East Broadway
Monticello, 111; 55362
Re: Barger Mortgage Matter
For legal servicou rendered in the above -entitled matter
including:
Receipt and review of file, conversations with CMIF officials and
conversations with 011ie concerning terms; (2.50 hours)
Receipt and review of sign leases; conversations with Jeff and
�- Rick regarding sign issue; conversations with Agribank's
attorneys; legal reseureh regarding removal of signs/
constitutionality of ordinance; (4.00 hours)
Receipt and review of title commitment; conversations with Mark
Tobolius, Barger, 011ie and Wilson regarding resolution of sign
issue; legal research regarding priority; telephone conversations
with title company; (3.00 hours)
Preparation and drafting of Loan Note, Mortgage, Attachments,
Corporate Guaranty, Escrow Agreamont, Sign Agreement, Seller's
Affidavit and other nuceuoary documents; correspondence to Mark
Tobelius regarding some; preparation and drafting of amendments
an reguanted and nngotiatod between wainyardan and Teboliva;
(14.00 hours)
Convernationn with 011io, Barger, 'Tobolius, Gary Taverna and
title company; convernations with John Dean regarding early
closing; nolirit and obtain legal opinion from 11olmos and Graven
r.nynrd.i.ng T.T.F issue; review of corraopondonee regarding same;
review of hank's title commitment to insure compliance with other
conditiona; review of updated title commitment; conversation with
Gibbona; (5.50 hour.o)
Miscellaneous conversations with Barger., 011ie, Toboliva,'Tavorna
and Chicago Title regarding plat and legal description issuel
numerous converoations with parties regarding closing and
continuation of cloning datel resolution of plat issue and oarly
closing agreement from Chicago Titlo; (2.50 huura)
F.A. 551 Poo OIJ 26 '?2 ICI:T_
Travel to and from closing; meet with Gary Taverna; final review
of documents; attend closing; follow up correspondence and
documentation; (4.50 hours)
Total hours: 36.00 hours at $75.00 per hour - $2,700.00
Costs:
Federal Express $ 45.00
Messenger service 25.00
Documcnt Preparation 30.00
Total Costs 100_00
TOTAL BALANCE DUE: $2,000.00
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F" NO. 7975(30) October 12, 1992 TBHDY RaND
BONNW TRONNW
011ie lCoropchak
City of Monticello
250 East Broadway
Monticello, MN 55362
Re: Barger Closing
Dear 011ie:
Enclosed herewith please find invoices which we have
generated in the above-entitled matter to date. I anticipate
there will be additional legal fees due arising out of the first
mortgage, CMIF and TIF transactions, to the extent that my
services are necessary. Should you have questions regarding the
same, please advise.
f very truly yours,
Paul A. Woingard
PAW:lld
Enclosure
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oul Flln No. 7975(30)
October 12, 1992
TOMY MIND
BONNIO TAONNO
011ie Koropchak
City of Monticello
250 East Broadway
Monticello, KN 55362
Re: Barger Loan Closing
Closing Fee:
$250.00
Coate:
Document Preparation $ 20.00
Messenger Fee 20.00
Total Costs: $ 40.00
TOTAL BALANCE DUE: $290.00
OLSON, USSET, AGAN & WEINGARDEN
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OUR FDD NO, 7975(30) October 12, 1992 IONTwiOWD
TNM
011ie Koropchak
City of Monticello
250 East Broadway
Monticello, MN 55362
Re: Barger Closing
For legal services rendered in the above -entitled matter
including receipt and review of file; conversations with 011ie,
Tom Racette, Barger, Gary Taverna and other necessary parties;
receipt and review of signs, receipt and review of title
commitment; preparation and drafting of Loan Note, Mortgage,
Corporate Guaranty, Escrow Agreement, Sign Agreement, Seller's
Affidavit and other necessary documents; colitic and obtain legal
opinion from Holmes 6 Graven regarding TIF issue; conversations
with John Dean and David Kennedy regarding same; resolve legal
description issue; attend closing; legal research.
Total hours: 36.00 $2,700.00
Costs:
Federal Express $ 65.00
Moesonger Service 25.00
Document Preparation 30.00
Total Costs $ 100.00
TOTAL BALANCE DUE: $2,800.00
IV. TERMS AND CONDITIONS
• LOAN SIZE - Minimum of $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
by majority veto.
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 roviewal
by EDA.
• ASSUMABILITY
OF LOAN - None.
GMEF GUIDELINES: 5/11/92 Page 3
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 EDA loan approval.
LOAN FEE -
Minimum fee of $200 but not to
exceed 1.5% of the total loan
project. Fees aro 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.
PREPAYMENT POLICY
- No penalty for prepayment.
DEFERRAL OF
PAYMENTS -
1. Approval of the EDA membership
by majority veto.
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 roviewal
by EDA.
• ASSUMABILITY
OF LOAN - None.
GMEF GUIDELINES: 5/11/92 Page 3
EDA AGENDA
OCTOBER 28, 1992
5. CONSIDERATION TO DEFINE FUNDABLE COSTS UNDER THE GMEF USE OF
PROCEEDS.
A. REFERENCE AND BACKGROUND.
Under the GMEF Guidelines Use of Proceeds are Real property
acquisition and development, real property rehabilitation
(expansion or improvements) and machinery and equipment.
Inorder to assist the Executive Director in explanation of use
of proceeds to loan applicants and for disbursement purposes,
the EDA may wish to further define what costs are fundable.
First, define hard and soft costs for real property.
HARD COSTS
Building materials
Labor
Building Permit Fees
Land Acquisition
Grading
Landscaping
Curbing/Parking Lot
Others
SOFT COSTS
Engineer Fees
Architect Fees
Legal Fees
Recording Fees
Appraisals
soil borings
Environmental Study
Others
Secondly, define hard and soft costs fundable by the GMEF.
Third, define machinery and equipment fundable by the GMEF.
THE GREATER MONTICELLO ENTERPRISES
i REVOLVING LOAN FUND POLICIES
v / I. 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 IRAN - Example: Equity 20%, RLF 304,
and bank 504. (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 dovolopment
• Real property rehabilitation (expansion or improvements)
• Machinery and oquipmonL
GMEF GUIDELINES: 5/11/92 Page 2
v
EDA AGENDA
OCTOBER 26, 1992
6. CONSIDERATION TO DISCUSS 1993 GMEF BUDGET
A. REFERENCE AND BACKGROUND.
Although, FDA Treasurer Wolfsteller has requested a transfer
from the Liquor Fund to the G14EF Appropriations within the
1993 City Budget. For accountability purposes, the EDA may
wish to make a motion of recommendation. Year-end statements
will be presented at the EDA Annual meeting In January,
however, here is a brief :3ummary.
Appropriation Balance,
January 1990 $200,000
Loans :
Tappers, Inc.
$88,000
Muller Theate
$50,000
Appropriation Balance,
January 1991 $ 62,000
Transfer:
UDAG
$ 90,000
Liquor Fund
$ 68,000
Appropriation Balance,
January 1992 $200,000
Loans:
Bargero
$50,000
Schoens
$85,000
Tranofer:
UDAG
$ 20,000
Appropriation Balance, October 1992 S 85,000
Tranofer Request:
Liquor Fund $115,000
Appropriation Balance, January 1993 $200,000