EDA Agenda 11-09-1993AGENDA
MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
Tuesday, November 9, 1993 - 7:00 p.m.
City Hall
MEMBERS: Chairperson Ron Hoglund, Barb Schwientek, Bob Mosford,
Clint Herbst, Patty Olsen, Al Larson, and Harvey Kendall.
STAFF: Rick Wolfsteller, Jeff O'Neill, and 011ie Koropchak.
1. CALL TO ORDER.
2. CONSIDERATION TO APPROVE THE JUNE 7, 1993 EDA MINUTES.
3. CONSIDERATION TO REVIEW THE PRELIMINARY AND FORMAL GMEF
APPLICATION FOR LAWRENCE T. DEMEULES DBA STANDARD IRON AND
WIRE WORKS, INC.
4. CONSIDERATION TO APPROVE OR DISAPPROVE GMEF LOAN NO. 007 FOR
LAWRENCE T. DEMEULES DHA STANDARD IRON AND WIRE WORKS, INC.
5. CONSIDERATION TO ENDORSE OR NOT ENDORSE THE FINANCIAL PROPOSAL
FOR ADVANCED FOOD SCIENCES, INC.
6. OTHER BUSINESS.
7. ADJOURNMENT.
MINUTES
MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
Monday, June 7, 1993 - 7:00 p.m.
City Hall
MEMBERS PRESENT: Chairperson Ron Hoglund, Bob Mosford, Clint
Herbst, Al Larson, and Patty Olsen (tardy).
MEMBERS ABSENT: Barb Schwientek and Harvey Kendall.
STAFF PRESENT: Rick Wolfsteller and 011ie Koropchak.
STAFF ABSENT: Jeff O'Neill.
GUEST: Lenny Kirscht, BDS, Inc.
CALL TO ORDER.
Chairperson Hoglund called the EDA meeting to order at 7:00
p.m.
2. CONSIDERATION TO APPROVE THE MARCH 30. 1993 EDA MINUTES.
Al Larson made a motion to approve the March 30, 1993 EDA
minutes. Seconded by Clint Herbst, and with no corrections or
additions, the minutes were approved as written.
3. CONSIDERATION TO REVIEW THE H -WINDOW EXPANSION FINANCIAL
PACKAGE.
Mr. Kirscht and Koropchak reviewed the H -Window expansion
plans and the proposed financial package with EDA members.
The H -Window's Immediate plans are to add 25,000 sq ft
doubling the manufacturing space and acquiring $650,000 of new
production equipment. The expansion will create 60 new jobs.
The company's 3-5 year plan requires the need for 200,000 sq
ft of monufacturing space.
Based on the fact the company has shown steady growth,
currently has no first mortgage holder on the property, and
with the difficulties the company experienced with state
financing at their start-up In 1987/88; BDS, Inc. recommended
a very aggressive financial package to meet the company's
Immediate and long-term expanoion needs.
Since the EDA has the power to issue General obligation
Taxable TIF Bonds, the recommendation was for the EDA to issue
$1,179,000 of G.O. TIF Bonds at 7.6% over 20 years. With the
City's favorable bond rating, the rate is anticipated at 7.1%.
The additional .5A override is for EDA administration costs
(5400/month or $4,800 annually). The EDA/City would take
C Page 1
EDA MINUTES
JUNE 7, 1993
first mortgage position with a loan -to -collateral value of 40-
45 percent. TIF would be used to "write-down" the interest
rate costs over the life of the district providing additional
security for the bond.
Other sources of funds for the $2,075,000 project are equity
at $400,000 and the State of Minnesota at $500,000 (5%
interest rate, 20 years, 2nd REM). A State job forgiveness
will be requested at $5,000 per job created.
CONSIDERATION TO ENDORSE OR NOT ENDORSE THE ISSUANCE OF
"TAXABLE" GENERAL OBLIGATION BONDS FOR THE H -WINDOW EXPANSION.
Although the EDA recognized their power to issue bonds through
the adopted ordinance, they felt uncomfortable about
exercising the power without first establishing written
guidelines or policies much as the GMEF Guidelines. Could the
City issue the bonds?
Additionally, the EDA questioned "What was the benefit to the
H -Window?" Mr. Kirscht responsed, "Currently, bank financing
would be at approximately 8% (2% over prime rate) fixed for
three years and adjusted annually thereafter. A SBA loan
would be a fixed 7.5% rate. The EDA 7.6% rate would be fixed
over 20 years."
Administrator Wolfsteller asked, "What's the likelihood of the
State approving the $500,000 request or would it be egg -on -
our -face as maybe its just a wish list request?" Mr. Kirscht
responsed, "It's a most aggressive approach and will likely
be a hard sell."
Mr. Mosford stated, "Europeans think long-term; therefore, a
fixed rate would be most attractive."
The EDA members fully supposed the H -Window Company and their
project. Feeling uncomfortable about issuing bonds without
established written guidelines and hearing no great benefit to
the 11 -Window with the anticipated G.O. Taxable Obligation Bond
rate, the EDA elected riot to endorse the issuance of bonds and
recommended maximum use of TIF, an agUresGlve approach for the
State's $500,000 request, and an explanation to Mr. Steve
Lemme of the EDA's recommendation.
5. OTHER BUSINESS.
None.
Page 2
EDA MINUTES
JUNE 7. 1993
ADJOURNMENT.
By consensus of members in attendance, the EDA meeting
adjourned at 8:20 p.
C� �< �
011ie Koropchak, $i Executive Di�tor
Page 3
EVA AGENDA
NOVEMBER 9, 1993
3. Consideration to review a oreliminary and formal GMEF
application for Lawrence T. Demeules dbs Standard Iron and
Wire Works, Inc.
