Loading...
5.0.- 8.0. EDSR 11-08-1993 ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY TO: ECONOMIC DEVELOPMENT AUTHORITY FROM: WILLIAM RUBIN, ECONOMIC DEVELOPMENT COORDINATO DATE: NOVEMBER 2 , 1993 SUBJECT: AGENDA MEMO FOR NOVEMBER 8, 1993 EDA MEETING 5 . FINANCIAL UPDATE The following is a summary from Finance Director, Lori Johnson: Revolving Loan Fund The Revolving Loan Fund had a cash balance of $167,577 .71 on October 31, 1993. In October, the loan with Indy Lube was completed and a loan application of $187 .50 was received from Theofii and Jeanne Eggert (Woodsmen Quality Products, Inc. ) As of November 3, all October payments . have been received and all November payments are current with the exception of Roma Tool and PureSteam. The three loans approved in September totalling $82,500 have not yet • been completed leaving cash currently available of approximately $85,000. This is an informational item only and no action is requested. 6 . SUBORDINATION AGREEMENT On Friday, October 29, 1993, the EDA funded its portion of the Indy Lube loan. Indy's primary lender, Security Bank Minnesota, filed a loan in July to cover all of the costs of this project. Eventually, the Security loan will be reduced by the SBA' s debenture financing with Indy Lube. Security Bank Minnesota desires that the Elk River Economic Development Authority execute a Subordination Agreement wherein, the EDA' s interests are subordinated to the bank mortgage, regardless of whether the bank mortgage is entered into and/or filed of record before or after the EDA mortgage. It is likely that a similar agreement will be required with the SBA portion of the Indy Lube financing. Action Requested The EDA is asked to authorize a Mortgage Subordination • Agreement with respect to the Indy Lube financing project. 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 7 . LOAN REQUEST FROM WOODSMEN QUALITY PRODUCTS (FELIX AND JEANNE EGGERT) • Commissioners should refer to a copy of a memo that was sent to the EDA Finance Committee on this matter. Following a presentation by the Eggert' s, the Finance Committee voted to recommend approval of the $18,750 loan request. Action Requested The EDA is asked to approve a Micro Loan in the amount of $18,750 to Theofil (Felix) and Jeanne Eggert. The loan will be secured by: - A second real estate mortgage on Lot 1, Block 1, Meadowvale Business Park; - A Promissory Note; and, - A Guaranty of Mortgage. The loan will be repaid over 15 years beginning with an interest rate of 6% (current prime rate) . The rate will be adjusted at six month intervals - floating with prime. 8 . ESTABLISH A NEGOTIATING TEAM The EDA Business Park Task Force conducted another meeting on November 3, 1993. A discussion item included the • creation of a "negotiating team" who would be charged with developing strategies for the ongoing discussions with owners of land that is suitable for business/industrial parks . The following Task Force members were selected to the negotiating team: - Hank Duitsman - Dick Gongoll - Carol Mills - Pat Dwyer Another committee comprised of John Oliver, Ed Cunnington, and Jeff Gongoll is charged with determining the availability of grants and loans, etc. , from REA-related agencies . Action Requested The EDA is asked to approve a recommendation by the Business Park Task Force that a negotiating team be established. 