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EDA Agenda 08-06-1996I~ IL...J • AGENDA MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY Tuesday, August 6, 1996 - 7:00 p.m City Hall MEMBERS: Chairperson Ron Hoglund, Vice Chairperson Barb Schwientek, Assist-Treasurer Ken Maus, Clint Herbst, Tom Perrault, Al Larson, and Bill Demeules. STAFF: Rick Wolfsteller, Treasurer. Ollie Koropchak, Executive Director. GUEST: Don Hunter, Standard Iron & Wire Works, Inc. 1. CALL TO ORDER. 2. CONSIDERATION TO APPROVE THE APRIL 23, 1996 EDA NIINUTES. 3. CONSIDERATION TO ACKNOWLEDGE A STATEMENT FROM COMMISSIONER BILL DEMEULES DISCLOSING APPLICATION FOR A GMEF LOAN. 4. CONSIDERATION TO REVIEW FOR APPROVAL THE PRELIMINARY GMEF LOAN APPLICATION FROM STANDARD IRON & WIRE WORKS, INC. 5. CONSIDERATION TO APPROVE OR DENY APPROVAL OF GMEF LOAN N0.013 FOR STANDARD IRON & WIRE WORKS, INC. 6. CONSIDERATION TO DETERNIINE THE ANNUAL LIQUOR FUND APPROPRIATION'S REQUEST FOR BUDGET YEAR 1997. 7. CONSIDERATION TO DISCUSS AND REVIEW THE GMEF GUIDELINES FOR POSSIBLE AMENDMENT. 8. OTHER BUSINESS: a) Update of GMEF Loan No. 011, Tapper's Inc. b) Consideration of Kennedy & Graven bill on legislative changes. c) Property Tax d) Other. 9. ADJOURNMENT. • 1VIINUTES MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY April 23, 1996 - 7:00 p.m. City Hall MEMBERS PRESENT: Chairperson Ron Hoglund, Tom Perrault, Bill Demeules, and Ken Maus. MEMBERS ABSENT: Vice Chair Barb Schwientek, Clint Herbst, and Al Larson. STAFF PRESENT: Ollie Koropchak, Executive Director STAFF ABSENT: Rick Wolfsteller, Treasurer. 1. CALL TO ORDER. Chairperson Hoglund called the EDA meeting to order at 7:05 p.m. • 2. CONSIDERATION TO APPROVE THE JANUARY 23, 1996 EDA MINUTES. Tom Perrault made a motion to approve the January 23, 1996 EDA minutes. Seconded by Bill Demeules and with no corrections or additions, the minutes were approved as written. Not present at the EDA meeting of January 23, Ken Maus abstained. 3. CONSIDERATION TO ACKNOWLEDGE THE RESIGNATION OF HARVEY KENDALL FROM THE EDA AND TO ACKNOWLEDGE THE APPODVTMENT OF KEN MAUS. Tom Perrault made a motion acknowledging the resignation of Harvey Kendall and the appointment of Ken Maus to the EDA. Maus, the IDC representative, was appointed by the City Council on April 22, 1996. His term expires December, 1996. Bill Demeules seconded the motion and with no further discussion, the motion passed. Maus abstained. 4. CONSIDERATION TO ELECT AN ASSISTANT-TREASURER OF THE EDA. With the resignation of Mr. Kendall, the office of Assistant-Treasurer was vacated. Maus volunteered to serve as Assistant-Treasurer. Bill Demeules made a motion electing Ken Maus as the EDA Assistant-Treasurer. Seconded by Tom Perrault and with no further discussion, the motion passed. Maus abstained. Page 1 EDA NIINUTES APRIL 23, 1996 5. CONSIDERATION OF AN DATE RELATING TO APPROVED MEF LOAN NO. 012 FOR STANDARD IRON. Based on the two options outlined by Attorney Bubul for resolution of the conflict of interest issue relating to the approved GMEF Loan NO. 012 in the amount of $70,000 to Standard Iron, the EDA agreed to Option No. 2: GMEF Loan No. 012 becomes null and void, July 23, 1996. The EDA to consider approval of a new loan (GMEF No. 013) after August 1, 1996, this the effective date of the amendment to the Law providing a provision for EDA Commissioners to declare a "Declaration of Potential Conflict of Interest". This allows Commissioner Demeules to remain on the EDA. Commissioner Demeules abstained from any discussion of this agenda item. 6. CONSIDERATION TO EXTEND THE DISBURSEMENT DATE FOR APPROVED GMEF LOAN NO Oll FOR TAPPER'S INC Koropchak expressed concern that either building or site plans for the Tapper expansion have been submitted to the City or City Engineer. GMEF Loan No. 011, a $100,000 real estate and M&E loan, was approved on November 28, 1995. Disbursement date of the loan is May 28, 1996. It is anticipated upon closing, the EDA funds will be placed in an Escrow Fund and disbursed by the lending institution (Stearns County National Bank, St. Cloud) or a title company. After some discussion, Ken Maus made a motion to deny the request to extend the disbursement date from May 28, 1996 to July 28, 1996. This to encourage submittal of the plans by the developer and also that the GMEF Guidelines do not have a provision allowing for the extension of the disbursement date. Tom Perrault seconded the motion and with no further discussion, the motion passed lm n~mously. 7. OTHER BUSINESS. a) H-Window -EDA Commissioners acknowledged receiving the check of $1,257.00 from the H-Window. Upon the withdrawal from the State and GMEF Loans by the company, the EDA requested a letter be mailed to the company for reimbursement of the legal fees associated with the preparation of the loan documents. This the reimbursement payment. b) Conflict of Interest billing - Koropchak informed the commissioners that Attorney Bubul would be submitting a bill to the EDA for work regarding legislative changes to the conflict of interest statute. The attorney suggested the company be responsible. Koropchak felt the conflict was not the sole responsibility of the company. Commissioners felt the bill should be shared Page 2 EDA MIlWTES APRIL 23, 1996 among other Kennedy & Graven clients who shared the same statutory issue. Without having received the bill, the commissioners agreed to a wait and see approach. c) Other -The commissioners requested the GMEF Guidelines be reviewed for possible revisions as some provisions may need fiuther defining or tightening up. Such as extension of disbursement date, up-front application fee, etc. d) Ken Maus requested a copy of the GMEF Guidelines and the year-end statements. 