EDA Agenda 08-09-2005
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AGENDA
MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
Tuesday, August 9, 2005 - 4:00 p.m.
City Hall - Academy Room
MEMBERS:
Chair Bill Demeulcs, Vice Chair Barb Schwientek, Coumcilmcmbers Wayne Maycr and
Tom Perrault, Ron Hoglund, Darrin Lahr, and Susie Wojchouski.
STAI;F:
Treasurer Rick Wolfsteller, Executivc Director Ollie Koropchak, Recorder Angcla
Sch ull1ann.
I. Call to Order.
2. Considcration to approve the ^pril 26, 2005 ED^ minutes.
3. Considcration of adding or removing agenda itcms.
4. Considcration to approve extending thc non-performance datc and to amend the loan position for
approved GMEF Loan No. 024. Applicant: Tapper's Ilolding, Inc.
5. Consideration to discuss the late paymcnt policy and continucd dclinquent payment on GMEF
Supplcment Loan No. 014. (Carl Bondhus, Eric Bondhus, and Dcnnis Bondhus).
6.
Executive Director's Rcport.
7. Othcr Business.
8. ^djourtlmcnt.
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MINUTES
MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
Thursday, April 26t\ 2005 - 4:00 p.m.
City Hall - Academy Room
MEMBERS: Chair Bill Demeules, Barb Schwientek, Tom Perrault, Wayne Meyer, Susie
Wojchouski, Darrin Lahr, Ron Hoglund
ABSENT:
None
STAFF:
Executive Director Ollie Koropchak, Recorder Angela Schumann, Rick
Wolfsteller
I. Call to Order.
Chair Demeules called the meeting to order at 4:00 PM, declaring a quorum.
2. Consideration to approve the February 10th, 2005 and October 26th, 2004 EDA minutes.
MOTION BY COMMISSIONER SCI-IWIENTEK TO APPROVE THE MINUTES OF
OCTOBER 26th, 2004.
MOTION SECONDED BY COMMISSIONER LAHR. MOTION CARRIED.
Prior to a motion on the February minutes, Koropchak noted corrections, including a
notation that the loan rate would be 2% below primc, with a minimum fee of $200 and
maximum fee not to exceed 1.5% of the EDA loan.
MOTION BY COMMISSIONER PERRAULT TO APPROVE THE MINUTES OF
FEBRUARY 10th, 2005.
MOTION SECONDED BY COMMISSIONER LAI-JR. MOTION CARRIED.
3. Considcration of adding or removing aJ!:enda items.
NONE.
4. Public Hearing - Consideration to elect 2005 EDA oHicers.
Commissioner Pcrrault noted an inconsistency between thc bylaws and slatc of officers.
Koropehak clarified that the correct position title should be assistant secretary rather than
treasurer.
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EllA Minutes - 04/26/05
McrrION BY COMMISSIONER LAHR TO APPROVE THE SLATE OF
CANDIDA TES WITH THE CORRECTION AS NOTED.
MOTION SECONDED BY COMMISSIONER SCHWIENTEK. M(YfION CARRIED.
5. Consideration to review and accept the year-end EDA Financial Statements, Activity
Report, and proposed 2005 Budget.
In reviewing the budget, Koropehak stated that for 2004, there were only two
appropriations, as in many cases recycled funds has bcen used. For WSI, the Small Cities
Economic Recovcry Fund and Minncsota Investment Fund, both using recycled dollars,
had been used. Koropchak commented on the loan and investment interest, as well as the
collection of legal fees, which rcsulted in revenucs of over $83,000. She noted that somc
expenses, including legal, planning, and cngineering costs, have not yet shown up on the
records. Koropchak stated that shc expects approximately $ I ,848 in total expenses in
those areas. For the end of 2004, the report shows $ I ,625,000 balance.
Koropchak reported on accounts receivable. Wojchouski inquired who the TJ Martin
loan was fen. Koropchak indicated that the party was Lake '1'001. Koropchak cXplained
that most loans had been paid off She reported on remaining principal balances and cash
in the bank.
Koropchak estimated cash now projections for 2005, noting that thc first payment on the
Tappcr loan was due in July. Koropchak statcd that the total rcceipts fix 2005 arc
cstimated at $1,072,941. Koropchak statcd that the EDA has made payments back to the
liquor store in the past, usually waiting until later in the year to make those paymcnts.
Koropchak reported that the expected cash balancc without repayment is $627,850.72.
Shc notcd that the recycling funds will change the total funds available amount.
Perrault askcd about the parking lot project on Block 35 and whethcr the funds for that
projcct could come from recycled funds. Koropchak noted the original funding had been
intended for fal(ade improvements. I Ioglund noted that the $200,000 originally allotted
by the EDA would have becn matching funds.
Koropchak noted that the reports presentcd would be going on to the Council for revicw
and approval as required by the by-laws.
Koropchak noted that the summary included details the EDA's activity throughout the
ycar.
Koropchak stated that funding for the Bloek 35 project would have come from the
Downtown Monticello Revitalization Fund. Lahr stated it was a f~u;ade improvement
program and was geared toward improving the back of the Bloek 35 buildings. The loan
would have essentially matched $195,000 for $25,000 worth of improvements by the
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EDA Minutes - 04/26/05
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property owners. Mayer asked why the project fell apart. Schwientek explained that
there were issues regarding parking concerns. [t was also noted that not all property
owners wanted to participate in the project.
