Loading...
HomeMy WebLinkAboutPacket - 11/06/2017 - Finance and Personnel Committee AOft McHenr Finance and Personnel Committee November 6, 2017, 5:30 PM McHenry Council Chamber 333 S Green Street McHenry, IL 60050 AGENDA 1. Call to Order. 2. Roll Call. 3. Public Comment: Persons wishing to address the Committee will be asked to identify themselves for the record and will be asked but are not required to provide their address. Public comment may be restricted to three-minutes for each individual speaker. Order and decorum shall be maintained at public meetings. 4. Motion to approved the October 2, 2017 Finance and Personnel Committee Report. 5. Review, Discussion, and Consideration of Revolving Loan Fund request in the amount of $35,000 from JM Foods I, LLC d/b/a Plum Garden Restaurant located at 3917 Main Street, and direction to place this item on the next available City Council meeting agenda. 6. Staff Reports. 7. Any Other Business. 8. Motion to adjourn the meeting. Next scheduled meeting is December 4,2017. The City of McHenry is dedicated to providing its citizens,husinesses,and visitors with the highest quali(p of prod>rams and services in a customer-oriented,efficient,and fiscally responsihle manner. FINANCE AND PERSONNEL COMMITTEE MEETING REPORT Monday, October 2, 2017 Municipal Center Classroom, 5:30 PM In Attendance at Roll Call: Chairperson Alderman Curry, Alderman Schaefer and Alderman Mihevc. Also in Attendance: Director of Finance Carolyn Lynch, Human Resources Manager Ann Campanella, and Director of Economic Development Douglas Martin. 1. Call to Order: The meeting was called to order at 5:30 pm. 2. Public Comment: None. 3. Review,Discussion, and Consideration of Revised Revolving Loan Program Criteria and Application; Review of an Ordinance amending the Municipal Code to establish the Finance and Personnel Committee as the Revolving Lan Fund Committee; and direction to place this item on the next available City Council meeting aEenda. Chairperson Curry reported a copy of the changes to the criteria for the Revolving Loan process were included in the meeting packet and as discussed at the last meeting, the biggest change to the application was simply removing the point value and references to working capital. Director Martin said this would give the application a degree of objectivity. Chairperson Curry asked for comments about the information. Alderman Schaefer announced he was ready to move forward with the revisions as presented. However as he expressed at the last meeting, he feels the Eligibility Requirements #1 and #2 will be a bone of contention and said it will be interesting to see if these criteria are met adding it will probably be visible in the next application received. Chairperson Curry said he appreciated Alderman Schaefer's comments and stated we will see how it goes. Chairperson Curry reported to the committee that he had a conversation with Mayor Jett about the fact that the Revolving Loan Committee was not established by ordinance. At some point in the past, the Mayor was part of that committee to recommend to the full City Council if applications should move forward. Chairperson Curry reported Mayor Jett told him he would prefer not to be a voting member of the Revolving Loan Committee. As the proposed ordinance stands, Revolving Loans would go through the Finance and Personnel Committee and then proceed with a recommendation to the full City Council. Alderman Schaefer asked if the Mayor agrees this matter requires adoption of an ordinance and Director Martin said the proposed ordinance clarifies the process. Chairperson Curry called for a motion to forward the revised application and proposed Ordinance to the full City Council for consideration. Alderman Mihevc voted in favor of Finance and Personnel Committee Page 2 October 2,2017 presenting the revised application and proposed Ordinance to the full City Council as presented; seconded by Alderman Schaefer. Chairperson Curry asked the Clerk to call the roll: Voting Aye: Mihevc, Schaefer, Curry 4. Property Tax Lew Discussion and Recommendation. Finance Director Lynch stated she was seeking a recommendation from the committee regarding the Tax Levy that will go forward to the Council on November 4. For five years, the levy remained flat and last year the levy was reduced by 3%. As we also know, we have items that will drive up expenses such as Police Pension and two bargaining units that we know will increase in cost. Director Lynch reminded the committee we have a 10% decrease in Income Tax for the foreseeable future as well as a 2% decrease in Home Rule Sales Tax. All of these items added together should be taken into consideration when determining what we want to with Property Taxes. For the committee's information, Director Lynch included information in the packet on PTELL calculations, as they would have