8 . ADJOURNMENT _ Tom Perrault made a motion to adjourn the EDA meeting. Bill Demeules seconded the motion and with no further business, the meeting adjourned at 8:00 p.m. O~ ~~^ ~ s Ollie Koropchak, Executive Director • Page 3 EDA AGENDA AUGUST 6, 1996 3. Consideration to acknowledge a statement from Commissioner Bill Demeules disclosing annlication for a GMEF Loan. A. Reference and Background: Minnesota Statutory 1994, Section 471.88, Subdivision 14_ (bl was amended and becomes law effective August 1, 1996. Excerpt of the amendment reads: If an officer of a local development organization applies for a loan or grant, the officer must disclose as part of the official minutes of a public meeting of the governmental unit that the officer has applied for a loan or grant. The disclosure by Demeules and the acknowledgement by the EDA eliminates the potential conflict of interest issue. B. Alternative Action: 1. A motion acknowledging the statement from Commissioner Bill Demeules, a partner of SELUEMED Limited Liability Partnership, disclosing the partnership has applied for a GMEF Loan for Standard Iron & Wire Works, Inc. i 2. A motion denying acknowledgement. 3. A motion to table any action. C. Recommendation. Recommendation is Alternative No. 1. Page 1 EDA AGENDA AUGUST 6, 1996 4. Consideration to review for approval the preliminary GMEF Loan ~„plication from Standard Iron & Wire Works, Inc. Don Hunter of Standard Iron & Wire Works, Inc. will be the spokes person at the EDA meeting. This is the same loan application information as provided for approved GMEF Loan No. 012 which became null and void on July 23, 1996. BOLD print dated August 6 is updated information. A. Reference and Background. GMEF LOAN REQUEST: $70,000 equipment loan, 5 years. PROJECT SUMMARY: Standard Iron & Wire Works, founded in 1930, is a metal fabricating job shop. In 1993, the company relocated their company headquarters to Monticello and constructed a 52,000 sq ft manufacturing/office facility along Dundas Road and purchased 10 acres of land for future expansion. The company also has facilities in Sauk Centre and Alexandria. The company plans to invest in $1,500,000 of equipment in 1996. In addition to the $70,000 GMEF request, the company is submitting an application to the Central Minnesota Initiative Fund (CMIF) for $60,000. The CMIF loan for $60,000 was approved at an interest rate of 6.5~, amortized over 5 years. The machinery includes a laser cutting machine, a press brake, and a second, smaller horizontal machine center. The company is in the process of lender negotiations for financing the equipment. The three prospects are Norwest, First Bank (St. Cloud), and First National of Sauk Centre. Selection of the lender is expected in a couple of weeks with funding in place by mid February. It is my understanding a laser cutting machine is on. reserve for Standard Iron and based upon funding approval, the laser could be delivered by late March or April. The laser cutting machine has been accepted by Standar~ Iron and the lender is First Bank (St. Cloud). The compa has also purchased the horizontal machine center and the len First National of Sauk Centre. The press brake has note Page 1 EDA AGENDA AUGUST 6, 1996 been purchased. The average wage of the projected 14 additional employees is $10.30 which does not include benefits. It is not necessary for the company to expand their Monticello facility at this time. The proposed uses/sources of funds for this project are estimated as follows: Uses of Funds Laser Cutting Machine Press Brake Horizontal Machine Center TOTAL USES OF FUNDS $ 800, 000 $ 400,000 S 300, 000 $1,500,000 $ 725,000 S 500,000 $1,225,000 Sources of Funds GME F CMIF Lender Equity(Brake/machine center) TOTAL SOURCES OF FUNDS $ 70,000 $ 60, 000 $ 670,000 S 700, 000 $1,500,000 $ 70,000 $ 60,000 $1,050,000 S 45, 000 $1,225,000 This project would be structured as a participation between the lender, the GMEF, and the CMIF for the laser cutting machine. Equity will be utilized for the press brake and horizontal machine center. The $45,000 of equity financed the laser cutting machine. The company has covered the cost of the GMEF and CMIF dollars while awaiting disbursement. GREATER MONTICELLO ENTERPRISE FUND (GMEF) GUIDELINES PUBLIC PURPOSE CRITERIA: Must comply with four or more of the criteria listed below, criteria #1 being mandatory. 1. Creates new jobs: 89 (82) jobs currently, 14 additional (37.5 hpw) jobs within two years. Average wage, $10.30 ph. 2. Increases the community tax base: Annual Estimated Page 2 EDA AGENDA AUGUST 6, 1996 Market Value, $1,250,000. Tax Increment received in 1995 at 43% Market Value, $23,200.63. The expanded operation does not increase the tax base. 3. Factors: Assist existing industrial business to expand their operations. The company's business environment meets the City's industrial objectives: nature of business, service and product, no adverse environmental effects, the comprehensive plan and zoning policy. 