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8.0. EDSR 04-13-2000
VII. APPLICATION FOR TAX REBATE FINANCING A. APPLICANT INFORMATION Name of Corporation/Partnership 1 4 /v iz' L . Address f t - A r✓ I Y YY D Primary Contact C C I✓ } Address 3/f I , ir, A 5 3'330 Phone 1 y / 91)r Fax Y / ) Email On a separate sheet, please provide the following: • Brief description of the corporation/partnership's business, including history, principal product or service, etc... Attach as Exhibit A . • Brief description of the proposed project. Attach as Exhibit B. • List names of officers and shareholders/partners with more than • five percent (5%) interest in the corporation/partnership. Attach as Exhibit C. • A but-for analysis. Attach as Exhibit D. r 'ani /r4�4C Attorney Name / .10®f-1A'47 ,e:4 .0 �Qor�� « Y` J �/i� J Address 7/ . Phone . // 7 D -O Fax Email Accountant Name /11d f� Q deS i /4 L y' c v A- C Address5tl�' C,Cw' —r J-'1 /f: / M 7; . in r P-f-3 G-- Phoned Fax 5J l Email Contractor Name ,7//4/ C i 4 C/77- )/4 pfo C Address / o y ( • . /{, N jS".73 0 Phone'f / f Fax y L/ c) 7 Email Engineer Namei• ,mac C4 4 A Address ,r(O D �� 41‘e" o 1"- 5/-c°1 d Phone `/.2- j 7$- Fax Email • Architect Name' ,A 0 L M r' )1 7( Air C 4// 7' c 1 S /'CO e Address 5' 5 a S- 727 4 v i+/ . //6 A.im TN' Phone(/g- f 7 7 aF/ Fax �J,f� 7 4 33 Email 8 B. PROJECT INFORMATION 1. Thproject will be�` IIIIndustrial: New Construction Expansion Redevelopment/Rehab. Class A or B Office which conforms to business park standards Commercial Redevelopment/Rehabilitation Other 2. In addition to the City of Elk River, applicant is requesting TRF funds from: Sherburne County School District 728 3. The project will be: _Owner Occupied Leased Space • If leased space,please attach a list names and addresses of future lessees and indicate the status of commitments or lease agreements.Attach as Exhibit E. 4. Project Address (3)— 5 �z o C/ l � CX/'JW 44/ ,W./e. /ark • Include Legal Description and PID Number. Attach as Exhibit F 5. Site Plan Attached: i Yes No 4� 6. Total Amount of TRF Requested: $ over years. G�� City Portion of TRF: Annual $ ' Total $ 2 i County Portion of TRF: Annual $ Total $ 7 0 , #Z�%o� ISD 728 Portion of TRF: Annual $ otal $ 11/ 6412- • 7. Current Real Estate Taxes on Project Site: $ Estimated Real Estate Taxes upon Completion: Phase I $ Phase II $ 8. Construction Start Date: ASA Construction Completion Date: f'/? Pe " " If Phased Project: Year % Completed Year % Completed C. PUBLIC PURPOSE It is the policy of the City of Elk River that the use of Tax Rebate Financing should result in a benefit to the public. Please indicate how this project will serve a public purpose. Job Creation: Number of existing jobs -I Number of jobs created by project /1 Average hourly wage of jobs created /i --/5--- New industrial development which will result in additional private /investment in the area. X Enhancement and/or diversification of the city's economic base. X 7The project contributes to the fulfillment of the City's Strategic Plan for Economic Development. Ill Removal of blight. Rehabilitation of a high profile or priority site. Other: 9 D. SOURCES & USES SOURCES NAME AMOUNT Bank Loan i44/ of E1. A'i& (/ $ Other Private Funds $ 636 0-0b Equity Fed Grant/Loan $ /4V 1-1 ) 7 State Grant/Loan $ EDA Micro Loan $ Tax Rebate Financing $ ID Bonds $ TOTAL $ USES AMO/NT Land Acquisition $ 7 Site Development $ ce 't Construction $ g ? 