EDA Meeting Date: November 25, 2024
To: Members of the Economic Development Authority
From: Nate Carlson, Economic Development Coordinator
Title
EDA Revolving Loan Application - Loon Liquors, LLC
Body
Action Requested:
The Economic Development Authority is recommended to consider a motion to approve Resolution 2024-006 Approval of a Revolving Loan in the Amount of $200,000.00 to Loon Liquors LLC for the Purchase of Property and Equipment for Relocation and Expansion of Distillery Business.
Summary Report:
Loon Liquor, LLC is requesting a $200,000 Loan from the EDA City-Wide Revolving Loan Program. The applicant has provided an application for the funds, which can be found attached to this report. Economic development staff has been working with Loon Liquor over the past 5 years regarding possible future expansion of the business. 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. Since April, staff and the applicant worked to refine the project and complete a loan application to EDA Board standards. This application was provided to staff on October 30, 2024. Staff has reviewed the loan application thoroughly and has identified that this application meets all loan criteria.
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 customer come from outside the Northfield area.
Loon is working through the loan underwriting process with Community Resource Bank as the lead financier as well as the SBA, SMIF and Rice County.
Attached to this report are the necessary documents for EDA Board review:
• Completed Application
• Funding Sources Table
• Revolving Loan Criteria
• Loan documents: Agreement, Borrower’s Affidavit, Mortgage, Promissory Note, and Personal Guarantees
The current balance available, as of October 31, 2024, reserved for revolving loans within EDA Fund 292 was $ 1,335,565.34, which is the total unreserved fund balance. The KYMN Loan closed on November 12, which was $50,000.
The EDA Board shall review the following terms for the loan request:
• Loan Amount Requested: $200,000
• Loan Terms Requested: 27 years; Initial 2 years of interest only payments
• Loan Amortization Requested: 25 years
• Loan Interest Rate proposed: 3%
• Collateral Offered: 3rd Lien Position on Mortgage of 115 5th St W
• Monthly Payments of $500 for the first 2 years and $948.42 from years 3 through 27
The EDA Loan Sub-Committee met on November 8, 2024 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 entire fund balance of Fund 292 is available for use. The current balance available, as of October 31, 2024, reserved for revolving loans within EDA Fund 292 was $ 1,335,565.34, which is the total unreserved fund balance. The KYMN Loan will closed on November 12, which was $50,000.
Tentative Timelines:
EDA Action on Loan request - November 25, 2024
Underwriting with SBA - November - December 2024
Closing on financing and property acquisition - December 20, 2024