EDA Agenda 09-05-2006
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AGENDA
MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
Tuesday, September 5, 2006 - 4:00 p.m.
City Hall- Academy Room
Chair Bill Demeules, Vice Chair Barb Schwientek, Assistant Treasurer Ron Hoglund,
Council members Wayne Mayer and Tom Perrault, Damn Lahr, and Susie
Wojchouski.
MEMBERS:
1.
2.
3.
. 4.
5.
6.
7.
.
STAFF:
Treasurer Rick Wolfsteller, Executive Director Ollie Koropchak, Recorder Angela
Schumann.
GUESTS:
Mike Maher and Paul Cserpes, Karlsburger Foods, Inc.
Call to Order.
Roll Call.
Consideration to approve the November 29,2005 and April 25, 2006 EDA minutes.
Bills and Communications.
Executive Director's Report.
Committee Reports.
Unfinished Businesses:
A. Consideration to review the revised EDA Fund Balances.
8. New Business:
A. Consideration to review loan application from Karlsburger Foods, Inc.
B. Consideration to approve or deny approval of GMEF Loan No. 025 for Karlsburger
Foods, Inc. and if applicable, call for a public hearing.
9. Adjournment.
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ANNUAL MEETING MINUTES
MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
Tuesday, April 25, 2006 - 4:00 p.m.
City Hall- Academy Room
MEMBERS:
Chair Bill Demeules, Vice Chair Barb Schwientek, Tom Perrault, and
Susie Wojchouski.
MEMBERS ABSENT:
Ron Hoglund, Wayne Mayer, Darrin Lahr
STAFF:
Treasurer Rick W olfsteller, Executive Director Ollie Koropchak.
Recorder Angela Schumann.
1. Call to Order.
Chairman Demeules called the meeting to order at 4:06 PM.
2. Consideration to approve the November 29. 2005 and December 13. 2005 EDA minutes.
The minutes of November 29th, 2005 are to be provided at an upcoming meeting.
MOTION BY COMMISSIONER SCHWIENTEK TO APPROVE THE MINUTES OF
DECEMBER 13, 2005.
MOTION SECONDED BY COMMISSIONER PERRAULT. MOTION CARRIED, 4-0.
3. Consideration of adding or removing agenda items.
NONE.
4. Consideration to elect 2006 EDA officers.
Koropchak reported that at the last meeting, Perrault had noted that a clarification was needed
for titles and position in order to be consistent with the bylaws. Koropchak reported that she had
checked the bylaws. Currently, Ron Hoglund is listed as Assistant Secretary. The bylaws
require an Assistant Treasurer. The correction has been made and the slate presented is correct.
Tom Perrault asked if because Schumann would be a secretary as she is taking minutes.
Koropchak stated that Schumann is recorder.
MOTION BY COMMISSIONER WOJCHOUSKI TO ELECT THE FOLLOWING AS 2006
EDA OFFICERS.
President, Bill DeMueles
Vice President, Barb Schwientek
Treasurer, Rick W olfsteller
Assistant Treasurer, Ron Hoglund
Secretary, Ollie Koropchak
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EDA Minutes - 04/25/06
MOTION SECONDED BY COMMISSIONER SCHWIENTEK. MOTION CARRIED, 4-0.
5. Consideration to review and accevt the vear-end EDA Financial Statements. Activity Revort. and
proposed 2006 Budget.
Koropchak noted that the EDA does not have a final interest income investment statement at this
time, as the City has not closed out its books. As such, the statement included is a draft, which
illustrates what is on record in loan fee and reimbursements. The EDA Statement of Revenues
and Expenditures year-end fund balance is $1,641,476.74.
Referencing the balance sheet, Koropchak noted that GWC and TJ Martin's balloon payments
come due in 2006. The balance sheet indicates a cash balance of$861,281.
Cash flow projections, as of December 2006, indicate a cash balance of$631,890. Looking at
potential expenditures, Koropchak noted that Karlsburger Foods is looking to apply for a loan for
machinery and equipment loan. There are also some other companies looking at Monticello that
may apply for a loan.
Schwientek asked if the liquor store was paid back, would there be enough funds to consider
other projects. Koropchak indicated that it appeared that there would be, as the EDA had
terminated the DMRF program and the revitalization plan for Block 35. Demeules asked if the
money had to be used to pay down bond debt for the City. W olfsteller clarified that the EDA
wouldn't be paying back anything but the original seed money. Demeules asked if at times when
there is a higher balance, is the EDA able to transfer funding back to reduce debt. Wolfsteller
stated that would be reasonable.
Koropchak clarified within the EDA Guidelines it states that EDA reserve Liquor Funds must be
transferred to the debt service funds of the city to be used solely to reduce tax levies for bonded
indebtedness of the city.
MOTION BY COMMISSIONER SCHWIENTEK TO APPROVE TRANSFERRING
RESERVE LIQUOR FUNDS IN AN AMOUNT OF $80,891 FOR BONDED
INDEBTEDNESS. MOTION SECONDED BY COMMISSIONER PERRAULT. MOTION
CARRIED, 4-0.
Remaining balance of the reserve Liquor Funds is $100,000 after transfer of the $80,891.