Koropchak explained that when using EDA or HRA funds, a public purpose must be
established.
Koropchak continued with the 2004 report, noting that the EDA was created in 1989.
The report shows approved loans through 2004, including approved paybacks and loan
disbursements. She commented that since inception, the EDA has only had to forgive
$27,000 in loans.
In explaining the tracking for specific funds and when they get paid back, Koropchak
stated that the UDAG funds have been paid back and that the two of the SMERG have
been paid back in full. The EDA is now into recycled funds for those programs.
Schwientek asked how much the EDA owes to the Liquor Store. Koropchak stated that
amount is $236,000.
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Lahr clarified that original purpose of the liquor store fund was to be start-up funds for
industry. The City set aside funds from the liquor store for start-up enticement.
Additionally, there are federal and state grants that can be received by businesses. The
City has to match certain amount of those grants. Koropchak eXplained that the interest
and principal on the loan is paid back to the City, which can then be used only for
economic development. In terms of the fcdcral funds, the City gets to kcep all the
principal and interest. The caveat is that the funding has to bc accounted for separately.
A rccycled loan has to meet federal guidelines for job income by HUD guidclincs.
Koropchak stated that with state grants, the City keeps the first $100,000 in principal and
interest, with the balance going back to the state. Those do not have to meet HUD
standards. Wolfstcllcr askcd which EDA loan returned principal and interest to the
County. Koropchak responded that it was the loan to Standard Iron and notcd that the
City is only allowed a certain amount of grant funding per year. As Standard Iron paid
their loan back, the funding went back to the County.
Mayer askcd about which fund could be used for Block 35 improvements. Koropchak
answered that the liquor store funding could be spent on anything. However, the EDA
chose to spend it downtown.
Demeules asked if the loan paybacks could be used to pay back the liquor store funds.
Koropchak stated about $106,000 in cash could be paid back to the liquor store, which
would deplete funds for projects downtown. Perrault asked if the funding could be used
f()r the industrial park. Koropehak stated that was originally what it was intended to do.
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EDA Minutes - 04/26/05
MOTION BY COMMISSIONER SCHWIENTEK TO ACCEPT THE 2004 YEAR-END
FINANCIAL STATEMENT AND ACTIVITY REPORT FOR SUBMISSION TO TilE
Crry COUNIL ON MA Y 9th or 23RD, 2005.
MOTION SECONDED BY COMMISSIONER HOGLUND. MOTION CARRIED
UNANIMOUSLY.
MOTION TO BY COMMISSIONER SCHWIENTEK TO TABLE DISCUSSION ON
PA Y BACK 'TO LIQUOR STORE fUNDS TO THE OCTOBER MEETING OF THE
EDA.
MOTION SECONDED RY COMMISSIONER WOJCHOUSKI. MOTION CARRIED
UNANIMOUSL Y.
6. Consideration to review year-end balances of the GMEF, DMRf, UDAG, and LRG
Funds.
Koropchak reviewed the re~payments and disbursements of loan payments. Koropchak
noted that additional funds are available for EDA in the MN Investment Fund. All other
funds have been recycled from SCERG and UDAG funds.
Koropchak reported that the final close-out report for the Twin City Die Cast loan was
submitted to the State. Once confirmed by the State, the EDA can start recycling those
funds. Koropchak stated that the City had to extend timeframe for job creation. The
State advised the City not to use the funds until jobs created.
Koropchak completed a review of the summary of activity and financial reports for the
noted funds, which was included in the EDA Commissioner's packets.
7. Consideration to review for amendment the Business Subsidy Criteria and bylaws of the
EDA.
Koropchak stated that it is required by the hylaws for the EDA to review for amendment
both the Business Subsidy Criteria and bylaws each year.
Koropchak explained that in terms of the Business Subsidy Criteria, she copies pubic
hearing notices on those requests and filcs as documentation and proof of publication.
MOTION BY COMMISSIONER HOGLUND 'l"O ACCEPT THE BUSINESS
SUBSIDY CRITERIA AS WRITTEN.
MOTION SECONDED BY COMMISSIONER SCHWIENTEK. MOTION CARRIED
UNANIMOUSI,Y.
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EDA Minutes - 04/26/05
MOTION BY COMMISSIONER SClIWIENTEK TO ACCEPT THE BY -LA WS OF
THE EDA AS WRITTEN.
Commissioner Perrault asked to staff to contlrm that the by-laws reflect correct officer
appointments as noted earlier. Koropchak indicated that she will verify appointments are
correct as listed.
MOTION SECONDED BY COMMISSIONER WOJCllOUSKl. MOTION CARRIED
lJNANIMOUSL Y.
8. Consideration of an update on the approved GMEF Loan No. 024 between the EDA and
Tapper's Holdings, LLC.
Koropehak stated that no action was required on this item. Koropchak reported that the
attorney did request some minor changes to the loan document. The EDA' s attorney
adyised the EDA to stand firm on the request for promissory note and personal guarantee.
Koropchak noted that the SBA may also contribute financing, which puts the EDA in
third position on the loan. Demeules stated that will not require action as it was not part
of criteria.
9.
Executive Director's Report
Koropchak provided a brief report on tJMC's and WSI'sjob creation. Koropchak stated
that the HRA' s Transformation Home Loan had started to generate leads.
