Agenda - Economic Development Authority - 07/13/2017

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Economic Development Authority (EDA) Meeting Date: 07/13/2017 Submitted For: Patrick Brama, Administrative Services By: Patrick Brama, Administrative Services 4. 5. Title: Request from Ramsey Business for Use of EDA Revolving Loan Fund: Case of Stone Brook Children's Academy Purpose/Background: PURPOSE Consider Request from Ramsey Business for use of EDA Revolving Loan Fund (RLF). $100,000 EDA loan amount, 4.24% of total project costs ($2.36M total costs), 15-year term, 3% interest, with land/building as collateral. The applicant is Stone Brook Children's Academy and Childcare Center (MK Johnson Properties LLC). 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 Stone Brook Children's Academy. The are proposing the construction of a new 9,500 square foot children's academy/ childcare center in The COR, on roughly 1-acre of city -owned land. Stone Brook is currently near the finish line with the "entitlement process" (site plan and plat). Stone Brook is expected to close on the purchase of the property in the next 45 days, and begin construction shortly thereafter. Please see emailed CMDC MEMO for details. THE REQUEST The financing for this project is includes the a private Bank (50%), the SBA/CMDC (35%), the City of Ramsey (4.24%), and owner equity (10.76%). The owner is interested in utilizing the City's revolving loan program to ensure enough working capital (i.e. owner equity) remains available to sustain the business for the first several years. The City's loan will be made against the property (land/ building). Notification: Observations/Alternatives: Credit analysis/ underwriting was completed by Mike Mulrooney of the Central Minnesota Development Corporation (CMDC). Please see emailed CMDC MEMO for a detailed analysis. Below is a summary. If EDA/ Council have specific questions/ concerns regarding the credit analysis, please email staff before the meeting (we would like to avoid discussing personal financial information in an open meeting as much as possible). Also, if you would like to personally review detailed financials, please contact staff --we will arrange for you to meet with CMDC before the EDA meeting. NOTE: staff does not possess detailed financial statements in-house (intentionally). EDA Loan Summary: (1) Amount:$100,000