HomeMy WebLinkAbout7.b. Chanhassen Field Tripi
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CITY OF ROSEMOUNT
EXECUTIVE SUMMARY FOR ACTION
PORT AUTHORITY COMMISSION MEETING DATE: AUGUST 4, 1992
AGENDA ITEK: CHANHASSEN FIELD TRIP
AGENDA SECTION:
CHAIRPERSON'S
REPORT
PREPARED BY: JOHN ,MILLER,
AGENDA Iller.A
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ECONOMIC DEVELOPMENT COORDINATOR
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ATTACHMENTS: NONE
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The field trip to Chanhassen is scheduled for:
9:00 A.M. Saturday
September 19, 1992
Debbie Widstrom will be contacting you to see if you are able to go on the
trip. If enough persons are going we can arrange for a van.
Chanhassen has had success in both downtown redevelopment and business park
development. In the past they've been visited by delegations from Albert
Lea, Apple Valley, and Prior Lake as well as other places. It might be
time very well spent.
RECOMKENDED ACTION:
Informational item only.
PORT AUTHORITY ACTION:
Who Are We?
Twin Cities -Metro Certified Development
Company (TCM -CDC) is a non-profit
corporation that was established to stimulate
the growth of small businesses in the Twin
Cities -Metro Area.
The Staff of TCM -CDC has arranged financing
for over 150 businesses under the SBA 504
Loan Program, with total loans exceeding
$30,000,000.
TCM -CDC provides secondary financing of 40
percent (not to exceed $750,000) of the
project's cost, with fixed below market
interest rates for qualified businesses, with
terms of 10 - 20 years.
Eligible project costs include:
Land, building and related costs
Equipment and related costs
EXAMPLE:
Who Is Eligible?
The SBA 504 Loan Program Requires That
Businesses:
• Have a net worth of less than $6 million
• Have a net profit after taxes averaging less
than $2 million over the previous two years
• Are located, or seek to locate in, the
metropolitan area
• Are for-profit corporations, partnerships or
proprietorships
• Have private -sector lender commitments
for 50 percent of the project cost
• Are able to provide 10 percent of project
cost
• Will be the actual "user" of the assets being
purchased with the loan proceeds
• Are not print media, lending institutions,
gambling facilities, recreational facilities
closed to the general public, or investment
real estate companies
Retain or create one new job for every
Uses of Funds $35,000 of TCM -CDC funds
Land, Building & related cost $ 750,000 . Maximum SBA 504 Loan is $750,000
Equipment and related cost 250,000
Total Uses of Funds $1,000,000 • Minimum SBA 504 Loan is $50,000
Sources of Funds
50% First Mortgage Lender $ 500,000
40% 504 Loan 2nd Mortgage 400,000
10% Owner's Equity 100,000
To Apply Call:
Total Sources of Funds $1,000,000 Robert Heck, Executive Director
(612) 786-9448
or your local Bank or Savings & Loan
BOARD OF DIRECTORS
Russell Andrews
Laventhol & Horwath
Clark Arneson
Bloomington Port Authority
Win Borden
Hessian, McKasy & Soderberg
Dorothy Dolphin
Dolphin Temporary Help Service
Daryl Erdman
College of St. Thomas
John Ingebrand
Minnesota Bankers Association
Jim Lupient
Lupient Oldsmobile
Al Madsen
City of Maple Grove
Paul McDonald
TCF Banking & Savings
Jim Passeri
Northern National Bank
Jim Reissner
First Bank Systems
Dean Riesen
Carlson Real Estate Co.
Ron Sorenson
Briggs & Morgan
Jim Trucker
Accent Real Estate
Frank Weaver
Norwest Bank
TWIN CITIES -METRO
CERTIFIED DEVELOPMENT COMPANY
Suite 230
8990 Springbrook Drive
Minneapolis, MN 55433
Telephone: (612) 786-9448
Fax: (612) 786-9034
TWIN CITIES -METRO
CERTIFIED DEVELOPMENT COMPANY
Small Business Administration
504 Loan Program
Financing For:
Land, Building and Equipment
90 Percent Financing
Fixed Below Market Rates
10 - 20 Year Terms
WHAT IS THE NPP?
A neighborhood self-help program, the NPP gives
grants and loans to neighborhood organizations,
business associations and others to fund neighbor-
hood improvement projects. The groups selected
must design and manage the projects as well as
find matching private contributions such as
property improvements, "sweat equity," volunteer
labor, in-kind services and foundation grants.
WHO IS ELIGIBLE?
Eligible applicants include District Councils, resi-
dential block clubs, business associations and non-
profit groups whose main purpose is serving Saint
Paul residents or neighborhoods.
WHERE CAN NPP PROJECTS BE?
NPP projects can be anywhere in Saint Paul,
including the downtown. There are some stipula-
tions, though, on how NPP money is spent in
different neighborhoods. Some of the money in the
NPP pot is Community Development Block Grant
(CDBG) funds and some is Capital Improvement
Bonds (CIB) funds. CDBG funds can only be used in
low income neighborhoods or for low income
persons in other neighborhoods and CIB funds may
only be used for physical improvements of public
areas.
ALICE AND JANE TALK ABOUT THE NEIGHBORHOOD PARTNERSHIP PROGRAM.
HOW MUCH MONEY IS AWARDED?
