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HomeMy WebLinkAboutMinutes - 11/06/2017 - Finance and Personnel Committee (2)FINANCE AND PERSONNEL COMMITTEE Monday, November 6, 2017 Municipal Center Classroom, 5:30 PM 1. Call to Order: The meeting was called to order at 5:30 pm. 2. Roll Call: Chairman Alderman Curry, Alderman Schaefer and Alderman Mihevc. Also in Attendance: Director of Finance Lynch, Director of Economic Development Martin, Human Resources Manager Ann Campanella, and Jason Moy of Plum Garden Restaurant. 3. Public Comment: None. 4. Motion to approve the October 2, 2017 Finance and Personnel Committee meeting minutes. Motion made by Mihevc, second by Schaefer, to approve October 2, 2017 Revolving Loan Committee meeting minutest as presented. Chairman Curry asked the Clerk to call the roll: Voting Aye: Mihevc, Schaefer, Curry Motion carried. 5. Review, discussion and consideration of an Application for a Revolving Loan Fund request in the amount of $35,000 from JM Goods 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. Chairman Curry announced the Committee is being asked to consider the application submitted by JM Foods I, LLC d/b/a Plum Garden Restaurant for a $35,000 Revolving Loan to fund the down payment for the purchase of the building at 3917 Main Street. Chairman Curry introduced the applicant Mr. Jason Moy to the Committee and invited him to begin the discussion. Mr. Moy stated he is requesting a loan to purchase the building and business from his father Perry Moy. The Moy family has owned and operated Plum Garden Restaurant on Main Street since 1965. Perry Moy is ready to retire and the applicant would like to retain the business in the family. Chairman Curry opened the floor for discussion: Alderman Schaefer said he is not in favor of approving a loan on top of another loan for the same business adding this point should have been included in the revised application. He also asked would we know if this money will be used in McHenry as the restaurant is expanding in another town. Finance and Personnel Committee Page 2 August 7, 2017 Mr. Moy assured the Committee that if approved, the funds would not be used for the Crystal Lake business The Crystal Lake business is owned under a different corporation and there is a clear distinction between the two businesses. Alderman Schaefer asked how the Crystal Lake business would be financed and Mr. Moy said his brother and another partner would finance the business in Crystal Lake. His roots are in McHenry and McHenry is his primary focus and home base. They are just expanding the brand. Alderman Mihevc asked for the circumstances surrounding the first loan. Mr. Moy said there are only 13 payments remaining and he would like time to pay it off or roll it into the second loan if approved. Alderman Mihevc asked if the personal guarantee is through his father and the answer was yes. Mr. Moy said if the first loan must be paid, he would arrange to do so. Chairman Curry noted the recommendation from lst National Bank is to roll the $8,900 into the $35,000 request and issue a new loan. Mr. Moy's concern is that it resets the interest in the old loan. Staff s recommendation is to pay off the old loan in totality prior to issuing the new loan. Alderman Schaefer asked if Mr. Moy tried to secure additional financing before applying to the city and he answered yes; at this time with purchasing the business and building at the same time, all his resources are committed. Owning the building would give him more flexibility to expand and hold community events, etc. Alderman Schaefer asked aside from purchasing the business and building were there other plans because this request does not fit into eligible uses; it is not renovation nor construction or purchase of machinery and equipment. Mr. Moy answered that this loan would be used primary for the purchase of the property on Main Street and would allow him the flexibility to update their menu, offer more products and expand to hold more events for the community. Chairman Curry stated he had a brief discussion with Mr. Busse who said that in terms of business cash flow he had no financial concerns about the business satisfying the outstanding loans. Alderman Schaefer did note a condition that Mr. Moy secure the $80,000 commercial real estate loan and Mr. Moy said he did receive a letter of approval for that loan. Chairman Curry asked the Committee if the city should use public funds to provide this use. He agreed with Alderman Schaefer that the criteria does not cover the application requirements. A discussion ensued on the amount of outstanding loans Mr. Moy will have should the city provide this loan including the purchase of the business from his father and all the internal equipment. Finance and Personnel Committee Page 3 August 7, 2017 Chairman Curry said he is still not clear about what would occur should Mr. Moy default, what is his collateral such as equipment or any physical asset and is it worth $35,000. Also, if there is a separate transaction with his father, who would be paid first, the city or his father. Chairman Curry noted cash flow was confirmed by Mr. Busse however, his concern is should Mr. Moy default, would the city be paid. Director Lynch stated all of the city's loans are based on the sale of equipment should the loan default but the city would never get the true value from the sale. The city also has the personal guarantee. Director Martin asked if the city only approved $20,000, would he still obtain the $80,000 loan to purchase the business and Mr. Moy answered yes and offered his personal guarantee that he would pay off the city's loan. Chairman Curry asked Mr. Moy what would happen if he did not own the building and what is the public interest to help him own the building. Mr. Moy answered that if he were not to purchase the building at 3917 Main Street, it would hinder his opportunity to purchase the restaurant; he sees this as a combined deal. There is a lease agreement with 3909 Main Street (the addition) and it would be more difficult for him to buy Plum Garden if he were to assume two lease agreements with two different individuals while operating the business. Mr. Moy said he could buy the building with the two loans and pay taxes for half the cost of the two leases. Alderman Schaefer noted if this loan were approved, the fund would have approximately $2,000. Director Lynch stated the $8,900 would be paid and deposited into the fund. The fund balance changes monthly as payments from all loans are paid. After further discussion, Chairman Curry asked the Committee to review the merits of approving the loan. Chairman Curry stated Plum Garden is a great business for the city and he had no concerns about the business. However, in his opinion, the request does not fit the loan criteria established by the city. Chairman Curry asked Mr. Moy if the Committee decided not to approve the loan tonight, would he be willing to provide a business plan showing how he intends to expand the business based on the consequences of obtaining this loan. Mr. Moy said he would. Chairman Curry asked the Committee if they would be willing to table the request for a month to review the business plan. Chairman Curry clarified that the loan request would go before the Council for consideration with or without a favorable recommendation by the Committee. Alderman Schaefer said he did not think it was necessary to submit a business plan as Mr. Moy explained his plans clearly this evening. Alderman Mihevc agreed with Alderman Schaefer stating Mr. Moy has sufficiently answered all the questions posed by the Committee. As there was no further discussion, Chairman Curry called for a motion. Finance and Personnel Committee Page 4 August 7, 2017 Alderman Mihevc made a motion, seconded by Alderman Schaefer to approve the Revolving Loan application for $35,000 submitted by Jason Moy of Plum Garden with the following conditions: the $8,921 loan to be paid off; security interest in the business assets; unconditional personal guarantee; personnel financial statement submitted annually to 1st National Bank; loan repayable monthly for a five year term at 4.25% fixed rate; no prepayment penalty; contingent upon receipt of a commercial real estate loan commitment for the balance of $80,000; the city would buy back the loan should the payments become more than 60 days delinquent; loan approval is subject to the full City Council approval; and, documents must be executed within 30 days of Council approval. Chairman Curry asked the Clerk to call the roll: Voting Aye: Mihevc Voting Nay: Schaefer, Curry Motion failed. 6. Staff Reports. Human Resources: Human Resources Manager Campanella reported she received compensation data from Crystal Lake and Woodstock as requested by the Committee. The data was forwarded to the consultant who will provide a report with and without the data. The classification/interview portion of the study with city employees is underway. Manager Campanella anticipates bringing the completed study to be Committee in December. Open enrollment is underway for employee health insurance. A few benefit provider changes were made and employees are now able to enroll online. Finance Department: Director Lynch provided the Committee with a copy of the Quarterly Financial Report that will be provided to the full City Council at its next meeting. 7. Any Other Business Director Martin reported he received a revolving loan application from a new do it yourself dog wash business and will bring it before the Committee on December 4. Director Martin reported that he will bring a proposed agreement with McHenry Township for a Pace Dial -a -Ride program at the December 4 meeting. Alderman Schaefer asked it were possible to increase the amount of money in the Revolving Loan Fund during the budget process. A discussion ensued on the merits of increasing the fund now that the process has been revised. The Committee discussed various revisions to the application. Chairman Curry asked the Committee if there were any points they would like Mr. Busse to discuss with the Finance and Personnel Committee Page 5 August 7, 2017 applicants prior to the public meeting for example if there was another loan already provided to the business. In addition, he informed the Committee that he and Director Martin removed from the revised application the request for the applicant's social security number and date of birth. Alderman Schaefer suggested a clause be added to the criteria about paying off existing loans at the same business. 8. Motion to adjourn the meeting. There being no further business to discuss, Chairman Curry called for a motion to adjourn. Alderman Schaefer made a motion, second by Alderman Mihevc, to adjourn the meeting. Chairman Curry asked the Clerk to call the roll: Voting Aye: Schaefer, Mihevc, Curry Motion carried. The meeting adjourned at 6:55 PM. Respectfully submitted by, Marci Geraghty, Executive Assistant/Deputy City Clerk Reviewed and approved this -�5-zuday of �gAMgq 2018.