090897 EDA Official File Copy
CITY OF NEW HOPE
EDA AGENDA
EDA Regular Meeting #8 September 8, 1997
Agenda #8
President W. Peter Enck
Commissioner Sharon Cassen
Commissioner Don Collier
Commissioner Pat La Vine Norby
Commissioner Gerald Otten
1. Call to Order
2. Roll Call
3. Approval of Minutes of August 25, 1997
4. Discussion Regarding Low Interest Loan Request by Jay Showalter for
Winnetka and 42nd 76 Station, 4200 Winnetka Avenue North
5. Adjournment
CITY OF NEW HOPE
4401 XYLON AVENUE NORTH
HENNEPIN COUNTY, MINNESOTA 55428
Approved EDA Minutes August 25, 1997
Meeting #7
CALL TO ORDER President Enck called the meeting of the Economic Development Authority
to order at 8:56 p.m.
ROLL CALL Present: Enck, Cassen, Collier, Norby
Absent: Otten
Staff Present: Sondrall, Hanson, Donahue, Leone, McDonald, Olson
APPROVE MINUTES Motion was made by Commissioner Collier, seconded by Commissioner
Cassen, to approve the EDA minutes of June 9, 1997. Voting in favor:
Enck, Cassen, Collier, Norby; Abstained: None; Absent: Otten. Motion
carried.
IMPROVEMENT President Enck introduced for discussion Item 4, Resolution Authorizing
PROJECT NO. 474 Commencement of Eminent Domain Proceedings to Acquire Property at
Item 4 7500 42nd Avenue North (Improvement Project No. 474).
Mr. DonahUe, City Manager, explained that this resolution authorizes the
acquisition of the Ardel Engineering property by direct purchase or
eminent domain.
President Enck suggested acquiring the property when there is no tenant
to avoid incurring relocation costs.
Mr. Steve Sondrall, City Attorney, noted the City is required to comply
with the Uniform Relocation and Assistance Act.
EDA Commissioner Norby introduced the following resolution and moved its
RESOLUTION adoption: "RESOLUTION AUTHORIZING COMMENCEMENT OF EMINENT
97-04 DOMAIN PROCEEDINGS TO ACQUIRE PROPERTY AT 7500 42ND AVENUE
Item 4 NORTH (IMPROVEMENT PROJECT NO. 474)% The motion for adoption
of the foregoing resolution was seconded by Commissioner Collier, and
upon vote being taken thereon the following voted in favor thereof: Enck,
Cassen, Collier, Norby, and the following voted against the same: None;
Abstained: None; Absent: Otten; whereupon the resolution was declared
duly passed and adopted, signed by the president which was attested to
by the executive director.
ADJOURNMENT Motion was made by Commissioner Collier, seconded by Commissioner
Enck, to adjourn the meeting. All present voted in favor. The New Hope
EDA adjourned at 9:00 p.m.
Respectfully submitted,
Valerie Leone
City Clerk
New Hope EDA August 25, 1997
Page I
EDA
REQUEST FOR ACTION
Originating Department Approved for Agenda Agenda Section
EDA
City Manager ~ 9-08-97 Item No.
By: Kirk McDonald By:
Management Assistant 4
/
DISCUSSION REGARDING LOW INTEREST LOAN REQUEST BY JAY SHOWALTER FOR
WINNETKA & 42N° 76 STATION, 4200 WINNETKA AVENUE NORTH
Staff request to discuss with the EDA a request for a Iow-interest loan from Jay Showalter, operator of
the Winnetka & 42"d 76 Station at 4200 Winnetka Avenue North. Uno-Ven 76 recently sold out to Citgo
Oil Company and Citgo now owns the lease and is the property owner. Citgo has offered the property to
Showalter for purchase. Citgo has appraised the value of the business (land, building, equipment, etc.)
and the asking price is greater than was anticipated by Showalter. The request is for consideration of a
$180,000 loan at an 8% interest rate to be paid off in 15 years or a suitable arrangement/terms that are
agreeable to the EDA. Per the attached correspondence, the proceeds from the loan would be used as
follows:
1. Cost to Upgrade Facility to meet Citgo requirements, including replacing the twin-pole sign, creating
new facia graphics on the canopy and building, and to meet other signage requirements. Hardware
and software changes to the satellite, cash registers and credit card terminals would also be
necessary.