WOJCHOUSKI MOTIONED TO ACCEPT THE DRAFT COPY OF THE 2005 YEAR-END
FINANCIAL STATEMENT WITH THE ADJUSTMENT FOR THE LIQUOR FUND
TRANSFER AND ACTIVITY REPORTS FOR SUBMISSION TO THE COUNCIL IN
MAY. MOTION SECONDED BY SCHWIENTEK.
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EDA Minutes - 04/25/06
6.
Consideration to review the summary vear-end balances of the GMEF. MIF. UDAG. and ERG
Funds.
Koropchak stated that all GMEF and MIF State and Federal loan payments are current, referring
the commissioners to the individual loan reports provided with the agenda packet. Additional
funds available for GMEF use are MIF State $27,983 and MIF Federal $331,307.
Perrault referenced the SCERG report, asking how the EDA had paid more interest than they
had on the Aroplax loan. Koropchak stated that she would check with the finance department.
Koropchak stated that no action was required on those reports.
7. Consideration to review for amendment the Business Subsidv Criteria and Bvlaws of the EDA.
Koropchak stated that the Business Subsidy Criteria was included as the EDA must annually
review them for changes. The EDA recently amended the Criteria to include guidelines for use
of federal dollars from the payback of the Twin City Die Cast loan.
The Commissioners did not fmd any items meriting change.
MOTION BY COMMISSIONER SCHWIENTEK TO ACCEPT THE BUSINESS SUBSIDY
CRITERIA AS WRITTEN.
MOTION SECONDED BY COMMISSIONER PERRAULT. MOTION CARRIED, 4-0.
DeMueles stated that the order of business spelled out doesn't necessarily follow the agenda.
Koropchak stated it would be easier to change the agenda, rather than bylaws.
MOTION BY COMMISSIONER WOJCHOUSKI TO ACCEPT BYLAWS AS WRITTEN.
MOTION SECONDED BY COMMISSIONER SCHWIENTEK. MOTION CARRIED, 4-0.
8. Executive Director's Report.
Koropchak reported that Karlsburger Foods was approved by Council for establishment of a TIP
District. They may apply for the machinery and equipment loan. They appear to be set to
commence construction on June 1 ". They have not yet chosen a lender.
Koropchak stated that Precision Teclmologies will be leasing from Brad Barger. They had
inquired if they would be able to get a loan to customize their lease space. The EDA attorney
stated that it is up to the EDA to decide on that item, as well as what type of security would be
given. Demeules asked if it would fit criteria based on employment. Koropchak confirmed.
Koropchak stated that the EDA wouldn't have a mortgage, rather personal and corporate
gnarantees.
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EDA Minutes - 04/25/06
Koropchak also briefly reviewed HRA activities and marketing committees efforts for the
industrial park.
Koropchak stated that the fiber optics task force has hired a consultant to do feasibility study.
Perrault asked what happened to VIPER. Koropchak stated that they were not able to get bank
fmancing, so they were able to fmd a building to lease in Big Lake.
9. Other Business.
NONE.
10. Adjournment.
MOTION BY COMMISSIONER SCHWIENTEK TO ADJOURN, MOTION SECONDED
BY PERRAULT.
MOTION CARRIED, 4-0. MEETING ADJOURNED AT 4:50 P.M.
RECORDERANGELASC~
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EDA Agenda - 09/05/06
5.
Economic Develovment Report:
a. Leads:
_ Karlsburger Foods, Inc. - Closing and conveyance of the land took place on August 14,
2006 and groundbreaking was held on August 23 at the site. Anticipated completion date
February 27,2007. EDA has targeted September 5 to consider machinery & equipment loan.
_ Custom manufacturer of die cut and thermo-formed components looking to expand - Lead
from website. Verified zoning and business use are compatible with Grittman. Move-in 2007,
will call week of August 25 on building size requirement, and I requested to visit existing site in
NE Mpls.
_ Medical Treatment Facility - 160,000 sq ft (2-story) facility. Forwarded from NAHRO via
State.. City responded and forwarded to Chadwick and Pfeffer. Chadwick also responded.
Their criteria could assist in shaping goals to achieve the Monticello Comp Plan Update if
consistent with citizen and council direction.
- Precision Technologies scheduled to move in September 7 and 8.
_ Washburn Computer Group installing new roof on Clow Stamping building. They hope to
confirm architectural plans on August 23 for submission for renovation to the building
department. Goal is to move in late October.
_ Out-state aluminum & glass company - was in Monticello August 23 and called from site
signage. Original lead from County Partnership for glass company, 1-2 Zone. 60,000 sq ft
building, 6-8 acres. 50-80 employees. National company expanding to MN. Verified zoning
with Grittman, mailed application, covenants, and other info. They retumed to CO the same
day. Followed up on August 29, received info. Liked Monticello, furthest site location outside
metro, looking at Maple Grove and Ramsey, like the idea of ownership rather than lease, return
to MN in September requested meeting with them. Steve Sussman, Postively MN, called
August 28, he also had just talked to company. Steve's visiting Monticello site with me on
September 11.
b. BRE:
_ Talking with existing businesses about needs and future plans. Also called Charlie Pfeffer to
talk about plans after interchange opens.
