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The Elk River Vision <br />A welcoming community with revolutionary and spirited resourcefulness, exceptional service, and community <br />engagement that encourages and inspires prosperity <br /> <br /> <br />Request for Action <br /> <br />To <br />Economic Development Authority <br />Item Number <br />7.2 <br /> <br />Meeting Date <br />September 16, 2024 <br />Prepared By <br />Brent O'Neil, Economic Development Director <br /> <br />Item Description <br />Payment Extension Request for Distinctive Iron <br />Loan <br />Reviewed by <br />Cal Portner <br /> <br />Action Requested <br />Authorize, by motion, a continuance of the payment schedule with Distinctive Iron/Hemmer Companies LLC <br />under regular amortization while its request to extend the balloon payment date is considered. <br /> <br />Background/Discussion <br />The EDA approved a loan to Distinctive Iron in 2015 and an additional $100,000 loan to the company in 2019. <br />The existing balance of $89,338.20 of the first loan combined with the additional loan was structured as a new <br />loan in the amount of $189,338.20. Amortized over 20 years, the present balance is $153,390.02 with a <br />maturity date of October 1, 2024, as a balloon payment. <br /> <br />Distinctive Iron has been discussing the loan extension with staff and has submitted a written request to <br />extend the loan to October 1, 2026, under current terms, which is in line with the program policy allowing <br />for extensions. The company has provided updated financial statements as well as a letter from its primary <br />lender, The Bank of Elk River, indicating a conventional refinancing of the loan would affect the payment <br />significantly by more than doubling interest charges and generating origination fees. The bank further indicated <br />that this extension would allow the company to manage its loan to pay it off in full by the maturity date of the <br />extension period. <br /> <br />The company has met all requirements of the existing loan terms and there are no issues with payment <br />history. Staff supports the extension request; however, the EDA's attorney would be able to provide updated <br />loan documents for the EDA to consider at its regular October meeting. <br /> <br />Financial Impact <br />The EDA will continue to receive regular installment payments. <br /> <br />Mission/Policy/Goal <br />Support existing businesses. <br /> <br />Attachments <br />None <br /> <br />Page 21 of 22