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7. EDSR 06-17-2013 Elk REQUEST FOR ACTION River To ITEM NUMBER Economic Development Authority 7. AGENDA SECTION MEETING DATE PREPARED BY April 8, 2013 Clay Wilfahrt,Assistant Director of Economic Development ITEM DESCRIPTION REVIEWED By Consider Forgivable Loan Application for Preferred Powder Jeremy Barnhart, Deputy Director, Coating Community Operations and Development REVIEWED BY ACTION REQUESTED Consider Forgivable Loan application for Preferred Powder Coating and recommend that City Council approve the Forgivable Loan of$200,000 BACKGROUND/DISCUSSION The attached staff report to the EDA Finance Committee dated March 29, 2013, and committee meeting minutes provide background regarding the Forgivable Loan request. The EDA passed the Forgivable Loan guidelines in February and set an initial application period of February 15 through March 15. The program is designed to stimulate private sector investment,help spur new construction, create and retain employment opportunities, and promote the sale of city-owned property. Staff received three applications for the Forgivable Loan during the initial application period. Preferred Powder Coating is a metal powder coating company out of Rogers,Minnesota. They are seeking the forgivable loan to help with the cost of constructing a 70,000 square foot facility in the city- owned Nature's Edge Business Center. Preferred Powder plans to add 8-10 new jobs to their existing 24 jobs as a result of the project. The project will induce $5.4 million in private investment. The Finance Committee recommends the EDA recommend City Council approval of the Forgivable Loan for Preferred Powder Coating with the following terms and conditions: • $200,000 at 3%interest, 5 year term,20 year amortization • EDA to secure personal guarantee • EDA to obtain subordinate lien position on building and subordinate lien on machinery financed The loan will be forgiven upon completion of all of the goals and requirements set forth by the Forgivable Loan Policy,and the jobs created as a result of the forgivable loan program are retained for a minimum of one year. In this case,Preferred Powder Coating will need to complete their construction,create a minimum of eight jobs,and retain them for one year. Five of the jobs must be awarded to Low to Moderate Income employees. FeiEAE1 tl NATURE The Finance Committee also requested that staff determine if the city would become eligible for state grants upon committing the dollars, as well as the ramifications of a situation where the city loaned dollars and then recouped them due to an applicant failing to fulfill the requirements set forth in the policy. Following a conversation with the Department of Employment and Economic Development, staff determined that the city is eligible to apply for state grants upon committing the funds. Should the money be recouped by the city, there would be no penalty;however, the dollars would need to be committed again in order for the city to apply for state grants. Once the EDA makes a recommendation,the City Council will call a public hearing on April 15 for its May 6 meeting. At the May 6 meeting, the City Council will hold a public hearing and take final action on the loan application. FINANCIAL IMPACT The Forgivable Loan fund balance is $703,679. The financial impact of approving the loan would be $200,000 with the applicant paying all legal and filing fees at closing. ATTACHMENTS • EDA Finance Committee Meeting Minutes dated March 29, 2013 • EDA Forgivable Loan Policy and Guidelines • Staff report to EDA Finance Committee re: Forgivable Loan Application dated March 29, 2013 Action Motion by Second by Vote Follow Up N:\Departments\Community Development\Economic Development\EDA to move\Agenda\Year2013\6-17-2013\Action Requested-EDA 4-8-13 Preferred Powder.docx MEETING OF THE EDA FINANCE COMMITTEE HELD AT THE ELK RIVER CITY HALL FRIDAY, MARCH 29, 2013 Members Present: Chad Vitzthum,Larry Toth,Paul Motin,Nate Ovall,Cliff Lundberg,Dan Tveite Members Absent: None Staff Present: Assistant Director of Economic Development,Clay Wilfahrt, Others Present: Bruce DeWitt,Blue Egg Bakery,Tim Dolan and Annie)) ,ert,Decklan Group,Peter Orluck,Orluck Industries,Dan Bosshart and Lloyd Peson,Preferred Powder Coating 1. Call Meeting to Order Assistant Director of Economic Development Clay Wilfahrt ciiIed the me to order at 7:30am 2. Consider Downtown Revitalization Loan for Blue EggMarket Mr.Wilfahrt reviewed the staff report. Mr.Lundberg asked if the EDA should seek a position}'- *lue `y,:`'. existing building. Tun Dolan of the Decklan Group who was working with the applicant s�t. iat they would be okay with that. Bruce DeWitt introduced himself and e ed about Blue ery. They just celebrated their first anniversary. He explained that high end . , �; • cakes have b ``eig well which led them to the idea of expanding. The committee discussed the fact that the loaf:was 41'40 year rm nd direct loan. Mr. Oval stated that the baker equipment 14,:: .ti time. The conittee was okay with the term and the fact that the loan was direct. The committee - fact that the loan was fully amortized. Several members of the tt ,., •entioned that as good to see the applicants had extensive experience in managemenP � MOV BY MOT AND .ONDED BY TVEITE TO RECOMMEND APPROVAL OF T APPLICATIOF,OR A OWN REVITALIZATION MICROLOAN FOR BLUE E BAKERY. MOTION "4 6-0. 3. Conside •an Applications for the Forgivable Loan Program—Alliance Machine,Orluck Industries, Preferred ' `� Coating Lloyd Peterson and Dan Bosshart of Preferred Powder Coating introduced themselves and explained their business and 4-eir ns to move to Elk River. Commissioner Vitzham noted that he is working with the applicants,and that he would abstain from voting. Mr.Tveite stated that the project fit exactly into what the EDA was looking for when they created the program. MOVED BY LUNDBERG AND SECONDED BY TOTH TO RECOMMEND APPROVAL OF THE APPLICATION BY PREFERRED POWDER COATING FOR A FORGIVABLE LOAN IN THE AMOUNT OF$200,000. MOTION CARRIED 5-0 WITH COMISSIONER VITZHAM ABSTAINING. EDA Finance Committee Minutes Page 2 4agiffilt,40F20.13 Page 2 of 3 Peter Orluck introduced himself and gave an overview of his business and plans for expansion. Mr. Ovall stated that the Bank of Elk River is working with the applicant and he would abstain from voting. Commissioner Toth noted that the business is growing quickly and expressed concern that they may move in the near future. He asked if the EDA had any protection against a business accepting the forgivable loan and then moving. Mr.Wilfahrt stated that under the city s iness subsidy policy,any business that accepts a subsidy and moves within five years of accep•:.1 that subsidy is subject to repayment and penalties. Mr. Motin expressed concern with the low score on the forge' . loan s . _ • system. Mr.Wilfahrt stated that the forgivable loan scoring system was design m ore`to differetilkv etween applicants than it was to indicate strength of the project. Mr.Wilfahrt4flaed that all three app i Y. ..ns received would score very highly on the abatement scoring system,, are comparable to other s .,, projects the EDA has accepted in terms of job creation,taxal� ov0 dded,a the other mess... nt criteria. Mr.Vitzham asked if the EDA or city accepted a state gr k ;.uld the city or EDA be penalized by the state if someone were to accept a forgi, .ble loan and the app;=1,..,,,, failed to go through with their project. Mr.Wilfahrt said that he wool. with the state to '''+., hat the recourse would be in that event. ,`, ,z A, The committee further recommended that th ,terms,c,. .,err with terms provided by the bank. MOVED BY TVEIT. SECONDED a,` VITZHAM TO RECOMMEND APPROVAL OF THE REQU BY O ' CK INDUS N' ES FOR A FORGIVABLE LOAN IN THE AMOUNT OF ';'):41, I I. MO N CARRIE ".