4. Used as a secondary source to supplement conventional financing: Approximately 470 of the total financial package will be financed by the un-named lending institution. The CMIF/GMEF may share a second position or sometimes the CMIF request a 2nd position with the GMEF in 3rd position. February 7, approximately 75$ of the total financial package will be financed by First Bank. August 2, 1996, approximately 85$ of the laser and horizontal machines are financed by either First Bank or First National. Approved shared 2nd position with CMIF. 5. Used as gap financing: Used as gap financing (see item # 6 below) and as an incentive to encourage economic development. 6. Used to assist other funds: Other sources of funds used in addition to the Page 3 ,,~ EDA AGENDA AUGUST 6, 1996 GMEF are the Central Minnesota Initiative Fund {CMIF) , the bank, and equity. GREATER MONTICELLO ENTERPRISE FUND POLICIES I. BUSINESS ELIGIBILITY: Industrial business: Yes. Located within city limits: Yes, Zoned I-2. • Credit worthy existing business: Undetermined, have not requested current financial statements. The 1993 $75,000 GMEF, $50,000 CMIF, and $250,000 State loan paybacks are all current. August 2, 1996, current financial statements enclosed. $10,000 loan per each job created, or $5,000 per every $20,000 in property market valuation, whichever highest: $140,000 by job created, no increase in property value. Compliance and approved: $70,000 II. FINANCING METHOD: Companion Direct Loan: All such loans may be subordinated to the primary lender(s) if requested by the primary lender(s). The GMEF is leveraged and the lower interest rate of the GMEF lowers the effective interest rate on the entire project. • Approved shared 2nd position with the CMIF. 3rd position Page 4 EDA AGENDA AUGUST 6, 1996 also ok. February 9, 1996, CMIF approved 2nd position with GMEF. III. USE OF PROCEEDS: Equipment. IV. TERMS AND CONDITIONS: Loan Size: Maximum not to exceed 50% of the remaining GMEF balance. Annual GMEF Appropriation Balance, January 20, 1996, $150,000 (Borrowed $50,000 for Tappers.) Loan request, $70,000. Remaining GMEF balance, $80,000. Compliance and approved: $70,000. ,~ August 6, 1996, annual GMEF Appropriation Balance is $100,000 if the full amount of Tapper's loan is considered. Leveraging: Minimum 60o private/public non-GMEF. Maximum 30o GMEF. Minimum loo equity of GMEF loan. Lender CMIF GMEF Equity August 6, 1996 Lender CMIF GMEF Equity $670,000 (44.6%) $ 60, 000 ( 4 .0 0 ) $ 70,000 ( 4.6%) $700,000 (46.60) (99.8%) $1,050,000 (85.7) $ 60,000 ( 4.9$) $ 70,000 ( 5.7~) $ 45,000 ( 3.7$) (64.2) Loan Term: Personal property term not to exceed life of equipment (generally 5-7 years). Compliance and approved: 5 or 7 years. Page 5 ,. ,. EDA AGENDA AUGUST 6, 1996 Interest Rate: Fixed rate not less than 20 below Minneapolis prime rate. Prime rate per National Bank (First Bank) of Minneapolis on date of EDA loan approval. (Prime 1- 19-96, 8 .5 0 ) (Prime 8-6-96, $,a5°~) Compliance and approved: 6.5~ fixed interest rate. Loan Fee: Minimum fee of $200 but not to exceed 1.50 of the total loan project. Fees are to be documented and no duplication of fees between the lending institution and the GMEF. Compliance and approved: $70,000 X .015 = Not to exceed $1,050. Prepayment Policy: No penalty for prepayment. • Deferral of Payments: 1. Approval of the EDA membership by majority vote. 2. Extend the balloon if unable to refinance, verification letter from two lending institutions subject to Board approval. Interest limitation on guaranteed loans: Subject to security and/or reviewal by EDA. Assumability of Loan: None. Business Equity Requirements: Subject to type of loan; Board of Directors will determine case by case, analysis under normal lending guidelines. Collateral: Mortgage deeds, securities, and/or guarantees as per the GMEF attorney. ,~ Page 6 • EDA AGENDA AUGUST 6, 1996 Compliance and approved: As per the GMEF attorney. Non-Performance: This approved GMEF loan shall become null and void if funds are not drawn upon or disbursed within 180 days from the date of EDA approval (January 23, 1996). Null and void July 23, 1996. August 6, 1996 approval - Loan becomes null and void February 6, 1997. GMEF 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. Consideration ~ _. to approve or disapprove GMEF Loan No. 013 is the next agenda item. C. Su~portina Data: Copy of the Preliminary GMEF loan application. • Page 7 25a ~.SI BROADWA`! MON'I':C~..LO, CL'NNESv ?c :' _:".IyAt ~ A?aT.IC.-:='T_CN : CR ~C~~ EFL-C-I`~='= Standard Iron & Wire Works. Inc. SCSrv'ccS ;rDgErc,;: •20? Dundas Road, Monticello. MN 55362-8916 (~ ~ S~_°°c) (Ci~y & S:.ate) (Zip Coce1 '='`~SC,ic: BQS~"cSS (61~ 295-8700 RCl"~' ( ) DA"'r ES"~~-3L~SR~: March, 1930 ~LO~ I.D. ?: 41-0652355 SC.L ?!?OP'~.I?'1'GR X CJR~ORA"'ION ~~.~~ I"1~NAGc "t.*1T NAI~r TZ ~'*..c OW'NE.°5"u? $ Lawrence Demeules President 1 Richard Demeules V.P. Industrial Products iv. JOSeph Demeules __V.P. Operations 3 William Demeules V.P. Manufacturing ~ ??.C~~C'_ LCC.~_ION: 207 Dundas Road, Monticello, M[~ 55362 NLri 3G5~1"c.SS X EnIS~ING BQSINESS C':'A:., ?~?C~~^' COST E„c:-1:a r': $ ~ ,~~p., nnn ?RGFCS~ IISES: ~_ a~ILDI*rG CCNS'r ?QC'1'~ON M_~C=NW v C~PIr'~L , ivORQ~1G C~FI^~L C'^~: RrQ~'S'I• AI"!CQN:.' OF LEAN , 70 ~ 000 ~QG--5=~ 5 v .a~~ A.PFLIC?~N'~" S ~D~'=`-' 320.000 LOAN ?QZ°OSL Purchase of Equipment FROFCSED BEGINNING DA"r: April 1. 1996 '_S"~`"_~'='~ GN~:,c~'ION DAMS' : March 30 ~ 1997 ' T~'~.R.. T/~ ??.~.~r.C':'`J?