EDA Agenda 10-30-1990AGENDA
MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
Tuesday, October 30, 1990 - 7:00 AM
�- City Hall
MEMBERS: Chairperson Ron Hoglund, Vice Chairperson Barb Schvientek,
Assist Treasurer Bob Mosford, Fran Fair, Warren Smith,
Harvey Kendall, and Al Larson.
STAFF: EDA Treasurer Rick Wolfsteller, EDA Executive Director
011ie Koropchak and Assistant Administrator Jeff O'Neill.
ORIGINAL EDA ORGANIZATIONAL COMMITTEE: Don Smith, Linda Mielke,
and Dale Lungvitz.
1. CALL TO ORDER.
2. APPROVAL OF THE SEPTEMBER 28, 1990 EDA MINUTES.
3. CONSIDERATION TO REVIEW AND DISCUSS THE GMEF PUBLIC
PURPOSE CRITERIA AND GUIDELINES.
4. OTHER BUSINESS.
S. ADJOURNMENT.
MINUTES
MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
Friday, September 28, 1990 - 7:00 AM
City Hall
MEMBERS PRESENT: Chairperson Ron Hoglund, Barb Schvientek,
Harvey Kendall, and Fair Fair.
MEMBERS ABSENT: Warren Smith, Bob Mosford, and Al Larson.
STAFF: Rick Wolfsteller and 011ie Koropchak.
GUESTS: Mike Muller, President of the Muller Theatre.
Kevin Doty, Commercial Lender, Wright County State Bank.
Tom Hayes, EDA Attorney.
1. CALL TO ORDER.
Chairperson Ron Hoglund called the EDA meeting to order at
7:03 AM.
2. APPROVAL OF THE JULY 24, 1990 EDA MINUTES.
Barb Schvientek made a motion to approve the July 24, 1990
EDA minutes. seconded by Fair Fair, the minutes were approved
as written.
3. CONSIDERATION TO HEAR UPDATE ON GMEF LOAN APPLICATION FOR
JEFF RASTF.Y ENTERPRISES. INC.
Koropchak reported the SBA 7(a) loan application requesting
bank participation was denied by Wright County State Beak.
Charlie Rogers, Attorney for the Jeffrey Eastoy Enterprises, Inc.,
informed Koropchak of the bank's notification to the company.
The company will submit applications to First Nntionol of
Monticello, Norwest of M:plo Grove, and a lending institution
in Young America. Until the Eastey Company receives SBA
bank participation will the EDA receive the company's formal GMEF
application for consideration and will the proliminnry application
for the Central Minnesota lnitativo Fund be submitted.
4. CONSIDERATION TO REVIEW PRELIMINARY AND FORMAL GMEF APPLICATION
FOR MULLER THEATRE EXPANSION.
EDA Chairperson Ron Hoglund called upon Mika Muller, President
of the Muller Theatre, to explain the theatre expansion project.
The project to begin this fall. after receiving adequate funding,
will enlarge the present theatre from two screens with seating
capacity of approximately 500 to a total of four screens
with seating capacity of approximately 1000. The lobby area
will be expanded into one large area to serve the entire complex
inclusive of a large chandelier whieh will illuminate through
the glass floor length psnals of the now lobby area. The show
times will be staggered to control traffic. With the demolition
EDA Minutes
9/28/90
Page 2
t 4. CONTINUED.
of the Stoke's Marine Service building and the demolished
National Bushing building by Wright County State Bank, the
bank and theatre will share the use of the parking lot
through a lease agreement. Parking lot plans have been
approved by the Planning Commission and the City Council.
Demolition of the Stoke's building and the beginning
theatre construction should occur simultaneously with the
hard surfacing of the parking lot nor to occur until the
frost is out of the ground in the spring. To remain
competitive in the theatre business, a theatre must offer
several choices to its customers with the most current
releases, therefore, if the theatre is unable to expand
customers will be drawn to the multi screens in Elk River
or planned theatre expansion in Buffalo. Mr. Muller has
gone out for three different bids in effort to reduce the
expansion cost. Originally, the theatre plans consisted
of two stories, the second and third bids consisted on
one story plans. The building construction costs were
reduced from $405,000 to $310.000.
Kevin Doty, Lending Officer, told the EDA members that the
total appraisal of the completed theatre (expanion plus existing)
as determined by jack Maxwell was $900,000. The project cost
was outlined as:
Project Cost: E 69.500 Land Cost
310.000 Construction Cost
175.500 M&E
$555,000 Total Project Cost
USES: $555,000 Project Cost
112,000 Muller Family Extsting Mortgage
$667,000 TOTAL.
SOURCES: $360,000
Wright County State Bank
542
35,000
Other Bank
51
112,000
Muller Family Existing Mortgage Remortgaged
171
50,000
CMEF •
82
110,000
EQUITY (M&E)
161
$667,000
TOTAL.
