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City of <br /> Elk Request for Action <br /> River <br /> To Item Number <br /> Mayor and City Council 4.8 <br /> Agenda Section Meeting Date Prepared by <br /> Consent May 19, 2014 Brian Beeman,Director of Economic <br /> Development <br /> Item Description Reviewed by <br /> Resolution Approving Intercreditor Agreement Jeremy Barnhart,Deputy Director, CODD <br /> with Preferred Powder Coating Reviewed by <br /> Cal Portner, City Administrator <br /> Action Requested <br /> Adopt,by motion,a resolution approving the Intercreditor Agreement between the City of Elk River and <br /> First National Bank of Elk River in relation to Preferred Powder Coating's new construction project. <br /> Background/Discussion <br /> On September 26, 2013, Preferred Powder Coating (PPC) closed on the necessary documents to obtain <br /> financing to start their 100,000 sq. ft. project. <br /> Since that time,due to an extended construction schedule, PPC has gone over budget on the construction <br /> costs. As a result, First National Bank of Elk River will be increasing its loan obligation to PPC. First <br /> National Bank is requesting that,by approving the Intercreditor Agreement,the city agrees to subordinate <br /> its rights to collect shortfall payments from Preferred Powder Coating,LLC, Preferred Real Estate <br /> Holding,LLC,Lloyd Peterson and Dan Bosshart to the Bank's rights to collect payments on its loan, <br /> including the original principal amount of$5,093,000 and the additional principal amount of$386,000. <br /> The city's right to collect and use tax increments and enforce the minimum assessment agreement would <br /> not change. It is common practice for cities to take subordinate positions in development projects. All <br /> parties have reviewed the documents and are satisfied. <br /> In order to keep the project on schedule, First National Bank and PPC plan to close on the new loan the <br /> week of May 19, 2014. The EDA's attorney from Kennedy Graven,will be available for questions. <br /> Financial Impact <br /> None <br /> Attachments <br /> • City Council Resolution Approving Intercreditor Agreement <br /> • Intercreditor Agreement <br /> P a w E A E U s r <br /> Template Updated 4/14 INIM UREI <br />