Commuinity Development Authority - MINUTES - 10/17/2006
CITY OF MUSKEGO Approved 12/5/06
COMMUNITY DEVELOPMENT AUTHORITY (CDA) Audio recording of meeting
MINUTES is also available.
Tuesday, October 17, 2006
Chairman Frank Waltz called the meeting of the Community Development Authority to order at 7:00 p.m.
Those in attendance recited the Pledge of Allegiance.
The meeting was posted in accordance with the Open Meeting Law.
PRESENT: Commissioners Gail Miles, Suzi Link, Frank Waltz, Alderman Nancy Salentine, Alderman Chris
Buckmaster, Executive Director Jeff Muenkel and Recording Secretary Sandi Asti.
ABSENT: Commissioner Rob Glazier (excused), Commissioner Dave Lidbury
GUESTS: Mr. John Meland from the Southeastern Wisconsin Regional Planning Commission (SEWRPC).
APPROVAL OF MINUTES
Alderman Salentine moved to approve the minutes for the May 15, 2006 meeting. Commissioner Link seconded
and requested that the minutes be corrected as follows: (Page 1 – Election of Officers) Suzi Link in her absence
as vice-chair person. (Page 2 – bottom on the page) The CDA agreed that the new proposal meets the
guidelines…….the retail center to the east that was approved by the CDA a few months back. Upon a voice
vote, the motion carried.
OLD BUSINESS — None
NEW BUSINESS
Chairman Waltz decided to take the items out of order to accommodate Mr. Meland.
Consideration of a recommendation to the Common Council concerning approval of a Revolving Loan Fund loan
to Stella & Chewy’s LLC to assist with working capital in establishing a new business in the building at W145
S6550 Tess Corners Drive.
Executive Director Muenkel commented that staff received the proposal last Friday afternoon. Mr. John Meland,
from SEWRPC (Southeastern Wisconsin Regional Planning Commission), was present to go over his review of
the proposal and make recommendations. Director Muenkel stated that Stella & Chewy’s LLC is a new business
to the Wisconsin area, dealing with dog food and other pet food products. They are looking to expand their
business and wish to lease 11,600 square feet of the existing building on Tess Corners Drive which is currently
vacant, and has previously been used as a food processing facility. In the past, the applicants have received
their food products from Appleton, but are looking to expand to produce the food in-house. They sell frozen and
freeze-dried meats and freeze-dried treats for dogs and cats. The Revolving Loan Fund request is for $100,000
and the Company would be providing five full times jobs in the pay range of $20,000 to $60,000. The breakdown
of the loan request is: $22,500 will be used for purchasing equipment; $76,000 for working capital and $1,500 for
closing costs.
Mr. Meland advised that 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 from owner’s contribution. Park Bank also agreed to
provide a standby line of credit in the amount of $50,000 with the possibility of increasing this amount, if
necessary. The Company is showing strong cash flow projections and looking to break even next year.
CDA Minutes October 17, 2006 - page 2
Currently, the Company is located in New York, however, the husband is being transferred to the Milwaukee area
and this location is very desirable.
Mr. Meland suggested that the one weak point would be the collateral. The bank has suggested that the line of
credit would be an accounts receivable base line but they do not need the inventory. Consequently, the City
would have a first position on inventory and the refrigerated truck. Then the City would have a junior position
behind the other lenders on the other assets. Park Bank would take a first position on equipment with Wisconsin
Business Development Finance taking a second position on equipment. The bank would have a first position on
accounts receivable and the City would have a second position. The final item is unlimited personal guaranties
from the owner and her husband. Mr. Meland distributed, for informational purposes only, the applicant’s
confidential personal financials. Lengthy discussion ensued on placing covenants on the loan to protect the City.
Items of concern were absence of substantial amount of equity by the business owner. Limited guarantee from
the father for the full amount of loan. Owners have no track record on manufacturing. Placing a cap on working
capital monies. Go with a five year term and seven year amortization. No salary if the additional fifty thousand
dollars is used. Items that were considered to be positive were: this business will add five jobs to the
community and the business has an incredible amount of revenue coming in and has been successful. A
decision was made that Mr. Meland will contact staff after meeting with the business owner, and rewrite any of
the contingencies that were agreed on.
Following are the updated contingencies agreed upon between The Southeastern Wisconsin Regional Planning
Commission and Community Development Authority as discussed:
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.
Commissioner Link made a motion to approve the Revolving Loan Fund request for Stella & Chewy’s LLC
loan as described by John Meland from the Southeastern Wisconsin Regional Planning Commission, with
the amendments described including limiting the loan term to five years with seven year amortization;
adding the borrower’s father as unlimited guarantor; and waiving any salary in the event that Ms. Moody,
CDA Minutes October 17, 2006 - page 3
owner, would tap the revolving operational capital loan in excess of the original fifty thousand dollars
from Park Bank. Alderman Salentine seconded. Upon a voice vote, the motion carried unanimously.
Approval of City of Muskego TID Guidelines
Commissioner Link made a motion to consider the TID Guidelines as submitted. Alderman Salentine
seconded.
Executive Director Muenkel reported that the guidelines have been developed from information gathered from
other communities along with discussions with the Community Development Authority. He made it clear that
these are guidelines to aid the developers along with staff in developing a TID. Staff has reviewed the guidelines
with the Community Development Authority attorney. Chairman Waltz suggested that the CDA go through the
document and discuss each section one at a time. After the committee went through the entire document and
discussed all the sections in detail, it was determined that Executive Director Muenkel would update the draft and
email the document to all members of the Community Development Authority. This document will also go to Plan
Commission and Common Council in the future.
PUBLIC INPUT — There was no public input.
MISCELLANEOUS BUSINESS AS AUTHORIZED BY LAW
Parkland View update
Executive Director Muenkel stated that things are still progressing. The City transferred ownership of this property
to the Community Development Authority. The developers made a formal offer of $150,000 to the CDA. After the
offer was reviewed by the City Attorney, it was accepted and the developers have started their site research and
things are moving forward.
Chairman Waltz had a question regarding documents being reviewed by Quarles & Brady. The CDA attorney
from Quarles & Brady, Jim Baxter, has retired. Chairman Waltz wondered who will be assigned to review items
brought forth in the future. Executive Director Muenkel assured Chairman Waltz that there are a number of
people at Quarles and Brady that will be reviewing items for this committee and should a TID document need
review a specific individual will be assigned to the Community Development Authority.
The next meeting date to be determined.
ADJOURNMENT:
There being no further business, Commissioner Link moved for adjournment, seconded by Commissioner Miles.
Upon a voice vote, the motion carried unanimously. Meeting adjourned at 8:59 p.m.
Respectfully submitted,
Sandra S. Asti
Recording Secretary