1001
The total debt service to $557.000 of which the existing Muller
Family mortgage will be remortgaged ($112,000) along with the new
mortgage at $445.000. Anticipated plans call for the Muller
Family to deed the property to the bank through a warranty deed
thereafter Mika Muller and his wife will deed through an assignment
dead or quick claim deed the existing remortgaged loan back to
the Muller Family. Kevin Doty reported that Wright County State
Bank was willing to participate at 501, however, at 601 would be the
possibility of a no go. It is anticipated to ask another lending
Institution for partial funding, amount and lending institution
yet to be determined. This amount will be determined upon the
* To be determined
EDA Minutes
9/28/90
Page 3
4. CONTINUED.
EDA's willingness to participate and if so, the dollar amount of
participation. The business currently owns and operates two
theatres in Delano and Waconia, and anticipates the construction
of a theatre in East Bethel. Kevin Doty recommended to the.
EDA, to the best of his ability and expertise, that the Michael
and Robert Muller Partnership to be a credit -worthy Informal
partnership and stated the EDA loan would be a Companion Direct Loan.
As included in the EDA agenda, the present theatre's EMV
for 1990 is $232,100 and the estimated EMV for the theatre
expansion as per Doug Gruber, County Assessor, is $269.100.
Estimated new total EMV for the theatre is $501,200. With
the planned exponion, the total projected new jobs as per
Mr. Muller is two full time and eight part-time for a total
of six full time jobs. Present employment is two full time
and nine part-time for a total of six point five full time.
Alternative recommendations for EDA participation ranged
from $30.000 to $50,000.
Koropchak outlined how the loan application meets the GMEF
Policy Criteria.
A. PUBLIC PURPOSE: Must comply with four or more of the six
public purpose criteria (creation of jobs
being a must.)
1. Creates new jobs: Two full time and eight part-time for
a total of six new full time jobs.
2. Increases community tax base: Estimated net gain of annual
taxes, $8,350.
3. Assists an existing non-competitive commercial business
to improve or expand its operation. The Muller Theatre
Is a business in no direct competition with existing
business within the City of Monticello (no other theatre.)
4. Used as a secondary source of financing to n conventional
bank. Conventional banks of Wright County State Rank and
one other.
5. Used as gap financing. Due to Legislative TIF restrictions
effective May 1, 1990, thin project does not meet the requirements
for the establishment of o Redevelopment or Renovation District
nor the TIF definition of blight or substandard buildings.
Additionally, a theatre expansion does not qualify for
SBA or State finnncing programs. Thirdly, the developer
made an effort to and did reduce his construction cost
from $405.000 to $310.000 by going out for three bids.
Finally, due to the country's economy, commercial lending
is more difficult to secure.
6. Does not assist in obtnining other funds such no SBA, federal
or state grants. (Thentros do not qualify under these programs.)
Therubye,the loan application meets five out of the oix public purpose
criteria inclusive of job creation and meets Lite purpooe to encourage
EDA Minutes
9/2$190
Page 4
4-
41 4. CONTINUED.
economic development,
In addition, the Muller Theatre expansion is an eligible
business as it is non-competitive business which enhances
the community, the business is located in the city of
Monticello, the business has been determined to be a
credit -worthy informal partnership, the business is an
existing business, and the business qualifies for a
loan amount of $60,000 (6 jobs X $10,000) or $67,275
($5,000 per every $20,000 increase in property market
evalution, $269,100) whichever is higher. The project
will also assist in maintaining a more vibrant downtown,
supports Streetscape, would increase the utilization of the
property, would encourage the demolition of an adjoining substandard
site, would eliminate the potential of business
leaving town, and enhances the Business Retention and
Expansion Program.
Koropchak further outlined that in accordance with the
GMEF guidelines and the loan under discussion to be a
Companion Direct Loan means that the GMEF loan will be
in the subordinated position to the primary lenders and
collateral is required. The CHEF would be in second
position to the banks on fixed real assets and machinery
and equipment (UCC Filings). Presently, the maximum dollar
amount of GMEF available to a business Is $56,000. Prime
rate as of October 24, 1990, National Bank of Minneapolis
(former First Banks) is 102.
Mr. Muller informed the EDA members that he anticipates
completion of the 5.775 aq ft theatre expansion on
Lot 4 plus W 24 inches of Lot 3, Block 53. City of Monticello,
and the remodeled present theatre to be in the spring of '91.
The EDA agreed that the Muller Theatre expansion was a good
project for the city and for it's people, saw efforts an the part of
developer to close the financial gap, and agreed that n good
use of the GMEF was to nsafst In a project that would encourage elimination
of a substandard site end encourage the development of a new appealing
aesthetic structure which has a $30,000 glass front.
Attorney Tom Hayes agreed with the EDA and agreed that the project
meets the EDA public purpose criteria and guidelines as
outlined by Koropchak, and recognized this as a difficult
time for a developer to secure full conventional financing.
Ila was very comfortable with the creditability of the developers.