7.
Other Business.
Mayer reported that the Council had authorized research of a fiber-optic backbone for the
City. Mayer stated that a workshop had been set for the 23rt! of May.
8. Adjournment.
MOTION RY COMMISSIONER L,AHRTO ADJOURN.
MOTION SECONDED BY COMMISSIONER SCHWlENTEK. MOTION CARRIED
UNANIMOUSL Y.
Recorder
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EDA Agenda - 08/09/05
4.
Consideration to approve cxtendinl! the non-performance date and to amend the loan
position for approved GMEF Loan No. 024. Applicant: Tapper's Holding, Inc.
A. Reference and backl!round:
As you recall, thc EDA approved GMEF Loan No. 024, a real property rehabilitation loan, to
Tappcr's Holding, Inc. on February 10,2005, for construction of a 25,00 sq. ft. expansion to a
vacant 60,000 sq. ft. building. The $200,000 loan at 3.5 % fixed interest rate amortizcd over
20 years with a balloon payment in 5 years. The proposed tenant, Strategic Equipment and
Supply to commit to job and wage levels. According to the EDA Guidelines, NON-
PERFORMANCE: An approved GMEF loan shall be null and void if funds arc not drawn
upon or disbursed within 180 days (August 10, 2005) from the date of FDA approval
(February 10, 2(05).
The EDA is asked to consider extending thc non-performance datc. According to the
Guidelines, NON-PERfORMANCE EXTENSION: The 180-day non-performance date can
be extended up to an additional 120 days: 1. A writtcn request is received 30 days prior to
expiration of the 180-day non-performance datc. 2. Approval of the EDA membcrship by a
majority. Sce attached request letter from Mr. Tappcr and must be approved by at least four
EDA commissioners.
81. Alternative Action:
I. A motion to extcnd the non-performance date up to an additional 120-days from
August 10, 2005, to Dccembcr 10, 2005 for approvcd GMEF I ,oan No. 024 with the
applicant to pay legal expenses to amend the loan agreemcnt.
2. A motion to deny extend thc non-performance datc for approved GMEF Loan No.
024.
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Secondly, when the EDA approved GMEF Loan No. 024, the EDA was in second position
behind thc lendcr, Stcarns Bank. According to the lendcr and following the EDA approval, a
construction loan was approved hy SBA with thc EDA loan to bc in third position behind the
lender and SBA. However, after commcncement of construction thc SBA Calif(xnia oiliec
rcjected the construction loan. Because thc SBA had egg on its face, they contacted the
Central Minnesota Initiative Foundation (CMIF) for an additional funding source. It now
appears that the SBA approved a land and building loan and the CMIF has approvcd a
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EDA Agenda - 08/09/05
$250,000 loan at a fixed rate of 6.8% and the EDA is asked to share a fourth position with the
eMIF or consider being in fourth or fifth position. Either way, the executed Loan Agreement
will need to be amended according at the expense of Tapper's Ilolding, Inc. See attached
revised uses and sources.
82. Alternative Action:
I. A motion to aecept a shared fourth position with the eMIF and authorize to amend the
Loan Agreement accordingly at the expense of the applicant.
2. A motion to accept that the GMEF Loan No. 024 be in flmrth position and authorize to
amend the Loan Agreement accordingly at the expense of the applicant.
3. A motion to accept that the GMEF Loan No. 024 be in fifth position and authorize to
amend the Loan Agreement accordingly at the expense of the applicant.
4. A motion to not accept the request and the GMEF Loan No. 024 to remain in second
position.
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c.
Recommendation:
The City Administrator and Executive Director recommend the following:
131. - Recommend alternative no. 1 to extend to December 10,2005. Subject to agreement by
the applicant to pay expenses to amend I,oan Agreements.
132. - Recommend alternative no. 2. This is consistent with the recommendation of the lender.
To share a fourth position with the CMIF means a shared Loan Agreement and is more
complicated than necessary. This subject to agreement by the applicant to pay expenses to
amend Loan Agreement.
D. Supporting Data.
Request letter from Mr. Tapper, commitmcnt letter from lender, and new uses and sources.
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August 4, 2005
Tapper's Holdings LLC
3935 Walden Lane
Wayzata, MN 55391
Ollie Koropchak
Monticello EDA
505 Walnut St.
Suite 1
Monticello, MN 55362
Dear Ollie:
. I am writing in regard to our EDA loan on the expansion of 1324 Edmonson avo NE. We
have experience construction delays do to the availability of concrete wall panels. As a
result I would like to request that our EDA loan commitment be extended a 120 days.
idering this request.
William R. Tapper cm
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STEARNS BANK
SOURCES
Stearns Bank
SBA 504
Steams Bank
City of Monticello
LF lnitiative Fund
~ Injection
Total Debt
USES
Purchase Price
Professional Fees
New ConstrUction
Contine;encv
Total Debt
3202584845
08/04 .05 17:54 NO.376 05/05
Tappers Projected Debt Schedule
1,191,638
953,310
735,052
200..000
250,000
370.000
3,700,000
2,350,000
33.275
1,216.725
100.000
3,700,000
I~REM
2nd REM
3 cd REM
4dl REM - Shared
4'" REM - Shared
STEARNS BANK
3202584845
08/04 '05 17:53 NO.376 02/05
STEARNS
Bank /II.A. ..o;T.CI.OUD
We Get the Job Done!
