6.2 EDSR 05-19-2014 - Laserfiche WebLink

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To Item Number Economic Development Authority 16.2 Agenda Section Fleeting Date Prepared by General Business May 19, 2014 Brian Beeman, Director of Economic Development Item Description Reviewed by Preferred Powder Coating (PPC) Subordination Jeremy Barnhart, Deputy Director, CODD Agreements Reviewed by Action Requested By motion, approve the Resolution approving the Security Interest Subordination Agreement and Mortgage Subordination Agreement between the Economic Development Authority of the City of Elk River and First National Bank of Elk River, in relation to Preferred Powder Coating's 100,000 sq. ft. new construction project. Background /Discussion On September 26, 2013 Preferred Powder Coating (PPC) closed on all of the documents necessary to obtain financing to start their 100,000 sq. ft. project. Since that tune, due to an extended constriction schedule, PPC has gone over budget on the construction costs. As a result, First National Bank of Elk River will be increasing its loan obligation to PPC. The FDA's loans were subordinate to the Bank's loan in the original principal amount of $5,093,000. First National Bank is now requesting that the EDA consent to being subordinate to the additional $386,000 increased loan amount as well, by approving the new Subordination Agreements. It is common practice for cities to take subordinate positions in development projects. All parties have reviewed the documents and are satisfied. In order to keep the project on schedule, First National Bank and PPC plan to close on the new loan the week of May 19, 2014. The FDA's attorney from Kennedy Graven, will be available for questions. Financial Impact None Attachments Resolution approving the updated Subordination Agreements Security Interest Subordination Mortgage Subordination Agreement POWERED 0Y Template updated 4/14 [NAYUREI