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5.0.-14.0. EDSR 09-13-1993 A.K. 140 Ay of TO: ECONOMIC DEVELOPMENT AUTHORITY V E1K FROM: WILLIAM RUBIN, ED COORDINATO (/E Rover � DATE: SEPTEMBER 8, 1993 SUBJECT: 9/13/93 EDA MEETING AGENDA MEMO 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 $179,926 .50 as of August 31, 1993 . As of September 8, all September loan payments are current with the exception of PureSteam Humidifiers . This is an informational item only and no action is requested. 6 . EDA MAIN STREET SITE At its June 14th meeting, the EDA authorized a 90-day exclusive • option with the Bruce Company. This option is scheduled to expire on September 13, 1993. At subsequent meetings, the EDA has discussed its desire to bring this project to closure by either a. ) a redevelopment project moving forward; or b. ) converting the site to open space. As with previous meetings, Mr. Chris Bulow of the Bruce Company will be in attendance to provide EDA Commissioners and staff with an update with the progress he has made on his redevelopment project. Mr. Bulow has indicated that if he has nothing specific or definite, he would likely not ask for an extension. In that light, should the EDA decide to abandon redevelopment efforts, it may be appropriate to take action which would convey title back to the City of Elk River. The City and its Park and Recreation Commission can then have an opportunity to plan an urban park in that area. 7 . LOAN REQUEST FROM WATER LABORATORIES, INC. Commissioners should refer to a copy of a memo that was sent to the EDA Finance Committee on this matter. 8. LOAN REQUEST FROM KEN AND CARRIE BEAUDRY (BEAUDRY OIL) 411 Commissioners should refer to a copy of a memo that was sent to the EDA Finance Committee on this matter. P.O. Box 490 • 13065 Orono Parkway • Elk River, MN 55330 • (612) 441-7420 • Fax: (612) 441-7425 7/12/93 EDA AGENDA MEMO Page 2 July 7, 1993 9 . LOAN REQUEST FROM R & D SALES Commissioners should refer to a copy of a memo that was sent to the EDA Finance Committee on this matter. 10 . VIDEO PRESENTATION SCRIPT At its August meeting, EDA Commissioners authorized an agreement with Diversified Marketing Resource, Inc. , for the creation of a video presentation on Elk River. In a related motion, the EDA also authorized President Gongoll to name three persons to assist the Economic Development Coordinator with this project. Jim Tralle and Dick Gongoll have been named to this Committee. In recent weeks, this group has met with Diversified Marketing, and together, the group has come up with a "treatment" and "narration" for the video presentation. The treatment includes potential shots or scenes, together with the video's narration. The narration is simply that - the script that a narrator would read. Both elements are included in the agenda packet. It is clear that the intent of this video is to leave a viewer with the understanding that Elk River is a very good place for both business and industry. In doing that, elements such as quality of life, housing opportunities, educational opportunities, etc. , will be presented. • ACTION REQUESTED The EDA is asked to approve the script as presented by Diversified Marketing Resource. This action will enable the company to begin a "story - boarding" process where more specific scenes and shots are detailed. 11. EDA TASK FORCE As the City continues to experience both growth and successes in its economic development efforts, it may be appropriate to go through an internal process to obtain feedback on such matters as the City's permitting and plan review processes . That is, this internal review may be used as a barometer to ascertain input from new and expanding businesses regarding their experiences with the economic development process. Issues such as those listed below may emerge: * Was the entire process a satisfactory experience? * Was the process streamlined? * Was City staff customer-friendly? * Most of all, are there flaws, gaps, or breakdowns in our system? • With that, I am calling on the leadership of the EDA to initiate this process . Initially, this process may likely be done internally. However, an external review may be 7/12/93 EDA AGENDA MEMO Page 3 July 7, 1993 411 appropriate, too. Regardless of the process, if problems or gaps exist, can the City/EDA a)solve them; and b) can the improvements be monitored? Desired results will no doubt improve the system and provide direction for the EDA's economic development efforts . ACTION REQUESTED The EDA is asked to create a Task Force to review the City's permitting and plan review processes . 12 . BUSINESS PARK TASK FORCE The Task Force met on June 29th, July 27th, and August 31st. It will meet again on September 14th. Much progress has been made regarding assessing the City' s existing inventory of industrially-zoned land, identifying suitable park locations, and exploring potential sources of financing. The basic issue, beyond identifying one or more suitable locations, is that of accessing funds for a) land acquisitions; and b) infrastructure activities. Task Force Chair, Pat Dwyer, will give Commissioners an update on progress at Monday's EDA meeting. Commissioners should refer to the one-page summary of funding sources in preparation of this topic. 13. NEWSLETTER TOPICS It is time once again to begin thinking about a late summer/early fall EDA newsletter. Topics may include UPA expansion, Elk River Machine expansion (completed) , Timron expansion (completed) , Guardian Angels update, Tescom groundbreaking, Custom Conveyor expansion (completed) , video project, the D.A.R.E. house, 101 connection update, and the Business Park Task Force. 14 . PROSPECT STATUS REPORT The Prospect Status Report has been sent under separate cover. ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY • TO: FINANCE COMMITTEE MEMBERS FROM: WILLIAM RUBIN, ECONOMIC DEVELOPMENT COORDINATO DATE: SEPTEMBER 2, 1993 SUBJECT: LOAN REQUEST FROM WATER LABORATORIES, INC. INTRODUCTION Water Laboratories , Inc. , 429 East Main Street, Elk River, Minnesota, requests a loan from the EDA Revolving Loan Fund in the amount of $15, 000 . This loan would be used by Water Laboratories to leverage primary financing and company equity for the construction and equipping of a 1,400 square foot suite in an office/townhouse project "to be constructed at Main Street and Freeport Avenue. BACKGROUND The cost of constructing and acquiring the office suite is estimated -at $107,400, . and is broken down as follows : Land $ 27,300 Building $ 77,700 Lab Equipment, etc. $ 2,400 $107 ,400 Sources of financing for this project are broken down as follows Percent of . Project Primary Lender $ 75, 000 69 . 8 Applicant Equity $ 17,400 16 .2% EDA Revolving Loan $ 15,000 14 . 0 $107 ,400 100 . 0% 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 e Loan repayments are proposed as follows : Source Term Interest Rate Security Primary Lender 15 yrs Prime + 2 . 75% First Position (adjusted quarterly) EDA Loan 15 yrs Prime Second Real (adjusted Estate semi-annually) Mortgage - Commercial Real Estate Debt service for the office suite is outlined as follows : Annual Source Debt Service Primary Lender $ 9 ,000 . 00 (initially) EDA Loan $ 1,520 . 00 ( initially) $10,520 . 00 • COMPANY NARRATIVE Information on Water Laboratories is outlined in greater detail in a summary that is attached to the loan application. Briefly, Water Laboratories was formed in 1988 and incorporated in 1989 . The company is owned by Kevin J. Kloeppner. It is certified by the Minnesota Department of Health which enables it to perform safe drinking water standards of nitrates and chloroform bacteria tests. In addition to the safe drinking water standards, • the company also performs tests relative to new wells, and, services VA and FHA lenders by completing water tests prior to mortgage approvals . Fluoride testing is also done by Water Laboratories . Water Laboratories reported sales (including — management charges) of $115,533 in 1992 . Net income of $12,288 was also reported for that period. Through May 31, 1993, itreports revenues of $54,482 and net income of $2 , 352 . As of May 31, 1993, the company had total assets of approximately $31, 000 . Per the attached lender' s analysis, the projected cash flows for 1993 and 1994 are $29 , 900 and $31, 300 respectively. Company revenues are expected to grow 21 . 5% from 1992 to 1993; • and 10 . 4% from 1993 to 1994 . • ACTION REQUESTED Upon its review of the Water Laboratories loan request, the EDA Finance Committee is asked to make a recommendation to the EDA Commissioners regarding the funding of this loan. The EDA will meet on September 13, 1993 to consider this matter. As with previous EDA loans, this loan would be secured by a mortgage on the Water Laboratories site plus a promissory note and personal guaranty signed by the applicant. AVAILABILITY OF FUNDS The EDA Revolving Loan Fund had a cash balance (that is , funds available for eligible projects) of $174, 900+ as of July 31, 1993 . This is an increase from the June 30, 1993 balance of $166,500+. PRESENTATION Mr. Kevin -Kloeppner and Ms. Lisa Maurer, First American • National Bank of St. Cloud, will make a short presentation to the Finance Committee regarding the loan request by Water Laboratories . ECONOMIC DEVELOPMENT REVOLVING LOAN FUND ELK RIVER, MINNESOTA APPLICATION • APPLICANT Water Laboratories, Inc. / Kevin J. Kloeppner ADDRESS 429 East Main St. , P.O. Box 388 CITY Elk River STATE MN ZIP CODE 55330 CONTACT PERSON(S) Kevin J. Kloeppner BUSINESS PHONE (612) 441-7509 HOME PHONE (612) 393-2814 AMOUNT REQUESTED $15,000.00 TERMS REQUESTED 15 years, Prime Variable adjusted semi-annually, secured. SOCIAL SECURITY NUMBER 471-68-1921 FED ID # 41-1612118 STATE ID # 2271507 1 . Type of Project: XX Construction/New Building Expansion/Existing Building Equipment/Machinery Purchase Remodel/Commercial • Retail/Industrial Industrial Inventory Working Capital Other 2 . Describe Project: The project is for construction of 1 ,400 sq.ft. of office space to house a laboratory and its offices. The proposed 1 ,400 sq.ft. office is part of a larger complex with each tenant owning their own space. 