HomeMy WebLinkAbout99-275 Resolution No. 99-275
RESOLUTION
OF INTENT TO ISSUE INDUSTRIAL DEVELOPMENT REVENUE BONDS
OF THE CITY OF ELGIN, ILLINOIS, TO FINANCE THE ACQUISITION,
REHABILITATION AND EQUIPPING OF A MANUFACTURING FACILITY FOR
N. D. NELSON FABRICATORS, INC. , a/k/a
NELSON GRAPHIC SCREENPRINT, AN ILLINOIS CORPORATION AND
LANDROWSKI FAMILY PARTNERSHIP, AN ILLINOIS GENERAL PARTNERSHIP
AND AUTHORIZING THE EXECUTION OF A MEMORANDUM OF AGREEMENT
WHEREAS, N. D. Nelson Fabricators, Inc . , a/k/a Nelson
Graphic Screenprint, an Illinois corporation, and Landrowski
Family Partnership, an Illinois general partnership
(collectively the "Company" ) , has proposed to finance the
acquisition, rehabilitation and equipping of a manufacturing
facility and related improvements of the existing facility at
1400 Crispin Drive, Elgin, Illinois (the "Project" ) , and
proposes that the City of Elgin, Illinois (the "Issuer" ) issue
its industrial development revenue bonds for the benefit of
the Company in an aggregate principal amount not to exceed
$3 , 200, 00 (the "Bonds" ) to provide financing for the Project;
and
WHEREAS, the Issuer has caused to be prepared a
Memorandum of Agreement under the terms of which the Issuer
agrees, subject to the provisions of such Memorandum of
Agreement, to begin the proceedings necessary to issue its
revenue bonds to provide financing of the Project .
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF ELGIN, ILLINOIS, AS FOLLOWS :
1 . That the Mayor of the Issuer is hereby authorized
and directed to execute and the City Clerk to attest to a
Memorandum of Agreement with the Company, a copy of which is
attached hereto.
2 . That the officials, officers and employees of the
Issuer are hereby authorized to take such further action as is
necessary to carry out the intent and purpose of this
Resolution (including, but not limited to, publishing notice
of any public hearing necessary to permit the Issuer to issue
the Bonds for the Project) and to cause not more than
$3 , 200, 000 of the Bonds to be issued upon the terms and
conditions stated in such Memorandum of Agreement, which
Memorandum of Agreement is hereby made a part of this
Resolution.
3 . That the Issuer hereby declares its intent to assist
the Company 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 .
4 . That this Resolution shall be in full force and
effect immediately upon its adoption and approval .
s/ Ed Schock
Ed Schock, Mayor
Presented: October 27, 1999
Adopted: October 27, 1999
Omnibus Vote : Yeas 7 Nays 0
Attest :
s/ Dolonna Mecum
Dolonna Mecum, City Clerk
UUf-21-99 IHU 16:29 LEGAL FAX Na 8479315665 P. 05
MEMORANDUM OF A.iru EMENT
THIS MEMORANDUM OF AGREEMENT is Between the City of
Elgin, Illinois (the "Issuer" ) and N.D. NELSON FAHRICATCRS,
INC. , a/k/a NELSON GRAPHIC SC'REENPR NT, an Illi.r_ois
corporation and LANDROWSKI FAMILY PAR'I'NE:iSHIP, an Illinois
general partnership (collectively, Lhe "Company") .
1 . Preliminary Stalumprit . Arno iq the - matters if
mutual inducement which have resulted in this Agreement a r:e
the following;
(a) The issuer is a home ruls unit under :he
Illinois Constitution of 1970, and as such is authorized and
empowered to issue industrial development revenue bonds for
the purpose of financing costs of the acquisition, purchase,
construction, rehabilitation, redevelopment or extension :)f
public, commercial and industrial projects in order r.o
encourage and promote the retention and expansion of exist.Lng
public commercial and industrial bt finesses within the Issi►t.•r
and the attraction of new facilities to the Lssucr.
(b) The Company wishes to acquire, rehabilitate and
equip approximately 25, 000 square 1eeL of existing facility
located at 1400 Crispin Drive in Elgin, Illinois, including
the acquisition and installation of equipment for use therein
(the "Project" ) and has proposed that the Issuer issue its
industrial development revenue bonds in an amount not to
exceed $3 , 200, 000 (the "Bonds") Lo finance all or a portion of
the costs of the Project .