9 . PROSPECT STATUS REPORT The Prospect Status Report has been sent under separate • cover. MORTGAGE SUBORDINATION AGREEMENT • THIS AGREEMENT is given this day of 1993 , by THE ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF ELK RIVER, a public body corporate and politic of the State of Minnesota (the "EDA") . RECITALS The EDA is the holder of a mortgage dated 1993 , recorded , 1993 , as Document No. in the office of the County Recorder in and for Sherburne County, Minnesota (the "EDA Mortgage") which affects certain real property legally described on Exhibit A attached hereto and made a part hereof (the "Property") . Security Bank Minnesota (the "Bank") is the holder of a mortgage dated Jui,K , 1993 , recorded Jubt( til 1993 , as Document No. 230{o1 in the office of the County Recorder in and for Sherburne County, Minnesota, affecting the Property (the "Bank Mortgage") . The Bank has required this agreement as an inducement to make the loan secured by the Bank Mortgage and the parties desire that the EDA subordinate the EDA Mortgage to the Bank Mortgage. NOW, THEREFORE, in consideration of One Dollar ($1. 00) and other valuable consideration, the EDA agrees that the EDA Mortgage and the EDA' s interests therein are hereby subordinated to the Bank Mortgage and the Bank' s interests therein, regardless of whether the Bank Mortgage is entered into and/or filed of record before or after the EDA Mortgage. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the above date. THE ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF ELK RIVER By: Its : • STATE OF MINNESOTA) ) ss . • COUNTY OF This instrument was acknowledged before me on 1993 , by , the of THE ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF ELK RIVER, a public body corporate and politic of the State of Minnesota. Notary Public THIS INSTRUMENT WAS DRAFTED BY: LARKIN, HOFFMAN, DALY & LINDGREN, LTD. 1500 NORWEST FINANCIAL CENTER 7900 XERXES AVENUE SOUTH BLOOMINGTON, MINNESOTA 55431 (612) 835-3800 4 • GAR:ZA8S 2 . EXHIBIT A • Legal Description: Lot 2 , Block 1, Auburn Commons 2nd Addition, Sherburne County, Minnesota. • GAR: ZASS ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY TO: EDA FINANCE COMMITTEE t\rFROM: WILLIAM RUBIN, ECONOMIC DEVELOPMENT COORDINATO ` DATE: OCTOBER 29, 1993 SUBJECT: LOAN REQUEST FROM THEOFIL (FELIX) AND JEANNE EGGERT (WOODSMEN QUALITY PRODUCTS, INC. ) INTRODUCTION Theofil (Felix) and Jeanne Eggert, owners of Woodsmen Quality Products, Inc. , 10550 County Road 81, Suite 118, Maple Grove, Minnesota, have requested a loan from the EDA Micro Loan Fund in the amount of $18,750 . 00 . This loan will be used by the applicants to leverage primary financing and equity for the construction of a 2,952 square foot cabinet shop to be located on Lot 1, Block 1, Meadowvale Commercial Park. ` BACKGROUND The cost of constructing the cabinet shop is estimated at $125,000 . 00 and is broken down as follows : • Land $ 28,000 Building $ 97 ,000 $125,000 Sources of financing for this project are broken down as follows: ' Percent of Source Amount Project Primary Lender $ 87 ,500 70% Applicant Equity $ 18,750 15% EDA Micro Loan $ 18, 750 15% $125,000 100% Loan repayments are proposed as follows; Source Term Interest Rate Security Primary Lender 15 yrs . 8 .5% fixed 1st Real (balloon (4 year period) Estate at 4 yrs . ) Mortgage EDA Loan 15 yrs . 6% (current prime; 2nd Real • adj . semi-annually) Estate Mortgage 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 4 Debt Service for the cabinet shop is outlined as follows : Source Annual Debt Service Primary Lender $10,342 . 50 ( first 4 yrs . ) EDA Loan $ 1, 899 . 38 $12,241 . 