5 Machinery & Equipment $ A Architectural & Engineering Fees $ P, U Legal Fees $ Interest During Construction $ Pd Debt SReserve $ o 7,4/4--/C'/� Contingencies $ 3'l 7J�' • TOTAL $ 7 F' 5 5'2 • 10 • E. ADDITIONAL DOCUMENTATION Applicants will also be required to provide the following documentation. • / A) Written business plan, including a description of the business, ownership/management, date established, products and services, and future plans B) Financial Statements for Past Two Years Profit & Loss Statement Balance Sheet C) Current Financial Statements V Profit & Loss Statement to Date V Balance Sheet to Date D) Two Year Financial Projections NiA F) Personal Financial Statements of all Major Shareholders / Profit & Loss V Current Tax Return '/ G) Letter of Commitment from Applicant Pledging to Complete During the Proposed Project Duration • v H) Letter of Commitment from the Other Sources of Financing, Stating Terms and Conditions of their Participation in Project I) Application fee of$5000 (to be returned upon project completion.) Note: All Major shareholders will be required to sign personal guarantees if up front financing of the project is required. The undersigned certifies that all information provided in this application is true and correct to the best of the undersigned's knowledge. The undersigned authorizes the City of Elk River to check credit references and verify financial and other information. The undersigned also agrees to provide any additional information as may be requested by the City after the filing of this application. , Applicant Name d1 id /c1/1/1(AV l f‘r / - e plic ///eLlf) By J VA,' /.-.1,�/ c/1j Its a,�I t f '-CYC A96-7;1K I' %/I c A'f • 11 . TAX REBATE FINANCING PROPOSAL REVIEW WORKSHEET • Office Use Only 1. The project meets the criteria set forth in Section V of the Tax Rebate Financing policy. . • -- res o 1 • . iz-, . ' -, an. .x . •. ' ,.-1VAV b) Meets at least one of the objectives in Section P(LIE c)4 .' Demonstrates need for TRF with the but-for analysis. e) Consistent with all city plans and ordinances. f) Serves at least two public purpose as defined in Section V. 2. Ratio of Private to Public Investment in Project: Points: S $ L- Private investment C—-- -:I,) 5 $ So,(NCV Public Investment --4-:'f 4 l y: 1 Ratio Private : Public Financing 3:1 3 2:1 2 Less than 2:1 1 3. Job Creation in the City of Elk River: Points: 3 Number of new jobs as a result of the project. 25+ 5 Number of existing/retained jobs divided by 10. 20+__21_ 15 Total 1+ 3 ID 10,000 0 1.30s rivt izer* .,_ 15 ESMLess than 10 1 4. Ratio of TRF to new jobs created: ___ Points: -5 $ Sa O( O TRF request (-- $8,000 o_r lis 5 15 Number of new jobs created $10,000 or less 4 $ 3T-S3 of TRF per new job created $12,000 or less 3 $15,000 or less 2 cE_s-t-rmii, Over $15,000 1 5. Wage Level of jobs created: Points: 2- Average Average hourly wage Over $21/hour 5 of jobs created: IC?- 13 $18-21 /hour 4 $1. 17 /hour 3 STS tC C�A$10-13%hq2 rider 10 /hour 1 6. Project size: Points: 2 The project will result in the construction +{,8'0,000+ 5 of square feet 14( 7 O 340,000+ 4 0,000+ 3 III __.. _.10;000+._. . - 2 10,000 or less 1 12 7. Type of Project: Points: 3 100% Owner Occupied 5 • Mix Owner Occupied & Investment 4 `7c Investment Property 3 8. Use: Points: /x Industrial Project 5 Commercial Redevelopment 4 Class A or B office construction 3 9. The project will pay annual Points: L\ property taxes in the first fully 35,000+ 5 assessed year of$ Z,00C) <-11_25 000+ 4 15,000+ 3 10,000+ 2 $10,000 or less 1 10. Likelihood that the project will result in Points: I unsubsidized, spin-off development. °� High 5 Moderate 3 )( Low4k 1 Sub - Total Points: 30 of a possible 45 points. • 9. Bonus Points Bonus Points: 3 X The project will be 100%Pay-as-you-go TRF. 3 point The project contributes to the goals of Energy City. 2 points • Product promotes sensible use of energy, OR • Project utilizes significant energy efficient design&/or materials in construction. Total Points: 3 T Overall project analysis: Hi h 45-38 points Moderate -29 points` T Low 28:20-points Not Eligible 19-0 points • 13 R W ENTERPRISES, LLC Exhibit D BUT-FOR ANALYSIS • WITH NO . WITH IIITAX REBATE FINANCING • TAX REBATE FINANCING SOURCES AND USES SOURCES AND USES SOURCES SOURCES Mortgage 830,000 579,713 Equity 128,597 128,597 • Tax Rebate Financing 0 50,287 TOTAL SOURCES 758,597 • 758,597 USES USES Land 45,000 • 45,000 Site Work 22,500 22,500 Soil Correction 0 0 Demolition , 0 ' 0 Relocation 0 0 Subtotal