Minutes ECIA Business Growth, Inc. Board of Directors

Transcription

1 Minutes ECIA Business Growth, Inc. Board of Directors DATE: Tuesday, February 28, 2012 TIME: PLACE: 9:00 A.M. ECIA 7600 Commerce Park Dubuque, Iowa MEMBERS PRESENT: Cedar County Vacant Vacant Vacant Clinton County John Staszewski Don Thiltgen* Norlan Hinke * Steve Lindner (alternate for Thiltgen) Delaware County Milt Kramer Brett Nagel Donna Boss Dubuque County David Gaylor Wayne Demmer Tori Richter Jackson County Roger Stewart Larry Koos Florian Steffen (by phone) OTHERS PRESENT: Thomas Rauen, SJR Properties, LLC (Envision Sports Design) Joanne Rauen, SJR Properties, LLC (Envision Sports Design) Chad Wagener, Dubuque Bank & Trust John Perry, TD&M Machining, LLC STAFF PRESENT: Eudaley, Nesteby, Schroeder, Specht Call To Order The meeting was called to order by Chairperson Gaylor at 9:00 a.m. Review/Approve Minutes of January 5, 2012 Motion by Staszewski, second by Hinke to approve the minutes of the January 5, 2012, Business Growth meeting. The motion passed unanimously. Request from SJR Properties, L.L.C. (Envision Sports Design) for a $336,000 SBA 504 Loan for Building Purchase and Renovations Introductions of Tom Rauen, Joanne Rauen, Chad Wagener, board members and staff followed. Specht said SJR Properties, L.L.C. is the borrower, and Rauen Incorporated is the operating company. Envision Sports Design was started in 2005 in Farley making sports photo balls for clients. They expanded by producing screen printing and embroidery items; opening up a store 1

2 located in Dubuque in The business has now outgrown their current space and the Rauens are looking to purchase land and a larger building. They are requesting a $336,000 SBA 504 loan to assist with the purchase of land, 11,770 sq. ft. building and renovations for 38% of the project. This loan will be for twenty years at an interest rate to be determined at the time of debenture sale. Dubuque Bank & Trust will have a $425,000 first mortgage/ucc loan on the real estate for 50% of the project. The applicants will contribute $100,000 downpayment for 12% of the project. Total project cost is $850,000. Personal guarantees will be required on both Rauens; with life insurance in the amount of the SBA loan on Tom Rauen. The business will create seven new jobs. Discussion followed concerning competition, marketing, the size of the new building, equipment and the downpayment funds. Rauen said their customers include a major league baseball team, banks, restaurants, bars, and high schools, both locally and nationally. Customers are reached through their web site, social media, referrals and direct mail. Their business will occupy about 8,000 sq. ft.; the other two storefronts will be leased out. Rauen has an upcoming meeting with a possible tenant who is interested in both areas. The additional equipment is estimated to cost approximately $60,000. The Rauens are interested in working directly with sales people who have clients while the Rauens have the equipment. Rauen noted the downpayment is from personal finances. At this time, the Rauens and Wagener left the meeting. Closed meeting Motion by Stewart, second by Staszewski to move to a closed session per Iowa Code Section 21.5 to discuss loan application at 9:12 a.m. Roll call vote: Yes-Gaylor, Yes-Staszewski, Yes- Stewart, Yes-Hinke, Yes-Steffen. Request from SJR Properties, L.L.C. (Envision Sports Design) for a $336,000 SBA 504 Loan for Building Purchase and Renovations Motion by Stewart, second by Steffen to approve a $336,000 SBA 504 Loan for SJR Properties, L.L.C. (Envision Sports Design). The motion passed, Gaylor abstained. Boss and Kramer were unable to attend the meeting, but both submitted their approval of the loan through paper ballets. The Rauens and Wagener returned to the meeting. Gaylor said the loan was approved by the board members. The clients thanked the board members for the loan approval. Receive/File December 31, 2011 Financial Status Report Schroeder referred board members to the December 31, 2011 financial status reports which were included in the agenda packet. The balance sheet shows $43, in checking. The EDA-RLF balance is $251,194.68; and the USDA IRP-RLF balance is $635, The Operating Reserve account is $71, and the EDA Loan Reserve is $85, Accounts receivable is 2