~Si 'S '~'J BE ~ 3v: ~ OP~A~ING ~ITT_^_^_' ~ AL~"R~ EG.7 'A-'~=c-'A='=VG ~~~: First Bank. St. C1oLd & First National Bank. Sauk Centre (Nz1ne) (Ace's ess f First Bank, St. Cloud-Jeanne Soleim .(612).654=2318 First National Bank. Sau_k_ Centre-Dale Emmel ~12J 352-5211 (Ccr.~ac~ ?srson) (Teieenone ~) ?F~n.~L:J':' ~ OF ~r.C'_'r"..:.5: 82 FQOT~C'~ = OF E*"~LOv'tr.S 96 ~r.GDI='T_CNr'. ?_°..~iv_~ INrCR."!~=_CN: ~?DLIC_'zN':' SIGN~"'G?W: / /y~~"~ DA_E SIGYL'J: ~~~ 02-21-1996 03~40PM • L P.02 February 9,1996 .. _ ~ ~ ~ . Don Hunter, Controller. Standard Iron & Wire Works, Inc. ~ ~ . 207 Dundas Road ... Monticello, MN 55362=891b ~ : ' . „~ .. ~,~ ear Mr. Hunger: . ~~' I am leased to inform of Central Minnnesota Initiative Fund approval of a loan~to Semeules. 'geed Liability Partnership subject to~FmHA concurrence and the 0 owing terms and conditions: • Loan Amount : $60,000 ~ ~ .. ~ ~ ~~ ~ ' f ~ • Interest Rage: sin and one half (6.5) percent per annum . ,' • Term: Five {5) years ~` • Collateral: Shared second position on CNC Later Cenger to.be purchased with proceeds of this loan ~ . • Guarantees: Standard Iron and Wire Works, Inc. ~ . ~ ~ . . Joseph Demeules ~ ~ ' . Richard Demeules Willia~ai Demeules ~ ~~ . ~ • Loan .approval of 5.550,000 from First Bank St. Qoud . ~ ~ • Loan. approval of 570,000 from the City of Mvnticello~ . • Attorney fees, filing costs, and other out of pocket expenses shall be the paid by Borrower ~ ~ ~ . . ~ ~ ~ ~ . The Central Niinnesota.Initiative Fund is. pleased to be a part of the expansion of a company that has, and continues to play, such ~an integral part of the econoazy of Central Minnesota. The loan closing will be coordinated with First Bank and .the City of Monticello. 58Y~ Fast Broadway. P.Q 8Cx 59.1ittle Fells. MN 56345(612) 632-9255 FAX(612) 632-gZ58 02-21-1996 03~40PM Page Two If you have questions or concerns regarding this approval, please contact me. If not, First Bank will coorduiate with the Initiative Fund and the City of Monticello on the closing date of closing date that is convenient for you. Sincerely, Jeanne Endahl Program Specialist cc: Penny Schmidt -First Bank St Cloud Ollie Koropchak -City of Monticello P.03 TOTAL P.03 • STANDARD 'RON & WIRE woRxs, rruc. QUALITY FABRICATIONS SINCE 1930 July 16, 1996 Ms. Ollie Koropchak Monticello Economic Development 250 East Broadway Monticello, MN 55362-9245 • Dear Ollie: 207 DUNDAS ROAD MONTICELLO, MINNESOTA 55362-8916 612-295-8700 • FAX 612-295-8701 Enclosed are Standard Iron ten month unaudited Finacial Statements per your request. Sincerely, STANDARD IRON & WIRE WORKS, INC. ti~~ Don Hunter Con~oller DAH/bej Enclosure Standard Iron and Wire FINANCIAL STATEMENT REPORT PREPARED AS OF PERIOD 96-10 FOR PERIOD ENDING 30 Jun 1996 '~1TED: 13:52:40 Jul 03 1996 Current Period Standard Iron & Wire Works Balance Sheet Assets Rounded to the nearest Dollar Last Year Period Current Assets Cash - Checking Cash Savings Total Liquid Cash 683,625 9.85 5,019 ---- 0.07 ----------- 688,644 ------ 9.93 -377,317 -6.59 4,882 0.09 --------------- ------ -372,435 -6.50 Accounts Receivable Trade 3,120,876 44.99 Less Allowance for Doubtful Accounts -30,002 -0.43 --------------- ------ Net Receivables 3,090,874 44.56 Cost in Excess of Billings Raw Materials Inventory WIP Materials Inventory Wip Labor Inventory WIP Outplant Inventory WIP Burden Inventory rk Assembly F .gal Assembly inventory Clearing 166,944 2.41 804,015 11.59 787,390 11.35 256,722 3.70 364,351 5.25 637,362 9.19 52,676 0.76 117,868 1.70 382,724 5.52 -1,322,162 -19.06 Net Inventories Prepaid Insurance Prepaid Other Total Prepaid Total Current Assets 2,080,947 30.00 -155,165 -2.24 1,279 0.02 --------------- ------ -153,885 -2.22$ 2,985,261 52.11 -29,999 -0.52 --------------- ------ 2,955,261 51.58 164,756 2.88 684,320 11.94 504,319 8.80 159,019 2.78 173,488 3.03 365,228 6.38 30,507 0.53 83,399 1.46 448,273 7.82 -520,190 -9.08 1,928,364 33.66 -54,985 -0.96$ 3,651 0.06 --------------- ------ -51,334 -0.90 --------------- ------ --------------- ------ 5,873,523 84.68$ 4,624,613 80.72 d Standard Iron and Wire FINANCIAL STATEMENT REPORT PREPARED AS OF PERIOD 96-10 FOR PERIOD ENDING 30 Jun 1996 ~'VTED: 13:52:40 Jul 03 1996 Standard Iron & Wire Works Balance Sheet Assets-Continued Rounded to the nearest Dollar Current Period Property & Equipment Machinery & Equipment Automobiles Office Equipment & Leasehold Improveme Less Accumulated Depreciation Net Property & Equipment Other Assets Cash Surrender Value Life Insurance Deposits / Clearings Note Receivable Stockholders Total Other Assets • • Total Assets Last Year Period 2,108,828 30.40 2,231,271 38.95 222,089 3.20 .102,017 1.78 657,121 9.47 621,196 10.84 -2,211,323 -31.88 -2,146,690 -37.47 776,716 11.20 807,794 14.10 271,433 3.91 231,219 4.04 14,413 0.21 5,406 0.09 60,000 1.05 --------------- ------ --------------- - 285,846 4.12 296,625 ----- 5.18 --------------- ------ --------------- ------ 6,936,085 100.00 5,729,032 100.00 0 Standard Iron and Wire FINANCIAL STATII~NT REPORT PREPARED AS OF PERIOD 96-10 FOR PERIOD ENDING 30 Jun 1996 NTED: 13:52:40 Jul 03 1996 Standard Iron & Wire Works Balance Sheet Liabilities Rounded to the nearest Dollar Current Last Year Period Period Current Liabilities Accounts Payable Trade Purchase Order Clearing Long Term Debt Current Portion Total Current Payables Billings in Excess of Cost Accrued Liabilities Payroll Income Taxes Sales Taxes Commissions Brest ~r Total Accrued Liabilities Notes Payable Bank Total Current Liabilities Long Term Debt Notes Payable DAD Notes Payable Finn Notes Payable Other Less Current Portion Total Long Term Debt Defered Income Taxes Stockholders Equity Commom Stock Additional Paid in Capital Retained Earnings Total Stockholders Equity Total Liabilities & Equity 826,694 11.