Red Wing Housing & Redevelopment Authority

Transcription

1 EQUAL OPPORTUNITY HOUSING / EQUAL OPPORTUNITY EMPLOYMENT Red Wing Housing & Redevelopment Authority ^ 428 West Fifth Street Red Wing, MN TDD/TTY Telephone (651) FAX (651) November 8, 2016 To: Red Wing HRA Board of Commissioners From: Randal Hemmeriln, Executive Director Report Prepared by CEDA Re: Resolution No to approve a Small Cities Program Income Loan for the Red Wing Masonic Lodge #8 Background; The Red Wing Masonic Lodge #8 is a 501 C 10 fraternal organization with owners listed as Red Wing Lodge No. 8 A.F. & A.M. (Ancient Free and accepted Masons). The building is located at 454 West Fourth Street in Red Wing and was built in It lies within a targeted slum and blighted area acceptable to DEED for Small Cities Program Income loans. The application was submitted by Jeffrey Seaberg, a Masonic Lodge Building Trustee, to be the signator for all necessary documents. Renovation plans are to include replacement of the flat roof. This project will be submitted to SHPO for their review. The total project cost is approximately $50,000. The Red Wing Masonic Lodge #8 is requesting $50,000 in a Small Cities Program Loan from the HRA. Sources and Uses of Funds for Work to Date: Use of Funds Source of Funds Rehab/Renovation $49,500 Small Cities- Loan $25,000 Working Capital $500 Small Cities Deferred $25,000 Total $50,000 Total $50,000 Analysis Red Wing Masonic Lodge had a net worth of $300,531. We project that following this loan, the Masonic Lodge will have a net worth of $294,716, assuming the project moves forward as proposed. The primary liability for the Masonic Lodge will be the long term debt from this loan. Red Wing Masonic Lodge was organized in 1855, and chartered in The current master is W. Bro. Jeff Boigenzahn, II. Other officers include the treasurer, W. Bro. Gerald Nelson, and the security, W. Bro. Ethan Seaberg. In 1980, interior restoration and leasing of the lower level added an additional source of income that has enabled the lodge to maintain its building of the years. The successful leasing of the lower level continues to be important for the success of the Red Wing Masonic Lodge. Red Wing Masonic Lodge will generate its main source of income from the leasing of the lower level. Currently, that space is being leased to Vogel & Gorman, PLC. The current lease agreement shows that Vogel & Gorman will continue to occupy that space through August Outside of the lower level lease, the lodge receives small portions of income from various different sources. We do not project an infusion of equity for the Lodge. However, we do project a steady positive cash flow based on their rental agreement that we have documented. It will be important for the lodge to continue leasing the lower level of their building in order to continue experiencing positive cash flow.

2 EQUAL OPPORTUNITY HOUSING / EQUAL OPPORTUNITY EMPLOYMENT ' Red Wing Housing & Redevelopment Authority 428 West Fifth Street Redwing, MN TDD/TTY Telephone {651) FAX (651) Projected Cash Flow for Masonic Lodse Year 1 (2017) Year 2 (2018) Year 3 (2019) Total Income (before COGS) $22,037 $21,725 $22,137 Total Expenses (including $19,262 $19,078 $19,226 COGS) Net Profit After Taxes $2,775 $2,647 $2,911 We don't expect job creation, but we are helping them prevent future property damage costs by loaning them the money to replace their roof before it becomes an issue. This loan assists in maintaining an important building in the downtown area. Recommeiidation Staff and the Finance Committee recommend adopting Resolution No to approve the loan and deferred loan application for the applicant in the amount of $50,000, subject to SHPO approval. The term of this loan is recommended to follow program precedent of 10 years at 0% interest, with 50% deferred. Collateral is recommended as a senior lien on their mortgage. Staff and the Finance Committee also recommend, contingent on approval of the loan, that payments are deferred until January 31,2018. This deferment is reflected in the amortization table.. Loan - 0% interest for 10 years. (Annual payments of $2,500) Deferred Loan - $25,000