-0 COMISSIONER OVALL ABSTAINING. '''N.,k, 3:\ V Annie e e Dec #soup informed a committee about Alliance Machine and their proposed expansion. `Zi ,' h mittee expressed at the scoring sheet may need to be updated to better reflect the strength of the app on. k Mr. Tveite s td that supporting the Affiance project is an excellent example of how a city can support an existing business to encourage economic growth. Mr. Ovall stated thaie Bank of Elk River is working with the applicant and he would abstain from voting. MOVED BY TVEITE AND SECONDED BY MOTIN TO RECOMMEND APPROVAL OF THE REQUEST BY ALLIANCE MACHINE FOR A FORGIVABLE LOAN IN THE AMOUNT OF$200,000. MOTION CARRIED 5-0 WITH COMISSIONER OVALL ABSTAINING. C:\Users\dhuebner\AppData\Local\Microsof\Windows\Temporary Internet Files\Content.Outlook\Q7RBTRKC13 29 2013_doe EDA Finance Committee Minutes Page 3 J3 Page 3 of 3 4. Consider Revisions to the Forgivable Loan Program Mr.Wilfahrt reviewed the staff report. He noted that there are several businesses that could utilize the forgivable loan if the requirement that businesses be in the manufacturing,high-tech,and industrial sectors was removed. Mr.Vitzham asked whether or not there was a provision to prevent businesses from leaving after receiving the dollars,particularly in leased situations. Mr.Wilfahrt stated that there is a requirement that they stay in Elk River for five years following the business subsidy,otherwise they would be subject to repayment and penalties. Mr. Motin and Mr. Tveite stated concern with removing the restnc., : om the program after only one round of applicants. Mr.Vitzham echoed the concern and stat at .-lieved the EDA should keep the program as is. The committee came to a consensus that no changes s , ild be made to the poi, ' -. this time. 4. Closing The EDA Finance Committee meeting ended at 9:08 a.m.` Respectfully submitted by, *2:?...- Clay Wilfahrt '` , c , �� - \ Assistant Director of Economic D , elopment , , ,,,,,,.,:::.\,,,,,,,H::::::: \ \,..:..s,,,, kk, '''''')*., '''' \k,,:\\ ,,„,,,,,,,,,„,,,,,,,,,,,,,,,,::,,,,,,'$ ,-\ .„,,,,E, \\ \ „..,,„ . � � uj.. i i- C:lUsersWhuebner\AppData\Loca1\Microsoft\Windows\Temporary Internet Fi les\Content.Outlook\Q7RBTRKCA3 29 2013.doc El REQUEST FOR ACTION River TO ITEM NUMBER Economic Development Authority Finance Committee 8. AGENDA SECTION MEETING DATE PREPARED BY March 29, 2013 Clay Wilfahrt,Assistant Director of Economic Development ITEM DESCRIPTION REVIEWED By Consider Forgivable Loan Application from Preferred Powder Jeremy Barnhart, Deputy Director Company Community Operations and Development REVIEWED BY ACTION REQUESTED Consider forgivable loan application from Preferred Powder Company BACKGROUND/DISCUSSION In February 2013, the EDA approved the Forgivable Loan program and set an initial application period of February 15 through March 15. The balance of the account is $703,679. The Department of Employment and Economic Development indicated that until this fund is expended, Elk River might be precluded from receiving additional state funding. Preferred Powder Company submitted an application during the initial application period. The details of the application are broken down below. The applicant must meet the following criteria for the Forgivable Loan Program: Forgivable Loan Criteria a) 50% of project financing from another source b) Maximum loan amount$200,000 c) Minimum of one job paying equal or greater to $12.19/hr. created per$35,000 requested, 51% of which must be awarded to low and moderate income (LMI) employees d) Retain jobs for a minimum of one year e) Interest—3% or two points below prime f) Financial Feasibility i) Appropriate ratio of private funds to Forgivable Loan funds ii) Sufficient cash flow to cover proposed debt service iii) Ability to demonstrate a positive net worth. iv) Letter of Commitment from applicant pledging to complete the project during proposed project duration. v) Letter of Commitment from other financing sources stating terms and conditions of their participation in the project if applicable vi) Sufficient collateral re1E1Ea 1r INATURE b) Certificate of Good Standing from the Minnesota Secretary of State or other satisfactory evidence of good standing. g) Project compliance with all city codes and policies The Finance Committee will review the application and determine to what degree the applicant meets the guidelines. The Finance Committee will then make a recommendation to the EDA the application. The EDA will consider the recommendation at its April 8th meeting. Preferred Powder Company Preferred Powder Company is an environmentally-sensitive metal powder coating company. They are currently leasing a 73,000 square foot facility in Rogers,Minnesota and employ 24 people. They are seeking$200,000 to help with the cost of constructing a 70,000 square foot facility in the city-owned Nature's Edge Business Center. Preferred Powder plans to add 8-10 new jobs at$15/hr. as a result of the project. The project will induce$5.4 million in private investment. Preferred Powder's application scored 333 out of a possible 465 points on the Forgivable Loan scoring sheet. This project would score 44 on the tax abatement application which would qualify it as a"high" desirability. In addition to the scoring, the Finance Committee is asked to consider the application in terms of the following: Preferred Powder Breakdown a) Amount Requested: $200,000 b) Interest Rate: 3% c) Job Creation: 8-10 jobs at$15/hr.At least 51%will be awarded to LMI applicants. d) Job Retention—retain the jobs for a minimum of one year e) Financial Feasibility i) Private Funding—there will be$5,414,000 in private investment to$200,000 in public funds or nearly a 27:1 ratio. This ratio is extremely good. ii) Cash Flow—According to the profit and loss statement provided by Preferred Powder,they have had a positive cash flow for each of the past four years. iii) Letter of Commitment from applicant —Staff received a letter dated March 11 From Dan Bosshart,Vice President of Operations of Preferred Powder committing to complete the expansion by November,2013. iv) Letter of commitment from other financing—Chad Vitzthum of First National Bank wrote a letter on March 14,2013 indicating that Preferred Powder demonstrates the ability to service debt payments on the proposed project. He anticipates that the SBA 504 will need to be utilized in conjunction with the forgivable loan and conventional financing. v) Collateral—the city will seek a subordinate position on building and machinery. The city will also secure a personal guarantee. vi) Certificate of Good Standing—As part of Preferred Powder's application,staff received a copy of its Certificate of Good Standing. Financial statements are available upon request,however considering the bank approval for this project staff does not believe it necessary to make this information public. N:\Departments\Community Development\Economic Development EDA to move\Agenda\Year2013\4-8-2013\Action Requested-EDA Finance 3-29-13 PPC.docx FINANCIAL IMPACT The Forgivable Loan fund has a balance of$703,679. The financial impact of approving the loan would be$200,000. The borrower will pay all legal and filing fees at closing. ATTACHMENTS • Preferred Powder Company application and attached documents • Forgivable Loan Policy Action Motion by Second by Vote Follow Up N:\Departments\Community Development\Economic Development\EDA to move\Agenda\Year2013\4-8-2013\Action Requested-EDA Finance 3-29-13 PPC.docx } ELK RIVER ECONOMIC DEVELOPMENT FORGIVABLE LOAN APPLICATION I. CONTACT INFORMATION Legal Name of Business: Preferred Powder Coating, LLC Project Site Address: 10.36 acre lot in Nature's Edge Businss Center City/State 1 Zip Elk River, MN 55330 Contact Person(s) Annie Deckert, Decklan Group, 612-564-0795 (office), annie@decklangroup.com Dan Bosshart, 763-428-4990 (office), clbosshart @preferredpowder.corn Federal ID # 80-0429246 State ID # 73189614 II. NATURE OF LOAN REQUEST Does your project involve purchasing city-owned property? X Yes No Amount Requested: $200,000 Total Project Cost: $ 5,614,000 Type of project: New construction for a startup business. X New