~92~ 546,081 9.53 323,232 4.66 283,052 4.94 164,536 --------------- 2.37 --- -- 149,010 2.60 1,314,462 - --- 18.95 ------------ 978,143 ------ 17.07 548,377 7.91 534,266 9.33 1,039,733 14.99 292,113 5.10 -207,861 -3.00 -75,111 -1.31 25,396 0.37 17,742 0.31 164 1,853 0.03 7,337 0.11 19,530 0.34 -27,576 ---- -0.40 -2,387 -0.04 ----------- 837,193 ------ --- 12.07 ------------ 253,740 ------ 4.43 200,000 3.49 --------------- ------ --------------- ------ 2,700,033 38.93 1,966,150 34.32 99,409 1.43 191,455 3.34 163,584 2.36 214,784 3.75 153,328 2.21$ 248,728 4.34 -164,536 --------------- - ----- --- -149,010 ------------ - ----- 251,785 3.63 505,957 8.83 -40,000 -0.58 -40,000 -0.70 58,150 0.84 59,440 1.04 3,611 0.05 58,521 1.02 3,962,506 --------- 57.13 3,178,964 55.49 ------ 4,024,267 ------ -- 58.02 ------------- 3,296,926 ------ 57.55 --------------- ------ --------------- ------ 6,936,085 100.00 5,729,032 100.00 --------------- ------ --------------- ------ --------------- ------ --------------- ------ standard Iron and wire FINANCIAL STATEMENT REPORT PREPARED AS OF PERIOD 96-10 F PERIOD ENDING 30 Jun 1996 13:52:57 Jul 03 1996 standard iron 4 wire Works Income Statement Combined Income Statement Rounded to the neeraat Dollar Current same Period Year To Dnte Year To pate Period Lnat Year Last Year Net Sales Coat of Snlee Material Coats Direct Labor Plant Overhead Coats Under(Over) Applied Overhead Outplant Coats Total Coat of Sales Gross Profit General 6 Administrative Expense Income From Operations OTF~R INCOME interest Income Gain on Sale of Assets other Income Total other Income Other Expanse Interest Expense LOSS ON SALE OF ASSETS Total Other Expense Income Before Taxes Net Income 1,833,852 100.003 1,795,488 100.003 19,137,827 100.001 17,553,690 100.008 508,328 27.721 564,886 31.461 5,691,841 29.741 5,547,862 31.618 149,326 .8.143 168,859 9.408 1,736,351 9.071 1,810,223 10.311 382,395 20.851 435,530 24.263 6,034,735 21.081 4,001,140 22.798 38,446 2.101 -33,162 -1.851 734,144 3.841 -157,945 -0.908 167,007 9.111 227,336 12.663 2,464,675 12.771 2,794,470 15.928 - - ------------ 1,245,502 ------ - 67.921 ----------- 1,363,466 ------ - 75.943 ----------- 14,641,846 ------ - 76.511 ----------- 13,995,749 --- - 79.738 588,350 32.083 632,021 24.063 6,696,281 23.498 3,557,940 20.271 197,114 10.758 243,922 13.598 2,932,982 15.333 2,258,284 12.878 - -- ------------ 391,236 ------ - 21.333 ----------- 188,100 ------ - 10.488 ----------- 1,563,300 ------ - 8.171 ----------- 1,299,656 - -- 7.403 1,510 0.018 939 47 713 2,068 0.018 67 3,162 0.021 2,068 0.018 5,049 0.288 5,619 0.313 80,392 O.d21 138,651 0.793, -5,000 -0.031 5,049 0.283 5,619 0.318 75,392 0.391 138,651 0.793 386,187 21.063 182,529 10.178 1,491,069 7.791 1,163,073 6.638 ------------ 386,187 ------ -- 21.061 ---------- 182,529 ------ - 10.178 ----------- 1,491,069 ------ - 7.793 ----------- - 1,163,073 ----- 6.638 U EDA AGENDA AUGUST 6, 1996 5. Consideration to approve or deny approval of GMEF Loan No 013 for applicant, Standard Iron & Wire Works.. Inc. A. Reference and Back rte,. ound: After review and discussion of the preliminary application from Standard Iron, the EDA is asked to consider approval or disapproval of the requested $70,000 GMEF Loan. As you recall approved GMEF Loan No. 012 became null and void via the agreement of the EDA members. On April 23, 1996, based on two options outlined by Attorney Bubul, EDA members agreed to allow GMEF Loan No. 012 become null and void, July 23, 1996. The EDA agreed to consider approval of a new loan after August 1, 1996, this the effective date of the amendment providing a provision for EDA Commissioners to disclose application for grants or loans and eliminating any potential conflict of interest. Standard Iron agreed to cover the non-disbursed, previously approved $70,000 GMEF and the $60,000 CMIF funds. These funds were to be applied toward the purchase of a laser machine. The laser machine has been delivered and accepted. The loader and unloader, a component of the laser, is under assessment for acceptance by the company. - For the sake of records and keeping this a clean deal, the EDA needs to deteimme if this GMEF loan application from Standard Iron will encourage economic development. Secondly, they need to determine if the proposed purchase of equipment and machine and the application complies with the GMEF public purpose criteria and policies. Note the loan will not increase the tax base of the community; however, this is not a mandatory requirement of the guidelines. Lastly, the EDA must determine the amount of the loan, etc. Loan No. 012 was approved as a $70,000 M&E loan with a 6.5% interest rate amortized over seven years. Loan fee not-to-exceed $1,050, GMEF legal fees the responsibility of the applicant, and shared second-position with the CMIF. Collateral, guarantees, and other condition requirements to be determined and prepared by the GMEF Attorney. Loan No. 013 would become null and void, February 6, 1997. Lender and CMIF commitment and approvals in place. Approved Loan No. 013 to be