EDA Agenda 01-23-1996AGENDA
MONTICELLO ECONOMIC DEVELOPMENT AUTSORITY ANNIIAL MEETING
Tuesday, January 23, 1996 - 7:00 p.m.
City Hall
MEMBERS: Chairperson Ron Hoglund, Vice Chair Barb Schwientek,
Clint Herbst, Tom Perrault, Al Larson, Harvey Kendall,
and Bill Demeules.
STAFF: Treasurer Rick Wolfsteller and Executive Director Ollie
Koropchak.
1. CALL TO ORDER.
2. CONSIDERATION TO APPROVE THE NOVEMBER 28, 1995 IDA MINUTES.
3. CONSIDERATION TO ELECT 1996 EDA OFFICERS.
4. CONSIDERATION TO REVIEW AND ACCEPT THE YEAR-END EDA FINANCIAL
STATEMENTS, ACTIVITY REPORT, AND PROPOSED 1996 BUDGET.
5. CONSIDERATION TO REVIEW YEAR-END FUND BALANCES OF THE GMEF,
UDAG, AND ERG FUNDS.
6. CONSIDERATION TO REVIEW FOR APPROVAL THE PRELIMINARY GMEF LOAN
APPLICATION FROM STANDARD IRON & WIRE WORKS, INC.
7. OTHER BUSINESS.
a) Update of GMEF Loan No. 009, H-Window.
b) Update of GMEF Loan No. 011, Tappers.
c) Others.
8. ADJOURNMENT.
MIl~TUTES
MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
Tuesday, November 28, 1995 - 7:00 p.m.
City Hall
MEMBERS PRESENT: Chairperson Ron Hoglund, Vice Chairperson Barb Schwientek,
Assistant Treasurer Harvey Kendall, Clint Herbst, Tom
Perrault, Al Larson, and Bill Demeules.
STAFF PRESENT:
STAFF ABSENT:
GUESTS:
1. CALL TO ORDER.
Ollie Koropchak, Executive Director
Jeff O'Neill
Rick Wolfsteller, EDA Treasurer
Bill and Barb Tapper.
Chairperson Hoglund called the EDA meeting to order at 7:00 p.m.
2. CONSIDERATION TO APPROVE THE EPTEMBER 1 ~ ~l 995 EDA MINLTTFS
EDA members reviewed the September minutes at the meeting. Barb Schwientek
then made a motion to approve the September 13,1995 EDA minutes. Clint Herbst
seconded the motion and with no additions or corrections, the minutes were
approved as written.
3. CONSIDERATION TO REVIEW FOR APPROVAL THE PRELIlVIINARY GMEF
APPLICATION FROM APPLICANT TAPPERS INC
Bill Tapper informed commission members that the 18,000 sq ft expansion included
a mezzanine with a lunchroom and laboratories, as well, as the production area.
Expansion materials will be block or span-certe. Currently, the company is leasing
space from Jay Morrell. Fifteen new jobs will be created at an average wage of
$8.30 per hour.
Koropchak reviewed the Tapper loan application request with the GMEF Guidelines
and the analysis prepared by Public Resource Group, Inc. Additionally, a letter of
intent to finance the project was submitted by Marquette Bank. Mr. Endres
indicated, "Although no bank approval or commitment has been received from
headquarters, approval is presumed." Koropchak noted the Marquette Bank's
appraisal of the real estate and machinery & equipment. The total appraised value
indicated a collateral shortfall of approximatley $53,000. Mr. Tapper felt the
appraisal was very, very conservative since the original appraisal was $1.5 million.
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Page 1
EDA MINUTES
NOVEMBER 28, 1995
EDA members agreed with Mr. Tapper and viewed the loan request as a definite
compliance of the "gap financing" requirement. Additionally, EDA members felt in
the real world if the loans were declared in-default, the GMEF 5th or 6th positions
were irrelevant.
Mr. Tapper indicated, he intends to meet the 7-year balloon obligation of GMEF
Loan No. 001 which is due August 13, 1997.
As of November 27, 1995, the annual GMEF Appropriation balance according to
disbursement records is $150,000 and according to approval records is $100,000. In
either case, the EDA felt the loan disbursement would occur in 1996 for compliance
of the GMEF Guideline. It was recommended, the approved $100,000 be
transferred from the UDAG account.
