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E lls <br />River` <br />Request for Action <br />To <br />Item Number <br />Economic Development Author* <br />6.4 <br />Agenda Section <br />Meeting Date <br />Prepared by <br />General Business <br />July 20, 2015 <br />Amanda Othoudt, EDD <br />Item Description <br />Reviewed by <br />19228, LLC (Promo Products) Consent to Sale <br />Cal Portner, City Administrator <br />Reviewed by <br />Action Requested <br />The EDA is asked to consider adoption of the attached Resolution consenting to the sale of business <br />relating to the loan to 19228, LLC (Promo Products) <br />Background /Discussion <br />On January 13, 2011, the city approved an Industrial Incentive Microloan for $30,000 for Promo <br />Products. The original maturity date of the loan was January of 2016 and on July 20, 2015, the EDA <br />approved a 2 -year extension. <br />The owners recently their business and the real estate they owned in the entity 19228, LLC. Brian Clark <br />is the new owner dba Liberty Clark, LLC. <br />The sale of the company and the real estate was intended to take place simultaneously however the buyer <br />proceeded with the purchase of Promo Products' assets. Both transactions were approved by 21" <br />Century Bank and an SBA 504 loan for the real estate was approved by Twin Cities -Metro CDC. Due to <br />new rules adopted by the EPA, an environmental review with vapor testing must be completed prior to <br />closing. To accomplish this, the property would undergo a "cold weather" vapor testing, as well as a <br />"warm weather" vapor testing. Unfortunately, the Cold Weather test cannot be completed until <br />November, after which time the property sale would be completed. <br />First National Bank's mutual customers have executed a lease with the new company and completed a <br />new appraisal which shows a positive cash flow. First National also will have a Loan -To -Value including <br />our Is' mortgage, the SBA Mortgage initiated by CMDC in 2010, and the City /EDA mortgage of <br />approximately 54 %. <br />The applicant is asking the EDA to consider continuing its loan until the earlier of the sale of the building <br />or the maturity of the city loan in January 2018. The loan originated in January 2011 with a 5 -year <br />maturity and the loan was extended for 24 months to mature in January 2018. Payments have been made <br />as agreed, the LTV is satisfactory, and the company has proven its ability to generate positive cash flow <br />and service its rent payments. <br />Financial Impact <br />None. Payments will continue to be received per the loan agreement. <br />4A UR <br />