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5.0.-13.0. EDSR 06-14-1993 ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY 111 DATE: JUNE 9, 1993 TO: ECONOMIC DEVELOPMENT AUTHORITY SUBJECT: AGENDA MEMO FOR JUNE 14, 1993, EDA MEETING 5 . FINANCIAL UPDATE The following is a summary from Finance Director, Lori Johnson: Revolving Loan Fund The May 31, 1993, Revolving Loan Fund cash balance is $158,817 . 67 . In May, a loan in the amount of $50,000 . 00 was made to Tescom. As of June 9, 1993, all June loan payments have been received with the exception of PureSteam and Second Generation Properties (NAPA) . This is an information item only, and no action is requested. 40 6. EDA MAIN STREET SITE Mr. Chris Bulow of The Bruce Company will again be in attendance to provide EDA Commissioners and staff with an update on the progress he has made with his project since the last EDA meeting. With no other developers expressing an interest in this site, it is likely that Mr. Bulow will request an exclusive option on the site at some point in the future. Staff has met with Mr. Bulow on several occasions since the May meeting. Ideas discussed at those meetings include creating a TIF District, repayment of the TIF grant, estimated state aid penalties, as well as the EDA co-developing the site with Mr. Bulow and other unnamed developers . No definitive direction came out of any of these concepts . 7 . RETAIL FOCUS GROUP STUDY At a May 27, Downtown Development Corporation meeting, Mr. John Houlton made a presentation on the need for a Retail Focus Group Study. Best estimates for the cost of this study are approximately $5,000 . Mr. Houlton suggested that the following groups underwrite the cost of this project: - Downtown Development Corporation III - Specific downtown businesses (banks, drug stores, newspaper publishers, etc. ) - City-EDA 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 0 The purpose of the Focus Study would be to identify perceived strengths, weaknesses, threats, and opportunities for the Elk River Central Business District. If one subscribes to the belief that a healthy downtown contributes to the overall vitality of a community, then it is appropriate to consider underwriting a portion of this project. Mr. Houlton and/or other members of a downtown marketing and advertising committee have been asked to make a presentation to the EDA on this project. ACTION REQUESTED Following a presentation by Mr. Houlton, the EDA will be asked to underwrite the cost of a Retail Focus Group Study. 8. LOAN REQUEST FROM INDY LUBE, INC. A separate memo has been prepared for this agenda item. 9 . MULTI-COUNTY DEVELOPMENT COMPANY Commissioners will recall at its March meeting, the EDA "pledged" $1,000 to purchase stock in the Coon Rapids Development Company - assuming the Small Business Aft Administration (SBA) approved its request to expand its service territory to include Sherburne County. This expansion contained some fundamental assumptions, among them, Coon Rapids would change its name to reflect a new, multi-county focus, shareholders from Sherburne County would become directors on an expanded board, and, retained earnings from the expanded multi-county organization would be expended throughout the service territory. I regret to inform you that the Coon Rapids Board changed its thinking and presented Sherburne County organizations with a new option, that is outlined in greater detail as an exhibit in the agenda packet. Namely, the new scenario suggests: - Coon Rapids would not change its name, rather, it would expand into Sherburne County dba (doing business as) Central Region Development Company. - The existing Coon Rapids Board would also act as the Central Region Board. - No financial participation (pledges) would be expected from Sherburne County entities . - Retained earnings from the multi-county service territory would be expended in one limited geographic area - the • City of Coon Rapids. III Representatives from several Sherburne County entities met to discuss this latest option. It appears as though this group is unwilling to accept the latest scenario in order to achieve SBA loan packaging services in Sherburne County. With that, other options may be explored, including evaluating the merits of creating a new development company that would serve Wright and Sherburne counties. Direction from EDA Commissioners relative to this matter is requested. 10 . SLIDE PRESENTATION VIDEO PRESENTATION Staff seeks input from EDA Commissioners to determine if an update on the City's existing slide presentation or the creation of a new video presentation is a priority. As Elk River went through its Star City process, it prepared a slide presentation on the community. With the advent of video cassettes and players, some communities created video presentations Slide or video presentations have many uses; that is, they can be used for business recruitment, new resident orientation, physician recruitment, etc. The City's existing slide • presentation is outdated and has not been used in some time EDA Commissioners may wish to update the, existing presentation, or, they may wish to create a new video presentation. 11 . BUSINESS PARK UPDATE Task Force Chair, Pat Dwyer, will provide an update on this topic to the Commissioners. Progress since the May meeting has been limited to Chair-staff interactions and the collection of information on this subject. Ili& 91 -rflsic pmc niWaNb 6CI414D4u4) r- ,Jun►e VInf. 12 . MAIN STREET PROGRAM On May 20th, President Gongoll attended a satellite downlink program on stablilizing and revitalizing downtown. The downlink was sponsored by the Minnesota Extension Service and the County's Economic Development Council President Gongoll will provide an update on this topic. EDA Commissioners may wish to explore the merits of the Minnesota Main Street Program offered through DTED. It is a structured, multi-year project that focuses on a 4-point approach (organization, design, promotion, and economic restructuring) . The program is open to Minnesota communities 411 with populations of 10,000 or less who are committed to devoting the necessary time, funds, and staff to revitalize its business district. • 13 . PROSPECT STATUS REPORT The Prospect Status Report has been sent under separate cover. i'\J Sincerely, V C/, • 111 v v ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY 410 DATE JUNE 9, 1993 TO: ECONOMIC DEVELOPMENT AUTHORITY SUBJECT: LOAN REQUEST FROM INDY LUBE, INC. INTRODUCTION On Monday, June 7, 1993, the EDA Finance Committee met to review a request from Indy Lube, Inc. , an Indianapolis-based company, The following Committee members were in attendance: Jim Simpson, Bill Birrenkott, Tom McNair, and Bud Houlton. Following a presentation by company President and Founder, Mr. Jim Sapp, the Committee recommended approval of a loan to Indy Lube to be repaid over a fifteen year period. The Committee's recommendation was subject to the following condition: That the total loans for this project not