4191 2nd St. S. . St. Cloud. MN 56301 . www.stearns--bank.com
320-253-6607 or 1-&00-320-7262 . FOX; 320-253-3051 . MGlmt>erFDIC.
,,~...,")."""\'.':,:
May 15, 2005
WilHam Tappc.'T
Tappers Holdings, LLC
212 Chelsea Rd
~onticello.~ 55362
Dear Mr. Tapper
Steams Bank (the "Lender") is pleased to advise Tappers Holdin.gs, LLC (the "Borrower") tJlat the Lender proposes to extend credjt
to the Borrower in the amount of up to 53,330.000 upOn the temlS and subject to the conditions set forth below and in the a.ttached
"Summary of Terms and Conditions".
The Lender's conditiou.al. comminnent is subject to the negotiation. and execution of deflllitivc credit, security and related loan
documents (the "Credit Documents") satisfactory to the Lender. The Credit Docwnents will embody th.e structure, pri.cing and other
tenns d~s("TJbed in the attacbed Summary ofTenns and Conditions. They will also in.cJ.ude provisions viewed by thc Lender and its
c01JJ)seJ. as appropriate for this transaction and for transactions of this type. Accordingly, it should be recognized that this letter and
the Summary of Terms and Conditions are indicati.ve, but not exhaustive.. as to the terms and conditions, which shall govern this
facil1ty.
. TIle Lender's. conditional commitment is further subject to the conditions that there shall not 11l1Ve occurred; (1) any material adverse
change in the busirwss, operati.oll$, or financial conc1ition of the Bon:ower, any of its subsidiaries or any guarantors of this faciJity; (ii)
any material diminution of value of the collateral proposed for the loall, in. eacb case deten:rrin.ed by the Lender. in comparison to date
of this letter or the date of the most recent quarterly financial stiltements and the date of the Lender's most recent analysis of such
Collateral; (iii) discovery of any information which the Lemler reasonable determID.es has a negative impact on the proposed
trallsaction; or (iv) discovery of any adverse eJJ.vironmental conditions wbich cannot be adeqUAtely resolved to the Lender's
satisfaction. The Lender reserves the right to rescind this conditional commitment if any of tbe above conditions exist.
By acknowlcd!,ring and agreeing to the terms of this letter, the Borrower agrees to be responsible for all reasonable costs and exp€:JJses
incurred by the: Lender (includin.i fees and expenses of counsel and other professionals) in connecti.on with the negotiation and
prepararion of the: Credit Documents and the transactions contemplated hereby, whether or D.ot the Credit Documents are executed and
whether or not loans are made available under the Credit Documents. This obligation survives the tc:..rmination or ex.piration of the
commitment.
The Credit Documents shall be t."tltered into Jlot later than August 2, 200S, after which date the conditiol)aJ. commitment of the Lender
hereunder shall expire. Tfthe foregoing is acceptable, please indicate YOW" agreeml:'lnt and acceptanCl: by signin.g, dating and returning
the enclosed copy of this letter. If the Borrower does Dot accept tills conditional commitment on or before May n, 100S. it will be
deemed to have been renninated.
Stearns Bank looks forward to this oppOrtuDi.ty to work with you on tbis transaction.
~'
~ ~:::nanC6k
Commercial I..cndcr
.[OffIcer initials/initials of party preparing ltt]
Attachment
ST9Crns Bon/( Loo:::rMons: Albcmy. MN · Edina. MN · Evonsv"'e. MN · HOldlngford, MN . St Cloud, MN . UpsOlo, MN . SCl)tt.sdole, AI.
STEARNS BANK
320258484,
U~/U4 'U~ l(:~j NO.~(o Uj/U~
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SummarY of Terms and Conditions
May IS, Z005
RE:
Interim construction I Perroan.ent loan financing to Tappers Holdings, LLC [Borrower] for a purchase and
subsequent construction ofa 25,200 sfaddition to a building located in Mon.tieello, MN.
Loan Amount: $3,330,000 construction loan. which win then be converted to permanent fmancing with the following
form.: Steams Bank l$Lmortgage ($1,191,638), SBA 504 2nd Mortgage ($953,310), Steams Bank 3rd Mortgage ($735,052)
and a shared 4th Mortgage from the City of Monticello ($200,000) and the Little Falls Initiative Fund ($250,000).
Interest Rate: A variable interest rate equal to 1.00% over the Wall Street Journal Prime Rate (the "Index") at the time of
closing on the Stearns Bank portion. of the loan. This Index may change as often as daily. Interest calculated on an
actua1l360 day basis.
Maturitv: S months constrUctioD. D.ote with a permanent loan to follow (240 month amortization) with 5 year balloon.
ReDavment / Amorti.~a.tif)n.: Interest payable monthly, beginning thirty (30) days from. date of loan closing. Principal
reduction to come from permanent financing take-out.
C"oslo!!: Costs: Closing costs include, but arc not limited. to: a) 1.5% Origination Fee (on construction costs); b) $1,450
Loan Documentation Fee; and c) out-of-pocket costs, such as title insurlUJ.ce,legaJ fees. appraisal. 3m party inspector's
fees. filing fees, etc.
