HomeMy WebLinkAbout97-160 Resolution No. 97-160
RESOLUTION
AUTHORIZING THE EXECUTION OF A MEMORANDUM OF AGREEMENT
AND ALLOCATING VOLUME CAP
(TERRI LYNN, INC. /BELLEN CONTAINER CORP. PROJECT)
WHEREAS, American National Bank and Trust Company of
Chicago, as Trustee under Trust No. 500126-08 (the "Borrower" )
wish to finance the acquisition of land and the construction of
improvements thereon comprising a manufacturing facility known
as Lot 43 in the Fox Bluff Corporate Center, Elgin, Illinois,
for use in the manufacturing of food products in the form of
fruit, candies and nuts and a flexible packaging facility
which, by means of various printing processes, labels various
packaged products (the "Project" ) and wishes to have the City
of Elgin, Illinois (the "Issuer" ) issue its industrial
development revenue bonds to finance such facilities; and
WHEREAS, a Memorandum of Agreement has been presented to
the Issuer under the terms of which the Issuer agrees, subject
to the provisions of such Agreement, to issue its tax-exempt
industrial development revenue bonds to finance the costs of
the Project; and
WHEREAS, based on the official estimate of the 1994
population of the Issuer of 85, 339 , the Issuer will have
estimated volume cap of $4,266, 950 for the years 1998 and 1999 ;
and
WHEREAS, the Issuer has not yet allocated any volume cap
for 1998 and 1999 and desires to make available for the Project
volume cap of at least $2, 000, 000 in 1998 and at leasts
$4 , 000,000 in 1999 ; and
WHEREAS, the Borrower, through its controlling
beneficiaries, has requested that the Issuer enter into the
Memorandum of Agreement and allocate at least $6 , 000, 000, but
not in excess of $7,500,000 of volume cap (consisting of at
least $2, 000, 000 for 1998 and at least $4 , 000, 000 for 1999 ) to
the financing of the Project.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF ELGIN, ILLINOIS, as follows :
Section 1 . That the Mayor of the Issuer is hereby
authorized to execute, and the Clerk of the Issuer is hereby
authorized to attest a Memorandum of Agreement with the
Borrower in substantially the form of such agreement appended
to this resolution as Exhibit A.
Section 2 . That the officers and employees of the Issuer
are hereby authorized to take such further action as is
necessary to carry out the intent and purposes of the
Memorandum of Agreement as executed and to issue in one or more
series of at least $6 ,000, 000 but not in excess of $7 ,500, 000
of its tax-exempt demand industrial development revenue bonds
upon the terms and conditions stated in such Memorandum of
Agreement for the purpose of defraying the costs of the Project
and that the same is declared .to be for a public purpose and a
matter pertaining to the government and affairs of the Issuer,
pursuant to applicable home rule authority.
Section 3 . The Issuer hereby allocates at least
$2 , 000, 000 of its 1998 volume cap allocation and at least
$4, 000, 000 of its 1999 volume cap allocation (subject to a
maximum volume cap allocation of $7 , 500, 000 for all series
issued in connection with the Project) to the issuance, in one
or more series, of industrial development revenue bonds to
finance the Project or, if the financing of volume cap amounts
herein allocated to 1998 with respect to the Project does not
occur on or before December 1, 1998, or if the financing of
volume cap amounts herein allocated to 1999 of the Project does
not occur on or before December 1, 1999, for the issuance of
such other industrial development revenue bonds for the purpose
of financing qualified manufacturing facilities as deemed
appropriate by the City Council of the Issuer.
Section 4 . That this resolution shall be in full force
and effect upon its passage and approval .
s/ Kevin Kelly
Kevin Kelly, Mayor
Presented: June 25, 1997
Adopted: June 25, 1997
Vote: Yeas 7 Nays 0
Attest:
s/ Dolonna Mecum
Dolonna Mecum, City Clerk
• SENT @Y ,CHICAGO ; 6 12 97 15 45 Dickinson, Wright-' 18479315610;: 6/ 8
MEMORANDUM OF AGREEMENT
F
THIS MEMORANDUM OF A
NaEEMNT is onaEBank and between
CompanlTY y of OChicago,las
ILLINOIS (the "issuer") and American
Trustee under Trust No. 500126-08 (the "Borrower").
1. Preliminary Statement. Among the matters of mutual inducement which
have resulted in this Agreement are the following:
(a) The Issuer is authorized under its home rule powers, as set forth in the
1970 Constitution of the State of Illinois, Article VII, Section 6, and the provisions of
ordinance No. S2-80, passed on February 13, 1980, as from time to time supplemented
and amended (the "Ordinance"), to issue industrial development revenue bonds for the
purpose of financing, in whole or in part, the cost of the acquisition, purchase,
construction, reconstruction, improvement, betterment or extension of any economic
project and to enter into a loan agreement
developth mentrrevenue bonds may be lent to the
Borrower pursuant to which the
proceeds of such tax-exempt industrial
Borrower to finance the costs of such an economic development project.
