HomeMy WebLinkAboutPacket - Revolving Loan Fund Committee - 7/17/17 1r ft
MCHenr
Revolving Loan Fund Committee
McHenry Municipal Center
333 S Green Street
McHenry,IL 60050
July 17, 2017, 5:30 PM
AGENDA
1. Call to Order
2. Public Comment: Any person 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.
3. Review of the Revolving Loan Application submitted by Anthem R.E. LLC
d/b/a Smith's Central Garage located at 3315 Pearl Street for $70,000 to install a
fire suppression system; and, proposed recommendation to present the
application to the full City Council for consideration.
4. Motion to adjourn the meeting.
The City of Mellenry is dedicated to providing its citizens,businesses,and visitors with the highest quality of programs
and services in acustomer-oriented,cfTcient,and fiscally responsible manner.
f Department of Community&
Economic Development
McHenry Municipal Center
oo-
333 Green Street
McHenry, Illinois 60050
Phone: (815)363-2170
McHenr Fax: (815) 363-2173
www.ci.mchenry.il.us
REVOLVING LOAN FUND
COMMITTEE SUPPLEMENT
TO: Revolving Loan Fund Committee
FOR: July 17, 2017 Revolving Loan Fund Committee Meeting
FROM: Douglas Martin, Director of Economic Development
RE: Revolving Loan Fund request in the amount of$70,000 from Anthem R.E., LLC d/b/a
Smith's Central Garage 3315 Pearl Street
ATT:
1. Photographs of Interior and Exterior of Building at 3315 Pearl Street
2. Revolving Loan fund Application
AGENDA ITEM SUMMARY:
The Revolving Loan Fund Committee is being asked to consider a request for$70,000 from Anthem R.E., LLC
d/b/a Smith's Central Garage, http://www.smithscentralgarage.com/, located at 3315 Pearl Street. On
March 6 of this year, the City Council approved a conditional use permit to allow an assembly use with
outdoor seating and entertainment for the property located at 3315 Pearl Street.
r�
A
Proposed Smith's Central
Garage(3315 Pearl Street)
r,.
1
�- Department of Community&
v l.a
Economic Development
McHenry Municipal Center
333 Green Street
McHenry, Illinois 60050
Phone: (815) 363-2170
McHenr Fax: (815) 363-2173
www.ci.mchenry.il.us
BACKGROUND:
As established, the Revolving Loan Fund program provides low interest loans to qualified existing and
prospective businesses within the City of McHenry. Loan proceeds can be used 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. The program was
established in the late 1980's with funding from a State of Illinois grant. The City completed four loans
between 1987 and 1998. Loan applicants were required to pay all attorney and processing fees and
personally guarantee repayment of the loan. In 2003, the City used funds from the retired state grant to
create the Small Business Retention Loan program with the goal of assisting businesses adversely affected
by the reconstruction of Route 120.
In March 2010, Buddyz Chicago Pizzeria received a$75,000 loan to utilize at their location on Green Street.
When the business was sold this year,the outstanding loan amount was satisfied with the City. In November
2011, Epic Cycle and Fitness received a $25,000 loan to startup their business, formerly located on Main
Street and currently located on Front Street. Hidden Pearl Cafe d/b/a Utopian Roast was received a loan
for a new startup business at 1208 N Green Street, for$34,000. A request in 2013 was approved for Perry
Moy,owner of Plum Garden,to assist in the expansion of his restaurant at 3917 Main Street. The approved
loan amount was $33,605. The most recent request was from Jimmy Bread and Brew for $55,000 and
although the request was approved, the plan for the business did not come to fruition therefore the loan
request is no longer valid.
Again,the Revolving Loan Fund is not comprised of tax dollars and funds loaned through the program must
not exceed the balance in the fund at the time of the request. The Revolving Loan Fund assists in bridging
the gap between a conventional commercial bank loan and applicants seeking to start or expand a business
but may not have perfect credit and need funding to move their business to the next level. It promotes
entrepreneurialism and growth of small business.
ANALYSIS:
Staff received a Revolving Loan Fund application from John Smith representing Anthem for the former
Hostess building located at 3315 Pearl Street. Mr. Smith has expended more than $800,000 of his own
money renovating the building and restoring and exposing the historic character of the building on both the
interior and exterior (see photographs attached). The building is approximately 7,000 square feet and
without installation of a fire, suppression system the occupancy of the building is limited to 100 people.
The cost of a fire suppression system is approximately$70,000. When I received the application from Mr.
