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Item 1 6,. <br /> ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY <br /> 1111 <br /> MEMORANDUM <br /> TO: Economic Development Authority <br /> F Cathy Mehelich, Director of <br /> Economic Development <br /> DATE: November 13, 2000 <br /> SUBJECT: Sportech Micro Loan <br /> Issue <br /> Chris and Debra Carlson(Sportech, Inc.) are planning to double the size <br /> of their commercial building to 20,000 square feet in order to <br /> accommodate business growth. The Bank of Elk River has requested <br /> that the EDA consider subordinating its second position mortgage to the <br /> expansion financing mortgage. <br /> Background <br /> • In_November of 1998 a $45,000 Micro Loan at 8.5%interest and a three- <br /> year balloon payment was awarded to Chris and Debra Carlson <br /> (Sportech, Inc.). The loan has a current balance of approximately <br /> $43,000 and is fully due and payable January of 2002. <br /> Attached is correspondence from The Bank of Elk River regarding their <br /> current mortgage and new mortgage for the expansion project. <br /> y mortgage The EDA currently has areal estate most a e as security. A condition of <br /> the micro loan approval in 1998 was to obtain personal guarantees. <br /> Since the property is owned personally by the Carlsons and leased to the <br /> company, a personal guaranty was not completed. <br /> Action Requested <br /> Staff has reviewed the project with legal counsel. Staff recommends the <br /> EDA subordinate its current second real estate mortgage to the new <br /> mortgage issued to the Carlsons from The Bank of Elk River to allow for <br /> the company's expansion, with the condition that a guaranty from <br /> Sportech, Inc. is executed. <br /> Attachment <br /> • Letter from The Bank of Elk River dated 10/25/00 <br /> 13065 Orono Parkway • P. 0. Box 490 • Elk River, MN 55330-1743 • (612)441-7420 • Fax (612) 441-7425 <br /> Equal Opportunity Housing and Equal Opportunity Employment <br />