The Standard Iran and Wire Works, Inc. $1,870,000 real estate
closing was held on September 28 In St. Paul and the
Groundbreaking Reception was held on October 1, 1993. Since
the real estate financing which included Tax Increment
Financing (TIF'), Small. Business Administration (SBA) , and bank
is history, I have not requested a representative from
Standard Iron be present at the EVA meeting.
The Greater Monticello Enterprise Fund (GMEF) request of
$75,000 As part of a pack -age to finance a $450,000 Horizontal
Machine Center. The other sources of funds are State of
Minnesota, $250,000; Central Minnesota Tnitiative Fund (CMIF),
$100,000: and equity, $25,000. The applicant for the State's
$250,000 is Wright County since the State allows only one
application per governmental unit per slate fiscal year. The
City of Monticello is the applicant of a $400,000 State
request to assist the H -Window Company expansion. The State
and CMTF applications for Standard Iron were submitted the
week of October 25 with award approval anticipated In about a
month. The Machine Center Lawrence be owned by Lawree Demeu3es
and le -Led to Standard Iron.
A second SHA, bank, and equity package will finance another
8805,000 of equipment.
A. Reference and Backaroundi
GMEF LOAN APPLICATION REQUEST:
075.000 equipment. Van at 6% over ton years.
Uses of Funds
Harizonta.1 Machine Center $450,000
TOTAL USES OF FUNDS $450,000
Sources at Funds
state at Mi"Mama JAY 10 Yew.) s250,000
CMIF (GY 10 Years) $100,000
GMEF (GL, 10 Years) $ 7b.000
Eq"Jty $ 23,000
TOTAL SOURCES OF FUNDS 9400,000
LAWRENCE T. DEMEULES .
STANDARD IRON & WIRE WORKS, INC.
E.isECUTTVE SUMMARY
Standard Iron & Wire Works, Inc. went into business in March of 1930 and
is a metal fabricating job shop. On August 28, 1946, the company was
incorporated as a C -corporation and has maintained that status to this date.
The founding owners were three brothers; H.Z. (Heine) Demeules, R.D.
(Rola) Demeules, and E.A. (Zez) Demeules. Later a fourth brother, J.A.
(Chuck) Demeules, joined the business.
From 1930 to 1941, the company's original market was miscellaneous metals
for commercial and industrial construction. During World War II there was
little construction being done, and as a result, the production facilities were
used to supply component parts to the defense industry. After the war the
company continued to fabricate parts for the OEM (Original Equipment
Manufacturing) market as well as the construction market. This
diversification has helped the company during economic downturns, since
historically the government has invested money in government construction
projects to stimulate the economy during depressed times.
Standard Iron currently has three locations and 135 employees, as follows:
LOCATION NUMBER OF EMPLOYEES
Corporate Headquarters 38
4990 North Highway 169
New Hope, MN 55428
Sauk Centre Facility 64
West Sinclair Lewis Avenue
Sauk Centre, MN 56378
Alexandria Facility 33
1401 36th Avenue West
Alexandria, MN 56378
TOTAL EMPLOYEES 135
Through death, inheritance and buy-outs, Lawrence (Rusty) Demeules and
David Demeules, the sons of Heine, became equal partners on August 31,
1972. On December 31, 1986, Rusty purchased David's half interest in
Standard Iron. Today, Rusty is the majority stockholder (81 percent
ownership), with his three sons; Richard Demeules, Joseph Demeules, and
William Demeules, as minority stockholders (6 percent ownership each).
The proposed project is for purchase of equipment. Standard Iron custom
fabricates components from steel, aluminum and stainless steel. Because of
the many types of materials used and the wide range of products fabricated,
it is necessary to install a variety of equipment, ranging from simple manual
machines to sophisticated computer controlled machines that can punch.
plasma burn, bend, and weld.
As a result of this project, Standard Iron anticipates hiring an additional 17
full-time employees for office operations and 80 production employees,
creating a total of 97 new jobs within two years of project completion.
N
M F.CT FINANCING
The equipment will be financed with a 10 -year SBA 504 loan and a separate
note from the City of Monticello, CMM, and the State of Minnesota via
Wright County. In addition, the company is proposing to finance the
building with a 20 -year SBA 504 loan. The proposed uses and sources of
funds for the equipment and building loans are as follows:
SBA -304
Land S 120,000
Site Improvements 194,000
Construction 1,556,000
Equipment 805.000
TOTAL 504 USES OF FUNDS $2,675,000
OT.E ER -USES
Horizontal Machining Center S450.000
TOTAL USES OF FUNDS L3.1?.5.000
M 50i - Building -
Bank (ARM, 20 Years, 1st) 5 856,000
SBA 504 (7%. 20 Years, 2nd) 700,000
Equity --1.^100.
TOTAL 504 BUILDING SOURCES OF FUNDS $1,8'/U,000
M
SBA�504'="<EQUIPMENT,
Bank (8%, 10 Years, 1st M & E)
$420,000
SBA 504 (6.5%, 10 Years, 2nd M & E)
300,000
Equity
85.000
TOTAL 504 EQUIPMENT SOURCES OF FUNDS $805"000
TOTAL 504 SOURCES OF FUNDS
$2,675,000
OTHER"S'OURCES OF'EUNDS
,'State of Minnesota (6% 10 Years, 1st Purchase Money)
$250,000
CMIF (6% 10 Years, 1st Purchase Money)
100,000
City of Monticello (6% 10 Years, 1st Purchase Money)
75,000
Equity
25.040
TOTAL OTHER SOURCES OF FUNDS
$450,000
TOTAL SOURCES OF FUNDS
DEBT SERVICE
53.125.000
Years 1-10
Bank - Building (Avg. 9%) $7,705
Years 11-20
$7,705
SBA - Building 5,427
5,427
Bank - Equipment 5,095
0
SBA - Equipment 3,406
0
State 2,775
0
CMIF 1,110
0
City 835
0
TOTAL MONTHLY $26,353
$13,132
TOTAL ANNUAL $316,236
$157,5Ca
1VU4111091 ra• : J.
