HomeMy WebLinkAbout[06b] RLF Request, Engholm DATE: April 9, 2015
MEMO TO: Economic Development Authority
Administrator
Judy Weyrens FROM: Cynthia Smith-Strack Municipal Development Group
Mayor RE: RLF Request: Jeff and Stacie Engholm (Prego Properties)
Rick Schultz
Background:
Councilors In 2002 the EDA/City established a Revolving Loan Fund (RLF)after a grant from the Minnesota
Matt Killam Investment Fund was secured in conjunction with the construction of the Fabral (formerly
Bob Loso VicWest)facility.The RLF has an unaudited balance as of April 1,2015 of approximately$42,000.
Renee Symanietz
Dale Wick The EDA has received an application for the RLF Program from Jeff and Stacie Engholm (Prego
Properties). Following receipt of the loan application and as set forth in the EDA's RLF policy, a
EDA loan review subcommittee met to review the application.
Doug Danielson
Larry Hosch The Engholm's have one other loan with the EDA which will be paid off by the close of 2015. All
Gary Osberg loan and interest payments were made on time and in full. In addition, the Minnesota Street
Rick Schultz Market has a small commercial loan through the EDA RLF. That loan is secured by equipment.
Dale Wick Payments on that loan have always been made on time and in full.
The request is for a principal of$37,000 at a rate of three(3) percent for 15 years. Proceeds will
be used to enhance the façade at 25 Minnesota Street West. The building consists of lease
commercial space and homestead residential on upper level. Minnesota Street Market, Closet to
Closet, and the Naan Bakery are retail lessees.The building is fully occupied.The façade project
will enhance the value of the lease space and thereby assist in retaining local jobs.
Improvements proposed include:
• Repairing and painting the sidewalk level façade
• Adding a new deck and railing to the upper level,
• Installation of new balcony door and fluted surround
• Reconstruction of roof overhang
• New soffit and fascia,
• New soffit lighting
• External window treatments on the upper level
• Decorative cover for attic ventilation
• New signage
Proposed security is a secondary position on the real estate with a personal guarantee. An
appraisal completed in 2013 and consultation with the holder of the primary loan on the real
property verifies there is adequate building equity to provide security for the proposed loan.
The Applicant has submitted, and the loan review committee has reviewed the following:
• Application
• Personal financial statements
• A letter of support following review by the Primary Lender.
3/
• Proof of real estate taxes paid.
• Proof of utility bills paid.
• Building/project plans.
• Quotes from contractors/vendors
The loan review committee recommends approval of a$35,000 loan at a rate of three percent for
a term of 15 years.
Please find a copy of the RLF application attached for your information. Jeff Engholm will be
attending the EDA meeting to discuss the loan application as will Robert McCoy project designer.
Eligible Loan Activities
1. Loan funds may be used for acquisition of land and/or buildings(s), rehabilitation of
building(s), reconstruction, new construction, site improvements, utilities or
infrastructure, and purchase of industrial equipment in connection with starting a new
business or expanding an existing business.
2. Land and building must be privately owned, taxable property and proposed for
commercial and/or industrial activities.
3. If building(s)are being purchased or rehabilitated with funds from the Revolving Loan
Fund any/all building code violations must be remedied. The project must comply with
the St. Joseph City Code including standards relating to land use.
4. Revolving loan fund assistance can be for no more than one-half of the cost of the
project, unless the project is valued at under$50,000 as is the case with this project.
Ineligible activities include the operation or expansion of a casino, sports facility when
the principal tenant is a professional sports team, housing projects and operating
expenses.
The proposed project meets the eligibility guidelines.
Approval criteria for RLF applications are as follows:
1. A gap in project financing is demonstrated.
2. The business must locate, remodel or expand within the corporate limits of the City of
St.Joseph.
3. The project will result in the creation or retention of existing jobs.
4. The project will result in an increase in tax base.
5. The project can demonstrate that the investment of public dollars induces private funds.
6. The project can demonstrate an excessive public infrastructure or improvement cost
beyond the means of the affected community and private participants in the project.
7. The project provides higher wage levels to the community or will add value to current
workforce skills;
8. Assistance is necessary to create new or retain existing businesses.
9. Job/wage goals must be consistent with the City of St. Joseph Business Subsidy policy.
It is noted the project is exempt from the City of St. Joseph Business Subsidy Policy due to the
value of the project being less than the statutory exemption of$150,000.