exceed ninety percent (90%) of the project costs, or, ninety percent (90%) of the estimated Fair Market Value of the project • following its completion. In either case, the EDA' s loan should not exceed $32,500 . Pursuant to the loan policy guidelines, total loans cannot exceed 90% of the estimated market value of the project upon its completion. As the Elk River loan is currently proposed, the total loans (primary lender, SBA debentures, and EDA loan) is at 92% . This effectively reduces the EDA's participation from $32,500 to $24,700. If an as-built appraisal can demonstrate a higher finished market value, the EDA' s participation can be increased, not to exceed $32,500. In addition, the initial interest rate on the EDA's loan will be at the current prime rate (6%) . This rate will be adjusted every six months over the 15 year repayment period BACKGROUND Enclosed is a copy of a June 3, memo on the Indy Lube loan request that was sent to the Finance Committee. The EDA loan will be used by Indy Lube to supplement other financing sources to construct and equip a new 2, 100 square foot oil change facility at 5th Street and Dodge Avenue NW. The cost of acquiring the site, constructing the new facility, and equipping it, is estimated at $380,500 Primary financing is committed through Security Bank of Albert Lea which has • structured this project as an SBA 504 loan. Security Bank is also participating in the Rochester and Austin projects . All three projects have been packaged under one application to the 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 SBA. Total project costs for the three projects are estimated • at $1,020,000 . ACTION REQUESTED The EDA is asked to approve a revolving loan to Indy Lube, Inc. The loan will be secured by a mortgage against, the development property. The loan is further subject to the execution of a Promissory Note and Personal Guarantee. Sincerely, • , Al William Rubin Economic Development Coordinator • • ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY TO: EDA FINANCE COMMITTEE FROM: WILLIAM RUBIN, ED COORDINATO a., DATE: JUNE 3, 1993 ((// ``'� SUBJECT: LOAN REQUEST FROM INDY LUBE, INC. INTRODUCTION Indy Lube, Inc. , an Indiana-based company, requests a loan from the EDA Revolving Loan Fund in the amount of $32,500 . This loan would be used by Indy Lube to lever primary financing sources for the construction of a new 3,50 square foot quick lube facility at Dodge Avenue and 5th Street in Elk River. The Elk River expansion is part of a large expansion into the Minnesota market that will also include new stores in Austin and Rochester. BACKGROUND Z�r� The cost of constructing the new three bay facility, equipping it, and providing small tools and opening day inventory, totals $380,500 . Those costs are broken down as follows : 410 * Land $115, 000 * Building $170,000 * Equipment $16,000 * Opening Inventory $12,000 * Signs, Site Prep, Utilities, Tanks, Etc. $67,500 $380,500 Sources of financing for this project are broken down as follows : * Security Bank of Albert Lea $173,750 * SBA Debentures $144, 000 * Applicant Equity $30,250 * EDA Revolving Loan $32,500 $380,500 The Elk River facility, along with the Rochester and Austin facilities, represent Indy Lube's initial expansion into the Minnesota market. Estimated project costs for the three expansions total $1,020,000, which will be financed through a nonprofit, Certified Development Company in Rochester. Security Bank of Albert Lea is the primary lender for all three projects . Owner equity for the three expansions totals $140,000 . With this project, owner equity can be defined as a combination of down payment on each project, plus typical opening inventory and equipment, etc. 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 15 years Prime plus one 1st Position SBA Debentures 20 years 7 . 5% ( fixed) 2nd Position EDA Loan 15 years 6% (adjustable) 3rd Position Debt service for the Elk River facility is outlined as follows : ANNUAL SOURCE DEBT SERVICE Primary Lender $18,748 SBA Debentures $13,925 EDA Loan $ 3,292 TOTAL $35,965 With respect to the three-store expansion, borrowed funds are estimated at $867,000 and are proposed as follows : SOURCE AMOUNT TERM INTEREST RATE Primary Lender $457,500 15 years Prime plus one SBA Debentures $377,000 20 years 7 .5% • EDA Loan $ 32,500 15 years 6% (initially) The three-store debt service is outlined as follows : ANNUAL SOURCE DEBT SERVICE Primary Lender $49, 346 SBA Debentures $36 ,445 EDA Loan $ 3,292 TOTAL $89,083 COMPANY NARRATIVE Information on Indy Lube is outlined in greater detail and is attached to the loan application. The expansions in Minnesota would be done as Indy Lube Minnesota, Inc. The first facility opened in Castleton, Indiana in February, 1996, and facilities are opened as either corporate-owned or as franchise stores . ELK RIVER FACILITY Sales and net income from the Elk River facility are projected as follows : • YEAR 1 ONE 1 TWO 1 THREE 1 FOUR 1 FIVE Sales ; $278, 9451 $305,5391 $338, 129 1 $374,6441 $409 ,904 Net Income ; $ 20,9211 $ 29,0351 $ 38,723 1 $ 41,8671 $ 50,798 Historical statements of income and balance sheets on Indy Lube, plus a personal financial statement, are also included in the application packet. ACTION REQUESTED Upon its review of the Indy Lube 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 June 14, 1993, to consider this matter. As with previous EDA loans, this loan would be secured by a mortgage on the Indy Lube site plus a Promissory Note and Personal Guarantee signed by the applicant. Company founder, Mr. Jim Sapp, and the primary lender for the Minnesota expansions, will be in attendance at the Finance Committee meeting. In addition, Mr. Sapp has retained Mike Mulrooney of Advance Resources for Development to package the • loans for the Minnesota expansions . He will also be in attendance. AVAILABILITY OF FUNDS The EDA Revolving Loan Fund had a cash balance (that is, funds available for projects) of $157,000+ as of May 31, 1993 . This figure excludes investment earnings attributable to this account from January 1st. • ELK RIVER REVOLVING LOAN FUND APPLICATION • APPLICANT INDY LUBE INC. ADDRESS 6505 EAST 82nd STREE!, SUITE 209 CITY INDIANAPOLIS STATE IN ZIP CODE 46250 CONTACT PERSON(S) JIM SAPP, PRESIDENT BUSINESS PHONE (317) 845-9444 HOME PHONE AMOUNT REQUESTED $32,500 TERMS REQUESTED 15vr. 6% SOCIAL SECURITY NUMBER 505-76-6656 FED ID # STATE ID # 1 . Type of Project : Construction/new Business X Expansion/Existing Business Equipment/Machinery/Fixtures Remodel/Commercial Retail/Industrial Other 2 . Describe Project: The project involves the construction of a new 3 bay quick lube facility on Dodge Ave. The total project cost is projected to be $3RO, 500_ The business will employ 6 people full time when it begins operations. Tndy Lube is an environmentally conscious company mandating the highest of standards for its facilities. The company has a policy of accepting other waste oil at each location and plans to do so at the new Elk Rikmr store. An opening is planned for late fall of 1993. ELK RIVER REVOLVING LOAN FUND APPLICATION PAGE 2 3 . Purpose of Loan: IIP The purpose of the loan is to fill a gap in financing not being obtained from other sources. The company plans to open three stores in Minnesota this year. In addition to Elk River, new stores will be located in Austin and Rochester. The total cost for all three stores is $1,020,000. First mortgage financing has been approved by Security Bank in Albert Lea in the amount of $457,500. The SBA 504 Loan Program is expected to provide $377,000. Other assets totaling $82,000 will be financed by the company in addition to equity provided to complete the construction of the facilities. 