Smith, I had a conversation with him and said I understood the reason he was seeking the loan however I
could not support the requested amount of $70,000 primarily because it would significantly deplete the
balance in the revolving loan account. I told Mr. Smith I could support a loan request of no more than
$50,000. He understood this and requested to move forward with the $50,000 but the underwriting was
completed using the original loan request of$70,000. While Smith's Central Garage is currently functioning
2
w� Department of Community&
Economic Development
McHenry Municipal Center
to
333 Green Street
McHenry, Illinois 60050
McHenr Ph Fax: (815) 363-21733
www.ci.mchenry.il.us
as an assembly-use business it is limited in total capacity due to the lack of a fire suppression system,and it
does make sense to install the fire suppression system now, particularly as the City is getting ready to do
improvements on Pearl/Lincoln Road in the near future. Further, when the fire suppression system is
installed,the existing lead water service can be replaced at the same time,which benefits the City,and Pearl
Street is impacted only once-from a construction disturbance standpoint.
Staff has been working with Bill Busse from First National Bank of McHenry,which conducted underwriting
services for the proposed loan application. While there is not a lot of historical cash flow from the business
on the site or other historical financial information on the applicant as it relates to this particular
business/building Mr.Smith has a strong credit history,and by conditioning the loan, Mr. Busse believes the
unknowns associated with the application can be appropriately addressed with minimal risk to the City. Mr.
Busse has been asked to attend the July 1711 Revolving Loan Fund Committee Meeting however, as of this
writing, he had not yet confirmed his availability.
The Revolving Loan Fund Committee is being asked to consider the application submitted by Anthem R.E.,
LLC d/b/a Smith's Central Garage located at 3315 Pearl Street for Revolving Loan funding for the
installation of a fire suppression system. Should the Committee choose to award funding, Staff is
recommending an amount of $50,000 for the reasons previously stated, along with the following
conditions:
• A blanket security interest in Anthem, d/b/a/Smith's Central Garage business assets (equipment,
inventory,accounts receivable, intangibles,etc.);
• An unlimited and unconditional personal guarantee from John M.Smith;
• Personal financial statement(John Smith)&business financial statements(Anthem d/b/a/Smith's
Central Garage)to be submitted annually to the bank as record keeper after the close of every fiscal
year beginning in 2017;
• Loan to be repayable monthly over a five year term; 4.00% fixed rate (current prime rate); no
prepayment penalty;
• A'due on sale'provision that in the event John Smith sells,assigns,or transfers his majority interest
in Anthem's ownership of the building and/or property,the remaining loan balance would be due
upon sale,assignment or transfer;
• City to buy back (we would assign) loan (by debit offset to demand deposit account) should loan
become delinquent more than 60 days;
• Request is subject to full City Council approval. (If approved by the RLF Committee the request
would go before Council at the August 7,2017 City Council Meeting.)
3
Department of Community&
.'�
Economic Development
�^ McHenry Municipal Center
333 Green Street
McHenry, Illinois 60050
Phone: (815) 363-2170
McHenr Fax: (815) 363-2173
www.ci.mchenry.il.us
PHOTOGRAPHS OF INTERIOR OF SMITH'S CENTRAL GARAGE 3315 PEARL STREET
t
i
.nit=T PAR
4
Department of Community&
^� Economic Development
McHenry Municipal Center
333 Green Street
McHenry, Illinois 60050
Phone: (815) 363-2170
MCHenr Fax: (815)363-2173
www.ci.mchenry.il.us
PHOTOGRAPHS OF EXTERIOR OF SMITH'S CENTRAL GARAGE 3315 PEARL STREET
5
Narrative for
Smith's Central Garage (SCG)
3315 Pearl Street
The existing building, affectionately known as the Hostess Building, has long stood as a vacant
eyesore to the City of McHenry. The building stands In an area that is actually considered one
of McHenry's hotspots or centers of activity. It also is within one block of the Riverwalk,
something which is obviously near and dear to me. In the summer of 2014,the naysayers were
out in full force. I could not listen any Ionger to the refrains of"McHenry is dying" and "more
buildings are becoming vacant", etc. I decided at that time to take matters in my own hands
and buy the building to refurbish it in to something that would benefit the City and its residents
along with quieting some of the negativity. I bought the building and immediately started to
renovate it, mostly using my own labor. After two years of a "labor of love" I have turned the
building into a brand-new facility. New roof, new insulation, new electrical, new HVAC, new
bathrooms, and basically new everything. For a while I thought the building would be a perfect
"makerspace" but after numerous business plans and financial analysis, I soon realized that
there was no way to even "break even". Soon I had numerous requests for rentals for events
and I decided to explore that a little more. The response was overwhelming. The occupancy
cannot be more than 100 people due to fire codes but I want to add sprinklers to the building.
The important part of economic development is to attract people to the downtown area.
Before, during or after an event, it is logical to assume that people attending an event will
patronize other businesses in the area. Since there will be no kitchen in the building so local
caterers will benefit. Tables and chairs will be provided by SCG as well as a catering kitchen.
