8. EDSR 06-17-2013 Elk REQUEST FOR ACTION
River
TO ITEM NUMBER
Economic Development Authority 8,
AGENDA SECTION MEETING DATE PREPARED BY
June 17, 2013 Clay Wilfahrt,Assistant Director of
Economic Development
ITEM DESCRIPTION REVIEWED By
Consider Downtown Energy Efficiency Microloan Application Jeremy Barnhart, Deputy Director,
for Ralphie's Victory Lane Community Operations and
Development
REVIEWED BY
ACTION REQUESTED
Consider and approve Downtown Revitalization Microloan Application for Ralphie's Victory Lane
BACKGROUND/DISCUSSION
The attached staff report to the EDA Finance Committee dated June 6, 2013, and committee meeting
minutes provide background regarding the Micro Loan request.
The Energy Efficiency Improvements Program is available to property owners of commercial or
industrial buildings in Elk River to provide capital to businesses to invest in energy efficiency and
improve their profitability through reduced energy costs and enhance their ability to retain and create
jobs.
Ralphie's Victory Lane will occupy the 3,000 square foot gas station at the corner of Joplin and Highway
10. They plan to use the $74,999 microloan to install high efficiency lighting and signs. Other projects
include improvement of the parking lot.
The applicant plans to attend the EDA meeting and respond to any questions about the project.
The EDA Finance Committee recommends the EDA approve the Energy Efficiency Microloan for
Ralphie's Victory Lane with the following terms and conditions:
• $74,999 at 3%interest, 10 year term, 10 year amortization
• EDA to secure personal guarantee
• EDA to obtain subordinate position mortgage on 13374 U.S. Highway 10, subordinate
position on all inventory and equipment.
FINANCIAL IMPACT
The Micro Loan Fund has a current cash balance of$1,221,360 with$252,806 in notes receivable.
P O I E R E I .71
NATURE
The EDA is asked to approve the Energy Efficiency Micro Loan request for Ralphie's Victory Lane with
the following terms and conditions:
• $74,999 at 3%interest, 10 year term, 10 year amortization
• EDA to secure personal guarantee.
• EDA to obtain subordinate position on 13374 U.S. Highway 10, subordinate position on all
inventory and equipment.
ATTACHMENTS
• EDA Finance Committee Meeting Minutes dated June 6, 2013
• EDA Micro Loan Fund Policy and Guidelines
• Staff report to EDA Finance Committee re: Ralphie's Victory Lane Micro Loan Application
dated June 6, 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 6-17-
13 Ralphie's Victory Lane.docx
MEETING OF THE EDA FINANCE COMMITTEE
HELD AT THE ELK RIVER CITY HALL
THURSDAY,JUNE 6, 2013
Members Present: Paul Motin, Cliff Lundberg,Dan Tveite
Members Absent: Chad Vitzthum,Larry Toth, Nate Ovall
Staff Present: Assistant Director of Economic Development, Clay Wilfahrt,Tom Sagstetter, Elk River
Municipal Utilities,Director of Economic Development,*�t n Beeman
Others Present: Brian Brehmer, Owner of Ralphie's Victory Lane ,\
1. Call Meeting to Order \y
Assistant Director of Economic Development Clay Wilfa alled the me o order at
7:30am \
\\
2. Consider Energy Efficiency Microloan for Ralphie\ Victory Lan � \ v`
Mr. Wilfahrt reviewed the staff report. \\ yA\ y
Brian Brehmer introduced himself and explained his projecfy informed the committee that he has
extensive experience managing conveni‘a stores in the area,'A. . plans to use the microloan to
renovate the gas station. He will be adds , LED price sign . ea an LIED sign on the side of his
building. He will also resurface the parkinglp\ \ \ \\\
u \Mr. Motin questioned how the security positi\ wo vberii � with the contract for deed. Mr.
Wilfahrt responded that v \ .• brances wo be lost in e event of a default.
Mr. Lundberg askew 'i . Brehma ho owned they nd, and Mr. Brehmer said it was Ralphie's Victory
Lane. Mr. Lundbereg\ter aske1who owned th ding, and Mr. Brehmer stated it was owned by his
company,Yankee Doodl*;, tei\�, Mr. Br timer explained that his sister was half owner of
rp �, v ; personal Doodl- �. to nse� ' .�Mr.� 't� � @ e' commended that the EDA seek ersonal arantees
from a arrie h'a.,\ci in thi N. ership of the building and land.
\ \\
T �`y imittee discus s vv ending\0 `microloan program to include more specific provisions
pert.'***** g to the energy e nt imvements. Mr.Wilfahrt said that he would come back to the
finance ittee at its ne. eeting in about two weeks.
MOVED BY EITE AND SECONDED BY MOTIN TO RECOMMEND APPROVAL OF
THE APPLICl' Q1FbR AN ENERGY EFFICIENCY MICROLOAN FOR RALPHIE'S
VICTORY LANE NTH THE EDA SECURING A SECURITY POSITION ON THE LAND
AND BUILDING,MOTION CARRIED 3-0.
3. Closing
The EDA Finance Committee meeting ended at 8:25 a.m.
Respectfully submitted by,
Clay Wilfahrt
Assistant Director of Economic Development
City of
yr
Powered by Nature
Economic Development
Microloan Fund Policy & Guidelines
And Application
Amended: May 2011
City of Elk River
Economic Development Division
13065 Orono Parkway
Elk River,MN 55330
763.635.1040
www.elkrivermn.gov/economicdevelopment/tools
ELK RIVER ECONOMIC DEVELOPMENT
MICROLOAN FUND POLICY & GUIDELINES
PURPOSE
The Economic Development Authority for the city of Elk River(EDA) recognizes
the need to stimulate private sector investment into manufacturing facilities and
equipment in order to create new jobs,boost productivity and retain existing jobs for
local residents.Additionally,the need exists to encourage investment in the
expansion and/or rehabilitation of commercial and retail buildings in order to
maintain the economic viability of Elk River's Downtown District. Subsequently,
the purpose of this program is to provide low interest,long-term (i.e.greater than
one year) loans as incentives for industrial development within the city of Elk River
and to encourage commercial and retail business owners in the Downtown District
to rehabilitate their existing buildings.
11. LOAN PROGRAMS
In order to meet the economic and community development objectives of the EDA,
three distinct loan programs exist within the Microloan Fund to promote business
growth in Elk River.
Industrial Incentive Program
Purpose: The purpose of the Industrial Incentive Program is to encourage
industrial and high technology business development that supports
the tax base and brings quality jobs to the city.