88 COMPANY NARRATIVE Information on Felix and Jeanne Eggert as well as Woodsmen Quality Products is outlined in greater detail in a summary provided by the applicants . Mr. Eggert has an extensive background in the cabinet business . The business was incorporated in March of 1988, and currently occupies 2 , 100 square feet of space in Maple Grove. The niche of the company is primarily raised panel doors, but with the expansion, Mr. Eggert expects to produce fine furniture, desks, and freestanding cabinets. Woodsmen reports sales of $180,882 and $197, 066 in 1991 and 1992 respectively. Most recent year to date sales (that is, January through July, 1993) is $93,550 . Net income for 1991 was reported at $12 ,361; and $29,858 in 1992 . Through July, 1993, net income is reported at $6,344 . 0 The company reports total assets of $30,873 in 1991, $10, 906 in 1992; and $15,224 through June 1993 . Total liabilities are reported at $25,667 , $4,692, and $7,567 over the same time periods respectively. Given past history, Woodsmen projects sales of approximately $200,000 for the upcoming two years . . All of the shop equipment is paid for, and, mortgage expenses are approximately the same as what the applicants are currently paying for leased space (base lease of $1,236 , per month) . ACTION REQUESTED Following its review of the Eggert loan request, the EDA Finance Committee is asked to make a recommendation to the EDA Commissioners regarding its funding. The EDA will meet on November 8, 1993, to consider this matter. As with previous EDA loans, this loan will be secured by a mortgage on the Eggert property plus a Promissory Note and Personal Guaranty signed by the applicants . PRESENTATION Felix and Jeanne Eggert will be in attendance to make a • presentation to the Finance Committee regarding their loan request. ECONOMIC DEVELOPMENT MICRO LOAN FUND ELK RIVER, MINNESOTA APPLICATION Business Loan To APPLICANT Woodsmen Quality Products Inc. Theofil(Felix and Jeanne Eggert Elk River, ADDRESS 10550 County Road 81 #118 19319 Oxford St. CITY Maple Grove STATE MN ZIP CODE 55369 CONTACT PERSON(S) Felix and Jeanne Eggert BUSINESS PHONE 493-2749 HOME PHONE 441-6148 AMOUNT REQUESTED $18.750.00 TERMS REQUESTED 15 year with balloon at 4 years SOCIAL SECURITY NUMBER 471-64-3393 FED ID # 41-16o8195 STATE ID # 2233023 1 . Type of Project: X Construction/New Building Expansion/Existing Building Equipment/Machinery Purchase Remodel/Commercial Retail/Industrial Industrial Inventory Working Capital Other 2 . Describe Project: Build a cahinPt shop on Lot 1, Blnwk 1, MParinmva1e CommerciR1 irk_ The building will be 36 x 82 in size with vinyl siding, and Metal windows. • 3 . Purpose of Loan: The loan will help the building project become a reality. The bank will pay 70% in a loan but owner is left with remaining 30%. This 411 loan will lower owners input at this time to 15% which is much more helpful in making this a reality. 4 . Cost of Project: A) Land $ $28.000.00 B) Buildings (attach plans & costs) $ $96.716.00 C) Equipment/Machinery/Fixtures (attach list and estimated costs) $ D) Remodeling $ • E) Industrial Inventory/Working Capital $ F) Other (attach description) $ TOTAL COSTS $ $124,716.00 5 . Proposed Financing: SOURCE NAME TERMS AMOUNT A) Bank Loan Bank of Elk River 15 yrs. 4yr.balloo4 87.500.00 B) Bank Loan $ C) Other Private Funds $ D) Applicant Contribution $ 18,750.00 E) Other $ F) Fed Grant/Loan $ G) State Grant/Loan111 $ H) This Loan $ 18,750.00 TOTAL FINANCING $ -2- 6 . Collateral to be assigned (Describe and show lien position) : r A) To Bank: (2.55 5r 1 / S fi?Defyy. B) To Bank: C) To Private Funding Source: • D) To Other Source: E) To Federal Govt: F) To State: G) To This Loan: QSSiS1 YVI r' �=J +yU)e— � 7 . Value of Collateral : COST BOOK VALUE EXISTING LIENS A) Land $ 28,000.00 $ $ none B) Buildings $ 96,716.00 $ $ none C) Mach. & Equip. $ $ $ none D) Other $ $ $ E) Other $ $ $ 8 . Employment* : • Present: # of Employees 1 fulltime, 3 Dart tiaotal Payroll $4500.00/month approx. with room to add more. After Project: # of Employees above Total Payroll *If Loan is for Job Retention Only, Explain in Business Plan. 9 . Attorney, Accountant (Names, addresses, phone) : William R. Dodds, LTD 730 Dodge Ave. Suite 107 Elk River, Minnesota 55330 441-2006 10 . Bank and Other Credit References (Names, addresses, phone) : The Bank of Elk River 630 Main, Elk River 441-1000 First National Bank Eden Prairie, 566 Prairie Center Dr. 942-7522 Jim The Huntinton Mortgage Co. PO Box 182444 Bell Mortgage Columbus, OH 43218-2444 1-800-323-4695 • -3- SI/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 /n--,.,76,-- n& Applicant Name Rel,C (T4eoi /) Tear/1eBy Jit./-4_ /1-t7(2 • • -5- Come home to full-service banking. "FITE BANK OF ELK RIVER 630 MAIN ST.,ELK RIVER,MN 55330 • PHONE 441-1000 ELK RIVER MALL,846 FREEPORT AVE. • PHONE 441-9000 Our Second Century MEMBER FDIC October 13, 1993 Felix and Jeanne Eggert 19319 Oxford St. NW Elk River, MN 55330 RE: Proposed new construction on Lot 1 , Block 1 , Meadowvale Commercial Park. Dear Felix and Jeanne: I am please to inform you that The Bank of Elk River has given initial approval of a $87,500 first mortgage loan for the building you propose to build. This loan commitment is contingent on the following: 1. An appraisal valuing the land and building at a minimum of $125,000. • 2. Approval of a subordinated loan of $18,750 from the Elk River EDA Micro-Loan program. 3. An equity investment on your part of $18,750. Your loan will be on a fifteen year amortization with a balloon due at the end of four years. If you have any questions, please call me. Sin ly, Patrick H. Dwyer Senior Vice President cc: Bill Rubin, Elk River EDA • . t 1 i 4 JPS Ar P's • Goof Rio; ID 1 RI•GE 40p� �� ; ••• „ r • Mk 1I11‘, o.'iii IR I R t ..7 • ir inn . Aismf se' . 2 ..... %." It4/e or ...... OOITION o.... 1 �� . 20121 A • 2929 thy G /90'N Willilir 0 1.41 IIV \ .' .# Alt III Pal ball ' 3 _ �, arm I i ilk . . i i STEL d ti doMI ve* � • O4,sktitimpimorrogi 193RD ST. VI j RD AVE. "pc tite, �� 4 .:.. g CO. RD. 1 .:4..:.•• z W 0 I 1 SERVICE DR p CC i I,z,s a RIVER 1 a ,idit ELK 2 ELK ` fp. ®zai® —PARS 2 —f#8US ' �\ i I _ 'RAJ ' 2ND STRI ..9. VW ;,l�aa s o x..:‘ i,, BLVD. qup[�,,t,,, ADDITION ` • 11 ;1 5:H.11 ' \ • • .1,1• 44 LAM I I RORLF�31 ADO. • 2 • Fi 11,1 4 ,o N. e! 00, ALF ko :• • • J! f" _ cr• .y . i1�� a z•®� '6-S3 ( lj isles MA A j Li < \ <711- \71 _ _____ �� F 9 gli Ara 4P I kihh.lb÷ 4.4 VCR � I ✓O 011041 � .�4 �1 c smth Elm. � i®m to n• r •• I scion ST. II liallifdr :ifffirMallii wan in 1. ~- ■■ ■ I' tI/I !� k.„,-_----.. r_C�RCL . liiiiiQ W r �r• � 2 ifi p AO roRS ,oN '. l� a iia6 )411 6 �ilzii' �� 04,5 �� LO a L tv �� 4 \ in I L� 1 - . �A III _ t cm, . ....,n „„,,,14 plg �L � ,''� T aI• g" .'-' .• .-,. �\ ORONO �� ©s v0 © �Yli� III IHi __. 4 O , y \\�I 4144141111176E, CIE a 1111111►n ge `-r t �' � 4 e, ♦ 11M■ II inf UMW iii,' 1S}. �_ _�� �1 I �� ar 1 / I PPO �' 7'.....- / SyG�• . ' �• I V O j / 1 �» :,., t•9 91 '2:- ... E 0Z ++ i ....ji ---f- ---"- / 0 12t-=3 0t ' 2 �� 1 i' X52'1' `pSEM�9 -- ,`.! 1 xi I c m •. 1 1, i 1• " 1699 - i c : 091 • i 5s'� .. rx I I ce c c • / r ' I I EN / 1 m N O' I V'1'•• :_ / 1 I " I I I O� 1 I 4 + I ni I I , (61,912 c II I k NSP , _ I 616691'0N 'ISM)I T u OI 1N3IY35V3 'V'd'fl < ; i 1 set ...7, ' 1 J, --' c - =Pm I a I owl I I r'- HI Sam yO2 �Z 1 I i��.6�09'S9' + 0- a-- I MIN 1 ' ga p. t1 Z SBL�' .