_ Attended Open House by TDS Telecom and 1-94 Interchange/Cty Rd 18 Ribbon cutting.
_ Dahlheimer Tour - Thanks for attending. Photo booklet mailed to Greg along with a note of
thanks.
- Attended John Bondhus funeral on August 25.
c. Marketing: Fliers mailed to about 50 precision manufacturers in metro area plus Graco
Rogers and Minneapolis. Billboard up along 1-94 starting September. Committee requested
$33,000 for budget year 2007, first request since 2001.
_ Requested DEED to complete a Labor Market Profile for City of Monticello, Monticello and
Big Lake Township comparing to Wright County and State.
_ Inquired into cost for pull-out section in Minneapolis/St. Paul Business Journal similar to St.
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EDA Agenda - 09/05/06
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Cloud.
o Been invited to participate in a roundtable discussion on the topic ofNW Corridor from
Rogers, Albertville, and Monticello on industrial, office, and retail development on August 31.
The results will be published in the September 29 Business Journal issue.
_ In collaboration with WSB will market industrial park at Wright Couoty Partnership Golf
outing September 7, Wild Marsh, Buffalo.
d. A VR: The closing on the 53 acres between the city and Chadwick took place on August
23. Council will award the bids for grading the 53 acres on August 28. The Council will also
approve plans and specs and authorize for bids for extension of Dalton A venue, Dalton Court,
and Dalton Way (option) on the 28th. A VR and city have executed the agreement with closing
anticipated for mid October. Infrastructure for access to 14-acre site completed by end of
November. I've requested the covenants be approved and recorded on the 53 acres less
A VR site. Simola is working on lighting along Chelsea West and Dalton Avenue. Forestation
also part of plan.
e. GMEF Loan 014 - T. J.Martin was paid-off in full in May 2006
GMEF Loan 019 - GWJ, LLC. A letter was mailed August 9, 2006 as a reminder of the
balloon payment due September 1, 2006 in the amount of25,121.38.
f. TCDC Federal payback - Total principal repaid $282,918.39 and approximately
$89,000 in interest. Balloon payment due Juoe 1,2007. Original amouot $500,000.
UMC State payback - Total principal repaid $32,458.89 and approximately $21,500 in
interest. Balloon payment due April I, 2008. Original amouot $290,000.
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August 9, 2006
Mr. Patrick R. Jensen
GWl, LLC
1335 Dundas Circle
Monticello, MN 55362
RE: Greater Monticello Enterprise Fund (GMEF) Loan No. 019
Dear Pat:
This is a reminder letter that the balloon payment for GMEF Loan No. 019 between GWl, LLC and
the Monticello Economic Development Authority (EDA) becomes due and payable on September 1,
2006.
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According to the Loan Agreement, principal and interest payments commenced on October 1,2001,
principal and interest payments were amortized over 20 years, and the entire remaining unpaid balance
of principal and interest are due and payable on the first day of the sixtieth month following the initial
payment date.
The remaining balance due and payable on September 1,2006, is $25,121.38 ($25,022.33 principal
and $99.05 interest). Daily interest will accrual for each day after September 1, 2006.
The Monticello Economic Development Authority appreciates the opportunity to have served GWl,
LLC with their financial needs and we would welcome suggestions to improve our program.
Respectfully yours,
MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
D~ \<0\ ~~_:>
Ollie Koropchak
Executive Director
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EDA Agenda - 09/05/06
7.
Unfmished Business:
A. Consideration to review revised EDA Fund Balance.
A. Reference and backl!round.
At the annual meeting of the EDA in April, the EDA Financial Reports presented were a draft
copy as the investment interest income for 2005 was not available. Therefore, the final draft is
presented for the commissioners review. The cash balance was adjusted or reduced by
approximately $180,000.
As you recall, the format for the EDA's Balance Sheet and Statement of Revenues and
Expenditures was developed by a previous EDA commissioner and accountant using an
"appropriation" line item for Liquor and grant funds. After the accountant resigned as a
commissioner and the Liquor and grant funds were recycled GMEF dollars, it was unclear how
to handle the "appropriation". As the EDA Executive Director, it was and is my goal to make
sure the EDA Annual Reports are consistent with the Finance Department reports and the
City's Audit Report.
Requesting the assistance of Paula Mastey, Finance Department, and receiving copies of the
previous years Financial Reports, it became apparent there were inconsistencies. Attached is
the revised 2005 EDA reports with the adjusted cash balance of $679,480.54 and revised
Cash Flow Proj ections. The inconsistencies were due to inaccurate reporting of a couple
appropriations, reporting estimated investment interest income, and inconsistent beginning and
ending year-end balances. This was a combination of finance and EDA inaccuracies.
The important outcome is the all three reports are now consistent.
