Economic Development Authority - Erik Thorvig, Community Development Director
Title
Title
Kingdom Bakery Loan Request
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Executive Summary
The owner of Kingdom Bakery is requesting an additional $25,000 from the EDA to complete the construction of a new bakery at 10130 Sunset Avenue.
Background
On July 6, 2020 the EDA approved a loan in the amount of $50,000 to Kingdom Bakery to help facilitate construction of a new bakery at 10130 Sunset Avenue. The loan was provided through the City of Blaine Commercial Loan Program which was established in 2018. This loan program allows for loans up to $75,000 to assist in various activities such as demolition, site improvements, signage, etc.
The business owner purchased the property in 2015 with a plan to construct a new bakery. The site originally was a gas station and the business owner had to demolish the original building. The purpose of the loan was to assist in the demolition and other site improvement costs. The business owner began construction of the new building in 2020. To date, the entire $50,000 has been spent on building demolition ($29,936), tree removal ($5,700), a portion of the parking lot ($12,750) and fence ($1,614).
According to the business owner, due to material costs and shortage of labor, prices have increased for the project. There is currently $148,350 of interior work and $49,675 of exterior work remaining along with a $5,000 contractor fee totaling $203,025. There is only $125,941 remaining from the private financing for the project. Therefore, the project needs an additional $77,083 in order to be completed.
The business owner has requested an additional $25,000 from the EDA to maximize the loan amount allowed through the commercial loan program. The business owner would still need to obtain additional equity or financing to complete the project as the $25,000 does not fulfill the $77,083 financing gap that exists. As a result, staff is concerned that if an additional $25,000 is provided from the EDA that the project may still not be completed. Staff would recommend that if additional money is provided by the EDA, that no money be disbursed until the business owner can prove that they have secured additional equity or financing to complete the project.
The EDA loan is structured at 0% interest for the first three (3) years and 3.25% interest years four through maturity on July 1, 2030. The first payment isn’t due until November 1, 2022. If additional dollars are provided, the loan agreement would be amended to reflect a higher amount, however the terms would not change.
Strategic Plan Relationship
Not applicable.
Board/Commission Review
Not applicable.
Financial Impact
The EDA loan is structured at 0% interest for the first three (3) years and 3.25% interest years four through maturity on July 1, 2030. The first payment isn’t due until November 1, 2022. If additional dollars are provided, the loan agreement would be amended to reflect a higher amount, however the terms would not change.
Public Outreach/Input
Not applicable.
Staff Recommendation
Discuss the request and determine whether to provide additional financing.
Attachment List
Cost estimates provided by business owner
Commercial Loan Program flyer
Body
WHEREAS; on July 6, 2020 the City of Blaine Economic Development Authority approved a loan in the amount of $50,000 for Kingdom Bakery to facilitate redevelopment of the site at 10130 Sunset Avenue; and
WHEREAS, the business owner began construction of the project in 2020; and
WHEREAS, the business owner has identified an increase in project costs exceeding the amount of financing available for the project; and
WHEREAS, the business owner has requested an additional $25,000 from the EDA to assist in completion of the project.
NOW THEREFORE, BE IT RESOLVED, that the Blaine Economic Development Authority hereby approves financing of an additional $25,000 for the project at 10130 Sunset Avenue and hereby directs the president and executive director to execute any documents related to the request.
NOW THEREFORE, BE IT FURTHER RESOLVED, that no additional funds be disbursed for the project until the business owner can provide evidence to the EDA that the project is fully funded in order to ensure completion.
PASSED by the Blaine Economic Development Authority this 20th day of September, 2021.