construction for an existing business. On site expansion Equipment purchase Other Project timeline: Preferred Powder Coating would like to break ground August of 2013 on their new facility, and anticipate project completion to be November 2013. Their lease on their existing facility in Rogers terminates July 2014. The company anticipates being completely moved out of their current facility (in Rogers) by March of 2014. Please give a brief summary of your business and its products or service: Preferred Powder Coating is a metal powder coating company that prides itself in environmental preservation and conservation, ensuring their work is done in an environmentally sensitive manner through a process known as EEP, or"Enhanced Performance Pretreatment" which was developed to meet the new phosphate restrictions, reduce water usage, lower chemical consumption and eliminate the natural gas needed to heat the stage. Preferred Powder Coating works with all types of ferrous and non-ferrous substrates including steel, aluminum, stainless, cast iron and zinc die castings. Preferred Powder works with a variety of industries that require premium powder services including, but not limited to: aeronautics, athletic equipment, automotive, die casting, medical equipment, OEM, recreational, retail and sheet metal. Please give a brief summary of the project: Currently located in Rogers, MN in a 73,000 state of the art facility, Preferred Powder is looking to expand their operations and relocate to the City of Elk River. In late 2012, Elk River Economic Development Authority President Dan Tveite and Elk River economic development staff toured the facility with President Lloyd Peterson and Vice President of Operations Dan Bosshart to learn more about their operations and future expansion plans. Preferred Powder currently employs 24 employees, and plans on creating 8-10 jobs within the next two years. They plan on constructing a 70,000-75,000 square foot facility (with room to expand an additional 30,000 square feet) which will not only increase Elk River's tax base, but will generate excitement and momentum for the newly finished Nature's Edge Business Center, being as they will be the first to build in the park. Preferred Powder is interested in purchasing the 10.36 acre lot in city owned Nature's Edge Business Center. This is a challenging lot, with a gas line running through the proprety, and wetlands located on the southern portion. Seeing as nothing can be built over the gas line, drafting a building footprint poses a challenge. In negotiating the land sale with the city, preliminary discussions with staff indicated the land could be purchased at$1.75/sq. ft., resulting in a total land cost of$713,512 (approximately 9.36 net acres at$1.75/sq.ft.) . Because of the various issues with this parcel as it relates to the total acreage (gasline and wetland), Preferred Powder will need to proceed with the wetland mitigation process. Conversations with Clay Wilfahrt, Assistant Director of Economic Development on 3-4-13 indicated this is an option. Conversations with City Engineer Justin Femrite and Environmental Engineer Rebecca Haug on 3-13-13 further indicated this option can be explored. At time of application submission, Decklan Group staff has begun the process to mitigate the wetland. If this request is denied, Preferred Powder will be exploring other site options in Elk River. III. FINANCING Project Costs Land $ 714,000 Site improvements Buildings (attach plans & costs) $ 3,500,000 Equipment/Machinery/Fixtures (attach list and estimated costs) $ 1,000,000 Remodeling Industrial Inventory/Working Capital $ 200,000 Other (soft costs) $ 200,000 Total Costs $ 5,614,000 Proposed Sources of Financing SOURCE NAME TERMS AMOUNT First N'tI Bank (2 loans) 25 yr, 7-10 yr ammort $ 2,708,000 SBA 25 yr, 7-10 yr ammort. $ 2,164,400 Cash Equity (applicant) $ 441,600 Fed Grant/Loan State Grant/Loan EDA Micro Loan $ 100,000 EDA Forgivable Loan $ 200,000 Tax Increment Financing Tax Abatement Total Financing $ 5.614.000 Collateral Assignments Description of Collateral LeinPosition First N'tl Bank 1st SBA 2nd To Private Sources To Other Sources To Federal Govt To State To EDA Micro Loan EDA Forgivable Loan 3rd Value of Collateral Book Value Cost Existing Liens Land (9.36 acres) $714,000 $ Buildings (existing) $ $3,500,000 $ Machinery & Equip. $ $1,000,000 $ Other $ $ Other $ $ $ IV. JOB & WAGE GOALS How many employees do you currently have? 24 (average hourly wage of current employees is$15.07) Guidelines require a minimum of one job created for every $35,000 requested. Of total jobs created, at least 51% must be taken to a low to moderate income person. Jobs To Be Created* Please provide the following information on jobs you expect to create Within 2-years. Average Are the Jobs Expected Permanent or Number Hourly Annual Hiring Temporary? Job Title of Jobs Wage Salary Date Various within two (truck driver, 8-10 $15.00 Permanent years of painters, packers, project assembly floor) completion Program Objectives (Check all that apply) X The project contributes to the fulfillment of the city's approved and adopted economic development and/or redevelopment plans. (Business Development as outlined in 2013-2016 Economic Development Strategic Plan) The project prevents or eliminates slums and blight. X The project increases the local tax base. The project brings a structure into compliance with an existing building code violation. V. PROJECT CONTACTS Financing Sources (lenders, partners, etc...) Name Chad Vitzhum, First National Financial Services, Inc. Address 812 Main Street NW, Elk River, MN 55330 Phone 763-441-2200, cvitzthum@fnber.com Name Todd Grunwaldt, AIA, Grunwaldt & Associates Address 3260B Church Street, Steven's Point, WI 54481 Phone 715-344-8647, todd@grunwaldt.com VI. ATTACHMENTS CHECK LIST Please attach the following: X A) Written Business Plan: 1. Description of Business 2. Ownership 3. Management 4. Date Established 5. Products/Services 6. Future Plans B) Financial Statements for Past Two Years (available upon request- okay with city; confirmed 2-19-13) X C) Financial Projections for Two Years available upon request- okay with city; confirmed 2-19-13) X D) Resume of Owner/Management available upon request- okay with city; confirmed 2-19-13) X E) Personal Financial Statements of Proprietor, Partners, Guarantors available upon request- okay with city; confirmed 2-19-13) X F) Letter of Commitment from Applicant Pledging to Complete During the Proposed Project Duration _X G) Letter of Commitment from the Other Sources of Financing, Stating Terms and Conditions of their Participation in Project H) Fee of 1% of amount of loan request _X l) Certificate of Good Standing V1. AGREEMENT 1 /We certify that all information provided in this application is true and correct to the best of my/our knowledge. I /We authorize the City of Elk River and the Finance Committee to check credit references and verify financial and other information. I /We agree to provide any additional information as may be requested by the City and the Finance Committee. I it Annie Deckert Date President, Decklan Group /() CA-1,11 la eit9R. /3 Dan Bosshart Date Vice President of Operations, Preferred Powder Coating rreferred owder Coating I About Preferred Powder Coating ( Rogers,Minnesota Page 1 of 2 \, PREFERRED P U W D E P ^ c 0 A I N G Call us at (763)428-4990 a .i REQUEST A QUOTE ?n'' I. I. Let us 4uate a Jab for you now ' 6 5 6I{}MS ABOUT UT US ROIADER i,O m:TING INDUSTRmES SEtRVED + SIG &nR'APHK,S GALLERY CONTACT US ... • About Us i • Mission About Preferred Powder Coating • Quality&Performance • ()in I'acilit, All employees of Preferred Powder Coating share the common goal of • Employment providing top-notch customer service that is second to none.This commitment • '=''1, is something we take very seriously. Just one of the things that sets Preferred apart is the personal attention each client receives from our staff,no matter the size of the job.Preferred does not