(b) The Borrower wishes to obtain satisfactory assurance from the Issuer that
evelopment revenue
the proceeds of the sale °f such to x-exempt itto financedthethcostal dof purchasing teasing and refurbishing
s of
the Issuer will be made available
a building comprising a manufacturing facility known as Lot 43 in Fox Bluff Corporate
Center, Elgin, Illinois, to be leased to Tern Lynn, Inc., an Illinois corporation, for the
manufacturing of food products consisting of candies, fruit and nuts and to be leased to
Bellen Container Corp., an Illinois corporation for the operation of a flexible packaging
process involving water-based printing and laminated materials used in connection with
the labeling of various packaged products (the "Project").
(c) Subject to the conditions contained herein and to the due compliance with
all requirements of law, the Issuer, by virtue of such statutory authority as may now or
hereafter be conferred by the Ordinance, will issue and sell its industrial development
to exceed, in aggregate,
revenue bonds in an amount of at least $6,000,000, but notnt of such bonds issued in
00 000 principal amount consisting of at least $2,D p
OOD ion „
$7,5D0, 9
1998 and at least $4,000,000 of such bonds issued in 1999 (the "Bonds ) to finance the
cos
ts of the Project, which bonds are intended to be tax-exempt under sections 103(a)
de
an
d 144 of
the Internal Revenue Code of 1986, as amended (the "Code"),
(d) The Borrower has presented the Issuer with evidence of its intention to
reimburse themselves for expenditures relating to the Project which they may pay from
funds which are not proceeds of the Bonds.
2. Undertakings
on the Par
t of the Issuer. Subject to the conditions above
stated, the Issuer agrees as follows:
SENT BY:CHICAGO ; 6-12-97 ; 15:46 ; Dickinson, Wright 184793156104 7/ 8
(a) That it will authorize the issuance and sale of the Bonds pursuant to the
terms of the Ordinance as then in force.
l respects to the
(b) That it will, at the proper
the Borrowers adopt or causle to be adopted, spuch
rior
advice, consent and approval of
proceedings and authorize the execution of such documents as may be necessary and
advisable for the authorization, issuance, and sale of the Bonds as aforesaid, and that it
will enter into a loan agreement whereby the Borrower will pay to or on behalf of the
Issuer such sums as shall be sufficient to pay the principal and interest and redemption
premium, if any, on the Bonds as and when the same shall become due and payable
which Bonds are limited obligations payable by the Borrower and therefore are not
eligible for designation under Section 265(b)(3) of the Code.
(c) The Issuer hereby declares its intent to assist the Borrower under
Treasury Regulations Section 1.150-2 to reimburse any expenditures made on costs of
the Project prior to the issuance of the Bonds with proceeds of the Bonds.
3. Undertakings on the Part of the Borrower. Subject to the conditions
above stated, the Borrower agrees as follows:
(a) That it will use all reasonable efforts to find one or more pur
chasers for
the Bonds.
(b) That contemporaneously with the delivery of the Bonds it will enter into a
loan agreement with the Issuer under the terms of which the Borrower will obligate itself
of and interest
the aggregate to pay the principal
to pay to the Issuer sums sufficient in shall become due
and redemption premium, if any, on the Bonds as when the same
and payable.
4. General Provisions.
(a) All commitments of the Issuer under Paragraph 2 hereof and of the
Borrower under Paragraph 3 hereof are subject to the condition that on or before
the case of anyseries to be issued in 1998 and December 1,
December 1, 1998 in shall be
such other as
mu 1999 inl the case of to the Issuers oabe nd the Borrower), theed in 1999 rIssuer and the dateBorrower shall
mutually satisfactory
have agreed to mutually acceptable terms and conditions of the loan agreement and of
the Bonds and other instruments or proceedings relating to the Bonds. The decision
ment or
not to approve or agree f the Boto any eim or ds shall rest solely withinn of any the completetds discretion of
take any
action prior to issuance
the parties to this Agreement.
(b) If the events sat forth in (a) of this Paragraph 4 do not take place within
the time set forth or any extension thereof and the Bonds in an amount rot exceeding
the amount stated above are not sold within such time, the Borrower agrees that it will
• ENT BY:CHICAGO ; 6-12-97 ; 15:46 ; Dickinson, irlght 184733156104 8/ 8
J
reimburse the Issuer for all reasonable and necessary direct out-of-pocket expenses
which the Issuer may incur at the Borrower's request or as a result or arising out of this
Agreement including but not limited to the payment of attorneys and other consultant
fees and disbursements arising from the execution of this Agreement and the
performance by the Issuer of its obligations hereunder, and this Agreement shall
thereupon terminate.