(c) The Company wishes to ob:ain satisfactory
assurance from the Issuer that the proceer.s of the sale ::L
such industrial revenue hands of the Issuer will be mad.,
available to it to finance the cost of the Project .
(d) The Bonds shall be limited obligations of thu
Issuer payable solely out of the revenues and receipts derived
from the trust estate established under the indenture of trust
pursuant to which the Bonds are t_; he issued; the Project
shall he financed by means of a loan of the proceeds of thy,
ponds to the Company, and the Company shall aqree uo makc
payments in an amount sufficient La pay the principal and
purchase price of, and premium, if any, and interest on, the
Bonds _ No holder of any of the Bonds shall have the right to
compel any exercise of the taxing owner ai the Issuer, and the
ponds shall not constitute an indebtedness or a loan of credit
of the Issuer within the meaning of any constitutional o
statutory provision.
UUl-21-9 IHU 16:3U LEGAL FAX NO. 8479315665 P. 06
2 . Undertakings on the Part of l_hc_ Issuer. Sub3ect
to the conditions above stated, the Issuer agrees as follows _
(a) That it will begin the proceedings necessary t.c:
authorize the issuance and sale of the Bonds in an amount nct
to exceed $3, 200, 000 .
(b) That if satisfactory purchase arrangements fo
the Bonds can be made by the Company, the Issuer will adopt
such proceedings authorizing the execution of such document;:
as may be necessary or advisable for the authorization,
issuance and sale of the Bonds and the financing of th&
Project, all as shall be authorized by =_aw and on terr.is
mutually satisfactory to the Issuer and the Company.
(c) That, if the Issuer issues and sells the Bond: ,
the financing instruments will provide that the Issuer will
use the proceeds of the Bonds to finance the Project and th
aggregate payments, basic rents or sale price (i .e- ,
t}14,
amounts to be paid by the Company and _ised by the issuer t: .l
pay the principal of, interest and redemptio:-i premium, if any,
on the Bonds) payable under the instruments whereby the
Project shall be financed, shall be such sums ds shall bc.
sufficient to pay the principal of , interest and redemption
premium, if any, on the Bonds as and whcri the same shall
become due and payable .
(d) That it will take or cause co be Laken such
other acts and adopt such turLher proceedings as may oe
required to implement the aforesaid undertakings or as it may
deem appropriate in pursuance thcreoi .
3 . Undertakings on the Part of the company .
Subject to the conditions above stated, the Company agrees as
follows :
(a) That it will use al i reasonable efforts to f in:i
one or more purchasers for the Bonds prior to the issuance anti
sale thereof by the issuer.
(b) That contemporaneousLy with the delivery of the
Bonds the Company will enter into a loan agreement with the
Issuer, under the terms of which the Company will obligaLe
itself to pay sums sufficient in the aggregate to pay the
principal and purchase price of, and premium, if any, and
interest on, the Bonds as and when the same shall become cite
and payable. The Company will also agree in such agreement to
pay all reasonable Lees and expense; in connection with the
Bonds .
UUI'-11-99 IHU 16:30 LEGAL FAX Na 8479315665 P. 07
Cc) That during the period beginning on the date of
the sale and delivery of the Bonds by the Issuer to the
purchasers thereof and ending three years thereafter, the
Company (i) will furnish upon request of th. Issuer, certain
information relating to the Project , including but not limite=
to, the numbers and types of jobs and employment opportunities
which have been created or maintained within the Issuer as a
result of the Project, and (ii; will permit any duly
authorized agent of the Issuer to enter upon: and inspect the
Project during regular business hours upon reasonable notice,
and to examine and copy at the principal office of the Company
during regular business hours all books, records and other
documents of the Company relating to expenditures from the
Bond proceeds for the Project and the numbers and types of
jobs at the Project .
(d) That it will Lake such further action and adopt
such further proceedings as may be required to implement its
aforesaid undertakings or as it may deem appropriate ir
pursuance thereof .