4 . Cost of Project: A) Land $ 115,000 B) Buildings (attach plans & costs) $ 170,000 C) Equip./Mach./Fixtures (attach list & costs) $ 16 000 411 D) Remodeling $ E) Other (attach description) cePENIN491Wkarq$ 12,000 F) Other (attach description) S16NS,S 1 09 $ 57,500 TOTAL COSTS UTit/1- u ', crA si�L)$ w, 500 5 . Proposed Financing : . SOURCE NAME TERMS AMOUNT A) Bank Loan SF.CITRTTY RANK 15 yr. p+1 $ 17'3,750 B) Bank Loan CRA 70yr 7 5`/, $ 144,000 C) Other Private $ D) State Grant/Loan $ E) Fed Grant/Loan • $ F) Other $ G) This Loan 15 yr_ 6% $ U,500 `• H) Applicant Contribution $ 0,0,250 TOTAL FINANCING $ '3R0, 500 ELK RIVER REVOLVING LOAN FUND APPLICATION PAGE 3 6 . Collateral to be assigned (Describe and show lien position) : A) To State B) To Federal Govt C) To Bank First MnrtC p D) To Bank Second Mnrt _p (Rnrhester rnr) E) To Private F) To Other G) To This Loan Third Mart&qsf 7 . Value of Collateral : COST BOOK VALUE EXISTING (see project costs) LIENS A) Land $ $ $ B) Buildings $ $ $ C) Mach. & Equip. $ $ $ D) Other $ $ $ E) Other $ $ $ 8 . *Employment: Present- Number of Employees Total Payroll After Project *of Employees 6 Total Payroll $95,0()0 *If Loan is for Job Retention Only, Explain in Business Plan. 9 . Attorney, Accountant (Names , addresses , phone) : 10 . Bank and Other References (Names , addresses , phone) : Security Bank Albert Lea, Rachel Lund, Vice President . ELK RIVER REVOLVING LOAN FUND APPLICATION PAGE 4 11 . Attach and include the following: 111 X A) Written Business Plan: 1 . Description of business 2 . Ownership 3 . Date established 4 . Products/Services 5 . Management 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 F) Letter of commitment from applicant pledging to complete during the proposed project duration 01/ X G) Letter of commitment from the other sources of financing , stating terms and conditions of their participation in project X H) Other PrnjPrtinns nn Minnecnta npPratinns I) Other J) Fee (1% of amount of loan request) ELK RIVER REVOLVING LOAN FUND APPLICATION PAGE 5 I/We certify that all information provided in this application is true 011 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 May 25, 1993 Applicant Name INDY LUBE INC By James R. Sapp By 4 06/03/9% 15:57 a 612 755 5393 --> CITY/ELK RIVER P.62 / Jër/Jr/tqHflh/kM/NNEsorA ALBERT LEA RACHEL LUND Ice President April 26, 1993 Mr. Jim R. Sapp Indy Lube, Inc. 6505 East 82nd Street Suite 209 Indianapolis, IN 46250 • Letter of Commitment 1LDear Mr. Sapp: Security Bank Minnesota (the "Bank") has received the loan request of Indy Lube, Inc . (the "Borrower") for $938 , 000 to purchase land, construct and equip three Indy Lube stores . The Bank has reviewed your financial statements, condition and the collateral supporting the loan. In accordance with the loan policy of the Bank which prohibits the Bank from funding 90% -- 100% of the project cost for 20 years, the Bank is pleased to offer the following credit facilities subject to the terms and conditions outlined below. AMOUNT: Four Hundred sixty nine thousand dollars ($469 , 000) or 50% of project cost, whichever is less. PURPOSE: Proceeds will be used to purchase land, construct buildings and equip Indy Lube stores in Austin, Rochester and Elk River, MN. INTEREST RATE: Wall Street Journal Prime plus 1% floating. Interest accrues on the actual number of days in a 360 day year LOAN ORIGINATION: Eight thousand nine hundred ninety five dollars III ($3, 995 . 00) . One half of fee is payable upon acceptance of this commitment. TERM: Fifteen years, fully amortizing. OC.84••73 00122 a G12 'ss sir > CIT .•CLK r.tvCr, r.oi _" LI1.4 — 3 - 93 THu 1 4 _ a e. _ P . 03 • BF.CURITYt secured by first mortgage on all purchased real estate. The 'Bank will require that the pledged real estate be appraised by a certified appraiser prior to funding. In addition, the Borrower shall pledge the machinery and equipment of the Borrower in each location. REFAXMENT: Monthly payment will be set to fully amorti2e the loan over the life of the loan. Monthly payments will be reset it and when interest rates change. FEES: The Borrower will be responsible for all fees and expenses incurred in connection with the loan which may include but is not limited to: -legal fees -surveys -appraisal fees title insurance -recording fees GUARANTEE: The loan will be personally guaranteed by Jim R. sapp. REPORTING • REQUIRY;MENT: Quarterly financial statements on operations of • Borrower. Annual personal financial statement and tax return of guarantor Annual financial statement of Borrower reviewed by an independent accountant OTHER CONDITIONG: The Borrower shall obtain subordinated Mortgage financing commitments totalling 40% of the project cost from the SBA and Southeastern Minnesota 504 Development Company. said financing shall be for a period of at least 20 years. Hold Bank harmless against any existing or future contamination of the properties Furnish policies of insurance with minimum coverage of $850, 000 on properties insuring against fire and other hazards. The policies will list the Bank as "Mortgagee" Execute and deliver all other such documents to Bank as deemed necessary Actual legal documents for the loan will contain adc.itional terms and conditions not discussed herein but which are also a part of the commitment. •• 06'04'93 08: 23 Z 612 755 5393 --> CITY/ELK RIUER P. 02 INTERIM FINANCING: In addition to the above commitment, the Bank is willing to advance interim financing in the amount not to exceed $850, 000 or 90% of the project cost • (whichever is less) at a rate equal to base plus one percent for a period equal to eight months provided that the Borrower submits satisfactory evidence and assignment of commitments from subordinated mortgage lenders totalling 401 of the total project cost. This commitment shall remain in effect until July 31, 1993 if this commitment is accepted by the Borrower by signing and returning to the Sank a copy of this letter along with payment of one half of the loan origination fee by May 15, 1993 . In the event that there is any material adverse change in your financial condition or obligations prior to the closing, the Bank may, at its sole discretion terminate this commitment. • Sincerely, • • Rachel A. Lund Security Bank Minnesota Accepted and Agreed this ` day of /j/� / , 1993 . Indy be, Inca laza% Ji 4. Sapp, Pre Sent /L.5 • • - I3rN'Z+ti*n7Dsi -Y t "5.LUBE r«7:1M.',� IsNNEy�Ns-„C°r-7+ �S▪° OhTa_p'Aa3'A.r k- y'▪ $,K•�, INC.