been completed if the increases had been adopted from 2010 through 2016. This was done to show that the city has forgone $550,246 in revenues by keeping a flat or reduced levy. The property tax rates for 2016 for all taxing bodies within the city was also attached. Chairperson Alderman Curry asked if we know for a fact the State of Illinois is reducing the Home Rule Tax and calling it an administrative fee. Director Lynch answered yes; it is a fact, only on Home Rule. Chairperson Curry asked based on our revenue for this year; it will be reduced by$312,000. Director Lynch said yes, for the current fiscal year. Chairperson Curry asked if this were based upon current revenue, for example if income within the city increased we would not see that much of a reduction in State Income Tax. Director Lynch said the state takes 10% off the monthly receipts. The $312,000 reduction is based off budget because that is all we have at this time. Chairperson Curry stated other than the state decrease; we know we have a higher expense for police pension fund. Director Lynch stated the police pension actuarial report calls for an increase in funding for next year of $145,000. We also know bargaining unit contracts will increase. Alderman Schaefer asked if it was correct that this does not take into account any new CIP projects. Director Lynch answered that was correct; we know the city has a road program and the Lakeland Park drainage project coming up that we will have to fund. Chairperson Curry said that all of that would shake- out during the budget process. Director Lynch said the most difficult part of determining the levy is that it occurs so early in the fiscal year. At this time, the city has only two months of Sales Tax data for this fiscal year and only two months of Income Tax data. In addition, the state usually pays the city two to three months behind making it more difficult to know where we will stand and, we are not even in the budget season. Chairperson Curry said we do have the quarterly budget report, which states the city is in good shape so far this year. Director Lynch responded saying in the budget report you are only seeing when the city receives the cash, some of that is really last year's money, Finance and Personnel Committee Page 3 October 2,2017 which all is adjusted at the end of the year. Alderman Schaefer asked for the deadline to adopt the levy. Finance Director said it must be submitted by the last Tuesday in December. The city will set the date for the Public Hearing at the meeting on November 6, and the Public Hearing will be held on December 4. Tonight we are merely seeking a recommendation to forward to the Council. Alderman Mihevc noted this is a difficult process however if the city does not levy something, it will be boxed-in. With the knowledge of pending increases, he does not see how the city could possibly keep the levy flat. Director Lynch said if the city were subject to PTELL, it would be 2.1%. Alderman Schaefer asked if that was the inflation rate and Director Lynch answered yes. Alderman Schaefer asked if there had been any discussion other than what was presented tonight, if we were to recommend a flat levy; adding he would prefer to keep the levy flat however we should think about capturing that 2% and see where the discussion goes with the Council. Chairperson Curry stated last year in Committee, he had raised the proposal to reduce the levy and several scenarios were presented to the Council for consideration. The Council adopted a 3% reduction in the levy. Alderman Schaefer noted staff presented the recommendation to the Council as flat and a 3% reduction was approved. Chairperson Curry said in his opinion if it was not for the state reduction, he would recommend another reduction. However, at this point he would recommend a flat levy versus last year and then budget to meet it. In his opinion, the process is backwards; the city has to make a decision before we have all the budget numbers. Chairperson Curry asked the committee to keep in mind that Property Taxes are only approximately 20% of the city's revenue and from a percentage point it has only a slight effect on the overall budget. In his opinion, people are fed-up with property taxes and although the city is less than 7% of the overall tax bill, McHenry should set the example to the other taxing districts. In summary, Chairperson Curry is of the opinion the levy should remain flat. Chairperson Curry further stated for the sake of discussion only, the city received approximately $2-million through the .5% Home Rule Tax is. If this tax were increased to .75%, the city would gain roughly $1-million. However, people pay attention to Property Taxes and if the city increased it by 2%, it would receive less than $100,000. If it were revenue that we are seeking,he would rather see an increase in Sales