(c) The closing of the Bonds in regard to the Project is subject to the
possession by the Issuer or the receipt by the Issuer of sufficient volume cap allocation
from the State of Illinois or otherwise pursuant to the Illinois Private Activity Bond
Allocation Act (30 ILCS 345/1 through 345/9 (1992 State Bar Association Edition)).
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement
by their officers thereunto duly authorized as of the 25th day of June, 1997.
CITY OF ELGIN, ILLINOIS
s. y
Mayor
(SEAL)
ATTEST: •
Cleric
AMERICAN NATIONAL BANK AND TRUST
This instrument is executed by the undersigned Land Trustee, COMPANY OF CHICAGO, not personally but
not personally but solely as Trustee in the exercise of the as Trustee under Trust No. 500126-08
power and authority conferred upon and vested in it as such
Trustee. it is expressly understood and agreed that all the
warranties, indemnities, representations, covenants, under-
takings and agreements herein made on the part of the
Trustee are undertaken by it solely in its capacity as Trustee By:
and not personally. No personal liability or personal respon- ItS: j/.�� �ie63i�ty
sibility is assumed by or shall at any time be asserted or en
forceable against the Trustee on account of any warranty,
indemnity, representation, covenant, undertaking or agree-
n American
tJ6tionbi�
g Of the Trustee in this instrument. Aaestatlori not raqujred by Chicago BY►aws
Attest: mj t company
Its:
CHKCALO 99688-100 4a382 (artp.97)
• c++ICAcO 99999-1o0 16382
06/11/97 10:51 '$1 312 346 8833 SPEER FINANCIAL 1J 002/009
CITY OF ELGIN
APPLICATION FOR INDUSTRIAL DEVELOPMENT BOND FINANCING
Business Name: Graziano Partners, Inc.
Address: P.Q. Box 457
City, state: Itasca, Illinois 60143
Representative: Joseph C. Graziano Jr.
Telephone: (630) 773 2400
Federal Tax ID Number: 36-3229021
Amount of Proposed Bond Issue
: $6. 000, 000 .00
Name of Bond Purchaser: American National $ank of Chicago
Name of Bond Counsel: Bond Counsel has not yet been selected.
Name of Corporate Lawyer: Drew Baker
Schulze, Baker & Associates
1111 Plaza Drive #450, Schaumburg,
IL 60173
Proposed Use of Proceeds: Land Acquisition and Industrial
Building Construction (Lot 43, Fox
Bluff Corporate Center) .
• 08/11/97 10:51 $ SPEER FINANCIAL Q1 003/0091 312 346 8833 - .
•
IS proposal a new facility? Yes
•
Is the proposal Industrial/Commercial/Retail? TnrtnatIisl
What is the principal product of the company? Processed Fpod -
Products and flexible packaging
What are the proposed financing arrangements?
IRB Proceeds and conventional financing through
American National Bank •
Give the approximate dates of construction: 7/97 thrn 12/98
•
ECONOMIC
A. P:olect Costs (Preliminary)
1. Construction Costs $ 5, 600, 000. 00
• 2. Financing Costs $ 225, 000. 00
3. Equipment Costs $ Included ,
4. hand $ 2, 184 000. 00 *
5. Architectural $ 100,000. 00
• 6. Legal $ • 50,000.00•
150, 000.00
7. Other $
06/11/97 10:52 $1 312 346 8833 SPEER FINANCIAL _ _ _ 004/009
B. Financial Stability (provide the following) '
1. Prospectus
2. Reports to stockholders
• 3. 5 years independently audited financial
statement
4 . Most recent interim financial report
5. Dun & Bradstreet report
6 . Name and address of project lender
7. Commitment letter for financing ,
(including length of commitment)
8. Name, address and contact of bond purchaser
9. Estimated tax yield to City
• 10.. Estimated increased payroll
11. Estimated assessed value of additional and total
real property
12. Number of years in business
Is any litigation pending by or against company?