Amount: Up to $100,000 of secondary financing not to exceed 20% of the
project cost.
Equity: Must have private-sector commitments for 50% of the project cost.
Borrower must provide 10% or more of project financing.
Rate: Fixed;2 points below the lowest prime rate published in
the Wall Street Journal the day the loan is closed, or 3%,whichever is
greater.
Term: Financing with a balloon payment in 5-years. The balloon payment
must not be longer than the balloon payment of the participating
bank. Loans may be amortized up to the following limits:
20-years on real estate uses;
10-years on equipment uses.
Extension: In the event that the Borrower is unable to obtain conventional
financing to replace the Microloan at the end of five years,the loan
may be extended up to two additional years at a market rate of
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interest.
Criteria: Borrower must be an industrial or high technology firm and create or
retain one new full-time job for each$20,000 loaned within 2 years.
Said jobs must pay a minimum wage of$10.00 per hour excluding
benefits required by law. Loans of$75,000 or more shall meet the city
of Elk River Business Subsidy Policy for the creation of new jobs at a
minimum wage of$15.00 per hour excluding benefits required by law,
as well as a 5-year location requirement.
In the case where the multiple sources of public financing are requested
(e.g. Microloan and Tax Increment Financing) job creation goals shall
not be double-counted.
Borrower must comply with the provisions of the city's Industrial and
Business Park zoning ordinances as applicable.
Downtown Revitalization Financing Program
Purpose: The Downtown Revitalization Financing Program is available to
business and property owners in the Downtown District(DD)
primarily for the rehabilitation and restoration of older buildings,as
well as new business development.
Amount: Up to$74,999 of secondary financing not to exceed 40% of the
project cost.
Equity: Must have private-sector commitments for 50% of the project cost.
Borrower must provide 10% or more of project financing.
Rate: Fixed at 2%.
Term: Financing with a balloon payment in up to 5-years. Loans may be
amortized up to the following limits:
20-years on real estate uses;
10-years on equipment uses.
Extension: In the event that the Borrower is unable to obtain conventional
financing to replace the Microloan at the end of five years, the loan
may be extended up to two additional years at a market rate of
interest.
Criteria: At a minimum,20% of Microloan dollars must be used for the
improvement of the building facades,with exceptions to be
considered when it appears the facade improvements are not
necessary. Financing of leasehold improvements will be considered at a
limit of$25,000.
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INATUREI
Borrower must be located in the Downtown District(DD).
Loans must be supported by sufficient collateral,which may include
personal assets and guarantees.
Energy Efficiency Improvement Program
Purpose: The Energy Efficiency Improvements Program is available to
property owners of commercial or industrial buildings in Elk River to
provide capital to businesses to invest in energy efficiency and
improve their profitability through reduced energy costs and enhance
their ability to retain and create jobs. In addition, the program helps
the city of Elk River use energy conservation as an economic
development tool.
Amount: Applicants may apply for the cost of improvements up to$74,999
Eligible Uses: Energy efficiency measures installed in or on a building include:
• Facility systems optimization (commissioning/re-commissioning)
• Facility systems control improvements
• Process efficiency improvements (CenterPoint Energy)
• Lighting efficiency improvements
• Heating,ventilation and air conditioning system modifications
• Exterior envelope improvements
• Motor and pump efficiency improvements
• Ground-source heat pump systems used to heat or cool a facility
• Installation of equipment or devices that use renewable energy
sources to generate electricity or heat or cool a building including
solar electricity (photovoltaic),wind turbine or solar thermal.
Equity: Must have a minimum of 10% equity provided by the borrower.
Rate: Fixed;2 points below the lowest prime rate published in the Wall S
treet Journal the day the loan is closed, or 3%,whichever is greater.
Term: The maximum maturity date will be determined by the useful life of
the improvement and the energy payback achieved. For projects that
have a shorter length of payback(2-5) years as calculated according
to energy savings, the loans will have an initial maturity of up to 5
years from the date of closing. Longer life improvements (6-15
years) may apply for a longer maturity of up to 10 years.
Criteria: Applicant must agree to energy audits conducted under the utility
company's Conservation Improvement Program(CIP). If warranted,
engineering studies then are performed on facilities with conservation
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opportunities under the utility company's CIP Program.
Proposed energy efficiency improvements that do not qualify for the
utility's prescriptive rebate program will be reviewed and approved by
the utility company servicing the upgrade measures (e.g. Elk River
Municipal Utilities,Connexus,CenterPoint) along with a letter
indicating eligible utility rebates.
Utility rebates as applicable will be assigned to the Elk River EDA
and applied toward principal repayment of the loan.
An Elk River Energy City Commission member will be asked to
participate in the EDA Finance Committee review and
recommendation of the application.
The loans will be secured by personal and corporate guarantees,and
if applicable a lien on equipment financed and subordinate mortgage
on the property. Loans are not transferrable.
Installation must be certified through a licensed contractor and
electrician. New construction is eligible when participating with a
utility company rebate program. Eligible costs shall include only
incremental costs over industry design standards.
III. USES
1. Permitted Fund Uses:
a. Building construction
b. Land acquisition
c. Machinery
d. Furniture, fixtures,and equipment(FF&E)
e. Renovation and modernization of buildings
f. Exterior renovation of retail,commercial and industrial buildings
g. Public infrastructure needed for economic development expansions
h. Investment real estate with a minimum of 50% of the space pre-leased
2. Ineligible Fund Uses:
a. Expenditures for the construction and/or renovation of residential units
b. Working capital
c. Refinancing of existing debt
d. Inventory
IV. 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 Microloan as further defined herein:
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• Business must be a for-profit corporation,partnership,or sole
proprietorship.
• Business must be a small business as defined by the Small Business
Administration (SBA).
• Business must have a positive net worth.
• Religious,political,and pornographic enterprises are not eligible to use
the Economic Development Microloan Fund.
V. MICROLOAN FUND TERMS & CONDITIONS
Loan Structure
All Economic Development Microloans shall be structured as participation loans and
serviced by the project's primary lending institution,rather than as a direct loan,
unless otherwise approved by the EDA Finance Committee. Such an arrangement
allows for the central distribution and collection of funds and simplifies the financing
process for all parties involved. A participation agreement will be signed by the
borrower,primary lender and the EDA.
The EDA may require additional agreements to be signed by the borrower
(i.e. security agreement,personal guarantees,business subsidy agreement).
Simultaneous Microloans
The simultaneous use of different Microloan Fund Programs by any one borrower or
for any one project is prohibited.
Call of Loan
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.
Late Payment Charge
A late payment charge of 8% of the installment amount may be enforced.