Following is a review of the historical and projected levels of sales and
profitability of Standard Iron & Wire Works, Inc.:
YEAR
SALES
NET INCOME BEFORE TAXES
1990
$11,218,709
$101,078
1991
$11,836,954
$345,168
1992
$10,955,982
$286,514
7/31/93'
$9,215,277
$242,255
PROJECTED
1993
$10,363,089
$322,982
1994
$12,563,089
$362,498
1995
$13,863,089
$340,818
1996
$15,588,089
$659,117
Represents financial performance for the 11 -months ending July 31,
1993. The company's fiscal year end is August 31.
NOTE: The large level of sales in 1992 and 1991 was due to the Mall of
America project which was completed in early 1992.
Ioil .1ar-BLI.111nd, t11
Based on the July 31, 1993 balance sheet the debt -to -worth ratio is 1.0:1.
The proforma debt -to -worth ratio is 2.5:1. The proforma debt -to -worth ratio
is calculated by accounting for the proposed facility and equipment on the
proforma balance sheet. The Sauk Centre, Alexandria, and New Hope
facilities are owned personally by Rusty Demeules and are not accounted for
on the proforma balance sheet for Standard Iron. The industry average debt -
to -worth ratio ranges between A:1 and 3.2:1.
Current Ratio
Based on the July 31, 1993 balance sheet, the current ratio is 2.0:1. The
proforma current ratio is 1.5:1. The industry average current ratio ranges
between 1.1:1 and 3.2:1.
Cash Flow Analysis
Based on fiscal year ending August 31, 1992 earnings before taxes of
5286,514, the cash flow coverage ratio is 1.5:1. Based on the earnings
forecast for fiscal year -ending August 31, 1994, the cash flow coverage ratio
is 2.2:1.
Lawrence (Rusty) Demeules has been employed by the company since
March, 1966. He is currently the Chief Executive Officer, Chairperson of
the Board of Directors and Treasurer. Lawrence has also held the positions
of Sales Manager, Vice President and President.
Harold Ramsay has been employed by Standard Iron since 1958. He is
currently Executive Vice President of the company and Corporate Secretary.
Harold has also held the positions of Sales Manager, Draftsperson, and
Estimator. He attended the University of Minnesota Institute of Technology.
Frank Scott has been employed at Standard Iron since October, 1959. He has
been Plant Manager of the Sauk Centre facility since March, 1972. From
September, 1967 to March, 1972, Frank was Foreman in the machine shop.
Prior to September, 1967, he was Lead Man in the Long Span Department.
From October, 1959 to October, 1960, he was a First Class Mechanic.
Lee Fielder has been Plant Manager at the Alexandria Facility since August,
1989. From August, 1986 to August, 1989, he was Plant Manager for
Pipkorn Industrial Wire. He was Plant Manager for C.W. Olson, Inc. from
March, 1979 to July, 1986. Lee held a similar position with Iron Works,
Inc. from 1967 to 1974. Both C.W. Olson and the Iron Works were in tlle.
same field of work as Standard Iron.
James Moe joined Standard Iron as Accounting Manager in November, 1989;
he was promoted to Controller in January of 1993. Prior to this, Jim was an
auditor with the public accounting firm that performs the annual audit,
Boulay, Heutmaker, Zibell & Company. Jim has worked closely with the
company over his four years at Boulay as a member and leader of the audit
team. While with Boulay, Heutmaker, Zibell, Jim was a member of their
Manufacturing Committee, a group that focuses on current accounting and
business issues related to manufacturing. Jim is a CPA and a graduate of the
University of Minnesota with a Bachelor of Science degree in Accounting.
Richard Demeules has been with the company since December, 1986 when
he was hired as Accounting Manager. In January, 1990, he made a career
move into the position of Sales & Marketing. Richard received an Associate
,of Arts degree in Accounting from North Hennepin Community College and
has a Bachelor of Science degree in Management from Cardinal Stritch
College.
Joseph Demeules has been with the company since June, 1986 when he was
hired as Purchasing Supervisor. He has been a member of the Twin City
Purchasing Association since June, 1983. He is currently working on his
Bachelor of Science degree in Management.
William Demeules serves as Technical Support at Standard Iron and has been
employed since June, 1983. Prior to his position as Technical Support,
William was a Sales Engineer, Assistant Plant Manager at the Alexandria
Facility and worked as a machine operator and welder at the New Hope,
Sauk Centre and Alexandria Facilities. William is a member of the American
Welding Society and has been a Certified Welding Inspector since 1986.
