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FIRST NATIONAL BANK of Elk River 1 May 11, 2017 Amanda Othoudt, EDFP Economic Development Director City of Elk River 13065 Orono Parkway Elk River, MN 55330 Amanda 812 Main Street Phone 763.01.3637 Elk River, MN 55330 Fax 761.433 .3800 www.fnbeccom As we discussed earlier, Andy Isle and Duane Hass recently had the opportunity to sell their business, Promo Products, and the real estate they owned in the entity 19228, LLC in which Promo Products had operated. The buyer of the company and real estate is a person by the name of Brian Clark who had formed a company called Liberty Clark, LLC to operate the business. Andy has stayed on for a short period of time to transition to the new owner, and two key people, Carl and Oscar, are still active with the business as employees. It was intended that the sale of the company and the real estate would take place simultaneously. it is my understanding that both transactions are approved by 21st Century Bank, and there would be a SBA 504 loan for the real estate that has also been approved by Twin Cities -Metro CDC. Due to some new rules adopted by the EPA, the environmental review of the property recommended vapor testing be completed prior to closing. To accomplish this, the property would undergo a "cold weather" vapor testing, as well as a "warm weather" vapor testing. Unfortunately, the Cold Weather test cannot be completed at this point until November, after which time the property sale would be completed. The buyer proceeded with the purchase of Promo Products' assets. Our mutual customers have executed a lease with the new company and also completed a new appraisal, both of which I'd sent via e-mail. Based on this information, we have a positive cash flow for our mutual borrower, 19228 LLC. We also would have a Loan - To -Value including our IIt mortgage, the SBA Mortgage initiated by CMDC in 2010, and the City /EDA mortgage of approximately 54 %. I am asking for the EDA to consider continuing its loan to 19228, LLC until the earlier of the sale of the building, or the maturity of the City loan in January 2018. As you'll recall, this loan originated in January 2011 with a 5 -year maturity, and the loan was extended for 24 months prior to its maturity in January 2016, per EDA eligibility, to mature in January 2018. Payments have been made as agreed, the LTV is satisfactory, and the company has proven its ability to generate positive cash flow and service its rent payments. PleaseY r"oipff any questions you might have. Thank you! )Vice President First National Bank of Elk River 13785 Rogers Drive Suite 100 Rogers, MN 55374 NMLS # 1249649 Y 5 -s } k -N_ fig♦ y> k; '. i;J3 r