4. CONSIDERATION TO APPROVE OR DISAPPROVE MEF LOAN NO Oll
FOR TAPPERS, INC.
The EDA found the Tapper {Genereux Fine Wood Products, Inc.) expansion project
to encourage economic development and that the GMEF application complied with
the GMEF public purpose criteria and policies. Barb Schwientek made a motion to
approve GMEF Loan No. 011 in the amount of $100,000 for Tappers, Inc. This a
real estate/equipment loan with a 6.75 % fixed interest rate amortized over 20 years,
ballooned in five years. Loan fee was set at not-to-exceed $1,500 and the GMEF
legal fees the responsibility of the applicant. GMEF Loan Nos. 001 and O10 will be
in fifth and sixth position, respectively, behind the two SBA 504 loans of third and
fourth position and the two bank loans of first and second positions. Collateral,
guarantees, and other condition requirements to be determined and prepared by the
GMEF attorney. The GMEF Loan approval is subject to SBA and Bank
commitment and approval. GMEF Loan No. O11 becomes null and void, May 28,
1996. Harvey Kendall seconded the motion and with no further discussion, the
motion passed unanimously. The Council will consider ratification of the EDA's
approval on September 25, 1995.
5. CONSIDERATION TO DISCUSS THE POTENTIAL OF CONSOLIDATING THE
EDA AND THE HRA FOR A RECOI\~IlVIENDATION TO CITY COUNCIL
EDA members discussed the potential consolidation of the HRA and the EDA.
Koropchak gave a background of the subject matter's origination and the IDC's
request for the joint meeting of September 27. Jeff O'Neill summarized the the pros
and cons of consolidation. Consolidation may be more efficient, would eliminate
Page 2
EDA MINUTES
NOVEMBER 28, 1995
redundancy for funding approval, most cities have either an HRA or an EDA, and
the powers of an EDA and an HRA are very similiar.
The makeup of an EDA has the option of a 3, 5, or 7-member commission with
representation from the City Council and the Statute does not contain a residency
requirement. An HRA has a 5-member commission and the Statute does contain a
residency requirement. The makeup of the commissions attracted the most
discussion. A consolidation to an EDA may provide a stronger linkage to the City
Council; however, a consolidation to an HRA would provide a checks and balance
system.
EDA members discussed the residency criteria for EDA members as adopted by the
City Council. They felt until an ample number of candidates with qualifications
applied for EDA or HRA commission seats, the EDA residency criteria should be
eliminated. Other discussion: EDA agendas are well-prepared with adequate
information for decision making which drives time-efficient meetings. Additionally,
EDA meetings occur only about four times a year; therefore, EDA membership is
not overly demanding or time consuming. Although the IDC may be a banch of the
Chamber of Commerce, the role of the IDC to make industrial related suggestions
or recommendations is important to the community and complements the objectives
of the HRA and the EDA. Consolidation of the EDA and the HRA does not
reduce the workload of the Executive Director.
Al Larson made a motion recommending the EDA and the HRA not consolidate and
the existing two-commission organizational structure continue, therebye, maintaining
both a linkage to the Council and a checks and balance system. Additionally, the
motion recommends the EDA residency requirement be eliminated until such time
an ample number of candidates apply for EDA commission seats. Non-resident
commissioners shall have a vested interest in the community. Harvey Kendall
seconded the motion and with no further discussion, the motion passed unanimously.
Yeas: Larson, Kendall, ' Hoglund, Schwientek, Herbst, Perrault, and Demeules.
Nays: None.
6. OTHER BUSINESS:
a) Vector Tool Update: GMEF Loan No. O10 for $50,000 closed on November
21, 1995, and the monies were disbursed from the Liquor Fund. Koropchak
contacted Mary Barger for a response to the EDA's question of September
13 relating to the Days Receivables and Payables' extension of approximately
20 days between June 1994 and 1995. Barger said Vector Tool had offered
its major customer a 3 % discount/net 10 days in 1994 and this was changed
•
Page 3
EDA NIINUTES
NOVEMBER 28, 1995
to a 1 % discount/net 30 days in 1995. This also accounts for the change in
Payables.
b) H-Window Update -Accepted the written update.
c) Other -None.