2. Underground Upgrades to include spill containment and overfill protection, per NOVA Environmental
Phase I and Phase II evaluations.
3. Reduction in Costs of SBA loan principal and decreased down payment. By reducing the SBA loan,
loan fees and costs for mandatory term insurance are decreased. The down payment would also be
decreased.
(cont'd.)
MOTION BY SECOND BY
Review: Administration: Finance:
RFA-O01 ~
Request for Action Page 2 9-08-97
The City Manager and Community Development Coordinator met with Showalter in August and
discussed the types of financial assistance that the EDA had participated in before with local businesses
and informed Showalter that the EDA considered each request on a case-by-case basis. A listing of
projects that have received financial assistance from the City/EDA in the past is enclosed. Showalter
was informed that there were essentially two tools that the City could consider:
1. Tax Increment Financing - The property is located in the 42nd Avenue Tax Increment Financing
District and TIF funds could be utilized for land acquisition, site preparation, etc. if, for example, the
Hardees site was purchased and incorporated into the property for redevelopment purposes. It was
stressed that TIF is usually only utilized in cases where there is a significant value added to the
property (similar to the Gill Brothers development). TIF funds cannot be utilized for building and
signage improvements.
2. Low Interest EDA Loan - If no additional land is being acquired and no value is being added to the
site, probably the only alternative to consider is some type of Iow-interest loan from the EDA. A Iow-
interest "gap" financing loan was approved for Universal Color Lab when they purchased and
renovated the Kuppenheimer building.
The general procedure that has been followed with these requests in the past is as follows:
1. Written request submitted to EDA for consideration.
2. If EDA is in general agreement with the concept, a financial analysis of the company is performed by
a firm selected by the City to determine the ability of the company to pay back the loan. The cost of
the analysis is paid by the company requesting the loan.
3. Once the financial analysis is completed, if the company has the ability to pay back the loan, loan
documents are prepared by the City Attorney.
4. The final loan documents are presented to the EDA for approval.
Showalter has been a merchant on Winnetka & 42nd Avenues since 1982. In 1993 significant upgrades
to the property were made, including the installation of new fuel islands, new canopy, new perimeter
curbing, and new landscaping.
Staff requests direction from the EDA on this loan request.
August 25, 1997
Jay Showalter
Winnetka & 42nd 76
4200 Winnetka Ave. N.
New Hope, MN 55428
Dan Donahlle
City of New Hope
4401 Xylon Ave. N.
New Hope, MN 55428
Dear Dan,
Thank you for taking the time to disoms Tax Increment fin~tneilag ariel the availability of low
interest loann in the Winnetka & 42nd Redevelolxnem Distri~
I would like to make a formal request to the City Council, to considex granting Winnetka 81; 42nd
76 a low interest loan. I unde~ancl that the~ is a fee for an outside consulting comlm~ to
evaluate the viability that meets city, state, and tlnsmeial institution guidelines. IfI would cpmli~,
rd tike to borrow $180,000.0o at 8% to t~ paid in 15 years or a suitable arrangemmt that meets
the City of New Hope's l~quiren:mlts.
R__eeomtly, Uno-Ven 76 sold out to Citgo Oil Comrmry. Citgo now owns my lease and is the
propexty owner. Citgo has offered the pmlm~ for m~ to buy. I have been on Winnetlm & 42nd
as a merchant since June 16, 1982. This is my livelihood. However, Citgo has appraised
value of my busineas as a 'Going Concern', (i.e. land, building, equipment and goodwill).
Therefore, the price that is bela8 asked is a little more than I was anticipating. The reason I am
making the request for a low intemmt loan is as follows:
I. Costs to upt~de facility: The cost ofre-imas/n8 to meet Citgo requirements are
extnmive. We must replace the twin-pole sign, create new facia IFaphes on the
cmmpy and the building, and meet other si~A~ requiremmts. ~ is also hardware
2. Undeegro,~: Saamimes mAjor upgmdegoeeur ~-a you never ~ see it 1998
lllallclatea ~ lllldet'gt~md spill c~ltainrm~nt ~nd over~ll pl~a~tiOlL We have
~ had NOVA En~ to the facility for ?haae ! aha Phase
evaluations.
