4.1. JFC 07-31-2018
The Elk River Vision
A welcoming community with revolutionary and spirited resourcefulness, exceptional
service, and community engagement that encourages and inspires prosperity
Request for Action
To
Joint Finance Committee
Item Number
4.1
Agenda Section
General
Meeting Date
July 31, 2018
Prepared by
Amanda Othoudt, EDD
Item Description
Review Energy Efficiency Microloan Application
for Ralphie’s Minnoco
Reviewed by
Cal Portner, City Administrator
Reviewed by
Action Requested
Consider and provide a recommendation regarding an Energy Efficiency Microloan Application for
Ralphie’s Minnoco.
The Finance Committee may recommend approval, approval with conditions, or denial of the request.
Background/Discussion
Ralphie’s Minnoco is a self-service gas station operating in a 3,000 square foot facility at 13374 U.S.
Highway 10. The gas station emphasizes food service, fuel, inside sales, U-Haul rental, and propane
sales. Owner Brian Brehmer plans to use the loan to finance energy efficiency lighting to the property and
the space leased to Mama D's Deli.
Mr. Brehmer has extensive experience in managing gas stations and has owned Ralphie's since July 1,
2013. He previously managed the Otsego F&F Food Mart for 19 years. He also worked as the Retail
Operations Manager for Adium Oil, an independent oil company operating six convenience stores.
Mr. Brehmer is requesting a $19,175 Energy Efficiency Microloan to defray the cost of new LED canopy
lights and improve perception of the gas station. He indicated a gas station image is a large determinant of
its success and improving the lighting and outward appearance will increase business.
Tom Sagstetter, ERMU Conservation and Key Accounts Manager, indicated they have exhausted all of
their 2018 rebate dollars. As such, this request can only be structured as a direct loan from the city.
Ralphie’s received a $74,999 Energy Efficiency Microloan in 2013. They are current on their payments
and are scheduled to pay off the remaining balance of $41,104.35 on September 1, 2023.
The EDA attorney stated fund disbursement for new expenditures should be structured as a new loan
rather than a modification of the first loan because it is a new project. If approved, the EDA could
subsequently consolidate the loans into one payment. The borrower would make one payment and
comply with one set of loan terms and documents.
In addition to the financial criteria that must be considered, the Finance Committee must also consider to
what degree the applicant satisfies the criteria set forth in the Microloan Fund policies outlined below:
N:\Departments\Community Development\Economic Development\EDA\Administrative\Agenda\EDA Finance Committee Agenda
Packets\2018\July 31, 2018\4.1 sr Ralphies Minnoco - Energy Efficiency Loan.docx
Micro Loan Criteria- Energy Efficiency Improvement Program
• Max. Loan Amount: $74,999
• Interest rate: Fixed at 3%
• Equity: 10% or more of project
• Term: The maximum maturity date will be determined by the useful life of the improvement and the
energy payback achieved. For projects that have a shorter length of payback (2-5) years as calculated
according to energy savings, the loans will have an initial maturity of up to 5 years from the date of
closing. Longer-life improvements (6-15 years) may apply for a longer maturity of up to 10 years.
• The loans will be secured by personal and corporate guarantees and if applicable a lien on equipment
financed and subordinate mortgage on the property.
• Exempt from job creation and wage goals because the loan amount does not exceed $150,000 and
does not qualify as a business subsidy by state law.
Ralphie’s Minnoco
• Amount requested: $19,175
• Rate requested: Fixed at 3%
• Equity proposed: 10%
• Term: 5-year amortization
• The EDA will maintain a subordinate position on the mortgage at 13374 U.S. Highway 10 by
amending and restating the mortgage, entity guarantee and a personal guarantee.
The EDA will consider the Finance Committee’s recommendation at their August 20, 2018, meeting.
Financial Impact
The Microloan Fund has a current cash balance of $738,369.15 with $537,038.15 in notes receivable.
Attachments
Microloan Application and Supporting Information
Corporate and Personal Financial Documents (distributed at the meeting)
2013 Loan Documents