. Collateral: Collateral will include the following:
a) A first real estate mortgage on the proposed real estate project located in Monticello, MN (legal to govern).
b) Assignment of Rents em. the proposed real estate project located in Monticello, MN (legal to govern)
c) A Security Agreement / Financing Statement covering fixtures, personal property and general intangibles,
inventory, accounts receivable and equipm.ent.
Guarantees: UnJimited guarantees of Wilham & Barbara Tapper and Tappers Tn.c.
Reaujred Documentation: All documents deem.ed nli:Cessary by Lender to be properly executed, including a
Construction Loan Agreement. The Lender will be provided with adequate coverage from. an acceptable title insurance
company (survey coverage will be required), wbj.ch will also handle the loan closing. Stearns Bank will disburse all funds
according to Lien Wai.vers. Evidence of a Payment and Pert"onnance Bond on the contractor may be required. Project
architect or 3nl party inspector to provide Lender with a monthly field report and sign off on aU hard cost draws.
~PDraisal: Lender shall be furnished with an appraisallhat is satisfactory to Lender. Such appraisal will be ordered by
Lender and prepared by an independent appraiser.
Environmental Audit: A fIrm acceptabl~ to Lender is to perform an enviromnental audit indicating mortgaged premises
is free of hazardous and toxic substances. lbe definition of hazardous and toxic substances is at the discretion of the
Lender. Lender will engage the environmental audit
Insurance: Evidence of builder' s risk / hazard insurance will be required at the time of loan closing, with Lender and/or
its assigns nam.~d as Mortgagee I Loss Payee.
Eauity:. All equity m.ust be injected jnto the project and/or deposited into an escrow account at Lender or its designated
.companyas scheduled.
. Cost Budllet: Fin.al cost budget m.ust be concU1Ted by the Lender.
Fin.an.clallnformation: The following financial. infonnation will be required: a) compiled year end fiD.3ncials statements
of Borrower, prepared by an independent CPA firm, to be submitted annually, along with annual tax returns, in.cluding all
STEARNS BANK
3202584845
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U~/U4 'U~ .1(:~4 NU.~(O U4/U;;l
supporting schedules; b) qua.cterly interim finat)cial statements; c) annual financial statements an.d tax returns, including
all supporting schedules and K-1 's, if applicable, from each guarantor.
OCCllDancv: Certificate of Occupancy within 5 months of construction. loan closing.
SDechd Conditions: Prior to funding, the followi.n.g items must be met:
(i) Receipt and review of the general. contractor's reSUm.e and financial statements.
(ii) Pen:nan.ent lenders commitment letter(s) with dates reviewed and conditions met
(Hi) Acceptable site visit
(iv) SBA 504 ADDroval: The U.S. Small Business Administration (SBA) or Certified Development Company shall
approve and issue to Borrower a SBA504 loan under the following scenario:
Sources 0 Funds
Steams Bank l,19l,638
SBA 504 953,310
SteaTn.s Bank 735,052
Monticello 200,000
LF Jnitiative Fund 250,000
Eauity Iniection 370,000
Tota.1 3,700.000
Uses of Funds
Bldg Purchase 2,350 000
New Cons1ru.ction. 1,216725
Contingency 100,000
Profession.al Fees 370,000
Total 3.700,000
Lender and'th.e Borrower are requesting the SBA 504 loan because the terms an.d conditions of this loan would not be
available under regular bank underwriting criteria.
. Governine Law: State ofMiMesota
Other: Prior to :fimding, all of the above-mentioned terms and con.diti.ons must be met and the advances m.ust be in
compliance with Bank Regulation 12CRF.32 (Legal Lendin.g Limit).
Fin.al approval of this financing proposal by the Len.der' s Loan Committee is required.
Any material. adverse change in the Borrower and/or any Guarantor's fmancial condition. or di.scovery of negative
information. not previously disclosed may invalidate this proposal.
The terms and conditions outlined above represent the general fman.cial terms and requirements, but are not n.ecessarily
all~inclusive.
I hereby accept the terms and conditions of the above..c:lescribed proposal to provide fmancing.
Tappers Holdings, LLC
X
By: Will1am Ta.pper
Its: Title
Date:
lMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENJNG A NEW ACCOUNT
To help' the govemment fight the funding of terrorism and money launderin g activities, F ederalla w requires all financial insti.tutions to
obtain, verify, and record i"tormation that identifies each persoll or entity that opens an. account.
~T THIS MEANS TO YOU: When you OpeII an account, we wi.ll. ask for your name &lor your company's name, address, date of
birth, and other infonnation that wi.!.l allow us to identify you or your company. We may also ask to see your driver's license or other
identifying dOCU1l1el1ts.
We thank you for your understanding and for joining us in securing a $afer tomorrow
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EDA Agenda - 08/09/05
5.
Consideration to discuss the late payment policy and continued delinQuent payment of
GMEF No. 014 Supplement Loan.
A. Reference and backf;round:
On February 18, 1998, the EDA and T.J. Martin, Inc. entered into a Loan Agreement for a
$87,500 machinery and equipment loan. On April 2, 2003, the EDA accepted a settlement in
the amount of $18,000 of the outstanding principal balance amount of $45,886.66. The
settlement over three years at 6.0% fixed interest rate. A Supplemental Loan Agreement was
enter into May 27,2003, between the EDA and Carl Bondhus, Eric Bondhus, and Dennis
Bondhus (collectively, the "Borrower") and a replacement promissory note.