3 Red Wing Housing and Redevelopment Authority RELUTION No Approving a loan and a deferred loan to Masonic Lodge # 8 WHEREAS, the HRA has Initiated a Small Cities Program Income loan fund with $450,000 allocated for Its use In the downtown and Old West Main areas; and WHEREAS, the HRA began accepting applications for Small Cities Program Income loans on February 22, 2013 In the designated target area, and WHEREAS, The Red Wing Masonic Lodge #8, with a building located at 454 West Fourth Street, Red Wing, have applied for $50,000 In loans for eligible improvemerits in its location in the Downtown area, and WHEREAS, Staff and CEDA have found the application as eligible and the loans as feasible, and WHEREAS, funds are made available to make these loans through the Small Cities Program Income cash reserves; and WHEREAS, Staff and the Finance Committee give a favorable recommendation to this request but subject to the following Items: 1. The Applicant will sign an acceptable balance sheet. 2. The Applicant will sign the 10-year pro forma. 3. A SHPO clearance Is necessary 4. All renovations must meet the eligible purpose of the Small Cities Program NOW, THEREFORE BE IT RELVED that the Red Wing Housing and Redevelopment Authority Board of Commissioners hereby adopt Resolution No approving the loan and deferred loan application to the Red Wing Masonic Lodge #8 In an amount not to exceed $50, and to authorize the Executive Director to close the transactions and sign any necessary documents. The loan terms will be as follows: Loan - 0% interest for 10 years. (Annual payments of $2, with the first payment due January 31,2018 and annually thereafter.) Deferred Loan - $25, for 10 years at 0%, forgivable if compliance terms are met. DATED: November 8, 2016 Chairperson Secretary / Treasurer

4 I. BALANCE SHEET Complled/Revlewed/Audlted Date (Month/Day/Year) l-dec-13 l-dec-14 l-dec-15 ASSETS 1 Cash and Marketable Securities $9,489 $8,248 $8,724 2 Accounts Receivable 3 Inventory 4 Prepaid Expenses 5 Other 6 Building Fund $4,104 $5,306 $6, CURRENT ASSETS $13,592 $13,553 $14,731 9 Net Fixed Assets $270,800 $270,800 $270, Notes Receivable 11 Investment in Subsidiaries 12 Intangibles 13 Other Assets $15,000 $15,000 $15, TOTAL ASSETS $299,392 $299,353 $300,531 LIABILITIES & NET WORTH 16 Note Payable - Bank 17 Note Payable - Other 18 Accounts Payable 19 Accruals 20 Income Tax Payable 21 Current Portion Long-term Debt CURRENT LIABILITIES so 26 Long-term Debt 27 Subordinated Officer Debt TOTAL LIABILITIES so 31 Common Stock 32 Capital Surplus 8( Paid-in Capital 33 Retained Earnings 34 (Less) Treasury Stock 35 TOTAL NET WORTH so 36 TOTAL LIABILITIES & NW so so 37 Contingent Liabilities 38 Check if Company Changed Accounts

5 II. PROFIT & LOSS STATEMENT Number of months % % % Period Ending 39 Sales $11,164 $13,780 $14, COGS 0% 0% 0% 41 = Gross Profit $11, % $13, % $14, % 42 SGA $22, % $21, % $19, % 43 = Operating Profit ($11,583) nnm (S8,183) -59% ($5,088) -36% 44 - Owner's Salary 45 - Depr. & Amort. Exp Interest Expense 47 - Rent (S9,852) (S8,458) (S7,863) 48 +/- Other Inc./Expense 49 = EBT (S1J31) -16% $275 2% S2,775 20% 50 - Income Taxes 51 = PAT (Sl,731) -16% $275 2% S2,775 20% OPERATING CYCLE 52 + Days Receivable III Days Inventory 54 - Days Payable 55 - Days Accrual 56 = Operating Cycle #VALUEI #VALUE1 #VALUEI IV. RATIO ANALYSIS 57 Sales Growth Ratio 23% 3% 58 Working Capital $13,592 $13,553 $14,731 so 59 Current Ratio 60 Quick Ratio 61 Debt/Equity Ratio V. CAPITAL EXPENDITURES 62 Ending Net Fixed Assets 63 + Depreciation 64 - Beginning Net Fixed Assets 65 = Net Capital Expenditures $270,800 $0 $270,800 $270,800 $0 $270,800 $0 VI. RECONCILIATION OF NET WORTH 66 Ending Net Worth 67 - PAT 68 - Beginning Net Worth 69 = New Equity (Distributions) $275 (S275) $2,775 _$0