411 3 . Purpose of Loan: The purpose of the loan is to supplement the financing of an SBA loan and the capital investment of the owner, Kevin J. Kloeppner. 4 . Cost of Project: A) Land $ 27,300 B) Buildings (attach plans & costs) $ 77,700 C) Equipment/Machinery/Fixtures (attach list and estimated costs) $ 2,400 • D) Remodeling $ E) Industrial Inventory/Working Capital $ F) Other (attach description) $ TOTAL COSTS $ 107,400 5 . Proposed Financing: SOURCE NAME TERMS AMOUNT First American 15 yrs. , NYP + A) Bank Loan-SBA Nat' l Bank-St. Cloud 2.75%, adj . qtly. $ 75,000 B) Bank Loan $ C) Other Private Funds $ D) Applicant Contribution $ 17,400 E) Other $ F) Fed Grant/Loan $ G) State Grant/Loan $ . 15 yrs, NYP + H) This Loan adi . semi-annually $ 15,000 TOTAL FINANCING $ 107,400 -2- Monthly Debt Service (P & I ) : SBA -$750, Elk River - $127 6 . Collateral to be assigned (Describe and show lien position) : A) To Bank: 1st Real Estate Mortgage - Commercial Real Estate 1st Security Interest - A/R, Inventory, Equipment & Intangibles. B) To Bank: Pledge of $10M Certificate of Deposit or Marketable Security 411 C) To Private Funding Source: D) To Other Source: E) To Federal Govt: F) To State: G) To This Loan: 2nd Real Estate Mortgage - Commercial Real Estate 7 . Value of Collateral : 5-31-93 COST BOOK VALUE EXISTING LIENS A) Land $ $ $ B) Buildings $ 107,400 $ 107,400 $ 0 C) Mach. & Equip. $ 19,387 $ 11 ,210 $ 0 D) Other AIR $ 4,058 $ 4,058 $ 0 E) Other CD $ 10,000 $ 10,000 $ 0 Proposed loan structure would result in first lien of $75M to FANB. 8 . Employment*: • Present: # of Employees 4 Total Payroll $72,000 After Project: # of Employees 6 Total Payroll 92,000 *If Loan is for Job Retention Only, Explain in Business Plan. 9 . Attorney, Accountant (Names, addresses, phone) : 1-800-445-9617 Frank Rajkowski , Donohue, Rajkowski Law Firm 11-7th Ave. St. Cloud, MN 56301 Steve Meyer Accounting Firm P.O. Box 7200, Collegeville, MN 56321 10 . Bank and Other Credit References (Names, addresses, phone) : The Bank of Elk River Stewart Wilson 441-1000 American Financial Services John Lenertz 218-829-9567 4 -3- 11 . Attach and include the following: X A) Written Business Plan: 1 . Description of Business 2 . Ownership 411 3 . Management 4 . Date established 5. Products/Services 6 . Future Plans X B) Financial Statements for past two years FY 1992 and interim F/S enclosed because current owner purchased business in X C) Financial Projections for two years October 1991 . X D) Resume of Owner/Management (included in business plan) X E) Personal Financial Statements of proprietor, partners, . guarantors X F) Letter of commitment from applicant pledging to complete during the proposed project duration X G) Letter of commitment from the other sources of financing, stating terms and conditions of their participation in project X H) Other Building plans and construction cost estimates • X I) Other Lender's Analysis for informational purposes. X J) Fee ( 1% of amount of loan request) -4- • 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 X--a76' " 9' '3 Applicant Name W4... eP Z;vc . By �,.� XV%o er N ci2 BY "C--e s • -5- mem BREMFR First American National Bank irjj of St. Cloud 1-) Member Bremer Financial Corporation Member FDIC August 24, 1993 William Rubin Economic Development Coordinator City of Elk River P.O. Box 490 Elk River, MN 55330 RE: Water Laboratories, Inc. / Kevin J. Kloeppner Dear Bill: First American National Bank of St. Cloud has agreed to lend Water Laboratories, Inc. and ECO-Systems Engineering, Inc. $75,000 for the purchase of an office condominium in Elk River subject to approval of an economic development loan of$15,000 and an owner's equity injection if $17,400. If the terms of the Elk River Economic Development loan would change substantially from the loan requested herein, the Bank's approval would be reconsidered. Terms • and conditions of the financing are outlined in an Authorization and Loan Agreement between the Bank and prospective borrower, which will be formalized in the near future. If you have any questions in regard to this prospect, I will welcome your call at (612) 255-7156. Thank you for your continued support of economic development and small business in the Elk River area. Sincerely, c iL?,c:l L 4l . ul la.tL/L(' 4 Lisa M. Maurer Assistant Vice President Government Guaranteed Business Loans • Downtown West Rice 1100 West St.Germain Street 4150 2nd Street South 100 East Main Street P.O.Box 847 St.Cloud,Minnesota 56301 Rice,Minnesota 56367 St.Cloud,Minnesota 56302-0847 (612)656-3300 (612)393-2600 (612)251-3300 FAX(612)656.3314 FAX(612)393-2414 FAX(612)255-7149 • . �: `ak 2 �• / �. ‘y- 1 I 193RD AVE • V�n at, 4T� 12 � y a 1� FtU •.• " [[ 1 E' 10 It , 0 AI w ,..LI. J 41 PORK • 2 I. 2 0 ,192 N��Ili m Ill ` ' 04 _ — Ts " 4fr dines" .4c% r.z1 9(a )?;!Itit*Ac7,',K.olp,oeip e - �' •� '�9 11 - 01 �� AyE �e PittizA �y >. 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"iitrmr iii i \14 ZZv: I 1p nr.) 4p ,or m .\\\1\,\ \\\\‘ \ g 11 ,, • AIN , \ I . . 0 SIT \ 1 ' C I � : 1 . • I •1 '-.• `\ \ /_ ! Q U t Z ri 7 (.4Q ` h 2,Li • • , . , . I t. UI 111 th 41 N I m 15S- . £ IA 44 S; t s • 1 r • .„ 151 sol I ;Sy; •_- • ?5 i{ r w .1 '1S 1SOd33 d EXHIBIT A ---- ig'}''.2-.1" ..._ , tt 7 L _________-__-_--11 ____ _-_-___ tt •--FIGe 447 r --4 1, K -5)14 lz_ec....e_r_rci..4 I ---_--. -_ ------ -- _- __.Tr_ F_____ ________________ 11 • _ _WA\—i-- F-- 1.. c.ff'y\-wr-4E- -, 1110. THE • COMPANY 317 Mein Street,Elk River,MN 55330 Phone(812)441-4488 r r ESTIMATED COSTS FOR WATER LABS • Land)Lot $27,300 City Fees 3,600 Legal/Arch/Survey/Plat 2,650 Financing 4,000 Building Shell 40,700 Mechanical 3,800 • •, ;, • Electrical 3,000 Interior Finish 15,230 ' Contracting fees 4,720 ' • Estimated Total $105,000 • • • • • Submitted as a per unit cost based o ,otal project costs of $682,000. • feel—"4 D:. nis C. Chub Pres/Owner The Chuba Company • AMERICA is REMOOEUNO YOUR COMPLETE CONSTRUCTION SERVICE v�M+ • Water Laboratories, Inc. located in Elk River, MN was formed in 1988 and incorporated in 1989. Water Laboratories is a Minnesota Department of Health certified laboratory. \Vater Laboratories specializes in drinking water analysis and is certified by the Department of Health to perform the Safe Drinking Water Standards of Nitrates and Coliform Bacteria. The Elk River area where Water Laboratories is located is one of the fastest growing areas in the state of Minnesota. Elk River is located in Sherburne county and is considered to be part of the Minneapolis / St.Paul metro area. Other counties that are in close proximity are Anoka, Hennepin, Mille Lacs, Stearns and Wright. The vast majority of homes in this area have their own wells from which they derive their domestic water. This provides our laboratory with a large client base to serve. Water Laboratories, Inc has been owned by Kevin J. Kloeppner since October,1991 and previously owned by Craig Willey of Elk River, MN. For Water Laboratories to be certified by the Minnesota Department of Health to perform the "Safe Drinking Water Standards" the laboratory must participate in a yearly and quarterly performance evaluation and blind standards program. Water Laboratories participates in The Wisconsin State Laboratory of Hygiene Blind Standards and Performance Evaluation • Program. Results from the Blind Standards Program are forwarded to the Minnesota Department of Health for approval and certification. For drinking water to be certified as " Safe Drinking Water " by the Minnesota Department of Health the water must pass the " Safe Drinking Water Standards " for Nitrates and Coliform Bacteria set by the U.S. Dep1u talent of Health. The closest competing state certified laboratory is Field Engineering located in Champlin, MN approximately twenty five miles south east of Elk River. Water Laboratories and Field Engineering have a good working relationship and no hostile competition exists. Although Field Engineering is a fine laboratory it is limited to performing only Nitrates and Coliform Bacteria testing. Water Laboratories however is capable of performing approximately fifty different tests in addition to Nitrates and Coliform Bacteria testing. The pricing of services between the two companies is virtually the same. With the increasing demand for environmental testing, the opportunities for growth are excellent in the water analysis field. For example, whenever a new well is drilled the well water must be tested to determine if the water meets the Safe Drinking Water Standards. The water must meet these standards before it can be hooked up to the house and used for consumption. Mortgage companies along with V.A. and F.H.A. require a water test on properties that have a well, as part of the requirements to obtain a mortgage. Fluoride testing of well water is recommended by the Minnesota Department of Health before Fluoride supplements are given to young children. Day • care centers are required to have their well water tested annually for the Safe Drinking Water Standards. Lead in drinking water is becoming a very large issue along with pesticides and • herbicides. As the local populations increase greater demands will be placed upon the ground water supplies. Larger populations mean increased pollution which eventually affects the quality of the ground water. Therefore, the need for qualified analytical services for thinking water testing is very strong and will most likely increase in time. In addition to single home well testing, we also provide testing services for local municipalities. This describes the clientele for which Water Laboratories presently serves and provides an outlook toward the future. In addition, we service the needs of various of local