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AGENDA RECOMMENDATION |
Item No: 4.B.
Economic Development Authority
- Meeting Date:
- 12/08/2025
Agenda Item:
Resolution authorizing Executive Director to execute the City Center Renaissance Loan Amendment documents for Cultivate Mankato, LLC and Innovation 6 Holdings, LLC.
Recommendation/Action(s):
Adoption of the attached resolution.
Summary:
At its meeting on August 13, 2018, the Mankato Economic Development Authority (EDA) approved a City Center Renaissance (CCR) loan for Cultivate Mankato, LLC (Cultivate) in the amount of up to $125,000 to finance a portion of leasehold improvement costs for the property located at 227 East Main Street. Subsequently, on February 11, 2019, the EDA approved an amendment to increase the loan by an additional $75,000 to support the installation of a fire suppression system, as required by the State Fire Marshall.
On December 13, 2021, the EDA approved a further amendment to defer loan payments at 0% interest until January 2023. Payments resumed via ACH on the 15th of each month. In 2024, Cultivate Mankato requested to transition to a bank bill-pay system to allow for more flexible payment scheduling. As a result, ACH payments were discontinued in October 2024. While payments for November and December 2024 were made, no payments have been received in 2025. The current outstanding balance totals $40,528.68, which includes $5,726.83 in accrued interest.
Staff have been working with the business, property owner, and other representatives from community organizations since May 2025 to identify possible solutions to the business' needs and the need to address the outstanding loan.
The property owner, Innovation 6 Holdings, LLC, has entered into a purchase agreement with New Horizon Real Estate Development 6, LLP, which intends to acquire the property and New Horizon Enterprises, Inc. will acquire the assets of Cultivate Mankato to establish a New Horizon Academy childcare center at the site. Completion of the sale is contingent upon repayment of the CCR loan. As Cultivate Mankato is unable to satisfy the remaining balance, the property owner has requested forgiveness of the accrued interest to facilitate the transaction.
Forgiveness of the interest is consistent with the City’s strategic plan, which prioritizes support for childcare availability and affordability, small business development, workforce retention, and the growth of existing businesses. The proposed sale would preserve essential downtown childcare capacity. New Horizon Academy is a well-established, Minnesota-based provider with nationally recognized accreditations, including those from the National Association for the Education of Young Children (NAEYC), the National Early Childhood Program Accreditation (NECPA), and a 4-star Parent Aware rating.
In accordance with the City’s Strategic Plan priorities and the potential to maintain critical childcare services in the downtown area, staff recommends approval of the request to forgive the remaining interest on the CCR loan.
On December 13, 2021, the EDA approved a further amendment to defer loan payments at 0% interest until January 2023. Payments resumed via ACH on the 15th of each month. In 2024, Cultivate Mankato requested to transition to a bank bill-pay system to allow for more flexible payment scheduling. As a result, ACH payments were discontinued in October 2024. While payments for November and December 2024 were made, no payments have been received in 2025. The current outstanding balance totals $40,528.68, which includes $5,726.83 in accrued interest.
Staff have been working with the business, property owner, and other representatives from community organizations since May 2025 to identify possible solutions to the business' needs and the need to address the outstanding loan.
The property owner, Innovation 6 Holdings, LLC, has entered into a purchase agreement with New Horizon Real Estate Development 6, LLP, which intends to acquire the property and New Horizon Enterprises, Inc. will acquire the assets of Cultivate Mankato to establish a New Horizon Academy childcare center at the site. Completion of the sale is contingent upon repayment of the CCR loan. As Cultivate Mankato is unable to satisfy the remaining balance, the property owner has requested forgiveness of the accrued interest to facilitate the transaction.
Forgiveness of the interest is consistent with the City’s strategic plan, which prioritizes support for childcare availability and affordability, small business development, workforce retention, and the growth of existing businesses. The proposed sale would preserve essential downtown childcare capacity. New Horizon Academy is a well-established, Minnesota-based provider with nationally recognized accreditations, including those from the National Association for the Education of Young Children (NAEYC), the National Early Childhood Program Accreditation (NECPA), and a 4-star Parent Aware rating.
In accordance with the City’s Strategic Plan priorities and the potential to maintain critical childcare services in the downtown area, staff recommends approval of the request to forgive the remaining interest on the CCR loan.