7. ADJOLTIZNMENT.
Barb Schwientek made a motion to adjourn the EDA meeting. Seconded by Bill
Demeules and with no further business, the EDA meeting adjourned at 8:30 p.m.
~~.. K ~,
Ollie Koropchak, Executive Director
•
L.J
Page 4
EDA AGENDA
JANUARY 23, 1996
3. Consideration to Elect 1996 EDA Officers
A. Reference and Background
In order to comply with EDA Ordinance Amendment No. 172,
Section 2-3-2: The Authority shall annually elect a
president, vice president, treasurer, assistant treasurer, and
secretary. The current list of officers are:
President
Vice President
Treasurer
Assistant Treasurer
Secretary
Ron Hoglund
Barb Schwientek
Rick Wolfsteller
Harvey Kendall
Ollie Koropchak
Nominations will be made at the meeting; therefore, any EDA
member unable to attend the meeting and doesn ~ t wish to be re-
elected or nominated, please contact me.
1996 EDA membership and terms:
Tom Perrault, Council 12-96
Harvey Kendall 12-96
Al Larson 12-97
Clint Herbst, Council 12-98
Barb Schwientek 12-98
Bill Demeules 12-99
Ron Hoglund 12-00
B. Alternative Action:
1. Call for nominations from the floor, cease nominations,
and approve the nominations as elected 1996 EDA officers.
2. Table election of 1996 officers.
C. Recommendation:
Recommendation is for the 1995 officers to consider accepting
nomination to their respective office.
•
Page 1
EDA AGENDA
JANUARY 23, 1996
4. Consideration to Review and Accept the Year-End EDA Financial
Statements. Activity Report. and 1996 Proposed Budget.
A. Reference and Background.
In order to comply with EDA Ordinance Amendment No. 172,
Section 2-3-6: The Authority shall prepare an annual budget
projecting anticipated expenses and sources of revenue. And
B: The Authority shall prepare an annual report describing
its activities and providing an accurate statement of its
financial condition. Said report shall be submitted to the
City Council by March 1 of each year.
Enclosed are the year-end statements, proposed budget, and
activity report.
The EDA will need to review for necessary revision and/or
accept the statements/report.
•
Page 1
MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
GREATER MONTICELLO ENTERPRISE FUND (GMEF)
1996 Cash Flow Projection
BEGINNING CASH BALANCE, January 1996
RECEIPTS
Appropriations, Expected -
Liquor Fund
UDAG
Notes Amortization Payments -
Tapper Inc. ($736.07 Mo.) 8-97
Muller Theatre
SMM, Inc. ($316.32 Mo.) 12-97
Aroplax Corp. ($1,241.73. Mo.) 12-99
Custom Canopy, Inc. ($269.03 Mo.) 6-98
Standard Iron ($795.49 Mo.) 7-01
Vector Tool ($380.18 Mo.) 11-00
Interest Income - Investment
Loan Fees
Miscellaneous
TOTAL RECEIPTS
___OTAL BEGINNING BALANCE AND RECEIPTS
EXPENDITURES
GMEF Loans -
Tapper, Inc. (approved 11-95 UDAG)
Standard Iron
Other
Legal Fees
Service Fees
TOTAL EXPENDITURES
EXPECTED .CASH BALANCE, December 1996
$100,000.00
$100,000.00
$ 8,832.84
-0-
$ 3,795.84
$ 14,900.76
$ 3,228.36
$ 9,545.90
$ 4,562.16
$ 3,000.00
$ 2,500.00
5 1,300.00
$100,000.00
$ 70,000.00
$ 30,000.00
$ 1,000.00
~ 150.00
$202,495.31
.$251,665.86
$454,161.17
5201, 150.00
$253.011.17
MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
GREATER MONTICELLO ENTERPRISE FUND (GMEF)
Balance Sheet
December 31, 1995
A ETS
Cash in Bank $202,495.31
Notes Receivable - Tapper, Inc.
Notes Receivable - Muller Theatre
Notes Receivable - SMM, Inc.
Notes Receivable - Aroplax Corp.
Notes Receivable - Custom Canopy, Inc.