compromise quality for any reason.We take the time necessary to perform work to meet—and exceed-our customers'expectations. Due to the size and capabilities of our facility,Preferred is exceptionally cost- competitive in large-run jobs.The technology we have on site provides our customers and staff with the latest status of each job on the floor,needs for materials,schedules,and costs associated with each aspect of our work. What makes Preferred Powder Coating distinctly different: • A focus on individual training with team-driven execution • Ensuring cost-effectiveness and high-quality standards • Being"green"with no phosphate,low-waste and CNC control • Quality calibration of automated chemical dispensing to ensure consistent and repeatable process controls • A return to the core competency of large-volume powder coating • Our development of partnerships that competitively compete against global manufacturing competition In the summer of 2009,Preferred Powder Coating acquired the assets and 43,000-square-foot facility of Profile Companies in Rogers,Minn.Preferred takes pride in continuing to provide clients with outstanding quality and service in powder coating—and plans to take customer service to a brand-new level. Preferred's Vice President of Operations,Dan Bosshart,worked as operations manager with the former company,and partnered with Lloyd Peterson to form Preferred. Lloyd Peterson has a long history in contract law and business relationships including many years with the Employers Assocoation. General Manager Scott Peterson,and Estimator/Buyer Derek Ram acher, remain from Profile Companies and bring 40 years of metal finishing experience to Preferred Powder Coating. Derek and Scott utilize state-of-the- „ _ . _ http://preferredpowder.com/abaut us/ - 11 March 2013 Elk River Economic Development Authority Suzanne Fischer, EDA Executive Director 13065 Orono Parkway Elk River, MN 55330 RE: Letter of Commitment for Elk River Forgivable Loan Application Dear Ms. Fischer, This letter is my official pledge of commitment to complete my approximately 70,000 square foot building for Preferred Powder Coating no later than November 2013. I am hoping to break ground on this project in August of 2013. If you have any questions or need additional information, please do not hesitate to contact Annie Deckert, Decklan Group, at 612-564-0795. I appreciate your time. Respectfully, bjL'it'71/-- Dan Bosshart Vice President of Operations, Preferred Powder Coating, LLC. 812 Main Street Phone 763.241.3637 ` l FIRST NATIONAL BANK of Elk River Elk 55330 Fax 763.441.5784 1 www.firstnationalfinancial.com March 14, 2013 City of Elk River 13065 Orono Pkwy, Elk River, MN 55330 RE: Preferred Powder Coating, Inc. Forgivable Loan Application To whom it may concern: I have been the banking relationship manager for Preferred Powder Coating for the past two years. Based on my examination and analysis of past financial performance and projected financial performance provided to First National Bank of Elk River, Preferred Powder Coating demonstrates the ability to service debt repayment necessary to support the building project proposed in their application with the City of Elk River dated March 15th, 2013. While Preferred Powder demonstrates the ability to service debt payments on the debt, I do anticipate a substantial equity gap requiring alternative funding sources including the utilization of the SBA 504 program and programs like the Forgivable Loan program to make the project a reality. This letter is only an assessment of Preferred Powders ability to service debt outlined in the application and not a commitment to lend from First National Bank. If you have any questions please feel free to contact me at 763-241-3600, at your convenience. Sincerely : ' (eed(. / _ - Chad A.Vitzthum Senior Vice President First National Bank of Elk River Business Filing Details Page 1 of 1 Home(/). Search(/Business/Search) Filings(/Business/Filings) Search » Business Filings « Back to Search Results Business Record Details » File Amendment or Renewal (/Business/Amendments?filingGuid=b9f3793f-94d4-e011 a886-001 ec94ffe7f) Order Copies Order a Certificate(/Business/Certificates?businessMasterGuid=b9f3793f-94d4-e011- a886-001 ec94ffe7f&route=filing&productld=063dd338-fad3-e011-a886- 001 ec94ffe7f&originalFilingGuid=197c2c30-4fd5-e011-a886-001 ec94ffe7f) Minnesota Business Name PREFERRED POWDER COATING LLC Business Type MN Statute Limited Liability Company(Domestic) 322B File Number Home Jurisdiction 3398194-4 Minnesota Filing Date Status 06/30/2009 Active/In Good Standing Renewal Due Date: Registered Office Address 12/31/2013 1369 Mississippi Str New Brighton MN 55112 USA Registered Agent(s) Manager Lloyd Peterson Dan Bosshart 13251 George Weber Drive Rogers MN 55374 USA Principal Executive Office Address 13251 George Weber Drive Rogers MN 55374 USA Filing History Renewal History http://mblsportal.sos.state.mn.us/Business/SearchDetails?filingGuid=b9f3793f-94d4-e011-a... 3/4/2013 , t 430.06' S 89°55'46 W 1 � , , I I O 2 1 1 I I I I I I I IN Im \... I i 1 ```OPFRTY '10Ty \ it I ' ' ,� I `,........??0.9i.F Lq , r, NF 1 \C 1 2S"SE' ; I T9gck.., �` I' II '�"\PROP 'i I 1 'I -y.20Z,ir2, , ■ 3 I I ----'- ----- r-.\------_____ ; , -i---„,____ ________ I , PROPOSED ----.--- '� MANUFACTURING I FACILITY \ I I i o; ■195'X 360' I F 70,200 SF I ! 1 1 1 ' 1 m z I ? 11 ,' , , I Cr I LL •i to C I' \ ■ A OI 1 P1 71 I \\ ', �Z a; 01111 \ Z 2 1 0y)1 I > 1 I 1, \ y, �^ f I N n I N\ u�. T II p1 ;Z1 t N1 1 N I to m 1 I -F\\ I O yy 4 It I m 1 I 11 \ O PROPOSED ,-- __ I I I I ,,1 ADDITION — — 195'X 150' 1 \ \ 29,250 SF OFFICES I 5625 SF k } 75'x 75' I ` , I i , , EXISTING WETLAND AREA IEl i L — — — — J N II 40' ETBA K I, 1 ∎°o NEW WETLAND AREA r 1 , T -I z L r _ _ _ 1 , \ I I ilk PROPERTY LINE 784.50' N 89°53'33"E Et Et ®SITE DIAGRAM City of Elk Rive r Economic Development Forgivable Loan Policy Guidelines & Application City of Elk River Economic Development Division 13065 Orono Parkway Elk River,MN 55330 763.635.1040 www.elkrivermn.gov POWERED BY NATuRE ELK RIVER ECONOMIC DEVELOPMENT FORGIVABLE LOAN POLICY GUIDELINES & APPLICATION OVERVIEW The Economic Development Authority (EDA) for the City of Elk River recognizes the need to stimulate private sector investment to help spur new construction, create and retain employment opportunities,and promote the sale of city-owned property. The focus is on industrial,manufacturing,and technology-related industries to increase the local and state tax base and improve economic vitality. The program can be used toward the purchase of land (preference given to city-owned property) or to assist in purchasing new machinery,equipment, furniture or fixtures. II. TO APPLY Applications will initially be accepted from February 15,2013 to March 15,2013. After March 15th, applications will be accepted on an ongoing basis and reviewed monthly. Projects will be scored based on the attached Application Review Worksheet.The applicant shall complete and submit the attached application to the city,along with a processing fee of 1% of the loan request to cover processing expenses (fee will be refunded if application is denied). Once application is deemed complete,it will be reviewed by the EDA Finance Committee and EDA (process may take up to six weeks). Applicants will be notified of application status no later than May 3,2013. 111. PURPOSE Forgivable loan funds are to be used for business start-ups,expansions,and relocations where jobs are created and tax base is generated. This can be accomplished by the following means: 1. Creation of permanent,private-sector jobs in order to create above average economic growth; 2. Stimulation or leverage of private investment to ensure economic renewal and competitiveness; 3. Increase of local tax base; 4. Improvement of employment and economic opportunity for citizens in the region to create a reasonable standard of living;and 5. Stimulation of productivity growth through improved manufacturing or new technologies. IV. PROJECT ELIGIBILITY AND REQUIREMENTS The forgivable loan must be based on the following criteria: 1. Creation of new jobs which meet the Federal low to moderate income (LMI) guidelines and wage goals (currently wages and benefits must equal at least$12.19/hr. requirements adjust annually in March). At least 51% of the jobs created must be made available or held by LMI person as outlined on page 18 of this application. 