HomeMy WebLinkAbout08-250 I
Resolution No. 08-250
RESOLUTION
AUTHORIZING EXECUTION OF A BUSINESS IMPROVEMENT
PROGRAM GRANT AGREEMENT WITH RED BAR WINERY, INC.
(74 S. Grove Avenue)
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN,ILLINOIS,that
Olufemi Folarin,City Manager,and Diane Robertson,City Clerk,be and are hereby authorized and
directed to execute a Business Improvement Program Grant Program Agreement on behalf of the
City of Elgin with Red Bar Winery,Inc. for the property located at 74 South Grove Avenue,a copy
of which is attached hereto and made a part hereof by reference.
s/Ed Schock
Ed Schock, Mayor
Presented: October 22, 2008
Adopted: October 22, 2008
Omnibus Vote: Yeas: 6 Nays: 0
Attest:
s/Diane Robertson
Diane Robertson, City Clerk
CITY OF ELGIN CENTER CITY SPECIAL
BUSINESS LOAN AGREEMENT
THIS AGREEMENT is hereby made and entered into
this a_, day of , 2008, by and between the City of
•
Elgin, Illinois, a municipal corporation (hereinafter
referred to as the "City") , and Ellsworth J. Canfield and
Doris Canfield (hereinafter referred to as the "Tenants") .
WHEREAS, the City has established a City of Elgin
• Center City Special Business Loan Program for building
improvements in the Center City area in an effort to
stimulate expansion, reinvestment and business retention, a
•
copy of such Center City Special Business Loan Program for
building improvements being attached hereto and made a part
•
hereof as Exhibit "A" (hereinafter referred to as the
"Program") ; and
WHEREAS, the Program contemplates the City paying a
portion of financing costs for eligible building
improvements; and
WHEREAS, Tenants are the Tenants in the real property
commonly known as 74 South Grove Avenue, Elgin, Illinois,
(hereinafter referred to as the "Subject Property") which
•
is located in the Center City area as described in Program
hereto; and
WHEREAS, Tenants have applied for and obtained
approval for a loan agreement to finance the cost of the
• proposed building improvements on the Subject Property, a
copy of such loan agreements being attached hereto and made
a part hereof as Exhibit "C" (hereinafter referred to as
the "Subject Loan Agreements°) ;and.
WHEREAS, Tenants have completed an application for
participation in the subject Program which identifies the
proposed improvements to the Subject Property, a copy of
Tenant ' s application for participation in the Subject
Program being attached hereto and made a part hereof as
Exhibit "B" .
NOW, THEREFORE, for and in consideration of the mutual
promises, covenants and undertakings contained herein, and
other good and valuable consideration, the sufficiency of
which is hereby mutually acknowledged, the parties hereto
hereby agree as follows :
1 . That the foregoing recitals are hereby
• incorporated into and made a part of this agreement in
• their entirety.
2 . That Tenants' application for participation in
the Program is hereby approved.
3 . That as long as the Tenants continue to make
regularly scheduled loan payments on the Subject Loan
Agreement and otherwise comply with the terms of this
agreement City shall pay an interest subsidy on the Subject
Loan Agreements consisting of monthly reimbursement
payments to Tenants in the amount equal to 90% of the first
year's interest, 80% of the second year' s interest, 70% of
the third year' s interest, 60% of the fourth years interest
and 50% of the fifth years interest, commencing as of
November 1, 2008, upon receipt of verification of payment
from lender and pursuant to the amortization and payment
schedules attached hereto and made a part hereof as Exhibit
"D,, .
4 . In no event shall the interest rate of any
Subject Loan Agreement provided for herein exceed fifteen
(15%) percent . In no event shall the total loan amount of
the Subject Loan Agreement exceed $200, 000 . In no event
shall the total interest payments provided for herein from
City to Tenants exceed $36,469. The Tenant shall make all
other principal and interest payments and all other
payments on the Subject Loan Agreements. The City is not
and shall not be deemed to be a party to the Subject Loan
Agreements or an obligor or obligee thereunder. This
agreement in general, and the City's agreement to make
interest payments hereunder in particular, shall not be
construed, and shall not be relied upon by any party,
including, but not limited to, the lender in the subject
loan agreement or any successor or assign thereof, to
require the repayment of any principal loan amounts, the
execution of any mortgage loan documents, or to otherwise
act as a guarantor on any loan agreements under any
circumstances. Additionally, the provisions of this
agreement shall not be construed so as to create any
obligations as to City based on any theory of equitable or
promissory estoppel .