municipalities. Our goal is to provide our customers with the best, quickest and most reliable testing service available. To achieve this we offer many services that our competition does not. For our well drilling customers we offer our analysis services six days a week, whereas most laboratories only accept samples a few days a week to be analyzed. Also we offer free sample kits for our well drilling customers that are prelabeled with a first class mailing label. This insures delivery of the samples to us in the proper time frame. Water Laboratories pays the postage charges for the sample kits. Analysis of the samples is begun the same day we receive the samples and the following day the test results are mailed out. We often times receive requests for fax copies of test results to accommodate a certain situation, such as a mortgage closing. Another service we provide is to contact by phone the well drilling company who ordered the testing that a unsatisfactory result was obtained from the sample they sent us. This is very much appreciated by • our customers since it allows them additional lime to remedy the problem, versus receiving the results in the maiL Again, since the water from a newly drilled well cannot be made available for usage until a sample of the water is found to meet the Safe Drinking Water Standards, it is very important to get test results quickly. We also offer our well drilling customers the option of monthly billing. Thus, we offer low cost, fast and accurate testing for well drilling customers. In addition we are able to serve our well drilling customers with many other water testing capabilities. For our real estate related customers we offer sample pick up by our laboratory within a few days of receiving the request. Often times a request is made for a sample to be collected and tested the day the order is placed. The vast majority of times this type of request is promptly serviced. Coliform Bacteria analysis does require twenty two to twenty four hours incubation before a reading can be taken, never the less the customer is able to receive results the day after the testing was requested. Again, a fax copy of the test results often times provides the necessary requirement for a mortgage closing to proceed , saving many headaches and additional expenses. If a unsatisfactory result is obtained from any water sample we inform the home owner or the person(s) using the water, as in the case of a renter, of the potential health risk along with a recommendation as to a remedy. For fluoride testing and day care businesses the customer can bring in their own water samples for analysis which allows us to charge much less. This provides the community with • laboratory services that are reasonably priced and easily accessible. Promotion of the laboratory is done through the placements of yellow pages advertising in area phone books. Through brochures that explain our services. By belonging to the • Minnesota Well Drillers Association and participating as an exhibitor at the Minnesota Well Drillers Conference. Through advertising in various trade magazines. A company vehicle displays the company logo. The desired image Water Laboratories would like to convey is that of a first rate established business that appears to be established, reliable and secure. Second rate will never be an acceptable level to which this company will strive for. Water Laboratories is designated as a "C" corporation. The owner and president of the corporation is Kevin J. Kloeppner. Secretary of the corporation is Cynthia R. Kloeppner, wife of Kevin. Kevin managed Water Laboratories for approximately one and a half years before purchasing the company from Craig Willey. In addition Kevin has a degree in Water and Waste Treatment Technology. Kevin was also a member of the Central Minnesota Water Quality Task Force Committee. This is where Kevin received the majority of the technical knowledge to operate a laboratory and perform the water analysis. Cynthia is a graduate of the St.Cloud Business College with a degree in bookkeeping and accounting. Both Kevin and Cynthia are on the company payroll. Kevin manages all laboratory operations, while Cynthia manages the office operations. In addition the company employees one full time laboratory technician and one part time secretary. The laboratory technician as a full time employee receives health insurance paid for by the company. Health insurance is also paid for by the company for Kevin and Cynthia. Part time employees do not receive health insurance. Workers Compensation is paid for by the • company for Kevin, the lab technician and secretary. Employees receive one week of paid vacation each year after being with the company for one year. Short term goals for the company is to move to a new location since the present lease is to expire on October, 1993. The purchase of a building is the most desirable option being considered. The proposed location is less than two blocks from the current location and is in a very busy area with a new medical office building across the street. A dental clinic, a real estate office, a abstracting and title company, a investment firm and a construction companies' offices are adjacent to the our proposed building site. Long term goals include the purchase of addition testing equipment and instruments to expand into new areas. Thus providing Water Laboratories with a wide variety of testing capabilities, providing additional opportunities and income and diversity. As Water Laboratories grows additional technicians will need to be employed to service the increased demands. The following page illustrates the growth Water Laboratories has achieved since 1991 when the laboratory was purchased by Kevin J. Kloeppner. Please take note that the change of ownership did not take place until October of 1991. Since that time the laboratory has continually set new sales records. • • WATER LABORATORIES, INC. 800 N U 600 !..,:',... 0 M Bgi E ..,,,s.'$ 1991 R x.. X1992 O 400 ':'.1': ■ 1993 F r'ru x Fe E 2i is �^ £t• 5 �Y 2 � En: 'tr \� o.� \ Y Pi .44 4 • < \�\ i • r' •\ '^ \ �`\'SN A •ate' a 1fS � 1, _ I I JAN FEB MAR APR MAY JUN JUL AUG SEPT OCT NOV DEC 0 WATER LABORATORIES, INC. 16000 14000 • 12000 — :: 1 100• N — 0 1992 C 8000 — mss: in 1993 M :: :::: .. • E 600' —.... -- — • • 4000—::�• : •,�:: • - - :i: 0 11: 1 : { =: } { I':': } : I :: I :: -1 • I : f JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC 0 • ................., ECO-SYSTEMS ENGINEERING 100 N U M 80 B E R 60 0 1992 0i.l ■ 1993 F11 I 40 tX :!% tX) .0 ::00 :Y.:t NIP xxx 20Ilr rin " .13 ntOt — sX) E o? <:!: �) %%% 111; 411; c< YYy ' x:.kSai:i Nil !liF 0 1. JAN FEB MAR APR MAY JUNE JULY AUG SEPT OCT NOV DEC MONTH • • • LENDER'S ANALYSIS Water Laboratories. Inc. HISTORY/MANAGEMENT: Water Laboratories, Inc. is a C corporation located in Elk River, MN since 1988. The corporation is a service provider that specializes in drinking water analysis. The lab is certified by the MN Department of Health, and is able to perform the Safe Drinking Water Standards of Nitrates and Coliform Bacteria. The lab is capable of performing approximately fifty different tests in addition to Nitrates and Coliform Bacteria testing. The customer base of Water Laboratories, Inc. has grown given the increasing demand for environmental testing. For example, when a new well is drilled, it must comply with the Safe Drinking Water Standards before being hooked up to the home for consumption. Kevin estimates that 2/3 of samples come from well drillers. In addition, mortgage companies and FHA/VA mortgage loan programs require a water test on properties that have a well. The trade area Water Laboratories, Inc. serves has a heavy concentration of homes served by private wells. Finally, day care centers relying on a private well need to have their water tested annually, and fluoride testing is also recommended prior to giving fluoride supplements. Along with environmental awareness, Central Minnesota's population growth will continue to • threaten ground water supplies. As development continues, the ground water sources will be exposed to more pesticides, herbicides, and general pollution. Minerals and pollutants from land fills, such as lead, continue to be of concern to communities. The closest competing state certified laboratory is Field Engineering located in Champlin, MN, approximately 25 miles southeast of Elk River. The two companies have a good working relationship and no hostile competition exists. Field Engineering is limited to performing only nitrates and coliform bacteria testing, compared to Water Laboratories' fifty tests. The pricing of services between the two companies is virtually the same. Water Laboratories, Inc. has been owned by Kevin Kloeppner since October 1991. One and one half years prior to purchasing the business, Kevin worked in the lab as a manager. The lab was previously owned by Craig Wiley. Kevin serves as the president of the corporation, and his wife, Cynthia, is Corporate Secretary. Kevin manages all laboratory operations, and Cynthia manages all office operations. Kevin has a degree in Water and Waste Treatment Technology from St. Cloud Technical College and is a member of the Central Minnesota Water Quality Task Force. Cynthia is a graduate of St. Cloud Business College with a degree in bookkeeping and accounting. ECO-Systems Engineering, Inc. is a Subchapter S corporation under the same ownership and management that specializes in the testing of septic systems. This line of business is a good complement to Water Laboratories, Inc. because Kevin has expertise in this field, and clients • who need to have private wells tested often need to have their private sewer and septic systems tested. • USE OF PERSONAL/ BUSINESS RESOURCES: Kevin Kloeppner is requesting a loan to assist Water Laboratories, Inc. in the purchase of a $107,400 office condominium in Elk River, MN. The proposed structure would include: SBA Loan $ 75,000 69.8% Kloeppner's injection 17,400 16.2% Community Development Loan 15.000 14.0% TOTAL $107,400 While Kloeppner and the corporation do have additional resources available for this project, Kevin would like to conserve his working capital resources to support growth. Kevin's additional resources would be utilized in the event of cost overruns. USE OF LOAN PROCEEDS: The loan proceeds would be utilized to purchase an office condominium in Elk River to house Water Laboratories, Inc. and ECO-Systems Engineering, Inc. The building is to be constructed by Dennis Chuba in Fall 1993, for occupancy in November or December 1993. Water Laboratories' unit would be 1400 sq. ft., as drawn in the attached Exhibit A. The builder • utilizes a cost estimate of$75 per square foot. The construction will be wood frame with brick finishes. The contractor will be financing all construction expenses, and our loan will be needed as a takeout only. The loan terms requested from the Elk River Economic Development Authority are $15,000, floating at Prime + 0% with semi-annual adjustments throughout the 15 year term. With an estimated initial rate of 6%, the payment would be $127 per month. The suggested collateral is a second REM on the commercial real estate. The borrower and lender will appear before the Elk River Economic Development Finance Committee in the second week of September. The SBA loan approval is contingent on the approval of the Economic Development financing substantially in the amount and terms relied on in this presentation. BALANCE SHEET ANALYSIS: As of May 31, 1993, Water Laboratories, Inc. had $31M in total assets. As a service provider, the company does not have inventory. With $10M in cash and $7M in A/R from ECO-Systems Engineering, Water Laboratories has a current ratio of 2.43:1. Working capital stands at$10M. Fixed assets consist primarily of lab equipment, with a current net book value of $11M. The fixed assets are on a rapid depreciation schedule because $8M of their $19M cost has been depreciated since purchase in October 1991. The corporation lists $15M in other • assets/intangibles for organizational and start up costs. All but $3M of these intangible assets have been amortized since 10/91. • Liabilities consist of $1M in accrued payroll taxes, and three existing notes payable. The company has $12M in existing bank debt, $2.5M in debt payable to a relative, and $10M in debt payable to stockholder. Because the N/P-Stockholder may be considered as pseudo-equity, the ratio of total liabilities (net of stockholder debt) to tangible net worth (incl. pseudo-equity) currently is 1.33:1. In order to facilitate the purchase of the office condominium by the corporation, Kevin Kloeppner will personally inject $15M of equity into the business. Assuming the approval of the proposed Elk River Economic Development Loan and SBA loan, the ratio of total liabilities (net of stockholder debt) to tangible net worth (incl. pseudo-equity) becomes 3.9:1. The N/P - Stockholder will be put under a standby agreement. Because of the specialty nature of this laboratory, RMA industry comparisons are not available. COLLATERAL: All existing debt is extended on an unsecured basis. The SBA loan would be secured by a first REM on commercial real estate, and a first secured interest in all A/R, Inventory, Equipment, and Intangibles. Kevin is willing to pledge a $10M deposit account as additional collateral. A real estate appraisal complying with FIRREA guidelines will not be required by the bank because the mortgage amount is $75M. • Collateral analysis is as follows: ADVANCE ADVANCE LIQ. LIQ. SOURCE VALUE % VALUE % VALUE CRE Cost $107M 70% $ 75M 60% $ 64M A/R Book 7M 50% 4M 40% 3M Equip. Book 11M 75% 8M 60% 7M Deposit Cost 10M 100% 10M 100% 10M TOTAL $135M $ 97M $ 84M SBA Loan $ 75M REPAYMENT ABILITY: The primary source of repayment for Water Laboratories' proposed loan is the cash flow from Water Laboratories' operations. The cash flow of Water Laboratories, Inc. had been satisfactory in FY 1992, with adequate coverage of debt service obligations. A traditional cash flow analysis would be as follows: • WATER LABORATORIES, INC. FY 92 • Net Income $12,288 Depreciation 2,874 Amortization 3,097 Interest Exp. 2,247 TOTAL CASH FLOW $20,506 EXISTING DEBT SERVICE $ 9,937 EXCESS CASH FLOW $10,569 COVERAGE 2.06 times Based on historical performance and backing out annual rent expense of $3,150, Water Laboratories would have had the cash flow ability to service the debt service in the proposed SBA and Economic Development loan. Interim cash flow is as follows: WATER LABORATORIES, INC. 05-93 • Net Income $ 2,352 Depreciation 1,123 Amortization 1,275 Interest Expense 1,201 TOTAL CASH FLOW $ 5,951 EXISTING DEBT SERVICE $ 4,140 EXCESS CASH FLOW $ 1,811 COVERAGE 1.44 times One note payable which had an $89 monthly payment was paid off in July 1993, which will reduce their debt service on existing debt in the future. 410 The projected cash flows of Water Laboratories for FYs 1993 and 1994 are as follows: S WATER LABORATORIES, INC. FY 1993 FY 1994 Net Income $33,790 $45,425 Depr./Am. 5,500 4,400 Interest Exp. 950 850 * TOTAL CASH FLOW $40,240 $50,675 EXISTING DEBT SERVICE $ 9,491 $ 8,868 PROPOSED DEBT SERVICE 877 10,524 EXCESS CASH FLOW $29,872 $31,283 COVERAGE 3.88 times 2.61 times • The interest expense figure allowed in the projection is inadequate. The annual interest expense would be approximately $9,892 in FY 1993 and $8,892 in FY 1994. While this adjustment would reduce profitability, the cash flow analysis above is not affected by this error because the real interest expense is included in the debt service. The projection is based on the following assumptions: • • Revenues are expected to grow 21.5% from FY 1992 to FY 1993, and 10.4% from FY 1993 to FY 1994. The growth in 1993 is based on YTD performance through May 1993. The actual sales could be higher than that as the last six months of the year are typically peak season. Interim profitability, however, is somewhat depressed because the company incurs extraordinary amounts of marketing expense in the winter months when their clients' and their business is seasonally slow. • Wages and salaries were kept constant with previous years. • Depreciation is modest because it does not include any depreciation on the new building. It simply is a continuation of past depreciation and amortization. • The projection did not include an allowance for property taxes. The estimate for this expense is $3,300, and does not materially impact the projected profit or cash flow coverage. • Most other expenses are self-explanatory and based on historical performance with an • allowance for growth. The display above supports the fact that adequate sources of repayment exist for the debt repayment of Water Laboratories' proposed loans. The operating income of ECO-Systems • Engineering represents an additional source of cash flow. An additional source of repayment is the liquidation of collateral. The collateral analysis above indicates the viability of this source of repayment. • • ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY • TO: FINANCE COMMITTEE MEMBERS FROM: WILLIAM RUBIN, ED COORDINATO/ V U DATE : SEPTEMBER 8, 1993 SUBJECT: LOAN REQUEST FROM KENNETH AND CARRIE BEAUDRY (BEAUDRY OIL, INC. ) INTRODUCTION Ken and Carrie Beaudry, operators of Beaudry Oil, Inc . , 335 Lowell Avenue, have requested a loan from the EDA Revolving Loan Fund in the amount of $50,000 . This loan will be used by the applicants to leverage primary financing and equity for the construction of a convenience store/gas station containing approximately 3,450 square feet to be located in the northeast corner of Highway 10 and Proctor Avenue. BACKGROUND . The cost of constructing and equipping the convenience store is • estimated at $1,049, 865, and is broken down as follows : * Land $ 375,000 * Building $ 258,061 * Petroleum Equipment $ 275,469 * Demolition and Land Preparation $ 7, 000 * Refrigeration $ 89 ,835 * Architect $ 6,500 * Video System $ 3, 000. * Finance Charges $ 35, 000 $1,049 , 865 • Sources of financing for this project are broken down as follows : Percent of Project Primary Lender $ 476,400 45 . 4% OMNI 504 $ 323,600 31. 09% Applicant Equity (land equity) $ 187, 000 Additional Applicant Equity $ 12, 865 19 .0% (total equity) EDA Revolving Loan $ 50,000 4 . 6% $1,049 ,865 100 . 0% • 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 • Loan repayments are proposed as follows : SOURCE TERM INTEREST RATE SECURITY Primary Lender 20 years Prime plus two 1st Real Estate (adjusted Mortgage quarterly) SBA 504 20 years 6% (assumed) 2nd Real Estate ( fixed) Mortgage EDA Loan 10 years Prime (adjusted 3rd Real Estate semi-annually) Mortgage Debt service for the convenience store is outlined as follows : ANNUAL SOURCE . DEBT SERVICE • Primary Lender $47 ,831 (initially) SBA 504 $27,830 ( fixed) EDA Loan $ 6, 665 (initially) TOTAL $82,326 COMPANY NARRATIVE • Information on Ken Beaudry and Beaudry Oil is outlined in greater detail ina summary that is attached to the loan application. Beaudry Oil was formed in December, 1981, and expanded by adding a wholesale division, bulk plant, propane division, convenience, and oil lube division. Beaudry convenience reported sales of $3,037 ,062 and $3, 754,854 in 1991 and 1992 respectively. Gross profit was reported at $472, 010 and $589 ,497 for 1991 and 1992 respectively. Income for the two years were reported at $(6, 980) and $2,815 respectively. Net losses were reported at $( 64, 667 ) and $ ( 17,969 ) respectively. Beaudry convenience reported total assets of $425, 077 and $487 ,433 in 1991 and 1992 . Total stockholder' s equity for the same period was reported at $73, 970 and $82 , 001 respectively. Beaudry Oil and Service, Inc. , reported sales of $13, 680,062 in 1991 and $14, 677,201 in 1992 . Net income - was reported at $266,491 and $167,587 over the two years respectively. Total