7.0. EDSR 05-12-2003 - Laserfiche WebLink

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ITEM # 7. City of Elk -�-� River MEMORANDUM TO: Economic Development Authority FROM: Catherine Mehelich, Director of Economic Development DATE: May 12, 2003 SUBJECT: Consider Micro Loan Extension — M & A Investments, LLC Attachments • Correspondence from M&A Investments,L.L.C. dated January 31, 2003. • Minutes from April 29, 2003 Finance Committee Meeting. • Proposed Amortization Schedule. • Background In March 2000 the EDA awarded a$50,000 Micro Loan at 7.75% to Mark&Alma Rothfork, owners of Ultra Image Powder Coating. The Rothforks own a multi-tenant building in the McChesney Industrial Park, of which the company occupies 13,500 square feet. The Micro Loan was used to expand the building. The loan was structured as a participation loan with First National Bank of Elk River. The balloon payment on this loan in the amount of$44,227.21 was due March 15, 2003. Prior to the due date Mr. Rothfork provided staff the attached written request for the EDA's consideration of a two-year extension. In addition,Mr. Rothfork's lender has submitted a letter regarding its inability to refinance the Micro Loan portion at this time based on the project's loan to value. In April the EDA granted a 3-month extension to allow the Finance Committee time to review the extension request. The Micro Loan Fund Policy allows for a 2-year extension at a market rate of interest. Finance Committee Recommendation The Finance Committee reviewed and discussed the extension request at its April 29th meeting. There was much discussion by the Finance Committee due to the precedence that this request may have on a policy regarding the use of the Micro Loan Fund for"investment property"-property that is not owner-occupied by an eligible business. Mr. Rothfork has indicated his intentions to relocate his business, Ultra Image Powder • Coating to a building that he has constructed in the Big Lake Industrial Park. The reason for