5 . In the event any of the Tenants convey any of
their respective interests in Subject Property prior to
September 1, 2013, Tenant shall refund all payments made by
city pursuant to this agreement no later than 30 days after
such conveyance. Each Tenant shall be jointly and severally
liable to City for such refund payments.
6 . That the terms, requirements and conditions of
the Program as set forth in Exhibit "A" hereto are hereby
incorporated into and made a part of this agreement in
their entirety. The City' s obligations under this agreement
including but not limited to the City' s obligations to make
continued interest payments are subject to Tenants' ongoing
compliance with all terms and requirements of the Program
and this agreement.
7 . That upon completion of the improvements, and for
a period of five (5) years thereafter, Tenants shall
properly maintain the improvements in their finished form,
without alteration or change thereto.
8 . That nothing herein is intended to limit,
restrict or prohibit the Tenants from undertaking other
work in or about the Subject Property which is unrelated to
the improvements provided for in this agreement.
agreement maynot be assigned without
9 . That this g g
the prior written consent of the City.
10 . Tenants hereby agrees to hold harmless, defend
and indemnify the City from and against any and all causes
of action, suits, claims for damages and any and all other
liability which may arise out of or in connection with the
proposed improvements or other work at the Subject
Property, or which may arise out of or in connection with
Tenants or Tenants ' agents, employees' , contractors' and
assigns' negligent performance of any of the terms of this
agreement. In the event the provisions of this paragraph
are invoked, counsel for City shall be of City' s choosing.
The terms and provisions of this paragraph shall survive
any termination and/or expiration of this agreement .
11 . That this agreement shall not be construed to
create a partnership, joint venture or employment
relationship between the parties hereto.
12 . Tenants shall also pay when due all other
obligations for the subject property including but not
limited to payments on any other loans, real estate taxes
and insurance.
13 . That this agreement shall be subject to and
governed by the laws of the State of Illinois. Venue for
the resolution of any disputes or the enforcement of any
rights arising out of or in connection with this agreement
shall be in the Circuit Court of Kane County, Illinois .
14 . That the terms of this agreement shall be
severable. In the event that any of the terms or
provisions of this agreement are deemed to be void or
otherwise unenforceable for any reason, the remainder of
this agreement shall remain in full force and effect.
15 . That notices regarding in, this agreement shall be
sent to the parties at the following addresses:
To: City of Elgin
150 Dexter Court
Elgin, IL 60120-5555
Attention: City Manager (with a copy to
Corporation Counsel)
To: Mr. Jim Canfield
Red Bar Winery & Bistro
74 S . Grove Avenue
Elgin, I1 60120
16 . This agreement constitutes the only agreement
between the parties hereto regarding the subject matter
here of. There are no other agreements, either oral or
implied, in existence between the parties hereto regarding
the subject matter hereof. The terms and provisions of
this agreement shall not be amended unless such amendments
are in writing and, are properly executed by the parties
hereto.
17 . In the event of Tenants' breach of any of the
terms of this agreement, Tenants' shall refund to City the
full amount of any payments made by City to Tenants' or to
any other entity on Tenants' behalf, including but not
limited to, any lender, upon thirty (30) days written
demand. City shall thereafter be entitled to any and all
�. .
other rights and remedies as may be available to it by law.
All parties to this Agreement, including Ellsworth J.
Canfield and Doris Canfield shall be jointly and severally
liable to the City pursuant to this Agreement.
18 . This agreement shall terminate on November 1,
2013 . City may terminate this agreement for any or no
reason upon fourteen (14) days written notice. In the
event City terminates this agreement, City shall be under
no further obligations pursuant to this agreement, and
Tenants shall be entitle to no further relief pursuant to
this agreement.
