Minutes - Economic Development Authority - 10/11/2012

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Motion carried. Voting Yes: Chairperson Riley, Members Skaff, LeTourneau, McGlone, Steffen, Williams, and Wise. Voting No: None. Absent: None. It was the consensus of the Economic Development Authority to move forward with completion of shovel ready certification, to rezone and apply for Comprehensive Plan amendment through the Met Council, to develop sketch plans /options for development of the site, to conduct an abatement assessment, and to update the City Council on the intentions of the EDA at a work session and ask for support moving forward. Management Analyst Brama advised that staff will be working with Connexus Energy and other partners, including Great River Energy and Anoka County, and will provide more information regarding the data center prospect to the EDA in the near future. 4.03: Revolving Loan Fund Application (RLF) Mr. Mulrooney indicated this item was discussed at the last EDA meeting and the owners have now reached a successful conclusion with the landlord for this fitness facility. He stated that total costs are $177,000 with $54,000 used for working capital, $54,000 used for equipment, and $69,000 used for leasehold improvements. He indicated the landlord has agreed to finance the majority of the leasehold improvement costs and the owners received a financing commitment from Bremer Bank subject to City participation. He stated the owners are requesting a $34,500 RLF loan at 3.25% fixed for ten years, which is also the term of their lease. He stated that from a collateral standpoint, the loan would be in a junior position to the Bremer SBA loan and the ability of the guarantors to repay the debt was closely reviewed. He indicated that the owners have excellent credit scores and in his professional opinion, the likelihood of repayment on the RLF loan in the event the business is not successful is strong and he regards this as a low risk loan on the part of the EDA. He recommended that the EDA approve the RLF request subject to Bremer Bank approval, clear title to the assets, filing a UCC on the fitness equipment, execution of the loan agreement, and personal guarantees from the owners in the project. Chairperson Riley questioned the ten -year term of the RLF. Mr. Mulrooney stated that the ten -year term of the RLF matches the term of the SBA loan from Bremer Bank. Member Wise stated that fitness equipment is replaced frequently and expressed concern that the EDA would be borrowing them money on equipment that will be sitting in recycling. Mr. Mulrooney explained that the equipment being used in the business is not typical fitness equipment such as that found at Lifetime Fitness. He stated the owners are putting in substantial equity of $34,500, which is 20% of project costs, adding that the owners have additional equity that could be put into the project if needed but they want to preserve cash equity for operating purposes recognizing that this is a start-up business. Economic Development Authority /October 11, 2012 Page 4 of 6