• Xk �i �'r �om *-x*• a"f,y .t� 1 -'ss 94:m±d •••r ;2 _�4C�• �a•# dt .; •K„w'r Txter�f ' „ , , R • 4 ; .iii S ..44‘,"c"";•''' r 3r zu 2r / NW L2��.I�iif, / i�R 4141114 10 i .lb* 7 �� 0111 rI CI, UM al •• P -- t ZMIMI 194 H •�THICIR P mar lo` FM As 4 ®111111r H •ND „� .,9. : £ i' . . ",i. 1oNA 0.IIP �3� �.��� `A E0• IV' Agr. ° ' 4411 lir 193RD AVE 1291 _• . `I93 RQ :4V• . E '� .I92 NO ,,,,,,,,,,,,j1„ ,I 1 =.ir ..Ir to At* lo', °r' ,,, 192 11111, CC OAS 11111 14 v 46-4.4. 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(-_-_,\ , k +� b h� J/ Os `..' p /G3 -"_- \`1 % m 1 }V :.�j 1 ' . „ b, .., f�8 w 14, \ 4.1-z- ti�t+ �. a ` u 1 N Q T \- \v L 1—I E C \4. t 1\472' ,h ccs\:::) ,d, ifl ‘ . : ! ;iiii- \ 9 1 ' _ • d'• L 0 \ lT 11 pl C ' t ° 71,--C-F. c a a 111 - G3`,2•\` -A\ ,� 0, 01 i 'i-• , , ....\ ' t • •s I 1 i i '1rua, YC� a \ �{ .--Z_,----------\ w 1 1 O.\ , 1 s \` 25=04 /0' ' VM-- I \ .0 - -L i W 16 1 1 d(� ', o C /< " V1 0ty� /� `'t , r 7i1 i • - 1 64- \1 X; -1 n m ,� sl _ i \ 4 ii170 0 , TKAA./LI hi s.: L 1 i —w— a ... ice '--.i- —I P— P - — / — .--_ •— — -- - r •) • STATEMENT OF PURPOSE INDY LUBE is seeking a loan to purchase real estate,construct buildings,purchase inventory,computers and office fixtures, and perform site improvements necessary to expand the existing and profitable Indy Lube chain. This • financing, together with the equity investment of the principals, will be sufficient to successfully finance this expansion and enable Indy Lube to build new locations in Central Minnesota in 1993. • ei MISSION INDY LUBE was created to service both consumer and commercial vehicles efficiently and quickly through environmentally safe methods. INDY LUBE, as an employer, aspires to promote good, safe working habits which are conducive to the betterment of our employees. 4 • • COMPETITION In all of the selected seven cities, xcept Rochester, there are no quick lubes in existence. Rochester has one bi- level Jiffy Lube in and a very old two bay Rapid Lube which uses lifts and has no drive-through capabilities, both are located in the central part of town. The competition in each of the cities is local car dealerships, tire centers and service stations. Nationally, dealerships make up 10 - 12% of the installer oil change market, tire centers have 12 -14%, and service stations only 8% and that number is dwindling as self-service gasoline stations become the wave of the future. Forecasts over the last six years have clearly indicated that the installer market will increase with quick lubes making the biggest gains and dealerships with a slight increase. The reason for the increase is less do-it-yourselfers and a decrease in the number of service stations. In 1986, the do-it-yourselfers market share was 68%. It is now down to 52% and is diminishing. Several factors are affecting the do-it-yourself market: 1) the "graying of America" --the number of senior citizens is increasing each year and will continue to be a larger portion of the population as baby boomers hit retirement age. Many older people are not physically able to change their own oil and most have more discretionary income so they can afford to have someone else change their oil. 2) increase in incomes --both single and double income families have more discretionary income. Time is a factor as families do not have or want to take the time to work on their own cars. It is easier to pay someone else to S maintain a vehicle. 3) complicated vehicles -- the downsizing of vehicles has complicated the position of oil filters. Cars are more difficult to work on so it is necessary to have a professional work on it who have the proper tools. Indy Lube's bi-level stores enable the lower bay technician to access the oil filter in a better position for removal and installation. 4) environmental concerns --waste oil is a problem for the environment. Do-it-yourselfers dump more oil into the soil and water in a year than 20 Exxon Valdez spills! Regulations will continue to get tougher with retailers having to collect oil and deposits from consumers buying oil. Many mass merchandise retailers will not want to handle the waste oil; therefore, they will not sell oil. This will make it more difficult for the do-it-yourselfer. ? G 5LA'((D IND`'( Lube. (6xv9ANSl orQ5 I N D6% A1,600,-C LkA t ANA TNJ 66s►Nto,D k ►2.IVCa, 1 owAroN Nik {hoc st-lo , , AND clovlt. IN t'CiXL V6IhLS WILL >3k Coto5C+4, kC ( ) Iry DMS'(irJ1, eLk- 4)1V01.- AND ADO.461bl, .. ; - August . 04. SX .N. . AUg .,... , „„,„.- •,,,,. * .„,.. AN INDI APOLIS -• ,4-. q: ,) - • .....,,,,. A. .. ,, ..,7t, # ..., ,,,z? • . ; ‘5>e .,- . . II I • I . l , I , . ,..,. ..., ....,... , ,,,.... , ^ -• • „,.. . „„,..,.-,, ' ',.,.. , '-4%.'''.....4.;';'n^..P..''''''''''''''.7:.i..4i,4 '':i•-•' ',--' 0_1.. E'\/1, 111_1 () IYJAIvrit-:,..y 1., (_}}ri .. : /Ail") ::; r_ . i-. R :. \ 1' -A 'll D11.,, _.,1,[,`,I 1;.j,1,jz 1: B u[3:11\iEs:i . ' _t. ,L) ''''''''' '''"I',14...'''''''''''''.?4‘ ''''''r, ,"'C.''''.,';IV'''''''',-*•'4'''' . A . ROUNDTABLE •. HEALTH CARE „.......,... .._ , Farris, K. Rawls -,,,-.- Lytle, . Kiely, & Bailey .;:.-.."•,,,..-,,,,.,..-,-\ .. , •,, „... ."..-. -,....., , • ' 11 ATE. ill'E. jp,., .. • ESTATES_IDF,NTIAL , ,.....::,,.„...„,-,,i,..,,:e. ,i,„...,.- . .. ... REAL ,,,,,,,,,,,,,,,,in,....A:,„,:,..-,,,s,:, , ,,. „...,,..„..„„,..- ,. . ., : „.. .„ . . . .. t I On The Water, Security & More! ,... ... ,, . „.. , . .C> , . .., /..':.7..' ,.,, ,-- - _ ... • FIGHT BACK: . ,. ;n. -,--.2,.... , , ,,..., _ , „ ,,,N• • Drug Costs Hit Bottom Line -' ,41./ .,...:f.-...-:-.., •,,,... . Tuition Financing— .. ..... .„.. -,... .,„...r,...,- ,, r ,:':-:!, ,.-.,;,),.:,- , .. .„,„ . , , , . Financing— Where to Get It . . f4:-"'0,.':. ., ' Meijer Stores Buy Land Here -,-,#-- -- - a . ...f ...„ Time Management for .-. Managers In ig Gear .„..,. s„.:. ,- 1 , Jim Sapp, .,.., . . _., Greasing the Wheel of Success 0 74471'773804 9 . ..., CEO Profile ,t ',.` • ,,,,.._,,,,,,,,,,,,„,,,,,_...7...„ .;',1',4..,: y +fi'a7 .,,, r' ;. r.y w„7':',-.1,,r414 - s ' - shY 1'.*_-,,t .„r '' x ,1 -�r ;7 ` r' ntr, 3 a'ag. t,ir -rk - P -yy4 . 7p ` '” �. 1, cr # #i c 1 j"' t5h-5, t rx k '- t ; o a: ren c s r+ • %sur f YY.-'-.' 111,f -.- `t # a R`.„4 Y':„ 1' 1 h--4•=! JA t`}...� f. I e, 1 Y # } a r ;�t i, .< t Ield ,, . , ,,,.„..„, 5 ,,:„..,.,-7,;, 'ter. ; i,,4,..."),,,•1T. - r ,,,, ';''''';',1„1/4,,S,'4' x Y' .k{ "tri 'WF"'"-'-'''''. r n i,�f w �P • :• :/ Ri.',/..,..`w". all lf'�� , , _ --,--i _` "`.�--- .. U -----.,._..�._--�--,� rev " ' ` " .. , , . ... � r ra a rf rTr"�--�ta'`''�� Fr` 'dM�.�XF' �,N 11+��),°:: ' ''j � ,„:,,„, ,, 1 ,.: „.,, ,:,,...,.......„,....,.i.,,,,,,,,, ,, ,. J y fTy a„ f t 97br t if F .3 , y, .. i, rnivl ,,aA ,,r! I ,� � r)l�. t � � ''''';W:':nl•�Mt� !! I t' t� ['r 1, r'�lll ry�� 'k y�c . ' , �t � ��" 11';. !� -0 I l '.i k A.,a'" i fy ii ;""i;,1„1•1::: ! 