assets for Beaudry Oil and Service was reported at $1,782,526 and $2, 033, 694 in 1991 and 1992 respectively. Stockholder's equity over the same two years was reported at $263,598 and $303, 247 respectively. Sales at a new convenience store is projected at $5,418, 360 and $6, 930,066 over a two year period. Net income is projected at $44 , 325 and $86 ,452 respectively. • ACTION REQUESTED Upon its review of the Beaudry loan request, the EDA Finance Committee is asked to make a recommendation to the EDA Commissioners on the funding of this loan. The EDA will meet on September 13 , 1993, to consider this matter. As with previous EDA loans, this loan would be secured by a mortgage on the convenience store site plus a Promissory Note and Personal Guarantee signed by the applicant. The primary lender will have a first real estate mortgage against the property, and, the OMNI loan will be a second real estate mortgage. PRESENTATION Ken and Carrie Beaudry will be in attendance to make a short presentation to the Finance . Committee regarding the loan request. • S ECONOMIC DEVELOPMENT REVOLVING LOAN FUND ELK RIVER, MINNESOTA APPLICATION • APPLICANT Ken & Carrie. Beaudry ADDRESS 19701 Rush Street CITY Elk River STATE MN ZIP CODE 55330 CONTACT PERSON(S) Ken Beaudry BUSINESS PHONE 441 _23R3 HOME PHONE 441-5297 AMOUNT REQUESTED R s(l , o[l(l. 0 0 TERMS REQUESTED Mnnthly Installments lOvr Amortization SOCIAL SECURITY NUMBER47R_76_9089 FED ID # 41-1625347 STATE ID # 237 3755 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: Taking the N . E . Corner of Highway 10 and Proctor and developing the corner with a new Convenience Store and gas station . The building will be approximately 3450 sq ft . Gasoline and Diesel Islands will have 40 hoses featuring nolead , unleaded plus , premium nolead , #1 & #2 diesel fuel . The Convenience store will feature soup and sandwiches and normal convenience store items . ' 3 . Purpose of Loan: The purpose of the Loan is to complete the Finance package • needed for the construction of the project . Presently we have $800, 000. 00 secured but are in need of $850, 000 . 00 4 . Cost of Project: A) Land $ B) Buildings (attach plans & costs) $ C) Equipment/Machinery/Fixtures (attach list and estimated costs) $ D) Remodeling $ E) Industrial Inventory/Working Capital $ F) Other (attach description) $ TOTAL COSTS ( see attached for breakdown ) $ $1049 , 865 . 83 5 . Proposed Financing: SOURCE NAME TERMS AMOUNT A) Bank Loan ict National 20yr $476 , 400 B) Bank Loan omni 504 -C) ),, ,(a $323 , 600 C) Other Private Funds $ D) Applicant Contribution Land Equity ( lR7 , nnn )E) Other F) Fed Grant/Loan $ G) State Grant/Loan $ 1 H) This Loan (p YL2.S s $50, 000. 00 TOTAL FINANCING $ $850, 000. 00 -2- 6 . Collateral to be assigned (Describe and show lien position) : A) To Bank: 1st National , 1st place on all Inventory, Property & Eqpt B) To Bank: SBA , 2nd place on all Property, Inventory & Eqpt . C) To Private Funding Source: D) To Other Source: E) To Federal Govt: F) To State: G) To This Loan: E . D . A. 3rd place on all Property, Inventory & Eqpt 7 . Value of Collateral : COST BOOK VALUE EXISTING LIENS Please see apprasial & construction statement A) Land $ $ $ B) Buildings $ $ $ C) Mach. & Equip. $ $ $ D) Other $ $ $ E) Other $ $ $ 8 . Employment*: Provided in projections Present: # of Employees Total Payroll After Project: # of Employees Total Payroll *If Loan is for Job Retention Only, Explain in Business 'Plan. 9 . Attorney, Accountant (Names, addresses, phone) : David Lenhardt Attorney 497-3099 Mosford Barthel & Co . Accountants 332-1033 10 . Bank and Other Credit References (Names, addresses, phone) : 1st National Bank of Elk River 729 Main Street 441-2200 411 -3- 11 . Attach and include the following: A) Written Business Plan: 1 . Description -of Business 2 . Ownership 3 . Management 4 . Date established 5 . Products/Services 6 . Future Plans X B) Financial Statements 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 X G) Letter of commitment from the other sources of financing, stating terms and conditions of their participation in project H) Other I) Other X J) Fee ( 1% of amount of loan request) 111 -4- IIII/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 9-1-93 Applicant Name Kenneth J . Beaudry By , / By • • • —5— FIRST NATIONAL BANK OF ELK RIVER } 72s MAIN STREET • ELK RIVER, MINNESOTA 55330 • (612) 441-2200 August 11, 1993 OMNI 500 Metro Square 121 7th Place E. St. Paul, Mn. 55101 Re: Kenneth J. Beaudry/Carrie J. Beaudry Our Bank Loan Committee has approved a loan request in the amount of $800,000.00 from Kenneth J. Beaudry and Carrie J. Beaudry to construct a convenience store/gas station to be located at Hwy 10 and Proctor Ave. in Elk River. We would like to offer the following loan- proposal which would utilize the SBA 504 Loan Program: LOAN • CONSTRUCTION Amount: Not to exceed $800,000.00 Purpose: To finance construction of convenience store/gas station to be at located Hwy 10 and Proctor Ave. in Elk River. (Survey to Govern) Store to be leased to Beaudry Convenience, Inc. Rate: Prime plus 21 floating. Pee: 1/2% of the construction loan payable at closing. Term/Repayment: Six month construction note with interest payable monthly based on a 365 day year. Collateral; First Real Estate Mortgage on the project including all equipment, furniture and fixtures'. Corporate Guaranty of Beaudry Oil & Service, Inc. and Beaudry Convenience, Inc. • Appraisal: An appraisal will be required that is acceptable to First National Bank of Elk River on the real estate supporting a loan value described above. •MMERMAN OFFICE FIRST NATIONAL MORTGAGE FIRST NATIONAL SECURITIES Mary &Main Street 729 Main Street 729 Main Street Local: (612) 856.2266 Elk River, Minnesota Elk River, Minnesota Metro: (612)421-0463 (612)441-7133 (612)441-2200 ext..16 800 PI SNVE 'LYN IS2fId TZ6C Tfi6 ZT9,$ T111 C6/T0/60 000-//<°'' • Teske Out: Written Commitment acceptable to Bank from SBA, • utilizing the 504 Loan Program in en amount of at least $323, 600.00 needs to be provided at closing. Disbursements: Disbursements under this construction loan will be made by a Title Insurance Company pursuant to a disbursing agreement acceptable to the Bank, between Borrower, Bank and Title Company. Expenses: All expenses in connection with this transaction shall be paid for by the Borrower, including but not limited to Title Insurance, Attorneys fees, Mortgage Registration tax, loan documentation and appraisal fees regardless of whether the loans contemplated here actually close. Start of Construction: No work may be started on the project until; 1. The construction loan to Borrower is closed. 2. The mortgages are recorded. 3. Authorization from the Title Company is received. Environmental Study: Borrower shall provide to the Bank an acceptable environmental study, indicating • the soil and water conditions are free of any toxic substances which may adversely affect the evaluation of the property. Additional Documents: A. Plans and specifications for the project which have received final approval from The City of Elk River. B. A draw schedule for the project. C. A sworn construction statement for the project. D. All permits necessary for the commencement of the construction project. PERMANENT REAL ESTATE LOAN Amount: The Bank will not exceed $476,400.00. SBA will provide $323, 600.00. The Borrower will provide the remaining funds necessary to pay in full the construction loan. Purpose: Proceeds will be used to refinance the above described construction loan. Rate: Prime plus 2% with a CAP of 13% over the life of the loan. • Interest rate would be adjusted quarterly. 600n ilNVH %LYN lS2II3 TZ6C TI i ZTWID TT:TT C6/T0/60 Fee: 1% of the permanent loan funds provided by the Bank. 0 Term: 20 year amortization. Collateral: First Real Estate Mortgage on the convenience store/gas station at Hwy 10 and Proctor Ave. in Elk River. CONDITIONS COMMON TO BOTH LOANS: Closing on both of the above described loans contemplated by this commitment letter shall be conditioned upon the following terms and conditions; Subordinated Mortgages: The borrower shall obtain subordinated mortgage financing commitment totaling S323, 600.00 from SBA. Said financing shall be for a period of 20 years at a rate to be determined when SBA debentures are sold. Loan Agreement: Loan Agreement will be developed and executed that will include but not limited to financial covenants, financial reporting requirements, default provisions, warrants and representations. Relationship: The Borrower agrees to establish and maintain a depository relationship with the Bank for the ongoing operation of the convenience store/gas station. • Expiration: This commitment will expire 60 days from the date of this letter and is subject to renewal at the option of the Bank. . Revocation: This commitment may be revoked by the Bank any time prior to the expiration date should any adverse factors develop that are materially different from the information provided to the Bank by you, or obtained by the Bank relative to its approval. We are pleased to work with you on this project and look forward to helping you finance the new facility. If you have any questions regarding this commitment, please give me a call. Sincerely, _464, Tom Lund Assistant Vice President TL:lcb • 0T02, )1NV 'INN IS2IId TIBC T'P ZT9$ ZT:TT C6/T0/60 • We hereby accept this commitment as outlined above: ;::::: s: J. =eaudry 0,w1 rie J. eau-dry ` S • ,,•. • TIO21 3INVEI '1.YN ZSHId TUC 'Mt ZT9Q. ZT:TT C6/T0/60 / , 10' t;RAI\ .04441817,.±,i 0 ti 1 e . p0 t I/ R 01a��£P ,1po �c� V`I'nr''ai Oil 1 11+ AVE I P ; :: SS' 16 ` Al lielil AffAINTLION \ �, P p R� `' iftir '-----131-'1 ii�� At 190 / OV LOT • OWEF 'f 33 34 y 0 Rpy�� 1r y; \ SI. KullElam.Shod EI•m School ❑ •N. 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'I -71 1 i• ill imi DITOR 4P.44.,N% 44.41014w..a‘ ..1 411q00 ,1 " ei;)6111,gaisVis tior 1; 4. 40/ jr spa riti1a N` ..