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of <br />Item 5.4. <br />River MEMORANDUM <br />TO: Mayor & City Council <br />FROM: William Rubin, Economic Developmeny~l <br />Coordinator 44 ~~'' <br />DATE: April 3, 1995 <br />SUBJECT: Financing Alternatives - <br />Custom Motors, 13913 Highway 10 <br />Introduction <br />At its meeting on Apri13, 1995, the Elk River City Council will continue to <br />discuss financing alternatives related to the successful relocation of Custom <br />Motors from its current site at 13913 Highway 10 to another site within the <br />community. Resolution of this issue is sought so as to provide Custom Motors <br />with definitive direction on the type and the depth of public participation <br />related to the company's relocation in Elk River. <br />Background <br />The owners of Custom Motors indicate that they control a parcel of land that <br />is located in both Elk River and Ramsey. Although Custom Motors has the <br />ability to extend the purchase agreement or option to purchase, the site's <br />owner desires resolution to this matter. That is, other parties may be <br />interested in acquiring this parcel should Custom Motors fail to exercise the <br />option. In addition, the owner of the site indicates that these extensions are <br />costing it money by virtue of carrying costs, taxes, and the like. <br />Another issue is that of Custom Motors' owners successfully obtaining long- <br />term permanent financing for its expansionlrelocation. A representative from <br />the financial sector indicated at the March 20 meeting that it will be difficult <br />to obtain permanent financing in light of the fact that Custom Motors deals <br />with substances that may pollute or contaminate the site. Should the <br />City/EDA participate in supplemental financing, the same concerns would <br />apply. For example, in an EDA mortgage, one will find specific language <br />dealing with mortgagor warranties and covenants addressing hazardous <br />substances, hazardous waste, toxic substances, pollutants, or contaminants <br />• affecting the mortgaged premises. The basis for this point is that any public <br />13065 Orono Parkway • P.O. Box 490 • Elk River, MN 55330 • (612) 441-7420 • Fax: (612) 441-7425 <br />