Demeules Family Limited Partnership has been established to be the
ownership entity for the proposed facility in Monticello. The building will
be leased back to Standard Iron. Lawrence Demeules will own the
equipment personally and lease it back to the company. The ownership
structure of Standard Iron & Wire Works, Inc. and Demeules Family Limiter{
Partnership are as follows:
Q
PERCENT OF
Lawrence Demeules
4,423
81%
Richard Demeules
339
6%
Joseph Demeules
339
6%
William Demeules
339
—b -I
TOTAL
5,440
100%
Summary of Class B Non-VotingS
tock
Harold Ramsay 375
Frank Scott M
TOTAL 504
L
C
lVTJ x:11'
Lawrence Demeules
4%
Richard Demeules
32%
Joseph Demeules
32%
William Demeules
M
TOTAL
100%
Standard Iron is a long-standing, well-established family business. The
company's success over the last 63 years has been a result of manufacturing
quality products by a dedicated employment base and meeting customer
requests in a timely manner. Recognizing the importance of the construction
division to the success of Standard Iron, the company has refocused it's
marketing efforts to include a larger geographic market area. The company
has recently been rewarded with a sustained increase in sales in the increased
market area as a result of these efforts. The sales for the industrial products
division have also been steadily increasing and the company has increased its
sales staff to ensure that this continues. In response to the recent increase in
customer demands, Standard Iron has made the decision to expand its
manufacturing capacity. The proposed building and equipment project in
Monticello will enable the company to grow and meet customers demands.
I
EUA AGENDA
NOVEMBER 9, 1993
y.
EXECUTIVE SUMMARY enclosed.
GREATER MONTICELL0 ENTERPRISE FUND (GMEF) GUIDELINES
PUBLIC PURPOSE CRITERIA: Must comply with four or more of the
criteria listed below, criteria nl
being mandatory.
1. Creates new jobs: 35 immediate new (37.5 hpw) jobs, 80
additional (37.5 hpw) jobs over
three years.
2. Increases the community tax base: Estimated Market
Value of $1,250,000
or estimated Tax
Capacity of $57,365.
3. Factors: Will Assist an existing industrial business to
expand and relocate their operat.tons. The
business and proposed project is compatible
with the comprehensive plan and existing
zoning policies. The company's product is not.
availnbie within the city and no potential
adverse environmental effects are anticipated.
4. Used as a secondary source of supplement conventional
financing: Although bank financing is not part of
the $450,000h1 ilor.izontal Machine Center
package, of the $3,129,000 total package
Norwest Sank financed 40.83% or
^$1,276,000.
5. Used as gap financing: Since about all other sources
of funds available are
structured in this deal and the
$75,000 GMJW Is 2.4% of the
total $3,125,000 package, this
qualifies as gap financing.
6. Used to assist other fundo: SDA, State, and Regional
Funds are being
requested.
Page 2
EDA AGENDA
NOVEMBER 9, 1993
GREATER MONTICELLO ENTERPRISE FUND POLICIES
I BUSINESS ELIGIBILITY:
Industrial business: Yes.
Located within city limits: Yes, Zoned 1-2.
Lots 7 & 8, Block 2, UIP
Credit worthy existing business: Yes, real estate
financing approved
with Norwest Bank
and SBA. Refer to
Executive Summary.
510,000 loan per each job created or $5,000 per every
$20,000 In property market valuation, whichever highest:
$160,000 or $68,500, respectively.
Recommend: $75,000 GMEF approval.
11. FINANCING METHOD:
Participation Loan: The State, CMIF. and GMEF will share
a 1st Purchase Money on the
Horizontal Machine Center.
I I I . USE OF PROCEEDS:
Equipment - Horizontal Machine Contor.
TV. TERMS AND CONDITIONS:
Loan Size: maximum not to exceed 500. of the
remaining (jM1!F balance. Balance jt)ly
1903, $157,500. Maximum loan utze,
$78,750.
Page 3
EDA AGENI;A
NOVEMBER 9, 1993
I
Leveraging:
Minimum 604 private/public non-GMEF.
Maximum 304 GMEF. Minimum 104 equity of
GMEF loan.
TOTAL PROJECT
Bank $1,276,000 (40.834)
SBA $1,000,000 (32.004)
TIF/EQUITY$ 314,000 (10.04'x)
STATE $ 250,000 ( 8.004)
CMIF $ 100,000 ( 3.20%)
GMEF $ 75,000 ( 2.404)
EQUITY $ 110,000 ( 3.404)
TOTAL HORIZONTAL MACHINE
STATE $ 250,000 (55.55%)
CMIF $ 100,000 (22.224)
GMEF $ 75,000 (16.66%)
EQUITY $ 25,000 ( 5.554) (33.33`.x)
Loan Term:
Equipment amortized over 7 years. State
and CMIF loans to be amortized over 10
years, ballooned in 7 years.
Recommend: Amortize over 7 years.
(
1 Interest Rate: Fixed rate not less than 24 below
Minneapolis prime rate.
Recommend: 5.04 interest rate.
Loan Fee:
Minimum fee of $200 but not to exceed
1.54 of total loan project. $75.000 k
.015 - $1,125.
Recommend:
Prepayment Policy: No penalty for prepayment.
Deferral of
Payment: 1. Approval of the EDA
membership by majurity vute.
2. Extend the balloon if
unable to refinance,
verification letter from two
lending inotitutions subject to
Board approval.
Page 4
EDA AGENDA
NOVEMBER 9, 1993
Interest Limitation on Guaranteed Loans:
Subject to security and/or reviewal by EDA.
Assumability of Loan: None.
Business Equity Requirements: Subject to type of loan
as determined by the EDA.
Collateral: Mortgage deeds, securities, and/or-
guarantees
nd/orguarantees as per the GMEF attorney.
Non-performance: The approved GMEF loan shall be null
and void If funds are not drawn upon
or disbursed with 120 days from date
of EDA approval.
Recommend: Approved GMEF shall
be null and void on
March 9, 1994.
GMEF legal fees: Responsibility of the GMEF
applicant.
B.
Recommendation:
Recommendation is to review the enclosed information prior to
the
EDA meeting for dJscussion and potential questions.
Consideration
to approve GMEF is the next agenda item.
C.
Supportlna Data:
1.
Copy of the preliminary GMEF application from L. T.
Demeules.