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MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
GREATER MONTICELLO ENTERPRISE FUND
REVISED STATEMENT
STATEMENT OF REVENUES AND EXPENDITURES
FOR THE YEAR ENDED DECEMBER 31, 2005 - REVISED
REVENUES:
Interest Income - Noles $ 15,504.37
Investmenllnterest Income $ 19,276.19
Loan Fees Revenue $ 200.00
Reimbursable Fees Revenue $ 1,262.50
TOTAL REVENUES: $ 36,243.06
EXPENDITURES:
Legal Fees $ 1,412.00
Professional Fees $
Service Fees $
Misc I Reimbursable Fees Revenue $ 257.77
TOTAL EXPENDITURES: $ 1,669.77
EXCESS OF REVENUES OVER EXPENDITURES: $ 34,573.29
. FUND BALANCE - Beginning of Year: $ 1,425,102.24
FUND BALANCE - End of Year: $ 1,459,675.53
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MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
GREATER MONTICELLO ENTERPRISE FUND
REVISED STATEMENT
BALANCE SHEET
DECEMBER 31, 2005 . REVISED
ASSETS
Cash in Bank
$ 679,480.54
Notes Receivable - T J Martin
Notes Receivable - GWJ, LLC
Notes Receivable - VisiCom
Notes Receivable - UMC
Notes Receivable - Tapper's 3
Notes Receivable - WSI
Notes Receivable - Tapper's 4
$ 2,697.38
$ 25,767.75
$
$ 177,891.20
$ 41,777.22
$ 332,638.03
$ 199,423.41
TOTAL ASSETS:
FUND EQUITY
Fund Balance
Reserved for Economic Development
Participation Loans
$ 1,459,675.53
TOTAL LIABILITIES AND FUND EQUITY:
$ 1,459,675.53
$ 1,459,675.53
MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
GREATER MONTICELLO ENTERPRISE FUND (GMEF)
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REVISED 2006 CASH FLOW PROJECTION
BEGINNING CASH BALANCE, January 2006
RECEIPTS
Appropriations, Expected -
MIF Fed or State
Notes Amortization Payments -
Tapper Inc.
Muller Theater
SMM, Inc.
Aroplax Corp.
Custom Canopy, Inc.
Standard Iron
Vector Tool
Tapper's II
SELUEMED
T.J. Martin ($547.60 Mo.) 6-06
Mainline Distrib.
Aroplax Corp. II
TCDC
IRTI
. EDMA ($193.89 Mo.) 9-06
VisiCom
UMC ( $1 , 084 . 33 Mo.) 3 - 08
Tapper 111($524.76 Mo.} 5-08
WSI ($1,483.49 Mo) 6-09
Tapper Holdings ($1,417 Mo.) 7-10
Interest Income - Investment (est.)
Loan Fees
Loan Fees Other
Miscellaneous
TOTAL RECEIPTS
TOTAL BEGINNING BALANCE AND RECEIPTS
EXPENDITURES
GMEF Loans -
Karlsburger
Other
Re-payment to Liquor Fund 2006
Liquor Fund Balance
Legal Fees
Miscellaneous
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TOTAL EXPENDITURES
EXPECTED CASH BALANCE, December 2006
$ 100,000.00
$ 100,000.00
$ 80,891.00
$ 100,000.00
$ 3,000.00
$ 1.000.00
$ 679,480.54
$ 384.891.00
$ 412,474.82
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EDA Agenda - 09/05/06
8.
New Business:
A. Consideration to review the nreliminarv GMEF Loan annlication from
Karlsburl!:er Foods. Inc.
A. Reference and Backl!:round:
GMEF Loan Application: See Attachment A.
Request is for a machinery & equipment loan.
Project Surnmary:
Karlsburger Foods, Inc. is a Minnesota corporation with Mike Maher as chief executive
officer. SL Real Estate Holdings LLC dba Karlsburger Foods, Inc. began construction of a
20,000 sq ft office and production facility in the Monticello Business Center on August 15,
2006. In addition to the real estate, the company plans to invest in $315,250 of machinery &
equipment. See Attachment B. Karlsburger Foods, Inc. was established in 1965 as a family
business in Dayton, MN.
If the amount of the approved Business Subsidy by a local government entity exceeds
$100,000, a public hearing is necessary and the Loan Agreement Business Subsidy Agreement
is available for review.
The EDA should review the preliminary application for compliance with the EDA-GMEF
Business Subsidy Criteria.
ESTIMATED PROJECT COST:
Uses
Construction
Land
M&E
TOTAL USES
$1,939,510
$ 245,182
$ 315,250
$2,499,942
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EDA Agenda - 09/05/06
Sources
Construction
Lender 1" mortgage
Lender 2nd mortgage
Line-of-credit
Subtotal
Land
Equity
TIF
Subtotal
Machinery & Equipment
Lender (Min 60% $189,150)$ 210,750
GMEF (Max 30%) $ 95,000
Equity (Min 10% EDA) $ 9,500
Subtotal
TOTAL SOURCES
$1,070,000
$ 818,649
$ 100,000
$1,988,649
$ 101,434
$ 143,748
$ 245,182
$ 315,250
$2,549,081
Criteria: 30% ofM&E $95,000. 30% of project costs $750,000
GREATER MONTICELLO ENTERPRISE FUND GUIDELINES
PUBLIC PURPOSE CRITERIA: Must comply with four or more of the criteria listed below,
criteria #1 being mandatory.
1.
Job Goal:
20 full-time jobs to the City of Monticello within two years ofthe
benefit date.