-k • r ;._ .� \\N,..,.. ....... \ �i „et �, �Iii "du �<4._ \........ ,, lit ...„.,5 "pr.i 8/� ''11D tip iii 1 �� aI ca ©� /3/ , _ ' ‘] —,1 I a , - 'Q'F� �zP......„ \ ii. , _ �'4� �___' Sao \, � _ j ``moo \\ �1 SITE 1(ii 1 i%ll 7 � ��\\....„ ��,; `, lei �l - \;\\ \ 1' - - „\\, ,, , A \•,...:\ 11 4 1/1/ I i \ \\ . , \ il t li ,......„.. , „. \ ii .__:., , A ,t % .i,., .‘, _.--_-_-__-= I \� o ri _. „. _ , • I \ - 1 _ !� I �� & E CONSTRUCTION MANAGERS, INC. :The "Solution Specialists" - Bus. (612) 251-1302 •: —–� - Fax (611) 259-6991 225 N. Benton Dr., Suite 209, Sauk Rapids. MN 56379 • September 2, 1993 • Beaudry Oil Company 335 Lowell Ave Elk River, MH 55330 Ret Beaudry Express Convenience Store • Ken, Please except our bid for the Hwy le & Proctor Ave aer per plans end specs. The price of the project broken down in as • • fealokR t Property: • Land (#1a7, P e. 00 equiiy $375, øøLø included) Building & Equipments Building $258, 061. 613 Petroleum Equpipment 9275, 469. 00 Demolition & Land Prep * 7, 000. 0 Refrigeration * 89, 835, 0 • Architects 9 6, 500. 0 • Video System 8 3, 000, 0 Finance charges * 35# 000. 0 �r Total Project *1, 049, 86S 83 Price includes complete building finished, a 1 refrigeration equipment installed, all gondolas and aabinelrry installed, canopy and all petroleum equipment, land preparation, blacktop surfacing, curb and gutters, storm ever, sewer and water hookups, architectural fees, all permi a and soil testing. • Again thank you for the opportunity to work ith you on thin project. If you have any questions please give me a call. ! . Thank you O4ifc4L– Doutan A. Carlson • President, C t E Construction Managers, Inc • d • APPRAISAL REPORT OF: Highway 10 and Proctor Avenue Elk River, MN 55330 FOR: • Mr. Tom McNair Senior Vice President First National Bank of Elk River 729 Main Street Elk River, MN 55330 BY: Riverside Appraisals 241 Main Street Unit #4 P.O.Box 279 Elk River, MN 55330 • (612) 241-0714 Riverside Appraisals Elk River, Minnesota • May 26, 1993 Tom McNair First National Bank of Elk River 729 Main Street Elk River, MN 55330 Re: Highway 10 and Proctor Avenue Elk River, MN 55330 Dear Mr. McNair: At your request, we have completed an analysis of the fee simple interest of the subject facility property located at Highway 10 and Proctor Avenue, Elk River, MN. The conclusions of the analysis are stated in the form of an abbreviated appraisal. This report summarizes the analyses and conclusions regarding the subject property. The physical inspection and analysis that form the basis of the report have been conducted by or under the supervision of the undersigned. • As a result of the examination and study made, it is our opinion that the Market Value of the fee simple interest in the subject property is: As-Is, May 26, 1993: $335,000 As Finished, as of August 31, 1993: $1,020,000 This report is done subject to completion per plans and specifications. This report has been made in conformity with the standards of professional practice and rules of professional ethics of the American Institute of Real Estate Appraisers. Respectfully submitted, 1'1 E Ji mes Foster, Appraiser 5 •eton Foster, Appraiser •erside Appraisals iverside Appraisals • Riverside Appraisals Elk River, Minnesota • SUMMARY OF SALIENT FACTS AND CONCLUSIONS LOCATION: Highway 10 and Proctor Avenue, Elk River, MN LEGAL DESCRIPTION: Lots 3, 4, 5 and 6, Block 8, W.H. Iloulton's Addition to the Village of Elk River. OWNERSHIP: The property is listed under the ownership of Kenneth J. and Carrie J. Beaudry. LAND AREA: 42,400 square feet ZONING: C-3 Highway Commercial HIGHEST AND BEST USE: Commercial IMPROVEMENTS: Proposed construction of a gas station with convenience store. HAZARDOUS MATERIALS: The property does not appear to have any hazardous material. FAL VALUE ESTIMATE: • As-Is, May 26, 1993: $335,000 As Finished, August 31, 1993: $1,020,000 DATE OF VALUATION: May 26, 1993 No personal property was included within this report. • • �� Oil�� '��.�4��~�J� �� Co.�~�'��' A Division of Beaudry Oil & Gervi000, Inc. September 2, 1993 RE: Request for Loan Dear E. D. A. At this time I am requesting a loan from your organization in the amount of $50, 000. 00. I have worked for almost a year at Financing this project and was able to obtain $800, 000. 00 in Financing Secured threw Omni 504 program, the SBA and 1st National Bank of Elk River. However I am still $50, 000. 00 short of the needed $850, 000. 00 Financed to complete the project. My intent of this letter is to give a few reasons why I believe I qualify for the full $50, 000. 00. As a Businessman in the city of Elk River for almost 13 years I have always been concerned in seeing the West End of town developed, however it hasn' t developed to the degree I always thought it would. At this time we have a great opportunity to renovate the N. E. corner of Proctor and Highway 10. Presently there is two homes that are in very rough shape. I invite any of the committee to walk on the properties and take a close inspection of the homes. The blue house on the corner for example the eaves are rotted and you can see right up to the rafters. The house is very poorly insulated and I am told the house is in tough shape and will have to be demolished. The white house to the East of the blue house has a leaky roof, is poorly insulated and has rotting siding on it. It also will need to be demolished. We have a great opportunity to take a rough looking corner and beautify it with a new commercial establishment which will have a much larger tax base and is in compliance with what that corner is zoned for (which is C-3 Highway Commercial) . which is by the way the first corner with lights that travelers see going East into Elk River. In respect to providing Jobs we will also have on staff approximately 20 part-time and full-time employees combined, including bookkeeping. In closing I am in need of the full $50, 000. 00 loan that the E. D. A. provides. I thank you for your consideration and look forward to working with you. 41) Since. ely, w� 4 ^� � - �� ism ° ~�� / .1111/ Kenneth J. eaudry 335 Lowell ^ venue • Elk :��-r. Minnesota 55330 • 612/441'2383 i Beaudry Oil Co. A Division of Beaudry Oil & Services, Inc. September 2, 1993 Dear E. D. A. This letter will be a brief background on Ken Beaudry the president of Beaudry Oil and Beaudry Convenience, also a brief background on said companies. Ken Beaudry was born February 13th, 1957 to Lester and Martina Beaudry. He was raised on a 200 acre Dairy Farm two miles north of Albertville Minnesota. His father had a belief in letting each of his son' s have a turn at managing the farm, mostly the Dairy Division. At the age of 17 Ken managed his fathers farm for approximately two years. As he worked on as manager of the farm he took college classes at North Hennepin Community College for Business Sales and Management. Wanting to get out on his own ken worked for Spancrete as a Heavy Equipment Operator for . two years, and then as a Iron Worker on buildings. On April 13, 1979 Ken •received his Real Estate Licence and immediately went to work • as an agent for Barthel Homes and RealtyHis sales record in the company is as follows: • 1979 3rd in sales 198th1st in sales 1981 1st in sales On December 4th of 1981 Ken and Carrie Beaudry founded Beaudry Oil Co. Here is a brief background on Beaudry Oil : 1982 to 1984 Increased Sales 1985 Started Wholesale Division 1986 Increased Sales 1987 Built New Bulk Plant Facilities and started Beaudry Propane Division 1988 Founded Beaudry Convenience 1989 Started Lubes Division 1990 Expanded Beaudry Convenience 1991 to Present continue to increase sales of all Divisions of Beaudry Oil and Beaudry Convenience, also working on company image, evaluating weak points, profit points and strategies in the companies. Thank you for your time if you have any question please call. Sicerely, �r /- ►. , Kenneth J. Bcsa 335 Lowell Avenue • Elk River, Minnesota 55330 • 612/441-2383 ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY 1 • TO: EDA FINANCE COMMITEE MEMBERS FROM: WILLIAM RUBIN, ECONOMIC DEVELOPMENT COORDINATO DATE: SEPTEMBER 10, 1993 SUBJECT: LOAN REQUEST FROM RICHARD AND DAWN SCHULZ R & D SALES, INC. INTRODUCTION Richard and Dawn Schulz, proprietors of R & D Sales, 580 Dodge Avenue NW, have requested a loan from the EDA Revolving Loan Fund in the amount of $17,500 . This loan will be used by the applicants to leverage primary financing and equity for the construction of a 2, 300 square foot production and sales facility to be located on a lot of record along County Road #1 (directly north of the Elk River Industrial Park) . BACKGROUND The cost of constructing and equipping the new facility is estimated at $102, 000 and is broken down as follows : • Land $ 28,000 • Building $ 74, 000 $102,000 Sources of financing for this project are broken down as follows : Percent of Project Primary Lender $ 72,000 70 . 6% Applicant Equity $ 12,500 12 .25% EDA Revolving Loan $ 17 ,500 17 . 15% $102,000 100 . 