4 r+ A. 4 h 1 F R� ..�.d . -.'a'r—,id_.`,..ru! Q .w^} }�, yu t y�1 ] +y`fr�y i ! I 34 yy hr �.'Y 1} �• • F'Wt)�N t.K\ j i',,,;.„ A Ittij !'�� i41 I,l1k i'f7:W M1.ix1 1 ,y �.1 y� . ak `i '� r + ��� ` J r ` " ' °way " ` Now 14 stores ! Ips irxk +�� +��Ir i r ',41,,,,,,i ��s a �t "� I.T. � ,., 4k �n,. +, r t �'�.� nx;"'� ' i �v{,k 1'r . 4!f lt�� x > r��' K .:41;',.;,d,,-.',.., +' �Ct�1Q`Jd °4 {+1 ')111.4,' I h4I;, ' x r �iSG ' 1� Ix 1r ilmm®i F'" � r A � r+. .'� e �tl`� � � „:;:,41!,,,i,',11,,.. xa ytr � ! 1 ��” dd"� �ny°,".rte sRsmK a t, � ! �n •:',,,,,„,10,!' t z iw ���R� �. �. R � r ((h 1 ', i[u +`�+r� � 4a 1 ( ._k , strong, Indy Lube � �k wr4�t ��`�r �1� H( 4��� l J>�hiy'''''';''...77,71, �'i r 7 � w � �.'"�„^Y- � g � `-'t:4;41'4.'1', ar,�i r tl ...•-,' �° �I� $� � :< h �!� +� Pc „sir 9� 1h16 o R � „,,,,:„..41,.,,;:;.: 1,4„ (� " �� �r, � i tI ('� e� t � " �'! ' IS Poised for �'} , .. :,, a'R� ' 2 s !0 rk I 4� ,ii ,i ,,„ ,0�,T I it I Tt a4 d N N y v. ;f • 4 ,S- • H �.0 Iiii rp ► i h,�d u��r..' k It j c�, , 4: ,v major growth in • ;w_,.i x � ., !r ! L ± t , i illis, ,, ' q,r (,,r"�l 2rxe 4` '''" ,,0 ", h' §! r{ t, m S' �r � � �, � ,,�[ �. r I � �, �t,, ,,�..„ p�' the competitive '°-' A ,,'!!';',,ilii: 1`x i t 1� I Ai!: R,':.111414-'44' . d414 nv z NG. -‘,IFIL a �r ,I r f4It ; r r',,i}, , a l ' �,,, ,i[ ,i .*,'+'. ��" � } , , franchise field ; .,.. J r t, ,e,,' ,..i .>a x �.. t .. � w ,y" Kte 35.��+f,�.,xfe r"' M �-� , �Viir .q f �fl I _ TI �,s`aM A .. , ♦ J. •00.411%,,,t,,,los , . ,fir. M , l'; �� ri mcs- -2r44'� c "r. :;,j, ":..3.,,,,,,e4. Rte}gip.' 4'''''''1,,;,,:"-,..,,f9,.. ''':� , .��' 'I: ' e4:5';'";...'. "."h c f t: .� 1 i " w !} dao �•t ',' - ---- - ,7'..:� p 1-. � „-.11430044,"°� Ati i yk,w;: !.r': a '' '.pv�,s'^ v • y *'. .-; ,- R. t' By JeffNewman J q Ma �'a - f_ :,,K 14 ' w ;At. c� da. . �.1 w, �'.' I. .4 . pt 4":.:, ..,4 . �e.�1.7�• .SWM""0++... �{ .t, ''.14'?" WWW a . a d -'4. r{{: 4/1 Y d '''''11: hY jty4 4r'. V ,4 ',.rT p 4 ®®y '`� 4a '?..;44'.4: ''''�. , ,' 'AM.v ,�ay Vrj � y gid!! r o WI' r”' ��/�t # 'ill' �� i,."t' Y4��, ", ,,,>~ , �;;V'��. �,,: r^ ,-'gY �.+. � �. y R� ,� e.�� r'I''�u'*.n� �' k�.��t� ''',..',4 614 is not often you see a man with a six-figure salary standing behind a cash register in a garage, waiting on customers—especially when that man is president of one of the fastest- growing businesses in central Indiana. Jim Sapp, however, does this almost every week at one his 14 Indy Lube stores. Until a couple years ago, it wouldn't have been uncommon to g,'', find him under one of his client's cars,his hands smeared with grease, removing an oil fil- ter or lubing a chasis.Sapp,like J.Paul Getty and John D,. For the 36-year-o#d Sapp, there are no country-club dues, Rocketeer, has found his fortune in oil, but Sapp didn't no BMWs, no power boats on Geist—not yet anyway. ) s strike it he drains it and replaces it, among other things. vehicles of choice area Ford Explorer and a minivan"fur And while his employees care for his customers' cars, the kids and the dog." His top business philosophy involves Sapp's unpretentious and genial nature seems to be the oil being "hands-on," and that's the reason his 100-plus that keeps his six- year-old operation running so smoothly. employees know him as"Jim"instead of"Mr.Sapp." 14 INDIANAPOLIS C.E.0. AUGUST 1992 CEO Profile "He's definitely not your.typical 4.0 scale, he moved to Noblesville and says Sapp."We decided we'd do things suit-and-tie-type guy who hangs took a job as a salesman with HealthCo differently,and that's what we did." • around the office all the time," says (now HealthCo/Ryker),a dental supply Sapp and Yates,who is still a finan- Indy Lube District Manager David and dentist consulting firm. cial partner in the business,put togeth- Graham, who's worked for Sapp since At HealthCo, Sapp traveled the er about $30,000 of initial capital,gat the company opened in 1986. "You state,helping dentists design their busi- an equipment loan frontrPennzoil and don't really look at him like a boss." ness facilities and manage their prac- went looking for a bank kiltn.It didn't In spite of Sapp's affable nature, tices. It was there that he learned an take Sapp long to find ouwhat other there is no naivete about his business or important lesson that he still applies small-business owners already know: his customers' wants and needs. In six today at Indy Lube. "You'd see people "I think the biggest initial challenge years, he's turned a one-sho nt_er- get into business for themselves, and was finding financing for a small busi- prise into a 14-store operation sp ,d they're in control of the checkbook, ness," Sapp says. "I bet I went to nine throughout central Indiana. -'}k and they just buy, buy, buy. We really or 10 banks with a presentation before Indy Lube's nine corporate stores ,-t,,y to think about whether we really I could get anyone to even seem inter- topped$3 million in n't"sales in 1991-.It t`ed something before we buy it.Do we ested. It was tough, and we ended up a 687-percent increase s .er the comps-', ' •ally need that new fax machine? Do paying some extra points in interest, ny's first full year (198 ., •.and Sa, We have to have that new computer? but it was better than going someplace expects that figure to excee• ` ' ';••`,,,,„ qu've got to watch your expenses else." lion in 1992.Including franchises, Ins eafefully, especially in the first few Despite Indy Lube's success, Sapp Lube pulled in more than $4 million A '2" admits getting a loan can dill be a lot of last year,and total sales projections for �t.''•althCo was good for Sapp, and work: "We've managed``to use, like, 1992 top $5.5 million. The corporation Sap+ ••as,good for HealthCo. He spent seven different banks. One bank will obtained a federal franchising license in 10 ye . wjth the company, soaked in loan you enough to build a building, '89 (five of its current stores are fran- an abun Ttt +ce of business information then they want a three-to-five-year his- chises) and Sapp has a long list of and exce i ,as a salesman. "The tory before they'll give you another prospective franchisees. Eventually, he biggest thin tN out Jim is that he was loan.So then you go sell your body and hopes to have Indy Lubes throughout always extremcustomer-oriented; soul to another bank to get that loan. the Midwest. he went out of his\y to do the best for We're doing better now and we have a • Indy Lube's tremendous success is his customers," r• Ylls Fred Boyer, history,but banking is just as challeng- somewhat surprising, considering that manager of Hea .