Notes Receivable - Standard Iron
Notes Receivable - Vector Tool
Appropriations Receivables -
1995 Other
1995 Liquor Fund
TOTAL ASSETS
FUND EOUITY
'~*'und Balance
Reserved for Participation Loans
(Economic Development)
TOTAL LIABILITIES AND FUND EQUITY
$ 75,938.49
-0-
$ 44,975.93
$ 51,643.23
$ 38,941.03
$ 65,958.88
$ 49,901.07
$100, 000.00
5100,000.00
5729,853.94
5729,853.94
5729,853.94
•
MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
GREATER MONTICELLO ENTERPRISE FUND (GMEF)
Statement of Revenues, Expenditures and Changes in Fund Balance
For the Year Ended December 31, 1995
REVENUES
Appropriations -
1994 Liquor Fund $ 50,000.00
1994 UDAG -0-
Interest Income - Notes $ 16,956.88
Interest Income - Investment (est.) $ 2,900.00
Interest Income - Investment (adj.) [ 474.05]
Loan Fees $ 750.00
Miscellaneous 5 1,275.00
TOTAL REVENUES $ 71,407.83
EXPENDITURES
Legal Fees $ 1,257.00
Professional Fees $ 112.50
Service Fees $ 60.00
Int. Adjustment - Notes 5 0
TOTAL EXPENDITURES $ 1.429.50
Excess of Revenues Over Expenditures $ 69,978.33
FUND BALANCE - Beginning of Year 5659.875.61
FUND BALANCE - End of Year $729,853.94
1995
ECONOMIC DEVELOPMENT AUTHORITY ACTIVITY REPORT
•
MEETING DATE
SUBJECTS
•
•
Annual Meeting EDA officers elected for 1995:
held 3-7-95. President - Ron Hoglund
Vice President - Barb Schwientek
Treasurer - Rick Wolfsteller
Assistant Treasurer - Harvey Kendall
Secretary - Ollie Koropchak
Accepted EDA 1994 Year-End Financial
Statements and Activity Report. All
existing GMEF loan paybacks are current.
Bill Demeules appointed EDA member
replacing Bob Mosford.
7-25-95. Reviewed the preliminary and formal GMEF
applications from the H-window Company.
Loan No. 008 became null and void, 1-15-
95.
Approved GMEF Loan No. 009 for the H-
Window in the amount of $50, 000 at 5. Oak
fixed interest rate and amortized over 7
years for equipment.
In preparation of planning for the 1996
City Budget, the EDA requested $100,000
from the Liquor Fund.
9-13-95. Reviewed the preliminary and formal GMEF
application from vector Tool &
Manufacturing, Inc. (VTM) .
Approved GMEF Loan No. 010 for VTM in the
amount of $50, 000 at 6.75 fixed interest
rate and amortized over 20 years, balloon
in 5 years for real estate. Disbursed
11-21-95 from Liquor Fund.
11-28-95. Reviewed the preliminary and formal GMEF
application from Tapper s, Inc.
Approved GMEF Loan No. 011 for Tappers in
the amount of $100,000 at 6.75 fixed
interest rate and amortized over 20
years, balloon in 5 years for real
estate/equipment. ~~~~ ~- ~`~~
In preparation of annual appointments,
the EDA recommended the EDA and HRA
remain aS two independent commission
organizations, waive the city residency
requirement for commissioners, and re-
appoint Ron Hoglund.
~6N) I1:02 OLSON/USSET P. A. TEL:6l2 925 5819
OLSON, tTSSET, ALAN & WEINGARDEN P.L.L.P.
ArroRNEYS wr LAw
PAUL A. WEWdARDt:I.1•
CHARLES T. ROAN
DAVE J_ IIssl~
THO~.tAS S. OLSON
DENNIS 1?. DALEN
~c.~r~.a ~t P,~q sp.~Gs
ovR Pa.a xo. 7 975
Rick Wolfsteller
City of Monticello
250 East Broadway
Monticello, MN 55362
sutra ~o
6600 FRANCE AVEMIE SOUTH
D~m~iNPaPOLLS.IrM SS/33
TELEPHONE (612) 92S36K
PAX (61Z) 92S•3i79
February Z7, 1995
LEGAt. AssLSTANRs
PEL9CY J. AGAN
SHDtLEE J. ALLEN
DEBRA k BAIQ~
PATSY A. PORTLAND
I~t POATIN
tiONNiE TRONKE9
TELEPHONE (612) X77.5010
For legal services rendered regarding H Window Company:
Receipt and review of documentation, preparation and drafting of
loan agreement with city and loan grant/loan agreement with State
of Minnesota; prepare and draft necessary security documents and
proportional share of time spent on standby creditor agreements;
miscellaneous conversations with all principals including Hrad
Simenson, Lenny Rirscht, Ollie and other necessary parties.
