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90-2086 `f:� � I � I �� � �.�. � � � o �o�� Council File � ', Green sheet # 10328 ! RESOLUT O -°�� CITY F S NT P I NESOTA ��., � � �.,,�'' � , _= Presented By Referred Committee: Date RESOLUTION AUTHORIZING SUBMISSION OF COMMUNITY DEVELOPMENT APPLICATION TO THE ', STATE OF MINNESOTA FOR ECONOMIC RECOVERY FUND PROGRAM GRANT FOR LANDMARK BREWING : ' COMPANY PROJECT �I BE IT RESOLVED that the City'of Saint Paul, Minnes'ota act 'as the legal sponsor for the pro�ect Gontained in the Community Development Application to be submitted on or before December 31, 1990 and that the Mayor is hereby authorized �o apply to the Department of Trade and Economic Development for funding of this project on behalf of the City of Saint Paul, Minnesota. BE IT FURTH�R RE30LVED that the City of Saint Paul, Minnesota has the legal authority to apply for financial assistance, and the institutional, managerial, and financial capability to ensure adequate construction, operation, maintenance and replacement of the proposed project for its design life. BE IT FURTH�R RESOLVED that the City of Saint Paul, Minnesota has not incurred any costs, has not entered into any agreements to purchase property, and has not contracted for or begun construction on energy conservation measures for the proposed pro�ect. BE IT FURTHER RESOLVED that the Gity of Saint �aul, Minnesota has not violated any Federal, Sta�e, or local laws; pertaining to fraud, bribery, graft, kickbacks, Collusion, conflict of interest or other unlawful or corrupt practice. BE IT FURTHER RE�OLVED that upon approval of its application by the state, the City of Saint Pai.11, Minnesota may enter into an agreement with the State of Minnesota for the above referenced project, and that the City of Saint Paul, Minnesota c�rtifi:es that it will comply with all applicable laws and regulations as s�ated on all contract agreements and described on the Compliances Checl�list of the Community Development Application. �' � � � I �A �. � � � � �-�a-�a� Page Two NOW, THEREFORE B� IT RESOLVED that the Mayor, or his designated representati,ve, �s hereby authorized to execute such agreements as are necessary to impLement the project on behalf of the applicant. � I I II ea Navs Absent Requested by Department of: imon o's�'' Z � � Planning and Economic Development —1�Tacca ee � ' e man � ' � �_ i son �— By: o v Adopted by Counci,l: D te N��� � ry �990 Form Approved by Cit " Attorney Adoption Certified by Council Secretary By: � � � By' �`� A ro ed b Ma or for Submission to PP Y Y Approved by Mayor: Date !/��:J��,' ��(��� � uncil ,...�z � t�� � / / �����r By: `ii�/,%��/`-����-�.f, By' PUBItSHED U E C 819 __ . . ' � � (�9o-°''a� DEPARTMENT/OFFICE/COUNCIL DATE INITIATED PED �� 7 go GREEN SHEET N° _10328 INIT DATE INITIAUDATE CONTACT PERSON&PHONE �DEPARTMENT DIRECTO �CITY COUNCIL Mara O'Neill X330 A$$�QN �CITYATTORNEY a CITYCLERK NUMBER FOR a gUDGET DIRECTOR �FIN.&MQT.SERVI 8 DIR. MUST BE ON COUNCIL ACiENDA BY( ATE) ROUTING ORDER �MAYOR(OR ASSISTANn ��.( .��� TOTAL#OF SIGNATURE P GES (CLIP ALL LOCATIONS FOR 31GNATURE) ACTION REQUESTED: Approve submissio of ommunity Development Application to the State of Minnesota for Economic Recovery Fund Grant for Landmark Brewing Company. RECOMMENDATIONS:Approve(A)or eJect(R) PERSONAL SERVICE CONTRACTS MUST ANSWER THH FOLLO N _ PIANNINQ COMMISSION CIVIL ERVICE COMMISSION 1• Hes this person/firm ever worked under a contrect for this dep8rtt����`�� _CIB COMMITfEE YES NO 2. Has this person/firm ever been a city empioyee? 1I _STAFF YES NO IV�V 8 1990 _ DISTRICT COURT 3. Does this person/firm possess a skill not normall y possessed by any current city employee? SUPPORTSWHICHCOUNCILOBJE VE? YES NO ,�,�j�� ATTO��EY Explaln all yes anawers on separats sheet and attech to y h t EconoMic Developm nt INITIATINO PROBLEM,ISSUE,OPPO UNITY( o,Whet,When,Where,Why): In July 1990, the Jaco Schmidt Brewing Company located at 882 G•7est 7th Street closed re- sulting in the lo s of about 150 jobs. Landmark Brewing Company, a new firr.l to be owned by Red Oak Inves ent orporation and a private investor group plans to purchase the fixed assets of the Sc idt rewery and start a new brewery operation which will create about 75 job opportunities St te Economic Recovery Funds are available to assist with the acquisiti n. HRA Resolution a tache for our