3 $19, The RLF Loans outstanding balance is $1,118,185.40, RLF Recapitalization loan is $154,697.35; with IRP-RLF Loans outstanding balance at $364, Total assets are $2,784, Total liabilities are $686,883.19; and Total liabilities and equity is $2,784, He noted the thirty-year note to USDA is at $651, The Profit & Loss from July, 2011 through December, 2011 shows a net income of $-36, Two loans will be funded in March; the processing fees will provide approximately $60,000 as income to allow the budget to break even. He reminded board members the projected budget shows a $30,000 loss for the fiscal year. Receipts and Disbursements lists the Department of Labor Green Jobs pass thru funds, and no other significant transactions. At this time, Nagel joined the meeting. Schroeder said the revolving loan funds will go out for bid to financial institutions in May, but the percentages will be low. Eagle has prepaid its RLF loan and funds have been recovered from Rockhard Concrete. Schroeder said TD & M Machining is a possible RLF loan; and a possible RLF loan from Dubuque County Fair could be presented at an upcoming meeting. USDA and the EDA-RLF loan loss reserves are required to be carried at 6.0% of the outstanding loan balances. Motion by Hinke, second by Stewart to approve to receive/file financial status report. The motion passed unanimously. Request from TD & M Machining, L.L.C. for a $184,000 EDA-RLF Loan for Equipment Purchases Introductions by John Perry, board members and staff followed. Schroeder said Perry and Donath want to purchase new equipment and refinance two current equipment loans for their business. TD & M Machining was started in Donath s garage in 2009 supplying machining parts to larger companies. Both owners have many years experience in the machining field. Perry also owns and operates Perry Construction, LLC, a concrete business. They are requesting an $184,000 EDA-RLF loan to purchase new equipment and refinance two existing equipment loans. This loan will be for seven years at 4% interest rate and will create two new jobs. Personal guarantees of both Perry and Donath will be required along with life insurance on both owners. Discussion followed concerning competition, current customers, and accounts receivables. Perry said they currently work with about seven businesses; and on good relationships with about eight other businesses. Competitors include foreign markets; he noted that few domestic businesses produce their type of product. Current accounts receivables are at 30 days in order to allow cash flow. Donath works in the shop with the production and shipping; Perry and his wife work in the office with inventory, costs and overhead. Many companies don t carry inventory, but want parts on demand. The business has a good office manager; Donath provides the engineering and technical expertise; Perry s wife provides the accounting knowledge. At this time, Perry left the meeting. 3

4 Closed meeting Motion by Nagel, second by Staszewski to move to closed session per Iowa Code Section 21.5 to discuss loan application at 10:02 a.m. Roll call vote: Yes-Gaylor, Yes-Staszewski, Yes-Nagel, Yes-Stewart, Yes-Hinke, Yes-Steffen. Request from TD & M Machining, L.L.C. for a $184,000 EDA-RLF Loan for Equipment Purchases At this time, Steffen left the meeting. Motion by Hinke, second by Staszewski to decline the application for $184,000 EDA-RLF Loan as presented, but modified the application to approve $100,000 EDA-RLF Loan to purchase equipment only for TD&M Machining, L.L.C. The motion passed, Gaylor abstained. Boss and Kramer were unable to attend the meeting, but both submitted their approval of the loan through paper ballets. Perry returned to the meeting. Gaylor and Schroeder explained that the original application was declined because of the refinancing of the existing business loans, but board members approved a modified loan of $100,000 EDA-RLF for the equipment purchase. Discussion followed that this application is the first time a request has been made to refinance existing private loans with revolving loan funds; and that board members do not want to set a precedent for refinancing private loans. Board members suggested that if refinancing existing business loans is part of the package; documentation is needed from the financial institution that shows approval of the refinancing as part of the application. Another suggestion is to restructure or amend the sevenyear EDA-RLF loan for smaller payments for several years, with a payment increase to be in effective for the remaining years once the existing private debts are paid. Perry will talk with Donath concerning the modified application; he suggested they may first pay off their existing debt over the next several months and then request an EDA-RLF loan through Business Growth. Perry thanked board members for their consideration of the loan application; he will contact staff once he and Donath make a decision about the loan. Receive/File Loan Status Report Closed Meeting Motion by Stewart, second by Nagel to move to closed session per Iowa Code Section 21.5 to discuss loan status at 10:32 a.m. Roll call vote: Yes-Gaylor, Yes-Staszewski, Yes-Nagel, Yes- Stewart, Yes-Hinke. Receive/File Loan Status Report Motion by Nagel, second by Staszewski to approve to receive/file loan status report. The motion passed unanimously. 4

5 Other Business Schroeder said some other possible loan applications for upcoming meetings are: Dubuque County Fair Association applying for a Dubuque County RLF loan to finance generator and lights on the race track; another loan for Maquoketa Newspapers; and a loan to a unique Cedar Rapids print company that specializes in the funeral industry. Adjournment Motion by Staszewski, second by Hinke to adjourn the meeting. The motion passed unanimously. The meeting adjourned at 10:46 a.m. Respectfully submitted, Kelley Hutton Deutmeyer Secretary/Treasurer 5