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City of Elk River, Minnesota <br /> Die Concepts Inc. <br /> March 23, 2016 <br /> Page 4 <br /> 7. Blighted Properties Forgivable Commercial/Industrial Loan Terms & Conditions (Page 4 of <br /> Policy) <br /> The HRA Commissioners are asked to evaluate the project application based on the <br /> following criteria <br /> a. Project design: evaluation of project design will include review of proposed activities, time lines and a <br /> capacity to implement <br /> b. Financial feasibility: availability of funds, private involvement,financial packaging and cost effectiveness <br /> • Appropriate ratio of private funds to the blighted properties forgivable loan funds: The applicant is <br /> providing more than 50%of the total project costs through private funding sources. The criteria related <br /> to equity and private financing are within the appropriate percentages(at least 50%private-sector <br /> commitments and 10% owner equity with 58.4% and 11.9%, respectively) <br /> • Sufficient cash flow to cover proposed debt service as demonstrated by financial statements and <br /> projections: The company has provided cash flow projections for 2016 and 2017 that includes existing <br /> operations of the business plus repayment of the loan obligations(bank and City's microloan)that shows <br /> positive cash flow and continued positive net income beginning in 2016 and moving forward. This <br /> positive net income and cash flow will allow coverage of the proposed debt service. <br /> • Ability to demonstrate positive net worth: the company has demonstrated positive net income in the <br /> provided 2014 and 2015 financial statements, with continued practices projected in cash flow analysis <br /> following the relocation commencing in 2016 and 2017. <br /> • Letter of commitment from applicant pledging to complete the project during proposed project <br /> duration: Provided <br /> • Letter of commitment from other financing sources stating terms and conditions of their <br /> participation. CorTrust Bank is willing to provide financing for the project in the amount of$540,800. <br /> The loan proceeds are to be used to pay the costs associated with the purchase, renovation, and <br /> improvement of the project. The project consists of the purchase, renovations and improvements of a <br /> 20,000+/-sf industrial building on the property, fixtures and permits being purchased by the applicant in <br /> the City of Elk River. Interest shall accrue at a fixed rate of 4.25%for 5 years after inception, and then <br /> reprice at a fixed rate of 2.75%over the 5-year treasury rate until the loan matures in 10 years. Fred <br /> Trapp, Michael Tracey and Die Concepts, Inc., a Minnesota Corporation, are the loan guarantors. The <br /> financing commitment letter from CorTrust Bank has been provided in conjunction with the loan <br /> application and supporting documents. <br /> • Sufficient collateral: CorTrust Bank is in position#1 on the land and building. The EDA would be#2 for <br /> the microloan and#3 on the HRA's Blighted Properties forgivable loan policy. A personal/corporate <br /> guarantee will also be provided. <br /> c. All other information as required in the application and/or additional information as may be requested by the <br /> Housing and Redevelopment Authority <br /> d. Project compliance with all city codes and policies <br />