Tax. Discussion ensued on the merits of Property Tax versus Sales Tax and the process of establishing the Tax Levy. Alderman Schaefer suggested presenting a 0% levy to the Council and to present calculations up to PTELL, which is at 2.1%. Chairperson Curry recommended the levy remain flat. He noted the pressures on staff regarding finances and stated that the city has a $2-million reserve fund. He realizes that there are financial commitments however on a daily basis this number could be at $9- Finance and Personnel Committee Page 4 October 2,2017 million. The commitments come at the end of the year however in his view, if push came to shove and we needed revenue, we have ways of approaching this. Chairperson Curry added he is not convinced that we need to raise the levy at this point. Chairperson Curry called for a motion to forward a recommendation to the full City Council for consideration. Alderman Schaefer voted in favor to recommend to the full City Council no change to the Property Tax Levy for the next fiscal year; seconded by Alderman Mihevc. Chairperson Curry called for discussion. Alderman Mihevc said he would prefer approval of an increase to PTELL however, he does agree to forward a recommendation to the full City Council. Chairperson Curry asked the Clerk to call the roll: Voting Aye: Schaefer, Curry Voting Nay: Mihevc Chairperson Curry asked staff to provide the Council with the PTELL. Although he is in favor of a flat levy, the Council should have all the facts. Director Lynch said when the total PTELL is determined she will provide calculations for 2.1% (inflation rate) as well as on-half of this rate or 1.05%. In summary, Chairperson Curry announced the recommendation to the Council is a flat levy however, staff will provide additional information for the Council's consideration. 5. Staff Reports. HR Manager Campanella distributed information to the Committee regarding the proposed Compensation Study. The study obtains surveys from 10 comparable communities. Non-contract employees will complete job questionnaires. Following review of the questionnaires, interviews will be held between the consultant and employees involved in the study to confirm the information. Chairperson Curry asked that based on this process, the city will vet the job descriptions to determine if they are accurate and Manager Campanella answered yes. Chairperson Curry said he was under the impression that the city would then take the job descriptions to various communities and ask them for salary information. How will we know we are getting salary information on a comparable job if we do not already have the information? Manager Campanella said she has been updating job descriptions for the past two years so we are comparing apples to apples. This would be the case if the city's job descriptions were in disarray, but they are not. To contract someone to create job descriptions would have been expensive. For example, she created a general job description for an Administrative Assistant. If the city were to hire an Administrative Assistant tomorrow, we would look for these items in that position. The comparable communities are selected using equalized assessed values, per capita income, population, number of employees, general fund expenditures, state sales tax, and Finance and Personnel Committee Page 5 October 2,2017 general fund property taxes. All information was obtained from the State Comptroller's office. The study looks for communities that are in McHenry's range. Each community receives a point value based on how similar they are to McHenry. The Committee received a list of the top 10 communities selected by the consultant. A discussion ensued on the reasons why some McHenry County communities were or were not selected as a comparable community. Alderman Schaefer expressed concern that only one community selected is located totally in McHenry County. Manager Campanella reported the numbers presented were obtained from the State of Illinois Comptroller's Office. This survey is not solely based on geography; it is based on quantifiable data. Discussion ensued on Alderman Schaefer's concerns about the communities selected as comparable to McHenry. Manager Campanella said she would ask the consultant if Home Rule was considered when selecting comparable communities. Alderman Curry asked if the city will receive salary comparisons and the answer was yes, it would be provided to the Council. Manager Campanella reported by the next meeting, she should have more information to bring to the Committee regarding the study and will forward a spreadsheet to the Committee. 6. Any Other Business. Chairperson Curry announced that the budget process will soon begin and all staff will be involved. He thinks it would be a good idea if each standing committees review with the respective department director the budget for their respective areas prior to consideration by this committee. 