Wage Goal: At least 90% of the new jobs must pay a wage of the higher of$9.00
per hour, or at least 160% of the federal minimum wage, exclusive of
benefits, for individuals over the age of 20 during the term of the
assistance. See Attachment C.
Annual reports are required until termination date. Failure to meet job and wage goals require
partial or full payment of the assistance plus interest.
2. Increases the community tax base: Annual $31,683 Total
Annual $21,232 Local
Annual EMV $1,000,000 at least.
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EDA Agenda - 09/05/06
3.
Factors:
To assist a new industrial business to expand their operation. Other
factors for consideration but not limited to: Nature of business
(office/production), present availability of product or service (none),
potential adverse environmental effect (acceptable food processing),
and compatibility to the comprehensive plan, covenants, and zoning
policy (yes, I-IA and Otter Creek covenants)
4. Used as a secondary source to supplement conventional financing.
The GMEF is a secondary source of financing for machinery & equipment.
5. Used as gap financing:Used to encourage growth and job creation in Monticello.
6. U sed to assist other funds: Primary conventional lender for real estate
development..
Land reduction and trunk fees - TIF
GREATER MONTICELLO ENTERPRISE FUND POLICIES
I.
BUSINESS ELIGIBILITY
Industrial business: Yes.
Located within city limits: Yes, Zoned I-IA
Credit worthy existing business:
Letter of Commitment for construction and permanent
financing, First Federal Savings Bank, Baxter, MN.
$10,000 loan per each job created. $10,000 X 20 = $200,000.
Or $5,000 per every $20,000 increase in property market valuation or increase in personal
property, whichever is higher = $250,000 and $78,812.50, respectively.
II. FINANCING METHOD:
Companion Direct Loan:
All such loans may be subordinated to the primary lender if
requested by the primary lender. The GMEF is leveraged and
the lower interest rate of the GMEF lowers the effective interest
rate on the entire project.
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EDA Agenda - 09/05/06
Criteria: The GMEF takes a second position behind the lender.
III. USES OF PROCEEDS:
Machinery and equipment
IV. TERMS AND CONDITIONS:
Loan Size: Maximum not to exceed 50% of the remaining revolving loan fund balance.
Cash balance as of December 2005 $679,480.54 Criteria: $339,740 w/o
amount earmarked for return of Liquor Funds in 2006.
Leveraging: Minimum 60% private/public non-GMEF
Maximum 30% public (GMEF)
Minimum 10% equity of ED A loan
See Uses and Sources above.
Loan Term: Personal property term not to exceed life of equipment (generally 5-7 years.)
Interest Rate: Fixed rate not less than 2% below Minneapolis prime rate. Prime rate per
National Bank of Minneapolis on date of ED A loan approval. Prime rate
September 5, 2006 r;, .1-~ .
September 5, 2006:
Loan Fee:
Minimum fee of $200 but not to exceed 1.5% of the total loan project. Paid by
applicant to the EDA within five working days after City Council approval of
GMEF loan. Non-refundable. Loan fee may be incorporated into project
costs. EDA retains the right to reduce or waive loan fee or portion of loan fee.
Options:
Minimum fee of $200 or not to exceed 1.5% of GMEF loan, due and
payable not later than September 29, 2006.
Prepayment Policy: No penalty for prepayment.
Deferral of Payments: 1. Approval of the EDA membership by majority vote.
2. Extend the balloon ifunable to refinance, verification letter from two
lending institutions subject to Board approval.
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Late Payment Policy: Failure to pay principal or interest when due may result in the loan being
immediately called.
Interest limitation on guaranteed loan~ot applicable.
Assumability ofloan: None.
Business equity requirements:Subject to type ofloan; Board of Directors will determine case
by case, analysis under normal lending guidelines.
Collateral:
Personal and/or corporate guarantees (requires unlimited personal guarantees)
as per the GMEF attorney. Machinery & equipment liens (except equipment
exempt from bankruptcy.)
Non-performance:
An approved GMEF loan shall be null and void if funds are not drawn
upon or disbursed within 180 days from date of ED A approval.
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September 5, 2006 EDA approval-loan becomes null and void March 5, 2007.
Non-performance extension: Not applicable.
Legal Fees: Responsibility of the GMEF applicant.
B. Recommendation:
Recommendation is to review this information prior to the EDA meeting for discussion and
potential questions. Mike Maher and Paul Cserpes will be at the EDA meeting. Consideration
to approve or deny GMEF Loan No. 025 and/or call for a public hearing date is the next
agenda item.
C. SUDDortinl! Data:
Preliminary GMEF application, job and wage-level goals, list of machinery & Equipment and
Articles of Incorporation.
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DEVELOPMENT SERVICES
Economic Development Director
Phone:
Fax:
Email:
(763) 271-3208
(763) 295-4404
ollie. koroochak@ci.montieello.nm.lis
MONTICELLO
ECONOMIC DEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF MONTICELLO, MINNESOTA
GREATER MONTICELLO ENTERPRISE FUND - PRELIMINARY APPLICATION FOR!\1
APPLICANT:
KARLSBURGER FOODS, INC.
1'41;0 Fembrook lane
Dayton, MN 55327
Sl ~\ bh\..-k [-kId.,;."
