CCR2006198.
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COMMON COUNCIL - CITY OF MUSKEGO
RESOLUTION #198-2005
APPROVAL OF REVOLVING LOAN FUND APPLICATION
(Stella & Chewy's LLC)
WHEREAS, The City of Muskego is a participant in the Revolving Loan Fund (RLF)
Plan; and
WHEREAS, Stella & Chewy's LLC has submitted a loan application form requesting a
loan in the amount of $100,000; and
WHEREAS, The Community Development Authority has recommended approval at its
October 17,2006 meeting, subject to the conditions outlined by SEWRPC being met.
NOW, THEREFORE, BE IT RESOLVED That the Common Council of the City of
Muskego, upon the recommendation of the Community Development Authority, does
hereby approve the attached loan fund application submitted by Stella & Chewy's LLC
subject to the following conditions:
1. That a $100,000 RLF loan is provided to Stella & Chewy's LLC. The loan would be used
to finance the purchase of a refrigerated truck and working capital.
2. That the RLF loan is matched with a loan of at least $258,000 from Park Bank, $188,000
from the Wisconsin Business Development Finance Corporation, and $77,400 in an
owner's contribution.
3. That Park Bank agrees to provide a standby line of credit of at least $50,000 to finance
working capital needs.
4. That the RLF loan is provided with a 5-year term, a 7-year amortization, a deferral on
principal payments for the first six months of the loan term, and an interest rate of 4.0
percent. Interest-only payments would be made on a monthly basis during the deferral
period.
5. That the Company signs a 5-year lease with R.D. Meyer & Associates.
6. That the RLF loan is secured with the collateral identified in this Memorandum, which
includes an unlimited personal guaranty from Dennis Moody.
7. That officer's salary and other compensation are reduced by an amount equivalent to any
funds that are drawn in excess of $50,000 on the Park Bank line of credit.
8. That the commitment for jobs as described above is incorporated in the loan closing
documents.
9. That the borrower provides to the City, or its designee, on an annual basis, semi-
annual financial statements and signed copies of the borrower's Federal income
tax return.
Resolution #198-2006 Page 2
. BE IT FURTHER RESOLVED That the Mayor and Clerk-Treasurer are authorized to
sign any documents in the name of the City.
DATED THIS 24th DAY OF October ,2006.
SPONSORED BY:
Ald. Nancy Salentine
Ald. Chris Buckmaster
This is to certify that this is a true and accurate copy of Resolution #198-2006 which
was adopted by the Common Council of the City of uskego.
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ler Treasurer
10/2006jmb
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Planning Department
Meß10
To: Mayor and Common Council
From: Jeff Muenkel AI&
Date: October 18, 2006
Re: Revolving Loan Fund Request
Attached you will find the $100,000 Revolving Loan Fund (RLF) request from a new company to
Muskego called Stella and Chewy's. The company is a manufacturer and distributor of animal food
and treats and looks to bring their business from New York to Muskego, WI to further expand their
operation.
The Community Development Authority (CDA) reviewed the RLF request at their October 17, 2006
meeting contingent upon the items found in the attached letter from John Meland at the
Southeastern WI Regional Planning Commission. The CDA found that the request was very
beneficial, as the proposed operation will bring in 5 new full time jobs to the community. The only
issue was the amount of collateral presented by the petitioners, thus the CDA made the approval
contingent on another person close to the business to become a personal guarantor in the amount
of the $100,000 loan.
This would be the second loan within a year that the City has been able to grant to a new or
expanding business in Muskego (Allowing 10 new full time jobs!). Over $350,000 is still available
for loans in the City after this grant is approved.
Thank You.
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SOUTHEASTERN WISCONSIN REGIONAL
W239 N1812 ROCKWOOD DRIVE. PO BOX 1607 . WAUKESHA, WI53187-1607.