(16.00 hours)
Total Legal Fees Due:
16.00 hours at $75.00 per hour $1,200.00
Costs:
Copy Costs $35.00
V.C.C. 1 search 22.00
Total Costs $ 57.00
TOTAL AMOUNT DUE: $1,257.00
t`lj C~(n. S ~ ~ 31 < I
2~
P. 003
EDA AGENDA
JANUARY 23, 1996
5. consideration to Review Year-end Fund Balances of the GMEF.
UDAG, and ERG Funds.
A_ Reference and Background:
All GMEF loan payback payments are current as accounted for in
the 1995 year-end statements. The approved $50,000 x-Window
Company GMEF Loan No. 008 became null and void in early 1995.
Loan No. 009 for $50,000 was approved on July 25, 1995, for
the H-Window and becomes null and void on January 25, 1996.
The VTM loan of $50, 000 was disbursed from the Liquor Fund
November 21, 1995. The Tapper loan of $100,000 will be
disbursed in 1996.
Copies of the UDAG-FSI and SCERG-Aroplax fund balances are
enclosed. The payback payments are current and the fund
balances are available for use by the EDA. The 1994 awarded
$250,000 SCERG-H-Window Loan was canceled by the company.
The $250,000 SCERG and $100,000 CMIF-Standard Iron loan
payback payments are current as accounted in the 1995 year-end
statements. Remember, this SCERG was awarded to Wright County
for a loan to Standard Iron. The EDA receives $1,0.00 annually
from Wright County to administer the SCERG loan and $15 and
$10 per month to service the SCERG and CMIF loans,
respectively.
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GREATER MONTICELLO ENTERPRISE FUND (GMEF)
LOAN STATUS
December 31, 1995
Economic Development Authority (EDA) was created in 1989.
APPROVED LOANS
Tapper/Genereux (1990)
Muller/Monti Theatre (1990)
Barger/Suburban (1992)
Schoen/Aroplax (1992)
Birkeland/Custom Canopy (1993)
Demeules/Standard Iron (1993)
Blue Chip DevNector Tool (1995)
$88,000.00
$50,000.00
$50,000.00
$85,000.00
$42,500.00
$75,000.00
$50,000.00
TOTAL APPROVED LOANS
$440,500.00
LOAN DISBURSEMENTS
Liquor Fund:
1991 to Tapper
1992 to Suburban
1992 to Aroplax
1994 to Standard Iron
1995 to Vector Tool
Total Liquor Fund
UDAG Fund:
1991 to Tapper
1991 to Muller
1992 to Aroplax
1993 to Custom Canopy
Total UDAG Fund
$73,000.00
$50,000.00
$65,000.00
$75,000.00
$50,000.00
$313,000.00
$15,000.00
$50,000.00
$20,000.00
$42,500.00
$127,500.00
TOTAL LOAN DISBURSEMENTS
•
440,500.00
GMEF.WK1: 01/19/96
URBAN DEVELOPMENT ACTION GRANT (UDAG) - FSI
FINANCIAL REPORT
December 31, 1995
Payback began in January, 1988 for 12 years ending in January, 2000.
Annual principal and interest payback total is $27,971.40.