He recommended that EUA loan secure title insurance on both
properties the same as the bank requirements and to obtain
r as much collateral an possible to protect the GMEF.
EDA Minutes
9/28/90
Page 5
5. CONSIDERATION TO APPROVE On DEIT G%lEF LOAN FOR 11FuLLER
THEATRE EXPANSION.
After the review and discussion of the Muller Theatre
expansion as recorded under Item 4., EDA member Barb
Schvientek made a motion to approve a Greater Monticello
Enterprise Fund (GMEF) loan of $50,000 to Michael and
Robert Muller, an informal partnership, for the Monticello
Theatre expansion. Loan terms of an 8% fixed interest rate
to be amortized over twenty years with ballon payment In five
years for real property acquisition, real property rehabil-
itation (expansion or improvements), and machinery and
equipment. Loan fee was set at not too exceed 1% of
the total loan project or $500 ($50,000 X 1%). Attorney
Tom Hayes to draft the necessary documents for protection
of the GMEF loan. Harvey Kendall seconded the motion
and without further discussion, the motion passed 4-0.
The loan was approved because the application and the project
met the general purpose of the GMEF, the public purpose
criteria of the CMEF, the business eligibility of the
CHEF, and the overall guidelines of the GMEF. The business was
analyzed as credit -worthy and was further determined by the
EDA to be n good project for both the city and it's people,
It would assist a project with gap ftnnneial needs, and
it would asvist a project which will increase the aesthetic
value of downtown, therebye, in a domino affect will encourage
another developer to demolish a substandard structure on
the adjoining property. The City Council to receive notification of
EDA loan approval.
6. OTHER BUSINESS.
Koropehak suggested to the EDA members that at their next
quarterly meeting the public purpose criteria and guidelines
be reviewed. The GMEF being in existence for about a year
mny need some general housekeeping or further defining
in the area of new jobs created, possible penalty if jobs
are not crested, levernging of loan or project, etc.
7. ADJOURNMENT.
Chairperson Ron Hoglund adjourned the EDA meeting at 8:25 A.M.
QaLl , �<00-9 J .91-
011ie Koropehak
EDA Secretary
EDA Agenda
10/30/90
Page 1
3. CONSIDERATION TO REVIEW AND DISCUSS THE GMEF PUBLIC
PURPOSE CRITERIA AND GUIDELINES.
A. REFERENCE AND BACKGROUND.
As per the EDA minutes, Koropchak had suggested the EDA review
the CHEF public purpose criteria and guidelines in the area
of further defining new jobs created, establish possible
penalty if job criteria not met within a designated time,
and define leveraging of loan or project, etc.
9
At the City Council meeting of October & the Council requested
the EDA review the GMEF guidelines. Specifically mentioned
were: What constitutes a full time job and funding for industrial
use only.
At the IDC meeting of October 20, the IDC recommended the original
GMEF Organizational Committee be present for the review and discussion
of the GMEF guidelines. That committee consisted of Don Smith,
Linda Mlelke, Dale Lungwitz. Jeff O'Neill, and 011ie Koropchak.
Enclosed as supporting data, in addition to the EDA September
minutes, Is a copy of the original purpose 1n the creation of
n revolving loan fund, copy of the Council agenda, copy of the
Council minutes, and a copy of the approved GMEF Guidelines
as written by the original committee, reviewed by Attorney
Tom Hayes, reviewed and accepted by the IDC Committee,
reviewed and approved by the City Council, and after adoption
of the EDA organization the guidelines were reviewed and
approved by the EDA members.
Please review the enclosed data prior to the EDA meeting
to•'enhan'te d4taussion of'the"GMP.P guidelines for the potential
need to amend the current guidelines. With the GMEF loan
being in existence for approximately a year and after a
couple of loan approvals it makes good sense to explore
the need to do some housekeeping of our intent.
city 4 monfiAl.
MONTICELLO, MN 553629245
Phone (6121 295-2711 C'
Morro (612) 3335739 TO: GounCi3 Council Members
FROM: 011ie Koropchak, Economic Development Director
Mayor: DATE: May 20, 1988
Arvo Gnmsmo
Cay Counae SUBJECT: Establishment of a Local Revolving Loan Fund
Dan Btonigen
Fran Fair
William Fair
Warren Smrm This is an in£ornational item only; therefore, no action need be
addressed or taken at this time by the City Council.
Aom,nislydtor: For the past year or two, the Industrial Development Committee (IDC)
Rick Woltsmaer has seen the need to create a local Revolving Loan Fund (RLF). This
Public Works:
John SimWa need becomes apparent because 1) federal and state sources of money
Planning a zoning: are continuously being cut back, 2) cities have discovered that
Gary Anderann existing array of financial tools, both public and private, do not
Economic Develoomanr always meet the needs for small business development, and 3) as
011ie Koroocnak Monticello's property tares have increased, it no longer leaves us in
as attractive a tax bracket as previously marketable. Many Minnesota
cities have had established local RLF's for some years. This creates
an additional competitiveness among communities for the recruitment
of industry.