Liquor will NOT be served by SCG but users may bring their own. There will be a SCG staff
person available at all events.
In an attempt to offer a better understanding of the uses for this building,the following pages
are used for advertisement purposes. There is also a website www.smithscentralgarage.com.
Many of our requests have been for events over 100 people. I have already spent
approximately$800,000 of my personal finances but can longer afford to make any more
improvements. Therefore, I am asking for the$60,000 to install a sprinkler system.
Summary of proposed work:
• Sign proposal for Protection Inc. (interior)$27,500 Doug Caithamer-Fire Alarm$4200,
Directional Drill and 4"water service upgrades budget$28,000 to$30,000.
• Optional open cut budget range$34,000 to$36,000.00
• Electric for Alarm dedicated circuit$500
• Repair loading dock area$10,000
• Total Budget range$70,200 to$72,200 for drilling method
• Total Budget range for open cut$76,200 to$78,200
Thursday,April 6,2017
John J.Smith—Occupation and Employment Record for Liquor License Application
Oct. 1.2015 to Present
Miller Formless
1805 Dot Street
McHenry, IL 60050
815-236-3700
Co-Owner/Principal
April 1,2017 to Present
Smith's Central Garage
3315 Pearl Street
McHenry, IL 60050
815-331-8992
Owner
May 1,1981 to July 20,2009
SEC Group, Inc./Smith Engineering Consultants,Inc.
McHenry, IL 60050
Owner/CEO
Plat of Surve
LEGAL DESCRIPTION:
PARCEL 1:
THE EAST 1/2 OF LOTS 2 AND 3, (EXCEPT THE SOUTHWESTERLY 6 FEET OF SAID LOT 3), IN BLOCK 19 OF THE ORIGINAL TOWN OF MCHENRY,
ON THE WEST SIDE OF THE FOX RIVER, IN THE SOUTHEAST 1/4 OF SECTION 26, TOWNSHIP 45 NORTH. RANGE B. EAST OF THE THIRD
CRINCIPAL,MERIDIAN, ACCORDING TO THE PLAT THERE OF RECORDED IN BOOK 2 OF PLATS, PAGE 40, IN MCHENRY COUNTY, ILLINOIS.
Ft�i6�L.73"yfy'+��•'S�0�.51�',� .yTERI. .6_FEET.OF THE EAST 1/2 OF LOT 3 AND THE NORTHEASTERLY 1 FOOT OF THE EAST 1/2 OF LOT 6 IN
•{„se �ttilna�'.c,�f 5,27'� ENRY, ON THE WEST SIDE OF THE FOX RIVER, IN THE SOUTHEAST 1/4 OF SECTION 2Q TOWNSHIP'
IIDD AJNCIPAL MERIDIAN, ACCORDING TO THE PLAT THERE OF RECORDED IN BOOK 2 OF PLATS, PAGE
ew
4b, IN.ld H Y CtSt�N ILuA sM' +''
P Ir. opEtJ
- �wtc�P f,ND AN9 (r o>r
wl 1l� c� _
Rea — tit
q
WDy @t � �1A'�CYr�/6i�+
• �irv, �l1 M►F�1. � /� IL. --tom.-•"�tYt/�� E!�-1/"a
To �Nl�OM;N
VAU4 VAVL-T :sw D cx, I" fWalcg
1 y y�� F}JD'T•. ^" Parking ytl�t°NDQ61�iA
I 'vc- X 'PIpE Spaces
p..
T•F n ;
66 eF ' jF
98
y��GCpTI,o��I,��)p— at .: CIr� 6'1 f L"l vN4FTt'�•. .a.` 2 C ` FND"'5- Ov — Y1a/yV
S�vCUpv1mfW^ D ° y' ' �y�G,r-Tn RE t4�
7 t F,C,l.I - ..t'•'s• SYNvx .. �324
•F17VNpA1'IoN Fill l�wOttOCbN�MAPR— !'v�'.` N- Dt�•14l P IT
�-
tklC� !I port 02 .. '
x--a.. :wa roc Q
;15�1� P AL Porkirtg' ..
^ ^—•1—Story : .SpageS
FIB, A/ /7wTw Brick
DES 16 �
3 t 3'
e� part ..
LOT D;T._:., :•:.'; "'; -
m
A•P dR.`
eN�O. Jtllny, 4 is14-
c4 _ � 331Ws6.rO �•T3i .. `Q
m �� �::�.o�.:•�. seas ��- S('ReNl�•
5 ., 0 S� /per n�
VC) cmte
STATE OF ILLINOIS
COUNT'OF MCHENRY 7t
I HEREBY CERTIFY THAT THE PROPERT!DESCPoBED HEREON HAS SEEN E
TIART�ME'PLURiVTEHE EONeUODR�RECOUR.S'�RL9Qli5 sN0 SINK RECORDANDO' 20' 40' 60'
ALL DISTANCES ARE SHOWN IN FEET AND DEMAAL PARTS THEREOF.