7. Motion to Adiourn: Alderman Schaefer made a motion, second by Alderman Mihevc, to adjourn the meeting at 6:55 pm. All ayes, motion carried. Reviewed and approved this day of 2017. Alderman Scott Curry, Chairperson . City of McHenry 333 Green Street McHenry, Illinois 60050 Phone: (815)363-2100 Fax: (815)363-2119 t, eff www.ci.mchenry.il.us FINANCE AND PERSONNEL COMMITTEE SUPPLEMENT TO: Chairman Curry Members of the Finance and Personnel Committee FOR: November 6, 2017 Finance and Personal Committee FROM: Carolyn Lynch, Finance Director Douglas Martin, Director of Economic Development RE: Revolving Loan Fund request in the amount of$35,000 from JM Foods I LLC Plum Garden Restaurant 3917 Main Street ATT: 1. Loan Application 2. Vision Statement and Mission Statement 3. Loan Analysis from Bill Busse at First National Bank of McHenry 4. Revolving Loan Fund Criteria AGENDA ITEM SUMMARY: The Finance and Personnel Committee is being asked to consider a request for$35,000 from JM Foods I LLC d/b/a Plum Garden Restaurant (Jason Moy) located at 3917 Main Street. BACKGROUND: As established, the Revolving Loan Fund Program has provided loan proceeds to assist in the startup of a new business, expand an existing business, and update existing facilities to make the business more competitive, or provide an incentive for established businesses to relocate to the City. At the most recent Finance and Personnel Meetings(8/7/17,9/5/17,and 10/2/17)the criteria was defined for the Revolving Loan Fund Program and a new application was created. Currently there are three outstanding loans in the Revolving Loan Fund, Plum Garden $8,921, Utopian Roast$16,971.44, and Smith's Central Garage $50,000 leaving a current balance available to loan of$37,000. ANALYSIS: Staff received a Revolving Loan Fund application from Jason Moy representing JM Foods I LLC (d/b/a Plum Garden Restaurant) for the down payment on the purchase of the building at 3917 Main Street. (It is important to note, this application was received before the new business loan application was completed so an older version was used.) A commercial real estate loan will be City of McHenry 333 Green Street McHenry, Illinois 60050 McHen Phone: (815) 363-2100 r Fax: (815) 363-2119 www.ci.mchenry.il.us obtained for the balance of the purchase price of the building($80,000). Plum Garden Restaurant was opened on Main Street in 1965. Jason Moy has been managing and operating Plum Garden since 2013. It is now his plan to purchase the restaurant and the building from his father and current owner, Perry Moy. Plum Garden Restaurant has been an excellent member of the McHenry community, donating over$10,000 a year through gift cards, events, and other donations. Staff has been working with Bill Busse from First National Bank of McHenry, who conducted underwriting services for the proposed loan application. In the underwriting process, Mr. Busse combined both proposed obligations(business loan and commercial loan)when looking at whether the current cash flows of the business could cover both loan payments. As per the attached analysis, "it appears cash flow from the existing business will be sufficient to service the combined loans to purchase the land and building at 3917 West Main Street, rent for the adjoining building 3909 West Main Street, and the leveraged buy-out of the Plum Garden business assets from his father." As stated above, Plum Garden Restaurant has an outstanding loan balance of $8,921. Staff recommends this balance be paid off before the new loan of$35,000 is issued. The Revolving Loan Fund Committee is being asked to consider the application submitted by JM Foods 1, LLC d/b/a Plum Garden Restaurant for Revolving Loan funding the down payment on the purchase of the building at 3917 Main Street. Should the Committee choose to award funding, Staff is recommending a loan amount of$35,000,along with the following conditions: • Previous loan to Plum Garden Restaurant with a principal balance of$8,921 be paid before new loan is issued • A blanket security interest in the business assets(equipment,inventory,accounts receivable, intangibles,etc.)of Plum Garden Restaurant, Inc.; • An unconditional personal guarantee of the borrowing from Jason Moy; • A requirement for submitting a personal financial statement(Jason Moy)&Restaurant annually after the close of each fiscal year beginning in FY 2017; • Loan to be repayable monthly over a five year term;4.25%fixed rate(current prime rate)with no prepayment penalty; • Receipt of a commercial real estate loan commitment from any lender for the balance of the funds($80,000) needed to acquire the land and building; • City to buy back(we would assign)loan(by debit offset to demand deposit account)should payments become more than 60 days delinquent; • Request is subject to full City Council approval; • Loan documents must be fully executed within 30 days of City Council approval. fy, Y F M.:C H E N R Y 00,' LOAN FUND APPLICATION N E .ART t'F THE FOX RIVER t In rrnadon can Project: \,,Jm r S . Name of B i�ie;ss (Legal and Co z 7rnmoS Street Address of Project(in City of McHenry) ClUnership Stru ure (%) (Primary Contact Phone) Sf. lv1 " Address of Owner(s) cityState Zip Code �� �'!.._C SS#of Principal DOB of Principal Email Address T e of Bu mess Date Established Employer ID# Flame of Bank/Finaneial institution j W Cr s "fit Bank Address(include City,State and Zip Code) Project Dwription—Purpose of Request—Why undertaking thie project/requesting Loan? U/&� ............ 