The IDC appointed a subcommittee of Dale Lungwitz, Linda Mielke, Joel
Winkelman (now replaced by Don Smith), Jeff O'Neill, and 011ie
Koropchak. This subcommittee has been designated to establish the
RLF policies and operational procedures. Their goal is to present
the preliminary draft of policies and operational procedures to the
IDC on June 16, 1988, thereafter, recommended for City Council
approval. The subcommittee has net with a state financial
representative, Dave Nelson, and have contacted five communities with
established RLF's (Madison, Jackson, Lakefield, Fergus Falls, and
Sauk Centre) for sample information and general input.
The establishment of the Revolving Loan Fund will be for public
fur so, not for a specific company. Public purpose: 1) Incentive
odit worthy businesses to allow for expansion; 2) Incentive is
labor intense, increase in jobs and increase in tax base; and
3) Incentive is used in a second seat to private institutions (bank
financing) and is not intended as a bank's crutch.
Needless to say, the subcommittee recognizes the complex and serious
task assigned them; however, they also view the establishment of an
RLP as a need, challenge, and real opportunity for the community.
One of the questions in the establishment of an RLF is "How do we
establish the original loan pool fund?" About a year ago, this was a
topic of discussion with City staff, who suggested one source was the
( transfer of monies from the City Liquor Store Fund. Other
250 L.4t CIAO—,
monnC411e, mm"Wta
55362•024Z
City Council Members
May 20, 1988
f Page 2
suggestions are possible proceeds from the gambling license (if the
RLF is established as a non-profit organization) and/or private
funding. The RLF can be replenished through the annual ODAG
repayment to the City. This annual repayment is approximately
$29,000 commencing in 1988 for the duration of 12 years.
This information is provided to inform you of the IDC's goal and to
inform you of the future recommendation and request by the IDC of the
City Council. Please consider the importance of Monticello's
economic development. We will continue to keep you informed of our
progress.
Other IDC activities:
1. Conduction of a 1988 Labor Survey (completion September
1988).
2. Recommendation for City staff to study cost and research
plans to upgrade the Industrial Park roads from 7 -ton to
9 -ton.
3. Recommendation to establish a joint meeting between the
Planning Commission, Housing and Redevelopment Authority,
and the IDC to discuss and establish common goals and
strategies for economic development.
4. Recommendation to enhance the cooperation and communication
between City staff and the IDC.
C
Council Agenda - 10/9/90
12. Consideration to review Greater Monticello Enterprise Fund
(GMEF) approval. (O.K.)
REFERENCE AND BACKGROUND:
On September 28, 1990, the Economic Development Authority
(EDA) met with the four members present and reviewed the GMEF
loan application from Mike Muller for the Muller Theatre
expansion.
Mr. Muller explained the theatre expansion plans to the EDA
and responded to questions. Mr. Muller expects the demolition
of the Stoke's property and the beginning theatre construction
to occur simultaneously. The planned parking lot to the west
of the theatre expansion will not receive hard surfacing until
the frost is out of the ground in the spring. Mike hopes to
open the new addition in the spring.
Kevin Doty, Commercial Lending Officer for the Muller project,
determined and so stated that Mike and Bob Muller, an informal
partnership, to be a credit worthy partnership. Jack Maxwell,
Century 21, appraised the total new expanded facility at
$900,000. The anticipated loan structure would consist of:
Wright County State Bank, $360,000; Another Bank, 535,000;
GMEF, $50,000; and the family, $112,000. Mr. Muller has
already invested 5110,000 for theatre seats, projectors, etc.
EDA Attorney, Tom Hayes, viewed the expansion as a good GMEF
project as it meets the criteria of our loan policies, and
agreed with Mr. Doty on the difficulty for businesses to
obtain adequate commercial funding at this time.
Barb Schwientek made a motion to approve the GMEF loan
application for Michael and Robert Muller, an informal
partnership. The loan amount is $50,000 at 8% interest,
amortized over 20 -years, with a balloon payment in five years.
The GMEF will be in second position on real estate and M 6 E.
Loan foe not to exceed $500. Mr. Hayes is to draft
appropriate documents and a commitment letter with terms and
conditions. The motion was seconded by Harvey Kendall. With
no further discussion, the motion passed unanimously. The
loan was approved because the Muller loan application met the
GMEF public purpose policies, the partnership was determined
to be credit worth by the lending officer, the project creates
six now full-time jobs, assists in maintaining a more vibrant
downtown, supports streotscape, increases utilization of the
property, adds aesthetic value to the downtown, increases the
local tax baso (project net gain approximately $8,350
annually), assists a non-compotitivo commercial business
within the City limits, and will assist an existing business
expansion.
