Loading...
CCR2006198. . . 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. . ' Y ler Treasurer 10/2006jmb . . . . 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. . . . 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. . . . -2- 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. . 4. 5. 6. 7. 8. 9. . . -3- 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. * * * JRM/jm #122264vl - S&C COMMON COUNCIL MEMO Enclosure . 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 . 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 23 . . . 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. 24