disbursed from the Liquor Appropriation Fund. EDA members borrowed $50,000 for Loan No. 011 from the 1996 Appropriation leaving a GMEF balance of $150,000. Upon disbursement of Loan No. 013, the remaining GMEF balance will be $80,000. • Page 1 ~. EDA AGENDA AUGUST 6, 1996 The City Council will consider ratification of the EDA's action of GMEF Loan No. 013 for Standard Iron on August 12, 1996. It is anticipated disbursement of the GMEF and CMIF funds to the company or lender will follow quickly. B. Alternative Action: 1. A motion to approve GMEF Loan No. 013 for Standard Iron & Wire Works, Inc. Loan amount and terms as determined by the EDA. 2. A motion denying approval of GMEF Loan No. 013 for Standard Iron & Wire Works, Inc. 3. A motion to table any action. C. Recommendation: Recommendation is for Alternative No. 1. The company is a major employer of the City of Monticello, has an excellent working relationship with the City, and the overall financing plan was previously accepted. D. Sunnorting Data: None. • Page 2 APPROVAL OF GREATER MONTICELLO ENTERPRISE FUNDS BY ECONOMIC DEVELPMENT AUTHORITY IN AND FOR THE CITY OF MONTICELLO, MINNESOTA Preliminary Loan Application Approval. Loan terms negotiated and agreed upon betweeen the developer, the lending institution, and the EDA Executive Director. Developer, EDA and CMIF Formal Loan Application and Financial Statements analyzed by the lending institution, BDS, Inc. or city staff. Building and Site Plan Preliminary and/or Final Review. DOES NOT APPLY Building Permit approval or construction commitment. Loan documents reviewed and/or prepared by the City Attorney. DOES NOT APPLY ECONOMIC DEVELOPMENT AUTHORITY APPROVAL OR DISAPPROVAL: LOAN NUMBER GMEF LOAN N0. 013 LOAN APPROVED BORROWER SELE smite is i sty Partnership ADDRESS 2 un as oa ontZCe lo, MN LOAN DISAPPROVED LOAN AMOUNT > 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: GMEF disbursed NAYS: 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: • • EDA AGENDA AUGUST 6, 1996 6. Consideration to determine the annual Liquor Fund A~ropriation's request for budget year 1997. A. Reference and Background: Since Administrator Wolfsteller starts the city budget process in August, the EDA should deternune if they wish to request an annual appropriation .from the Liquor Fund. As you will recall, initially the request was $200,000 and in the last year or two that amount was reduced to $100,000. It has always been the intent of the EDA to become self sufficient and eventually not request an annual appropriation. An appropriation means dollars are available; however, the appropriation is only utilized and transferred from the Liquor Fund upon disbursement of an approved loan. Of the total $610,500 dollars lend to businesses since the EDA's first approval in 1990, $383,000 was disbursed from the Liquor Fund and $227,500 was disbursed from the UDAG Fund. Below is the cash balance of each account which is available for use by the EDA for the GMEF. These are the sources of funds for the GMEF program. 7AN 1996 7AN 1997 GMEF CASH BALANCE UDAG CASH BALANCE SCREG - AROPLAX TOTALS LIQUOR FUND APPROPRIATION $202,495.31 132,047.00 94,205.67 $428,747.98 $253,011.17 59,047.00 124,005.00 $436,063.17 $ 70,000.00 (EXPENDED) $100,000.00 TWO BALLOON PAYMENTS ARE DUE IN 1997: TAPPER'S (AUGUST, 1997) PRINCIPLE REMAINING $70,989.14 SMM (DECEMBER, 1997) PRINCIPLE REMAINING $41,.188.73 TOTAL $112,177.87 FUTURE BALLOON PAYMENTS DUE: One loan each in year 1998, 1999, 2000, and 2001. • EDA AGENDA AUGUST 6, 1996 1996 IS THE LAST YEAR THE CITY RETAINS THE SCREG-AROPLAX PRINCIPLE AND INTEREST. (ANNUAL $29,800) 1999 IS THE LAST YEAR OF PRINCIPLE AND INTEREST PAYBACK FROM THE FSI-UDAG GRANT (ANNUAL $27,000) Here is an excerpt from the guidelines relating to the SOURCE -CITY LIQUOR STORE FUND. "Revenue created through this program shall be under the control of the EDA and shall not be transferred to City funds unless the City Council determines that reserves generated are not necessary for the successful operation of the Authority. If such is the case, such 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 (see Section 5 B of the ordinance establishing the Monticello EDA)." • 2 MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY GREATER MONTICELLO ENTERPRISE FUND (GMEF) 1996 Cash Flow Projection BEGINNING CASH BALANCE, January 1996 $202,495.31 RECEIPTS Appropriations, Expected Liquor Fund $100,000.00 UDAG $100,000.00 Notes Amortization Payments - Tapper Inc. ($736.07 Mo.) 8-97 $ 8,832.84 Muller Theatre -0- SMM, Inc. ($316.32 Mo.} 12-97 $ 3,795.84 Aroplax Corp. ($1,241.73 Mo.) 12-99 $ 14,900.76 Custom Canopy, Inc. ($269.03 Mo.) 6-98 $ 3,228.36 Standard Iron ($795.49 Mo.) 7-01 $ 9,545.90 Vector Tool ($380.18 Mo.) 11-00 $ 4,562.16 Interest Income - Investment $ 3,000.00 Loan Fees $ 2,500.00 Miscellaneous S 1,300.00 TOTAL RECEIPTS 5251.665.86 ~OTAL BEGINNING BALANCE AND RECEIPTS $454,161.17 EXPENDITURES GMEF Loans Tapper, Inc. (approved 11-95 UDAG) $100,000.00 Standard Iron $ 70,000.00 Other $ 30,000.00 Legal Fees $ 1,000.00 Service Fees ~ 150.00 TOTAL EXPENDITURES X201.150.00 EXPECTED CASH BALANCE, December 1996 $253.011.17 EDA AGENDA AUGUST 6, 1996 7. Consideration to discuss and review the GMEF Guidelines for Qossible amendment A. Reference and Background: Upon consideration to extend the disbursement date for GMEF Loan No. Ol 1 in April, members suggested the GMEF Guidelines be reviewed for possible amendment. Non-performance: No provision exists within the guidelines allowing the EDA to extend the disbursement date beyond the 180 days. Alternatives for consideration: 1. Establish a provision allowing the EDA the right to extend the original disbursement date, therebye, the loan does not become null and void. (Previously the provision was amended and the disbursement date was extended from 120 days to 180 days, this appeared sufficient time for loan document preparation . The previous amendment was discussed and suggested by commercial lenders.) 