0% Loan repayments are proposed as follows : SOURCE TERM INTEREST RATE SECURITY Primary Lender 15 years Prime + 2 .5% 1st Real Estate ( fixed 1st 5 yrs) Mortgage EDA Loan 15 years Prime (adjusted 2nd Real Estate semi-annually) 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 Loan Request R & D Sales Page 2 September 10, 1993 • Debt service for the new facility is outlined as follows : ANNUAL DEBT SOURCE SERVICE Primary Lender $ 8,510 (first 5 years) EDA Loan $ 1, 773 (initially) $10,283 COMPANY NARRATIVE Information on R & D Sales is outlined in greater detail in a summary that is attached to the loan application. It was established in May, 1985, and is owned and operated by Richard and Dawn Schulz . R & D Sales is a computerized embroidery specialty shop. It offers a wide array of embroidered items such as caps, jackets, sweatshirts, golf shirts, T-shirts, s etc. All these items are offered to corporate p e accounts or to individuals . Production is completed on computerized embroidery equipment. R & D Sales reported sales of $330,554 and $343,563 in 1991 and 1992 respectively. The company reported a net profit/loss of $( 14,371) and $24,722 in 1991 and 1992 . Sales through June 30, 1993 are reported at $196, 164; net profit is reported at $5,486 . • R & D Sales reported total assets in 1991, 1992, and through June 30, 1993, of $35,418, $42,898, and $50,505 respectively. Total liabilities are reported at $39,881, $22,639 , and $23,012 over the same time periods respectively. The applicants estimate that corporate and wholesale accounts should increase ten to fifteen percent each year. The remaining sales accounts should increase by five percent. Projected expenses should decrease as a result of a financial lease contract on production equipment being fulfilled in the upcoming year. The applicants do not foresee the need for new equipment in the near future. ACTION REQUESTED Upon its review of the Schulz loan request, the EDA Finance Committee is asked to make a recommendation to the EDA Commissioners on the funding of this loan. The EDA will meet on September 13, 1993, to consider this matter. As with previous EDA loans, this loan would be secured by a mortgage on the Schulz property plus a Promissory Note and Personal Guaranty signed by the applicants . 111 Loan Request R & D Sales Page 3 September 10, 1993 • PRESENTATION Richard and Dawn Schulz will be in attendance with their primary lender to make a presentation to the Finance Committee regarding this loan request. • • s n ECONOMIC DEVELOPMENT REVOLVING LOAN FUND ELK RIVER, MINNESOTA APPLICATION • APPLICANT S0r\W, \AvN 1��isllQ �Slk LL ADDRESS \ROI, �A c51- CITY j CITY \-$-- 1Ut12 STATE '(Y\n ZIP CODE S S?Dl C) CONTACT PERSON S BUSINESS PHONE y`-\ - \9\L HOME PHONE L'iL1 - X 53 AMOUNT REQUESTED 1 4 9 00 TERMS REQUESTED Do NE4RS SOCIAL SECURITY NUMBER LO - (S)3 FED ID # Wi = \\-V1 t STATE ID # a 3959 39 Type of Project: X Construction/New Building Expansion/Existing Building Equipment/Machinery Purchase Remodel/Commercial • Retail/Industrial Industrial Inventory Working Capital Other CDDescribe Project: i cc v►L �1ti� E�tCT�t� ` .i \-67 2.0c.$EiD rn4\!o C,1 1Y 1°,\Yn\�S 1R\VE� :�N kVaR Oc: 1v(L\ - s1-13\ -:J:yJi-1-\t h S A M1l J�'rv1 S4®1‘)-9\tik7 WCIA-1,5 y � AILV65 ) SJR SOZ_,it t- I Q.RaY..\\k \j i q) Purpose of Loan: i xQ� \1\6, r. \EAS\' \ \33\-\ c. �z S 0.,uN a+'��i S F(at+��Z; , t �o C\K:,� \qZ (17i/6w-0A � w t.S.Cn,`; \o lJ(?(tilr CG a)< o c.•')t\�5� ,c:v,3 cv..\yNk_�� ,'V i v�;'v(,- `F T c , \.),30,y.) c-\\\ HD''J3 4 . Cost of Project: (A Land $ ;�B 000 . D 0 cBuildings (attach plans & costs) $_1'' Czo . O 7 C) Equipment/Machinery/Fixtures (attach list and estimated costs) $ • D) Remodeling $ E) Industrial Inventory/Working Capital $ F) Other (attach description) $ TOTAL COSTS $ /O 1 ). O D 5 . Proposed Financing: SOURCE NAME TERMS AMOUNT Bank Loan 'T\-!E 7a, 000 .00 B) Bank Loan $ C) Other Private Funds $ aApplicant Contribution $_) Z.1 S-00 c00 E) Other $ F) Fed Grant/Loan $ G) State Grant/Loan $ • This Loan ()14, :7 syENZ $ /7,5000oo TOTAL FINANCING $ lo? ,`Jct -2- 6 . Collateral to be assigned (Describe and show lien position) : A) To Bank: B) To Bank: • C) To Private Funding Source: D) To Other Source: E) To Federal Govt: F) To State: G) To This Loan: 7 . Value of Collateral : COST BOOK VALUE EXISTING LIENS A) Land $ $ $ B) Buildings $ $ $ C Mach. & Equip. $ $ $ D) Other $ $ $ E) Other $ $ $ 8 . Employment* : Present: # of Employees -� Total Payroll 5014.50 Y1'1N After Project: # of Employees j Total Payroll Si�l c\A. *If Loan is for Job Retention Only, Explain in Business Plan. ThZN 1'$ 9 Attorney; Accountant (Names, addresses, phone) : ` 1YY11r`)j k, 13103 azo A1 #3 \ PnrA'<1_ (7 PAN) 10 Bank and Other Credit References (Names, addresses, phone) : clANAL Stc � �i ��; c).-‘;,Az Q ac\��, ., v'';n�l ,i \N\ • -3- . • 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 9 -9 - 913 Applicant Name By7/ G-�- L-Z By /dIC- .. 1 - dC`c- I • • -5- Thin 2 2 Russ, �csy • 6 a ii ounor c 1 IDN 01.17L07 a "•• 1 20 21 , moa r q2L28 .4P \ . 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Awa Mal 1,0 _ QO pi �iF� O 11) / 1 6 c-) •a a —11.7",-0 •9 4iy d o% q� A'p I I. • !~ ,%� N �v,•�I/POP 9tit Rp �4 1� 4';m of I68irl1114�OO4k7 'I • ,, 1;61010 �� kli S 1 °a fti/1 C c iW.10�► � — SC-IDOL A 0 D L111111 Ir ■. 1 uja .....Z=....-- �!a� C/RCL °� F. ) �(. °N a --7—'1"' liffal QI • `\ p suB°' >. 6— n/ ZAR ff,iii : ) s,_-01.401111 ..• • /Akar ___....._.___.... . ,r, 1. 6 TI4—°- ST.L N. c_il fr 46; m 13 77T /d' ---\ LAKE \\ ©�� V�mila �''[7 C Mi �� ___ GS ORONO iziravin _ 4 = e j_ 1 \la zie: t H// \ �� Com/ �, N i R & D Sales, Inc. 580 Dodge Avenue, Elk River, MN 55330 • (612) 441-4416 • Fax (612) 441-5737 R. &D Sales was established as a business on May 9, 1985. It is owned and operated by Richard W. and Dawn M. Schulz as sole proprietors. R & D Sales has been an S-Corporation since September 28, 1988. Officers: Richard W. Schulz - President / Treasurer Dawn M. Schulz - Vice President / Secretary • 19173 Zane Street N. W. Elk River, MN 55330 (612) 441-2531 - Residence (612) 441-4416 - Business R & D Sales, Inc. is a computerized embroidery specialty shop. Our clientele is nationwide from large corporate accounts to small individual personalized items. We embroider on a wide range of items which include caps,jackets, sweatshirts, golf shirts T-shirts, towels, bags, shorts, sweatpants and ties. Other services we offer are multi-color screen printing, art department, typesetting and individual packing and drop shipments of complete garments. The future plans for R & D Sales, Inc. are to broaden its sales base with unique creativity, top quality, dependable service and competitive pricing. We have up to date production equipment which we plan to maximize on its output capabilities by adding a second shift. • Richard William Schulz 19173 Zane St . N.W. Elk River, MN. 55330 612-441-2531 D.O.B. 9-13-59 S.S. 473-80-1963 High School Graduate 1978 Dunwoody Industrial Institute Midwest Cap Mfg. Sales Reynolds Printing Laser Scanner Operator Self Employed Dawn Michelle Schulz 19173 Zane St . N.W. Elk River, MN. 55330 612-441-2531 D.O.B. 4-01-62 S.S. 469-56-1016 High School Graduate 1980 Crystal State Bank Teller Prudential Claims Examiner Employee Benefit Claims Re-insurance Claims Examiner Self Employed Richard and Dawn Schulz as officers of R & D Sales , Inc. make the following sales projections . We project all corporate and wholesale accounts to increase 10 - 15 percent each year. All remaining sales accounts should increase by 5 percent. Our expense projection should decrease due to the fact that a financial lease contract on production equipment will be fulfulfilled in the coming year. We do not forsee the addition of new equipment in the near future. RichardSchulz tbile.e2Dawn Schulz 09/03/93 15:08 $612 259 9404 GENESIS CABLE AD [j002 4 Elk River TREATMENT Robert Chouinard Initial Draft 8/30/93 Revised 9/1/93 Revised 9/3/93 FADE UP FROM BLACK: (We are greeted by a peaceful, early morning river shot which slowly dissolves into a mid-aged person taking his/her early morning walk in a city park next to chamber sign. A late afternoon ball game fades into an early evening dinner. ) NARRATION: WHERE THE MIGHTY MISSISSIPPI MERGES WITH THE ELK RIVER, LIES A VIBRANT AND SPIRITED COMMUNITY. . . ELK RIVER, MINNESOTA, WHERE CITY AND COUNTRY FLOW TOGETHER. (Natural sounds can be heard as we see a plow breaking ground. • Another shot reveals a man with an oxen plowing at the Kelley Farm. This shot slowly dissolves into an earth mover pushing dirt in the community. Another shot lets us look at the night life on main street as a couple walk hand in hand. ) ORIGINALLY SETTLED AS A TRADING POST IN THE MID-1800'S, TODAY ELK RIVER IS LED BY A STRONG COMMITMENT TO BUSINESS AND INDUSTRIAL GROWTH, AND IS ONE OF THE STATE'S MOST DYNAMIC CITIES. (Elk River's water tower or an aerial shot of the community. The next shot reveals an interior shot of the refuge, followed by a lake Orono scene and a nice looking residential shot with a person mowing his/her lawn. ) ELK RIVER HAS GROWN TO BE A LEADER IN EDUCATION, RECREATION, AND PUBLIC SERVICES. IT IS HOME TO THE OLIVER KELLEY FARM, FOUNDER OF THE NATION'S FIRST FARMER'S ASSOCIATION, NUMEROUS PARKS AND PLAYGROUNDS AND PEACEFUL RESIDENTIAL NEIGHBORHOODS. ( Interior shot of the Twins/Vikes or the Elk River High School football team playing in the dome. The following shot should be a notable place in the community. State map page, then we see two people talking about the game over a back yard fence. ) • LOCATED JUST THIRTY-rIVE MINUTES FROM THE HUBERT H. HUMPHREY METRODOME, THIS SMALL TOWN AMBIENCE IS CAREFULLY BALANCED WITH THE CLOSE PROXIMITY OF THE GREATER METRO AREA. IT ENABLES ELK RIVER RESIDENTS AND BUSINESSES TO ENJOY THE BEST OF BOTH WORLDS_ 09/03/93 15:08 $612 259 9404 GENESIS CABLE AD Q003 • CA long shot reveals an industrial park to the viewer. A boom shot from a crane or a balloon shot would show off the park better. Other ground shots and activity. ) WITH ROOM TO EXPAND, NUMEROUS SITES ARE AVAILABLE FOR COMPANIES ON THE MOVE, AND MOST ARE COMPLETE WITH WATER AND SEWER LINES, ELECTRICITY, NATURAL GAS AND METRO PHONE SYSTEMS. BUSINESSES AND COMMUTERS ENJOY CONVENIENT ACCESS TO HIGHWAYS 10, 169, AND I-94. (We see a group of people with silver shovels ground breaking in the industrial park. We then see the map of the industrial parks in relation to the highways. Possible shot from inside semi truck going down highway and showing expansions in Elk River_ ) ELK RIVER'S AREA CHAMBER OF COMMERCE, CIVIC LEADERS AND THE ECONOMIC DEVELOPMENT AUTHORITY HAVE PLACED A HIGH PRIORITY ON SUCCESSFUL ECONOMIC STRATEGIES. (Interior of an Elk River school. Individual shots will show people practicing advance math. Another playing a violin, and yet another excelling at sporting event. These scenes fade into an older person working in a community education class. He or she is enjoying what they are doing.) ELK RIVER SCHOOL DISTRICT 728 IS A LEADER IN OUT-COME BASED EDUCATION. IT RECOGNIZES EACH STUDENT'S POTENTIAL FOR INDIVIDUALIZED GROWTH AND ACHIEVEMENT_ _ _ AND LEARNING NEVER CEASES WITH COMMUNITY EDUCATION CLASSES FOR ENRICHMENT, CAREER ADVANCEMENT, OR JUST FOR FUN. (Shot of community and technical college classrooms. Other shots of major universities will follow. ) THERE ARE SEVERAL COMMUNITY AND TECHNICAL COLLEGES WITHIN A 20 MILE RADIUS, AND THE UNIVERSITY OF MINNESOTA, ST. CLOUD STATE UNIVERSITY, AND NUMEROUS PRIVATE COLLEGES ARE WITHIN AN HOUR'S DRIVE. (Interior shots of people working hard. Any number of businesses could be represented but UPA would be a nice facility to see, as well as signs from Tescom, Altool, Elk River Machine, etc_ ) • ELK RIVER BOASTS A PRODUCTIVE WORK FORCE WHICH HELPS MAKE THE 4 COUNTY AREA A LEADER IN JOB CREATION. DURING THE PAST TWO DECADES, EMPLOYMENT OPPORTUNITIES CONTINUE TO KEEP PACE WITH POPULATION GAINS. THIS IS DUE, IN PART, TO A DIVERSE GROUP OF BUSINESSES AND INDUSTRIES LOCATED IN ELK RIVER. 