4 . General Provisions . (.-i) All commitments under
paragraphs 2 and 3 hereof are subject t.o the condition that on
or before two years from the daLe hereof (o:' such other date
as shall be mutually satisfactory to the Issuer and the
Company) , the Issuer and the Company or an affiliate thereof
shall have agreed to mutually acceptable terns and conditions
of the loan agreement referred t.o in paragraph 3 , and of the
Bonds and other instruments or proceedings relating to the
Bonds . The decision not to approve or agree to any term cr
condition of any document or not to take an'r action prior to
the issuance of the bonds shall rest solely with the complete
discretion of each of the parties to this Agreement .
(b) If the events set forth in (a) of Lhis paragraph
do not take place within the time set forth therefor or any
extension thereof, and the Bonds in an amount of approximately
the amount stated above are not issued and sold within such
time, the Company agrees that it will reimburse the Issuer fcr
all reasonable out-of-pocket expenses which the issuer may
have incurred at the Company ' s request arising from the
execution of this Agreement and the performance by the Tssuer
of its obligations hereunder, and this Agreement shall
thereupon terminate .
(c) The Issuer agrees to apply its 2000 volume cap
allocation in the amount of $3 , 200, 000 to the issuance of the
Bonds .
UUI-21-99 fHU 16:31 LEGAL FAX NO. 8479315665 P. 08
IN WITNESS WHEREOF, the parties hereto have entered
into this Agreement by eheir officers thereunto duly
authorized as of this Y day of itc9-y.a. � ___, 1999 .
C_TY OF ELGIN
Pv
Mayor -- -
AtteSL :
City Clerk
N.D. NELSON FABRICATORS, INC .
By at/ cp /42.
I ( Ceo
LANDROWSKI FAMTLY PARTNERSHIP
L—/Zzl
io/tea//yf
OFFICIAL SEAL
KAY RAMSEY
NOTARY PUBLIC,STATE OF ILLINOIS
MY COMMISSION EXPIRES:04/O1/03
•
p
'(,4 OF EL.
` ~ City of Elgin Agenda Item No.
'4TGDik'
October 1, 1999
TO: Mayor and Members of the City Council
FROM: Joyce A. Parker, City Manager
SUBJECT: Request from N. D. Nelson Fabricators, Inc .
for a Portion of the City' s 2000 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 N. D. Nelson
Fabricators, Inc. for $3 . 2 million of the year 2000 Industrial
Revenue Bond (IRB) authority.
BACKGROUND
The City has received a request regarding the availability of IRBs
for business expansion. N. D. Nelson Fabricators, Inc . has
presented a request for $3 .2 million of the City' s $4 . 3 million IRB
capacity. This is the first and only request for year 2000 IRB
assistance .
Bond proceeds will be used for the purchase of a new six-color,
large format, screenprinting press, other machinery and a 25, 000
square foot building commonly known as 1400 Crispen Drive located
at the Fox Bluff Corporate Center. Legal, financial and other
costs in the amount of $115, 000 will also be paid by the proceeds .
The company was founded in 1957 . The principal product of the
company is screenprinting and fabrication of plastics, metal, paper
and glass . The new six-color, large format screenprinting press is
reportedly superior to the traditional single-color, flatbed
printer in efficiency and labor savings . The company states that
additional business will be gained by reducing prices by as much as
20% while increasing their profit . The press will also allow the
company to operate at higher quality, while reducing rejection
rates . Reportedly, there are currently only 15 large format, six-
color presses in the U. S. and the company has entered an order to
purchase one . Delivery is expected in March 2000 .
Request from N. D. Nelson Fabricators, Inc .
October 1, 1999
Page 2
The market areas served are the advertising and gaming industries .
The customer base is spread throughout the U.S . , but the company
focuses on the Midwest . Some 17 employees work for the company, of
whom seven live in Elgin. Of the ten employees who do not live in
Elgin, four reportedly have plans of moving to Elgin. Of the three
principals of the company, one lives in Elgin and one reportedly
has plans to move. The average employee salary from August 1, 1998
to July 31, 1999 was just over $30, 000 per year, and the yearly
payroll was under $700, 000 . With the new equipment, an increased
payroll of approximately $100, 000 to $150, 000 is expected,
depending on sales . This increase will create approximately six
new jobs, with five being permanent full-time positions and one
being a permanent part-time position. Of the six positions, one
will be clerical, four labor and one supervisory. The benefit to
the City of the bond issue is job creation and filling of a vacant
building. No tax base growth is expected.