-ea.661 inI /yb , /' = 1i W t0o N •°D �7. i R�\� 6'p9 S9 'l ' i---,-----_ 44 ,, r.. . CC u P° • _36 59' - < .... I 1 '•••••\:..13.55 ,/� -♦ `� '23.70• .. I in uu= 6B'ff—r— O\` ` . ��Q96 735 i , 1 • I ;� ££ a 9� ; " I I co • r Ss. �',S - j6�0g s ' o I Oti _ I ( - I I. I 6 y7 ob I _ ->,. I /■1\1 1 09 I t1 y 1 R.., - d i 1 w in ��. Mill N I re Q ££ ; ci It I ,46'. - J 1 N i I _ •• iI -. i I z' ' I =I t ,C: _ � ' ==- 0 z° E I• -r i> ' JI I -r 0.--T ' I a _ iJI9 I I �I• fix �`' I ^ .is 1 .� � -'- , I I 0>j I - " I I - _, mY� I I > d I , c 0 o .I' �: IUU� I 7&5----725----785---J 1 ?•j 1 CV •': Z uU'3 Q' i t 1i i < I f9'6fZ _ O O 1 L77 g _• — I i Z r7_ I•-1 :•i:•:;.;.:...•.• :•.•�. .725•x—:rr:•:�:�.•. '•.t•:•: •'''::c• ■ — • I •I•••••• .#•.• .. ..... . ...} . .... n . i _' ..•:yM•:.. . 1: I C9° •: : .c —I ::::::• :: ••:• r C\ c . =m— •;:•' :: 1 t i II i I. I II 1• Ii f A — •: � / v..RCS ti•..��KY •-•$ _..i.... n I ::...•: 'P:nn.. : I 1 • ,on z�v Z4.> / / • VI I z E9'6£Z....\ I cui \ / I� Z I 4 -§ , J d = 1 ,-3 I \ z I � s / 11 I LU ,'1 _ \ I I I° ... ...., ,„ , 7,,,,., a:l P_:b\ aZ , ,......,....._,..._„, , f i I Ii I Vi• a I tiZ a7 o 1 0 � 4. ' I W w. \ 'a:-_,y o I I CC 1Q : \ �Q o a�I 111 ;\ I• fsf 1 O � a Q Q •O-.•L d £ / o bZ o;bt c4 1 \ I 1 0 1r CC / o \\ a- v a 7 • fy-, \\ i` I M / G- -, o 010 , ' '` \ N o ei \ III _ ig, \ t / I I � �to - � T it Ity,w3SV3 do .o•.of 1 � a • \ \ \ ' I \ 1-- / \\\ � \ �l \ L/J �\ /` -- i \ \ - --- IS . . .z_.: )./0 _-,. — , . NOSIVM \ . N 4 m 0 ' ..k) Q.. P October 25,_ 1993 Economic Development • Micro Loan Fund Elk River, Minnesota RE: Written Business Plan for Woodsmen Quality Products Inc. Dear Economic Development Board: Woodsmen Quality Products was incorporated with the State of Minnesota in March 1988, as an S-Corporation. The business manufacturesraised panel doors, die panels and glass doors with muttons and mulls. The sale of these products goes to both cabinet shops as well as the private sector, to be used on existing cabinets, furniture, walls and ceilings. Both Felix(Theofil) and Jeanne Eggert own Woodsmen Quality Products. Felix is President and manages the manufacturingend of company; He is Woodsmen. The office and it's duties are managed by Jeanne who is acting secretary and treasurer of company. The business was born in our home garage in the early 80's. Suburban Wood Products, a cabinet shop Felix worked at for 11, years, asked Felix to consider manufacturing raised panel doors and die panels. They knew personally the high standards and quality of Felix's work, and they knew they would get a quality product which they had found hard to find in existing market. • After a few years of ever increasing business Woodsmen soon grew out of garage and home. We moved to a space in Elk River, but that soon proved too small. In March 1988 when we could find no space in Elk River we moved to Maple Grove. In March 1988 we became Incorporated with State of Minnesota and moved into 10650 Cnty Rd 81, Suite C, Maple Grove, Mn. We again moved, when space was needed, in 1990 to 10550 Cnty Rd 81, Suite 118, Maple Grove, Mn. We are presently at this location and use all of our 2100 sq. ft. of space. Over the last 56 years we have experienced all the work we can handle and even turn work away. We have never advertised, our work comes from word of mouth which is a result of quality and happy customers. Felix has put twenty years of journeyman cabinet making experience into manufacturing quality 3/4" solid oak, birch etc. raised panel doors, glass doors with muttons and mulls and die panels for island cabinets, furniture and walls. Our company works mostly with other cabinet shops which we deliver to. We do have a few customers who refinish existing kitchens or remodel and use our doors. Felix also has cabinet shops and home handy- men come in to have wood sanded on our large timesaver sander. At this time we are turning away more work each month than we are able to do. The future is bright with guarantee of more work then we can handle. Felix is looking at hiring high school students or young adults he can train correctly in working with wood. He also would eventually like to specialize in fine furniture, desks, and free standing cabinets. 