Council Agenda - 10/9/90
With the approval of two GMEF loans to Tapper's, Inc. and
Michael Muller, $88,000 and $50,000 respectively, the
remaining balance of the loan fund is $62,000. This means the
maximum we can consider for our next loan applicant is
$31,000.
In accordance with the GMEF policy, "The EDA shall have
authority to approve or deny loans; however, within 21 days of
EDA approval, the City Council may reverse a decision by the
EDA to approve a loan if it is determined by Council that such
loan was issued in violation of GMEF guidlines". Therefore,
unless the Council determines the EDA approval for Michael and
Robert Muller to be in violation of the GMEF guidelines, no
action is necessary.
8. ALTERNATIVE ACTIONS:
1. The Council determines the Michael and Robert Muller loan
to be in violation of the GMEF guidelines; therefore,
reverses the EDA loan approval.
2. The Council determines the Michael and Robert Muller loan
not to be in violation of the GMEF guidelines; therefore,
no action is necessary.
' C. STAFF RECOMMENDATION:
Staff supports the EDA approval; however, gives no
recommendation.
D. SUPPORTING DATA:
None.
14
Council Minutes - 10/9/90
12. Consideration to review Greater Monticello Enterprise Fund
approval.
Economic Development Director, 011ie Koropchak, reported that
on September 28, 1990, the EDA reviewed the Greater Monticello
Enterprise Fund loan application for Mike Muller for the
Monticello Theatre expansion. Koropchak informed Council that
the GMEF loan application in the amount of $50,000 was
approved. The terms include 88 interest amortized over
20 years with a balloon payment in five years. Koropchak
reminded Council that the EDA has the authority to approve or
deny loans; however, within 21 days of EDA approval, City
Council may reverse a decision by the EDA to approve a loan if
it is determined by Council that such a loan was issued in
violation of GMEF guidelines.
Council was then asked to discuss whether or not the proposed
loan to a theater is consistent with the Greater Monticello
Enterprise Fund guidelines.
Dan Blonigen noted that he did not support the use of the
revolving loan fund for this type of commercial operation. It
was his view that the revolving loan fund should be reserved
for industrial uses only.
Assistant Administrator O'Neill reported that the use of tax
increment financing to help defray excessive redevelopment
costs associated with demolition and land acquisition is no
longer available to the City due to recent action by the state
legislature. In addition, the loan applicant has worked hard
at obtaining financing from private sources but is unable to
obtain the full amount needed to conduct the project;
therefore, the money requested should be considered as gap
financing. Without the added assistance by the City via the
revolving loan fund, this project would not proceed, and the
redevelopment of the site could not occur.
Ken Maus noted that if the City utilizes the revolving fund to
supplement the theater expansion finance plan, we should
better define under what terms and circumstances the City
would utilize this fund to finance commercial development. He
noted in this case, with the state removing our ability to use
TIF for redevelopment of an under-utilized area, use of the
fund is acceptable. This criteria for use of the fund is not
noted by our fund guidelines; therefore, the guidelines should
be updated. In addition, he noted that the guidelines should
provide a clear definition of what constitutes creation of
full-time versus part-time Jobs.
Page 7
0-p-
Council Minutes - 10!9!90
After discussion, motion was made by warren Smith, seconded by
Fran Fair, to approve the GMEF loan application for Michael
and Robert Muller in the amount of $50,000. The commercial
loan is approved only because it provides gap financing that
will result in redevelopment of a blighted property. The main
thrust of the loan program is to continue to be oriented
toward providing gap financing for industrial development.
Motion to include a request that the EDA adjust the GMEF
guidelines accordingly. Voting in favor of the motion:
Shirley Anderson, Fran Fair, warren Smith, Ken Maus. Opposed:
Dan Blonigen.
13. Other matters.
011ie Koropchak and Jeff O'Neill reported that the City of
Monticello received the Star City Marketing Award for 1990.
Star City Marketing Award judges commented that Monticello had
overall a very strong, well thought out marketing campaign.
The repeat appearance of the logo reinforces Monticello's
image and is easy to identify. it also neatly ties in all of
the various elements used in a strong marketing campaign. The
materials in the brochure were excellent and very well
coordinated. The consistency and attractiveness makes the
program work. The brochure was tasteful and not overdone.
Ken Maus requested that staff consider putting together
detailed information outlining the basis of each department
budget. He is interested in going through the logic behind
how each department budget is developed. Dan Blonigen agreed
that additional detail and a review of department service
delivery methods would assist Council in development of the
1991 budget.
John Badalich reported that the City is nearing a population
of 5,000; and in fact, if the City's challenge to the census
figures is validated, the City will be eligible to receive a
minimum of S80,000 in state highway aids for 1991. Staff was
directed to provide the Minnesota Department of Transportation
with information noodod to expedite the acquisition of state
aid funding in 1991.
There being no further discussion, the meeting was adjourned.
