Agenda - Economic Development Authority - 02/09/2017

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Economic Development Authority (EDA) 4. 3. Meeting Date: 02/09/2017 Submitted For: Patrick Brama,Administrative Services By: Patrick Brama,Administrative Services Title: Consider Request from Ramsey Business for Use of EDA Revolving Loan Fund Purpose/Background: PURPOSE Consider Request from Ramsey Business for use of EDA Revolving Loan Fund (RLF). $72,500 EDA loan amount, 5%of project costs ($1.44M), 10-year term, 3%interest. Please see attached draft loan agreement. NOTE: this case came to the EDA/Council for the first time in January. At the time,the EDA/Council, provided the following direction to American Print&Digital: (1) an exception to the City's minimum owner equity would be allowed for American Print&Digital, from 10%to 5%, and(2) authorization to formally apply for the use of the EDA Revolving Loan Fund. BACKGROUND The intent of the EDA RLF program is to provide gap financing in situations in which conventional/normal financing is not available for small/medium sized businesses,to make good projects "GO." Please see attached EDA RLF guidelines for details. APPLICANT/BUSINESS The business considering the EDA RLF is American Print&Digital. They are located of Radium Street in eastern Ramsey,just south of Bunker Lake Boulevard. They currently lease about 5,000 sf in a multi-tenant spec building. They are a"broker" style printing firm. Meaning,they don't work with end-user customers directly--they only work with brokers. Brokers sign contracts with American Print&Digital for work. They have 7 full-time employees. The business started in 2009 and has steadily grown year-after-year. American Print&Digital needs room to grow, at least 10,000 sf total. They recently placed an order for a very expensive piece of equipment,which they already have enough orders to run for a minimum 6-hours per week, and expect at least 20-hours per week immediately when it's installed. The new piece of equipment allows them to expand their production capacity to larger runs, on physically larger pieces of material, and to produce product quicker/cheaper. Please see attached cover letter from American Print&Digital for details. THE PROJECT American Print&Digital has a purchase agreement in place for the former"All-Brite Printing" building located between Do-All Printing and Lano Equipment on US Highway 10 (6320 Highway 10). This building is just less than 15,000 sf, and is set up ideally for their operations. Some renovations are needed. This purchase will allow for expansion of their business,placement of their new machine, and room for small future expansion. Additionally, in the short term,American Print&Digital plans to sub-lease a small portion of the property until they need it(about 3,000 sf). The project is about$1.4M total--in which American Print&Digital is seeking financing,with about$600,000 of the total project costs are the new machine. The Bank of Elk River has tentatively indicated they would fund 50%,