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2.0. EDSR 01-18-1994 ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY • TO: ECONOMIC DEVELOPMENT AUTHORITY FROM: WILLIAM RUBIN, ED COORDINATO Vf^ Y� DATE: JANUARY 12, 1994 SUBJECT: LOAN REQUEST FROM JAMES AND MARLENE LAROSE (JIMBOB'S PIZZA AND PASTA) BACKGROUND Commissioners should refer to a copy of a memo that was sent to the EDA Finance Committee on this matter. The Committee' s recommendation will be forwarded to the EDA for its consideration. ACTION REQUESTED The EDA is asked to approve a Micro Loan in the amount of $25,000 to James and Marlene LaRose (Jimbob' s Pizza and Pasta) . Itis intended that this loan will be used to assist with the purchase of restaurant equipment. 411 The proposed structure of the EDA Micro Loan is as follows : - Amount: $25,000 Term: Seven years - Interest Rate: 6% fixed rate Repayment of the loan will be secured by: - A blanket UCC Filing on the equipment - Personal Guaranty - Promissory Note • P.O. Box 490 • 13065 Orono Parkway • Elk River, MN 55330-1743 • (612) 441-7420 • Fax: (612) 441-7425 Equal Opportunity Housing and Equal Opportunity Employment ECONOMIC DEVELOPMENT MICRO LOAN FUND ELK RIVER, MINNESOTA APPLICATION APPLICANT Jim LaRose - JimBob' s Pizza & Pasta ADDRESS 508 Freeport Avenue, Elk River, MN. CITY Elk River STATE MN ZIP CODE 55330 CONTACT PERSON(S) Jim LaRose BUSINESS PHONE N/A HOME PHONE 441-2895 AMOUNT REQUESTED 215-owe TERMS REQUESTED 10 years SOCIAL SECURITY NUMBER 469-54-4340 FED ID # To be assigned STATE ID # To be assigned 1 . Type of Project: Construction/New Building Expansion/Existing Building K Equipment/Machinery Purchase Remodel/Commercial Retail/Industrial • Industrial Inventory Working Capital Other 2 . Describe Project: I desire to open a pizza/pasta restaurant in the city of Elk River. I 've tentatively agreed to lease space (3500 square feet) from Triple S Investments (Big Wheel Rossi) just south of the Elk River Mall . JimBob' s will be a family-owned, family-oriented restaurant with a sports-type atmosphere, providing banquet facilities for community functions. 3 . Purpose of Loan: To purchase restaurant equipment and small warps (i.e. dishes, silverware, etc. ) along with tables, rhairG, • and booths . 4 . Cost of Project: A) Land $ B) Buildings (attach plans & costs) $ C) Equipment/Machinery/Fixtures (attach list and estimated costs) $ 85, 000 D) Remodeling LEASEHOLD IMPROVEMENTS $ 80, 000 • E) Industrial Inventory/Working Capital $ 45. 000 F) Other (attach description) $ TOTAL COSTS $ 215, 000 5 . Proposed Financing: SOURCE NAME TERMS AMOUNT 1st National Bank A) Bank Loan of Elk River 5 yr. 10% $ 601000 B) Bank Loan $ C) Other Private Funds Family members 7 yr. 4. 5% $ 80, 000 D) Applicant Contribution $ 45, 000 E) Other $ F) Fed Grant/Loan $ G) State Grant/Loan $ H) This Loan EDA 10yr. 6% ? $ 7.5 Doo • TOTAL FINANCING $ 215, 000 -2- 6 . Collateral to be assigned (Describe and show lien position) : A) To Bank: 3rd Mortgage on homestead -- $30, 000 B) To Bank: C) To Private Funding Source: • D) To Other Source: E) To Federal Govt: F) To State: G) To This Loan: Restaurant equipment 7 . Value of Collateral : COST BOOK VALUE EXISTING LIENS A) Land $ $ $ B) Buildings $ $ $ C) Mach. & Equip. $ 85, 000 $ 50, 000 $ -0- D) Other $ $ $ E) Other $ $ $ 8 . Employment* : • Present: # of Employees N/A Total Payroll After Project: # of Employees 15 - 20 Total Payroll $90, 000 *If Loan is for Job Retention Only, Explain in Business Plan. 9 . Attorney, Accountant (Names, addresses, phone) : Bruce Johnson. Atty. at Law 1102 West Broadway, Mpls . , 521-3503 Jim McGie & Assoc. , CPA 4601 Excelsior Blvd. , St . Lcnnis Park 920-3280 10. Bank and Other Credit