As you recall, at the time of the original loan the EDA Guidelines did not include a late payment
policy, this was added to the guidelines prior to and for the purpose to be included in the
Supplemental Loan Agreement. Attached is the payment schedule showing the payments due
the 1 sl of each month and a letter dated July 6, 2005. As you can tell, the June payment, July
payment, and accrued interest was paid but not the later fee. Additionally, administratively we
have accepted the monthly payment of$547.59 in three individual checks of equal amount from
the Bondhus'. Consistently, one check is late. The loan is scheduled to be paid off in May,
2006.
Discuss the alternative action options for the EDA.
1. A motion to collect delinquent late fee of $250 through conciliation court.
2. A motion to draft a letter stating only one monthly check in the amount of $547.59 will
be accepted.
3. Make a motion requesting the EDA Attorney prepare notice to immediately call the
loan for reason of failure to pay principal and interest when due.
4. A motion of no action.
Administratively, the EDA Director and the Finance Department have accepted the monthly
payment in three individual checks, with the Finance Department continuously holding one to
two checks prior to deposit. The Finance Department and Director have gone beyond the call
of duty to accommodate the borrower. The response about the $250 latc payment was: didn't
rcmember that in thc loan and would not pay. The EDA graciously forgave $27,886.66 of
principal in 2003.
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City of Monticello Amortization Schedule
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GMEF 014 - T. J. MARTIN (Lake Tool)
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Principal Amount of Debt: $ t B,OOO,OO
Interest Rate: 6,000%
iTerm (Years): 3
First Payment Date: 6/1/2003
Principal Distibution Code: 250,18310
Interest Distribution Code: 25036220
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Period Receipt --~ ~ ,.............--- E:.,,'" .:..v ,- ::r",', " r'~'.r.;'.'~: '.. Balance After
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Number Payment Date Number Month Principal Interest Total Payment Payment
--1,~.6~ ~. 1 1.;;/ A /._~ ~1-j ~" 6/1/2003 $457.59 $90.00 '* $547.59 $ 17,542.41
.V'\ :;: 2 1/'7/03 '1g1.'1 7/1/2003 $459.88 ./ $87.71 v $547.59 $ 17,082.52
3 7/~II<'j io cO 3 i 8/1/2003 $462.18 / $85.41 v" $547.59 $ 16,620.34
4 'fi3/c,{ Ie :LLl. 9/1/2003 $464.49 II $83.10 Iv' $547.59 $ 16,155.85
5 lo/Lle3 I 05'f~ 10/1/2003 $466.82 v $80.7;1' V' $547.59 $ 15,689.03
6 /1/1.,/05 log,>D 11/1/2003 $469.15 ./ / $78.4f/ v / $547.59 $ 15,219.88
7 {^/s'/~3 f it3 f15" 12/1/2003 $471.50 v 'i:7R.i:f.E11t1.... ~7J:;:a 'i: 1 Ll 7 LlA ~Q i
8 1111o't .' lAc.. 1/1/2004 $473.85 v $73.74 ,/ $547.59 $ 14,274.53
9 "J~/o'4 it ., ( '6' 2/1/2004 $476.22 . v $71 .37 ,,/ $547.59 $ 13,798.31
. 10 :: /;,/c'.f II S<;(, 3/1/2004 $478.60 ;j $68.99 ./ $547.59 $ 13,319.71
11 '" /'1/(;>'1 111<;4 4/1/2004 $481.00 v $66~ ,,/ $547.59 $ 12,838.71
12 S /3 Ie i \j'\V"L 5/1/2004 $483.40 ,/ $64.19 v $547.59 $ 12,355.31
13 (; (,?/r:.'+ \,).."),..l.{'!. 6/1/2004 $485.82 ../ $61.711 V $547.59 $ 11,869.49
14 6/30 [0 'f 1~'-ISb 7/1/2004 $488.25 v $59.3f "../ $547.59 $ 11,381.24
15 <(/4/'H l'l-jl4 8/1/2004 $490.69 ,,/ $56.90 ./ / $547.59 $ 10,890.56
16 '/ /11.0/0 'I 1 ).'11 q 9/1/2004 $493.14 \, $54.45 v $547.59 $ 10,397.41
17 1"/'1/r;d 13/1 S 1 0/1 /2004 $495.61 V $51.98 ,/ $547.59 $ 9,901.81
18 1I/5(",j \ ?"111.. 11/1/2004 $498.09 J $49.5"0 ./ / $547.59 $ 9,403.72
19 jil"r.d()'\ \ ~S"ll 12/1/2004 $500.58 \. $47.0t ;/ $547.59 $ 8,903.14
20 I /v I D 5 i'S ,\ 'IS 1/1/2005 $503.08 v $44.5~ J $547.59 $ 8,400.06
21 :!.!.o//?',; Hlo"> 2/1/2005 $505.59 1/ $42,00 II $547.59 $ 7,894.47
22 3)11 /6 S ) r; ? 1,1{", 3/1/2005 $508.12 V $39.47 1/ ./ $547.59 $ 7,386.35
23 'l/1.'; la ') 1'1- 1:;~ 4/1/2005 $510.66 \I $36.93 ,,/ $547,59 $ 6,875.68
24 '0'1 ' ',) , 5/1/2005 $513.22 :,.r $34.~} , .~ $547.59 $ 6,362.47
25 '}) I q If) ,(' ; <;"'\'L>i' 6/1/2005 $515.78 V $31.81 ;/ $547.59 $ 5,846.69
26 7/1'7/1.'') . \-<"' t, I) 7/1/2005 $518.36 vi $29.23 ,/ $547.59 $ 5,328.32
27 8/1/2005 $520.95 $26.64 $547.59 $ 4,807.37
28 9/1/2005 $523.56 $24.04 $547.59 $ 4,283.81
29 10/1/2005 $526.18 $21 .42 $547_59 $ 3,757.64