IN WITNESS WHEREOF, the parties hereto have entered
into and executed this agreement the day and year first
written above.
CITY OF ELGIN Winery & Bistro
By. By:
Olu eml olari , Do ' s Canfiel
City Ma ger
Attest: E swo h J. Canfield
City Clerk
IL
A'Xif► t
•
CITY OF ELGIN
Center City Special Business Loan Program
PROSE STATEMENT:
The City of Elgin and the Elgin financial institutions have
established a special loan program for building improvements and
business development in Center City Elgin in an effort to stimulate
expansion, reinvestment and business retention. Interest on.loans,
for loans up to a total maximum amount of $200,000 per project, may
be subsidized by the City of Elgin for the first five years of the
loans.
LOAN TERMS:
Interest Rate: May not exceed 15%. Must be at or above Prime
rate of interest
Terms of Loan: Up to a 10 year amortization/conventional
commercial loans
Up to a 30-year amortization/home equity and
second mortgage loans
Collateral: First or second mortgage on property
Maximum Loan: up to $200,030 per building project
Purpose of Loan: Shall be used only for the acquisition or
lease of operating facilities, the purchase of
equipment or fixtures, space built out or
inventory
Conventional Commercial Loan
Monthly Payments.: Interest payments by the City shall be at the
following rates payable over a period of five years:
year - 90% of first year interest costs
2°d year - 80* of second year interest costs
3rd year - 70% of third year interest costs
4th year - 60% of fourth year interest costs
5th year - 50% of fifth year interest costs
Home Equity and Second Mortgage
Monthly Payments: Interest payments by the City shall be at the
following rates payable over a period of five years:
l8t year - 85% of first year interest costs
2t year - 75% of second year interest costs
3rd year - 65% of third year interest costs
4th year - 55% of fourth year interest costs
5th year - 45% of fifth year interest costs
Notwithstanding anything to the contrary in this loan program
the maximum amount of interest payments by the City for any loan
shall be in the maximum amount of $92,365.29. •
ELIGIBILITY REQUIREMENTS:
To.be eligible to apply for this special loan program, the applying
business must satisfy both of the following criteria:
1. Geographic: The business must be located in Center City
Elgin, in the areas outlined in the accompanying target
area map.
2. Type of Business: The business must be engaged in
retailing, wholesaling, distribution, professional
services, technology industry and other types of general
commercial and retail lines of business consistent with
those business uses identified as desirable in the
adopted Riverfront/Center City Master Plan.
GENERAL REQUIREMENTS:
1. This program does not include financing for furniture,
standard office equipment (i.e. personal computers and
related equipment) or operating capital.
2. Building improvements must be done by an independent
contractor. Agreement with contractor must be supported
by two different contractor bids.
3. Any business which is approved and is to receive benefits
under this Center City Special Business Loan Program must
execute a written agreement with the City in a form as
directed by the City which shall include the terms
necessary to comply with the provisions of the program
requiLeu nts and which shall include an agreement by such
business to complete building improvements within a
specified time period and to thereafter remain in
business at the specified location for a period of not
_ less that three years. If the business is required to
vacate the Center City location due to action directed or
supported by the City, the business must relocate within
the Center City in order to retain the benefits of the
Business Loan Program.
4. Participants in the Center City Special Loan Program
must provideannual financial statements to the City
during participation in the program.
QUALIFYING STANDARDS:
i. Applicant business and owner must have an acceptable
credit history with a record of timely loan payments.
2. Business profits and cash flow must be sufficient to
support loan payments in accordance with the customary
loan (with the loan to value ratio not to exceed 75%1 to
80%) unless other collateral or financial strength is
provided.
APPLICATION PROCESS:
1. Eligible businesses should request a complete copy of the
program guidelines and a loan application form. Once the
loan is conditionally approved and structured by the
lending institution, the lender shall complete a loan
proposal for submission to the City of Elgin for final
approval.