I
FIRM OR TRADE NAME:
BUSINESS ADDRESS:
CITY/STATE:
ZIP CODE:
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TELEPHONE:(BUS) '7 (,,"3 4 L I
DATE ESTABLISHED: 19(.,$"
S-'i"il
(HOME) 7b 3 '177 79''1)
SOLE PROPRIETOR
1z./30l".;- EMPLOYERlD# Lj 1- 010 - /1'11?
-X- CORPORATION PARTNERSHIP
LLC
MANAGEMENT
NAME
D~tJ'''f I (YlAHe)\
A"L C.., t' R-Pi 5
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TITLE
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Ui,nW, oPfA~-hdvl-;
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OWNERSHIP %
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PROJECT LOCATION:
'fJ NEW LOCATION
TOTAL PROJECT COST ESTIMATE: $ 2 FICJ OOC)
I /
EXISTING BUSINESS
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Monticello City Hall, 505 Walnut Street, Suite 1, Monticello, MN 55362-883 J . (763) 295-2711 . Fax (763) 295-4404
Office of Public Works, 909 Golf Course Rd.. ~Ionticello, MN 55362 . (763) 295-3170 . Fax (763) 271-3272
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GMEF Preliminary Application Form
Page 2
PROPOSED USES:
REOUESTED:
LAND
EXISTING BUILDING
CONSTRUCTION
MACHINERY CAPITAL
WORKING CAPITAL
OTHER
TOTAL USES:
$ X.
AMOUNT OF LOAN $
MATURITY & TERMS
REQUESTED
APPLICANT'S EQUITY
LOAN PURPOSE fiJl\rJ..,.d<1
x
$
PROPOSED BEGINNING DATE:
<g-llrOc,
ESTIMATED COMPLETION DATE:
2.-27-07
TITLE TO
PROJECT ASSETS TO BE HELD BY: ~ OPERATING ENTITY
ALTER EGO
PARTICIPATING LENDER:
(Name)
(Address)
L->
(Telephone #)
(Contact Person)
PRESENT # OF FT EMPLOYEES 15 (See Attached)
PROJECTED # OF FT EMPLOYEES (within 2 years) Z 1..
PROJECTED A VERAGE WAGE PER HOUR: I 7, .5 {) 1="" r 7 A./!W ~JfI1f'/P,/E6 5
ADDITIONAL PROJECT INFORMATION:
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APPLICANT SIGNATURE:
M:-J.J 4llilL ^
I
DATE SIGNED:
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GMEFPreliminaryappl.form
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12450 Fernbrook Lane
Dayton, MN 55327
DEVELOPMENT SERVICES
Phone: (763) 271*320&
Fax: (763) 195-4404
Ema i 1- ollie. koroochakrQ")ci. moo ticetlo. mn. us
Economic Development Director
MONTICELLO
CITY OF MONTICELLO, MINNESOTA
II
JOB AND WAGE LEVEL - EXISTING JOBS
II
Please indicate number of current permanent employees at each level and indicate the corresponding benefit level.
Number of.lob5
Hourlv Wage
Level
Hourlv Value
of Vol un tar v
Benefits (S)
Full-time
Part-time
(Excl. benelits)
.--
Less than $7.00
$7.00 to $7.99
$8.00 to $9.99
$10.00 to $] 1.99
$12.00 to $13.99
$14.00 to $ I 5.99
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$16.00to$17.99
$18.00to$19.99
.3
520.00 to $21.99
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$22.00 and higher
JOBS \VACEFX fS-rINGFORNl
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~tonticello City Ha!l, 50j \\'alnu[ Street, Sui[e l. Monticello, MN 55361-8831. (763) 295-2711. Fax: (763) 295-4404
Office of Public Works, 909 Golf Course Rd., Monticello, MN 55362 . (763) 295-3170 . Fax: (763) 271-3272
KARLSBURGER FOODS, INC.
12450 Fernbrook Lane
Dayton, MN 55327
DEVELOPMENT SERVICES
f)hone: (763) 271-3208
Fax (763) 295-44U4
Emat I 011 ie. kOfODchakr'mci, roo nticc 110 .mn. us
Economic De\elopment Director
MONTICELLO
CITY OF MONTICELLO, MINNESOTA
II
JOB AND \VAGE LEVEL GOALS - NEW JOBS
II
Please indicate number of additional employees at each level and indicate the corresponding benefit level. Number of
new permanent jobs anticipated to be created over the first two years of relocation or expansion.
.I ob Creation
Hourlv Wage
Level
Hourlv Value
of Vol un tar v
Benefits (S\
Full-time
Par1-time
((::xcl. benefits)
.----
Less than $7.00
$7.00 to $7.99
$8.00 to $9.99
$]0.00 to $11.99
$12.00 to $13.99
:2.
$14.00toSI5.99
lad. '-\00
$16.00to$17.99
$18.00 to $19.99
;;z.
$20.00 to $2] .99
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~
$22.00 and higher
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eB\VAGESNE\V FOR.V!