2.
Description of the Rorizontal Machine Center.
3.
Copy of the executed Release of Information forms.
4.
Copy of the. formal GMEF Checklist.
5.
Copy of the site location.
Supporting Data On -hand:
1.
State. Economic Recovery Grant Application.
2..
CMIF Application.
3.
Private Redevelopment Contract between the. Demeules
Limited Partnership .and the IIRA.
Page 5
G? -EA':' -t MCN::CE:.LO EN"EPPR:S-c
250 EAS". BROADWAY
MCMI=7E 0, MINNESOTA
Por=M711ARY APPLIU'":CJ FCR. LOAPI
APPL:01117: L.T. "RUSTY" DFMr1!1�5
M-41' CR T?ADE NAMF: STANDARD IRON AND WIRE WORKS. INC.
BUSINESS ACORESS: 4990. NQkTH KTGHWAX 149 MINNEAPOLIS, MN 55428-4083
(; G. Street) (C:c1 b State) (Zip Ccce)
TELc_�SCNE: BUSINESS ( FIS 531-111Q ECHE ( 1
DATE ES- BLISHED: 1930 EMPLOYI4 I.D. 1: 41-0652355
SCLC PP.OPRIETOR X CORPCRA'_'ION PAR' -NE_- FI?
MANAGE EN':
NAME T17LE OWNERSEI? 9
L. T. Demeules President 81%
Harold Ramsav Vice President
Joseph DCmellleSMaterials Nlanager tiro
Richard Demeules Sales F Marketing NanaRer 6&
William Demeules Technical Support Mana¢er be
PROJECT LOCATION: InTq 7 AND R. BLOCK 7. oAKwoOD 1NDUSTRIA[,_ZARK. MONTICELLO
NEW BUSINESS EXISTING BUSINESS RELOCATION AND EXPANSION
TOTAL PRC=—" COST ESTIMATE: 5 1_I?5.000
PROPOSED USES: RECUESC:
LAND S 120_nnn AMDON" OF LOAN 575.000
'%:S:':NG BUILDINGAA JRI: ' b T}3ENS
CONSTRUCTION 1_75n_Onn RECOESTED 6; OVER IO YEARS
MAC3:NERY CAPITAL 1 �55_nnn APPLICAN'"'S
WORK:NG CAPITAL ECUI='Y $25.000 of
OFIER LCAN PURPOSE 5450.000 HORIZONTAL
:CTRL USES 51 t,5 nnn MACHINING CENTER
PROPCSED BEGINNING DATE: nrTnnrR t iaai
ES -:,'A -.ED C2112LE1:ION DA^.E: APRTI 10 )nal.
J
PROJECT' ASSETS TO BE HELD BY: OPERA':ING EN'": Y AL= EGO
PAR-:C:PA'::NG LENDER: Norwest Ran{.
(Name) (Ac=cess)
( 1
(Contact Person) (Telepnone 1)
PRESE'r. ; OF L"3L0YEES: 35 PROJEOF LvLOYEES 115
ADDIT:CNAL PPDJEC'' INFCRYATMN:
APPLICArr. SICIA17URE: DA^_
15 ISO 25th Avenue Nor:, Minneapolis. MN 55147.1981
Productivity Inc Prone 612.476-8600 0 FAX 612.476.4092
September 15, 1993
Standard Iron and Wire Works
4990 North Highway 169
Minneapolis, MN 55428-4083
Attention: Mr. Bill Demeules
Subject: Machining Systems HMC 100, Proposal No. M012383
Gentlemen:
We are pleased to submit for your consideration this Proposal
No. M012383 for the Machining Systems HMC 100 Horizontal
Machining Center with DynaPath Control.
To date, Machining Systems has installed over 225 Horizontal
Machining Centers around the world. Current users include
Caterpillar, JI Case, and Westinghouse. Our experience shows that
given normal operating conditions and a proper maintenance schedule
the HMC 100 will provide 10 plus years of use.
Machining Systems HMC 100 Horizontal Machining Center
Including,
Automatic 4 Pallet System
2 39' x 39' Pallets
2 39' x 56' Pallets
Extended 'X' axis travel of 120'
Extended 'Y' axis travel of 60'
Chip Conveyor
Delta 20 Control Upgrade Package
Renishaw Touch Probe
Tooling Package
Surfcam Off Line Programming System
Freight, Rigging, and Sales Tax $459,204.00
SALES a SERVICE a ENGINEERING
'➢ Page Two
` Standard Iron & Wire Works
September 15, 1993
Kindly note that the manufacturers warranty is passed on to the
customer and is for one year.
Thank you for this opportunity to offer our equipment and services.
Please contact me if you have any questions or suggestions.
Very truly yours,
PRODUCTIVITY, INC.
Andy Archer
Sales
L
C
Maximum Productivity
minimum investment
Maximum Productivity
minimum investment
M.S. Machining Systems, Inc. offers four horizontal spindle machining centers with an advanced computer
numerical control and automatic tool changer, performing a wide variety of machining operations on large and
heavy work pieces. Numerous standard features increase your productivity and reduce non -cutting time.
Basic Machine Construction
Major machine components, such as base, column and slides, are high
strength, stress relieved weldments forexccUent rigidity and stability. Thcir , r y
massive, well ribbed design permits the machine to combine heavy roughing me"
and precision finishing in one operation.
G
Precision Index Table
The fast accurate 360 position index table assures muldface machining can be I.
done precisely. Hydraulics provide the clamping force for maximum rigidity -
stiffness strongly resisting any cutting tool forces. For additional machine
flexibility a 360.000 position table is offered as optional equipment on some
models.