NO RIGHTS ESTABLISHED:
1. The provisions of this program are intended to provide
guidelines for considering applications related to
business development entities seeking to participate in
the Center City Special Business Loan Program. The City
of Elgin, in its sole and exclusive discretion, shall
determine whether to provide any of the incentives
-contemplated by this program after duly considering the
costs incurred by the City of Elgin for providing the
incentives and after considering the relative gain
derived by the public from those incentives. The City of
Elgin further expressly reserves the right and option to
decide at any time whether or not to provide continued or
additional funding for this program. The creation of
existence of this program shall not be construed to
create or provide any vested rights in any person or
organization to obtain approval of a program application,
a program agreement or any incentive, grant, rebates or
funding thereunder.
CORRESPONDENCE:
1, Please direct questions and comments regarding this
program to: Ray Moller, Director of Economic Development
and Business Services at 847-931-6749 or Lindsay Stanton,
Economic Development Coordinator at 847-931-5593.
(Map remains the same)
APPLICATION FOR
CITY OF ELGIN
CENTER CITY SPECIAL BUSINESS LOAN PROGRAM
Date:
Loan Amount Requested: $ Total Project Cost: $
Company Name:
Address:
Phone:
Owner's Name •(a) :
Type of Business:
Purpose of Loan:
Does this loan represent an addition to a loan previously approved
for this project? YES NO
If yes, please indicate original amount, date approved and total
loan amount with proposed increment.
Original loan approved: $
Date Approved:
Total loan with proposed increment: $
BREAKDOWN OF PROJECT
AMOUNT CONTRACTOR DESCRIPTION OP WORK
1. $
2. $
3. $
4. $
I I
OTHER CONTRACTOR BIDS OBTAINED
DESCRIPTION OF PROPERTY:
(Size &. Description)
APPRAISED VALUE:
OWNER IN TITLE:
EXISTING MORTGAGE
ON PROPERTY:
OTHER INFORMATION REQUIRED INITIALLY:
1. Business Year end Financial statements - last two years.
2. Business Interim Financial Statement - current year-to-date.
3. Personal Financial Statement - current.
4. Copy of Contractor Estimates.
5. Corporate and/or Personal Tax Returns may be required.
6. Appraisal of property may be required.
The undersigned applicant hereby certifies that the loan funds
obtained shall be used for the purposes outlined in this
application.
DATE
Applicant Business
BY:
Owner
Please deliver this completed application to the bank or savings
and loan official of your choice. They will process your credit
application and submit a loan proposal to the City of Elgin for
final approval.
Revised 04-09-2008
')(ti►b, -(s
APPLE___1, 1 FOR
CITY OF ELGIN
CENTER CITY SPECIAL BUSINBSS LOAN PROGRAM
Revised 2005
Date:
Loan Amount Requested: $ )S k c o Total Project Cost: -$ Z. 8'5, s®o
Company Name: Rtt +NC•
Address: s_
Phone: $y7 - 69$- }b59
Owner's Name (s) : ELCSU,O I4 C-1411(e:L•O
Type of Business: µT Li"rel
Purpose of Loan: "13wtO d7."'T I-gutP43_.1I jtt�R P doSr-S
•
Does this loan represent an addition to Na loan previously approved
for this project? YES
If yes, please indicate original amount, date approved and total
Irian- amount with proposed increment.
Original loan approved: $
Date Approved:
Total loan with proposed increment: $
BREAKDOWN OF.FROJECT
AMOUNT CONTRACTOR DESCRIPTION OF WORK
1. $ L<I'leo M. % ..ofie3 € ,0C. -etecrelC.l L., Est r,o.
1`7r, t..pc7`S£ ‘?Luot 1) ALL. ?Lc-N.4446 -• 6Attaz r .
3. $ i 2, 0o'o
C�z'eGrulz'"` '�„'•cs ALL,
4.
t 5 So :pke..0.04E.,...,Nwevese4.441
OTHER CONTRACTOR BIDS OBTAINED
(-Vc &Atrr12oCt t0.1•.1
Ly L G 3 Nika-( ;:L 'tit 17;k1 C tol4
Revised 2005
DESCRIPTION OF PROPERTY: •
: 4' .