3wZ mm,4Mr Awn - acdo ea - A'Ln s cv v S cat Q S t ci e7 c' tom. -i - ke "MCHENRY ' L 0 A N FUND APPLICATION 3 HEART OP' THE FOX RIVER I'ormation on Project: ployment Impact. #ExLs Employees 0 Positions Created =Total -SA Relocation Y/N(State primary reasons for relocation) Expansion Y/N(State primary reasons for expansion/primary reason(s)for requesting loan) History and Description of Company and Principal (Examples of Community investment-Monetary and Non. Monetary,i.e.: Community Service;partnerships,causes supported,/service organizations) Information on Use of Project Funds: i Land Acquisition $ Lance Improvement Purchase and/or Remodel on Existing Building doh New Construction $ Purchase and/or Repair Machinery&Equipment $ Purchase Furniture&Fixtures $ I Working Capital $ Employee Training $ Total Project Cast i l?�! rrnrr�r�rrr�c r � CH E N R Y h� tU LOAN FUND APPLICATION ' k ' — �� H E A R T O FTHE FOX RIVER �essmervtPoints iobs Created and/or Retained(w/i rst 2 years insert date }: I Jobs)Obs Created E tT'E- Created lobs R PTE lobs Retained • Total Capital investment(w/in first 2 years(insert date l: land $- i Building $ I/L bow Equipment $ _____ 1 i • location of Site. Underutilized building/land Brownfield site I 00w0town/West Route 120 -~" • Primary justification for application(i.e. Has conventional Iran or other type of financing been considered?)Other types of investment vehicles being utilized?(Please list and include amounts term and any conditions associated.): Grants Loan(Personal/Other) SBA County Revolving loan Fund s Other • Economic Benefit to City(one,five and ten-year estimates)(can be increase in tax-base as well if existing business): (I Yr.) Yr.) 110 Yr.) Sales Tax i) 'I: $emu v g Stn� S_ �c 0 Pro rty Tax $?�} $M& Income Tax $ $ S i • Consistent with goals of adopted City Council Economic Development Strategy: Please state/Illst how,(Be specific)- !r � • Although application will be submitted by the City to a local financial institution for underwriting,please generally state primary guarantee or collateral for loan:6tPr(rA ( 14- xf tO Filing Fee:$100 non-refundable application fee and all costs incurred by the City will be the reslronsibilitY ofthe appllcam. e�rrrr JM Foods I LLC Loan Application for City of McHenry Jason Moy- Principal In regards to: Plum Garden Restaurant Sale Building and Business Background "52 years in the McHenry Community" My Grandmother,Connie Moy, had a dream. Her dream had always been to one day become a part of a community she believed in. A community that she could dedicate her life to serving and to helping prosper. In 1965,Connie Moy accomplished her dream by opening the Plum Garden Restaurant at 3917 Main Street in the city of McHenry. My Grandmother believed in family, business and community. She taught her children and grandchildren to be good family members,great business people and even better parts of their community. My father, Perry Moy,continued Connie's tradition by taking over the Plum Garden Restaurant in the 1970's and continued to grow our family,the Plum Garden business and our participation and activity in the McHenry Community. In 2013 1 began to officially manage and operate the Plum Garden Restaurant. Since I was a boy, my father Perry had been teaching me the time honored family recipes passed down from generation to generation,as well as the invaluable lessons of hard work and commitment to one's community. During my time as the General Manager and Executive Chef of Plum Garden Restaurant,we have doubled in size, increased our sales and we have continued to support our McHenry Community. 