Spindle Drive
The large diameter spindle shaft with positive tool lock is supported by five
bearings for rigid tool support. 'Rte constant mesh gear train, two range
transmission, dependable high torque D.C. spindle drive assures superior
cutting tool performance. Spindle speeds can be selected in one RPM incre-
ments by direct S4-dig1t commands: range shift is automatic.
Slide Drives and Ways
Machine ways are made of hardened and ground alloy sleet. The slides move
on recirculating preset roller way bearings providing a high level of position-
ing accuracy. All axis are powered by high response D.C. Servo motors driv ing
preloaded precision ball screws. Ways are protected by a unique wiper system
developed by M.S. Machining Systems, Inc. split
Tool Change System
The random preselect bi directional toot chain can store up to 76 CV type
taper tools. Tools called for by the program are automatically exchanged by
the toot changer from the tool chain into the spindle. Oversire tools can be
accomodated by leaving adjacent pockets empty.
Optional Pallet System
To increase machine working time the four or six
n station pallet changer inter changes pallet - pans
i automatically. The rotary design reduces floor space
and provides the ftex�bitity for future autom7tion.
Machine Control Unit
The machines are equipped with an advanced,CNC
system designed for them, incorporating most desir-
able features and modern microcomputers to simplify
programming, operation and mainteneance.
Part programming format switchable between
menu - driven coversational and conventional
EIA RS -274.
500 Ret (150 M ) part program storage with 99
program names.Additionatl program storage available.
Subroutines, repeat cycles, pan scaling and rotation.
Direct RPM spindle speed control. Random access
( tool charge capabilities. Full travel alphanumeric
keyboard and CRT defined soft keys.
RS -232 interface ports.
Fully upgradable, control specs enclosed.
Std.(4) four position pallet changer
Dyno-Path Delta series CNC
Major sub -assemblies
and components inter changeable
SPECIFICATIONS HMC - 100
Ails travel ranges
longitudinal travel ( saddle, X axis I
100' • 120' optional
vertical travel ( spindle carrier. Y axis)
40' • 60' optional
cross travel ( Z axis table) 40'.
Rotary Index table
work surface dimensions 99' ■ 99'.
programmable Index positions ( B axis)
standard 380 In 1 degree Increments
maximum Indexable work bad 10.000 [Its.
lIndsx rate 2 rpm.
3pindle carrier
drive motor D.C. 25 h.p. duty rated at 05 h.p.
spindle wood range 0 to 533 low range
O to 2400 high range. 1 rpm Increments,
Linear Food Rates X. Y,and Z
food rotes 0.1 to 50 Ipm
rapid traverse rate 250 ipm
Z axis thrust 0,000 pounds
Accuracies
slide positioning pot axis
X.Y and Z .0005 pot foot
e axis, index table 10 arc seconds
repeatability pot axis X.Y and Z .0002 in.
Automatic tool storage and changer
storage capacity 48 tools
selection mothod,outomatk; pro -salad next tool
maximum tool weight 50 pounds
maximum tool diameter full chain 5.50 Inches
adlacent pockets empty 10.00 inches
machine weight 80,000 lbs.
L _J j
MACHINING CENTER SPECIFICATIONS
Description
NMC 15
HMC 40
HMC 60
HMC 100
Table size
"X"
22.5' x 22.5"
28" x 28"
28" x 28"
39" x 39"
Axis travel
"Y"
30 inches
40 inches
60 inches
100 inches
Axis travel
"Y"
22 inches
34 inches
40 inches
40 inches
Axis travel
"2'
optional 28"
optional 40"
optional 60 "
Axis travel
20 inches
28 inches
28 inches
40 inches
Spindle II.P.
15
25/35
25135
25/35
Spindle ranges
2
2
2
Spindle speed
0-3000
0-2400
0-2400
2
0-2400
Spindle taper
50 CV
50 CV
50 CV
50 CV
Table index
360 - 1 degree
360 - I degree
360 - 1 degree
360 - I degree
Table toad
"T'
3.000 lbs.
4,000 lbs.
4,000 lbs.
10.000 lbs.
axis thrust
4,000 lbs.
4,000 lbs.
4,0001bs.
6.000 lbs.
A.T.C.
48 tools
48 tools
48 tools
48 tools
Toot weight
50 pounds
50 pounds
SU pounds
SU pounds
Tool diameter maximum
10 inches
10 inches
10 inches
10 inches
Tool length
24 inches
24 inches
24 inches
24 inches
Machine weight
26,000 pounds
36,000 pounds
40.{X)0 pounds
60,000 pounds
MACI IINE OP11ONS CONTROL OPTIONS Consult factory direct for options not listed.
Four pallet system Delta - 20
Six pallet system
Chip conveyorMa c hi ning�
Coolant through spindle �`Jyslem5
High pressure coolant v
Extended tool capacity PRODUCTIVITY, INC.
High s spindle. 48M m te1°a Q°°' x"""" N=u
8 p v � '+� '? 3 5833 Fisher Road • Nowell, Michigan 48843
Full enclosures w1°°°a , Phone 517 •546 1170
Fox 517 •546. 0542
Business Plan for Expansion
Equipment Projections:
Press Brakes (2)
S 154,122.00
Horizontal Machining Center
450,000.00
HyDefinition Plasma
298,000.00
1/4• X 8' Shear
95,400.00
150 Ton Punch Press
129,000.00
Air Compressors (2)
21,000.00
Programming Systems
28,000.00
(Include sheet metal and machining)
5 Ton Crane System
80.000.00
Total Estimated Equipment Cost: $1,255,522.00
Standard Iron custom fabricates components from steel, aluminum and stainless steel. Bemuse
of the many types of materials used and the wide range of products fabricated, it has been
necessary to install a variety of equipment, ranging from simple manual machines to
sophisticated computer controlled machines that can punch, plasma bum, bend and weld.