COMMUNITY GROUPS/INTERESTED PERSONS CONTACTED
None .
FI ANCIAL IMPACT
>)p....:„..„
All costs pertaining to the IRB issuance will be borne by N. D.
Nelson Fabricators, Inc .
Speer Financial, Inc. found the N.D. Nelson Fabricators, Inc .
expansion to be a good credit risk and worthwhile project and
recommended that the City proceed with an inducement resolution.
Speer Financial, Inc . found the company, based on its unaudited
financial information, to be financially sound. The IRB project
will enhance their business and bring a new corporate citizen into
the City. Speer finds this a worthwhile project and recommends
that the City proceed with the proposed assistance .
wive LEGAL IMPACT
None .
ALTERNATIVES
1 . Authorize N. D. Nelson Fabricators, Inc . to use $3 . 2 million
of the City' s IRB capacity.
2 . Deny the request by N. D. Nelson Fabricators, Inc . to utilize
$3 . 2 million of the City' s 2000 IRB capacity.
i
•
Request from N. D. Nelson Fabricators, Inc .
October 1, 1999
Page 3
RECOMMENDATION
It is recommended that an inducement resolution be adopted for N.
D. Nelson Fabricators, Inc . in the amount of $3 . 2 million in
Industrial Revenue Bonds .
ectfully subm' ed,
Jo e A+! Parker
City Manager
RHM:amp
Attachments
PUBLIC FINANCE CONSULTANTS SINCE 1954
rffl SPEER FINANCIAL INC.
KEVIN W.McCANNA DAVID F.PHILLIPS LARRY P.BURGER DANIEL D.FORBES BARBARA L.CHEVALIER
PRESIDENT SR.VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT
September 21, 1999
The Honorable Ed Schock 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 N.D. Nelson
Fabricators, Inc. (the"Company"). The financial reviews are on a fiscal year basis ending August
31 and are prepared by Alfred Richter of Spring Grove, Illinois. The Company is applying for
City approval of$3,200,000 industrial revenue bonds. The purchaser is expected to be Harris
Trust and Savings Bank of Chicago, Illinois. Bond counsel has not been identified yet. Proceeds
will be used for the purchase of a new six-color,large format, screenprinting press, other
machinery and a 25,000 sq. ft. building commonly known as 1400 Crispen in Elgin. Legal,
financial and other costs,in the amount of$115,000,will also be paid by the proceeds.
The Company was founded in 1957. The principal product of the Company is screenprinting and
fabrication of plastics,metal,paper and glass. The new six-color, large format screenprinting
press is reportedly superior to the traditional single-color,flatbed printer in efficiency and labor
savings. The Company states that additional business will be gained by reducing prices by as
much as 20%while increasing their profit. The press will also allow the Company to operate at
higher quality,while reducing rejection rates. Reportedly,there are currently only 15 large format,
six-color presses in the U.S. and the Company has entered an order to purchase one. Delivery is
expected in March 2000.
The market areas served are the advertising and gaining industries. The customer base is spread
throughout the U.S.,but the Company focuses on the Midwest. Some 17 employees work for the
company,of whom 7 live in Elgin. Of the 10 employees who do not live in Elgin, 4 reportedly have
plans of moving to Elgin. Of the three principals of the Company, one lives in Elgin and one
reportedly has plans to move. The average employee salary from 8/1/98 to 7/31/99 was just over
$30,000 per year,and the yearly payroll was under$700,000. With the new equipment, an
increased payroll of approximately$100,000 to$150,000 is expected depending on sales. This
increase will create approximately six new jobs with five being permanent full-time positions and
one being a permanent part-time position. Of the six positions,one will be clerical, four labor and
one supervisory. The benefit to the City of the bond issue is job creation and filling of a vacant
building;no tax base growth is expected.
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.