VI. REGULATION FOR NEW CONSTRUCTION AND IMPROVEMENTS
All buildings which public funds will be used for construction or renovation are to
be brought into conformance with city ordinances and state building codes. Repairs
may include the following systems and portions of real property:
a. Mechanical heating,plumbing, and electrical
b. Structural;including the facade of the structure and energy related
improvements.
c. Hook-up to city services (i.e.water, sewer)
d. ADA (Americans with Disabilities Act) improvements
VII. LOAN SECURITY AND GUARANTEES
Applicant must be able to secure the loan by providing the EDA with a minimum of
a subordinate mortgage upon the building and/or assets or other approved collateral.
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Applicant must demonstrate the financial means to repay the loans,as determined by
the Economic Development Authority.
Whenever possible,personal guarantees will be made part of any loan agreement.
Key person life insurance may be required as determined by the EDA Finance
Committee based on loan amount and company ownership partners.
VIII. TIMING OF PROJECT EXPENSES
No project should 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 generally not eligible expenditures.
No building construction should commence until the required city permits are
secured.
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.
IX. 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 shall then meet with city staff to obtain
information about the Microloan 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.
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. Sat.
Sections 13.59,Subd. 1,respectively.
5. The application will be reviewed by the city staff 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.
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b. Whether the proposed project will result in conformance with building
and zoning codes.
c. Whether it 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. To make an appointment
with the SBDC,call 320.308.4842.
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 and in relation to the project's
overall impact on the community's economy. Downtown Revitalization
Program applications will also be reviewed by a Housing&Redevelopment
Authority Commissioner in conjunction with the EDA Finance Committee.
Energy Efficiency Improvement Program applications will also be reviewed by
an Energy City Commissioner in conjunction with the EDA Finance Committee.
The EDA Finance Committee will evaluate the project application in terms of
the following:
a. Project Design -Evaluation of project design will include
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 Microloan 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.
c. All other information as required in the application and/or additional
information as may be requested by the Economic Development
Authority.
d. Project compliance with all city codes and policies.
e. Program Objectives -In addition to quality job and wage
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creation/retention requirements,the applicant must meet all Microloan
Fund criteria and demonstrate how the proposed activities will meet at
least one of the following objectives:
• 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.
8. A written request for an extension shall be accompanied by a copy of current
financial statements and a$500 upfront processing fee. The processing fee is
used to cover processing expenses and will be returned if request is denied. The
application for an extension beyond the original term should include a letter of
denial from a conventional lender. Refinancing will not be allowed solely for the
purpose of reducing the interest rate due to lower market interest rates.
9. 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.
X. 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.
XI. 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.
XII. COMPLIANCE WITH MN BUSINESS SUBSIDY LAW
Each company receiving assistance in the principal amount of$75,000 or more from
the EDA Microloan Fund shall be subject to the provisions and requirements set
forth by Minnesota Business Subsidy Law Statute 116J.993 and the city of Elk River
Business Subsidy Policy.
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ELK RIVER ECONOMIC DEVELOPMENT
MICROLOAN FUND 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
Social Security No.
Federal ID # State ID #
II. NATURE OF LOAN REQUEST
Which Micro-Loan Program are you applying for?
Industrial Incentive Program
Downtown Revitalization Financing Program
Energy Efficiency Improvement Program
Amount Requested: $ Total Project Cost: $
Type of project:
New construction for a start-up business.
New construction for an existing business.
On site expansion
Equipment purchase
Remodeling: (circle one)Commercial/ Retail/ Industrial
Refinancing existing debt
Other
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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:
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Proposed Sources of Financing
SOURCE NAME "PERMS AMOUNT
Bank Loan $
Bank Loan $
Other Private Funds $
Applicant Contribution $
Other $
Fed Grant/Loan $
State Grant/Loan $
EDA Microloan $
Tax Increment Financing $_
Tax Abatement $
Total Financing $
Collateral Assignments
Lien
Description of Collateral Position
To Bank 1
To Bank 2
To Private Sources
To Other Sources
To Federal Govt
To State
To EDA Microloan
Page 12 of 15 P O I E R E I O 1
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Value of Collateral
Book Value Cost Existing Liens
Land $ $ $
Buildings $ $ $
Machinery&Equip. $ $ $
Other $ $ $
Other
IV. JOB & WAGE GOALS
Present# of Employees Total Payroll
Jobs To Be Created*
Please provide the following information on jobs you expect to create Within 2-years.
Average Are the Jobs Expected
Number Hourly Annual Permanent or Hiring
Job Title of Jobs Wage Salary Temporary? Date
*If loan is for job retention only,please explain in Business Plan.
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.
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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
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INATUREI
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
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
Page 15of15 I P O V I E R E I 11
INATUREJ
El REQUEST FOR ACTION
River
TO ITEM NUMBER
Economic Development Authority Finance Committee
AGENDA SECTION MEETING DATE PREPARED BY
June 6, 2013 Clay Wilfahrt,Assistant Director of
Economic Development
ITEM DESCRIPTION REVIEWED By
Energy Efficiency Micro Loan Application,Ralphie's Victory Jeremy Barnhart, Deputy Director
Lane Community Operations and
Development
REVIEWED BY
ACTION REQUESTED
Consider Energy Efficiency Micro Loan application for Ralphie's Victory Lane and make
recommendation to the EDA with conditions as outlined in staff report.
BACKGROUND/DISCUSSION
Ralphie's Victory Lane will be a self-service gas station operating in a 3,000 square foot facility at 13374
U.S. Highway 10. The gas station will emphasize food service,increased fuel sales,inside sales, U Haul
rental,and propane sales. Brian Brehmer, owner of Ralphie's plans to use city and bank financing to
purchase and renovate the existing property.
Brian Brehmer has extensive experience in managing gas stations, most notably serving as the manager of
F&F Food Mart in Otsego for 19 years. Most recently,Mr. Brehmer worked as the Retail Operations
Manager for Adium Oil, an independent oil company operating six convenience stores.
Mr. Brehmer is requesting a $74,999 Energy Efficiency Microloan to help pay for the cost of a new LED
price sign, canopy lights, and the asphalt overlay and striping and lot marking of the parking lot. Mr.
Brehmer is making the improvements to increase the positive perception of the gas station. Mr. Brehmer
has stated that the image of a gas station is a large determinant of its success, and improving the lighting
and outward appearance of the gas station will increase business.
Mr. Brehmer is securing a contract for deed for the property from Farmers State Bank of Albert Lea.
They have attached a letter of commitment for$395,250 at 5%interest amortized for 20 years. Mr.