ACTION
If the EDA finds the proposed RLF request appropriate, a motion to recommend the Council
approve the loan and authorize/direct the preparation of loan documents is in order.
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APPLICATION FOR REVOLVING LOAN FUND
CITY OF ST.JOSEPH,MINNESOTA
Applicant: Prego Properties, LLC
Address: PO BOX 386
city: St Joseph Stets: MN zip Cede: 56374
Contact Person(s): Jeff Engholm
Contact Email: jeffengholm@gmail.com
B usiness Phone: 763-607-3338 Home: GII:
Name of Business: Prego Properties, LLC
P rincipal(s)of Business: Jeff Engholm, Stacie Engholm
Stab m 011111111.111 Fed ID or S.S.I:Oarlialfill
Business is a: Proprietorship
Partnership
x Corporation Date of Incorporation
Type of Business: Retail, Bakery, and Grocery Cooperative
Present location: 256W Minnesota St
X Owned Rented Sq.ft.of present building: 4500
Proposed Location(if different from above):
Owned Rented Sq.ft.of present building:
Type of project:
Construction/New Business ExpandinglExis ing Business
Equipmerlt/Machinery/Fixture X Remodel/CommerciaVRetalllnd.
Other:
('.Nv of St .Inasnh—Ravnhiinn I non FA Nil Prnnram AnnlinMie+n mans 1
33
Describe Project:
A refurbishment of the storefront of the old Loso building, including
fixing up the existing awning, including new lighting and soffits,
the addition of a balcony based on historical photographs, and
new and improved signage for the renting businesses.
Estimated Prosect Costs: Proposed Financing:
Land: $ filent Terms/Intarest Amami
Site improvement $ Bank
Construction/Rehab: $38,000 Equity
Machinery/Equip.:$ Other-describe BFA GRANT $1,000
Bldg.: $ City 3%/I s'r WAO°
Other(Specify): $
TOTAL: $+' .1 ' M TOTAL: $38,0002IMNSW.
Describe of collateral available to secure ban,including market value and prior liens:
Equity in building at 27 W Minnesota Street
Purpose of loan:
To cover the costs of the refurbishment and new signage.
f:Ih,of Rr .Inas+nh_R,wnluinn I non Fund Omnrom Annlirafinn Penia 9
Amount requested: $37,000
Terns requested: $3% interest
Present number of full-time employees: 5
Anticipated jobs created or retained within twelve(12)months of project completion:
Total#of Annual Anticipated Hiring
Position Name Jobs HrsJJob Date
(Use additional sheets if necessary)
If redevelopment estimate markt value of the subject parcels)prior to project and
estimated market value following project completion.
EMV Present
EMV Post Project Completion:
Attach and include the following H requested:
A. Written Business Plan
• Description of Business
• Ownership
• Date established
• Products/Services
• Management
• Future plans
B. Financial statements for the past two(2)years
C. Financial projects for three(3)years
D. Resume of all principals
E. Personal financial statements of proprietor, partners,guarantors
F. Letter of commitment for applicant pledging to complete during the proposed project
duration
G. Letter of commitment from other sources of financing,stating terms and conditions of
their participation in project
H. Written quotes from contractors and vendors for all cost estimates listed above
I. Site plan for new constriction
('iiv of St .inea►h—Ravnhdnn I non Find Prnn nrn Anniirotinn Pone 1
J. Authorization for release of information
K. Other:
L. Other.
M. Fee: (1%of amount of loan request)
Attach an explanation if any answer to the following is yes:
1. Have you or any officer or owner of your company ever been involved in bankruptcy or
insolvency proceedings?
Yes X No
2. Are you or any officer or owner of you business involved in any pending lawsuits or
judgments?
Yes X No
3. Does your business have any subsidiaries or affiliates?(INCLUDE: financial statements with
explanations as requested)
Yes X N
4. Do you buy from,sell to,or use the services of any concern in which someone in your
company itself has a significant financial Interest?
Yes X No
rev of Ct .Inaonh—Rovnhdnn I rswn Fs Ind Prnnram Annlirsfinn Pans d
36
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