x Yes No
' Type of ProduCCprocessed food products ansi flprgbLc packaging
Description of Product _Candy, Nuts. r ed Y•,{ tom, AST,es
and Water based printed and laminated flexible parktl.gina
Market Area Served National and International
•
C. Employment
1. Number of Current Employees:
Full Time: 51
Part Time: 40
•
• • Managers: 9
Employees living in Elgin: , 4
06/11/97 10:52 271 312 346 8833 SPEER FINANCIAL Z 005/009
:M Y 2e '97 11:55 METHOD K PARTNER INC P,2/2
2. Number 'at new job created/retained (pleases specify)
a. Permanent Full Time: RE ' iWED CREaT§D
b. Permanent Part Times1
• c. Seasonal/Temporary: 40
10-20
•
3 . Type of new jobs created/retained
a. Clerical: 7 3-4
b. Labor: 70• 26-38
c. Supervisory: 5 2-3
O. managerial: 9 1-2
4 . Average Employee salary (present) :
$25, 760 r.n $34 .048
5 . yearly Payroll (present) : S2,0170ou oq
6 . ' Employes Skills Required: kacjoz ins, Machine nnerator,
Fork Lift Operators, Food Proceesing _Equipment 0,yrrat1nna,
Flexible printing Operations , Computer Overarure
b. ' Environmental
11 A. Plant CNew)
1 . Location: 1.nr. pox Bluff C.L.
141n. 'Illinn1 ,c
2. Land Sire: _ 17. A Acres
Square Feet: 774, 257
•
3. Present Plant; 40000 combi c
New Plant: 120.000 C:nmbiae'C_ (Phases T $$Vt.
4 . Land Coverage: 1).9X LPhal T n n l y)
B. Pollution
1. Water/Sewer effluent X domestic
x industrial,
None unusual wastes
3. Air/forejgn or toxic substances: _Eau_
3. wore: Mild oder related to Chocolates cull
• Roasted nuts, alight ammoniac
06/11/97 10:52 /21 312 346 8833 SPEER FINANCIAL _ V1 006/009
• ti
•
4. Glare: None
• • 5. Noise: None .
6. Pollution devices required: None •
•
7. *According to City Engineer, are there adequate
• number of Water and Sewer Connection to the
site? •
• X Yes No
E. Community •;Services
A. Traffic
1. Number of Vehicles into Site per day;
Trucks:15-17• Cars: 50 - 55
• Other Vehicles: 0 •
2. Ability of Street to Carry Additional Land
a. Access - sketch, of ingress/egress patterns
b. Safety - plans to facilitate any
substantial traffic movement
B. Utility Requirements
•
1. Water used per day: 2100 . gallons
• • Fire Protection adequate? Yes
•
Additional water or sewer requirements: (i.e.
pretreatment, extensions) None
2. Type of Sewage: . Employee Welfare, 'Floor Cleaning
3. A. Projected annual electrical usage: •
1 .5mm KWH per year
• B. Projected annual,.gas usage:
• 100 M therms 'i,er year
•
•
•
•
•
• 06/11/97 10:53 $1 312 346 8833 SPEER FINANCIAL Z 007/009
C. • Schools
Will. you project significantly increase school
enrollment?
No
CIVIC AWARENESS
1. Provide evidence of past civic activity:
Members, Chamber pfCnrgmerere
2. How will your company support local civic activities?
der_ OpP or mnrn rim (• clubs CLIDTgq, Kiwanis , Jaycees , Etc . )
All supportive financial documents and information required by
the City of Elgin must be supplied before application will be
considered by the City Council of the City of Elgin.
We agree to all the conditions as specified in ap•licable city •
ordinances. .
1
Signs Signed: AAt
Title: Title:
Chief Corporate Officer C�Chief Financial Officer •
Date: s(ar a-�q 1
06/11/97 10:53 $1 312 346 8833 SPEER FINANCIAL 1008/009
- r _
ADDENDUM TO IRB APPLICATION - GRAZIANO PARTNERS
FOX BLUFF CORPORATE CENTER
This Addendum addresses several line items in Section B (Financial Stability) of the
Application which are as follows:
1. Prospectus:
The various business interests of Graziano Partners have not needed to issue
a prospectus, hence none exists.
2. Reports Of Stockholders:
The family interests are closely held. As a result no formal reports to
Stockholders are available.
3. 5 veers Independently audited financial statements;
Enclosed are five years of financial statements for the business Interests
of Graziano Partners. 1996 was the first year that certain business
interests were audited. As a result the balance of the statements were
unaudited. The companies finances are continuously reviewed by Kaplan
& Company, an accounting firm in Northbrook, Illinois.
4. An interim financial report for the period ended June 30, 1997 will be
provided upon completion.
5. Dun & Bradstreet reports on all companies are included.
6. The project lender is:
American National Bank & Trust Company of Chicago
33 North La Salle Street
Chicago, Illinois 60690
Attn: Ms. Nancy Cleland Manella
7. A commitment letter from American National Bank is included herewith.
8. At this time it is contemplated that American National Bank & Trust
Company will acquire the Industrial Revenue Bonds. The address is as
follows:
American National Bank & Trust Company of Chicago
33 N. La Salle Street
Chicago, Illinois 606910
Attn: Karen L. Martin
9. See second Addendum
10. The estimated increase payroll as a result of this new facility Is estimated to
be $ 500,000 - $700,000 (Phase I only).
