HomeMy WebLinkAbout4. Hennen's Shell Facade Loan ReimbursementCASE NO.: NA
CITY OF SHAKOPEE
Memorandum
TO: Economic Development Authority
Mark McNeill, Executive Director
FROM: R. Michael Leek, Community Development Director
SUBJECT: Request for Reimbursement of Facade Improvement Loan for Hennen's Shell
MEETING DATE: December 20, 2011
INTRODUCTION:
On July 5, 2011, the Economic Development Authority (EDA) approved a facade improvement
loan request by John and Mary Hennen for renovation of the Hennen's Shell building, located at
807 1 Avenue East. Since that approval, the applicant has completed the proposed improvements
consistent with the request; therefore, they are requesting reimbursement for the improvements to
the Hennen's Shell building, consistent with the Repayment Agreement for the Shakopee
Downtown Facade Improvement Program.
DISCUSSION:
The improvements approved by the EDA as part of this project included interior office remodeling
of the Hennen's Shell building. The applicant had stated that these improvements would total
$94,491.00, with the amount of the approved loan not to exceed $25,000.00. The applicant has
submitted invoices that are from multiple vendors & contractors that were involved in this project.
Those invoices exceed the original estimate noted above, and the work completed is consistent with
what was proposed and approved by the EDA.
ALTERNATIVES:
1. Offer and pass a motion directing staff to reimburse John and Mary Hennen, Hennen's Shell at
807 1 Avenue East, an amount of $25,000.00, consistent with the loan agreement for this
facade improvement.
2. Table the request for additional information.
ACTION REQUESTED:
Offer and pass a motion directing staff to reimburse John and Mary Hennen, Hennen's Shell at 807
1 Avenue East, an amount of $25,000.00, consistent with the loan agreement for this facade
improvement.
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R. Michael Leek
Community Development Director
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Repayment Agreement
Shakopee Downtown Facade Improvement Program
THIS AGREEMENT, made and entered into this lS day ofF04-esr5.c*-- , 20 tt by and
between John E. and Mary L. Hennen, husband and wife (hereinafter referred to as "Owners "),
and the Economic Development Authority for the City of Shakopee, having its principal office at
129 Holmes St. South, Shakopee, Minnesota 55379 (hereinafter referred to as "Lender ").
WHEREAS, on the 5 day of July, 2011, hereinafter referred to as the "effective date. The
Lender agreed to grant to the Owners a Deferred Payment Loan, hereinafter referred�as
"Deferred Loan," relating to the real estate hereinafter described, in the amount of $25,000.00.
NOW THEREFORE, in consideration of the said Deferred Loan, the parties do hereby agree as
follows:
1. That the Owners promise to use the proceeds of the Deferred Loan for the purposes of
interior office remodeling, for the building located at 807 First Avenue East in the City of
Shakopee, Minnesota.
2. That if the Owners sell, transfer or otherwise convey the real estate hereinafter
described, within a period of five (5) years from the effective date of the Deferred Loan (to
wit, July 5, 2016), the Owners will pay to Lender a pro rated share of the Deferred Loan
equal to twenty percent (20 %) of the amount of the Deferred Loan for each year prior to
July 5, 2016 that the sale occurs. For example, if the Owners sell the real estate
hereinafter described in December, 2013, the Owners must pay Lender fifty percent
(50 %) of the amount of the Deferred Loan.
That any such repayment shall be made to the Lender no later than the 30 day following
such sale, transfer or other conveyance, or on such later date or dates as the Lender, in
its sole discretion, may designate.
3. That as security for the Owners' obligation of repayment, and subject to the terms and
conditions of this Agreement, the Owners hereby grant, and Lender shall and hereby
does have, a lien on the real estate hereinafter described as the full amount necessary to
satisfy said repayment obligation and the cost including reasonable attorney's fees, of
collecting the same. The real estate subject to said lien is situated in Scott County,
Minnesota, is located at 807 First Avenue East, Shakopee, MN and is legally described
as:
Lot 1, Lot 2, the West 30 feet of Lot 3, and that part of the adjacent vacated alley, Block
9, EAST SHAKOPEE, Scott County, Minnesota, according to the plat on file and of record in the
Office of the Register of Deeds in and for said county and state,
4. Promptly after the date of any sale, transfer or other conveyance of the above - described
real estate (or, in the event of a sale by contract for deed at least ten (10) days prior to
such date of sale), the Owners or their heirs, executors, or representatives shall give the
Lender notice thereof.