30 11/1/2005 $528.81 $18.79 $547.59 $ 3,228.83
31 12/1/2005 $531.45 $16.14 $547.59 $ 2,697.38
32 1/1 /2006 $534.11 $13.49 $547.59 $ 2,163.27
33 2/1 /2006 $536.78 $10.82 $547.59 $ 1,626.49
34 3/1/2006 $539.46 $8.13 $547.59 $ 1,087.03
35 4/1/2006 $542.16 $5.44 $547.59 $ 544.87
36 5/1/2006 $544.87 $2.72 $547.59 $ (0.00)
Distibutlon Codes: 250.18310
250.36220
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Page 1 of 3
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DESIGN PRO
DENNIS J BONDHUS 763-295-8227
B-532-139-429-820
8944 DARLlNGTml AVE
MONTICEllO, MN 55362
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BANK 801 Marq~tte Avenue ,.~~"'J_l-!:'1t,.~
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Minl1e-sota's Most Conv~nl8nl B~nK~ 612- TC~.e.ANK
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MONTICELLO. MN 55362
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July 6, 2005
--
MONTICELLO
RE: CirVIFF Nu. 014 - Failllt'e to pay prinl:ipal and interest when clue
D<.:ar Eric, ('ad, and D<.:nnis Bonclhus:
On May 27,2003, Carl Bonclhus, Eric Bondhus, and Dcnnis Bonclhus (collectively, the "Borrower") entered into a
Supplemental Loan Agreement with thc Monticcllo Economic Developrnent Authority (EDA).
Acwrcling to the Supplement,1i Luan Agl'eement, the parties agr<.:<:d tu:
S Failllre to pul' principal and inlCl'estlvhen due Inay resu!t in Revised Loun being immediute/y
called
!n uddition or any other amounts due on the Revised Loon, and lVithout lVaiving any right o/the
Authority under any applicoh!e documents, a !otefee ofS250 lvill be imposed on the BorrOlverjr)J' any
/HI)'lI/ellt not received injitl! by the A uthol'ity lVithin J() calendar days o/the date on lVhich it is due.
Furtherll/ore, interest lVi!! continue to aCCl'ue on any oll/ount due until the dote on lvhich it is paid to the
Allthority. and of! sudl interest lVill he due and payable at Ihe same lime os the omount on lVhich it hus
occrucd
As of July 6, 2005, th<: Monticello EDA has not received the $547.59 monthly payment due June 1,2005, therefore, a
late fee of$250 is imposed on the Borrower. Only one (Auto Launch Inc. - $182.53) of three checks were received_
Secondly, the July 1,2005, payment in the arnount of$547.59 in past due.
Please remit immcdiately to the Monticello LDA. 505 Walnut Street, Suite I, Monticello. rvlN 55362 the total alllount
due as of July 8, 2005: $1,171.02.
$365.06 Remaining June 1.2005 paymcnt
$250.00 Late Fee
$ 8.37 !\l:l:rued interest on June balance ifpaid by July 8, 2005
$54759 Past due July 1,2005 payment
Should you have questions, please call me at 763-271-3208.
Sincen:ly,
MONTICELLC) LCONOlvllC DEVELOPMENT /\IITHORITY
uL\~~~D~
Ollie i\.oropchak
Exccutive DircdOI-
Attachment
c- (;MEF No. 1-14 File
Finance Department
Mayor Clint Hcrbst
Monticello City [fall, 50S Walnut Stre..:!, Sui!..: I, Monticello, MN 55362"8~n 1 . (763) 295-2711 . Fax: (763) 295,4404
Office of Punl ic Works, (JOl) nol f Course Rd., Monticello, MN 55362 . (763) 2l)5.3 170 . Fax:: (76J) 271-3272
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SUPPLEMENT AL LOAN AGRI~EMENT
TI-IIS AGREEMENT is made this? l') day of~, 2003 by Carl Bondhus, Eric
Bondhus, and Dennis Bondhus (collectively, the "Borrower") and the Monticello Economic
Development Authority, a public body corporate and politic (the" Authority").
RECITALS
~'".......--------
WHEREAS, TJ. Martin, Inc. (the "Original Borrower") entered into a loan
agreement with the Authority on February 18, 1998 (the "Loan Agreement"), pursuant to
which the Authority lent the Original Borrower $87,500 (the "Original Loan") in order to
pay a portion of the purchase price and installation costs of certain equipment; and
WHEREAS, the Borrower has assumed all rights and obligations of Original
Borrower under the Loan Agreement and in this Supplemental Loan Agreement; and
WHEREAS, as of October 1,2002, the outstanding principal balance of the Original
Loan was $48,886.66; and
WHEREAS. the Authority has agreed 10 forgive repayment of $27.886.66 of that
balance, leaving a principal balance of $18,000, and has also agreed to forgive interest
accrued on the Original Loan since October 1 ,2002: and
WIIEREAS, the Authority and Borrower have determined to modify the terms of
the Ori gi nal Loan as further described herein.
