6.0. EDSR 05-14-2001 ` / Item 6.
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ee
CityofElk -..�
River
TO: Economic Development Authority
FROM: MEMORANDUM
Marc Nevinski, Assistant Director of Economic DevelopmentDATE: May 14, 2001SUBJECT: Consider Request by Roma Tool for Temporary Loan Payment
IssueReduction
Roma Tool & Plastics contacted staff in late March requesting a suspension of
payments on their state loan for the period of February 2001 to September 2001. The
company has cited a limited supply of working capital as the reason for their request.
The plastics industry has been hit hard by the recent economic downtown. The EDA
is asked to consider the request.
Background
Roma Tool & Plastics received a $500,000 state loan in 1986 as part of the State's Small
Cities Economic Development Program. As with the State's current loan program, the
City was required to administer the loan, but was allowed to retain the first $100,000
of principal to build its own economic development loan fund.
In 1991 the loan was restructured. Monthly payments were reduced from $5533 to
$500 per month and then increased annually until 1997 when payments topped-off at
$2643 per month. At this point the City had recouped its share of the loan principal,
with the remaining repayments going back to the State. In 1998 the company was
purchased and moved to Almena, Wisconsin. Concerns by both the buyer and city
staff about the company's viability if full and immediate repayment of the loan was
required resulted in an agreement to allow the continuation of amortized payments.
Records indicate that the loan has generally been kept current since the restructuring
in 1991. However, no payments have been made since January of this year. The
current balance on the loan is $327,000 with an interest rate of 1%. Monthly payments
are $2643.
The EDA may wish to consider the following options:
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.• Recommendation
1. Allow a complete suspension of payments until September of this year. This
would provide the company a total of$15,860 in operating capital.
2. Require a partial payment of$1000 per month, which would provide the
company with operating capital, $9860 in total, while maintaining a repayment
schedule. This would push the complete repayment of the loan out from
January 2012 to June 2012.
3. Deny the request for a loan suspension. This may contribute to a need to close
the company and the subsequent loss of loan funds.