2. Increase in tax base 3. The project demonstrates that investment of public dollars induces private funds; 4. The project provides higher wage levels to the community or will add value to current workforce skills; 5. The project results in the sale and development of city owned property; 6. Whether assistance is necessary to retain existing business;and 7. Whether assistance is necessary to attract out-of-state business. A forgivable loan cannot be made solely on a finding that the conditions in clause 6.) or 7.) exist. A Forgivable Loan Policy and Application t i / E i E 1 i Page 1 of 20 NAME finding must be made that a condition in clause 1.),2.), 3.),4.),or 5.) also exists. Forgivable loans are awarded to businesses that meet all project and job requirements as outlined within. Projects are awarded based upon meeting program criteria. V. ELIGIBLE ACTIVITIES Forgivable Loan may be used for the following activities: 1. Land acquisition (city-owned property given preference) 2. Purchase of furniture, fixtures,and equipment (FF&E) along with new construction* *if equipment installation is greater than$2,000,Davis Bacon Rates apply VI. BUSINESSES ELIGIBILITY Any project meeting the above criteria, and located or proposed to be located within the city limits of Elk River as defined by this program,may be eligible for an Economic Development Forgivable Loan as further defined herein: 1. Business must be a for-profit corporation,partnership, or sole proprietorship. 2. Business must be a small business as defined by the Small Business Administration (SBA). 3. Business must have a positive net worth. 4. Business must be an industrial,manufacturing or technology-based industry 5. Religious,political, casino, sports facilities and pornographic enterprises are not eligible to use the Economic Development Forgivable Loan Program. VII. FORGIVABLE LOAN TERMS & CONDITIONS Loan Amount There is a maximum of$200,000 per forgivable loan. Federal guidelines require a minimum of one job to be created for every$35,000 requested. To receive maximum loan amount of$200,000,applicant would need to create six new FTE positions of which 51%meet LMI requirements. Wage and benefits must be equal or greater than$12.19/hr. The Federal poverty level changes annually. Applicants will have a minimum of two years to hire these jobs. The jobs created by the forgivable loan program must be retained for a minimum of one year. Loan Structure All Economic Development Forgivable Loans shall be structured as direct loans. Interest will be fixed at 3% or 2 points below the lowest prime rate published in the Wall Street Journal, whichever is greater. The applicant must provide at least 50%of project cost through other means. Equity down payment requirements may vary depending on project and primary lending institution. Forgivable loan funds may be used as equity upon approval of primary lending institution. The EDA may require additional agreements to be signed by the borrower (i.e. security agreement, personal guarantees,business subsidy agreement). Other EDA Incentives Projects can combine the forgivable loan with all other incentives (i.e.: Micro Loan Program,Tax Abatement,TIF,etc.) Call of Loan Forgivable Loan Policy and Application P�I N E R E / 1 1 Page 2 of 20 to E Forgivable Loan terms are set by the EDA.Projects which don't meet the terms may be required to repay all or a portion of the loan as determined in the loan agreement. If the 51% of LMI job creation is not met,the funds will need to be repaid. A job creation extension may be granted upon review of the Economic Development Authority on a case by case basis. Repayment terms will vary depending on the use of funds and collateral securing the loan. Specific repayment terms will be defined in the loan agreement in the event repayment of part or the entire forgivable loan is required. A loan shall become due and payable in full if a business relocates outside of the City of Elk River prior to the maturity date of the loan. The loan will be forgiven upon completion of all of the goals set forth by the EDA,and the jobs created as a result of the forgivable loan program are retained for a minimum of one year. VIII. LOAN SECURITY AND GUARANTEES Applicant must secure the loan by providing the EDA with a minimum of a subordinate mortgage upon the building and/or assets or other approved collateral. Personal guarantees will be made part of all loan agreements. Key person life insurance may be required as determined by the EDA Finance Committee based on loan amount and company ownership partners. IX. TIMING OF PROJECT EXPENSES/PROJECT TIMELINE No project can commence until the Elk River Economic Development Authority has approved the loan application. Any costs incurred prior to the approval of the loan application are not eligible expenditures. Applicant must submit project timeline with application;timeline will assist in determining job creation goal deadlines. The applicant will be responsible for all legal,recording,and other fees required for protection of a security interest in the loan,payable by a non-refundable 1%processing fee,which is paid at the time of application. In addition to the non-refundable 1%processing fee, all legal and filing fees shall be paid by the borrower at loan closing. X. PROCEDURAL GUIDELINES FOR APPLICATION AND APPROVAL 1. All applicants shall first contact a primary lending institution to determine if additional equity is needed,and if so,how much. 2. The applicant and the primary lender (if applicable) shall then meet with City Staff to obtain information about the Economic Development Forgivable Loan program,discuss the project, and obtain application forms. 3. The applicant shall complete and submit an application form to the City,along with a processing fee of 1% of the loan request. (The fee is used to cover processing expenses and will be returned only if application is denied.) The applicant must provide evidence of their ability to meet the equity requirements or provide a letter of commitment for conventional financing from the primary lending institution if applicable. 4. The EDA is a governmental entity and as such must provide public access to public data it receives. Data deemed by Applicant to be nonpublic data under State law should be so designated or marked by Applicant. See Minn. Statute Sections 13.59,Subd. 1,respectively. Forgivable Loan Policy and Application P I N E I E 1 1 P Page 3 of 20 NA 2E 5. City staff will review the application to determine if it conforms to all City policies and ordinances and to consider the following: a. The availability and applicability of other governmental grants and/or loan programs. b. Whether the proposed project conforms with building and zoning codes. c. Whether the proposed project is desirous and in the best interests of the public to provide funding for the project. 