6.0. EDSR 04-14-2008REQUEST FO R ACTIO N
To Item Number
Economic Develo ment Authori 6
Agenda Section Meeting Date Prepared by
April 14, 2008 Catherine Mehelich, Director of
Economic Develo ment
Item Description Reviewed by
Consider Industrial Incentive Micro Loan to Pomeroy Tool, Inc. Lori ohnson, Ci Administrator
Reviewed by
Action Requested
The EDA is asked to consider the EDA Finance Committee's recommendation for action on the
Pomeroy Tool, Inc. Micro Loan request in the amount of $100,000.
Background/Discussion
The attached staff report to the EDA Finance Committee provides background regarding the Micro Loan
request. The project involves assisting the financing of Mr. Long Do's purchase and continued operation
of the established Pomeroy Tool, Inc. business located in the Elk River Industrial Park.
In order to accommodate the applicant's timing needs, the EDA Finance Committee will be meeting the
morning of April 14`'' to review the application and provide a recommendation to the EDA. Staff will
provide a verbal update on the Finance Committee's recommendation for the EDA's consideration.
Financial Impact
The Micro Loan request is in the amount of $100,000 at the terms outlined in the staff report. The Micro
Loan Fund has a current cash balance of approximately $925,000.
Attachments
Staff report to EDA Finance Committee re: Pomeroy Tool, Inc. Micro Loan Application, April 14,
2008.
Action Motion by Second by Vote
Follow Up
S:\EDA\Micro Loan Fund\Finance Committee\2008\Pomeroy Tool\Action Requested 4.14.08 Pomeroy.doc
of
ver
MEMORANDUM
TO: EDA Finance Committee
Tim Simon, Finance Director
FROM: Catherine Mehelich, Director of Economic Development
DATE: April 14, 2008
SUBJECT: Consider Micro Loan Application -Pomeroy Tool, Inc.
A meeting of the EDA Finance Committee will be held at City Hall on Monday, Apri114,
2008 at 7:00 am to review a Micro Loan application.
Attached is the Micro Loan application submitted by Mr. Long Do who is proposing to
purchase Pomeroy Tool, Inc.
Pomeroy Tool, Inc. is an established Elk River company that specializes in the
manufacturing of precision machined parts and components for the aerospace, laser
manufacturing, and electrical motor manufacturing industries. An outline of the company's
history in Elk River since establishment in 1986 is included in the application. Founder Dick
Pomeroy has an identified a buyer, Mr. Long Do, who proposes to continue the business
operations in Elk River. Mr. Long Dow will be present to discuss the project with the
committee.
Pomeroy Tool, Inc. is requesting an EDA Industrial Incentive Micro Loan of $100,000
toward the purchase of existing equipment, of which the the EDA would obtain a 2nd
position lien. An appraisal of the equipment is included in the application for review. A
lease agreement has been established to continue operations in its current Elk River location.
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 Micro Loan
Fund policies outlined below:
Micro Loan Criteria
• Max. Loan Amount: $100,000
• Interest rate: fixed, 2 below prime
Consider EDA Micro Loan Application -Pomeroy "1'001, Inc.
April 14, 2008 EDA Finance Corruruttce Meeting
Pagc 2 of 2
• Equity: 10% of project
• Private Financing: 50% of project
• 1 job created per $20,000 loaned
• Minimum wage of $15 per hour
Pomero,~, Inc.
• Amount requested: $100,000
• Rate requested: fixed, 2 below prime
• Equity proposed: 10% of project
• Private Financing: 75% of project
• 1 job retained/created per $16,600 loaned
• Minimum wage of $15 per hour
In accordance with the MN Business Subsidy Law, any loan amount over $75,000 requires a
Business Subsidy Agreement for job and wage goals to be created as a result of the assistance,
and a requirement to continue operations in Elk River for 5-years. In addition, the Subsidy Law
requires approval by the local elected body. Following review and approval by the EDA at its
April 14`" meeting, staff anticipates the City Council's consideration for final approval at its
Apri121, 2008 meeting.
Requested Action
The EDA Finance Committee is asked to provide a recommendation to the EDA and Ciry
Council for approval of the micro loan with the following terms and conditions:
Participation Loan: The Bank of Elk River
Loan Amount: $100,000
Interest Rate: fixed, 2 points below prime
Term: 10-year amortization; 5-year balloon
Security: 2°d position lien on related equipment purchase
Business Subsidy: Execution of a Business Subsidy Agreement for the retention of
4 full-time employment positions, and the creation of 2 full-time
positions at wages not less than $15.00 per hour within 2-years of the
loan closing.
Attachments
• Micro Loan Fund Policy & Guidelines
• Pomeroy Tool, Inc. Micro Loan Fund Application and related attachments
S:\EDA\Micro Loan Fund\Finance Committee\2008\Pomeroy Tool\4.14.08 Finance Comm.doc
INFORMI~TION
FREERS
~EADE~S iPJ PUBLi~~ FI?vANCE
O To: Cathy Mehelich - Director of Economic Development
From: Stacie Kvilvang and Sid Inman- Ehlers and Associates
W Date: Apri18, 2008
Subject: Energy Entertainment Center Proposal
Ehlers has been completing the financial analysis of the above referenced project. On April 3,
2008, we met with staff and representatives of the project to go over questions, additional
information we needed and concerns we had with respect to the project as proposed.
Based upon the meeting, all parties agreed that further information and analysis was needed for
the project before a recommendation could be brought before the City's FDA. Therefore, all
parties agreed that postponing the April 14`h review of the project by the City's EDA was
prudent and that the review should be rescheduled to a date when all information is complete
and agreed upon by both parties.
Please contact me at 651-697-8506 with any questions or if you require further information.
LEADERS IN PUBLIC FINANCE
3060 Centre Pointe Drive
8555
Roseville, MN 55113-1105
Phone:651-697-8506 Fax: 651-697-
skvilvang@ehlers-inc.com
i~1F®~M~Ti®@~
Save The Date!
What? Development Roundtable MAR l g 2008
Who? Sherburne County city council members, county
commissioners, EDA and SCEDA members and other
economic development stakeholders
When? April 30, 2008 from 4:00 pm - 6:00 pm
Where? Sherburne History Center in Becker*
Why? Listen to perceptions of Sherburne County's
economic development strengths and challenges from
a panel of top-notch developers and brokers as they wrap
up a full-day tour and presentations by Sherburne County
communities.
Learn about their experiences in other markets and how that
might inform choices in your community.
Participate in a dialog with the developersJbrokers and other
policy-makers in Sherburne County.
Help build a stronger economic future for Sherburne County!
RSVP To Mary 7o Robish at Sherburne County at 763-241-
2701 or by e-mail at mart',robishCalco.sherburne.mn.us by
Wednesday, April 16, 2008. Refreshments will be
provided.
~~~~
* The Sherburne History Center is located at
10775 27~' Avenue SE, Becker, Minnesota.
55308