411 Woodsmen's future is one of growth and change where all Felix's skills and talents will be realized. October 26, 1993 . Economic Development Micro Fund Elk River, Minnesota RE: Resume of Owner Dear Economic Development Board; Felix realized he had a talent with wood in high school shop class. He was chosen to complete two special projects; a platform rocker and a freighter canoe. He graduated in 1969 from Grand Rapids High School. After graduation he moved to Twin Cities where he enrolled in Vol Tech school and worked in two cabinet shops, Bob's Cabinets and Suburban Wood Products. In two years he finished his schooling and became a journeyman cabinet maker with Suburban. Felix worked for Suburban Wood Products for 11 years leaving Suburban 2 years after our move to Elk River in June of 1978. The drive to Richfield each day was becoming longer and longer with increased traffic. Felix went to work for Beal's Cabinets in Crystal and worked at Beal's until a strike forced Beal's out of business. At this time Suburban had approached Felix to go on his own and manufacture raised panel doors. The business was started in the home. As Felix set up his business he also worked at Associated • Wood Products as a manager in the door department. This gave him more experience for the future. Eventually business at home was too busy to work for anyone else. At this time Felix moved business out of home to a larger space and has devoted all his time to Woodsmen Quality Products Inc. Jeanne graduated from St. Louis Park High School in 1969 in the top 1/3 of her class of 849 students. I had 1 trimester at UofM when entire family moved to Phoenix. I then completed a year and a half of Glendale Community College in Phoenix. At twenty years of age I moved back to Twin Cities by my self and worked as a secretary for Blue Shield of Minnesota. In 1973 Felix and I were married. I chose a job closer to home at this point and became a bank teller for Northwestern National Bank of Hopkins. Two years later when our first son Troy was born I left the bank to be a full time mother. Since,I have remained home filling in with part time jobs as election judge for city of Elk River, Secretary at St. Andrew's School and secretary for Woodsmen Quality Products Inc, plus much volunteer for church and school. Sincerel ; (L.--7---Z664d) r. 00 , / . . .X' Felix(Theofil)E. Eggerf� Jeanne A. Eggert October 26, 1993 Economic Development Micro Fund Elk River, Minnesota RE: Financial Projection for two Years. Dear Economic Development Board; The best way to show you where we are headed financially is to look at the past history in sales: July-December 1988 sales of $104,601.53 1989 sales of $179,999.16 1990 sales of $179,863.65 1991 sales of $180,882.33 • 1992 sales of $197,066.21 January-July 1993 sales of $93,550.91 Spring of 1993 was slower than normal due to wet season, but fall is very busy and sales will catch up fast. We can safely say with our past history that we can expect sales of approximately $200,000.00 for the up coming two years. We also have all our equipment paid for and our move to our own building will cost about what we are paying now for lease �eC a oi,-,-� is ' 1„R36. ag- Qer vn0-11-1i. •