HomeMy WebLinkAbout3. Request of Hennen's Shell Auto Center for Downtown and First Avenue Corridor Commercial Site Improvement Loan Program 3.
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 facade 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 fagade loans made between 2006 and 2011;
2011: Riverfront Printing (awning with signage): $850.00
2009: Hennen's Shell (facade finishes): $5,581.50
2009/10: Karizma (awning with signage: $7,013.79
2009: Scott Co. Historical Society (Stans Home Improvements): $1,270.00
2008/09: El Toro (Signage and exterior materials): $16,804.00
2007 — 2009: Valley Sports: 2@ total of $2135.50
2006/07: Bill's Toggery (Signage): $1,835.00
3. From what fund would additional funds come?
This fund would be replenished from the revolving loan 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.
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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, Counter top: $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 loan agreement for building interior improvements not to exceed an
alternative amount for Hennen's Shell Auto Center at 807 1st Avenue East.
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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 807 1st 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
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