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Member Hardin left the meeting at 8:46 a.m. <br /> 4.05: Request from Ramsey Business for Use of EDA Revolving Loan Fund: Case of <br /> Stone Brook Children's Academy <br /> Economic Dev. Mgr/Assistant City Administrator Brama presented the staff report. <br /> Mike Mulrooney, CMDC, stated that when they reviewed the request they believed that it would <br /> be helpful for the owners to reserve as much capital for working purposes. He stated that the <br /> borrowers are highly educated with excellent track records and have jobs outside of this <br /> endeavor, which lends additional support for the repayment ability for the loan long-term. He <br /> explained that this is a start-up business and therefore additional equity is required, moving the <br /> line from ten percent to 15 percent. He noted that the revolving loan fund could fill that equity <br /> gap. He explained the difference between the note rate and effective rate. <br /> Chairperson Steffen asked if the construction costs have risen in the past few months. <br /> Michael Johnson, representing the applicant, replied that the construction costs have risen with <br /> the comments and requirements of the Planning Commission. He noted that the increased brick <br /> and glass will have a positive impact on the aesthetics of the project,but do have a higher cost. <br /> Member Riley asked if the landowner and business operated are separate entities or whether the <br /> two are one in the same. <br /> Mr. Mulrooney replied that the landowner will be separate for the operator but noted that both <br /> parties will be signed onto the loan as co-borrowers. <br /> Chairperson Steffen asked if it is necessary to go out 15 years on the term of the loan. <br /> Mr. Mulrooney stated that he believes that it is necessary because the loan will be secured with <br /> the same assets and therefore the SBA policy is to match the same term as the SBA. He stated <br /> that the SBA term is 20 years but he feels that they will be able to gain approval from the SBA <br /> on the 15-year term to match the requirements of the City. <br /> Chairperson Steffen asked for input on the process from the applicant. <br /> Mr. Johnson stated that they are in the final stages of the approvals from the City and are <br /> awaiting the finishing touches on the loan processes. He stated that once approval is gained from <br /> the City, they would finalize the purchase of the property and would hope to break ground soon <br /> after. He stated that they are ready and are about three months behind their original schedule. <br /> Motion by Chairperson Steffen, seconded by Member Burandt, to recommend to City Council to <br /> approve a Ramsey EDA Loan to MK Johnson LLC consistent with the terms and conditions <br /> outlined in this case and to direct staff to draft proper loan agreements and loan documents for <br /> approval by the City Council. <br /> Economic Development Authority/July 13,2017 <br /> Page 7 of 9 <br />