(Size & Description)
APPRAISED VALUE:
• OWNER IN TITLE:
EXISTING MORTGAGE
ON PROPERTY:
•
OTHER INFORMATION REQUIRED INITIALLY:
1. Business Year end Financial Statements - last two years.
2. Business Interim Financial Statement - current year-to-date.
3. Personal Financial Statement - current.
4. Copy of Contractor Estimates.
5. Corporate and/or Personal Tax Returns•may be required.
6. Appraisal of property m y be required.
The undersigned applicant hereby certifies that the loan funds
obtained shall be used for the purposes outlined in this
application.
DATE Applicant Business
BY: PEA $NAB- Waat�Q• "l
Owne •
Please deliver this completed application to the bankifor savings
and loan official of your choice. They will process your credit
application and submit a loan proposal to the City of Elgin for
final approval.
Revised II-24-03 •
•
Revised 2005 . •
National City® .
May 19;2008 •
Red Bar Winery •
74 S Grove St.
Elgin,IL 60120
Dear Ellsworth and Dorris Canfield;
We are pleased to advise you that National City Bank("Bank")has approved your request for a
("Loan").The following is a summary of the business conditions of that approval.
Borrower: Red Bar Winery,Inc
Guarantor: Ellsworth J Canfield and Doris Canfield
Loan Amount: $159,000 Term Note with SBA gaurantee
Collateral: 2nd Lien Position on personal property located 1223 Foxpointe Drive,
Sycamore,IL 60178 and a blanket lien on all business assets including but
not limited to AIR,Inventory,and Equipment
Tenn: Seven years
•
•Rate: 8.25% .
Loan Fees: Bank Origination fee,SBA fees plus all additional third party fees(such as
appraisal fee,flood determination,Lender's title insurance,
Filing/recording fees ect.)to be paid by the Borrower
Prepayment Premium:If the loan is paid off prior to 80%of the initial loan term passing,a 2%
prepayment premium will be charged on the balance remaining at the time
of said payoff. The prepayment penalty is waived in it's entirety after 80%
of the initial loan term has passed.
Conditions to closing and disbursement include but are not limited to the following:
• Evidence that borrower is in title to the property being pledge as collateral.
• Borrower shall maintain permanent insurance coverage satisfactory to the Bank on the real
estate,business assets and the personal property securing this loan.This loan will not close .
without proof of proper insurance coverage.An insurance binder is acceptable,it must be a
declaration page naming National City Bank mortgage bolder.
• If it is determined the property is located in a federally identified flood hazard zone and the
Bank determines flood insurance is required,borrower will provide flood insurance coverage
in a minimum amount not less than the loan amount.
• The terms and conditions of this commitment shall survive the closing.
• Approval of complete cost estimates,plans and specifications for interior constructions.
• Satisfactory"as is"and"as completed"appraisal of building.
• Satisfactory environmental site assessment if required.
• Business Plan outlining total start up expenses to be submitted for approval.
• Borrower to submit articles of organization and certificates of existence for borrower and
corporate guarantor.
•
Your acceptance of this commitment letter shall constitute your agreement to pay all fees,
charges and expenses incident to closing and disbursing this loan,including without limitation,
the cost of title examination and insurance,surveys,recording fees,appraisal and possibly an
environmental site assessment incurred by National City Bank provided that the Borrower's have
not completed this transaction with National City Bank-
This commitment shall be effective upon our receipt of this commitment bearing your signed
acceptance.Upon the Borrower's acceptance of this commitment shall remain in full force and
effect until July 31st,2008. The loan must be closed on or before July 315`,2008.
Sincerely,
Matthew Hackney
National City Bank •
Business Banking
•
•
•
a ;r
____,
ACCEPTED this day Y of 2008.--��.s �+--� .
Red Bar Winery,Inc. (`Borrower") .
By. X .
Ell
BY:
Doris Canfield
By: ------
law anfiei Guarantor -
By: •
Doris Canfield,Guarantor
1
Loan Payment Schedule
Bond issue $159,000 .
•
Issue date 1-Jan-08
Annual interest rate 8.25%
Bond term 7
2006 Bond Days Payment Beginning Principle Interest Ending
Issue outstanding number Principle payment payment Total payment Principle Interest Subsidy Interest Subsidy Total Interest Subsidy .