+Co/Ryker in ing. There are different problems now, Sapp once rejected the very notion of Indianapolis and Sapp' +rmer super- more regulation. I think because of the working in the automotive-aftermarket visor. "He was also ver '`rganized, S&L crisis,bankers have tightened up." business as a career. His father, Ray, knew his products extren : •_well— Sapp feels the most important thing runs a successful chain of truckstops really just a complete all-aro -guy.: he did while trying to get Indy Lube off (Sapp Brothers Truck Plazas) located It's really not surprising Indy it ,e is the ground was not leave HealthCo. on highways from Illinois to Colorado. doing well,because he has the tale "That kept money coming in. There But after helping with the family busi- succeed in just about any business." •s a 3-and-a-half-year overlap in ness as a youth in rural Nebraska,Sapp After five years as a salesman, Sap s'which I maintained my full-time sales shied away from working there after he was becoming restless."I was the No. 1 'esition while juggling duties to Indy began high school. "Like a lot of salesman in our region and I was get- I>r f+eian&my family.It was quite a jug- teenagers and college kids,I was a little ting bored,so I decided to start my own gh ?'ract..- i was one of the first rebellious,"Sapp says. "I wanted to get business. I didn't know what I wanted pe o in the st a to get a cellular away from Nebraska and do my own to start,so I started looking at different phone because I was traveling around thing. It's kind of a*Ike that I'm also avenues,different opportunities." tenni Indiana foHealthCo and so in an automotive-related field." In 1984, Sapp and buddy Jim Yates much olfircstuff s going on." A business career was far from went on a two-week camping trip in the As it"turned"out, Sapp needed the Sapp's mind when he enrolled at the Rocky Mountains, serving as advisors money,because Indy Lube"started out University of Nebraska. He studied to 14 boy scouts. One rainy night, the a little rough."Sapp and Yates signed psychology and life science—a double- topic of business opportunities came an agreement to buy 12 acres of prop- major Sapp recalls could have been up, and out of that discussion,the idea erty on the south side of Indianapolis called the "I-don't-know-exactly-what- of Indy Lube was born. Sapp discov- on U.S. 31. "It was zoned C.S., I-want-to-do" curriculum. "I didn't ered the quick-lube market in explains Sapp, "and I thought that take one business class,"he says."and I Indianapolis was still mostly untapped. meant commercial, but it was really • wish I had." After graduating in 1978 "McQuik's had been here since the late special-use commercial.The bottom with a 3.25 grade-point average on a '70s and had very little competition," line was, we went to get our building INDIANAPOLIS C.E 0. AUGUST 1 9 9 2 1 5 CEO Profile permit and they said `no.' So we had 12 "Not that I admire everything about all of pany's customers are at least 35 years old • acres of great property that we couldn't put them," he says, "but you pick up little bits and in the upper-income bracket. That's an Indy Lube on." of advice from a lot of different sources." why the stores have courtesy phones in Sapp didn't want to back out on his Plenty of I4-hour days and Sapp's ideas their glass-enclosed reception (not "wait- agreement to buy the property, and began to pay off at Indy Lube. "The auto- ing") rooms. The rooms are wall-papered, unsuccessful efforts to get the property re- motive aftermarket had a poor image," with plants,color TVs and free coffee. zoned, ended up just keeping it. "We says Sapp, "and we wanted to improve In another career, Sapp would probably bought it on contract and it turned out to be that; we wanted to get away from the have gone far in marketing alone. a good thing in the long run.The payments greasy, old, stereotypical garages. We Saturdays at Indy Lube are"Family Days," never totally drained us and we sold the wanted new, clean, bright facilities. We and toys can be found in the reception property for almost three times what we didn't want a cheap look." room. Tuesdays are "Ladies Days" and paid for it two years later. But, the whole Sapp boasts that Indy Lube was the first every woman gets a$2 discount and a car- thing slowed us down by six months." quick-lube business to computerize, "and nation. On Thursdays, senior citizens get a Because of low funds, the first Indy now everybody's following us." Inventory discount. Sapp also implemented a cus- Lube opened on leased property on 82nd is computerized and so is the customer's tomer-referral program(free oil-change for Street in Castleton in February 1986.From maintenance history."We can get a printed referral), preferred customer cards (free then on,Indy Lube bought its properties. record of every visit a customer makes to oil-change every fifth visit), customer Despite his lack of formal education in Indy Lube and what was done to their car," audit forms(questionnaires to evaluate ser- business, Sapp had plenty of ideas about says Sapp. A history of a well-maintained vice)and quarterly customer newsletters. how to make Indy Lube successful. An car can mean a 5-percent increase in the Knowing that the bottom line relies on avid reader, Sapp absorbs inspiration from value of a car at resale time and can be the customer, Sapp puts great emphasis on a number of sources. He listens to books important in case of warranty questions. pleasing them. "We spend a lot of time on audio tape in his Explorer and lists Lee Indy Lube's differences are designed to with our employees," he emphasizes, Iacocca, Donald Trump, Abe Lincoln and appeal to a slightly up-scale client. "making sure they know I'm not really the Earl Nightingale as influential figures. Demographics find that most of the corn- boss—the customer is their ultimate boss." N. momminimommi HBUSINESS ®CENTERS Corporate America's Branch office Leader Y Individual Offices & Multi-Office Suites With Complete Business Services Two Premier Indianapolis Locations NORTH SUBURBAN DOWNTOWN Two Meridian Plaza 101 West Ohio 103rd & Meridian Ohio & Illinois • 684-6800 Over 100 Business Centers Worldwide. For more info`call 254-5855 or circle 162 on Response Card 16 INDIANAPOLIS C.E.O. AUGUST 1992 CEO Profile 1111That's part of the reason Sapp spends "but I love going to the stores and taking over last year. "When I look at the news- )0 much time in his stores,welcoming cus- tickets, greeting people and ringing them papers or Newsweek and read about all the tomers and collecting their opinions. He out. You have to be hands-on. We've got doom and gloom, then I think, 'Wow, we tries to reserve every Friday for store vis- to know our employees'problems and cus- are doing real well,' "Sapp says. its, not only to see the clients, but to get tomers' problems. You can't figure those The Indianapolis business community feedback from his managers and other out sitting in an office." took notice of Indy Lube's success, and in employees. During a month's time, Sapp Sapp's hands-on approach continues to 1991, Sapp received an Emerging attempts to personally hand every one of work. Despite the recent economic slow- Entrepreneur of the Year Award, an honor his employees their paycheck. "I don't down, average sales per store in the first he didn't take lightly. "Small businesses change oil much anymore," says Sapp, four months of 1992 were up 21 percent are a lot of work and I really respect small-business people,"Sapp says. "It was nice having business leaders recognizing what you and the company have accom- shed." EAT pliThe 10 minute oil-change business isn't g nt O ALLS exactly a can't-miss venture. Even though the market is still growing slowly, compe- tition is intense and some quick-lubes have II folded under the pressure. Yet Indy Lube Fcontinues to grow. IF INII • I . . . It didn't take Sapplong ong to find out what other small- • i•:_, _':: 4. business owners already ar4V' �\ ..