Job Creation:
The expansion of a new facility in Monticello will also allow for substantial job creation. In the
first 3 years, we project to hire an additional 17 employers for office operations and 80
production employees, creating a total of 97 new jobs. We will mainly be seeking to hire semi-
skilled employees and will offer a competitive wage and benefit package. Standard Iron
currently employs 125 people.
Risk Identification and Ntanagement of the Monticello Expansion Plan:
Whenever expansion is considered, there is always some risk, due partially to the increase in
feed costs. We feel we have reduced our exposure to the risks involved due the following
factors:
industrial Products:
Standard Iron has good, long term relationships with its customers. They have
communicated to us that are pleased with our delivery and quality reliability.
B. We currently have to tum away or sub -contract work because of lack of capacity
at our present facilities.
C. We service the agricultural industry with both new parts and replacemcnt pw-ts.
Therefore, our orders are not dependent only on new farm machinery srlcs.
250 East Broadway
P. 0. Box 1147 AUTHORIZATION RELEASING INFORMATION
Monticello, MN
55362.9245
Phone: (612) 2952711
Metro: (612) 3335739
Fax: 14662) 295.4404 Norwest Bank Mknnejota (navid Iforri,; Asst Vice Prue,)
Name of Financial Institution
4141 Lyndale Avennn Vnrrh
Street
ftuy Caoot i 4
City
qty %%e7onhA
State Zip
I hereby authorize any person to furnish to the Monticello Economic
Development Authority, 250 East Broadway, PO Box 1147, Monticello,
Minnesota 55362, any and all financial records, reports,
statements, or other documentation or information in their
possession regarding: t T nmm—ttne
Developor's name(s)
1206% AArh Avnnun Nn r r Ntp le My q q A t
Developer's address
Upon presentation of this authorization or an exact copy thereof,
you are directed to permit the personal review, copying, or
photostating of such records, information, and evidence and provide
same to the Monticello Economic Development Authority.
1, the undersigned, acknowledge the said above information may
becomo public.
This authorization shall be valid
the entire term of the loan.
Dated: le- 078— 2'3
Ono copy for each principal of a
partnership or corporation as
well as the entity itself.
�f
uthoC z n uro
Z50 East Broadway
P.O. Box 1147 AUTHORIZATION RELEASING INFORMATION
Monticello, MN
55362.9245
Phone: (612) 295-2711
Metro: (612) 333.5739
Fax: 7(012) 295.4404 Norwest Bank Minnesota, (David Norris, Asst Vicc Pres.)
Name of Financial Institution
4141 L-vndale Avenue North
Street
Minneapolis, MN 55479-2065
City state Zip
I hereby authorize any person to furnish to the Monticello Economic
' Development Authority, 250 East Broadway, PO Box 1147, Monticello,
Minnesota 55362, any and all financial records, reports,
statements, or other documentation or information in their
possession regarding: Standard Iron
Doveloper's name(a)
4990 No, Hwv 169, Mnls„ MN 554:8
Developer's address
Upon presentation of this authorization or an exact copy thereof,
you are directed to permit the
personal review, copying, or
photostating of such records, information, and evidenco and provide
same to the Monticello Economic Development Authority.
I, the undersigned, acknowledge
the said above information may
become public.
This authorization shall be valid
the entire form of the loan.
Dated: F7
(,Abthorizbd-Blgnature
GTANDARO IRON A VAng WORitB, DIQ
Ono copy for each principal of a
LT.OEYEULES pRMDEW
partnership or corporation as
4MN081NN10NWAY189
wail as the entity itself,
CMN SUM -4m
GMEF FORMAL APPLICATION
MONTICELLO EDA CHECKLIST FOR LAWRENCE T. DEMEDLES DBA STANDARD IRON
viper
Preliminary GMEF Loan Application.
u
Formal GMEF Loan
Application -- Business Information:
V
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.
V
Business financial statements current within 60 days --
operating statement and balance sheet.
✓
Aging of existing accounts receivable and paynbles.
V
Schedule of existing debt.
✓
Operating projections for two years.
Project Information:
Purchase Agreement.
✓
Cost estimates with supporting documentation.
Project Appraisal.
✓
Collateral Listings.
I/
Business benefit analysis -- jab creation/efficiency.
etc.
Lender commitment letters or commitment agreement between
lending institution and the RDA.
Prior to Loan
Closing:
Certificate of Good Standing (verifies existence).
Y
Corporation Resolution (who is authorized to borrow).
✓
Articles of Incorporation/By Laws (listing of do's and don't).
Ficitious Name Statement.
Equity doposti verification. �}y
Applicable permits and/or licenses.
Lease Agreements
Monticello EDA Checklist for LAWRENCE T. DEMEULES DBA STANDARD IRON
Page 2
Z
UCC I Filings: State (M&E) Date of Filings continuations
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)
L111 Authorization Releasing Information.
Loan Agreement.
Subordination Agreement.
The EDA reserves the right to request additional information if so
determined.
C
I
OPTIONAL REQUIREMENTS
Business Information:
Business and marketing plan.
Franchise Agreement.
Financial Information:
L/ Month -by -month cash flow.
L/f~ Source of equity capital.
Personal/business federal and state tax returns.
t-"' Proforma balance sheet.
Project information:
City, state. feaeal review by
t/ Plans and specifications -- city site plan review.
i
i
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.�- ,
I L 1.4 {�!1�R.�M«P-
ryws! �411J'AVI —
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LOT i3 OUNDAis ROAD LV �}
fQ,QCE a ! 404+
EDA AGENDA
NOVEMBER 9, 1993
R111
Consideration to anorove or disanorove GMEF Loan No. 007 for
Lawrence T. Demeules dba Standard iron and Wire Works. Inc.