Jeff O'Neill
Assistant Administrator
Pago 8
�01
GREATER MONTICELLO ENTERPRISE FUND GUIDELINES
250 EAST BROADWAY
,` r;--ICELLO, MINNESOTA 55362
(612) 295-2711
INTRODUCTION
The purpose of the Greater Monticello Enterprise Fund (GMEF) is to encourage
economic development by supplementing conventional financing sources available
to existing and new businesses. Through this program administered by the
Economic Development Authority and participating lending institution(s), loans
are made to businesses to help them meet a portion of their financing needs.
All loans must serve a public purpose by complying with four or more of the
criteria noted in the next section. In all cases, it is mandatory that
criteria Al be satisfied which requires the creation of new jobs. It is the
responsibility of the EDA to assure that loans meet the public purpose standard
and comply with all other GMEF policies as defined in this document. Along
with establishing the definition of public purpose, this document is designed
to outline the process involved in obtaining GMEF financing.
DEFINITION OF PUBLIC PURPOSE
1. To provide loans for credit worthy businesses that create new jobs.
2. To provide loans for credit worthy businesses that would increase the
community tax base.
3. To assist new or existing industrial or non-conpetitive commercial
businesses to improve or expand their operations. Loans will not be
provided for businesses in direct competition with existing businesses
within the city of Monticello.
4. To provide loans to be used as a secondary source of financing that is
intended to supplement conventional financing (bank financing).
5. To provide loans in situations in which a funding gap exists.
6. To provide funds for economic development that could be used to assist
in obtaining other funds ouch an Small Business Administration loans,
federal and state grants, etc.
THE GREATER MONTICELLO ENTERPRISES
REVOLVING [DAN FUND POLICIES
I. BUSINESS ELIGIBILITY
• Industrial businesses
• Non-competitive commercial businesses which enhance the community
• Businesses located within the city of Monticello
• Credit worthy existing businesses
• Non-credit worthy start-up businesses with worthy feaoibility
studies (Deny all historical non-credit worthy businesses)
• $10,000 loan per each job created, or $5,000 per every 820,000
Increase in property market valuation, or $5,000 per every 520,000
increase in personal property used for business purposes, whichever is
higher.
RLF Administration
Page 2
( II. FINANCING METHOD
• COMPANION DIRECT LOAN -
Example: Equity 20%, RLP 30%, and Bank 509
(all such loans may be subordinated to the
primary lender(s) if requested by the primary
lender(s). The RLF loan is leveraged and the
lover interest rate of the RLP lowers the
effective interest rate on the entire
project.)
• PARTICIPATION IRAN -
RLF buys A portion of the loan (the RLP is not
in a subordinate position, no collateral is
required by the RLF, and the loan provides a
lover interest rate.)
• GUARANTEE LOANS -
RLP guarantees a portion of the bank loan.
(Personal and real estate guarantees handled
separately.)
III. USE OF PROCEEDS
• Real Property Acquisition and Development
• Real Property Rehabilitation (expansion or improvements)
• Machinery and Equipment
W. TERMS AND CONDITIONS
• IRAN SIZE -
Minimum of $5,000 and Maximum not to exceed
509 of the remaining revolving loan fund
balance] for example, if the remaining
revolving loan fund balance is $50,000, the
maximum loan issuance is $25,000.
• LEVERAGING -
Minimum 609 Private/Public non-01EP
Maximum 309 Public (GMEP)
Minimum 10% Equity
• LOAN TERM -
Personal Property term not to exceed life of
equipment (generally 5 to 7 years).
Real Estate Property maximum of five year
maturity amortized up to 30 years. Balloon
payment at 5 years.
• INTEREST RATE -
Fixed rate of up to 29 below Minneapolio prime
rate.
• LOAN PEE -
Minimum fee of $200 but not to exceed 19 of
the total loan project. Fees are to be
documented and no duplication of flee between
the lending institution and the RLF. Loan fee
`
tretains
may be incorporated into project coat. EDA
the right to reduce or waive loan fee
or portion of loan fee.
RLP Administration
Page 3
• 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 -
• Liens on real property in project (Mortgage Deed)
• Liens on real property in business (Mortgage Deed)
• Liens on real property held personally (Subject to Board of
Directors - homestead exempt)
• Machinery and equipment liens (Except equipment exempt from
/ bankruptcy)
1 • Personal and/or corporate guarantees (requires unlimited
personal guarantees)
The Greater Monticello Enterprise Fund is operated as an equal opportunity
program. All applicants shall have equal access to GMEF funds regardless of
race, sex, age, marital status, or other personal characteristics.
ORGANIZATION
The Greater Monticello Enterprise Fund is administered by the City of
Monticello economic Development Authority (EDA) which is a 7 member board
consisting of two Council members and five appointed members. EDA members are
appointed by the Mayor and confirmed by the City Council. Formal meetings are
held on a quarterly basis. Please see the By -Lava of the EDA for more
information on the structure of the organization that administers the Greater
Monticello Enterprise Fund.
PARTICIPATING LENDING INSTITUTION(S)
1. Participating Lending Inatitution(o) shall be determined by the GMEF
applicant.