52 years since my grandmother Connie started the Plum Garden Restaurant,we are still here happily running a business in the McHenry community and more importantly,continuing to support our community in every way we can. Vision and Mission Statement "Continuing to Serve the McHenry Community" It has always been my dream to continue the tradition that my grandmother began back in 1965. After a lifetime of learning the business and gaining valuable real world experience of cooking, managing,and operating Plum Garden Restaurant, I am asking for the City of McHenry to approve my application for a loan from the Revolving Loan Fund. I am asking for the amount of$35,000 to use as a down payment to secure a loan for the building of 3917 Main Street,the current and original building for Plum Garden Restaurant. I will be buying the Plum Garden Restaurant business and I am asking the city of McHenry to help with the purchase of the building of 3917 Main Street. My goal is to continue to serve the McHenry Community for another 52 years and beyond and to keep Plum Garden Restaurant as the anchor of Main Street. Community Involvement Plum Garden Restaurant has always donated and served the McHenry Community since 1965. Since 2013, under my guidance and direction, Plum Garden Restaurant proudly donates over$10,000 dollars a year with a combination of gift card, events and other donations. We have always been honored to be part of the McHenry Community and we will always support any organization or person in need. City of McHenry Revolving Loan Presentation (City of McHenry Guaranty • JM Foods I, LLC (an Illinois Limited Liability Company) d/b/a Plum Garden Restaurant 3917 West Main Street McHenry, Illinois 60050 Jason Moy (Guarantor) 809 Locust Lane Vernon Hills, IL 60061 Amount requested: $35,000 Terms: 4.25% per annum (fixed rate) Full amortized: 60 month term Estimated monthly payment: $ 661.60 per month (including principal + interest) Purpose: JM Foods I, LLC d/b/a Plum Garden Restaurant is requesting a revolving loan from the City of McHenry in the amount of $35,000. The purpose of the loan is to provide down payment equity for a real estate transaction to acquire the land and building located at 3917 West Main Street, McHenry. Purchase price of the building is $115,000. At the present time, the building is owned by the applicant's father, Mr. Perry Moy. As part of his plan to acquire the land and building, the applicant will be further required to obtain a commercial real estate loan for the balance of the funds ($80,000) required to purchase the land and building plus any closing costs. At the present time, the applicant is actively seeking a commercial first mortgage real estate mortgage loan from a local lender to complement the balance of the funds needed to acquire the land and building. In the interest of full disclosure, The First National Bank of McHenry has been approached by Mr. Jason Moy to consider its interest in lending the balance of the funds required to acquire the land and building. Plum Garden Restaurant also leases space in the adjoining commercial building located at 3909 West Main Street. Both buildings are connected and share a dining area. Plum Garden primarily uses 3909 West Main Street for additional restaurant seating. Financial Analysis: Plum Garden Restaurant is a well-established local restaurant operating at the same location on West Main Street since 1965. An established revenue stream and good reputation support ongoing operations capable of producing sufficient cash flow to support a reasonable additional debt load. As indicated above, the borrower is also seeking a commercial real estate loan in the amount of $80,000 to fulfill the purchase price of the land and building. In calculating the borrower's ability to repay and debt service coverage, both proposed obligations should be combined and considered over the proposed repayment period. By combining the two obligations, the borrower is therefore seeking 100% financing of the building acquisition. As such, adequate cash flow is essential to successful repayment of both obligations since little or no building equity is available during the early years of the loan's repayment term. We propose the City structure this credit facility in the form of a term loan at a fixed rate repayable over five years with monthly principal and interest payments. Typical of every City of McHenry Revolving Loan fund request, we would also highly recommend the City's loan be personally guaranteed by Mr. Jason Moy, as sole managing member of JM Foods I, LLC. Additionally, the loan should be secured by an unlimited pledge of the entity's business assets. In our pro-forma analysis of the transaction, it appears cash flow from the existing business will be sufficient to service the combined loans to purchase the land and building at 3917 West Main Street, rent for the adjoining building at 3909 West Main Street, and the leveraged buy-out of the Plum Garden business assets from his father. Based on our analysis of cash flow from the existing business based on revenues and expenses over FY 2016, it would appear sufficient cash flow is available to service both new debt obligations based on proposed loan rates, terms and conditions. Comments. Observations and Recommendation: Mr. Jason Moy is also acquiring the business assets (equipment, inventory, accounts