3.1. EDSR 03-27-2015 - Laserfiche WebLink

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Elk River Request for Action To Item Number Economic Development Authori 3.1 a, b, and c. Agenda Section Meeting Date Prepared by General Business March 27, 2015 Jeremy Barnhart, Deputy Director, CODD Item Description Reviewed by Consider documents associated with the sale of Cal Portner, City Administrator land owned by Envision (Sportech) Reviewed by Action Requested Consider documents associated with the sale of land owned by Envision (Sportech): Escrow agreement 2. Release and Satisfaction of Mortgage 3. Consent to Transaction Background /Discussion In 2014, the EDA and Sportech entered into a loan agreement whereby the EDA would provide a $111,155.13 loan to assist Sportech in the development of an engineering/ design center at 10800 175`'' Avenue. To meet the business subsidy requirements, Sportech agreed (section 6, page 5) to provide four new jobs, three of which must meet low to moderate income requirements, and retain the new and existing positions (183 at the time) for at least a year, and operate in the location for a period of five years. At the satisfaction of these conditions, the loan would be forgiven. In the interim, the security for the loan was a mortgage on the property, in favor of the EDA. The agreement also includes a provision (Section 9, page 7)that Sportech agrees not to sell or transfer the property without consent of the EDA. The agreement stipulated that the EDA would not unreasonably withhold consent if Sportech relocated within the city and provides "alternative and equivalent security." Sportech seeks consent of the sale and leaseback of 10800 175`'' to Broadstone STI Minnesota. Sportech leases the headquarters building at 10800 175`'' Avenue from Envision Company, a related entity. Envision intends to sell the building to Broadstone STI Minnesota. Envision purchased the lot for $1 in 2008, with the land value being repaid to the city with a property tax abatement. Sportech requests the EDA release the mortgage. If required, Sportech has proposed an escrow agreement as an alternative to the mortgage. The escrow agreement requires Sportech place $111,155.13 in escrow, held by a tide company, to be returned on April 1, 2016, provided the job goals are met. The release of the escrow is not tied to the company's obligation to remain in the city for five years. Anal Without the escrow agreement, there is no liquid financial security to guarantee provisions of the loan. You may recall that forgivable loan funds are funded through the federal government and administered by the State of Minnesota. Failure to adhere to loan requirements may result in repayment to the state. With no security, that responsibility might fall to the taxpayers. P a f E A E a a i Template Updated 4/14 INAWR