6. With written permission granted by the applicant,the application will be submitted by City Staff to the Small Business Development Center (SBDC) as advisory consult for staff and EDA Finance Committee. Applicant will be asked to execute a Release of Information form with SBDC. 7. The EDA Finance Committee and EDA Commissioners will review each application in terms of its consistency with the goals of the City's Comprehensive Plan and Economic Development Strategic Plan. Consideration will also be given to the project's overall impact on the community's economy. The EDA Finance Committee will evaluate the project application in terms of the following: a. Project Design -Evaluation of project design includes review of proposed activities,time lines and a capacity to implement. b. Financial Feasibility-Availability of funds,private involvement, financial packaging and cost effectiveness. • Appropriate ratio of private funds to Forgivable Loan funds. • Sufficient cash flow to cover proposed debt service as demonstrated by financial statements and projections. • Ability to demonstrate a positive net worth. • Letter of Commitment from applicant pledging to complete the project during proposed project duration,if the loan application is approved. • Letter of Commitment from other financing sources stating terms and conditions of their participation in the project if applicable. • Sufficient collateral. • Certificate of Good Standing from the Minnesota Secretary of State or other satisfactory evidence of good standing. c. All other information as required in the application and/or additional information as may be requested by the Economic Development Authority. d. Job retention requirements may apply and will be determined at the time of approval. e. Project compliance with all city codes and policies. f. Program Objectives -In addition to quality job and wage creation/retention requirements, the applicant must meet all Forgivable Loan Program criteria and demonstrate how the proposed activities will meet at least one of the objectives listed on page two of this application. 8. The EDA Finance Committee will recommend the approval,denial,or request a resubmission. A recommendation from the Finance Committee will be forwarded to the EDA for final action. 9. Loan proceeds will be disbursed upon proof of expenditures. A closing to execute the forgivable loan documents will only occur upon the following: Forgivable Loan Policy and Application IPIIIESEI 1 1 Page 4 of 20 NAME a. Evidence that Applicant's portion of project funds have been disbursed or escrowed;or b. Written confirmation from the primary lender that Applicant has met equity requirements for the project and primary Lender has funded their portion of the project; c. Lender has fully funded the project and is seeking take out financing by EDA for EDA's portion of the project; or d. Lender is requesting simultaneous closing for the funding of the project. XI. LOAN POLICY REVIEW The above criteria will be reviewed on an annual basis to ensure that the policies reflected in this document are consistent with the economic development goals set forth by the City. XII. RIGHT OF REFUSAL The Elk River Economic Development Authority may deny any project which it deems inappropriate according to the guidelines established in this document. XIII. COMPLIANCE WITH MN BUSINESS SUBSIDY LAW Each company receiving assistance in the principal amount of$75,000 or more from the EDA Forgivable Loan Program shall be subject to the provisions and requirements set forth by Minnesota Business Subsidy Law Statute 1161993 and the City of Elk River Business Subsidy Policy. All applicants will be required to submit annual progress reports to the Economic Development Authority until job creation requirements are met. Additionally,all new hires will be required to complete a salary survey to prove LMI requirements are met and forgivable loan policy requirements are met XIV. OTHER FEDERAL REQUIREMENTS The RLF policies and procedures must comply with the following Federal laws,executive orders and regulations: 1. FAIR HOUSING AND EQUAL ACCESS a. Title VI of the Civil Rights Act of 1964,as Amended (42 U.S.C. 2000d et seq.) (24 CFR Part 1) i. No person may be excluded from participation in,denied the benefits of or subjected to discrimination under any program or activity receiving Federal financial assistance on the basis of race,color or national origin. b. The Fair Housing Act (42 U.S.C. 3601-3620) ((24 CFR Part 100-115) i. Prohibits discrimination in the sale or rental of housing,the financing of housing or the provision of brokerage services against any person on the basis of race,color,religion,sex, national origin,handicap or familial status. Furthermore, section 104 (b) (2) of the Act requires that each grantee certify to the secretary of HUD that it is affirmatively furthering fair housing. The certification specifically requires grantees to conduct a fair housing analysis,develop a fair housing plan,take appropriate actions to overcome the effects of any impediments identified and maintain records on the analysis,plan and actions in this regard. c. Equal Opportunity in Housing(Executive Order 11063,as amended by Executive Order 12259) (24 CFR Part 107) i. Prohibits discrimination against individuals on the basis of race, color,religion,sex or Forgivable Loan Policy and Application E P I I I I I I I I 1 Page 5 of 20 NAME national origin in the sale,rental,leasing or other disposition of residential property,or in the use or occupancy of housing assisted with Federal funds. d. Age Discrimination Act of 1975,As Amended (42 U.S.C. 6101) (24 CFR Part 146) i. Prohibits age discrimination in programs receiving Federal financial assistance. e. Section 109 of Title I of the Housing and Community Development Act of 1974 i. Requires that no person shall be excluded from participation in,be denied the benefits of or be subjected to discrimination under any program or activity funded with Community Development Block Grant (CDBG) funds on the basis of race, color,religion,national origin or sex. f. Americans with Disabilities Act (ADA) (42 U.S.C. 12131;47 U.S.C. 155,201,218, and 225) i. Provided comprehensive civil rights to individuals with disabilities in the areas of employment,public accommodations, state and local government services and telecommunications. The Act also states that discrimination includes the failure to design and construct facilities that are accessible to and usable by persons with disabilities and requites the removal of architectural and communication barriers that are structural in nature in existing facilities. g. Section 504 of the Rehabilitation Act of 1973 i. Prohibits discrimination in Federally assisted programs on the basis of handicap. It imposes requirements to ensure that"qualified individuals with handicaps"have access to programs and activities that receive Federal funds. h. Architectural Barriers Act of 1968 (942 U.S.C. 4151-4157) ii. Requires certain Federally funded buildings an other facilities to be designed,constructed or altered in accordance with standards that ensure accessibility to,and use by,physically handicapped people. 2. EQUAL OPPORTUNITY a. Equal Employment Opportunity,Executive Order 11246,as amended.. (41 CFR part 60) i. Prohibits discrimination against any employee or applicant for employment because of race,color,religion,sex or national origin. Provisions to effectuate this prohibition must be included in all construction contracts exceeding$10,000. b. Section 3 of the Housing and Urban Development Act of 1968 i. Requires that, to the greatest extent feasible,opportunities for training and employment arising from CDBG will be provided to low-income persons residing in the program service area. Also,to the greatest extent feasible,contracts for work(all types) to be performed in connection with CDBG will be awarded to business concerns that are located in or owned by persons residing in the program service area. c. Minority/Women's Business Enterprise (Executive Orders 11625, 12432, 12138) (24 CFR 85.36(e)). i. City must prescribe procedures for a minority outreach program to ensure the inclusion, to the maximum extent possible,of minorities and women,and entities owned by minorities and women,in all contracts. 