2. Take no action and have applicant submit a new loan request. 3. Establish an GMEF application fee payable with submittal of the GMEF application request and returned to the developer upon the disbursement of the loan. Similar to that used for TIF applicants. 4. Require the loan fee payable at the time of EDA approval rather than at closing or disbursement. 5. Other. Some EDA members felt an application fee may eliminate the need to extend the disbursement date as the fee may encourage a timely commencement of the construction or expansion project. Loan Fee: Is the GMEF loan fee consistent with the objectives of the EDA and purpose the GMEF? At times, an applicant has questioned the out-of-pocket costs associated with the GMEF. The EDA collects 1.5% of the approved loan amount as the loan fee . For example on Loan No. 011 for $100,000, the EDA collected $1,500. The attorney fees were $1,348.22 and recording fees were $254.50. However, this was not a typcial loan as several things changed mid-stream and this was a real estate/NI&E loan • EDA AGENDA AUGUST 6, 1996 Kennedy & Graven, the law firm preparing the closing documents, estimates legal fees at approximately $700 for the GMEF. Typically, Kennedy & Graven also prepares closing documents for the CNIIF at a cost of approximately another $700. The applicant is responsible for legal costs associated with the CNIIF. A developer utilizing the CNIIF can either prepare the application themself or hire Public Resource Group, Inc. for approximately $2,500. The CNIIF has no loan fee. Generally, the commercial lender's attorney reviews the GMEF and/or CIVIIF documents and the developer's attorney review the documents. These are additional expenses for the developer. At seminars relating to revolving loan funds, it is recommended that a loan fee be required to market the commercial lender as the primary lender and to ensure the "gap" financing purpose. Loan Size: Please clarify the meaning of "remaining revolving loan fund balance." Does this mean? a. Annual GMEF Appropriation of $200,000. b. GMEF balance of estimated January 1997 of $253,011.17. c. GMEF sources of funds estimated January 1997 of $428, 747.98 (does not include $100,000 Liquor Fund Appropriation.) Originally the "remaining revolving loan fund balance" meant the annual Liquor Fund Appropriation of $200,000. This is used as a guide for loan packaging and is a provision of the GMEF Guidelines. What is the remaining balance date? The date of loan approval or disbursal`? This is an accountability issue. Other criteria for review. • 2 EDA AGENDA AUGUST 6, 1996 8. Other Business: a) Update of GMEF Loan No. Ol 1, Tapper's Inc. -With the preliminary building and site plans submitted and upon the recommendation of the EDA attorney, Loan No. 011 closed on May 28, 1996. The $100,000 was disbursed into an Escrow Account at the Stearns County National Bank for disbursement by the bank. The developer agreed to the amortized payment schedule with loan payback beginning June 1, 1996. The developer has made three payments of principal and interest on dollars unavailable to him because the building permit has not been issued. The developer was notified of his $30,000 to $35,000 storm sewer charge after closing of the GMEF loan and project funding approval. Issuance of the building permit is pending the confirmation of minor site plan corrections and resolution of the storm sewer issue. This according to the Chief Building Official. b) Consideration of Kennedy & Graven bill on legislative changes -Please refer to the enclosed letter and billing from Attorney Bubul. I am looking for direction from the EDA relating to authorization to pay the bill in full or partial or to deny payment. c) Copy of the 1996 Monticello Property Tax from the Minnesota Chamber of Commerce. ~~ d) Other. • KENNEDY & GRAVEN CHARTERED Attorneys at Law JAMES J. THOMSON 470 P(Ilsbury Center, Minneapolis, Minnesota 55401 LARRY M WERT}IEAt OBERT A. ALSGP (612) 337.9300 . BONE ~ ~L~Ns UCE M. BATTERSON JOE Y. YANG ONALD H. BATTY Facsimile (612) 337-9310 -- STEPHEN J. BUBUL Jolliv B. DEAN DAVID L. GRAVEN (1929-1991) DANIEL J. GREENSwEIG DAVID J. KENNEDY CHARLES L. LEFEVERE OF COUNSEL JollN M. LEFE VRE, JR. WRITER'S DIRECT DIAL ROBERT C. CARLSON ROBERT J. LPIDALL ROBERT L. DAVIDSON ROBERT C. LONG 337-9228 wELLUVGroN H. LAw JAMES M. STROMMEN I'LOYD $. OLSON CORAINE H. THOMSON CURTLS A. PEARSON T. JAY SALMEN July 19, 1996 Ollie i~oropchak Commissioners of the Monticello City of Monticello P.O. Box 1147 Monticello, MN 55362-9245 RE: Monticello EDA Invoice No. 8886 Economic Development Authority Dear Ollie and EDA Commissioners I am writing to explain our invoice. for services .related to conflict of interest legislation adopted in the 1996 legislative session. As you know, when we became aware that Mr. DeMeules