`-•. know: "I think the biggest ini- •',•,,• ` ` 7M . .thy..- , ` +� •-. P'•' tial challenge was finding ,.' • to •'fit'•".'• ,�;,,. ' S. ;J' financing for a small busi- �J ness," Sapp says. "I bet I `AAtiftt` " - •••A.01 '-• went to nine or 10 banks with Goodness,gracious—let's have some fun! a presentation before I could Indianapolis Racquet Club is the place for good times, get anyone to even seem good friends and good tennis. Members are signing up now for fall and winter programs that begin September 14. interested." And there are programs for all ages and skill levels. If you're not a member yet,come join us and enjoy the city's best tennis/fitness value.We have 32 championship courts, the Keiser K300 Exercise Circuit,free weights,exercise bikes, stair climber,sauna and more. A new franchise is scheduled to open in Membership is good at both locations,so goodness,gracious—get in on the fun! Avon in early September and another should open in Carmel in the fall. Muncie, IRC&Fitness Center Kokomo and Lafayette could join the list A140°L15 8249 Dean Road of Indiana cities with Ind Lubes next IOUY `C1�a' Located just east of year. "I wasn't thinking about franchising Keystone at the Crossing until people started callingme and asking ,--4fir-\ questions about getting dealerships," Sapp / �\./) IRC EAST says. "We don't advertise for fran- 4901 N.Shadeland chisees—theycome to us. We'll probably Just off 1-465 at 56th p y &Shadeland jump out of state in the next year.We want 545-2228 to grow, but not too quickly. We'd like to For more info, circle 5 on Response Card branch out in an eight-to-10 state area in 18 INDIANAPOLIS C.E.O. AUGUST 1992 CEO Profile the next five years." ny when you're starting,"he explains."My 500 Festival Mini-Marathon for the second Ask Sapp how he keeps the business salary's better now than it was at year in a row, but this time he led a blind • growing and he'll rip off a list of things HealthCo, but it took six years to get it runner on a tether to the finish. that make Indy Lube different from its there." Don't, however, expect to see Sapp on competitors. But, in his estimate, the bot- There might even be a boat in the future the golf course or driving in a Porsche tom line depends on his people. "A lot of for the Sapp family—"I promised my anytime soon. "Someday, some of that the other quick-lubes are shrinking and daughter we'd get one by the time she was kind of stuff might be just fine," he we're growing, and I think that comes 10," says Sapp, who loves to ski, both on explains with a smile. "But right now I'm down to personnel and management." water and snow, as well as bike ride and enjoying just watching the business grow Indy Lube's hiring process includes run.In May,he completed the Indianapolis and watching people grow along with it."0 something Sapp developed called a "working interview." After a preliminary interview, potential employees come in, spend time in the shop to experience what's expected of them. If there's a good match, employees are given plenty incen 4 X) Single Source Systems, Inc. tive to work hard for Indy Lube. Sapp, "The Single Source For All of Your Business Computer Needs" who likes "to see his people grow and to help them grow," promotes his managers from within. Managers set goals for their OBJECT ORIENTED COMPUTER & NETWORKING stores and are eligible for bonuses based PROGRAMMING .. SALES, SERVICE on sales, organization and efficiency. Bay UNIX, XENIX, NOVELL & SUPPORT. employees get commissions based on how &TCP/IP 4X many accessories they sell. Long-time __ _ employees can buy stock in the company. –j–�%�%��' "i.' With reliable employees in place, Sapp = ' r- has been able to trim his work schedule to = MO V E L Lm Smake more time for his wife, Theresa, SOFTWARE ����� their 7-year-old daughter Lindsey, 5-year- - ,""�""\ old son Ryan and year-and-a-half-old twin SCO \ toddlers,Nathan and Nicholas. • The couple recently had a house they 4e \ designed themselves built in Carmel. "It's " neat to see the kids grow up," Sapp says. The Networked Computing Ne50Y16 01 AT&T \- AUTHORIZED "My father didn't have a lot of time for / / / RESELLER / r the family because he was in business,and Ole I really want to do both. Sometimes that's a hard juggling act,but so far,so good." One of Sapp's priorities is to make sure Indy Lube gives back to the community that supports it. He's conducted a Lube-a- FRE E Thon in conjunction with the Muscular Dystrophy Association for the past three - = years and raised almost $30,000 for the AI AI ._ Single Source Systems Computer Info. Hotline charity. He also feels strongly about the TOUCH Call Green Movement and invites people to FOUR 630-3844 Then Press 5033 bring their old oil to Indy Lube to have it For additional free computer information,consult the recycled into hydraulic fluid. "We have a "Touch Four" section of your 1991-92 or new 1992-93 lot of opportunities to help the good old Yellow Pages. earth,"says Sapp. Sapp also might be able to finally take advantage of some of the financial rewards he's earned after initially being 3 1 7_253_0665 frugal for Indy Lube's sake. "I waited two For more info, circle 56 on Response Card years to begin taking a salary from Indy Lube—you have to leave it in the comps 4911 E.56TH STREET • INDIANAPOLIS,IN 46220 • FAX (317)253-0385 INDIANAPOLIS C.E.O. AUGUST 1992 19 ,r 1 t R _ k. « 21 1993 L Nom ammo Illni.11.41 111111111111•111111111 M "go!..-.114•• IMMO COON RAPIDS DEVELOPMENT COMPANY 1308 Coon Rapids Blvd., Suite 211 • P.O. Box 33346 • Coon Rapids, Minnesota 55433 • (612) 755-2304 May 19, 1993 Mr. Bill Rubin City of Elk River P.O. Box 490 Elk River, MN 55330 RE: Meeting to Discuss Central Region Development Company 1:00 p.m.,iWednesday, May 26th at at Russell's Dear Mr. in: 1� ✓o I I • The Board of Directors of the Coon Rapids Development Company has met several times in recent weeks to discuss the structure of Central Region Development Company - the certified development company proposed to service Sherburne, Wright and Anoka Counties. During these discussions, several major structural changes were made by my Board to the plan which was originally presented and accepted by your economic development group. Before any further work is invested in a formal application to the SBA for an expansion of service territory, I would like to be certain that you both understand and accept the changes my Board has proposed. Following are the major changes suggested by the CRDC Board: 1) The name of the organization will be "Coon Rapids Development Company d/b/a Central Region Development Company". 