31-Dec-07 365 1 $159,000 $17,684 $13,118 $30,801 $141,316 90% $11,805.75
31-Dec-08 366 . 2 $141,316 $19,143 $11,659 S30,801 S122,174 -80% $9,326.88.
31-Dec-09 365 3 $122,174 $20,722 $10,079 $30,801 $101,452 70% $7,055.54
31-Dec-10 365 4 $101,452 $22,431 $8,370 $30,801 $79,021 60% $5,021.88
31-Doc-11 365 5 $79,021 $24,282 $6,519 $30,801 $54,739 50% $3,259.61 $36,469.66
31Dec-12 366 6 $54,739 $26,285 $4,516 S30,801 $28,454 -
31-Dec-13 365 7 $28,454 $28,454 $2,347 $30,801 ($0)
Totals
w
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October 2, 2008 f
,q
TO: Mayor and Members of the City Council 1,1
FROM: Olufemi Folarin, City Manager C,✓-1xrti Dot/quo/In
Raymond H. Moller, Director of Economic Development
SUBJECT: Red Bar Winery&Bistro Center City Special Business Loan Program
Participation
PURPOSE
The purpose of this memorandum is to provide the Mayor and members of the City Council with
information to consider a request from Red Bar Winery&Bistro to participate in the Center City
Special Business Loan Program.
RECOMMENDATION
It is recommended that the City Council enter into an agreement with Red Bar Winery & Bistro
to allow for the participation in the Center City Special Business Loan Program in the amount of
$36,469.
BACKGROUND
James and Doris Canfield are the owners and operators of the Red Bar Winery & Bistro which
will be located at 74 South Grove in Elgin. On May 19, 2008, the owners obtained a loan
commitment in the amount of$159,000 to develop the business at the leased property. The loan
is for a seven year period at 8.25%.
In order to participate in the Center City Business Loan Program, the applicant must seek
financing through and receive approval from a lending institution and file an application for
interest subsidy with the City. The maximum loan amount is $200,000 per building project, with
an interest rate at or above prime, and loan proceeds may be used for the acquisition or lease of
the operating facility, equipment or fixtures, space build out, or inventory.
a
Red Bar Winery&Bistro Center City Special Business Loan Program Participation
October 2, 2008
Page 2
Interest payments by the City shall be at the following rates payable over a period of five years:
1st year—90%of first year interest costs
2nd year—80% of second year interest costs
3rd year—70%of third year interest costs
4th year—60% of fourth year interest costs
5th year—50% of fifth year interest costs
Year Annual Interest Payment City% City Payment
1 $13,118 90% $11,806
2 $11,659 80% $ 9,327
3 $10,079 70% $ 7,055
4 $ 8,370 60% $ 5,022
5 $ 6,519 50% $ 3,259
The interest subsidy for the five year period is $36,469.
In addition to requesting participation in the City's loan program, Mr. Canfield also desires to
participate in the façade program. He has submitted an application for the program and is in the
process of securing the necessary cost estimates.
Mr. Canfield has received the required conditional use approval for the project and will receive a
liquor license when an occupancy permit is approved for the business at 74 South Grove Avenue.
COMMUNITY GROUPS/INTERESTED PERSONS CONTACTED
None
FINANCIAL IMPACT
The cost of the proposed assistance for Red Bar Winery & Bistro is $36,469. The original 2008
budget for the Economic Development Program was $727,460. There is $232,301 remaining
available. Funding to enter into this agreement is budgeted in the Riverboat Lease Fund, account
number 276-0000-791-80-27, "Economic Development Incentives," project number 17711T.
Following the approval of this item, there will be$195,832 available for future projects.
LEGAL IMPACT
A development agreement is required.
d L V
Red Bar Winery&Bistro Center City Special Business Loan Program Participation
October 2, 2008
Page 3
ALTERNATIVES
1. The City Council may choose to enter into an agreement with James and Doris Canfield
to permit their participation in the Center City Special Business Loan Program in the
amount of$36,469.
2. The City Council may choose not to enter in to an agreement with James and Doris
Canfield to permit their participation in the Center City Special Business Loan Program.
Respectfully submitted for Council consideration.
Attachments
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