receivable, intangibles, such as name and trademarks, etc.) from his father, Mr. Perry Moy in a separate transaction apart from the purchase of the building. No external financing is requested or required for this separate transaction. Terms of the business acquisition and leveraged buy-out of the business assets call for monthly payments to also be considered when calculating the borrower's cash flow needs and ability to repay the City's revolving loan obligation as a financing package. Under reasonable commercial bank loan underwriting standards, a commercial lender would seek to minimally secure this borrowing with a security interest in the business assets (equipment, inventory, accounts receivable, intangibles, etc.). A City of McHenry Revolving Loan in the amount of $33, 604.76 was previously approved by the City in December, 2013. This previous loan will mature in December, 2018 and bears interest at a rate of 3.25% per annum. To date, the loan has been repaid as agreed with scheduled principal and interest payments of $616.29 per month. The remaining loan balance is $8,921. The City may wish to consider and we would recommend combining the new $35,000 loan request and the unpaid loan balance of $8,921 into a single loan. The new combined loan of approximately $43,921 would be amortized over five years pursuant to the terms proposed above. If satisfactory to the City, Mr. Moy appears to be agreeable to the terms of this restructure. In addition, Mr. Moy's personal credit is well established and his credit report scores are satisfactory. We recommend the loan be approved based on the financial information submitted. Loan approval should be conditioned upon the borrower securing a commercial real estate loan commitment from any lender for the balance of the funds ($80,000) needed to purchase the land and building. The City's Revolving loan will not be necessary in the event the borrower is unable to obtain financing for the balance of the purchase price. In summary, listed below are conditions and considerations the City would likely consider in a loan agreement for J M Foods I, LLC: • A blanket security interest in the business assets (equipment, inventory, accounts receivable, intangibles, etc.) of Plum Garden Restaurant, Inc.; • An unconditional personal guarantee of the borrowing from Jason Moy; • A requirement for a submitting a personal financial statement (Jason Moy) & business financial statements from all operating entities of Plum Garden Restaurant annually after the close of each fiscal year beginning in FY 2017; • Loan to be repayable monthly over a five year term; 4.25%fixed rate (current prime rate)with no prepayment penalty; • Receipt of a commercial real estate loan commitment from any lender for the balance of the funds ($80,000) needed to acquire the land and building; • City to buy back (we would assign) loan (by debit offset to demand deposit account) should payments become more than 60 days delinquent. If the City requires any additional information, please contact me. William J. Busse The First National Bank of McHenry 3814 West Elm Street/ Post Office Box 338 McHenry, IL 60050-0338 direct 815.363.5806 Revolving Loan Fund Criteria City of McHenry, Illinois Goals: The overall goal is to foster economic development or expansion of an existing business and to provide incentive for businesses to locate and grow within the City. 1. Assist in the startup of a new business. 2. Expansion of an existing business. 3. Generate/preserve employment. 4. Positive impact on economic development. Target: Any businesses located in,or locating to the City. Eligible Uses: I. Construction of or addition to a building. 2. Renovation of an existing building. 3. Leasehold improvements. 4. Purchase of new or used machinery& equipment. Eligibility Requirements: 1. The applicant has demonstrated that a regular commercial loan is not obtainable or feasible. 2. The applicant has an inability to secure funding through any other sources, personal or commercial. 3. The applicant demonstrates a minimum assurance of repayment through personal guarantees sufficient to satisfy the City's loan officer. 4. The applicant provides a net worth statement to the City's loan officer. Loan Criteria: 1. Amount—Loans can be any amount up to the amount of the current balance in the fund. 2. Collateral—Adequate collateral must be employed to reasonably secure the loan in the event of default. 3. Guarantee—a personal guarantee of repayment must be provided. 4. Term—Maximum 5 year term. Rate is no less than the prime rate at the time of the Finance and Personnel Committee recommendation and if loan is approved loan documents must be fully executed within 30 days of City Council approval. 5. Fee-$100 non-refundable application fee. If approved,the borrower is responsible for other fees incurred by the City; recording,filing,etc.