Serving the Counties of:
MEMORANDUM
TO: City of Muskego Common Council
FROM: John R. Meland, Chief Economic Development Planner
Southeastern Wisconsin Regional Planning Commission
DATE: October 19,2006
SUBJECT: REVOLVING LOAN FUND (RLF) REQUEST: STELLA & CHEWY'S LLC
The purpose of this memorandum is to provide a summary and Commission staff analysis of the request
from Stella & Chewy's LLC for a loan from the City of Muskego Revolving Loan Fund (RLF) program.
The City of Cedarburg Community Development Authority (CD A) met on October 17,2006, and recom-
mends approval of the loan request subject to the lending conditions described below.
Background
Stella & Chewy's is an existing "raw diet" natural pet food retail/supply company located in Brooklyn,
New York. They sell frozen and freeze-dried meats and freeze-dried treats for dogs and cats. The Company
was founded in 2003 by Marie Moody, who is originally from the greater Milwaukee area. Stella &
Chewy's sells in over 210 retail locations nationwide and is the top selling frozen fresh diet for dogs and
cats in New York City. The Company has been growing rapidly since inception and featured in numerous
magazines and related press circulations including Organic Style, NYDOG, CNN, and the New York Post.
Ms. Moody plans on expanding the operation and relocating to leased space at W145 S6550 Tess Comers
Drive in the City of Muskego. The Company currently purchases its pet food from a manufacturer in Green
Bay. However, since demand is currently exceeding the supplier's capacity to provide the product line, Ms.
Moody is planning to manufacture her own pet food with recipes developed in consultation with an animal
nutritionist from UW -Madison. The Muskego location will provide access to nearby meat processing facili-
ties and a favorable distribution network. The expansion project includes purchasing equipment and financ-
ing working capital expenses.
The Company will be leasing 11,600 square feet of space from R.D. Meyer & Associates. The term of the
lease is for five years with a three-year option to renew.
Financial projections show breakeven sales being achieved in 2007 with initial cash flow needs financed by
the RLF loan. By 2008, sales growth is projected to provide adequate cash to finance operations.
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Funding Request
Stella & Chewy's is requesting that the City provide a $100,000 RLF loan to assist with the purchase ofa
refrigerated truck and to finance working capital expenses (see attached RLF application). The RLF loan
would be matched with $258,000 from Park Bank, $188,000 from the Wisconsin Business Development
Finance Corporation (WBD) that is funded through the U.S. Small Business Administration (SBA) 504
loan program, and $77,400 in an owner's contribution. The matching funds would be used to purchase
freeze-drying and other related equipment that will be used to manufacture frozen and freeze-dried pet
foods. The equipment financing from Park Bank is being provided with a seven-year term and a 10-year
amortization. The WBD financing is being provided with a 10-year term and amortization. The owner's
contribution is being provided as a loan from Dennis Moody, Ms. Moody's father, which will be subordi-
nate to all debt financing with no repayment until the Company satisfies WBD underwriting standards.
Park Bank has also agreed to provide a standby line of credit through the SBA Express loan program that
would be initially capitalized at $50,000 with possible increases as needed to finance operations. The initial
line of credit would only be used as needed.
The Company is requesting that the RLF loan be provided with a term and amortization of seven years, a
six-month deferral of principal payments, and an interest rate of 4.0 percent. Interest-only payments would
be made during the deferral period. The CDA recommends that loan term be reduced to the initial term of
the lease - five years - and that the amortization, deferral, and interest rate be provided as requested.
The following collateral has been offered to secure the loan: 1) a first priority lien on inventory and the re-
frigerated truck, 2) a lien on furniture and equipment that is junior to $446,000 in financing from Park Bank
and the Wisconsin Business Development Finance Corporation, 3) a lien on accounts receivable that is jun-
ior to the Park Bank line of credit, and 4) the unlimited personal guaranties of Ms. Moody and her husband,
Douglas Siegel. The CDA recommends that Dennis Moody also be required to provide an unlimited per-
sonal guaranty.