informat�on. ADVANTAOE3 IF APPROVED: Private sector jo cre tion Prevention of tax base erosion City will be able to r tain first $100,000 of principal and interest. DISADVANTAGES IF APPROVED: None DISADVANTAQE3 IF NOT APPROVED: Inability to com lete project financing. RECEIVED • , ,-,�,F,.,,, �_ ..,,►; ��,,,;,-- N4V]-519A0 �,,� � 1 ,g 9ti �, CITY CI.ERK TOTAL AMOUNT OF TRANSAC ION S COST/REVENUE BUDGETED(CIRCLE ONE) YES NO FUNDING SOURCE ACTIVITY NUMBER FINANCIAL INFORMATION:(EXPLAIN dw �y�-�6� . , . RESOLUTION 90-10/23- . RESOLUTION AUTHORIZING LOAN FROM THE NEIGHBORHOOD COMMERCIAL REAL ESTATE DEVELOPMENT PROGRAM TO ' LANDMARK BREWING COMPANY FOR BUSINESS START-UP AND FOR PURCHASE OF ASSETS OF JACOB SCHMIDT BREWING CO. , i 882 WEST SEVENTH STREET, DISTRICT 9 WHEREAS, on 4hlay 311, 1990 the HRA Board of Commissioners approved Resolution 90-5/31-1 authori,zing preliminary approval of a loan up to $500,000 from the Neighborhooc� Commlercial Real Estate Developrnent Program to Midwest Schmidt Company, a �ompan,y which would have been owned by Sohan Sahota and which intended to 'purchase the fixed assets and beer labels of the Jacob Schmidt Brewing Co. ',from G. Heileman Brewing Co. , Inc. , and WHEREAS, Sohlan Sa�ota was never able to close on on the purchase of the fixed assets of th�le Jacbb Schmidt Brewing Co. , and WHEREAS, G. �ieileinan Brewing Co. , Inc. , owner of Jacob Schmidt Brewing Co. , closed the S�chmidt Brewery, iocated at 882 West Seventh Street, in early July 1990 becausel it w�s unable to find a buyer which met its requirements, and WHEREAS, in aP,ugusit 1990, G. Heileman Brewing Co. , Inc. agreed to sell the fixed assets of the Jacob Schmidt Brewing Co. as well as the Grain Belt label to Red Oak Investment Corporation, and WHEREAS, G. kIeileinan has recently been expressing concern regarding the time it has been itaking to secure financing, and WHEREAS, Red Oak xnvestment Corporation and a Private Investor Group intend to form a new cprpor�tion, tentatively called Landmark Brewing Company, to purchase the fixekl assets of Jacob Schmidt Brewing Co, and to produce beers under the Grain B+elt label and under a new label, and to produce a line of premium bott�.ed m�.neral water, and WHEREAS, the, tota� proposed uses of funds total $8,500,000, and WHEREAS, the prin�ipals of Landmark Brewing Company will contribute $2,375,000 in equity fo� thelproposed project, and WHEREAS, it is an�icipated that the Port Authority will provide a financing commitment tmtali�g $3,500,000 and that a commercial lender will provide a line-of-credit fo* at least $1,750,000, and WHEREAS, the Minn�sota Department of Trade and Economic Development has indicated th$t itl,, is prepared to assist the City of Saint Paul with the financing oflthe �broposed project through the use of the Econornic Recovery Fund program' in tl�e amount of $500,000, and i � WHEREAS, aft�r an evaluation of Landmark Brewing Company's business plan, financial pr��ect�ons, and immediate job creation, HRA staff and the principals o$ the ''new company have agreed to a $375,000 loan from the Neighborhood Commercial Real Estate Development Program (UDAG Revolving Fund) with terms a�d cor�ditions outlined in Exhibit A attached hereto, and WHEREAS, the ,Neigt�borhood Commercial Real Estate Development Program funds are needed to en�ure L�hat the project is sufficiently capitalized and that the new � I company's cash flow has a chance to stabilize, and • WHEREAS, the start-up of the new company will immediately create about 75 job , opportunities most of which will be filled by individuals laid off when the Schmidt Brewery closed, will prevent erosion of the real estate tax base that would occur were the Schmidt Brewery to remain closed and non-operational, and will result in the continued economic stability of the West Seventh Street community. NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners of the Housing and Redevelopment Authority of the City of Saint Paul as follows: 1.) Final approval is granted for a loan in the amount of $375,000 to Landmark Brewing Company from the Neighborhood Commercial Real Estate Development Program for business start-up and the purchase of assets of the Jacob Schmidt Brewing Co. , 882 West Seventh Street, District 9, as per the terms and conditions in Exhibit A attached hereto. 