5. In the event the Owners or their heirs, executors or representatives shall fail or refuse to
make a required repayment within said limited period, the Lender may, with or without
notice to the Owners, foreclose said lien in the same manner as an action for the
foreclosure of mortgages upon said real estate, as by statute provided.
6. Said lien shall terminate and shall be of no further force or effect in the event the Lender
has not, on or before July 5, 2016, commenced an action in the aforesaid manner to
foreclose the same.
7. This Agreement shall run with the aforesaid real estate and shall inure to the benefit of
and be binding upon the parties hereto and their respective heirs, executors,
representatives, successors and assigns.
8. If this agreement is executed by a contract for deed vendor or a mortgagee of the
property, as one of the Owners, such execution shall be deemed for the purpose of
establishing and continuing the existence of the indebtedness described herein and the
lien granted herein. However, in the event of default of the terms hereof, neither the
Lender nor its assignees shall take any action against such contract for deed vendor
except such as may be necessary in order to subject to the satisfaction of said
indebtedness the property described herein.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first
written above.
John E. Hennen
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Economic Development Authority for the City of
Shakopee
By
By
President
Executive Director
STATE OF MINNESOTA )
) ss
COUNTY OF SCOTT )
The foregoing instrument was acknowledged before me this /5 day of ac, ,
201j_, by John E. and Mary L. Hennen, husband and wife.
STATE OF MINNESOTA )
) ss
COUNTY OF SCOTT )
STATE OF MINNESOTA
COUNTY OF SCOTT
City of Shakopee
129 South Holmes Street
Shakopee, MN 55379
) ss
)
3
tary Public
My Commission Expires: /9f - /5
JEANETTE M. SHANER
Notary Pub a-.-Minnesota
My Commission Expires Jan 31, 2015
The foregoing instrument was acknowledged before me this day of
20, by , President of the Economic Development Authority
of the City of Shakopee, Minnesota, on behalf of the Economic Development Authority.
Notary Public
My Commission Expires:
The foregoing instrument was acknowledged before me this day of
20_, by , Executive Director of the Economic Development
Authority of the City of Shakopee, Minnesota, on behalf of the Economic Development Authority.
Notary Public
My Commission Expires:
This instrument is exempt from registration tax under Section 287.06 of Minnesota Statutes.
Drafted by:
CASE NO.:
TO:
FROM:
SUBJECT:
NA
MEETING DATE: July 5, 2011
2011:
2009:
2009/10:
2009:
2008/09:
2007 — 2009:
2006/07:
CITY OF SHAKOPEE
Memorandum
Economic Development Authority
Mark McNeill, Executive Director
R. Michael Leek, Community Development Director
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.
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 facade loans made between 2006 and 2011;
Riverfront Printing (awning with signage):
Hennen's Shell (facade finishes):
Karizma (awning with signage:
Scott Co. Historical Society (Stans Home Improvements):
El Toro (Signage and exterior materials):
Valley Sports:
Bill's Toggery ( Signage):
3. From what fund would additional funds come?
This fund would be replenished from the revolving loan fund, code 2071.
$850.00
$5,581.50
$7,013.79
$1,270.00
$16,804.00
2@a total of $2135.50
$1,835.00
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:
2. Plumbing:
3. New Flooring:
4. Shelving, Coolers:
5. Counter, Counter top:
6. Camera system:
7. Door, Windows:
8. Framing, Finish work:
9. Concrete Work (inc. hdcp. ramp):
10. Insulation:
11. Painting:
Total:
$9,850.00
$16,155.00
$12,500.00
$10,900.00
$18,500.00
$5,922.00
$4,164.00
$8,500.00
$5,000.00
$1,500.00
$1,500.00
$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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