Financial Analysis
As the accompanying table indicates,N.D.Nelson Fabricators, Inc.'s financial position has been
improving over the past year after several years of reportedly breaking even. As a privately held
company,they state that they practice tax management where taxable revenue is minimized
through bonuses. Sales revenues have been pretty steady around$2,000,000 with a dip in the year
1997. According to Erik Landrowski, Chief Financial Officer,their 1999 sales revenues ended at
approximately$2,330,000 before accounting adjustments. He also stated that the dip in 1997 was
particularly because the gaming industry went to a major slump in 1997 and had been declining for
the last five years. Therefore,the Company started focusing on the advertising industry. It was
mainly a product/customer switch in that year that revived their revenue. The recent trend is
toward decreasing net income due to higher costs related to the Company's acquisitions of
machinery and equipment. In addition, accounts receivable have fluctuated over the past five
years. The Company's total assets have managed to grow 54%from 1994 to 1998. As assets
increased, liabilities have also increased by 37%over the same five years. In 1999,their
investments have jumped from approximately$30,000 to a reported$230,000. As stated,this is
primarily because the Company is saving for expansion. The increase in balance sheet items
indicates a financially sound company.
The$3,200,000 of bonds are to amortized over 20 years. The bonds will pay interest on an
adjustable rate, at approximately a beginning rate of 3.30%plus 1.25%bank fees. Annual debt
service at an estimated average total rate of 4.55%is some$236,000 annually. Other debt of the
Company consists of long term debt to a bank, debt to officers and notes to individuals. As of the
end of May 1999,total debt is some$558,000. The new debt is expected to be secured by a lien
on the building and the equipment purchased. Current results provide sufficient cash flow
coverage of the debt. From a future monthly cash flow analysis that the Company did,the monthly
cashflow difference of the Company for the borrowing is an additional cost of approximately
$1,551. This analysis is based on increased sales, rent and loan payoffs and debt service
requirements. The new machine should improve financial operations.
Conclusion
In summary,we find the Company,based on its unaudited financial information,to be financially
sound. The IRB project will enhance their business and bring a new corporate citizen in the City.
We find this a worthwhile project and recommend that the City proceed with the inducement
resolution. We would be pleased to discuss this with you.
Sincerely,
Kevin W. McCanna
President
KWM/sc
Enclosure
N.D.NELSON FABRICATORS,INC.
Accountant's Review as of August 31 Partial as of July 31
1994 1995 1996 1997 1998 1999
ASSETS:
Current Assets:
Cash $ 108,714.14 $ 143,121.76 $ 170,938.45 $ 45,020.45 f 88,931.70 f 43,970.45
Investments 15,250.00 20,750.00 26,250.00 31,750.00 31,750.00 228,430.90
Account Receivable 200,017.30 195,524.70 232,601.24 140,148.48 353,243.87 328,882.84
Inventory at Cost 26,500.00 26,500.00 74,001.00 70,800.00 64,300.00 65,850.00
Total CtareN Assets f 350,481.44 $ 385,896.46 $ 503,790.89 $ 287,718.91 f 538.225.37 $ 666,934.19
Fixed Assets:
Machinery&Equipment f 238,738.25 $ 263.221.25 f 608,366.48 $ 695,488.60 $ 811,844.79 f 883,858.79
Less:Reserve for Depreciation (238,736.25) (257,632.25) (338,221.25) (481,656.25) (585,534.24) (688,058.78)
Truck 8 Auto Equipment 108,513.23 108,513.23 108,513.23 108,513.23 108,513.23 109,513.23
Less:Reserve for Depreciation (27,375.87) (38,421.87) (45,467.87) (50,997.87) (54,347.87) (58,697.87)