SRANT TOTALS
ORIGINAL PAID REMAINING
Principal $256,957.71 $159,615.81 $97,341.90
Interest $78,700.35 $64,155.39 $14,544.96
TOTAL $335,658.06 $223,771.20 $111,886.86
Principal Payback $159,615.81
Interest Payback $64,155.39
Interest Income -Investment:
1990 $6,342.02
1991 $8,593.59
1992 $8,436.32
1993 $8,647.10
1994 $3,756.77
1995 $0.00
Transfer from GMEF - [company)
Transfer from GMEF - [company]
TOTAL REVENUES $259,547.00
EXPENDITURES
1991 Transfer to GMEF $65,000.00
1992 Transfer to GMEF $20,000.00
1993 Transfer to GMEF _ $42,500.00
TOTAL EXPENDITURES $127,500.00
FUND BALANCE FOR ECONOMIC DEVELOPMENT 132,047.00
~~
UQAG.WK1: 01/22/96
SMALL CITIES ECONOMIC RECOVERY GRANT (SCERG) - AROPLAX
'~ FINANCIAL REPORT
December 31, 1995
Payback began in December, 1992 for 7 years ending in November, 1999.
Annual principal and interest payback total is $29,801.40.
First $100,000 principal payback ends January, 1997.
GRANT TOTALS
•
Principal
Interest
TOTAL
Principal
Interest
TOTAL
ORIGINAL
$170,000.00
$37,969.92
$207,969.92
1 7
$170,000.00
$29,634.75
$199,634.75
PAID
$73,355.98
$18,531.77
$91,887.75
GMEF
$100,153.60
$23,659.34
$123,812.94
Grant must be expended by December 31, 1994, up to $170,000.
EXPENDED: $116,556.75 1993
$16, 996.18 1993
$12,356.59 1993
$4,021.10 1 /18/94
$15,132.50 4/13/94
$4, 936.88 7/20/94
$170,000.00
REVENUES
Principal Payback
Interest Payback
Interest Income -Investment:
1993
1994
1995 (est.)
TOTAL REVENUES
EXPENDITURES
Transfer to GMEF
TOTAL EXPENDITURES
$0.00
$0.00
REMAINING
$96,644.02
$19,438.15
$116,082.17
T T
$69,846.40
$5,975.41
$75,821.81
FUND BALANCE FOR SMALL CITIES GRANT 94,205.67
$73,355.98
$18,531.77
$1,061.92
$1,256.00
$94,205.67
SCERG-A. WK1: 01 /19/96
CENTRAL MINNESOTA INITIATIVE FUND (CMIF) -STANDARD IRON
• FINANCIAL REPORT
December 31, 1995
Payback began in July, 1994 for 7 years ending in June, 2001.
Annual principal and interest payback total is $13,322.52.
•
•
GRANT TOTALS
EXPENDED: $100,000.00 1994
$100,000.00
REVENUES
Loan Payback $19,983 78
Interest Income -Investment:
1994 $0.00
1995
TOTAL REVENUES $19,983.78
EXPENDITURES
Reimbursement to Wright County $19,803.78
Transfer to GMEF $0.00
TOTAL EXPENDITURES $19,803.78
FUND BALANCE FOR CENT MN INITIATIVE FUND 180.00
CMIF-S I . W K4: 01 /19/96
•
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SMALL CITIES ECONOMIC RECOVERY GRANT (SCERG) -STANDARD IRON
FINANCIAL REPORT
December 31, 1995
Payback began in July, 1994 for 7 years ending in June, 2001.
Annual principal and interest payback total is $33,306.12.
GRANT TOTALS
Grant must be expended by December 31, 1994, up to $250,000.
EXPENDED:
Loan Payback
Grant Administrative Fee
Interest Income -Investment:
1994
TOTAL REVENUES
EXPENDITURES
$250,000.00 8/18/94
$49,959.18
$2,000.00
$51,959.18
Reimbursement to Wright County $49,689.18
Transfer to GMEF $0.00
TOTAL EXPENDITURES $49,689.18
FUND BALANCE FOR SMALL CITIES GRANT 2,270.00
SCERG-SI.WK1; 01/19/96
SUMMARY
GMEF Cash Balance
UDAG Cash Balance
SCREG-Aroplax Cash Balance
Subtotal
Liquor Fund Appropriation
TOTAL AVAILABLE FOR 1996
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$202,495.31
$132,047.00
$ 94,205.67
$428,747.98
$100,000.00
$528,757.98
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EDA AGENDA
JANUARY 23, 1996
6. Consideration to review for approval the preliminary GMEF Loan
application from Standard Iron & Wire Works Inc
Bill Demeules, Standard Iron & Wire works, Inc. will represent
the company at the EDA meeting.
