EDA Meeting Date: March 24, 2025
To: Members of the Economic Development Authority
From: Nate Carlson, Economic Development Coordinator
Title
EDA Revolving Loan Application - Loon Liquors, LLC (Second Loan - Equipment)
Body
Action Requested:
The Economic Development Authority is being ask to consider a motion to approve Resolution 2025-003 Approval of a second Revolving Loan in the amount of $200,000.00 to Loon Liquors LLC for the Purchase Equipment for Relocation and Expansion of Distillery Business.
Summary Report:
Loon Liquor, LLC is requesting an additional $200,000.00 Loan from the EDA City-Wide Revolving Loan Program. On April 23, 2024, the City Council and Loon executed a purchase agreement for the city-owned property at 115 5th Street W (formerly known as the Northfield News Building) as their future home for the business.
The EDA Board approved a loan request of $200,000.00 on November 25, 2024, via Resolution 2024-007. See attached.
The reason for their request for additional funding is due to a local economic development partner not approving their $200,000.00 loan request, which has created another funding gap. Additionally, there are possible environmental concerns that may need mitigation depending on spring time soil samples. These added environmental costs were not originally budgeted during Loon’s previous EDA loan request.
Loon has approved financing through Community Resource Bank as the lead financier as well as the SBA and Rice County. Rice County has approved a $75,000.00 gap loan, which is more than their typical $50,000.00 loan amount.
Loon Liquor has been in operation for over 10 years. The craft distillery is owned and operated by its two co-founders Simeon Rossi and Mark Schiller, who are Northfield High School friends. The company was established in 2011 and has been producing certified organic spirits since 2014. They were the first legal distillery in Southern Minnesota in over 100 years. Distilleries were not allowed to have a cocktail room when they first started.
They are committed to making their spirits 100% from scratch using locally-sourced organic ingredients, while being environmentally conscious of their production methods. About 90% of their ingredients are sourced within 10 miles of its distillery. The new site will allow Loon Liquors to expand its operations and cocktail room. Loon Liquors currently distributes its spirits to over 300 liquor stores, bars, and restaurants in Minnesota. This expansion will create the opportunity to expand regionally, and possibly into international markets. While Loon Liquors is already a destination for tourists, it could bring new life to downtown Northfield, increase tourism to downtown businesses and the riverfront. Loon Liquors’ owner Mark Schiller says about 70-80% of their customers come from outside the Northfield area.
The current balance available, as of February 28, 2025, reserved for revolving loans within EDA Fund 292 was $ 1,328,261.15, which is the total unreserved fund balance. The EDA Fund 293 also has a positive balance and can be used for loans. The current Fund balance is $217,782.84.
Attached to this report are the necessary documents for EDA Board review:
• Funding Sources Table
• Loan documents: Agreement, Borrower’s Affidavit, UCC filing, Promissory Note, and Personal Guarantees
The EDA Board shall review the following terms for the loan request:
• Loan Amount Requested: $200,000
• Loan Terms Requested: 15 years; Initial 2 years of interest only payments
• Loan Amortization Requested: 13 years
• Loan Interest Rate proposed: 3%
• Collateral Offered: 1st Position Equipment with minimum value of $100,000 (equipment TBD)
• Monthly Payments of $500 for the first 2 years $1,549.84 from years 3 through 15
The EDA Loan Sub-Committee met on March 10, 2025 to review the application. The EDA committee has provided a recommendation of approval to the EDA Board according to the drafted terms.
Alternative Options:
Deny the request and state the reasons for denial.
Financial Impacts:
The EDA does not limit the funds for revolving loan applications. The current balance available, as of February 28, 2025, reserved for revolving loans within EDA Fund 292 was $ 1,328,261.15, which is the total unreserved fund balance. The EDA Fund 293 also has a positive balance and can be used for loans. The current Fund balance is $217,782.84.
Tentative Timelines:
EDA Action on #1 Loan request - November 25, 2024
Underwriting with SBA - November 2024 - March 2025
Closing on financing and property acquisition - March 27, 2025