11. See second Addendum
12. The initial origins of these various businesses date back to 1936.
13. All projected job creation/payroll estimates are based on Phase I only.
1st51597ctw
08/11/97 10:53 221 312 346 8833 SPEER FINANCIAL Q 009/009
r
ADDENDUM TO I.R.B. APPLICATION - GRAZIANO PARTNERS,
FOX BLUFF CORPORATE CENTER
This Addendum addresses items 9 (estimated tax yield to City) and
11 (estimated assesses value of property) . Basic components of
calculations were provided by Jim McConoghey of the Elgin Area
Chamber of Commerce.
Assumptions for calculation purposes:
1. Normal assessment practices are more detailed and
comprehensive than those below. For purposes of this
application we are using cost estimates from a contractor
for building value and the land acquisition price for the
assessed value of the land.
2 . This project is being phased over the next several years.
Phase I is a 120, 000 square foot building to be built in
1998. Phase II is an additional 80, 000 square feet
tentatively scheduled for 2003 to 2004 and Phase III of
80, 000 tentatively scheduled for 2008 to 2009 . For purposes
of this calculation we used Phase I (120, 000 square feet)
only on the entire 18 acre site.
3 . The calculations below attempt to arrive at an assessede uses
value of theproperty
erty at fu
ll
1 build-out of Phase P
the latest published tax rates to calculate the tax yield to
the City.
Estimated Land and Building Cost $7, 800.000
Cost to Assessed Valuation Factor
Assessed Value $2, 574, 000
Township Equalizer Factor 1 .0227
Equalized Valuation $2, 632,430
Latest total tax rate 8 .3798
Total Estimated Annual tax bill $ 230, 069
• City of Elgin tax rate 1.90
Annual Estimated tax yield - City of Elgin $ 50, 016
2n5 1597ctw
Method Partners
INC.
June 17, 1997
Mr. Ray Moller, Director Business Services
City of Elgin
150 Dexter Court
Elgin, Illinois 60120
Dear Ray:
By now you have received a draft of an inducement resolution for the Graziano
Partners I R B's. The resolution drafted by American National Bank's bond counsel
suggests a volume cap of $7,500,000 over two years rather than the $6,000,000
which we know is Elgins local limit. The reason for the high amount is two-fold.
First we continue to have discussions with the bank regarding the potential to
obtain additional IRB funds as a result of unused volume cap from other
municipalities. I assume this would come through I.D.F.A. but apparently would be
issued through Elgin.
Secondly, the project cost as you know is currently estimated at somewhere near
$8,000,000.00. The attorneys thought that using a not to exceed volume cap
number for this documentation that more nearly reflects the project costs would be
the better course of action.
We are about to retain our own bond counsel who will also deal with these issues.
In the interim we need to obtain Elgin's City Counsel approval.
If your understanding of the above is different or you have questions please call
me.
Sincerely,
.....7.....f)__tiors
Howard C. Builta
HCB:ctw
2400 East Oakton • Arlington Heights, Illinois 60005-4809 • (847) 439-4310 • Fax (847) 439-4314
•
no
0 OF FCC
City of Elgin Agenda Item No.
AO 5)
'411
tie
June 16 , 1997
TO: Mayor and Members of the City Council
FROM: Robert O. Malm, Interim City Manager
SUBJECT: Inducement Resolution with Graziano Partners
for a Portion of the City' s 1998/1999 Annual
Industrial Revenue Bond Authority
PURPOSE
The purpose of this memorandum is to present to the Mayor and
members of the City Council a request from Graziano Partners
for $2 million of 1998 Industrial Revenue Bond ( IRB) Authority
and $4 million of 1999 Industrial Revenue Bond Authority.
BACKGROUND
The City has received a request regarding the availability of
IRBs for business expansion. Graziano Partners has presented
a request for $6 million. The City currently has an annual
allocation of $4 . 267 million in IRB capacity.
Graziano Partners will utilize the bond funds to purchase land
and construct a building at the Fox Bluff Corporate Center.
The Graziano Partners plans to I peraat d twoPa businesses atBy the
Fox Bluff site: Terry Lynn, c.
The firms are involved in processed foods and flexible packag-
ing. Both firms currently employ approximately 100 individu-
als . An additional 50 jobs can be anticipated as the project
buildout progresses .
