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7.2. EDSR 10-17-2022
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7.2. EDSR 10-17-2022
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10/14/2022 4:29:13 PM
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Request for Action <br /> <br /> <br /> <br /> <br /> <br />To Item Number <br />Economic Development Authority 7.2 <br />Agenda Section Meeting Date Prepared by <br />General Business October 17, 2022 Brent O’Neil, Economic Development Director <br />Item Description Reviewed by <br />Orluck EDA Loan – Assignment and Cal Portner, City Administrator <br />Assumption Agreement <br />Reviewed by <br /> <br /> <br />Action Requested <br />Approve, by motion, the attached resolution authorizing the EDA to consent to an assignment and assumption <br />agreement between Orluck Industries and Twin City Metal Works (TCMW) regarding the EDA’s loan to Orluck. <br /> <br />Background/Discussion <br />Orluck Industries received an EDA loan for $200,000 in 2018, with a maturity date of July 2025 following an <br />extension granted two years ago. Orluck is an aerospace manufacturer of seating, propulsion, and engine parts. It <br />also provides medical, locomotive, and manufacturing industry services. This loan is secured by two pieces of <br />production equipment, of which the EDA holds a first collateral position on both. <br /> <br />Staff has been working with Orluck regarding changes at the company as they transfer most operations and assets <br />to TCMW. Many operations will remain the same. As Orluck no longer would hold the secured equipment, they <br />propose to assign liability to TCMW which would assume debt service liability and payments once the transfer is <br />complete this Fall which requires EDA board consent. The loan agreement terms would remain the same <br />including the EDA’s first collateral position on the equipment. The present principal balance is $87,956.03. This <br />balance is in line with an estimated value of the equipment. <br /> <br />The Business Subsidy Policy remains applicable and is addressed in the Assignment and Assumption Agreement to <br />ensure TCMW complies with the policy. <br /> <br />Financial Impact <br />As a continuation of an existing loan and amortization, this agreement does not alter the financial impact of the <br />EDA. The legal costs incurred by the EDA regarding this agreement are the responsibility of the borrower. <br /> <br />Mission/Policy/Goal <br />Support Elk River’s existing businesses through programmatic offerings. <br /> <br />Attachments <br /> Resolution Consenting to an Assignment and Assumption Agreement <br /> Orluck Industries Assignment and Assumption Agreement <br /> Original Loan Documents <br /> <br />The Elk River Vision <br />A welcoming community with revolutionary and spirited resourcefulness, exceptional <br /> <br />service, and community engagement that encourages and inspires prosperity. <br /> Updated: August 2020 <br />
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