Reference and liackoround:
Following discussion of the preliminary and formal GMEF
application for Lawrence T. Demeules dba Standard Iron and
Wire Works, Inc.; the EGA is asked to consider approval or
disapproval of the recommended $75,000 GMEF Loan. The
applicant requested terms of 6% interest rate amortized over
ten years.
First, the EDA needs to determine if the GMEF loan application
from Mr. Demeules will encourage economic development, and
that the proposed Standard iron 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 EDA must
determine the amounts of the loan, interest rate and terms,
service and legal fees, and required equity. Additionally,
the EDA must determine necessary collateral or any other
conditions.
A. Alternative Actions:
1. A motion to approve GMEF Loan No. 007 for Lawrence T.
Demeules dba Standard Iron and Wire Works, Inc. loan
amount and terms as recommended: $75,000 far equipment
at 5.0% interest rate amortized over seven years.
2. A motion to al,rove GMEF loan No. 007 for Lawrence T.
Demeules bia Standard Iron and Wire works, Inc. Loan
amount and terms as determined by the EDA.
9. A motion to disapprove C14PP Loan No. 007 for Lawrence T.
Demuules. dba Standard Iron and Wire Works, Inc.
C. Staff Fer_ommendation:
Assuming the EDA determines that the proposed project complies
with the GMEF public purpose criteria and policies, staff'
supports Alternative No. 1. Additionally, the EDA must
determine service/legal fees and equity/col lateral
requirements. and any other conditions, and direct the City
Attorney to prepare necessary closing documents. Motion
should be subject to final equipment funding approval,
`N
EDA AGENDA
NOVEMBER 9, 1993
1
Suauortinq Data:
Copy of the GMEF Approval Form.
CPape 2
APPROVAL OF
~ GREATER MONTICELLO ENTERPRISE FUNDS
BY
ECONOMIC DEVELPMENT AUTHORITY
IN AND FOR THE CITY OF MONTICELLO, MINNESOTA
Preliminary Loan Application Approval. YES
Loan terms negotiated and agreed Ylpon
betweeen the developer, the lending
institution, and the EDA Executive Director. BANK CLOSING - SEPTEMBER 28, 1993
Formal Loan Application and Financial
Statements analyzed by the lending
Institution, BOS, Inc. or city staff. YES
Building and Site Plan Preliminary and/or SITE FINAL
Final Review. AS OF 11-4-93 BUILDING PRELIMINARY
Building Permit approval or construction FOOTINGS, FOUNDATION, EXTERIOR WALLS.
commitment. AS OF 11-4-93 ROOF, AND FLOOR PERMIT.
Loan documents reviewed and/or prepared
by the City Attorney,
ECONOMIC DEVELOPMENT AUTHORITY APPROVAL OR DISAPPROVAL:
LOAN NUMBER CHEF LOAN N0, 007 LOAN APPROVED
BORROWER LAWRntvLt. j. UCMtULtb UBS STANDARD IRON AND WIRE wuxxb, INC:.
ADDRESS 4yyu NUMui "ILnwAY iby, MINNEAPO[. N DISAPPROVED
LOAN AMOUNT $0.000 egUIPMLN'IMN 55428-4083
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
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:
C
EDA AGENDA
NOVEMBER 9, 1993
Consideration to endorse or not endorse the financial proposal
for Advanced Food Sciences, Inc.
Reference and Background:
On November 2, the Industrial Prospect Team and City Staff met
with Jim DeVine, Project Consultant, Advanced Food Sciences,
Inc. and Peter Lytle, General Manager, Land O'Lakes, Inc.
They were accompanied by Debra Palmquist, NSP Economic
Development Consultant, from where the prospect lead
originated.
Enclosed you will find a copy of the company's criteria, OHMIC
Processing, City response to additional questions, and the
November 2 agenda.
Upon BDS, Inc. receiving a copy of their preliminary Phase I
equipment list and building plan, Lenny Kirecht will prepare
a financial proposal from the City of Monticello, of which,
the EDA is being asked to review for endorsement. Thereafter,
would the proposal be submitted to Advanced Food Sciences,
Inc. The proposal would be based on the receipt of corporate
guarantees.
The Phase I includes a $15,000,000 capital investment,
$3,000,000 real estate and $12,000,000 equipment. Phase I
Includes an approximate _2.1,000 sq ft building and 10 acres,
between 55-65 jobs at an average wage of $18.00 per hour (with
benefits). The company is looking for community "gap"
financing and a building lease back agreement. Completion of
Phase II and III could see an approximate total 80,000 eq ft
building and the creation of 250-300 jobs.
Because the OHMIC Processing is now and would be the first of
its type in the US, the technology is very expensive. Food
particulates arrive via trucks to the selected sits. The
vertical heat penetration process (food charged equally),
which sterilizes the food, allows for a shelf life of up to
three years. When the foods ars prepared by the consumer,
they maintain a crisp uniformity throughout.
On the firet-tier round, eleven communities are being visited:
Decker, Foribault, Monticello, and four metro -communities are
some known. In addition to Land O'Lakes, Hormal and Cargill
are part of some 50 food companies endorsing the now food
processing technology:
t
EDA AGENDA
NOVEMBER 9, 1993
Again, the EDA is being asked to review the financial proposal
as prepared by BDS, Inc. for endorsement. Plans are to submit
the endorsed proposal the next day.
Financial proposal will be distributed at the EDA meeting.
CPago 2