Agenda - Economic Development Authority - 03/09/2017

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Economic Development Authority (EDA) 4. 3. Meeting Date: 03/09/2017 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: ***IMPORTANT UPDATE* This case was reviewed by the EDA in January and February. This loan request was approved by the EDA and Council in February, contingent upon staff obtaining sufficient collateral (a second mortgage on personal residence was specifically identified at the time). The purpose of this case is to update the collateral source. American Print& Digital is suggesting the City take a first lien on the attached existing equipment list, rather than a second mortgage on their personal residence. Staff has verified sufficient value exists in the attached equipment list to collateralize the EDA loan. Please see Mike Mulrooney's MEMO and recommendation on this change.With this in mind, staff believes this change is administrative in nature, and still meets the intent of Ramsey's policies and prudent lending standards. Staff recommends the EDA re-approve this loan request with the updated collateral requirement. ***ORIGINAL CASE MEMO*** 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.