Brehmer is working with the Bank of Elk River to finance $71,110 of the project amortized for 10 years.
Additionally,Mr. Brehmer will contribute $120,000,or 17.8%, to the project.
Mr. Brehmer is working with Municipal Utilities and has identified two key areas to make energy efficient
upgrades. Tom Sagstetter from ERMU visited Ralphie's with Economic Development staff. Mr.
Brehmer's plan is to replace the existing sign near the corner of HWY 10 and Joplin with a new LED
display. The plan includes replacing the existing canopy lights with new LEDs. Mr. Brehmer plans to
add a new high efficient sign mounted directly to the building. Mr. Sagstetter was satisfied that signs and
I P O I E R E I / 1
NAME
Brehmer, a requirement of the Energy Efficient Microloan. Any rebates received will be assigned to the
Elk River EDA and applied toward principal repayment of the loan.
In addition to the financial criteria that must be considered, the Finance Committee must also consider to
what degree the applicant satisfies the criteria set forth in the Micro Loan Fund policies outlined below:
Micro Loan Criteria- Energy Efficiency Improvement Program
• Max. Loan Amount: $74,999
• Interest rate: Fixed at 3%
• Equity:10% or more of project
• Term: The maximum maturity date will be determined by the useful life of the improvement and the
energy payback achieved. For projects that have a shorter length of payback (2-5) years as calculated
according to energy savings, the loans will have an initial maturity of up to 5 years from the date of
closing. Longer life improvements (6-15 years) may apply for a longer maturity of up to 10 years.
• The loans will be secured by personal and corporate guarantees, and if applicable a lien on equipment
financed and subordinate mortgage on the property.
• Exempt from job creation and wage goals because the loan amount does not exceed$150,000 and
does not qualify as a business subsidy by state law.
Ralphie's Victory Lane
• Amount requested: $74,999
• Rate requested: Fixed at 3%
• Equity proposed: $120,000
• Term: 10-year amortization
• The EDA will obtain a subordinate position mortgage on 13374 U.S. Highway 10, subordinate
position on all inventory and equipment, and a personal guarantee.
The EDA will consider the Finance Committee's recommendation at their June 17 meeting.
If recommending approval, the following terms and conditions will apply:
Participation Loan: Farmers State Bank,The Bank of Elk River
Loan Amount: $74,999
Interest Rate: 3% fixed
Term: 10-year amortization
Security: Subordinate position mortgage on 13374 U.S. Highway 10, subordinate position
on all inventory and equipment, and a personal guaranty.
ATTACHMENTS
• Microloan Policy and Guidelines
• Micro Loan Application and applicable attachments
• Location Map
N:\Departments\Community Development\Economic Development EDA to move\Agenda\Year2013\6-17-2013\Ralphy's Victory Lane EDA
Finance RFA 6-6-2013(2).docx
ENERGY EFFICIENCY IMPROVEMENT PROGRAM
LOAN AGREEMENT
THIS ENERGY EFFICIENCY IMPROVEMENT PROGRAM LOAN
AGREEMENT ("Agreement") is made effective as of , 2013
(the "Closing Date"), by and between Yankee Doodle Enterprises, LLC, a Minnesota
limited liability company ("Borrower"), and Economic Development Authority of the
City of Elk River, a public body corporate and politic of the State of Minnesota
("Lender").
RECITALS
A. Borrower has applied to Lender for a construction and term mortgage loan
on the Loan Property (as hereinafter defined) in the principal amount of Seventy-four
Thousand Nine Hundred Ninety-nine and No/100s Dollars ($74,999.00).
B. Lender is willing to make such mortgage loan to Borrower in the principal
amount of Seventy-four Thousand Nine Hundred Ninety-nine and No/100s Dollars
($74,999.00), subject to all of the terms and conditions of this Agreement.
C. Contemporaneously with the execution hereof, Borrower is executing and
delivering to Lender the following security documents:
(i) A Promissory Note ("Note") effective as of the date herewith made
by Borrower and payable to the order of Lender, in the original principal amount
of Seventy-four Thousand Nine Hundred Ninety-nine and No/100s Dollars
($74,999.00).
(ii) A Mortgage, Assignment of Rents, Security Agreement and
Fixture Financing Statement securing the Note ("Mortgage"). The Mortgage is
of even date herewith, is executed by Borrower, as mortgagor, in favor of Lender,
as mortgagee, and covers property therein described situated in Sherburne
County, Minnesota as legally described in the Mortgage (the "Loan Property").
(iii) Personal Guaranties of Brian Brehmer and , owner of
Borrower(the "Guaranties").
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, it is hereby agreed as follows:
1. Amount and Purpose of Loan. Borrower agrees to take and Lender agrees
to make a mortgage loan in the principal amount of Seventy-four Thousand Nine
Hundred Ninety-nine and No/100s Dollars ($74,999.00) (the "Loan")to be advanced in a
single disbursement as hereinafter provided, the Loan to be evidenced by the Note and
secured by the Mortgage and any other security document required under this Agreement.
The proceeds of the Loan may only be used to construct approved Program
Improvements (as defined below).
2. Construction of Improvements. For the purposes of this Agreement, the
term "Loan Property" means the real estate described in the Mortgage together with all
improvements now located or hereafter placed thereon.
Borrower agrees to improve as a part of the Loan Property a project ("Project")
consisting generally of renovations to and equipping of the building located at 13374
U.S. Highway 10, Elk River, Minnesota, substantially in accordance with plans and
specifications which have been provided to Lender (the "Plans and Specifications").
The improvements to and equipping of the Loan Property contemplated by the plans and
specifications, as the same may be changed with the approval of Lender, are herein
collectively referred to as the "Improvements." The Improvements will consist of:
(i) replacing the asphalt overlay on the Loan Property parking and drive areas and re-
striping the same (the "Non-Program Improvements"); and (ii) certain improvements
which are intended to increase the energy efficiency of the Loan Property, as specifically
set forth on Exhibit A (the"Program Improvements"). Borrower covenants that when
completed, the Improvements shall comply with all applicable restrictions, conditions,
codes, ordinances, regulations and laws of the City of Elk River ("City") and all other
governmental bodies having jurisdiction over the Loan Property, including, without
limitation, the all municipal sign ordinances, the Americans with Disabilities Act and
those related to environmental protection.
Borrower SHALL NOT commence construction of the Improvements until after
this Agreement is signed. Borrower agrees to commence construction of the
Improvements promptly after the Closing Date and to carry on continuously, diligently
and with reasonable dispatch the construction of the Improvements to full and final
completion.