Land Costs 67,500 67,500 Construction 627,976 627,976 Finish Manufacturing 0 0 'Subtotal,Construction Costs 627,976 627,976 Soft Costs 10,000 10,000 . Taxes 0 0 • • Finace Fees 21,882 21,882 Project Manager 0 0 Develper Fee 0 0 Contingency 31,239 31,239 Subtotal Soft Costs 63,121 63,121 TOTAL USES 758,587 758,597 Income Statement . Income Statement Sq. Ft. Per Sq. Ft. Sq. Ft. Per Sq. Ft. Rent-Space 18,720 $5 93,600 18,720 $5 93,601 Vacancy Loss (936) $5 (4,680) (936) • $5 (4,680) Other 0 $0 0 1 $0 '0 Subtotal Rent 88,920 88,921 Mortgage 20 Term 71,744 20 Term 68,050 9.75% Interest 9.75 % Interest 630,000 Principal 579,713 Principal Net Income 17,178 22,870 Total Return on Equity 13.37% 17.78% NOTE: Anticipating a 50% occupancy III first year or a negative cash flow of $14,625 EO 39Vd DOSSV QNV 1H3I3M r 9L ISTbtZT9 LE:ZZ 0003/S0/t, MC TA SHEET INDEX P s AverillERN7NbPEM151tAmeIGVtYEgMA °"' D sa(6)NA115P1U50REAih11Eff NNW M AVP,F.N�Wv KeRvtIMODeS 7 2''6+5 10.500 sq n ` 9%2 f'MEM:1500 52PC MI Cr R.aR MA J WEE,MAIM ELIE 4 2"0.0 19.500 se rt Al.r-SITE/(AND PIAN ae.soo so n AZ FLOOR PUN W WULW.'5t 0 5 5 4'1•0104T zl.coo sq rt A3 ELEVATIONS R�� AVOC 901L:A1� 07.500 sq ft ,I,«�-' lialLOC 18,500sf 45 •t6 ` WPM V lLNA4EI6IfN 5 T'0+0 92 s UMW 18120 A' t� R6 s s°BL.COaKnOUE P�AFllYRSajt 0 0'WIT Si FOUNDATION PLAN '_ ItVKw/PAOlGMAW 87 92 or. QIYRG'D DMZ L!W QS e. I f 28 5.7.10 18 28 S 25 4,2.8 15 25 t €1s ..... G/n�V AOR 111 r��-___-=-==-i_== __ Lin/ __=^ ; J Vii__ _- - __- .--�/ V /1 ~c �Al/ JJr/� ib FI Ml Vg26A.A25 7osqss 1 � ..; ga .4 0 6.000sf EXI511NG PULPING / c 3 • ' iz5oo,r• c • • '1 ��l Hr2 ;381 4. iiiiii. - "%////// ; I 5 V% •.�.pO _ iRiWEN10A/I ©, �� U r,3.• \ ' © __ P17Nr8N'.WN.L h'LESS/s.E RMV \\ giSi all — � , - . • /a. / ‘e. i aC .. 4 p • FA DIAL-PINGSea e°161(20 4 /Mir , ri ; / . . , / v] i +1 �: vow / 7.2C0sflOv8R max 20 I J ��►�aai/ : Iar oittar oak,� O p �g ® erc ti 5 0 io 50 d m q II ..._ .... NKr ( .,,,.. j Xitel I".ta me I.. IakEhome. SAW/Q�V at Sheds 0 04105/2000 22:37 6124415176 J WEICHT AND ASSOC PAGE 02 Exhibit B R & W ENTERPRISES, L.L.C. • P. O. Box 368 Elk River, Minnesota 55330-0368 Telephoner(763) 441-4112 Fax: (763)441-5176 April 5, 2000 City of Elk River 13065 Orono Parkway Elk River, Minnesota 55330 Attention: Mr. Marc D. Nevinski Dear Marc, In response to your letter of April 4, 2000, here is the information you have requested. R.&W Enterprises, L.L.C. is being formed by, Mark Rothfork and John Weicht, who are principals in two existing businesses in Elk River. The purpose of this new endeavor is to create needed commercial rental space in the city of Elk River. Our plan is to build as demand requires. This is not primaryto either of our businesses and growth will be restricted to capability to carry vacant rental space until occupied. • Mark Rothfork, the "R", owns an existing building that houses his powder coating company, Ultra Image, and rental space for three other businesses. John Weicht, the "W', is the managing partner in John C. Weicht &Assoc. LLP, a local general contracting firm that specializes in design build work in the commercial and industrial fields. With other investors, he owns over $4,000,000 in other real estate holdings in the Elk River area. R &W Enterprises, L.L.C. will be owned equally between the two partners, unless financial constraints dictate otherwise. The construction management, as well as future management will be done by John C. Weicht & Assoc. LLP. There are no current prospects for tenants.in this proposed building. Small industrial tenants cannot wait six months or longer when they need space. This has been verified by calls from existing small industrial firms looking for immediate rental space. When we cannot help them, they go elsewhere. We.feel Elk River is losing potential business because of a lack of adequate space available for this type of rental. Thank you for your help in this matter. Sincerely, 411 John C. Weicht R & W ENTERPRISES, L.L.C. P. O. Box 368 • Elk River, Minnesota 55330-0368 Telephone: 763/441-4112 Fax: 763/441-5176 BUSINESS PLAN April 4, 2000 Triple net leases to average $5 per square foot: 18720 square feet at $5 equals $93,600 5% vacancy loss (4680) Annual income $88,920 Bank loan: $630,000 borrowed 20 year amortization at 934% equals $5,978.70 monthly $71,744.40 annually Miscellaneous expenses: Estimate $4,315.90 • 10% return on investment: 10% of$12,859.70 equals $12,859.70 INCOME Monthly Annually Rental Rate $7,800 $93,600 5%Vacancy Loss (390) (4,680) Net Income $7,410 $88,920 EXPENSES Monthly Annually Bank Loan $5,979 $71,744 • Note Interest only during 18 months Lease up 5,119 61,425 Miscellaneous Exp. 360 4,316 Net Expenses $5,619 $67,428 RETURN ON INVESTMENT Monthly Annually 10% Return on $128,597 $1,072 $12,859 • • TAX REBATE FINANCING PROJECTION WORKSHEET Project Name: R &W Enterprises TRF Project#: 1 Date: 4-Apr-00 TA PAYBALE .......x ,,,,,.,.,,€, kiii 1st $150,000 0.02 Remaining Value 0.03 Tax Capacity Rate 1.19362 City Portion 0.30194 County Portion 0.31433 School District Portion 0.56032 INPUT Market Value $ 730,000.00 Years of TRF Project 4 Property's Total Tax Capacity $ 20,400.00 y!, linty T Total Property Taxes $ 24,349.85 $ 50,287.63 City Portion $ 6,159.58 $ 24,638.30 • County Portion $ 6,412.33 $ 25,649.33 School District Portion $ 11,430.53 $ 45,722.11 • rnIE BANTK • OF ELK RIVER Member FDIC February 10, 2000 John C. Weicht and Associates LLP Box 368 Elk River, MN 55330 RE: Commitment Letter to R&W Enterprises LLP Dear John and Mark, It gives our bank pleasure to provide this Commitment Letter to you in connection with the construction of a building in the McChesney Industrial Park presently owned by Mark Rothfork. • I. AMOUNT: The maximum loan will be Six Hundred Thirty thousand dollars ($630,000.00). II. TERMS: The $630,000.00 loan will be repaid in monthly installments based on up to a twenty-year amortization with interest computed on a 360-day basis with monthly payments with interest only for up to the first eighteen months. The note would have a five year maturity. III. COLLATERAL: The Bank will have a First Lien position on the land and building. IV. LOAN AGREEMENT: The loan agreement will dictate the covenants of the loan as it relates to financial reporting, defaults and acceleration clauses and insurance coverage requirements. V. INTEREST RATE AND FEES: Interest will be computed at a variable rate of New York Prime(currently 8.75%) plus 1.00 (currently 9.75%) and the option to fix the rate for five after the eighteen(18) month interim period. One-half percent bank origination fee plus out of pocket costs will be charged including lien searches, and recording fees, appraisal, title insurance, flood check, etc. VI. GUARANTORS: John C. Weicht and Mark Rothfork. • MAIN STREET OFFICE SCHOOL STREET OFFICE OTSEGO OFFICE 630 Main Street 846 Freeport Avenue 15800 88th Street NE Elk River,MN 55330 Elk River,MN 55330 Otsego,MN 55330 (612)441-1000 (612)441-9000 (612)441-7700 Fax(612)441-0847 Fax(612)441-0791 Fax(612)441-7755 • VII. CONTINGENCIES: This commitment is subject to the following: 1. Satisfactory receipt of appraisal for a minimum of$905,000.00. 2. Satisfactory receipt of a final approvals from the City of Elk River. 3. Satisfactory financial information provided to the bank on the borrower and the guarantors. 4. Title Insurance insuring over mechanics liens with bank disbursement of funds. Please sign the enclosed"copy" of this letter indicating your approval of this letter and along with a check for$1,000.00 to be applied toward closing costs and return a copy in the enclosed envelope by February 21, 2000. If you have any questions or points needing clarification, please don't hesitate to call me. This commitment will expire in 60 days from the date of this letter. Sincerely, Jack E. Ellis Vice President Enc. I, the undersigned, do accept this commitment. Borrowers R&W Enterprises LLC Guarantors John C. Weicht Mark Rothfork •