HomeMy WebLinkAbout4.A. Approval of Request for Subordination Decision nder Facade Laon Program77PE 6
TO: Economic Development Authority
FROM: Mark Noble, Senior Planner
DATE: 02/18/2014
General Business 4. A.
SUBJECT: Approval of Request for Subordination Decision under Facade Loan Program - 807 1 st Ave. E.
Action Sought
John & Mary Hennen, recipients of facade improvement loans for their property at 801 1 st Avenue East, have
submitted a request for subordination to the Economic Development Authority.
Discussion
John & Mary Hennen received approvals from the City on December 15, 2009 ($5,581.50, for exterior
improvements) and July 5, 2011 ($25,000, for interior office remodeling) under the Facade Improvement Loan
Program, for improvements to their business, Hennen's Auto Service. Staff reports for those applications are
attached for the EDA member's information. The loans stipulate that 20% of the full amount of the loans is
forgiven each year the borrowers remain in ownership of the business, for a period of five (5) years. Should they
sell, transfer or convey the property to someone other than themselves within the five (5) years, they would pay to
the City a pro -rated share of the deferred loan. The Repayment Agreements for these two (2) loans state the liens
shall terminate on or before December 15, 2014, and July 5, 2016, respectively, should the stipulations of the
Agreements be met. The City does have liens on the real estate to satisfy the repayment obligation and the cost to
collect the repayment for these two (2) loans.
At this time, John & Mary Hennen are in the process of refinancing their current mortgage with Prime Security
Bank, and are asking that the City of Shakopee agree to take second lien position on the refinance with Prime
Security Bank. Mr. & Mrs. Hennen are not intending to sell their business nor transfer ownership; they are
attempting to take advantage of a drop in the mortgage interest rates.
Alternatives
1. Offer and pass a motion approving the request for subordination of two (2) Facade Improvement Loans for
801 1st Avenue East, and direct staff to work with Prime Security Bank to implement the request.
2. Provide staff with any further direction it deems appropriate regarding the request.
Staff Recommendation
Staff recommends alternative no. 1, offer and pass a motion approving the request for subordination of two (2)
Facade Improvement Loans for 801 1 st Avenue East, and direct staff to work with Prime Security Bank to
implement the request.
Relationship to City Goals
By providing for the upgrading of existing businesses in the downtown corridor, this item relates to City Goal D,
vibrant, resilient and stable.
Attachments: 2011 FILP Memo
2009 FILP Memo
CITY OF SHAKOPEE`
Memorandum
CASE NO.: NA
TO: Economic Development Authority
Mark McNeill, Executive Director
FROM: R. Michael Leek, Community Development Director
SUBJECT: Request of Hennen's Shell Auto Center for Downtown and First Avenue
Corridor Commercial Site Improvement Loan Program (DFACCSILP) funding
for interior office remodeling for the property at 807 1st Avenue East.
MEETING DATE: July 5, 2011
INTRODUCTION:
The EDA first considered this application on June 21, 2011. The request was tabled to July 5, 2011
in order to obtain additional information about the following questions;
1. What are the payback terms of loans under this program?
Under the loan agreement which has been used for all the previous fapade loans, the loan is
a deferred loan. That means that payments are not made on the loan unless the property
owner conveys the property before five years from the date the loan is made. If they own
the property for five years, the loan essentially becomes a grant. In the event they convey
before five years, owners are responsible to repay 20% of the value of the loan for each
year prior to five years that a sale occurs.
2. What previous loans have been made, and specifically, for which businesses have more
than one loan been made?
Following is a list of fafade loans made between 2006 and 2011;
2011:
Riverfront Printing (awning with signage):
$850.00
2009:
Hennen's Shell (fagade finishes):
$5,581.50
2009110:
Karizma (awning with signage:
$7,013.79
2009:
Scott Co. Historical Society (Stan Home Improvements): $1,270.00
2008109:
El Toro (signage and exterior materials):
$16,804.00
2007 -2009:
Valley Sports:
2@ total of $2135.50
2006107:
Bill's Toggery (signage):
$1,835.00
3.. From what fund would additional funds come?
This fund would be replenished from the revolving loon fund, code 2071.
4. What is the timetable for the proposed work?
Project manager Mark Noble visited the site last week, and noted that work had begun on
the site.
HACO2 0 1 1107- 051EDA Hennens Shell 07052011.docx
DISCUSSION REGARDING THE HENNENS APPLICATION:
The City received the attached application for a loan under the Downtown and First Avenue
Corridor Facade Improvement Loan Program. Hennen's Shell Auto Center is proposing to remodel
the office area of their building. The request included a number of proposed improvements, as
noted below:
1.
Electrical:
$9,850.00
2.
Plumbing:
$16,155.00
3.
New Flooring:
$12,500.00
4.
Shelving, Coolers:
$10,900.00
5.
Counter, Countertop;
$18,500.00
6.
Camera system:
$5,922.00
7.
Door, Windows:
$4,164.00
8.
Framing, Finish work:
$8,500.00
9.
Concrete Work (Inc. hdcp. ramp):
$5,000.00
10.
Insulation:
$1,500.00
11.
Painting:
$1,500. 00
Total:
$94,491.00
The EDAC recently recommended that the loan program be expanded to include interior work, as
well as other site improvements. The EDA is asked to direct staff whether to prepare a loan
agreement for the subject project. In this case, 50% of the total project cost would equal
$47,245.50. The total maximum for any one loan is $25,000.00, however, at this time there is a
balance of $20,080.00. Thus, if the EDA wished to approve the maximum loan for this project it
would need to also direct staff to transfer funds from one of the other EDA funds.