3. Title Insurance. ("Title"), is designated
as the title insurer with respect to this Agreement. Title will insure Lender against loss or
damage on account of mechanic's liens upon or unmarketability of the title to the Loan
Property, and will insure that the Mortgage constitutes a [second][third] lien upon
Borrower's interest in the Loan Property, subject only to the Contract for Deed and the
Secondary Financing (each as defined below), as contemplated by this Agreement.
Borrower agrees to promptly and fully observe and comply with the reasonable
requirements of Title and Lender with respect to the title, the Mortgage, disbursements of
funds and such other reasonable requirements as Title may make.
4. Borrower's Deliverables. Borrower covenants and agrees to immediately
cause the compliance with the following conditions, which full and timely compliance is
a condition precedent to Lender's obligations under this Agreement:
(a) Note. Deliver to Lender the Note.
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(b) Mortgage. Deliver to Lender the Mortgage,together with evidence
that the Mortgage has been or will be duly filed for record.
(c) Guaranties. Deliver to Lender the Guaranties.
(d) Title Insurance Policy. Deliver to Lender a Mortgagee's title
insurance policy ("Title Policy"), from Title issued to Lender in the amount of
Seventy-four Thousand Nine Hundred Ninety-nine and No/100s Dollars
($74,999.00) with respect to the Mortgage and insuring that the Mortgage is a
[second][third] lien on the Loan Property free and clear of all mechanic's liens,
materialmen's liens, taxes, special assessments, rights of parties in possession,
other than: (i) that certain contract for deed between Farmer's State Bank of
Albert Lea, a , as vendor, and Borrower, as vendee, dated
, 2013, recorded in the Office of the Sherburne County
[Recorder][Registrar of Deeds] on , 2013, as document number
(the "Contract for Deed"); (ii) that certain [Mortgage] between the
Bank of Elk River, a , as lender, and Borrower, as borrower, in
the initial principal amount of Seventy-one Thousand One Hundred Ten and
No/100s Dollars ($71,110.00), dated , 2013, recorded in the
Office of the Sherburne County [Recorder][Registrar of Deeds] on
2013, as document number (the "Secondary Mortgage");
(iii) questions of survey; and(iv) exceptions approved in writing by Lender.
(e) Organizational Documents and Resolutions - Borrower. Deliver to
Lender copies of: (i) the articles of [incorporation][organization] for Borrower
certified by the Minnesota Secretary of State, (ii) a certificate of good standing for
Borrower issued by the Minnesota Secretary of State; (iii) the bylaws and
[member][shareholder] control agreement and/or operating agreement for
Borrower; and (iv) a certified copy of resolutions of Borrower authorizing the
execution and delivery of this Agreement, the Note, the Mortgage, and any other
document to be executed by Borrower pursuant to this Agreement.
(f) Insurance. Deliver to Lender: (i) a certificate or policy for all
insurance required, under the terms hereof or of the Mortgage, to be maintained
by Borrower; and (ii) evidence that no part of the Loan Property is located in an
area designated as being a flood plain or flood hazard area as defined by the Flood
Hazard Boundary Map published by the Federal Insurance Administration.
(g) Compliance With Laws, Etc. Deliver to Lender such evidence as
Lender may require as to the compliance of the Loan Property and the
Improvements with: (i) all applicable laws, codes, rules, regulations and
ordinances, including, without limitation, those relative to environmental
protection, protection of wetlands, building and zoning matters and the Americans
with Disabilities Act; and (ii) the requirements of any restrictive covenants,
conditions and restrictions; conditional use permit and/or planned unit
development applicable to the Loan Property.
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[(h) Hazardous Substances. Deliver to Lender evidence acceptable
to Lender, that: (i) the Loan Property has not been used as a hazardous
waste storage facility or burial site; (ii) the soil is free from hazardous waste,
hazardous substances, pollutants and contaminants; and (iii) no hazardous
waste, hazardous substance, pollutant or contaminant has been used in the
construction or use of any building or other improvement on the Loan
Property. For purposes of this subparagraph, the terms "hazardous waste,"
"hazardous substances," "pollutants" and "contaminants" shall include, but
not be limited to, polychlorinated biphenyls (PCBs), asbestos, petroleum
products and any other chemical or substance determined to be a hazard to
human health or the environment.][EDA — Note that this is a placeholder
paragraph. As this is a gas station, there is a significant likelihood of some
amount of environmental contamination. We will need to consult further on
the level of investigation that the EDA will require and the language to be
utilized here. I suggest that the EDA, minimally, require Borrower to
provide a Phase I Environmental Assessment of the Loan Property]
(i) Indemnity. Deliver to Title any indemnity agreement in favor of
Title in the form required by Title in order for Title to issue the title insurance
policies referred to above.
(j) Construction Contracts, Plans and Specifications and Permits.
Deliver to Lender copies of the Plans and Specifications, any agreements with
contractors or subcontractors relating to the Project (the "Construction
Contracts"), any other specifications and contracts relating to the Project and/or
the Improvements together and any building permits reasonably necessary to
complete the Improvements. All contractors and subcontractors must be bonded,
insured and licensed to do business in the State of Minnesota and be of good
repute. Lender reserves the right to reject any contractor or subcontractor that
does not meet the requirement of the previous sentence.
(k) Project Cost and Source of Funds Certificate. Deliver to Lender a
sworn project cost and source of funds certificate ("Project Cost and Source of
Funds Certificate"), in a form acceptable to Lender, verified on oath by a
manager of Borrower showing an itemized breakdown of: (i) the source and
amount of all Project funds; and (ii) of the total cost of the Improvements,
including, without limitation, the cost of constructing the Improvements, any
special assessments, soft costs and all other costs and charges to be paid from the
Loan proceeds and/or other Project funds or necessary to complete the
Improvements. Borrower shall deliver to Lender lien waivers, receipts for
payment and other evidence of payment acceptable to Lender with respect to any
such portion of costs and charges incurred to the date of the Project Cost and
Source of Funds Certificate.
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(1) Sworn Construction Statement. Deliver to Lender a Sworn
Construction Statement acceptable to Lender completed and executed by
Borrower which identifies all subcontractors and suppliers having a contract with
the Borrower or Borrower's contractor and the amount of the contract between
Borrower or Borrower's contractor and each subcontractor or supplier with
respect to the construction of the Improvements.