Monticello City Hall, 505 Walnut Street, Suite!, Monticello, MN 55362-8831 . (763) 295-2711 . Fax: (763) 295A404
Office of Public Works, 909 Golf Course Rd., Monticello, ~'{N 55362 . 063.1 295~3170. Fax: (763) 271-3272
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arn All in Bhnm ilrhrse 'resents Shall QLnme, l1)tttting:
Bhtrtas, Articles of Incorporation, duly signed and acknowledged under oath,
have been filed for record in the office of the Secretary of State, on the -30th--
day of Decemhsl" , A. D. 19~ for the incorporation of
Karlsburger Foods, Inc.
under and in accordance with the provisions of the Minnesota Business Corporation
Act, Minnesota Statutes, Chapter 301 i
N 11ID, mhertfnrt, I, Joseph L. DonoY/In,Secretary of State of the State of Minnesota,
by virtue of the powers and duties vested in me by law, do hereby certify that the said
Karlsburger Foods, Inc.
is a legally organized Corporation under the laws of this State.
Witness my official signature hereunto sub-
scribed and the Great Seal of the State of Minnesota
hereunto affixed this -.tbirtleth--
day of
December
in the year of our Lord
sixty-five.
08/30/2006
10:55
HENNINGSoN & SNoXELL, LTD. 7 92954404
NO. 626 Q002
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AMENDMENT Of ARTICLES Of INCORPORA nON
'J
OF
KARLSBURGER FOODS, INC
The following Amendment of the Articles oflncorporation being a full and complete restatement of
the Articles ofrncorporation of Karlsburger Foods, Inc., were adopted:
ARTICLES OF INCORPORATION
OF
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KARLSBURGERFOODS,INC
The undersigned, of full age, for the purpose of forming a Corporation under and pursuant
to the provisions of Chapter 302A, Minnesota Statutes, and laws amendatory thereof and
supplementary thereto, hereby creates a body corporate and adopts the following Articles of
Incorporation:
.
-,
J
ARTICLE 1
NAME
The name ofthe Corporation is: KARLSBURGER fOODS, INC.
ARTICLE 2
REGISTERED OFFICE
The address of the registered office of the Corporation is: 12131 North Fernbrook Lane,
Dayton, Minnesota 55327.
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..ARTICLE 3
PURPOSES AND TERM
The Corporation shall have general business purposes, and shall have perpetual existence.
ARTI.CLE 4
SHARES
The shares of capital stock of the Corporation shall be subject to the following:
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The Corporation is authorized to issue one million (1,000,000) shares
of no par value capital stock, to be held, sold, and paid for at such
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138/3<1/28136
10:55
HENNINGSON & SNOXELL, LTD. ~ 929544134
NO. 626 Gl13133
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times and in such manner as the Board of Directors may from time to
time determine. in accordance with the laws ofthe State ofMinnesota.
Unless othelWise established by the Board of Directors, all shares of
the corporation are common shares entitled to vote and shall be of one
class and one series having equal rights and preferences in all matters.
Unless otherwise provided in these Articles, or Bylaws of the
Corporation, or in the terms of the shares, a common shareholder has
one (1) vote for each share hel d,
The Board of Directors shall have the power to establish more than
one class or series of shares and to fix the relative rights and
preferences of any such different classes or series.
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The shareholders of the Corporation shall not have preemptive rights,
unless with respect to some or all of the authorized and unissued
shares, the Board of Directors grants preemptive rights.
Cumulative voting for directors is permitted.
.
o
Notwithstanding the powers granted to the Board of Directors
expressed above or otherwise provided by law, at anytime following
tbe filing of an election to be treated as an S corporation under the
Internal Revenue Code, as amended from time to time, and prior to
the revocation or temlination of S corporation status, in order to
preserve said election, the Board of Directors are not authorized to
issue shares to any person or take any other action that would result
in the termination of the S election without the prior express written
consent of the holders of a majority of the voting power of the shares
entitled to vote. Any such action taken without such consent shall be
null and void and shall not affect the beneficial ownership of the
shares.
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ARTICLES
INCORPORATOR
The name and address of the person acting as incorporator of this Corporation is as follows:
Frank R. Cserpes
1213\ North Fembrook Lane
Dayton, MN 55327
t
MffiNDMENT TO ARTICLES OF INCORPORATION
Page 2
08/30/2006
10:55
HENNINGSON & SNOXELL, LTD. 7 92954404
NO.626 Gl004
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ARTICLE 6
DIRECTORS' ACTION
Any action, other than an action requiring shareholder approval, may be taken by written
action signed by the number of directors that would be required to take the action at a meeting at
which all directors were present.
ARTICLE 7
DIRECTORS' LIABILITY
A director of the Corporation shall not be personally liable to the Corporation or its
shareholders for monetary damages for breach offiduciary duty as a director; provided, however, that
this Article 7 shall not eliminate or limit the liability of a director to the extent provided by applicable
""""'o'h /;,,,;e',:;)eW:'.{i),.{Q.IHIRj' .breach.ofthe .director's duty of loyalty to the Corporati~~it""shal'eh(}/der-s;{4f<ijt~,.::.:.~.k.,..."".".:-:.
acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of
law, (iii) under Sections 302A.559 or 80A.23 of the Minnesota Statutes, (iv) for any transaction from
which the director derived an improper personal benefit, or (v) liability for any act or omission
occurring prior to the effective date of this Article 7. If Minnesota Statutes Chapter 302A is hereafter
amended to authorize the further elimination or limitation ofthe liability of directors, then the liability
of a director ofthe Corporation in addition to the limitation on personal liability provided herein, shall
be limited to the fullest extent permitted by the amended Minnesota Statutes Chapter 302A. Any
repeal or modification of this Article 7 by the shareholders of the Corporation shall be prospective
only and shall not adversely affect any limitation on the personal liability of the Corporation eJcisting
at the time of such repeal or modification.