3. LABOR REQUIREMENTS Forgivable Loan Policy and Application IPOVIEBEll B t Page 6 of 20 INAIUREI All contracts for construction and installation of equipment must comply with the following: a. Davis-Bacon and Related Acts (40 USC 276 (A)-7) i. Ensures that mechanics and laborers employed in construction work under Federally assisted contracts are paid wages and fringe benefits equal to those that prevail in the locality where the work is performed. b. Contract Work Hours and Safety Standards Act,as amended (40 USC 327-333) i. Provides that mechanics and laborers employed on Federally assisted construction jobs are paid time and one-half for work in excess of 40 hours per week,and provides for the payment of liquidated damages where violations occur. It also addresses safe and healthy working conditions. c. Copeland (Anti-Kickback)Act (40 USC 276c) i. Governs the deductions from paychecks that are allowable. Makes it a criminal offense to induce anyone employed on a Federally assisted project to relinquish any compensation to which he/she is entitled,and requires all contractors to submit weekly payrolls and statements of compliance. d. Fair Housing Standards Act of 1938,As Amended (29 USC 201,et.seq.) ii. Establishes the basic minimum wage for all work and requires the payment of overtime at the rate of at least time and one-half. It also requires the payment of wages for the entire time that an employee is required or permitted to work,and establishes child labor standards. e. In accordance with 24 CFR Part 5,CDBG funds may not be used to directly or indirectly employ,award contracts to or otherwise engage the services of any contractor or subrecipient during any period of debarment, suspension or placement of ineligibility status. Grantees should check all contractors,subcontractors,lower tier contractors and subrecipients against the Federal publication that lists debarred, suspended and ineligible contractors. See internet site at http://www.arnet.gov/epls/. 4. PROCUREMENT The procurement standards of 24 CFR 85.36 apply. 5. CONFLICT-OF-INTEREST For the procurement of property and services, the conflict-of-interest provisions at 24 CFR 85.36 and 24 CFR 84.42 apply. This requires the city to maintain written standards governing the performance of their employees engaged in awarding and administering contracts. At a minimum, these standards must: a. Require that no employee,officer,agent of the city or its subrecipient shall participate in the selection,award or administration of a contract supported by CDBG if a conflict-of-interest, either real or apparent,would be involved; b. Require that grantee or subrecipient employees,officers and agents not accept gratuities, favors or anything of monetary value from contractors potential contractors or parties to subagreements; and c. Stipulate provisions for penalties, sanctions or other disciplinary actions for violations of standards. Forgivable Loan Policy and Application 101E11E2 1 f Page 7 of 20 INATUREI A conflict would arise when any of the following has a financial or other interest in a firm selected for award: a. An employee,agent or officer of the grantee or subrecipient; b. Any member of an employee's,agent's or officer's immediate family; c. An employee's,agent's or officer's partner;or d. An organization that employs or is about to employ an employee,agent or officer of the grantee or subrecipient. In cases not covered by the above,the CDBG regulations at 24 CFR 570.611 governing conflict-of- interest apply. These provisions cover employees,agents,consultants,officers and elected or appointed officials of the city or subrecipient. The regulations state that no person covered who exercises or has exercised any functions or responsibilities with respect to CDBG activities or who is in a position to participate in decisions or gain inside information: a. May obtain a financial interest or benefit from a CDBG activity; b. Have an interest in any contract,subcontract or agreement for themselves or for persons with business or family ties. This requirement applies to covered persons during their tenure and for one year after leaving the city or subrecipient entity. Upon written request, exceptions to these provisions may be granted by HUD on a case-by-case basis only after the city has: a. Disclosed the full nature of the conflict and submitted proof that the disclosure has been made public, and b. Provided a legal opinion from the city stating that there would be no violation of state or local law if the exception were granted. 6. ENVIRONMENTAL REVIEW The city is responsible for undertaking environmental reviews in accordance with the Environmental Handbook. The Environmental Review must be completed before funds are committed. 7. FLOOD INSURANCE Section 202 of the Flood Disaster Protection Act of 1973 (42 USC 4106) requires that CDBG funds shall not be provided to an area that has been identified by the Federal Emergency Management Agency (FEMA) as having special flood hazards unless: a. The community is participating in the National Flood Insurance Program,or it has been less than a year since the community was designated as having special flood hazards;and b. Flood insurance is obtained. 8. DISPLACEMENT, RELOCATION,ACQUISITION AND REPLACEMENT OF HOUSING Projects involving acquisition,rehabilitation or demolition may be subject to the provisions of the Uniform Relocation Act. 9. ANTI-PIRATING RULE Funds may not be used to assist for-profit businesses,including expansions,as well as infrastructure improvement projects or business incubator projects designed to facilitate business relocation IF a. The funding will be used to assist directly in the relocation of a plant, facility or operation;and Forgivable Loan Policy and Application 1 1 . E 1 E f t Page 8 of 20 NATURE b. The relocation is likely to result in a significant loss of jobs in the labor market area from which the relocation occurs The following are definitions to assist in determining if a business location falls under these provisions: • Labor Marketi Area (LMA):An LMA is an economically integrated geographic area where individuals can live and work within a reasonable distance or can readily change employment without changing their place of residence. • Operation: A business operation includes,but is not limited to,any equipment,production capacity or product line of the business. • Significant Loss of Jobs o A loss of jobs is significant if: • The number of jobs to be lost in the LMA in which the affected business is currently located is equal to or greater than one-tenth of on percent of the total number of persons in the labor force of that LMA; OR in all cases • A job is considered to be lost due to the provision of CDBG assistance if the job is relocated within three years of the provision of assistance to the business. • Notwithstanding the above definition,a loss of 25 jobs or fewer does not sonstitute a significant loss of jobs. XV. STATE REQUIREMENTS 1. MINNESOTA INVESTMENT FUND (MS.116J.8731) Wage Goals -Businesses receiving RLF assistance must pay each employee total compensation, including benefits not mandated by law,that on an annualized basis is equal to at least 110% of the federal poverty level for a family of four,which as of March 1,2012 is $12.19 per hour. The federal poverty level changes annually. Retail Businesses are not prohibited from receiving federal ED assistance. 2. MUNICIPAL RIGHTS, POWERS,DUTIES (MS 471.87-471.88) An officer of the city may not have a personal financial interest or personally benefit financially from the business to be assisted. 3. BUSINESS SUBSIDY LAW (MS 116J.993-116J.995). Any state or local government agency or public entity that provides financial assistance to a business must comply with this statute. 4. FIRST SOURCE AGREEMENT (MS 116L.66) A business that receives grants or loans in an amount greater than$200,000 must agree to list any vacant or new positions with the MN Department of Employment and Economic Development. 5. SURETY DEPOSITS REQUIRED FOR CONSTRUCTION CONTRACTS (MS 290.9705) Forgivable Loan Policy and Application I P I V I E N E I / T Page 9 of 20 NAME When a contract exceeds $100,000 and a non-Minnesota construction contractor has been hired to perform the work, the city must do one of the following: a. Deposit with the Department of Revenue, 8 % of every payment made to the contractor;or b. Have in its possession a Waiver of Withholding from the Department of Revenue. 