2) Special "Central Region" letterhead will be used for all correspondence with Sherburne and Wright County clients, and a "dedicated" telephone line will be established to assist borrowers from those counties. 3) The Coon Rapids Board of Directors will serve as the Board for Central Region Development Company. No special representation from Sherburne or Wright • Counties will be solicited. 4) All Board meetings will be held in Coon Rapids, and the company headquarters will remain in Coon Rapids. • May 19, 1993 Page 2 5) No financial contribution or stock purchase will be expected from either Sherburne or Wright County entities. Attached is a written outline of the proposal being advanced by my Board of Directors. By comparing this outline to earlier correspondence, you may better be able to ascertain the differences between the two plans. I would like to invite you to be my guest at a lunch at 1:00 p.m. on Wednesday, May 26th at Russell's Restaurant in Big Lake to discuss this latest proposal. I will be prepared to answer any questions you may have on the different proposals at that time. Assuming that you would wish to proceed with the plan for expansion of CRDC's service territory into Sherburne County, I would also like to get your thoughts as to whether or not we should apply for a temporary (1 year) expansion or opt for the somewhat riskier permanent expansion. The attached sheets outline some of the pros and cons of each of those courses of action. • Although I hope to see you at Russell's on May 26th, I hope that you will not hesitate to call me at 1-755-2304 before that date if you have any questions. Sincerely, COON RAPIDS DEVELOPMENT COMPANY Kristin M. Wood Administrator KMW/ld Attachments Coon Rapids Development Company d/b/a Central Region Development Company GOAL: To provide small businesses a greater geographic region with an access to the SBA 504 loan program. 1) Territory of Operation A) Sherburne County B) Wright County NOTE: Anoka County will continue to be serviced by the Coon Rapids Development Company. 2) Identification A) A "dedicated" telephone line will be set up to answer any calls from Sherburne or Wright Counties. • B) Central Region letterhead will be used - promoting itself as the d/b/a of Coon Rapids Development Company. 3) Staffing and Responsibilities - Shared with CRDC A) Director (full time) B) Loan Packaging Consulting Firm (Bridgewater Financial Group) C) Clerical Worker (part time, 15 hours per week) 4) Projected Revenue and Expenses (rt cickt") See the attached sheets for CRDC projections for two full years of operation, including the two new Counties, beginning October 1, 1993. 5) Board of Directors The Coon Rapids Development Company will also serve as the Directors of Central Region Development Company. All Central Region loans will be reviewed on the same day as CRDC loans. All meetings will be held in Coon Rapids. • 6) Financial Participation cipation No financial participation will be expected from Sherburne or Wright Counties. MINNESOTA DEPARTMENT OF TRADE AND ECONOMIC DEVELOPMENT INFORMATION 110 ccnomic6 • TC Nr • •• 500 Metro Square :3 121 7th Place East : Saint Paul,Minnesota 55101-2146 USA • 4a ���: w'daa e>os`. � � May 15 1993 Mr. Bill Rubin Star City Coordinator City of Elk River 720 Dodge Avenue, NW Elk River, MN 55330 Dear Mr. Rubin: Congratulations! The City of Elk River has been recertified as a Minnesota Star City for 1993. Your community must be very proud of its innovative Economic Development Team! The goals are the catalyst that propels your City's productive job creation strategies and enables a bright and promising future for the greater Elk River area. • The City of Elk River is to be commended for an excellent economic development effort in 1992. This effort included the creative use of local and state programs to facilitate industrial, commercial and residential development. Marketing efforts were directed internally and externally through mailings, newsletters and business education. The city should also be congratulated for its efforts with the county economic development effort and the quad-county network. The 1993 Action Plan is equally aggressive and comprehensive. The successful completion of the Main Street Redevelopment project will be a real plus for the City and its downtown businesses. Elk River is well prepared to take advantage of its favorable manufacturing location. Should your community need any technical assistance, DTED Regional Star Staff is available to be of service to you. Wishing you and your Star Organization continued success. Sine- • 411110? 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James Stoudt Montrose, MN Staff was in contact with this Montrose resident who seeks existing industrial space for a contract assembly and light manufacturing operation. Mr. Stoudt seeks approximately 2,000 square feet of available space for this endeavor. Information on available sites and financing programs were sent to him. 2 . DTED Prospect Staff was in contact with a DTED representative regarding a telemarketing prospect that seeks 6,000 square feet of • available office space for a second Minnesota location. The telemarketing company is currently located in greater Minnesota, but seeks a second location within closer proximity to the Twin Cities . Information on Elk River locations was sent to DTED and it is hoped that the Elk River proposal will survive when the list of candidate cities is reduced. 3 . North Star Specialties This is a southeast Minneapolis sheet metal and metal stamping company that seeks to construct a new 25,000 square foot facility. The company employs approximately 30-35 people. The company's inquiry on Elk River was made well in advance of a relocation date. That is, the company will likely make a decision within one half of a year and final relocation will occur approximately nine to ten months from now. Staff sent the inquiry information on Elk River as well as information on available sites and financing programs. It is hoped that a meeting can be arranged with this company to further ascertain information on its relocation program. 4 . Office Inquiry Staff received an inquiry from an area resident seeking 0 executive office space for a company that designs and installs computer network systems . Information on available office space was provided to the prospect. 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 III 5. Custom Cutter Grinding Staff was in contact with the owner of this company who is currently operating near the Elk River-Ramsey border. This prospect was listed in previous Prospect Status Reports as far back as 1990. The company still seeks to expand in Elk River and desired information about available sites in the Elk River Industrial Park, plus those areas where a new Industrial Park may be developed. Sincerely, A 4,-. William Rubin Economic Development Coordinator ill •