was a member of the EDA, we explained that his EDA revolving loan probably created a conflict of interest under Minnesota statutes. (Such potential conflicts are treated differently under the HRA statute, where a conflict can generally be avoided if the official discloses the conflict to the board and abstains from any further participation in the decision-making on that matter. } At the same, time we were aware of pending legislation that would create an exception for public officials in Mr. DeMeule's circumstance. Because this legislation might allow his loan to go forward, we made the decision to pursue and clarify the bill. We proceeded with this work knowing that the EDA had not expressly directed us to take this on;, we simply felt it was in the best interest of the EDA and Mr. DeMeules . The legislation was approved, allowing local government officials to participate in their local authority's loan programs. (A copy is enclosed.) Some ambiguity was left in the approved bill; clarifying language that we developed was included in a "revisor's bill" passed by the Senate, but that bill was not approved by the House on the last day of the session. Nevertheless, we think the legislation is a substantial improvement for the EDA. . We have, I think, fairly apportioned the fees for this work among clients who had an interest in the conflict of interest legislation. -The attached invoice represents only a portion of the fees for our work in meeting with legislators, drafting revisions, conferring with staff, and shepherding the legislation through the frantic last few days of the session. 3JB107566 PN115-2d Ollie Koropchak Commissioners of the Monticello Economic Development Authority July 19, 1996 Page 2 Having said all this, I want to acknowledge that, while we kept you informed of our activities and the progress on the bill, the EDA did not expressly engage us to perform this task. As such, please consider the invoice as a request. I think our service was of long-term benefit to the EDA and members of the local business community who may wish to serve on the board, but I understand that the EDA may approve or deny the request at its discretion. If you have questions or concerns about this matter, please let me know. Ve ly yours, St en u ul • • 9JH307566 PN115-24 KENNEDY 8~ GRAVEN Chartered 200 South Sixth Streec, Suite 470 Minneapolis, MN 55402 (612) 337-9300 May 14, 1996 Monticello EDA Ollie Koropchak PO Box 1147 Monticello, MN 55362-9245 MN325-00002: Standard Iron Loan Invoice # 8886 Through April 30, 1996 For All Legal Services As Follows: 03/27/96 SJB 03/27/96 DJG 03/28/96 SJB 03/28/96 DJG 03/29/96 SJB 04/01/96 SJB 04/02/96 RCL 04/02/96 SJB 04/03/96 RCL 04/03/96 SJB Intraoffice conference with D. Greensweig re conflicts issue; phone call with O. Koropchek re same; research legislation Research conflict of interest issue Phone calls with Senate Tax Committee, O. Koropchak and B. DeMeules; intraoffice conference with R. Long; letter to Senator Hottinger Intraoffice conference with Steve re conflict of interest; phone calls to City and Standard Iron re conflict of interest Track Conflict legislation Track legislation re conflict rules Work on revisions to bill amendments re HF 2102 on local development authority Track conflict legislation; fax to J. Michael re same Meeting with J Rohm re revisions amendment Intraoffice conference with R. Long re legislation Total Services: Total Services And Disbursements: ~Olp~j 2.50 322.50 '~ 2.00 200.00 ~' 3.00 387.00 1.60 160.00 f:~~q . S~ 0.50 64.50 0.80 103.20 4.00 516.00 1.00 129.00 0.50 64.50 0.25 32.25 $ 1,978.95 $ 1,978.95 • Q7 ~ ^I~L p~ ~ ~ yI ^i -I4~ c'? m E ~ ~ i=i Ti , E u~ j ~ ro ~ u >, ~ ~' U >~I v ~I ; ~b I~ S F V. ~I `i FI "y m.. Y T ~ b cd Y ~i C C ~ d ta 5.'> O rw-~ r'I ~ E I i .. .r C' '9 d :7 Cr ~ . ~ ~ CO E w ~ . 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L.I ~ cV L L '~ '~ ~I aedR a at, v~ ~°' u.~'Y R ~~o 0 7F.. ~ .~•° ~ ~ R. y C ~ 6:, m a~='~,~,o~w E~ c~ pia ~ m~'t~^~ c. ~ L zi E'E^z" 3 .~ ~ '~'~I •S c 3 y u "y v c '~ .S ci 3 ~ ,~, -o 00 " co• w ^ .:: z .~ 'So o ~ mot' ~ '~ .~ ~ :a o a ~; ~ .,"m ~ ._ c", c ~ ~ c .Ci C .G I" C .~~ q ^ .C d 7 C ~ GEl O V .~. ~ C V V cC ~ m 'L R .~. d ~ C .~ ?~ A C R ~ 'C ..~ C ... ~ ~ •v -x, Ci V vcCec°^~~3 UVl~~c~~^.~~~~G~~"~cc~~c:c_c..I..,.`>?~^2s ~;jJCt-~`c•r~ -c~zlt` MONTICELLO 1996 Local Government Spending Ci $5,959,521 Coun $40,323,933 S.D.882: $24,881,815 1996 Property Tax Levy Ci $2,922,800 Coun $15,886,491 S.D.882: $11,843,491 1996 State Aids Aid T e 1996 Aid Local Government Aid LGA $0 Ci Homestead and A ricultural Credit Aid HACA $261,099 Coun HACA * $1,945,127 School Aids ** $10,932,500 * County HACA benefits taxpayers throughout the county, including taxpayers in this city. ** Estimate. School aids may benefit taxpayers outside of this municipality. 1996 Property Tax Base • Pro e T e Market Value % of Total Tax Ca aci ~ % of Total Homestead $104,172,000 23.0 $1,235,237 7.5 Non-Homestead $10,803,174 2.4 $248,473 1.5 A artment $8,967,706 2.0 $304,902 1.9 Commercial/Industrial $49,788,392 11.0 $2,059,418 12.6 Other $278,306,347 61.6 $12,546,915 76.5 Total $452,037,619 $16,394,945 Market Value Example • Tax Capacity Pro e T e Market Value Tax Ca aci Net Tax Avera a Value Home $90,000 $1,080 $1,194 A artment $250,000 $8,500 $9,399 Commercial/Industrial $250,000 $9,900 $10,948 Commercial/Industrial $1,000,000 $44,400 $49,098