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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 E~.EIdETART CIVIC CENTER CITY X 910.8 Z' // o 0 0 0 I, 000 N o ~ ? 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.