6. GOVERNMENT DATA PRACTICES (MS 13) Information contained in the application for assistance will become a matter of public record with the exception of those items protected under the Minnesota Government Data Practices Act. Forgivable Loan Policy and Application IPIIMEREB t T Page 10 of 20 INATLJREI ELK RIVER ECONOMIC DEVELOPMENT FORGIVABLE LOAN APPLICATION I. CONTACT INFORMATION Legal Name of Business: Project Site Address: City / State / Zip Contact Person(s) Business Phone Fax Home Phone Email Check One: Proprietor Corporation Partnership Federal ID # State ID # *Social Securtiy Number may be requested. II. NATURE OF LOAN REQUEST Does your project involve purchasing city-owned property? Yes No Amount Requested: $ Total Project Cost: $ Type of project: New construction for a startup business. New construction for an existing business. On site expansion Equipment purchase Other Project timeline: Forgivable Loan Policy and Application it 1 ! i I i I 111 Page 10 of 20 NAM Please give a brief summary of your business and its products or service: Please give a brief summary of the project: Please describe how this loan will impact your project: III. FINANCING Project Costs Land $ Site improvements $ Buildings (attach plans &costs) $ Equipment/Machinery/Fixtures (attach list and estimated costs) $ Remodeling $ Industrial Inventory/Working Capital $ Other (attach description) $ Total Costs $ Comments: Forgivable Loan Policy and Application /~1 1 E I E 1 1 t Page 11 of 20 NA E Proposed Sources of Financing SOURCE NAME TERMS AMOUNT Bank Loan $ Bank Loan $ Other Private Funds $ Applicant Contribution $ Other $ Fed Grant/Loan $ State Grant/Loan $ EDA Micro Loan $ EDA Forgivable Loan $ Tax Increment Financing $ Tax Abatement $ Total Financing $ Collateral Assignments Lien Description of Collateral Position To Bank,I To Bank 2 To Private Sources To Other Sources To Federal Govt To State To EDA Micro Loan EDA Forgivable Loan Forgivable Loan Policy and Application p , t 1 Page 12 of 20 NAME Value of Collateral Book Value Cost Existing Liens Land $ $ $ Buildings $ $ $ Machinery&Equip. $ $ $ Other $ $ $ Other $ $ $ IV. JOB & WAGE GOALS How many employees do you currently have? Guidelines require a minimum of one job created for every$35,000 requested. Of total jobs created,at least 51% must be taken to a low to moderate income person. Jobs To Be Created* Please provide the following information on jobs you expect to create Within 2-years. I Average Are the Jobs Expected Number Hourly Annual Permanent or Hiring Job Title of Jobs Wage Salary Temporary? Date Program Objectives (Check all that apply) The project contributes to the fulfillment of the city's approved and adopted economic development and/or redevelopment plans. The project prevents or eliminates slums and blight. The project increases the local tax base. The project brings a structure into compliance with an existing building code violation. Forgivable Loan Policy and Application P i • E i E i i t Page 13 of 20 NAME,E V. PROJECT CONTACTS Attorney Name Address Phone Accountant Name Address Phone Financing Sources (lenders,partners, etc...) Name Address Phone Name Address Phone Parent Company Name Address Phone Others Name Address Phone Name Address Phone Forgivable Loan Policy and Application P 1 / ERE 1 1 Page 14 of 20 NAME VI. ATTACHMENTS CHECK LIST Please attach the following: A) Written Business Plan: 1. Description of Business 2. Ownership 3. Management 4. Date Established 5. Products/Services 6. Future Plans B) Financial Statements for Past Two Years C) Financial Projections for Two Years D) Resume of Owner/Management E) Personal Financial Statements of Proprietor,Partners, Guarantors F) Letter of Commitment from Applicant Pledging to Complete During the Proposed Project Duration G) Letter of Commitment from the Other Sources of Financing, Stating Terms and Conditions of their Participation in Project H) Fee of 1% of amount of loan request I) Certificate of Good Standing VI. AGREEMENT I / We certify that all information provided in this application is true and correct to the best of my/our knowledge. I /We authorize the City of Elk River and the Finance Committee to check credit references and verify financial and other information. I / We agree to provide any additional information as may be requested by the City and the Finance Committee. APPLICANT SIGNATURE BY DATE Forgivable Loan Policy and Application 'POWER� 1 1 / Page 15 of 20 NAME APPLICATION REVIEW WORKSHEET TO BE COMPLETED BY CITY STAFF 1. The project meets the criteria set forth in Section IV of the Forgivable Loan Policy. Check those which apply. Must meet first four to score 20 points. 0 points if any of the first four boxes are unchecked ❑ Creates new jobs which meet the federal low to moderate income guidelines ❑ Increases tax base ❑ The project can demonstrate that investment of public dollars induces private funds ❑ The project provides higher wage levels to the community or will add value to current workforce skills. El The project results in the sale and development of city owned property (additional 100 points given) ❑ Applicant has sufficient collateral(f box isn't checked loan won't be considered) Subtotal Section 1 (maximum 120 points) 2. Consideration of Capacity. Check those which apply. Must meet all four to score 20 points. 0 points if any boxes are unchecked ❑ Applicant included a realistic implementation /project schedule ❑ Applicant has the ability to administer and monitor project ❑ Applicant has the ability to conform to city, state and federal requirements ❑ Applicant has agreed to annual progress reports and submission of salary surveys for all new hires Subtotal Section 2 (maximum 20 points) 3. Impact: Points Number of new jobs as a result of the project: *Award points per job created up to 150 points Ratio of loan funds to jobs created/retained $15,000 or less/job 80 points $15,001-$24,999/job 60 points $25,000-$34,999/job 40 points $35,000 and over/job 20 points Increase in the local real estate tax base >$500,000 20 points $250,000 to$500,000 15 points <$250,000 10 points Immediacy of Impact *20 points awarded ifproject will begin within 6 months Subtotal Section 3 (maximum 270 points) "minimum of 60 points must come from this section in order for project to be considered Forgivable Loan Policy and Application rillE111 1 1 Page 16 of 20 II'1ATLJREI 4. Wage Level of new jobs created: Points Minimum hourly wage of jobs created/retained: Over$21/ hour 5 points $18-21 / hour 4 points $14-17 / hour 3 points $11-13 / hour 2 points Below$11/ hour application disqualified 5. Project size: The project will result in the construction of square feet. 80,000+ 50 points 65,000+ 40 points 50,000+ 30 points 35,000+ 20 points 25,000+ 10 point Subtotal Sections 4-5 (maximum 55 points) Sub-Total Points: of a possible 465 points. Forgivable Loan Policy and Application r 0 / E A E I 1 f Page 17 of 20 hA E LMI Income Limits I. OVERVIEW Below is the Low and moderate income limits for Sherburne County. In order to qualify for the Forgivable Loan program as outlined above, 51%of the full-time jobs created by the project need to be filled by employees falling into one of the categories in the table below. To calculate the income of the individual or household: 1. The Family's entire income must be counted. 2. A family is all persons living in the same household who are related by blood,marriage,or adoption. 3. Adult children who continue to live at home should be included in the entire family's income. 4. A dependent child who is living outside of the home but continues to be claimed by the parent(s) as a dependent on their taxes should include their parents'income along with theirs to make up the family's income. ipr Inc® ®g ian n _a ee 1.persons . ® a e I er r.0 a 5 1 �.�iw:, Low Sherburne $82,300 (80%� $45,100 County Income $51,550 $58,000 $64,400 $69,600 $74,750 $79,900 $85,050 Limits Forgivable Loan Policy and Application r111111 1 T Page 18 of 20 AE