DATE: January 24, 2019
TO: Members of the Economic Development Authority
FROM: Nate Carlson, Economic Development Coordinator
Title
Consider Resolution for Revolving Loan request for Reunion Project
Body
SUMMARY AND ACTION REQUESTED:
The Northfield EDA Board shall review the Loan Committee recommendation and take action to approve Resolution for revolving loan request from 5th & Division Partners, LLC.
BACKGROUND:
The Reunion is requesting a $100,000 Loan from the EDA City-Wide Revolving Loan Program. The applicant, 5th & Division Partners, LLC, has provided an application for the funds, which can be found attached to this report. Mr. Brett Reese and Mr. Joshua Drivdahl introduced there project to Economic Development Coordinator, Nate Carlson, in spring of 2018. There has been thorough due-diligence by City Planner, Scott Tempel, and previous Community Development Director, Chris Heineman, regarding the project scope and land use specifications of the project. Nate and Reunion representatives worked to refine the project and complete the application to EDA Board standards. This application was provided to staff on December 10, 2018. Staff has reviewed the loan application thoroughly and has identified that this application meets all loan criteria.
The Reunion will be a newly renovated restaurant, which was previously occupied by the Rueb ‘N’ Stein. The restaurant will be located at 501 Division Street, Northfield, MN. The business will feature multiple dining and live entertainment spaces, both indoor and outdoor. The primary business model for the rehabilitation project of the Reunion is to renovate the existing buildings in a historically accurate context, ensure the maintenance and usefulness over the next 50 years, and to provide an enhanced community venue to allow others to experience and appreciate the history of the buildings in downtown Northfield. The restaurant will employ 23 to 37 FTE positions at full employment. Types of positions will include General Manager, Assistant Managers/Event Coordinators, Kitchen staff and Wait staff with wage ranges from $9.65 per hour to $15 per hour and a few salaried positions.
They have requested funding to assist with gap financing related to renovations of the facility. This project has required several financing sources including a significant amount of private equity, an SBA loan, a local bank loan, a line of credit, and an EDA Revolving Loan. Currently, Rice County is not willing to provide a Revolving Loan to assist with the project.
Attached to this report are the necessary documents for EDA Board review:
• Completed Application
• Funding Sources and Uses Table
• Completed Business Plan
• Project Narrative
• Proposed Amortization Schedule
• Revolving Loan Criteria
The current balance available, as of December 31, 2018, reserved for revolving loans within EDA Fund 292 is $972,695.39, which is the total unreserved fund balance.
The EDA Loan Committee met on January 11, 2019 to review the application. The minutes of the meeting are attached. The Committee has recommend approval of the loan according to the following terms:
• Loan Amount Requested: $100,000
• Loan Terms Requested: 20 years
• Loan Amortization Requested: 20 years
• Loan Interest Rate proposed: 5.25%
• Collateral Offered: 2nd Lien Position on Mortgage of buildings owned by investor outside of the project (See buildings and mortgage)
• Monthly Payments of $673.84
• Annual reporting to the EDA Board
OPTIONS:
EDA Board has the following options to consider:
1) Approve the Committee recommendation for full funding of the Revolving Loan request according to the proposed Loan terms ($100,000)
2) Request further information from applicant to review at a follow-up loan committee meeting
3) Deny application
RECOMMENDATION:
Staff recommends approval of the Loan Committee recommendation.