The site size is 17 . 8 acres . The initial building construc-
tion will be 120,000 square feet . The cost for the initial
development is anticipated to be $7 . 8 million.
Speer Financial, Inc. found the company to be a good credit
risk and the project worthwhile and recommends that the City
proceed with an inducement resolution. Please see the at-
tached report from Speer.
COMMUNITY GROUPS/INTERESTED PERSONS CONTACTED
None.
Inducement Resolution with Graziano Partners
June 16 , 1997
Page 2
FINANCIAL IMPACT
CAll costs pertaining to the IRB issuance will be borne by
Graziano Partners .
The benefit to the City' s tax base is estimated to be $2 . 2
million of equalized assessed valuation. Total estimated
annual property tax revenues will be $220,000 . The City' s
annual portion of this property tax revenue is estimated to be
approximately $42 , 000 .
/ �
LEGAL IMPACT
None.
ALTERNATIVES
None.
RECOMMENDATION
It is recommended that an inducement resolution be adopted for
Graziano Partners totaling $6 million in Industrial Revenue
Bonds in 1998 and 1999 .
Respectfully submitted,
mes R. Nowicki
Direr r of Finance! 1 /��
f�e" /
Raymond H. Moller
Director of Business
Services and Properties
Robert 0. Malm
Interim City Manager
amp
Attachments
PUBLIC FINANCE CONSULTANTS SINCE 1954
SPEER FINANCIAL, INC.
ELWOOD BARGE RICHARD A.PAVIA KEVIN W.MCCANNA DAVID F.PHILLIPS LARRY P.BURGER DANIEL D.FORBES
CHAIRMAN EMERITUS CHAIRMAN EMERITUS PRESIDENTSR.VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT
June 4, 1997
The Honorable Kevin B. Kelly and
Members of City Council
City of Elgin
150 Dexter Court
Elgin, IL 60120
Dear Mayor and Council:
Pursuant to the request of the City, Speer Financial,Inc.has reviewed the industrial revenue
bond application, and supporting documentation including unaudited financial reviews, of
Graziano Partners,Inc. The reviews are on a calendar year basis and are prepared by Kaplan&
Company of Northbrook. Graziano Partners, Inc. is applying for City approval of$6,000,000
industrial revenue bonds. The purchaser is expected to be American National Bank of Chicago.
Bond counsel has not been identified yet. Proceeds will be used to purchase land in Fox Bluff
Corporate Center for$2,184,000, construct a building for$5,600,000, and pay legal, financing,
and other costs estimated at$525,000. This is noted as the first of several phases of
development.
The company has been manufacturing its products in Niles and Itasca. The increase in business
• and the need to consolidate operations in order to improve operating efficiencies necessitate an
expansion.
The company has two wholly owned subsidiaries. The products of the company include edible
nuts,berries, dried fruit products used by fundraising organizations and sold by retailers (Terri
Lynn, Inc.) and flexible packaging materials used in commercial industries (Bellen Container
Corporation). The market is national and international. Some 100 people work for the company,
of whom 4 live in Elgin. New job generation will be in the range of 30-50 positions. The initial
positions will be a mix of jobs,2-3 supervisory, 3-4 clerical, 26-38 factory, and 1-2 managerial.
Current salaries range from$25,800 to $34,000 with the new facility expected to bring an
increase of$500,000-$700,000 in payroll. Benefit to the City's tax base will likely be some
$2,000,000 of equalized assessed valuation. At a tax rate of$1.90 and $8.38 for the City and all
governments, expected revenues will be $38,000 and$167,600 respectively.
Financial Analysis
Graziano Partners, Inc. is the holding company of Bellen Container Corporation. As the
accompanying table indicates,Bellen Container Corporation's financial position has remained
stable over the past six years. Sales have been relatively stable while net income as a percentage
of sales over the past six years has averaged 17.65%,ranging from 15.55%to 19.54%. In
addition,while liabilities have fluctuated over the past six years, equity has increased steadily.
Assets as well are stable. The stability in balance sheet items indicates a financially well-
managed company.
I •
SUITE 3435.55 EAST MONROE STREET•CHICAGO,ILLINOIS 60603•(312)346-3700•FAX(312)346-8833
SUITE 500.531 COMMERCIAL STREET•WATERLOO,IOWA 50701•(319)291-2077•FAX(319)291-6787
•
SPEER FINANCIAL, INC.