2. Participating Lending Inatitution(s) shall cooperate with the EDA and
assist in carrying out the policies of the GME? as approved by the
City Council.
RLF Administration
Page 4
3. Participating Lending Institution(s) shall analyte the formal
application and indicate to the EDA the level at which the lending
institution will participate in the finance package.
IRAN APPLICATION/ADMINISTRATIVE PROCEDURES
The IDA desires to make the GMEF loan application process as simple as
possible. However, certain procedures must be followed prior to EDA
consideration of a loan request. Information regarding the program and
procedures for obtaining a loan are as follows:
City Staff Duties:
The Eccnomic Development Director, working in conjunction with the Assistant
City Administrator, shall carry out GMEF operating procedures as approved by
the EDA and Council. Staff is responsible for assisting businesses in the loan
application process and will work closely with applicants in developing the
necessary information.
Application Process:
1. Applicant shall complete a Preliminary Loan Application. Staff will
review application for consistency with the policies set forth in the
Greater Monticello Fund Guidelines. Staff consideration of the
preliminary loan application should take approximately one week.
Staff will ask applicant to contact a lending institution regarding
financing needs and indicate to applicant that further action by the
EDA on the potential loan will require indication of support from a
lending institution.
2. if applicant gains initial support from lending institution and if the
preliminary loan application is approved, applicant is then asked to
complete a formal application. If the preliminary loan application is
not approved by staff, the applicant may request that the EDA consider
approval of the preliminary application at the next regularly
scheduled meeting of the EDA.
3. if preliminary loan application is approved, applicant shall complete
a formal application. Formal application shall include a business
plan which will include its management structure, market analysis, and
financial statement. Like documentation necessary for obtaining the
bank loan associated with the proposal is acceptable. Attached with
each formal application is a written release of information executed
by the loan applicant.
4. City staff will meet with applicant and other participating lender(a)
to refine pian for financing proposed enterprise.
1
3
RLF Administration
Page 5
S. City staff shall analyze the formal application and financial
statements contained therein to determine if the proposed business and
finance plan is viable. Staff may, at its discretion, accept the
findings of a banking institution regarding applicant credit and
financial viability of the project. After analysis is complete, City
staff shall submit a written recommendation to the EDA. A decision
regarding the application shall be made by the EDA within 60 days of
the submittal of a completed formal application.
6. The EDA shall have authority to approve or deny loans; however, within
twenty-one days of EDA approval, the City Council may reverse a
decision by the EDA to approve a loan if it is determined by Council
that such loan was issued in violation of GMEF guidelines.
7. Prior to issuance of an approved loan, the City Attorney shall review
all contracts, legal documents and intercreditor agreements. After
such review is complete, the City shall issue said loan.
ORIGINAL REVOLVING IRAN FUNDING
"LETTER OF CREDIT" FROM MONTICELLO CITY COUNCIL - $200,000.00
SOURCE - City Liquor Store Fund
City shall transfer needed loan amount from existing accounts at such time that
individual loans are approved. 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. Ordinance
establishing the Monticello EDA).
REPORTING
1. Staff shall submit quarterly summaries and/or annual report detailing
the status of the Monticello Enterprise Fund.
FUND GUIDELINES MODIFICATION
1. At a minimum, the EDA shall review the Fund Guidelines on an annual
basis. No changes to the CMEP guidelines shall be instituted without
prior approval of the City Council.
LOAN ADMINISTRATION
1. City staff shall service City loan, monitor City position with regards
to the loan, and shall assure City compliance with intercreditor
agreement.
RLF Administration
Page 6
3
2. All loan documents shall include an intercreditor agreement which must
include the following:
A. Definition of loan default, agreements regarding notification
of default.
B. Agreements between lending institution and City regarding
reproduction of pertinent information regarding the loan.
3. All loan documentation shall include agreements between borrower and
lenders regarding release of privacy regarding the status of the loan.
3
GREATER MONTICE•LLO ENTERPRISE FUND
ECONOMIC DEVELOPMENT AUTHORITY
IN AND FOR THE
CITY OF MONTICELLO
Preliminary Loan Application approval 9/28/90
EDA
Loan terms negotiated and agreed upon between the dg3fdIX4". the
lending Institution, and the EDA Executive Director Yes ,
Formal loan application and financial statements analyzed by the
lending institution Kevin Doty, Commercial Lender
Formal loan documents reviewed by,city staff Partially
parking lot yes
Building permit approval or construction commitment subdivision yes.