.
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ARTICLE 8
AMENDMENT OF ARTICLES
The shareholder vote required for adoption of an amendment to these Articles of
Incorporation shall be the affinnative vote orthe holders ora majority ofthe voting power of the
shares present and entitled to vote at a shareholder's meeting.
," .~,' , - -'--~"-',-,." .,., - '- -'-.
'ARTlCLE 9
FUNDAMENTAL CHANGES
In any of the following types of actions or transactions with respect to which the law requires
a vote of the outstanding shares of the corporation, the affinnative vote of a majority of the shares
entitled to vote shall be sufficient to authorize the action or transaction:
(I) A merger with any other corporation or corporations;
(2) An exchange of one or more classes or series of the shares of the Corporation
for the shares of one or more classes or series of one or more other Corporations;
AMENDMENT TO ARTICLES OF INCORPORATION Page:3
08/30/2006
10:55
HENNINGSoN & SNoXELL, LTD. ~ 92954404
NO. 626 Gl005
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(3) The sale, lease, transfer, or other disposition of all, or substantially all, of the
Corporation's property and assets, including its goodwill, not in the usual and regular
course of business;
(4) The voluntary dissolution of the Corporation,
IN WITNESS WHEREOF, 1 have subscribed my name this
tY)A If ,195L.
13 day of
This amendment has been approved pursuant to Minnesota Statutes Chapter 302A or 317 A
I certify that I am authorized to execute this amendment and I further certify that I understand that
by signing this amendment, I am subject to the penalties of perjury as set forth in section 609.48 as
if! had signed this amendment under oath.
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Michael H. Maher, Chief Executive Officer
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5lS\4\CORr\KARIA04;\40450J,\MOI
STATE Of MINNESOTA
DEPARTMENT Of , STATE
FILED \...
JUN 2 4 19~
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Seaelary of Stale
AMENDMENT TO ARTICLES OF INCORPORATION
Pilge4
.
.
.
EDA Agenda - 09/05/06
8.
New Business:
B. Consideration to approve or denv GMEF No. 025 (determine business subsidv
amount) for Karlsburl!.er Foods. Inc. and if applicable. call for a public hearinl!..
A. Reference and Backl!.round:
The EDA is asked to consider approval or denial a request for GMEF machinery and
equipment loan. Should the loan amount exceed $100,000, the EDA must call for a public
hearing date of Tuesday, September 19, 2006.
SL Real Estate Holdings LLC has a line-of credit of$100,000 from First Federal Savings
Bank, Baxter, MN and a line-of-credit of $200,000 through Wells Fargo. I've requested a
letter of creditworthiness from both lenders as to cover the gap between the EDA approval
loan amount and the estimated cost of the M&E.
First, the EDA needs to determine if this GMEF loan application from Karlsburger Foods, Inc.
will encourage economic development. Secondly, the EDA must determine if the preliminary
M&E loan application complies with the EDA Business Subsidy Criteria - GMEF Guidelines.
Lastly, the EDA must determine the amount, terms, and fee ofthe loan for approval.
The City Council will consider ratification of the EDNs action for compliance ofthe EDA-
GMEF Business Subsidy Criteria on September 25, 2006, following the EDA public hearing of
September 19, 2006. If approved, the GMEF will be disbursed at a date yet to be
determined.
B. Alternative Action:
I. A. A motion to approve GMEF Loan No. 025 for Karlsburger Foods, Inc. in the
amount of $ with term and conditions as recommended at the
meeting. Collateral, guarantees, and other condition requirements to be determined and
prepared by the GMEF attorney. The GMEF loan approval subject to Public Hearing
on Business Subsidy, lender commitment, credit worthiness letter and Council
ratification of EDA action.
B. Should the amount of GMEF No. 025 exceed $100,000, the EDA hereby calls for
a public hearing on September 19, 2006, 4:00 p.m., City Hall for the proposed
business subsidy to Karlsburger Foods, Inc..
2. A motion to deny GMEF Loan No. 025 for Karlsburger Foods, Inc.
I
.
EDA Agenda - 09/05/06
3.
A motion to table any action.
c.
Recommendation:
Recommendation is for Alternative No. IA. The amount of the loan and terms to be
determined by the EDA in compliance with the Guidelines. The amount of the loan can be
determined by number of jobs, total project or just M&E costs, or fund balance. It is
suggested the EDA consider between $95,000 (M&E) and $200,000 Gobs). Should the
amount be $100,000 or exceed $100,000, please call for the public hearing Alternative No.
lB.
D. Suoportinl!: Data:
Lender documentation if available.
.
.
2