(m) Equity Contribution. Deliver to Lender evidence acceptable to
Lender that: (i) Borrower has closed upon the Secondary Financing and that the
proceeds thereof have been disbursed [to Borrower][into escrow with Title];
and (ii)Borrower has deposited into escrow with Title all of Borrower's Equity
Contribution, in the amount of [One Hundred Twenty] Thousand and No/100s
Dollars [($120,000.00)]. [EDA — I am assuming that Mr. Brehmer's equity
and the proceeds of the Bank of Elk River financing are being used to
finance the construction of the Improvements. To the extent that any of
these funds are being utilized otherwise, several of the subsections in this
section 4 will need to be revised]
(n) Lien Waivers. To the extent that Borrower has expended any
funds on items set forth in the Project Cost and Source of Funds Certificate, to
Deliver to Lender an original written lien waiver from each contractor,
subcontractor and supplier who performed work or supplied materials to the
Project.
(o) Property & Financing Documents. Deliver to Lender a copy of:
(i) the executed Contract for Deed; (ii) a consent to the Mortgage from the
Contract for Deed vendor, in the form attached to the Mortgage as Exhibit C;
(iii) all documents by and between the Bank of Elk River, as lender, and
Borrower, as borrower, evidencing that certain Seventy-one Thousand One
Hundred Ten and No/100s Dollar ($71,110.00) loan facility (the "Secondary
Financing"); (iv) a consent to the Mortgage from the Bank of Elk River, in the
form attached to the Mortgage as Exhibit D; and (v) the Certificate of Occupancy
for the Loan Property. The Certificate of Occupancy will be considered timely if
Borrower delivers it to Lender promptly after receipt and in any case, not more
than sixty(60)days after the Closing Date.
(p) CIP Audits. Deliver to Lender copies of the: (i) pre-
commencement Conservation Improvement Program audit for the Loan Property;
(ii) the list of approved Program Improvements and related rebates, if any; (iii)
post-completion Conservation Improvement Program audit for the Loan Property.
The post-completion Conservation Improvement Program audit for the Loan
Property will be considered timely if Borrower delivers it to Lender on or before
the thirtieth (30th) day after issuance of the Certificate of Occupancy for the Loan
Property.
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(q) Zoning Matters. Deliver to Lender evidence that Borrower has
obtained municipal and zoning approval necessary to complete the Improvements,
including, without limitation, compliance with any signage ordinances.
(r) Disbursing Agreement. Deliver the Disbursing Agreement,
executed by Borrower and Title, to Lender.
(s) Program Fee. Deliver to Lender the program fee of$ .00.
Lender may waive any of the above requirements in its sole discretion.
5. Disbursement of Loan. Upon receipt by Lender of the items required
pursuant to paragraph 4 above and confirmation from Title that Title is prepared to issue
the mortgagee's title insurance policy as required herein, Lender agrees to disburse the
Loan proceeds to Title.
6. Rebates. Pursuant to the Energy Efficiency Improvement Program,
Lender expects to receive certain rebates (the "Rebates")relating to the energy efficiency
improvements made by Borrower to the Loan Property. By executing this Agreement,
Borrower assigns and Lender assumes all right and title to proceeds from any Rebate
arising from the Improvements. Borrower will execute any documentation reasonably
necessary to effectuate such assignment and will otherwise assist Lender in a timely
manner to obtain any available Rebate. All proceeds of the Rebates received by Lender
will be applied to the outstanding principal balance of this Note as set forth therein.
7. Access to Loan Property. Lender and its respective representatives shall
have at all reasonable times the right to enter and have free access to the Project and the
Loan Property and the right to inspect all work done, labor performed and material
furnished in connection therewith.
8. Books and Records. Borrower agrees to maintain accurate and complete
books, accounts and records in regard to the Loan Property in a manner reasonably
acceptable to Lender. Lender and its representatives shall have the right to inspect,
examine and copy all such books and records of Borrower and Borrower shall, at
Lender's request, furnish such information as Lender may reasonably demand.
9. Encumbrances and Transfer. Borrower agrees not to sell, transfer, lease or
convey the Loan Property or any part thereof, or any interest therein, or further encumber
the Loan Property or any part thereof, in any manner, without written consent of Lender
which consent may be granted or withheld in the sole discretion of Lender. This
requirement shall apply to each and every sale, transfer, lease, conveyance or
encumbrance, whether voluntary or involuntary and whether or not Lender has consented
to any such prior sale, transfer, lease, conveyance or encumbrance.
10. Time of Essence. Time is of the essence in the performance of this
Agreement.
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11. Assignability. Borrower shall not assign this Agreement or all or any part
of any Advances to be made hereunder without written consent of Lender, which consent
may be withheld, conditioned or delayed in Lender's sole discretion. Lender may freely
assign or otherwise transfer (including by participation) all or any part of its interest in
the Loan or any or all of the Loan documents, in Lender's sole discretion.
12. Miscellaneous Covenants of Borrower. Borrower covenants and agrees
with Lender that, without costs to Lender, Borrower will:
(a) Performance of Conditions. Promptly keep, perform and comply
with all of the terms, covenants and conditions to be kept and performed by
Borrower, as required by the City and any other governmental body having
jurisdiction over the Loan Property as a condition of platting, rezoning or
developing the Loan Property; keep unimpaired the rights of Borrower under any
permit or agreement issued or made by the City or other governmental body
having jurisdiction over the Loan Property and the Construction Contracts and
any other contracts obtained or held by Borrower in connection with the
construction or operation of the Improvements; and to enforce the prompt
performance of all of the terms, covenants and conditions to be kept and
performed by the City or other governmental body having jurisdiction over the
Loan Property, respectively, under any permits or agreements issued or made by
the City or such other governmental bodies, or by any design professional, the
general contractor and any other contractors under all contracts obtained or held
by Borrower in connection with construction or operation of the Improvements.
(b) Amendment, Etc. of Documents. Not amend, cancel, terminate,
supplement or waive any of the material terms, covenants and conditions of any
permit or agreement issued or made by the City or any other governmental body
having jurisdiction over the Loan Property, or any other contracts obtained or held
by Borrower in connection with the construction or operation of the
Improvements or any contracts, documents or agreements referred to herein
without the prior written approval of Lender. Borrower will provide to Lender
complete documentation concerning any change made to the Project.
(c) Performance of Note, Mortgage, Etc. Without limiting the
foregoing, keep and perform all of the terms, covenants, conditions and
requirements of the Note, the Mortgage, this Agreement, the Contract for Deed
and the Secondary Mortgage all other documents evidencing the Secondary
Financing. If Borrower fully performs the Contract for Deed or pays off the
Secondary Financing while any amount of Loan indebtedness remains
outstanding, Borrower will provide Lender with copies of the deed or satisfaction
and release of the Secondary Mortgage, as applicable, promptly after receipt of
the same.