Graziano Partners,Inc. is the holding company of Terri Lynn,Inc. As the accompanying table
indicates,Terri Lynn,Inc.has been growing rapidly in recent years. This is evident given the
dramatic increase in sales,with growth of 137%coming in the years 1994 through 1996. The
rapid expansion of sales is reflected in the balance sheet. As assets have increased to meet
demand,so too have liabilities and equity increased. The increase in assets is marked by an
increase in inventory from$370,025 in 1993 to$2,773,100 in 1996 and an increase in
receivables from$216,065 in 1993 to$1,266,673 in 1996. The increases in various balance
sheet items indicate a rapidly growing company. Dun and Bradstreet reports that the financial
statement of the company is"fair." The debt will be guaranteed by Graziano Partners,Inc.
The$6,000,000 of bonds are to be amortized over 20 years. The bonds will pay interest on a
blended rate. This is assuming that some portion of the yield will be taxable while another
portion will be tax exempt. Annual debt service(at an estimated rate of 8%)will be
approximately$605,000. Other debt of the company consists of notes to the shareholders and
secured debt to American National Bank. Total related party debt is some$1,300,000 and debt
owed to the Bank is approximately$3,000,000. The new debt is expected to be secured by a
mortgage on the Fox Bluff facility. Average 1995-1996 financial results provide over 200%
coverage of the approximated amount. This is reasonable coverage of the bonds.
Conclusion
In summary,we find the company,based on its unaudited financial information,to be financially
viable. The IRB project will bring new jobs to Elgin,and Graziano Partners,Inc.will be a
significant tenant of Fox Bluff Corporate Center. We find this a good credit and worthwhile
project and recommend that the city proceed with the inducement resolution. We would be
pleased to discuss this with you.
Sincerely,
!` Zw C✓ f4-c.ao
Kevin W.McCanna
President
KWM/avg
Enclosure
SPEER FINANCIAL, INC.
• BELLEN CONTAINER CORPORATION
Accountant's Compilation as of December 31
1991 1992 1993 1994 1995 1996
ASSETS:
Cash $ 588,182 $ 577,837 $ 402,667 $ 398,805 $ 573,307 $ 753,496
Note Receivable $ 408,845 $ 758,333 $ 557,805 $ 353,034 $ 450,000 $ 1,000,000
A/R $ 425,121 $ 344,713 $ 318,823 $ 397,602 $ 391,929 $ 445,017
Inventory $ 347,681 $ 394,775 $ 280,004 $ 395,365 $ 334,521 $ 431,439
Property and Equipment, $ 379,559 $ 357,227 $ 1,005,058 $ 819,332 $ 816,521 $ 672,781
Other $ 38,218 $ 25,792 $ 29,611 $ 39,231 $ 42,449 $ 33,776
TOTAL ASSETS $ 2,187,606 $ 2,458,677 $ 2,593,968 $ 2,403,369 $ 2,608,727 $ 3,336,509
LIABILITIES:
Current Debt $ 532,615 $ 360,499 $ 74,633 $ 75,065 $ 35,034 $ 394,144
Accounts Payable $ 72,602 $ 74,402 $ 201,393 $ 327,199 $ 194,104 $ 141,686
TOTAL LIABILITIES $ 605,217 S 434,901 $ 276,026 $ 402,264 $ 229,138 $ 535,830
ITY:
Common Stock $ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 1,000
Retained Earnings $ 1,581,389 $ 2,022,776 $ 2,316,942 $ 2,000,105 $ 2,378,589 $ 2,799,679
TOTAL EQUITY $ 1,582,389 $ 2,023,776 $ 2,317,942 $ 2,001,105 $ 2,379,589 $ 2,800,679
Annual Compilation
1991 1992 1993 1994 1995 1996
Net Sales $ 5,077,957 $ 5,261,684 $ 5,562,439 $ 4,686,620 $ 5,402,506 $ 5,267,926
Cost of Sales $ 3,294,440 $ 3,641,009 $4,107,876 $ 3,478,066 $ 3,806,470 $ 3,622,034
General Expenses $ 541,071 $ 443,762 $ 444,811 $ 388,594 $ 470,958 $ 614,631
Operating Income $ 1,242,446 $ 1,176,913 $ 1,009,752 $ 819,960 $ 1,125,078 $ 1,031,261
Otherincome(Expenses) $ (215,374) $ (148,778) $ (137,872) $ (90,820) $ (108,009) $ (171,188)
Net Gain(Loss) $ 1,027,072 $ 1,028,135 $ 871,880 $ 729,140 $ 1,017,069 $ 860,073
SPEER FINANCIAL, INC.
TERRI LYNN, INC.