I NRTHER CERTIFY THAT UNLESS OTHERWISE SiCWN.THE BUWNGS ON THE
IMPROVE ARE WITHIN NOT
ENCROACH
UNFS AND THE PROPERTY
DESCRIBED
CRIBEE LEGEND LUCO CONSTRUCTION CO.
IMPROVEMENTS DO NOT ENCROACH ON THE PROPERTY JOINING
VISIBLE
ED LIE7♦EQL
I FURTHER CERTIFY THAT THE PROFESSIONAL SERVICE CONFORMS TO THE O Set ry PR FESSI NAL D SI I N .164.004629
CURRENT 0.LNpS M MU� 9Q BOUNDARY SURVEY. • Fnd IP CLIENT NAME.-
Fnd•Lr 54 Lou Ave.
uY uCENSE ExPwEs tt- •' GI Fnd P.K. SMITH Crystal Lake,IL 60014
C.T.AMESE.ZUNCIS PROFESSIONAL LAND SURVEYOR NO.35-2143 -D-HN°-a ti.. CLIENT REFEREN(£ 81552"974
COMPARE THE DESCRIPTION OF THE PLAT WITH DEED.REF10t TD THE TITLE 815$26-3984 F-
POUCY FOR 1704 OF RECORD NOT SHOWN.NOTED URUTIFS WITHIN EASENDAS ®�+�•.
ARE NOT SHOWN HEREON_UNDERGROUND UTILI-nm INCWDNG BUT NOT
LIMITED TO CONDUITS AND CABLES QF ANY)HAVE NOT BEEN SHOWN HEREON. ®West W& FIELDWORK SURVEY DRAwN BY: N0.
COMPLETED: COMPLETED:
VOID WITHOUT RAISED SEAL OR RED STAMP. ® 06-16-14 1 7/7115 JJp 15-36 8
�vVN ,
City of McHenry
Revolving Loan Fund pplicatlon 1. Information on business to be assisted: 141)7 fV //�, F. f /G-- (f d
e r t'w y e
Name of Business
31!9- �
Street Address of Project
C 1
City 1 State Zip Code
3TZ2 g/5236 -?7,40
Name of Principal in Charge Business Phone Cell Phone
2o /
Home Address of Princi al
City State Zip Code
SS#of Principal DOB of Principal
Yell�- cS',O�Ce �/ f �
Type of Business Da4 Established
Employer ID# Name of Bank/Financial Institution
Bank Address(include City,State an Zip Code)
2. Project Description—Purpose of Request—W y undertaking the project:
#&k
ol� rwnr
s
of �n �s 7( a�� i*r� �- 4' 70 a.
Revolving Loan Fund Application Page 1
3. Information on Project Impact:
Job Impact:
#Existing Employees #Positions Created =Total
Relocation(if yes,Identify new location In space provided):
Yes No A
4. Information on Participating Financial Institution: a _
Xm V �?
Name of Institution
57
Street Address 7
je'h�m f I/
City State Zip Code
Repayment Terms:
ODD er71 70
S. History and Description of Company and Principals:
ZZess
e%I
c coy'
Revolving Loan Fund Application Page 2
r
6. Information on Use of Project Funds:
Land Acquisition $ f9� p
Land Improvement
Purchase and/or Remodel on Existing Buildin $,
New Construction
Purchase and/or Repair Machinery&Equipment $
Purchase Furniture&Fixtures $
Working Capital $
Other Contingencies(Identify below): $
Total Project Cost $_ !
Revolving Loan Fund Application Page 3
EMPLOYEE INCOME CERTIFICATION FORM
(Job Retention)
Date:_�jZ/ 40/
Dear Employee:
Please provide the information requested on this form so that we can verify to the Department of
Commerce and Community Affairs that your employment here is achieving the goals of the Illinois
Community Development Assistance Program. The information will be placed in your confidential
personnel files and Is available to only a limited number of company officials.This information is also
subject to verification by the City of McHenry and representatives of the Department of Commerce
and Community Affairs. ,
For assistance,please see
hank you.
(company official)
Step 1: Circle the size of�your family.County yourself and all family members living at home.
Family Size: 1 ( 2 / 3 4 5 6 7 8 9 10
Family Income: +-$50,000 $75,000 $100,000 $125,000 $150,000
$175,000 $200,000 $225,000 $250,000 �$275,000+
Step 2:
A.Indicate your racial group.
White Y African American Hispanic
Native American Asian/Pacific Isids Other
B.Sex: Male _ Female
C.Are you a female Head of Household? Yes No
D.Are you handicapped? Yes No
Revolving Loan Fund Application Page 4