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(d) Insurance. During the term of the Mortgage, Borrower shall
procure and maintain or cause to be procured and maintained at its sole expense
casualty insurance, public liability insurance and such other types of insurance as
are reasonably required by Lender from time to time, including, without
limitation, the coverages expressly required by the Mortgage, insuring Lender and
Borrower with coverages, in amounts and with companies satisfactory to Lender.
The policy or policies or duly executed certificate or certificates for such
insurance and renewals or replacements thereof shall be deposited with Lender.
(e) Pay Charges. Immediately pay all loan charges including, but not
limited to: (i) Lender's attorneys' fees; (ii) title insurance fees, costs and
premiums; (iii) mortgage registration taxes and filing fees of the Mortgage and
any other instruments required under this Agreement.
(f) Pay Certain Costs. Immediately after written demand from Lender
and without regard to whether or not any of the Loan proceeds have been
advanced under this Agreement, pay or cause to be paid from time to time if
requested by Lender, costs referred to in the Project Cost and Source of Funds
Certificate in an amount equal to the costs referred to therein in excess of the
[escrowed Project funds][Loan proceeds] remaining available to be advanced to
pay such costs, and furnish to Lender proof of payment thereof satisfactory to
Lender and Title.
(g) Copies of Plans, Contracts, etc. Furnish Lender from time to time
as reasonably requested by Lender, copies of the Plans and Specifications, the
Construction Contracts and any other specifications and contracts relating to the
Improvements,together with estimated costs of such Improvements.
(h) Default Notices. Provide Lender with a copy of any default notice
received pursuant to the Contract for Deed or any document evidencing the
Secondary Financing, promptly after receipt of the same.
(i) Title. Except as specifically set forth herein, as of the Closing
Date Borrower owns a vendee's interest in the Loan Property and owns or within
[sixty (60)] days after the Closing Date will own all of the fixtures, trade fixtures,
equipment, personal property and inventory located upon the Loan Property
(along with the Loan Property, collectively, the "Collateral") "free and clear,"
that Lender will have a "first position" lien in the Collateral pursuant to the
Mortgage and that no other party has any right, title or interest in the Collateral,
except those security interests in the Loan Property in favor of the Contract for
Deed vendor and in the Collateral by the Bank of Elk River.
(j) Program Covenants. At all times while any portion of the Loan
remains outstanding, Borrower will: (i) maintain its status as a for profit entity;
(ii) maintain a positive net worth; and(iii) will operate from the Loan Property.
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13. Warranties. Borrower represents and warrants to Lender the following:
(a) The Borrower is a [corporation][limited liability company] duly
formed, validly existing and in good standing under the laws of the State of
Minnesota.
(b) The making and performance of this Agreement and the execution
and delivery of the Note, the Mortgage and any other instrument required
hereunder are within the powers of the Borrower and have been duly authorized
by all necessary company action on the part of the Borrower. This Agreement
and the Note, the Mortgage and any other instruments required hereunder have
been duly executed and delivered and are the legal, valid and binding obligations
of the Borrower enforceable in accordance with their respective terms.
(c) No litigation, tax claims or governmental proceedings are pending
or threatened against the Borrower or the Loan Property, and no judgment or
order of any court or administrative agency is outstanding against the Borrower or
the Loan Property which would have a material adverse effect on Borrower or the
Loan Property.
(d) Borrower has filed all tax returns (federal and state) required to be
filed for all prior years and paid all taxes shown thereon to be due, including
interest and penalties. Borrower will file all such returns and pay all such taxes
for the current and future years.
(e) All information, financial or other, which has been submitted by
Borrower and Guarantor in connection with the Loan is true, accurate and
complete in all material respects.
14. Indemnification. Borrower agrees to indemnify Lender and save it
harmless against all loss, liability, expense, or damages including but not limited to
attorneys fees, which may arise by reason of the assertion of any lien against the Loan
Property.
15. Defaults. Each of the following shall constitute an Event of Default:
(a) Borrower abandons the Loan Property, work on construction of the
Improvements is halted or the Improvements are not constructed in accordance
with this Agreement.
(b) Bankruptcy, reorganization, assignment, insolvency or liquidation
proceedings, or other proceedings for relief under any applicable bankruptcy law
or other law for relief of debtors are instituted by or against Borrower and, if such
proceedings are instituted against Borrower, an order, judgment or decree,
without the consent of Borrower appointing a trustee or receiver for Borrower or
any part of its property or approving a petition under the bankruptcy laws of the
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United States or any similar laws of any state or other competent jurisdiction,
shall have remained in force undischarged or unstayed for a period of thirty (30)
days.
(c) Any judgment, attachment, garnishment or other similar process is
entered against Borrower or against any property or assets of Borrower and is not
released, satisfied or discharged or bonded to Lender's satisfaction within thirty
(30) days of entry.
(d) Borrower fails to commence or complete construction of the
Improvements within the time designated in this Agreement.
(e) Any of the terms, covenants or conditions of any permit or other
agreement issued or made by the City or other governmental body having
jurisdiction over the Loan Property, including, but not limited to, those relating to
the cost of or time for installation of the Improvements, are not complied with
within the time required thereby or are terminated or modified by the City or such
other governmental body and Borrower has not taken the necessary steps to
correct or cure the same within thirty (30) days after written notice is given by
Lender.
(f) Any mechanic's or material supplier's lien is filed, against the Loan
Property and is not released, satisfied or discharged or bonded to Lender's
satisfaction, subject, however, to Borrower's right to contest the same in
accordance with the provisions of the Mortgage.
(g) A transfer which violates by Paragraph 11 hereof, occurs.
(h) Borrower: (i) fails to pay any amount due under this Agreement,
the Note, the Mortgage, the Contract for Deed or any document evidencing the
Secondary Financing when due; or (ii) fails to perform any other obligation to be
performed under this Agreement, the Note, the Mortgage, the Contract for Deed,
any document evidencing the Secondary Financing or any other document
executed by Borrower pursuant to this Agreement and such failure continues
beyond any applicable cure period.
(i) Any representation or warranty by Borrower contained herein or in
the Note, the Mortgage or any other instrument required hereunder is false or
untrue in any material respect when made.
(j) Borrower defaults in the payment or performance of anything by it
to be paid or performed under any note, mortgage or other agreement now or
hereafter made by Borrower in favor of or with Lender or otherwise now or
hereafter held by Lender and as to defaults other than in the payment of a sum
when due, the continuance thereof beyond any notice and/or cure period
contained therein.