References (Names, addresses, phone) : Norwest Bank Minnesota/ Barb Peitso, Consumer Manager, 421-0168 217 E. Dean Avenue, Champlin MN 55316 Midland Mortgage Co. P.O. Box 26648, Oklahoma City, OK 73126-0648 1-800-654-4566 or Loral (405) 943-8079 Marquette Bank Brookdale 5620 Brooklyn Blvd . , Brooklyn Cnl-r. 55429 • -3- 11 . Attach and include the following: X A) Written Business Plan: 1. Description of Business 2 . Ownership 3 . Management • 4 . Date established 5 . Products/Services 6 . Future Plans X B) J�come xtteme is for past two years X C) Financial Projections for two years X D) Resume of Owner/Management X E) Personal Financial Statements of proprietor, partners, guarantors x 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) Other • I ) Other J) Fee ( 1% of amount of loan request) • -4- 411 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. DATE January 3, 1994 Applicant Name James B. LaRcse By By 411 • -5- COMMERCIAL LOAN APPLICATION INFORMATION AND MATERIAL IN RE: JAMES B. LaROSE • GENERAL INFORMATION 1 ) Name of Business: JimBob' s Pizza & Pasta Jim LaRose , President. S. S. #469-54-4340 Business Address : 508 Freeport Avenue , Elk River 2 ) The purpose of the loan is for the purchase of kitchen equipment for a pizza-pasta restaurant, in the amount of $85, 000 . 3 ) The amount required for start-up, including leasehold improvements and operating capital , is approximately $210 , 000 , but I am requesting a loan in the amount of $85 , 000 . BUSINESS DESCRIPTION JimBob' s will be a family-owned, family-oriented restaurant with a sports-type atmosphere . Upon the start-up of business, we anticipate employing approximately 10-15 part-time employees, encompassing pizza and pasta cooks , kitchen helpers , waiters, waitresses , and pizza delivery drivers . • MANAGEMENT PROFILE Jim LaRose , principal owner/operator; graduate of Osseo High School in 1966 . Completed four years of service with the U. S . Navy as an Aviation Storekeeper , with an Honorable Discharge in September, 1971 . Work experience includes 17-1/2 years with Skelgas , Inc . , a propane gas company, beginning as a truck driver in 1976 . In 1983 , was promoted to branch manager of Anoka Skelgas , supervising nine employees and in charge of the total wholesale/retail operations for the entire Twin City area. In 1989 , was promoted to the position of Area Manager , supervising 84 employees and in charge of the day-to-day operations of 12 retail stores throughout Minnesota and Wisconsin. During the past year, I have been working and training with John Mooney, president of Angeno' s Pizza & Pasta, learning every facet of the pizza restaurant business. MARKET INFORMATION 1 ) JimBob' s will be serving numerous types of pizza and pasta dishes, all of which will be homemade and freshly made rather than pre-made or frozen. Other menu items 111 consist of homemade garlic and cheese breads , salads, desserts and beverages, including beer and wine to compliment the meal . page 2 • 2 ) The primary market area for our business will consist of the cities of Elk River, Ramsey and Otsego. We will provide home delivery, take-out, and dine-in services . One of our major objectives is to become involved with the local youth sports programs , inasmuch as we will be able to provide adequate banquet facilities for team and family get-togethers. 3 ) Current competition consists of: ( a ) Pizza Hut, whose menu consists basically of pizza and spagetti dishes using primarily pre-made ingredients . Services include dine-in, take-out and delivery, but no banquet facilities; (b) Domino' s Pizza, whose business is strictly pizza delivery or take-out; ( c) Broadway Bar & Pizza, providing a varied menu including pizzas, but very little, if any, pasta dishes . Services include dine-in or take-out, but no home delivery; also has a bar atmosphere not suitable for youngsters. 