6 Vll. CASH FLOW STATEMENT PERMANENT WORKING CAPfTAL ANALYSIS WORKSHEET 70 PAT S27S S2, Depredation & Amort. PART 1: THE DERATING CYCU OPERATING USES Year! Years Year 4 OPERATING URCES Year 2 Years Year 4 71 Gross Funds Flow S275 S2,775 73a * Increase Receivables $0 73b 4 Oecreate Receivables Yearl Year 2 Years Year 4 74a * Increase Inventory 74b 4 Decrease Inventory so Days Receivable a * Decrease Payables so so 7Sb 4 Increase Payable So 4 Days Inventory 76a * Oeaease Accruals so 76b 4 Increase Accruats Days Payable 77a Operatlnn Uses so so 77b OperatingSources so Days Accrual 77a - Operating Uses Operating Cyde RVALUE! RVALUEI RVALUEI 77b 4 Operating Sources so so NON-OPERATING USES NON-OPERATING URCES 78 Operating Cash Flow S275 S2,775 PART 11: PERMANENT WORKING CAPITAL 79a r Make Capital Expend. 79b 4 Sell Fixed Assets 80a > Buy Other Assets 80b 4 Sell Other Assets so Yearl Year 2 Years Year 4 81a r Incr. Other C/A Sl,202 S701 81b 4 Decrease Other C/A So Accounts Receivable 82a r Repay N/P Bank so 82b 4 Borrow N/P Bank 4 Inventory 83a -f Repay N/P Other so so 83b 4 Borrow N/P Other - Account* Payable 84a * Repay LonK-term Debt so 84b 4 Borrow LTD Accruals 8Sa r Repay Sub, Off. Debt So 85b 4 Incr. Sub. Off. Debt So PWC 8Sa Distribution to Owner S275 so 66b 4 Invest New Equity 87a 4- Incr. Notes Receivable so 87b 4 Deer. Note* Receivable Change in PWC 88a * Deer. Taxes Payable so so 88b 4 Increase Taxes Payable so so 89a * Deer. Other liabilities so 89b 4 Incr. Other UablBties Gross Funds Flow S275 S2,775 90a Non-Operating Uses S1.477 S701 90b Non-OperatingSources so so so 90a - Non-Operating Uses Sl,477 S701 so Change In PWC 90b 4 Non-Operating Sources 91 a NET CASH FLOW (Sl,202) S2.074 Operating Cash Flow S27B S2,775

7 I. BALANCE SHEET Compiled/Reviewed/Audited Date (Month/Day/Year) 15-Dec Dec Dec Dec-16 ASSETS 1 Cash and Marketable Securities $8,724 $2,935 $2,961 ($5,628) 2 Accounts Receivable 3 Inventory 4 Prepaid Expenses 5 Other 6 Building Fund $6,007 $7,007 $8,007 $9, CURRENT ASSETS $14,731 $9,942 $10,968 $3,379 $0 9 Net Fixed Assets $270,800 $319,774 $318,748 $317, Notes Receivable 11 Investment in Subsidiaries 12 intangibles 13 Other Assets $15,000 $15,000 $15,000 $15, TOTAL ASSETS $300,531 $344,716 $344,716 $336,101 $0 LIABILITIES & NET WORTH 16 Note Payable - Bank 17 Note Payable - Other 18 Accounts Payable 19 Accruals 20 Income Tax Payable 21 Current Portion Long-term Debt $0 $2,500 $2,500 $2, CURRENT LIABILITIES $0 $2,500 $2,500 $2,500 $0 26 Long-term Debt $0 $22,500 $20,000 $17, Subordinated Officer Debt 28 Forgivable Debt $25,000 $25,000 $25, TOTAL LIABILITIES $0 $50,000 $47,500 $45,000 $0 31 Common Stock 32 Capital Surplus & Paid-in Capital 33 Retained Earnings $300,531 $294,716 $297,216 $291, (Less) Treasury Stock 35 TOTAL NET WORTH $300,531 $294,716 $297,216 $291,101 $0 36 TOTAL LIABILITIES & NW $300,531 $344,716 $344,716 $336, Contingent Liabilities Check if Company Changed Accounts

8 II. PROFIT & LOSS STATEMENT Number of months % % % Period Ending 39 Sales $14,174 $13,725 $14,137 $14, COGS 0% 0% 0% 0% 41 = Gross Profit $14, % $13, % $14, % $14, % 42 SGA $19, % $19, % $19, % $19, % 43 = Operating Profit ($5,088) -36% ($5,353) -39% ($5,089) -36% ($5,242) -36% 44 - Owner's Salary 45 - Depr. & Amort. Exp. $0 $1,026 $1,026 $1, Interest Expense 47 - Rent ($7,863) ($8,000) ($8,000) ($8,000) 48 +/- Other Inc./Expense 49 = EBT $2,775 20% $1,621 12% $1,885 13% $1,732 12% 50 - Income Taxes 51 = PAT $2,775 20% $1,621 12% $1,885 13% $1,732 12% III. OPERATING CYCLE 52 + Days Receivable Days Inventory 54 - Days Payable 55 - Days Accrual 56 = Operating Cycle #VALUEI #VALUEI #VALUEI #VALUE1 IV. RATIO ANALYSIS 57 Sales Growth Ratio -3% 3% 3% 58 Working Capital $14,731 $7,442 $8,468 $ Current Ratio Quick Ratio Debt/Equity Ratio V. CAPITAL EXPENDITURES 62 Ending Net Fixed Assets 63 + Depreciation 64 - Beginning Net Fixed Assets 65 = Net Capital Expenditures $319,774 $1,026 $270,800 $50,000 $318,748 $1,026 $319,774 $317,722 $1,026 $318,748 $0 VI. RECONCILIATION OF NET WORTH 66 Ending Net Worth 67 - PAT 68 - Beginning Net Worth 69 = New Equity (Distributions) $294,716 $1,621 $300,531 ($7,436) $297,216 $1,885 $294,716 $615 $291,101 $1,732 $297,216 ($7,847)