Also, if the EDA approves the present request, it would deplete this loan fund, and the EDA should
provide direction as to whether to transfer any additional funds from other EDA accounts. If this is
not done, staff will not actively market the loan program unless and until the program Is
replenished.
RELATIONSHIP TO CITY GOALS;
This item relates to Goal B. Positively manage the challenges and opportunities presented by
growth, development and change.
ALTERNATIVES:
1. Offer and pass a motion to allow improvements to Hennen's Shell as noted above, as part of
the Downtown and First Avenue Corridor Commercial Site Improvement Loan Program, and
direct staff to prepare a loan agreement for building interior improvements not to exceed
$25,000.00 for Hennen's Shell Auto Center at 807 1st Avenue East.
2. Offer and pass a motion to allow improvements to Hennen's Shell as noted above, as part of
the Downtown and First Avenue Corridor Commercial Site Improvement Loan Program, and
direct staff to prepare a ban agreement for building interior improvements not to exceed an
alternative amount for Hennen's Shell Auto Center at 8071st Avenue East.
H:1CC120 1 1107- 0 5\EDA Hennens Shell 07052011.docx
3. In the event the EDA approves a $25,000.00 for interior improvements to Hennen's Shell,
direct staff to make an interfund transfer to cover the loan above the current fund balance of
$20,080.
4. Offer a motion to direct staff to transfer additional funds to the loan program to cover future
possible loan requests.
5. Deny the request for Downtown and First Avenue Corridor Facade Improvement Loan funds.
6. Table the request for additional information.
ACTION REQUESTED:
Council is asked to take the following actions;
• Offer and pass a motion to allow improvements to Hennen's Shell as noted above, as part
of the Downtown and First Avenue Corridor Commercial Site Improvement Loan Program,
and direct staff to prepare a loan agreement for building interior improvements not to
exceed $25,000.00 for Hennen's Shell Auto Center at 8071st Avenue East.
• Direct staff to make an interfund transfer to cover the loan above the current fund balance
of $20,080.
• In the event that the EDA wishes to replenish the loan fund, direct staff to transfer
additional funds to the loan program to cover future possible loan requests.
R. Michael Leek
Community Development Director
HACC12011107- 051EDA Hennens Shell 07052011.docx
CITY OF SHAKOPEE
Memorandum
CASE NO.: NA
TO: Economic Development Authority
Mark McNeill, Executive Director
FROM: I R. Michael Leek, Community Development Director
SUBJECT: Request of Hennen's Shell Auto Center for FILP funding for garage door
replacement, and stucco work on the building'. s fagade for the property at 807
1 a Avenue East.
MEETING DATE: December 15, 2009
INTRODUCTION:
The City received the attached application for a loan under the Downtown and First Avenue Fagade
Improvement Loan Program. Hennen's Shell Auto Center is proposing to replace their overhead
garage door frames, and to stucco all areas of the building facades that are presently painted white
block. The EDA is asked to direct staff whether to prepare a loan agreement for up to 50% of the
fagade improvement costs.
DISCUSSION:
The proposed improvement to replace the overhead garage door frames is an estimated cost of
$1,923.00, and the stucco work is estimated to cost $11,163.00, totaling $13,086.00. In this case,
one -half of the cost would equal $6,543.00.
The EDA should be aware that there is not a specific funding allocation for this program, and that if
approved,, funds would need to come from the EDA Funds budget, as directed by the City Finance
Director, and that the EDA will need to approve a budget amendment for this program.
DESIGN REVIEW COMMITTEE RECOMMENDATION: _
On Tuesday, November 10, 2009, the president of the Downtown Partnership, Mike Beard, and the
chair of the Historic Preservation Advisory Committee, lay Whiting, met With Community
Development staff to review the FILP applications. After discussion,: the, - recommended
not granting the requested loan for the replacement of the garage door frames for the reason that
there would be no substantial visual change. or enhancement of the current building facade.
However, the committee did reconimcnd granting the requested loan for the stucco work, equaling
an amount of $5,581.50, as they felt this improvement was consistent with the program guidelines.
RELATIONSHIP TO CITY GOALS:
This item relates to Goal D. vibrant, resilient and stable.
ALTERNATIVES:
1. Offer and pass a motion directing staff to prepare a loan agreement for fagade improvements not
to exceed $6,543.00 for Hennen's Shell Auto Center at 8071 a Avenue East
2. Offer and pass a motion directing staff to prepare a loan agreement for fagade improvements not
to exceed $5,581.50 for Hennen's Shell Auto Center at 807 1 a Avenue East.
3. Deny the request for Downtown and River Corridor Fagade Improvement Loan funds.
H: \CC\2009\12- 15\EDA Hennen's Shell.doex i
</G
4. Table the request for additional information.
ACTION REQUESTED:
Offer and pass a motion directing staff to prepare a loan agreement for fagade improvements not to
exceed $5,581.50 for Hennen's Shell Auto Center at 807 1s` Avenue Eastt.� /
R. Michael Leek
Community Development Director
H:\CC\200%l2- 15\EDA Hennen's Shell.docx 2
JUEEMO s r[OKIK
LIC. # 20135258
P.O. Box 344
SHAKOPEE, MN. 55379
MI.524I"M
FARl52#li -152
ESTIMATE
Hennen's Shell
807 1$` Aveune
Shakopee, Mn. 55379
RE: Station exterior refinish
Replace overhead garage door frames with metal clad jambs and vynil stops
NOV 2 4 2009 D
Bid Date: 09tM12009
$ 1,923.00
Stucco all area's that are presently painted white block and apply an acrylic finish coat in the
color of your choosing.
$ 11,163.00
Total estimate for above items is
S 13,056.00
If removal and replacement of signs and etc, is wanted , it will billed at a time and material basis
Juergens Construction Inc.
Gene F. Juergens