2.) The Executive Director is authorized to negotiate a loan agreement and other documents with Landmark Brewing Company based on these terms and conditions. IT IS FURTHER RESOLVED by the Housing and Redevelopment Authority of the City of Saint Paul, Minnesota, that upon recommendation of the Executive Director, the 1990 budget is amended as follows: Current Amended Budget Chan� Budget SPENDING PLAN Loan to Midwest Schmidt Company 154-36802-0547-66034 500,000 (500,000) 0 Loan to Landmark Brewing Company 154-36802-0547-66034 0 375.000 375.000 Net Increase/Decrease 500,000 (125,000) 375.000 K:LBCRESO.MPO � � � �� � �yd-���- . . , , � ' Exhibit A � I ,Terms and Conditions of UDAG Revolving Loan � Red Oak Investment Corporation, et al. AMOUNT: $375,000 at closing. REPAYMENT TE�tMS: ReQayment of Principal and Interest: ' I� Payments of principal and interest deferred for the ' first three months. Monthly payments of interest only , at a rate of 2� per annum to be made during months 4 through 15. Monthly payments of principal and interest based on an amortization of 20 years and a rate of 2� per annum to be made during months 16 � through 27. Beginning in month 28, the outstanding 'i principal balance (including any additional injection ' due to job creation) shall be amortized at a rate of prime plus 3 over 10 years with equal monthly payments i� of principal and interest. COLLATERAL: I Shared second lien with the State of Minnesota on all , business assets, including xeal estate, and machinery � and equipment. ,� EQUITY INJEC�fION: Red Oak and the other investor groups to inject equity � of at least $2,375,000 in cash or other form acceptable to the City/HR.A prior to or at closing. OTHER FINANC�NG: The City/HRA Loan is contingent upon the new brewing company obtaining firm commitments from the Port �, Authority for $3,500,000, from the State of Minnesota ', for $500,000, and from a commercial bank for a ' line-of-credit totaling at least $1,750,000. HRA BOARD AP�ROVA�.: The City/HRA Loan must be approved by the Board of ' Commissioners of the Housing and Redevelopment ' Authority of the City of Saint Paul. DISPOSITION �F ST CK, DIVIDENDS, E C. : The new brewing company shall agree that it will not, ' , without prior written consent of the City/HRA, declare ' !, or pay any dividend or make any distribution upon its I' �' capital stock, or purchase or retire any of its � �' capital stock, or consolidate or merge with any other � company, or give any preferential treatment, make any ; advance, directly or indirectly, by way of loan, gift, bonus or otherwise, to any company directly ' controlling or affiliated with or controlled by the new brewing company, or any other company, or to any officer, director or employee of the new brewing company, or of any such company. APPLICATION �EE: The new brewing company shall complete and submit an , application for the City/HRA loan and pay an ' application fee of $750. This fee will be due prior j � to first HRA Board meeting on the pro,ject. , � i � w OTHER FEES: The new brewing company shall pay an origination fee ' of 1-1/2 percent of the City/HRA loan amount at , closing. This amounts to $5,625 on a loan amount of $375,000. A servicing fee totaling 1/4 of 1� of the outstanding principal balance will be charged annually. COMPLIANCE WITH GUIDELINES: The new brewing company shall comply with all the guidelines and compliance requirements associated with the City/HRA loan. LABOR UNIONS: The new brewing company shall enter into labor agreements with all bargaining units necessary to operate the business. MONTHLY FINANCIAL STATEMENTS: The new brewing company will submit monthly financial statements to the City/HRA. TORONTO STREET WAREHOUSE: The new brewing company agrees that for one year from loan closing it will not lease this warehouse to any tenant for a term longer than sixty days. At the end of that year, the West Seventh Street Federation or its assignees will have the right of first refusal for a long-term lease at a lease rate comprised of the warehouse's pro-rata share of the first mortgage payment, the pro-rata share of real estate tayes, and insurance costs. The principals of the new company this lease payment amount prior to closing. ' OTHER TERMS AND CONDITIONS: Other standard lending terms and conditions (including but not limited to Hazard Insurance, Late Fees, No Prepayment Penalty, and so on) will apply to the City/HRA loan.