A. Reference and Background
GMEF LOAN REQUEST:
$70,000 equipment loan, 5 years.
PROJECT SUNIlKARY:
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 (CHIP) for $60,000. 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 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 $ 800,000
Press Brake $ 400,000
Horizontal Machine Center S 300.000
,`~ TOTAL USES OF FUNDS $1,500,000
Page 1
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EDA AGENDA
JANUARY 23, 1996
Sources of Funds
GMEF $ 70,000
CMIF $ 60,000
Lender $ 670,000
Equity (Brake/machine center) S 700.000
TOTAL SOURCES OF FUNDS $1,500,000
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.
GREATER MONTICELLO ENTERPRISE FUND (GMEF) GUIDELINES
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PUBLIC PURPOSE CRITERIA: Must comply with four or more of the
criteria listed below, criteria #1
being mandatory.
1. Creates new jobs: 89 jobs currently, 14 additional
(37.5 hpw) jobs within two years.
Average wage, $10.30 ph.
2. Increases the community tax base:
Annual Estimated
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.
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4. Used as a secondary source to supplement conventional
financing: Approximately 47~ 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.
Page 2
EDA AGENDA
JANUARY 23, 1996
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
GMEF are the Central
Minnesota Initiative Fund
(CMIF), the bank, and
equity.
REATER 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.
$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: $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.
Request a shared 2nd position with the CMIF. If not, is
3rd position ok?
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Page 3
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EDA AGENDA
JANUARY 23, 1996
III. USE OF PROCEEDS:
Equipment.
IV. TERMS AND CONDITIONS:
Loan Size: Maximum not to exceed 500 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.
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Compliance: $70,000.
Leveraging: Minimum 60~ private/public non-GMEF.
Maximum 30~ GMEF. Minimum 10$ equity of
GMEF loan.
Lender $670,000 (44.6)
CMIF $ 60,000 ( 4.0~)
GMEF $ 70,000 { 4.6$)
Equity $700,000 (46.6$)
(99.80)
Loan Term: Personal property term not to exceed life
of equipment (generally 5-7 years).
Compliance: 5 or 7 years.
Interest Rate: Fixed rate not less than 2~ 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~k)
Compliance: 6.5% fixed iaterest rate.
Loan Fee: Minimum fee of $200 but not to exceed
1.5~ of the total loan project. Fees are
to be documented and no duplication of
fees between the lending institution and
the GMEF.
Compliance: $70,000 X .015 = Not to exceed $1,050.
Prepayment Policy: No penalty for prepayment.
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Page 4
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EDA AGENDA
JANUARY 23, 1996
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.
Compliance: As per the GMEF attorney.
•
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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.
GMEF Legal Fees:
Responsibility
applicant.
Page 5
of the GMEF
EDA AGENDA
C. Recommendation:
JANUARY 23, 1996
B. Alternative Action:
1. A motion to approve the preliminary GMEF application from
Standard Iron & Wire Works, Inc.
2. A motion denying approval of the preliminary GMEF
application from Standard Iron.
3. A motion to table any action.
Recommendation is to review this information prior to the EDA
meeting for discussion and potential questions. Items for
discussion: Loan without tax increase; however, is not a
mandatory requirement. Second or third position.
Recommendation is to take action on the preliminary loan
application and not the final application because of the lack
of a secured lender and without current company financials.
The company is a major industrial employer of Monticello and
has an excellent working relationship with the City of
Monticello.
D. Supporting Data:
Copy of the Preliminary GMEF loan application.
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Page 6
GP.EAT~4 ~^CN'^ICrLLO ENT~DRISE
250 EAST BROADWAY
MCNTICrZ.LO, MINNESOTA
PRELI~IVARY AFDLICATICN FCR LOAl'V
.APPLICArIT: Standard Iron & Wire Works, Inc.
F L~P^ GR '^R.~ E NA1~.E
BUSINESS ADDRESS: 20? Dundas oa , ion ice o, MN 55362
(a & Street) (C~t'~ & S~dt°) (Zip Coce)
TEL~RCNc: BUSINESS Ala 295-8700 HG"".E ( )
DATE EST?.RLISaED: March 1930 Et~LOY~ I.D. Q: 41-0652355
SCLL PROPRIETOR x CORPORATION P_~P"'N~.ScIP
M.ANAGc !E^1T
NAMEL 'r'T'f'r~E W'N~SHIP ~
awrence T. Demeules President 1/.