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Upon the occurrence of an Event of Default, Lender, at its option, shall, in addition to any
other remedies which it might be entitled to by law, have the right to:
(1) To refrain from making advances under this Agreement;
(2) To enter into possession of the Loan Property and perform any and all
work and labor necessary to complete the Improvements substantially as
required under this Agreement and to do all things necessary or incidental
thereto;
(3) To perform such other acts or deeds which reasonably may be necessary to
cure any default existing under this Agreement, and to this end, it is
hereby agreed as follows:
(i) All sums expended by Lender in effectuating its rights under
Subparagraphs (2) and (3) of this Paragraph shall be deemed to
have been advanced under this Agreement and to be secured by the
Mortgage and any other security document required under this
Agreement as security for the Loan.
(ii) Borrower hereby constitutes and appoints Lender its true and
lawful attorney-in-fact with full power of substitution either in the
name of Lender or in the name of Borrower or in the name of both,
for the following purposes: (a) to complete the Improvements or
cause the same to be completed; to use the plans and
specifications; to make such additions, changes and corrections in
the plans and specifications as Lender reasonably shall deem
necessary or desirable; to collect and use any funds of Borrower; to
use any funds which may remain unadvanced under this
Agreement; to employ such contractors, subcontractors, agents,
design professionals and inspectors and enter into such contracts
and arrangements as Lender reasonably deems necessary for such
purposes; to pay, settle or compromise all existing bills and claims
which may be liens against the Loan Property or as may be
necessary or reasonably desirable for the completion of the
Improvements or clearance of title; to execute all applications and
certificates in the name of Borrower; to prosecute and defend all
actions or proceedings in connection with the construction of the
Improvements on, or any other matter relating to, the Loan
Property and do any and every act which Borrower might do in its
own behalf; (b) to enforce by any means that Lender then
reasonably deems necessary or advisable, all of the terms,
covenants and conditions of any permit or agreement issued by the
City or any other governmental body having jurisdiction over the
Loan Property or the construction contracts or any other contracts
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obtained or held by Borrower in connection with the construction
of and any other contracts; (c) to perform each of the terms,
covenants and conditions to be kept and performed by Borrower
under any permit or authorization issued by the City or any other
governmental body having jurisdiction over the Loan Property or
the construction contracts or any other contracts and/or leases
obtained or held by Borrower in connection with the construction
or operation of the Improvements, and any other contracts; (d)
without limiting the foregoing to perform each of the terms,
covenants and conditions to be kept or performed by Borrower
under this Agreement, the Mortgage and any other instrument
required under this Agreement; and (e) to do all things that Lender
reasonably deems necessary or advisable for the purpose of
carrying out the powers enumerated in (a), (b), (c) and (d) of this
Subparagraph(ii);
(iii) The powers herein granted Lender shall be deemed to be powers
coupled with an interest and the same are irrevocable;
(4) cancel this Agreement;
(5) bring appropriate action to enforce such performance and the
correction of such Event of Default;
(6) declare the entire unpaid principal of the Note and all accrued
interest thereon immediately due and payable without notice;
(7) foreclose the Mortgage and any other security instrument referred
to in this Agreement and/or exercise any other rights or remedies it may have
under the Mortgage and such other security instrument.
16. Default under Note and Mortgage. The failure by Borrower to keep or
perform any of the terms, covenants and conditions to be kept or performed by it under
this Agreement shall constitute a default under the Note, the Mortgage and any other
security instrument held by Lender in connection with the Loan.
17. Notices. Any notices given hereunder shall be in writing and shall be
deemed to have been given when delivered personally or three (3) days after deposited in
the United States mail, registered,postage prepaid, addressed as follows:
If to Borrower:
Yankee Doodle Enterprises, LLC
13374 U.S.Highway 10
Elk River, Minnesota 55330
Attention: Brian Brehmer
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If to Lender:
Economic Development Authority of the City of Elk River
13065 Orono Parkway
Elk River, Minnesota 55330
Attention: Director of Economic Development
or addressed to any such party at such other address as such party shall hereafter furnish
by notice to the other party. Any notice delivered personally to Borrower shall be
delivered to an officer of Borrower, and any notice delivered personally to Lender shall
be delivered to an officer of Lender at the address for Lender for the mailing of notices.
Either party may change its address for the giving of notices by giving the other party at
least ten(10) days notice in the manner provided above.
18. Headings. The headings used in this Agreement are for convenience only
and do not define, limit or construe the contents of this Agreement.
19. Bindings on Successors and Assigns. Subject to the limitations on transfer
contained in this Agreement, this Agreement shall be binding upon and inure to the
benefit of the successors and assigns of the parties hereto.
20. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of Minnesota, without giving effect to any choice or conflict of
law provision or rule.
21. Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which shall be an original and all of which shall constitute the same
agreement.
22. Entire Agreement. This Agreement, the Note, the Mortgage and the other
documents executed by Borrower and/or Lender pursuant to this Agreement contain the
entire agreement between the parties with respect to the subject matter hereof and
supersede all prior understandings and agreements, both oral and written. This
Agreement may be amended only in a writing signed by the parties hereto.
23. Fees and Expenses. Borrower agrees to pay to Lender immediately upon
demand all costs and expenses, including, without limitation, all attorneys fees, incurred
by Lender in connection with the enforcement of the Lender's rights and/or the
collection of any amounts which become due to Lender under this Agreement, the Note,
the Mortgage or the other documents executed in connection herewith; and the
prosecution or defense of any action in any way related to this Agreement, the Note, the
Mortgage or the other documents executed in connection herewith.
[Signature Pages follow]
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[Remainder of page intentionally left blank.]
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Signature Page to Loan Agreement
IN TESTIMONY WHEREOF, each of the parties hereto has caused these
presents to be effective as of the day and year first above written.
YANKEE DOODLE ENTERPRISES, LLC,
a Minnesota limited liability company
By:
Name: Brian Brehmer
Its:
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Signature Page to Loan Agreement
IN TESTIMONY WHEREOF, each of the parties hereto has caused these
presents to be effective as of the day and year first above written.
ECONOMIC DEVELOPMENT
AUTHORITY OF THE CITY OF ELK
RIVER
By:
Name:
Its:
And
By:
Name:
Its:
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EXHIBIT A
Program Improvements and Rebates
1) Replacement of the existing [pole][monument] sign near the corner of U.S.
Highway 10 and Joplin Street NW with a new sign featuring a LED display.
2) Replacing the existing canopy lighting with LED lighting
3) Installing a high-efficiency Building sign along the facing of the building
upon the Loan Property.
GP:3190652 vl
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