2
3. Reduction in costs: Reduction of SBA loan principal and decreased down payment.
A. By reducing the SBA loa% it decreases all loan fees and mandatory term
/nmmmc, e.
B. R cxeates less of a down payment. This will exmble s~lf-sustainment in off
~les.
for some reason there is 11 e. hange or eonsiderati~a that the city would like to see, I am interested
in working towards that mutual
My ~ fi'nme that lam anticipating is an Oetob~ 3, 1997 closing or the~ about.
Thank you, for your tim~ and consideration with thi~ project.
s~ly,
Jay Showalt~r
NEW
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CIVIC
CENTER
CITY
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FRONT L-LEVATiOtq RIGHT SIDE ELEVATION
BACK ELEVATI'?!~ LEFT SIDE ELEVATION
Businesses That Have Requested Financial Assistance
From City of New Hope Since 1990
Development Proiect $ Amount Type
Autohaus of Minneapolis $187,500 Low Interest Loan
7709 42nd Avenue 4/4/91
Interest/Payback
Interest rate 9%
Interest reduced on 5/9/94 to 7.75%
Loan paid in full summer of 1995
Purpose
Acquire New Hope Animal Hospital property and development improvements
Animal Hospital Acquisition $140,000
I m provement{ 47,500
$187,500
Development Project $ Amount Type
Broadway Village Community Center $142,500 Loan/Grant
West Broadway 3/8/94 Commitment
$14,000 (deferred
9/22/94 repayment
($156,500) loan)
No interest unless default on terms in contract, then 8% per annum.
Purpose
Rehabilitate and expand Community Center and street lighting at Broadway Village Shopping Center.
$200,000 Community Center
85,000 Lighting
28,000 Storm Sewer
$313,000
$156,500 City Portion - % Cost
Development Proiect $ Amount Type
Universal Color Lab $140,000 Gap Financing
7709 42n~ Avenue ,5"/?~ Loan
Interest/Payback
8% interest
15 year amortization period & balloon at end of 10 years
Purpose
To purchase/improve Kuppenheimer building and remain in New Hope.
Development Proiect $ Amount Type
New Hope Apartments $97,350 Loan
7200, 7220, 7240, 7260 43rd Avenue 6/10/94
$20,000
518195
($117,350)
I nterest/Payback
Payback: 1% of principal/month until paid ($973.50) beginning 11th month.
No interest as long as rents are raised during next 2 years. If default on rents, 8% interest per
annum.
Purpose
To improve the property by rehabilitating basic components of existing buildings, including roof and
windows.
Development Proiect $ Amount Type
Gill Bros. Funeral Chapels $150,000 Pay-As-You-Go
7300 42nd Avenue TIF
Term of Agreement ends 12/31/2006
Purpose
To develop property with funeral chapel. $$$ for land acquisition and site improvements.
City Assists with Land Acquisition
Development Proiect $ Amount
Conductive Containers, Inc. $60,000
4500 Quebec Avenue
Purpose
City assisted with purchase of 4400 Quebec Avenue for $120,000 and sold the property to CCI for
$60,000 in exchange for CCI platting the property and granting the City a storm water ponding
easement on the property.
Industrial Development Revenue Bonds
Development Project Bond $ Amount
Chicago Cutlery $4,300,000
5420 Cty Road 18 (existing bldg) November 1988
9440 Science Center Drive (new bldg)
(Refund 1979 bonds which were used to finance and construct existing building and issue new
bonds.)
Purpose
Land acquisition, renovation of newly acquired building, remodel existing facility, construction of
25,000 sf addition, acquisition and installation of items of equipment.
Development Proiect Bond $ Amount
Paddock Laboratories $4,000,000/Loan Agreement
3940 Quebec Avenue June 1992
6.00%
Purpose
Finance the acquisition, construction and equipping of a manufacturing facility, together with related
and ancillary facilities in the City.
Development Project Bond $ Amount
Central States Diversified (West Pac) $6,000,000
9000 Science Center Drive June 1992
Purpose
Construction of approx. 18,000 sf addition, acquisition and installation of equipment in such
manufacturing facility.
Development Project Bond $ Amount
Gaines & Hanson Printing Co., Inc. $1,000,000/Loan Agreement
5197 Winnetka Avenue May 1994
3.5O%
Purpose
Acquisition of a Goss-450 printer, dryer and related auxiliaries.