In the past, the awards have varied from $900 to
$234,000. For each half-year cycle, about $550,000
to $700,000 is available, and five to eight applicants
are selected. Funds are awarded as grants or low-
interest loans.
HOW MUCH PRIVATE MATCH
IS REQUIRED?
The ratio of private to public dollars varies
according to the income characteristics of the
neighborhood. For highest -income neighborhoods,
the project must match each public dollar with
threeprivate dollars in contributions. In the lowest
income neighborhoods, each public dollar requires
only one dollar in private match.
WHEN CAN GROUPS APPLY?
Groups can apply twice a year in the spring and fall.
WHAT KIND OF PROJECTS ARE ELIGIBLE?
• Property improvements for homes and busi-
nesses, including renovation and repair.
• Economic Development projects, including new
construction, business attraction, business expan-
sion and job creation.
• Minorpublic improvements such as trees, decora-
tive lights, benches and playground equipment.
(But street paving, curbs, sewers, and recreation
centers are generally not eligible.)
New public service programs such as neighbor-
hood crime watches, block nursing services and
other activities that rely on neighborhood
participation.
• Otberprojects benefiting neighborhoods. Innova-
tive proposals are encouraged!
HOW ARE WINNING PROPOSALS
SELECTED AND COMPLETED?
1) Neighborhood applicant identifies the need for
the project.
2) Neighborhood applicant develops a proposal
and applies to NPP for funding (a two-month
process).
3)
All NPP proposals are reviewed by the local
District Council, CIB Committee, Planning
Commission and Mayor with final approval by
City Council Resolution (a two-month
process).
4)
Selected applicants formpmject committees of
affected residents, businesses, local groups, etc.
5)
Project committee develops detailed project or
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program with help from PED.
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6)
Project committee secures private pledges as
matching contribution.
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7)
Applicant signs partnership contractwith PED.
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Applicant has 24 months to complete the
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project or program.
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FOR MORE INFORMATION:
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Call PED's Neighbortioocf Development Division at
3 °
228-3200.
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AMENNEirity of Saint Paul
went of Planning and
Economic Development
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Minneapolis Economic Development How the Loan Works What's the Bottom Line?
Company
The Minneapolis Economic Development Company
(MEDC) is a private, nonprofit corporation that assists
small businesses in obtaining long-term financing. MEDC is
certified by the Small Business Administration to process,
package, fund and service SBA 504 loans.
Who Qualifies?
Any small business is eligible for MEDC 504 financing if it
meets the following broad criteria:
• Located within Hennepin County
• Company net worth is less than $6 million
• Profit after tax does not exceed $2 million
• Positive cash flow for two of the last three years
Who Doesn't Qualify?
The following types of businesses are not eligible:
• Nonprofit organizations
• Investment or real-estate companies
• Media firms which influence public opinion
• Organizations involved with speculation or gambling
Eligible Uses of Loan Proceeds
The MEDC offers fixed-rate financing to businesses
acquiring capital assets such as:
• Land • Building (new or used)
• Equipment • Machinery
• Leasehold improvements
A business expansion is eligible for financing as long as the
property is owner -occupied. Working capital (accounts
receivable, inventory or accounts payable) is not eligible
for financing under the 504 loan program.
Financing your project requires two loans — one from
MEDC at below-market interest rates, and one from a local
bank or other financial institution at current market rates.
Typically, MEDC provides 40 percent of the project cost
(with MEDC funds guaranteed by the federal government).
The bank provides another 50 percent. You, the small
business, provide the remaining 10 percent as equity.
50% — Financed by a financial institution
40% — Financed by MEDC with a subordinated lien position
10%— Your down payment or equity
• The interest rate for the MEDC portion of your loan
(a government guaranteed debenture) can be compared
to the five and ten year U.S. Treasury bond rates at the
time of loan closing.
• The bank portion will be priced at its current market rate
of interest.
• The term of the MEDC loan will be either 10 or 20 years,
determined by the useful life of the fixed asset being built
or acquired.
The Bank and You
MEDC makes your loan request more "bankable" by
subordinating its collateral position to the bank ( i.e.,
taking a second lien position on the assets being
purchased).
In addition, the bank's exposure is as little as 50 percent
loan -to -value on the property or equipment while holding
the first lien position on all the assets being financed.
When you receive your 504 loan, not only are you
helping your company, you're also stimulating the
Minneapolis economy by:
• Creating jobs
• Expanding capital
• Broadening the tax base
• Positioning your company for long-term stability
Also, local banks generate low- risk loans for their portfolios.
More About the MEDC
MEDC is staffed by the Minneapolis Community
Development Agency (MCDA), the development arm of
the City of Minneapolis. The MCDA provides funding and
development programs to assist businesses and neighbor-
hoods with housing and economic revitalization.
MEDC prides itself on giving personal attention to our
clients. We will give you timely answers to your questions
and help fill out all paperwork so that you can concentrate
on what you do best... run your business!
MEDC can assist in providing up to 90 percent financing
for fixed- asset purchases between $125,000 and $2
million. Call the MEDC office at (612) 673-5176 to
determine if the 504 program can help your business.
Remember, the 504 program offers:
• Up to 90 percent loan -to -value financing
• Attractive fixed interest rates
• Long-term financing (10 or 20 -year debentures)
for lower monthly payments
Let MEDC help you obtain the money you need to make
your small business grow.
You help your business, you help Minneapolis, you help
your local banks. It's good business all around!
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