Richard Demeules Vice President - Ind. Products iv.
Jose h Demeules Vice President -Operations 33,.
William DemeuIes Vice Presidenti_~ Manufacturing .
~7~--- T__ _ _ _ _ -
PRO~zC'~' LCC.A'"ION: 207 Dundas Road, Monticello, MN 55362
NLrT BUSINESS x EXISTING BUSINESS
TOTAL PRC c.Cr COST ESTI.uATE: $ 1, 500 , 000
PRCPCSc~D USES:
REQUEST:
LAND $
~ISTIVG BGILDING
CCNSTRUC_'ION
MACSIN~ CAPITAL 1, 500Q1, 000
GvCRF{ING C.API_AL
OTS:~.
TOTAL US^cS $ 1, 5000', 000
A~!CWi T OF LOAN ~ 70 , 000
MATIIRITY & TE4P~lS 5 Year s
REQUESTED
APPLIC.~NT' S 700 000
EQUITY '
LOAN PURPOSE Purchase of
_-
P°OPCS~ BEGIDTNI\G D1~"'.~.': Januaxy .1,. 1996
ESTI~uATED CDNR~LETION DATE: December 31, 1996
TITLc TO
PRCuc,CT ASSETS TO BE BFLD BY: x CPE+RATING ENTITv x ALTr.R ECG
PAR'?'ICIPATING Lr-'~iDER. Currently under negotiation . _
(Name) (Address)
( )
(Contact Person) (Telephone a)
PRESc-N'I' a OF EP'1OLOYEES: 89
ADDI_ICNAL PP.C~~CT INFURP~ATICN:
PRO~~CTE'D ~ OF Ef"PLOY~'S 103
APPLiC.~NT SIGLTA`TUt2E:_ ~~~ ~J ,~~ rti~~i~~sr DATL SIGNr~'D: )~`J ~C• •.
33%
Equip.
JAN 03 '96 06~41PM H WINDOW COMPANY
v
W/NDOW
SIMPLY ReYOLUTIONARY"'
January 3, 1995
Ollie Koropchak
Economic Development Director
City of Monticello
P.O. Box 1147
Monticello, MN 55362-9245
Dear Ollie:
l would like to formally confirm our telephone conversation informing the city that
The H Window Company is no longer interested in pursuing the $250,000 loan
through the Minnesota Department of Trade and Economic Development as well
as the $50,000 approved through the Greater Monticello Enterprise Fund. The
company feels that the conditions imposed on us by Brad Simenson and the
state to secure the loan are unreasonable and not in line with what was
approved in the original application. It is truly disappointing considering the fact
that the company proceeded forward in good faith to finance the expansion
project on its awn until the loans were closed on and disbursed.
I appreciate your assistance in trying to complete this transaction. It would have
been a benefit for both us and the city.
Regard
John F. Babcoc
Operations Manager
cc: Bradley Simenson
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H Window Company 1324 East Oakwood Drive - MonOCello, Minnesota 55362
Phone: (612) 295-5305 - Fax: (612) 295-4656 (800) TMe-H-WAr
`moo ~~ ~
PUBLIC RESOURCE __
GROUP, "INC. ~~ ~ ~..
Business Development €~ Finance Specialists ~-
~O c~~-
December 27, 1995.
v~~-~J
~:
Ms. Ollie Koropchak ~ ~ ~ ~
City of Monticello "
250 East Broadway, "
P.O. Box 1147
Monticello, MN 55362
STATEMENT "
Consulting Services--November 16, 1995 through December 15, 1995 ,
11-20-95 LPK--Amortization schedule. for Blue Chip Development Company,
follow up with Ollie, and fax information ~ 1.25
NET CHARGEABLE HOURS: ..1.25
Net Chargeable Hours @ $90/Hour. $112.50
TOTAL AMOUNT NOW DUE 112.50
CURRENT OVER 30 OVER 60 OVER 0
$112.50
TERMS: NET DUE UPON RECEIPT, "1.33.% PER MONTH SERVICE
CHARGE ON PAST DUE ACCOUNTS