09/03/93 15:09 V612 259 9404 GENESIS CABLE AD 0004 • (We are back in the industrial park showing new construction or additions of existing buildings. City council talking over a map of the industrial park. Council people reassuring each other that their plan is sound and just. Shots of local lending institutions. ) THE CITY WELCOMES THE CHALLENGE OF PROVIDING INNOVATIVE FINANCING TO NEW . AND EXPANDING BUSINESSES. PROGRAMS MAY INCLUDE: INDUSTRIAL REVENUE BONDS, TAX INCREMENT FINANCING, ECONOMIC DEVELOPMENT UTILITY RATE, OR SUPPLEMENTAL MICRO-LOANS. AS PART OF ELK RIVER'S COMMITMENT TO RETAIN A HIGH QUALITY OF LIFE, THE CITY COUNCIL ADOPTED A GROWTH MANAGEMENT PLAN TO ENSURE THAT GROWTH RELATED ISSUES ARE EFFECTIVELY MANAGED. THIS IS ELK RIVER'S COMMITMENT TO CREATING BETTER JOBS, PROVIDING QUALITY HOUSING OPTIONS, AND PRODUCING MORE OPPORTUNITIES FOR EVERYONE. (Industrial park showing yet another expansion. Exterior shots of • neighbor kids playing. A sporting event shows an Elk River team's smashing success. Interior shot of an antique shop, a high school class room, and inside of a church. ) THIS IS THE PLACE TO WORK. . . RESIDE. . . AND GROW. COMMUNITY PRIDE AND SERVICES WILL ALWAYS KEEP ELK RIVER UNIQUE. THIS IS REFLECTED IN EACH BUSINESS. . .EACH CLASSROOM. . . EACH HOME. (Aerial or back to the river with the closing title and natural sound) COME JOIN US, AND BE A PART OF ELK RIVER'S FUTURE. CREDITS FADE TO BLACK • 09/03/93 15:10 22612 259 9404 GENESIS CABLE AD Ij006 S woo Elk River Script Initial Draft 8/30/93 Revised 9/1/93 Revised 9/3/93 WHERE THE MIGHTY MISSISSIPPI MERGES WITH THE ELK RIVER, LIES A VIBRANT AND SPIRITED COMMUNITY. . . ELK RIVER, MINNESOTA, WHERE CITY AND COUNTRY FLOW TOGETHER. ORIGINALLY SETTLED AS A TRADING POST IN THE MID-1800 'S, TODAY ELK RIVER IS LED BY A STRONG COMMITMENT TO BUSINESS AND INDUSTRIAL GROWTH, AND IS ONE OF THE STATE'S MOST DYNAMIC CITIES. • ELK RIVER HAS GROWN TO BE A LEADER IN EDUCATION, RECREATION, AND PUBLIC SERVICES. IT IS HOME TO THE OLIVER KELLEY FARM, FOUNDER OF THE NATION'S FIRST FARMER'S ASSOCIATION, NUMEROUS PARKS AND PLAYGROUNDS AND PEACEFUL RESIDENTIAL NEIGHBORHOODS. LOCATED JUST THIRTY-FIVE MINUTES FROM THE HUBERT H. HUMPHREY METRODOME, THIS SMALL TOWN AMBIENCE IS CAREFULLY BALANCED WITH THE CLOSE PROXIMITY OP THE GREATER METRO AREA. IT ENABLES ELK RIVER RESIDENTS AND BUSINESSES TO ENJOY THE BEST OF BOTH WORLDS. WITH ROOM TO EXPAND, NUMEROUS SITES ARE AVAILABLE FOR COMPANIES ON TEE MOVE, AND MOST ARE COMPLETE WITH WATER AND SEWER LINES, ELECTRICITY, NATURAL GAS AND METRO PRONE SYSTEMS. BUSINESSES AND COMMUTERS ENJOY CONVENIENT ACCESS TO HIGHWAYS 10, 169, AND 1-94. ELK RIVER'S AREA CHAMBER OF COMMERCE, CIVIC LEADERS AND The ECONOMIC DEVELOPMENT AUTHORITY HAVE PLACED A HIGH PRIORITY ON SUCCESSFUL ECONOMIC STRATEGIES. ME ELK RIVER SCHOOL DISTRICT 728 IS A LEADER IN OUT-COME BASED EDUCATION. IT RECOGNIZES EACH STUDENT'S POTENTIAL FOR INDIVIDUALIZED GROWTH AND ACHIEVEMENT. . . AND LEARNING NEVER CEASES WITH COMMUNITY EDUCATION CLASSES FOR ENRICHMENT, CAREER ADVANCEMENT, OR JUST FOR FUN. THERE ARE SEVERAL COMMUNITY AND TECHNICAL COLLEGES WITHIN A 20 0 MILE RADIUS, AND THE UNIVERSITY OF MINNESOTA, ST. CLOUD STATE UNIVERSITY, AND NUMEROUS PRIVATE COLLEGES ARE WITHIN AN HOUR'S DRIVE. 09/03/93 15:10 $612 259 9404 GENESIS CABLE AD 0005 4 ELK RIVER BOASTS A PRODUCTIVE WORK FORCE WHICH HELPS MAKE THE FOUR COUNTY AREA A LEADER IN JOB CREATION. DURING THE PAST TWO DECADES, EMPLOYMENT OPPORTUNITIES CONTINUE TO KEEP PACE WITH POPULATION GAINS. THIS IS DUE, IN PART, TO A DIVERSE GROUP OF BUSINESSES AND INDUSTRIES LOCATED IN ELK RIVER. THE CITY WELCOMES THE CHALLENGE OF PROVIDING INNOVATIVE FINANCING TO NEW AND EXPANDING BUSINESSES. PROGRAMS MAY INCLUDE: INDUSTRIAL REVENUE BONDS, TAX INCREMENT FINANCING, ECONOMIC DEVELOPMENT UTILITY RATE, OR SUPPLEMENTAL MICRO-LOANS. AS PART OF ELK RIVER'S COMMITMENT TO RETAIN A HIGH QUALITY OF LIFE, THE CITY COUNCIL ADOPTED A GROWTH MANAGEMENT PLAN TO ENSURE THAT GROWTH RELATED ISSUES ARE EFFECTIVELY MANAGED. THIS IS ELK RIVER'S COMMITMENT TO CREATING BETTER JOBS, PROVIDING QUALITY HOUSING OPTIONS, AND PRODUCING MORE OPPORTUNITIES FOR EVERYONE. THIS IS THE PLACE TO WORK. . .RESIDE. _ .AND GROW. COMMUNITY PRIDE 411 AND SERVICES WILL ALWAYS KEEP ELK RIVER UNIQUE. THIS IS REFLECTED IN EACH BUSINESS. . .EACH CLASSROOM. . .EACH HOME. COME JOIN US, AND BE PART OF ELK RIVER'S FUTURE. i • CITY SOURCES/CITY PARTICIPATION RE: ELK RIVER BUSINESS PARK FINANCING CONCEPTS *Tax Increment Financing (TIF) - Access funds for existing TIF Districts to purchase land and/or improve property - Recapture funds through: a) cash sales; or b) creating new TIF Districts - Reuse TIF Funds for other phases *EDA Levy - Use a portion of the EDA's annual levy to acquire land and/or make improvements - Excess Levy (reverse referendum) *HRA - Historically, the HRA is an urban renewal agency - Possible partner (i.e. co-developer with EDA) *Minnesota Statutes, Chapter 429 - Enables cities to bond for infrastructure • improvements, subject to the 20% threshold. That is, 20% of the bond issue must be used for street, water, sewer, etc. , costs. Staff is exploring the merits of utilizing the balance of a bond issue for, say land purchases *Grants - U.S. Economic Development Administration *Funds available for infrastructure costs *Does not fund 100% of costs * Finite grant pool - Utility Companies *Possible co-developer, or; *Cash grant to underwrite a portion of the costs *Internal Financing - Access funds from various City accounts - Funds are finite - Funds need to be repaid 110 ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY . TO: ECONOMIC DEVELOPMENT AUTHORITY FROM: WILLIAM RUBIN, ED COORDINATO Y v DATE: SEPTEMBER 8, 1993 SUBJECT: PROSPECT STATUS REPORT The following is a summary of new industrial and commercial prospects that have expressed an interest in locating in the City of Elk River since the last EDA meeting. 1 . Real Estate Prospect - An agent for CB Commercial inquired to City Hall regarding the availability of a 3 plus acre industrial site to accommodate a 20,000 to 40,000 square foot building. The City Planner and ED Coordinator put together information on available sites. Staff understands that the agent is also evaluating existing buildings that may be suitable for his prospect. 2 . Superior Tool Grinding This is an Elk River company located on Twin Lakes Road that is operating in • approximately 1,200 square feet of space. The owner desires to construct a 4,000 square foot facility (includes additional lease space) for his operation. The owner met with staff to review potential sites and building criteria, etc. - 3 . Restaurant Prospect The Elk River Area Chamber of Commerce fielded an inquiry from a restaurateur in St. Cloud. The individual desires a location, existing or to be built, for a restaurant. Staff and civic leaders are hopeful that this prospect will move forward. 4 . Bike Shop The Chamber also fielded an inquiry from a former Minnesota resident who now resides in Missouri . The inquiry desired available space for a bike shop. It was understood that this person may have driven up to Elk River over the Labor Day weekend. 5 . PVC Plastic Coating - Staff referred this inquiry to Mr. Jerry McChesney. The inquiry desired 7 ,000 to 10,000 square feet of space for a PVC plastic coating operation. Additional follow ups are planned. 6 . Bike Shop II During one of staff 's cold calls, a connection was made with a bike shop in the Columbia • Heights-Fridley area. Information on available space was sent to the inquiry and additional follow ups are occurring. 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 . Brumar - This is an Elk River company that is located on • 205th Avenue NW (Wes Hunt's property) . The company is going through a fairly aggressive expansion - including an ESOP (employee stock option plan) exercise. In the near future, Brumar will likely require $100,000 to satisfy certain equipment needs. The company owner obtained information on the EDA's Revolving Loan program plus the loan program available through the Central Minnesota Initiative Fund. PREVIOUSLY LISTED PROSPECTS 1. McLean Midwest - Following the EDA's special meeting, on August 23, and the City Council 's meeting of the same date, a letter outlining Elk River's incentive package was sent to McLean. This information was well received and was precisely what the company desired. Toward that end, staff learned that Elk River was considered a "finalist" in the site selection process. Further, staff understands that McLean's Board of Directors will be in Minnesota for a post-Labor Day evaluation visit. 2 . R & D Sales This company is moving forward with an expansion plan, and, has requested a loan from the EDA Revolving Fund.