10/23/90 Building plans submitted but not reviewed by the Bldg Inspector
Loan documents reviewed by the City Attorney Drafted by Ton Haves
Economic Development Authority approval or disapproval:
Loan Number GMEF Loon No. 002 Loan approved Yes
Borrower Muller Family Theatres ,
Address j/ Gast aroaaway. Monticello Loan disapproved
Loan Amount S�'U.U0u.0u
Rate ai Date 9/28/90
Terma amortized over 20 years with
balloon payment in five years
A motion was mnde by EDA member Barb Schwientek to (approve -
dXYYjiji %U) GMF,P in the amount of Fifty thousand dollars and no cents ($50,000)
dollars and cents to developer Muller Family Theatres
this 28 dny of September 1990 Seconded by EDA
member 11arvev Kendnll
YEAS: Barb Schwientek NAYS: None
Harvey Kendall
Fran Fair
Ron Hoglund
Absent: Bob Mosford, At Larson, and Wnrren Smith.
GMEF disbursed October 21 19_IQ by Check No. X09
Wright County State Bank and
2app Abstract 6 Title Company Rick Wolfateller EDA Treasurer
City Council may reverse an EDA loan decision within twenty-one days
of EDA approval. Information reviewed and accepted. October 9. 1990
ACCEPTANCE OF TERMS
1 (We) hereby•nccept the terms MAX88l(71i6 US stated above as approved
by the Economic Development Authority In and for the City or Monticello.
Dated:
11
September 28, 1990
Muller Theatre Expansion
APPLICANT: Michael Muller and Robert Muller
An Informal Partnership
A. Final Cap? Will the project to completed withnut GMEF monies?
B. 5) OTHERS: Can't expand any place else at current location.
Could move out-of-town, however, goad use of �I
current building without parking.
C. PROJECT COST INCREASED BY $5.000
$395.000 BANKS (Wright County $360.000 and Maple Lake Bank $35.000)
50.000 CHEF
112,000 Muller Family
110.000 Equity
$667.000 TOTAL.
Will be Companion Direct Loan - GMEF in second position on real estate
amortized over 20 years, ballooned in
five years.
$395.000
Banks 59%
50,000
GMEF 8%
112.000
Family 17%
110,000
Equity 16%
$667.000
100%
$112,000
Existing Mortgage
555,000
Project Cost
$667,000
TOTAL.
110,000
Equity
$557,000
D/S or New mortgage
$445.000
$395,000
Banks 711
$395.000
flanks
71%
50,000
GMEF 91
30,000
GMEF
5%
112,000
Family 202
112,000
Fnmily
20%
$557,000
D/S 100%
20.000
Gnp
41
Muller Theatre Expansion
CP
Present structure: Lots 5 6 6 plus W 14 Inches of Lot 7, Block 53
Building: 8,526 sq ft first floor
2,600 sq ft second floor
EMV '90 - $232,100 (land and building)
C 9,508
Taxes 7,781.64
Employment - 2 FT
9 PT
6.5 Full Time
Purchase: Lot 4 plus W 24 inches of Lot 3, Block 53
EMV: Lot 4 $19,100
Purchase Price - $69,500
Expansion: 5,775 sq ft, two screen theatre ($40-550 per sq ft)
EMV per Doug Gruber, County Assessor, Building $250,000
Land 19,100
Total EMVS269,100
$100,000 $169,100
.0320 .0495
$ 3,200 S 8,370
C - $11,570
Texas $ 9,470 Estimated
Nov employment - 2 FT
8 PT
6 Full Time
Project Budget: Land S 69,500 ($12.035 per sq ft)
Construction 310,000
M&E 104,000 (Projectors, screens, sound system)
Carpet 5,000
Architect 6 Design 36,500
Santa 25,000
TOTAL $550,000
Bank $360,000 or $360,000
GMI!F 50,000 30,000
Equity 140,000 75.000
Total 3550,000 Other 85,000
$550.000
PROJECT: Creates 6 full time jobs $60,000 maximum for GMF.F
Maintains a more vibrant downtown
Supports Stroatscrapo
Batter use of property With a shared use of parking spaces
Increases local tax baso (Net gain $8.350 annually)
Cap funding
Theatre (non-compotitive commerical business)
Within City Limits
Assist an existing business (RHE)
c
13
Adjoining Property:
Lot 1, Block 53 EMV $19,100
Taxes 790.70
Lot 2 6 3, Block 53 EMV $71,000 (Bldg 32,900, Land 38,100)
Taxes 1,918
All lots have special assessments on them.
HRA purchased Old Monticello Ford for $75,000
Steltons for 65,000 plus $10,000 for relocation
and moving expenses
Doug Gruber suggested $6.00 per square foot on land
$35,000
GMEF REMAINING BALANCE $112,000
Eastey Project 50,000
REMAINING $ 62,000
One half remaining balance 31,000
MAIL GMEF 30,000
If Eastcy project funded then the max the CMEF could loan is $30,000
unless the EDA request additionni funds from the City Council.
ASSESSMENTS ON LOT 4
190
'Remaining
'60 Improvement
$ 10.02
-
'6l Improvement
3.72
$ 3.32
'77-3 Street Imp
3.50
23.31
'88 Strectsenpe
324.52
1,370.13
TOTAL.
$341.76
$1,396.76
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