9 VII. CASH FLOW STATEMENT PERMANENT WORKING CAPITAL ANALYSIS WORKSHEET OPERATING USES Veir2 Yew 3 Year 4 OPERATING URCES Year 2 Year 3 Year 4 73a * Increase Receivables so 73b a Decrease Receivables So so 74a + Increase Inventory so 74b + Decrease Inventory so 7Sa * Decrease Payables so so 7Sb + Increase Payable so 7Sa * Decrease Accruals so 76b t Increase Accruals so so so 77a Operatlnn Uses so so 77b Operatlnx Sources So so NON-OPERATING USES NON-OPERATING URCES 79a V Make Capital Expend. ttsmii so so 79b 4 Sen Fixed Assets so 80a + Buy Other Assets so so 80b 4 Sell Other Assets so 81a e Incr. Other C/A $1,000 Sl.000 Sl b + Decrease Other C/A 82a * Repay N/P Bank so so so 82b 4 Borrow N/P Bank so so 83a + Repay N/P Other so so so 83b 4 Borrow N/P Other 84a -f Repay Long-terni Debt S2400 S2,500 84b 4 Borrow LTD mm 85a e Repay Sub. Off. Debt so so 85b 4 Incr. Sub. Off. Debt so 86a * Distributkxi to Owner S7.436 so S b -»Invest New Equity S615 87a * bicr. Notes Receivable $0 so 87b * Deer. Notes Receivable 88a * Deer. Taxes Payable so S8b + Increase Taxes Payable so So 89a * Deer. Other UabHitles so so S9b 4 Incr. Other Liabilities mwtiiw so a Non-Operatlnfl Uses PMIIItttl $3,500 Mimitip 90b Non-Operatlm Sources inipirim S61S so 70 PAT Sl,621 Sl.885 $1, Depredation & Amort. S1.026 $1,026 $1, Gross Funds Flow S2,647 S2,911 S2,758 77a - OperatlnR Uses So 77b r OperatlnR Sources So 78» OperatlnR Cash Flow S2,647 $2,911 S2,7S Non-OperatlnR Uses $58,436 $3,500 mm 90b + Non-OperatinR Sources $50,000 $615 so 91 = NET CASH FLOW ($5,789) $26 mnm> PART I: THE OPERATING CYCLE Days Receivable * Days Inventory - Days Payable - Days Accrual OperatlnR Cvde m/aluel HVALUEI nvaluel IIVAIUEI PART II: PERMANENT WORKING CAPITAL Accounts Receivable $0 * Inventory - Accounts Payable So - Accruals so opwc So so Change In PWC so Gross Funds Flow S2,647 $2,911 $2,758 Change in PWC so so Operating Cash Flow $2,647 $2,911 $2,758

10 Master Project Sources and Uses of Funds Uses of Funds Sources of Funds Use Amount Lender Term Rate Collateral Amount Annual D/S Land N Buildings Red Winu MRA 10 0 ()()",, Rnnt" s :'=;.ooo S 2. ^0( 1 10% New Building Margin 1, Red Wing!IR \- [^clerred (1 0 00" liooi 1 :>.ooo s Lease Hold Improvements MaM>nic I otigc rquiiv ^ ^oo s Fixed Assets - Equipment Inventory Prepaid Expenses Goodwill s SBA Fees/Loan Fees Engineering Working Capital S s S Total Uses of Funds $50,500 Total Sources of Funds $ 50,500 $ 2,500

11 Masonic Lodge Amortization Loan Amount: Interest Rate: Length of Term: Annual Payments Payments Begin: $25,000 0% 10 years 1/31/2018 Deferred Amount: $25,000 Date of Payment Payment Amount Principal Interest Remaining Balance 1/31/2018 $ 2, $ 2, $ - S 22, /31/2019 $ 2, $ 2,500.00? - $ 20, /31/2020 S 2, $ 2, S - S 17, /31/2021 S" 2, $ "2, s - s 15, /31/2022 s 2, $ 2, $ " " - s 12, /31/2023 $ 2, $ 2, $ - s 10, /31/2024 $ 2, $ 2, s $ 7, /31/2025 $ 2, $ 2, $ - $ 5, /31/2026 s 2, $ 2, $ - $ 2, /31/2027 $ 2, $ 2, $ - $ -