Accountant's Compilation as of December 31
1991 1992 1993 1994 1995 1996
ASSETS:
Cash $ 24,981 $ 86,944 $ 118,126 $ 116,436 $ 684,648 $ 266,723
A/R $ 144,576 $ 227,828 $ 216,065 $ 1,114,319 $ 935,751 S 1,266,673
Other receivables $ 3,600 $ 12,398 $ 2,386 $ 2,636 $ 7,041 S 4,015
Inventory $ 423,503 $ 458,965 $ 370,025 $ 1,821,610 $ 2,344,239 S 2,773,100
Property and Equipment, $ 159,985 $ 733,825 $ 736,581 $ 937,807 $ 1,232,346 $ 1,434,679
Other $ 261,140 $ 145,299 $ 63,656 $ 118,101 $ 117,498 $ 48,861
TOTAL ASSETS $ 1,017,785 $ 1,665,259 $ 1,506,839 $ 4,110,909 S 5,321,523 $ 5,794,051
LIABILITIES:
Current Debt $ 461,844 $ 896,220 $ 1,014,450 $ 1,822,739 $ 3,675,908 $ 3,946,264
Accounts Payable $ 213,807 $ 13,368 $ 85,737 $ 1,240,283 $ 318,594 $ 398,832
Long Term Debt $ 139,535 $ 442,082 $ 33,097 $ 192,705 $ 135,128 $ 216,534
T^TAL LIABILITIES $ 815,186 $ 1,351,670 $ 1,133,284 $ 3,255,727 $ 4,129,630 $ 4,561,630
___.TY:
Common Stock $ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 1,000
APIC-Common Stock $ - $ 219,755 $ 264,510 $ 514,510 $ 514,510 $ 514,510
Retained Earnings $ 201,599 $ 92,884 $ 108,045 $ 339,672 $ 701,383 $ 716,911
TOTAL EQUITY $ 202,599 $ 313,639 $ 373,555 $ 855,182 $ 1,216,893 $ 1,232,421
Annual Compilation 1
1991 1992 1993 1994 1995 1996
Net Sales $ 3,011,605 $ 2,724,107 $ 3,319,073 $ 5,228,355 $ 12,563,967 $ 12,399,958
$ 10,517,752616 $244
Cost of Sales $ 2,398,014 $ 2,156,182 $ 2,572,587 $ 410,863,094
General Expenses $ 481,785 $ 590,734 $ 644,151 $ 651,078 $ 970,351 $ 1,164,795
Operating Income $ 131,806 $ (22,809) $ 102,335 $ 332,661 $ 730,522 $ 717,411
Other Income(Expenses $ (93,069) $ (85,906) $ (87,174) $ (101,034) $ (281,811) $ (363,883)
Net Gain(Loss) $ 38,737 $ (108,715) $ 15,161 $ 231,627 $ 448,711 $ 353,528
. SENT BY:CHICAGO ; 6-12-97 ; 15:44 ; Dickinson, Wright-, 18479315610;# 2/ 8
DICKINSON,WRIGHT,MOON,VAN DUSEN&FREEMAN
COUNSELLORS AT LAW •
225 WesT WASIInicroN STREET,StrrrB 400
CWCAGO,lu.tNOts 60606-3418 canto,,Mi,oAm
11141m 014310-000 YI.00uD lid.wbnOAS
fl 1U!p14 1 iwNYtiG,M1P4 M 4
wimp�u,ruu..rtnaaAH
('RIIIGHTON R.MLIAND JR. • WpN.wi'.d °'"r' °"°' WASH.fl
dd��°°�r►Rirsr'coN
(511)114-zr o June 12, 1997
Via Facsimile(847)931-5610
Mr.Raymond Moller
City of Elgin
150 Dexter Court
Elgin,Illinois 60120
Re: Industrial Revenue Bond Financing for Terri Lynn,
lnciBellen Container Corp.
Dear Mr.Moller;
Please find enclosed a form of proposed resolution related to the Terri Lynn, Inc./Kellen
Container Corp. matter. Please call me at (312) 214-2970 with any questions or comments
concerning the enclosed draft.
Very trul ours,
Creighton R.Meland Jr.
CRM/crm
Enclosure
cc: Karen Martin(by fax 312-661-7352)
Joseph Graziano,Jr.(by fax 630-773-2405)
Howard Builta(by fax 847-439-4314)
CoPY
July 29 , 1997
Mr. Howard Builta
Method K Partners
2400 E . Oakton, #200
Arlington Heights, IL 60005
Re: Inducement Resolution with Graziano Partners
Dear Mr. Builta:
Pursuant to our telephone conversation, I am enclosing a
certified copy of Resolution 97-160 Authorizing Execution of a
Memorandum of Agreement and Allocating Volume Cap for the Terri
Lynn, Inc. /Bellen Container Corporation Project.
Please contact me if I can be of further assistance.
Very truly yours,
Dolonna "Loni" Mecum, CMC
City Clerk
847/931-5660
dkm
Enclosure