ACCORDINCiL y, in consideration of the parties' mutual agreement to modify the
terms of the Original Loan and for good and valLtable consideration, the receipt and
sufficiency of which are hereby acknowledgecl, the parties hereto agree as follows:
1. The Borrower agrees to repay tIle balance of $18,000 (the "Revised Loan"),
together wi th interest thereon from June 1,2003, in monthly installments at the rate of 6.0%
per annum, in the amounts that will amortize the revised principal amount over a term of
three years.
2. The Loan shall be evidenced by a replacement promissory note (the
"Replacement Promissory Note") payable by the Borrower to the Authority in substantially
the form of Exhibit A hereto, which shall be elated as of .June 1,2003. Upon execution and
delivery to the Authority of the Replacement Promissory Note, the Authority shall deliverto
the Borrower the original Promissory Note in the amount of $87,500 dated February 18,
1998 (the "Original Note') and thereafter the Original Note shall be deemed cancelled.
3. The Borrower's liability under this Supplemental Loan Agreement and the
Replacement Promissory Note is joint and several.
I.,MT"2J I 'WN I
IVlN,25-15
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BORROWERS
CARL BONDI-IUS
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EDA Agenda - 08/09/05
6.
Consideration of Executive Director's Report.
a) TIF Annual Audit Reports to State out July 29, 2005.
b) TIF pay-as-you-go semi-annual payments out August 1,2005.
c) Twin City Die Castings/City of Monticello Grant/Loan closed by State of Minnesota.
This
means the EDA can now consider re-use ofthe $500,000 plus interest payback. See
attached.
d) Dahlheimer's Distributing is relocating into the new city industrial park. They plan to
construct a new 54,000 sq ft office/distribution center. Construction is planned to begin
this fall.
e) Have prepared offers for three businesses interested in the new park. One still viable.
Another one on my desk to prepare. With the billboard along 1-94 and the web site:
monticelloland.com, a majority of the inquiries will not meet a criteria for the $1 price.
f) Attended Standard Iron's 75th Anniversary, Wal-mart Open House, and Premier Bank
Open House in Wal-mart. Met with Kaltec, Inc.
g) City Council interviewed individuals for new building inspector and city engineer
positions.
h) Landmark Square II project and TIF application will be completed by September 12 for
redevelopment of three homes into an 11,000 sq ft retail center on the comer of Locust
and Third Street West.
i) Marketing - Billboard up, web site up and running (after billboard up about 400 hits on
web site), classified ad in Sunday Tribune, post card to brokers, realtors, etc. noting we
will pay commission. Yet to advertise in MN Real Estate Journal, etc.
j) Fiber Optics Task Force - This group of volunteers and Council member Mayer have
been meeting for the last couple of months. Anywhere from 2 to 5 hours per week. They
will be making a presentation and recommendation to the City Council on August 22.
This week, in addition to the weekly meeting, they will tour UMC along with the
Council. They invited the current providers (TDS and Charter) for a presentation and
heard from other fiber optic specialists. They should be commended for their long hours
of research.
1
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June 20, 2005
Honorable Clint Herbst
Mayor, City of Monticello
City Hall
505 W alnut Avenue, Suite 1
Monticello, Minnesota 55362-8822
RE: Minnesota Investment Fund Program
City of Monticello/Twin City Die Casting
Dear Mayor Herbst:
.
This is written to inform you that we are changing the status of the
Twin City Die Casting Minnesota Investment Fund project from "ACTIVE"
to "CLOSED, PROGRAM INCOME." I have enclosed a copy of the Grant Adjustment
Notice implementing this change.
I wish to thank Ollie Koropchak of your staff for her diligence and professionalism in
administering this grant.
If you have questions, please feel free to call Carol Pressley-Olson of my staff at 651-
296-3898.
Sincerely,
, \. \ ..
C~,~"-'~"---
Paul A. Mae, Director
Office of Business and Community Finance
cc: Ollie Koropchak
Rick Wolfsteller
Doug I-Iarmon
.
Department of Employment and Economic Development
1st National Bauk Building' :1:32 ~linnesota St., SuIte E200 · Saint Paul. MN 55101.1351 . USA
651"297"1291 . ROO-657.3858. Fax 651.296.883:1 · TTYffDD: 651-296-3900 · www.deed.state.mn.us
All equal opportullity employer alld service provider.
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Monticello EDA
Ollie Koropchak
505 Walnut Street
Suite 1
Monticello, MN 55362
Kennedy & Graven, Chartered
200 South Sixth Street
Suite 470
Minneapolis, MN 55402
(612) 337-9300
Tax 10 No. 41-"1225694
July 29, 2005
Throuah June 30. 2005
MN325-00018 Tappers (Strategic Equipment) Loan 46.50
1 declare, under penalty of law, that this
account, claim or demand is just and correct
and that no. ~ of it has been paid.
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Signature of CI . ant
Total Current Billing: 46.50
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