EDA Minutes 06-26-1991
.
.
.
MINUTES
MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
Wednesday, June 26, 1991 - 7:00 PM
City Hall
MEMBERS PRESENT:
Chairperson Ron Hoglund, Barb Schwientek, Brad
Fyle, Clint Herbst, Harvey Kendall, and Al
Larson.
MEMBERS ABSENT:
Bob Mosford.
STAFF PRESENT:
Ollie Koropchak.
GUEST PRESENT:
Jerry and Mary Schoen, Arop1ax corporation.
Deb Gustafson, BDS, Inc.
1. CALL TO ORDER.
Chairperson Hoglund called the special EDA meeting to order at
7:00 PM.
2. CONSIDERATION TO REVIEW GMEF LOAN NO. 003 FORMAL APPLICATION
FOR AROPLAX CORPORATION.
a)
Project Plans - Mr. Jerry Schoen told of the company's
plans to construct a 23,000 sq ft manufacturing/office
facility in the Oakwood Industrial Park. At this point,
Norwest Camden Bank indicates a positive position for
bank commitment, however, no commitment has been made.
Mr. Schoen hopes to occupy the facility by the end of
October. He expects the majority of his employees to
transfer as they live in the northwest metro suburbs and
additionally he has advertised in the Monticello Times
for a couple positions. Total emploYment of 20-25 jobs.
The company currently owns a 40,000 sq ft facility on
Chestnut Avenue of which they utilize 17,000 sq ft and
lease the remaining portion to two other companies. It is
their plan to lease the vacated space to the current
tenants. Aroplax needs to relocate from the old Burma
Shave building because the ceiling height is 10 feet and
is a wood structure. The manufacturing ceiling height in
the new concrete facility will be 24 feet which will
allow increased utilization and efficiency of their
machinery and increase production capabilities. Mr.
Schoen responded to the EDA that a general contractor
hasn't been selected, however, they have four bids which
do not include the electrical. Appraisal of the building
is approximately $24.00 per square foot.
.
EDA MINUTES
6/26/91
b)
.
c)
.
GMEF Guidelines and terms/conditions - Koropchak reviewed
with the EDA members the Axoplax Corporation formal loan
application and how it compares with the GMEF public
purposes and policies as provided with the agenda
supplement. Recommending to the EDA that the loan
request meets the GMEF public purposes and policies. In
addition to the information the EDA members received,
Koropchak has on file the history and description of the
business; sources and uses of funds; balance sheets and
income/operating statements for fiscal years ending
September 30, 1990, 1989, and 1988; balance sheet and
income/operating statement for the period ended March 31,
1991; proforma balance sheet and two years' earnings
forecast; resumes of Jerry, Paul, and Steve Schoen;
personal financial statement of Jerald and Mary Schoen,
majority owners of Aroplax Corporation; Articles of
Incorporation; and purchase agreement for the 5.2 acre
parcel to be acquired and a map showing the location in
the Oakwood Industrial park. Additional information is
available to the EDA if so requested as each principal of
the corporation has signed the Authorization Releasing
Information Form.
The loan request is for $30,000 to be used for machinery
and equipment. With the approval of the GMEF, the EDA
needs to determine the loan term/interest rate, loan fee,
and the required collateral.
Attorney's recommendation - Koropchak informed the EDA
that Mr. Paul Weingarden, City Attorney, had received and
reviewed the all the loan application data. He concluded
the overall project was a good project for Monticello.
d)
Financial analysis and total project funding Deb
Gustafson reviewed the total project funding of $925,000
as $462,500, 50% bank; $370,000, 40% SBA; $30,000, 3%
GMEF; $62,500, 7% TIF. She reported the company appears
to be a credit-worthy business, as the debt to net worth
ratio is 2.3 which falls within the industry average of
3.9 to .9. The company's financials of the last 3-1/2
years indicate an increase in sales and profit. The
company appears to be well managed, and last year's cash
flow to total debt service ratio is 1.7:1 and the
projected cash flow to total debt service ratio is 1.8:1
which is considered more than sufficient.
Although the Norwest Bank Camden commitment letter hasn't
been received, she foresees no problem and anticipates
submittal pf the SBA loan to the OMNI Board in early
July, with SBA approval the end of July.
.
.
.
EDA MINUTES
6/26/91
The EDA inquired of why the decrease in profits when
sales increased in years 1989 and 1990. Deb referred to
the attached sheet per the company's accountant stating
the verification of bonuses and profit sharing expenses.
3. CONSIDERATION TO APPROVAL GMEF LOAN NO. 003 FOR THE AROPLAX
PROJECT WITH RECOMMENDATION FOR CITY COUNCIL TO REVIEW ON
JULY 8.
Based upon the information received above the EDA determined
the Aroplax Corporation loan application to be in compliance
with the GMEF public purposes, policies, and guidelines and
EDA viewed this industrial company as the ideal company which
supports the recruitment criteria and efforts of the
Industrial Development Committee.
Barb Schwientek made a motion to approve the $30,000 GMEF Loan
No. 003 request for Axoplax Corporation subject to bank
commi tment and SBA approval. Use of the proceeds for
machinery and equipment, interest rate of 6.5% (two percent
below Minneapolis prime rate on 6-26-91) over seven years,
developer's loan fee at actual costs or not to exceed $450.
Loan documents to be prepared by Attorney Paul Weingarden.
The motion was seconded by Al Larson and without discussion
the motion passed unanimously. Koropchak will submit the
approved loan information to the City council on July 8, 1991
to comply with the 21 days City Council has to reverse the
EDA's decision if determined the loan was issued in violation
of the GMEF Guidelines.
4.
ADJOURNMENT.
The EDA meeting adjourned at 7:45 PM.
~~ ~t1'^'~~
Ollie Koropchak, EDA Executive Director