Economic Development Authority - Erik Thorvig, Community Development Director
Title
Title
Approval of Loan with 4 Taps LLC
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Executive Summary
Consider approving a $75,000 loan to 4 Taps, LLC for build out of space at 10950 Club West Parkway.
Background
In 2019 the Blaine Economic Development Authority established a commercial loan program. The intent of this program is to provide additional financial assistance to small business owners who are improving an existing building and/or redeveloping a commercial or industrial property. In general, projects will increase tax base, improve blighted properties, increase employment, and/or bring properties into conformance with existing city and state codes.
The program is structured to assist with exterior site improvements such as parking lots, signs, trash enclosures, fences, and landscaping; exterior building improvements such as additions, windows, awnings, masonry repairs and exterior finishes; and demolition of existing buildings, parking areas or signs. It can be used for existing commercial and industrial buildings and sites, or buildings/improvements that are part of a redevelopment. The program was amended in 2022 to allow for fixed assets to be an eligible cost to expand the program to more businesses, particularly restaurant/hospitality uses that often incur extraordinary expenses when converting existing spaces.
4 Taps, LLC has requested a loan for $75,000 to remodel space at 10950 Club West Parkway, Suite #160. This building is located at 109th Avenue and Club West Parkway and is anchored by the Tavern and Wild Bills. The business concept is a self-pour taproom with pre-prepared food items along with partnering with local businesses to have customers order food and have it delivered to the establishment. A business plan is included in the attachments which explains the business model, operations, etc.
Earlier in 2022, the applicant presented at a workshop as certain changes were required to the city’s alcoholic beverage ordinance to accommodate the limited food preparation at the business. The city council amended the alcoholic beverage ordinance on May 16, 2022, to accommodate the business’s operation.
At least 50% of the financing must come from a private lender or private equity. The applicant has secured financing in the amount of $315,000 from Northeast Bank therefore the requirement is met. There is also $35,000 in private equity contributed towards the project.
Staff is proposing a loan based on the following terms:
• Amount - $75,000
• 10-year term
• Defer first payment for two years
• 0% interest for the first three years
• Prime rate (of when the loan was approved) after third year
The city has a partnership with Central Minnesota Development Company (CMDC) to review loan applications and provide loan closing services. CMDC staff is currently reviewing the loan application and further information regarding their analysis will be provided at the meeting.
Financial Impact
The EDA dedicated $250,000 from the EDA general fund for the revolving loan program. To date, two loans have been approved totaling $104,359. The proposed loan is $75,000 therefore there is financial capacity in the program to approve the loan.
Staff Recommendation
Adopt the attached resolution approving a loan with 4 Taps, LLC.
Attachment List
Business Plan
Body
WHEREAS, the Blaine Economic Development Authority created a commercial loan program in 2019; and
WHEREAS, 4 Taps, LLC has requested a loan in the amount of $75,000 to occupy space at 10950 Club West Parkway; and
WHEREAS, the Blaine Economic Development has considered the recommendation by CMDC who has reviewed the application and applicable loan documents.
NOW THEREFORE, BE IT RESOLVED, that the Blaine Economic Development Authority hereby approves a loan with 4 Taps, LLC and directs the president, executive director, and community development director to facilitate closing of the loan an execute any necessary documents.
PASSED by the Blaine Economic Development Authority this 3rd day of October, 2022.