4 ) To profile our customers is difficult because they encompass children and adults of all age groups, but our intent is to provide a family dining atmosphere and serve Italian-style food at competitive prices, with an emphasis on banquets for youth groups, family get-togethers , business luncheons, and the like, and • offering discounted meals for senior citizens . COLLATERAL At the present time, we are willing to pledge equity in our home in Ramsey as collateral on this loan. • page 3 • WORKING CAPITAL Insurance 1;`"," y"• Building Permit soy Wine & Beer License 15-a•17-46 Training of Employees Utilities Hook-up Start-up Advertising Monthly Payments Incorporation Fees Initial Inventory Computer & Software • LEASEHOLD IMPROVEMENTS Plumbing & Fixtures Electrical & Lighting Tile Work /1, GOC Carpet Installation Sheetrocking & Taping Wallcoverings Carpentry Work +1f = • • PROJECTED FIRST-YEAR GROSS SALES & EXPENSES In re : Jim LaRose/JimBob' s Pizza & Pasta Gross Sales $350 , 000 + Taxes EXPENSES Food & Paper Products $115, 500 33% Rent Payment $ 24 , 700 7% Salaries & Wages $ 90 , 000 25 . 7% Utilities $ 15, 000 4 .2% Miscellaneous $ 15 , 000 4 .2% ( Insurance, Licenses, Phone , Misc . Repairs , etc . ) • Advertising $ 5, 000 1 . 4% Loan Payment $ 40 , 000 12 . 2% $305, 200 88 . 0% • PROJECTED SECOND-YEAR GROSS SALES AND EXPENSES In re : Jim LaRose/JimBob' s Pizza & Pasta Gross Sales $395 , 000 + Taxes (Approx. 12% increase ) EXPENSES : Food & Paper Products $130, 350 33 . 0% Rent Payment $ 24 ,700 6 . 3% Salaries & Wages $100 , 000 25 . 3% Utilities $ 15, 000 3 .8% Miscellaneous $ 15, 000 3 . 8% ( Insurance, Licenses , Phone, • Misc. Repairs, etc . ) Advertising $ 7 , 000 2 . 0% Loan Payment $ 40 , 000 10 . 0% $332, 000 84 .2% PROJECTED PROFIT: 63 , 000 15.8% . I , Jim LaRose, on behalf of JimBob' s Pizza & Pasta, pledge to complete leasehold improvements , install kitchen equipment, and open for business within a reasonable amount of time . At this time, I am approximating that to be ninety to one hundred twenty days after receipt of my building permit. / 4,d ,Z: 1 4 Jim LaRose1 / - y-� (Date ) s �Q__.—\-'C -' 93 . J � t4ryKA. phi 7 iv , Illiri .�AVE� . 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('iT' T '' /1.� �,\ „„„, \� ' 166- r \\,\ \\ tii i \ \-\ \I II , .P .90 `� ); \ ' �� w� \� o Q O,p �) 1) // \\ \ � li \� 1\1.1 1 N 4/ /4"5 Ir /�//// I A 1I • FIRST NATIONAL BANK OF ELK RIVER 729 MAIN STREET • ELK RIVER, MINNESOTA 55330 • (612)441-2200 January 6, 1994 Bill Rubin Economic Development Coordinator 13065 Orono Parkway Elk River, MN 55330 Dear Bill: The First National Bank of Elk River has issued a commitment to lend up to Sixty Thousand Dollars ($60,000.00) to James and Marlene LaRose for the purpose of purchasing restaurant equipment. The conditions of this approval are as follows: 1. Approval of EDA Micro fund loan in the amount of Twenty- Five Thousand Dollars ($25,000.00) . . 2. James and Marlene LaRose demonstrating their ability to raise One Hundred Twenty-Five Thousand Dollars ($125,000.00) of additional capital for the remainder of the start-up costs of proposed restaurant. 3. Satisfactory valuation of homestead in the amount of at least One Hundred Sixty-Five Thousand Dollars ($165,000.00) . Sincerely, ) JA1 11 Olitm J./?,// Thomas Lund Assistant Vice President • ZIMMERMAN OFFICE FIRST NATIONAL MORTGAGE FIRST NATIONAL SECURITIES Mary & Main Street 729 Main Street 729 Main Street Local: (612) 856-2266 Elk River, Minnesota Elk River, Minnesota Metro: (612)421-0463 (612)441-7133 (612)441-2200 ext. 16