The CDA also recommends adding a contingency that, should more than $50,000 be drawn on the Park
Bank line of credit, the salary and other compensation paid to the Company's officers be reduced by an
amount equivalent to the additional draw.
The Company has agreed to create five new full-time equivalent jobs in exchange for the RLF loan. The
jobs would be recruited through the Waukesha County Workforce Development Center.
Contingencies
Should the City decide to provide the requested financing, it is recommended that the following lending
conditions accompany approval of the loan:
1. That a $100,000 RLF loan is provided to Stella & Chewy's LLC. The loan would be used to finance
the purchase of a refrigerated truck and working capital.
2. That the RLF loan is matched with a loan of at least $258,000 from Park Bank, $188,000 from the
Wisconsin Business Development Finance Corporation, and $77,400 in an owner's contribution.
3. That Park Bank agrees to provide a standby line of credit of at least $50,000 to finance working capi-
tal needs.
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That the RLF loan is provided with a 5-year term, a 7-year amortization, a deferral on principal pay-
ments for the first six months of the loan term, and an interest rate of 4.0 percent. Interest-only pay-
ments would be made on a monthly basis during the deferral period.
That the Company signs a 5-year lease with R.D. Meyer & Associates.
That the RLF loan is secured with the collateral identified in this Memorandum, which includes an
unlimited personal guaranty from Dennis Moody.
That officer's salary and other compensation are reduced by an amount equivalent to any funds that
are drawn in excess of $50,000 on the Park Bank line of credit.
That the commitment for jobs as described above is incorporated in the loan closing documents.
That the borrower provides to the City, or its designee, on an annual basis, semi-annual financial
statements and signed copies of the borrower's Federal income tax return.
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JRM/jm
#122264vl - S&C COMMON COUNCIL MEMO
Enclosure
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ATTACHMENT B
City of Muskego Revolving Loan Fund Application
1. Business Name:
Address:
Stella & Chewy's LLC
W 145 S6550 Tess Corners Drive
Muskego, WI 53150
Contact Person:
Telephone No.:
Marie Moody
718-522-9673
2. Brief Project Description: Our production needs are growing very quickly and our current manufacturer
is unable to keep up with the demand. We are therefore taking manufacturing in-house. To that end, we
are leasing space in the City of Muskego and purchasing meat processing equipment and a freeze drier.
. 3. Source and Use of Funds
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a) Real Estate Purchase
b) Building Construction
c) Building Renovation
d) Equipment
e) Working Capital
f) Closing Costs
TOTAL PROJECT COSTS
4. RLF Assistance Requested:
a) Loan Amount
b) Interest Rate (percent)
c) Loan Term (years)
d) Principal Deferral (months)
RLF
Financing
Park Bank
Financing
SBA 504
Financing
Owner's
Contribution TOTAL
$ 22,500 $ 258,000 $ 180,600 $ 77,400 $ 538,500
$ 76,000 $ 50,000 $ 126,000
$ 1,500 $ 7,400 $ 8,900
$ 100,000 $ 308,000 $ 188,000 $ 77,400 $ 673,400
$100,000
4%
5 years wi 7 -year amortization
6 months
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5. Source of Private Debt Financing
Name:
Address:
Park Bank
15850 W. Bluemound Road
Brookfield, WI 53005
Contact Person:
Telephone No.:
Sue Eick
262-827 -5105
6. Job Creation and Retention
New Jobs Retained Jobs
Full-Time Jobs
Part-Time Jobs
Number
5.0
Number Pay RanÇle Pay RanÇle
$20-60,000
TOTAL JOBS 5.0
7. Date Project Will Begin: January 1, 2007
I hereby certify that the information provided above and in the attached supporting documentation is to
the best of my knowledge true and correct.
sl Marie Moody
Signature
10/17/06
Date
This attachment is included for reference, and is subject to change upon the availability of updated
information from the Wisconsin Department of Commerce or SEWRPC.
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