Buldng 308,039.28 339,039.28 339,039.28 339,039.28 338,039.28 339,039.28
Less:Reserve for Depreciation (308,039.28) (306,039.28) (306,039.28) (306,039.28) (306,039.28) (306,039.28)
Land 33,000.00 - -T.Shares:Incentive Program for Employees 158,000.00 138,000.00 69,000.00 66,000.00 - -
TOTAL ASSETS 3 820,618.80 5 632,57882 $ 938,981.28 $ 858484.62 $ 65Q501.25 8 945,547.58
LIABILITIES:
Current Liabiities:
Accounts Payables $ 85,774.00 f 114,687.15 $ 83,619.00 f 58,169.00 $ 78,759.00 f 44,324.00
Accrued&Withheld Taxes 13,200.27 - 1,598.00 2,398.28 (789.84)
Notes Payable: Current: - - 52,837.00 67,986.26 89,400.00 94,800.00
Total Current Liabiities $ 98,974.27 f 114,687.15 $ 138,054.00 $ 126,553.54 f 167,389.16 f 139,124.00
Long-Term Liabiities:
Notes Payable Barn* $ - f - f 234,501.00 f 210,000.00 f 250,144 14 f 180,121.72
Due Officers 254,000.00 254,000.00 323,000.00 343,000.00 383,904.01 280,000.00
Total Long-Tenn Liabiities $ 254,000.00 $ 254,000.00 f 557,501.00 f 553,000.00 $ 614,048.15 f 440,121.72
TOTAL LIABILITIES $ 352,974.27 $ 388,687.15 $ 895,555.00 $ 679,553.54 f 781,437.31 f 579,245.72
SHAREHOLDERS EQUITY
Capital Stock $ 7,500.00 f 7,500.00 f 7,500.00 f 7,500.00 f 7,500.00 f 7,500.00
128,942.31
Paid in Surplus - - (54,000.00)
Less:Treasury Shares -
Earned Surplus:
Retained Earnings 261.257.28 260,144.53 256,389.67 232,979.56 621.16 59,648.43
#79 Deduction (1,462.61) (3,829.69) (5,298.00) (7,095.58) (1,683.00) (1,854.00)
Earnings Fiscal Year 349.86 74.83 (15,167 41) (254,872.92) 63,625.81 228,865.10
TOTAL SHAREHOLDERS EQUITY f 267,644.53 f 263,889.67 $ 243,426.28 $ (21,488.92) $ 70,063.97 $ 367,301.84
TOTAL SHAREHOLDERS EQUITY 8 LIABILITIES $ 820,81880 8 832.57862 f 938,961.26 5 658,064.52 8 851,501.28 $ 948,547.58
Amual Review Partial as of May 31
1994 1995 1998 1997 1998 1999
SALES f 2,327,925.24 $ 1,989,781.87 $ 2,006,828.19 f 1,432,391.43 $ 1,958,773.96 f 2,082,938.25
Less:Cost of Goods Sold (1,543,838.77) (1,248,398.88) (1,259,083.53) (976,137.07) (1,186,991.41) (1,235,619.11)
Less:Endng Inventory (28,500.00) (26,500.00) (74,001.00) (70,800.00) (64,300.60) (65 650.00)
Total Cost of Goods Sold $ 1,517,136.77 $ 1,221,898.88 $ 1,185,082.53 $ 905,337.07 f 1,102,891.41 $ 1,189,969.11
GROSS PROFIT f 810,788.47 $ 767,882.99 $ 821,743.66 f 527,054.36 $ 858,082.55 f 912,969.14
Less:Operating Expenses (764,295.89) (747,881.16) (751,587.24) (649,024.72) (887,663.88) (535,556.39)
Total Other Income&Expenses (46,142.92) (20,127.00) (85,323.83) (132,902.56) (104,792.86) (148,847.65)
NET INCOME $ 349.86 8 74.113 $ (15,167.41) $ (254,872.92) f 63,625.81 f 224585.10
ADJUSTMENT TO CASH:
Add Depreciation f 48,142.92 $ 27,942.00 $ 89,635.00 $ 148,965.00 $ 125,227.00 $ 126,874.54
AVNLABLE FOR DEBT SERVICE f 46,492.78 $ 28,018.83 f 74,467.59 $ (105,907.92) $ 188,852.81 $ 355,439.64
SPEER FINANCIAL,INC.
q/4
ON
/`. FAB - ICATORS, INC.
926 Lunt Avenue • Schaumburg, IL 60193
847-352-8866 Fax 847-352-2209
9/3/99
Mayor Ed Schock
City of Elgin
150 Dexter Court
Elgin, IL 60120-5555
Dear Mayor Schack:
I would like to take this opportunity to thank you and the City of Elgin for the time and effort you have put into
our Industrial Revenue Bond Application. The treatment that Elgin has given Nelson Fabricators has been
truly appreciated. You can be assured that Nelson Fabricators, Inc. looks forward to moving to Elgin and
becoming a productive addition to the Elgin community.
Nelson Fabricators has searched for over two years to find the right facility and location to fit our needs. In
+hrse two years we have severely outgrown our current buildings. The building on 1400 Crispin is a perfect fit
our future. Nelson Fabricators has grown at a rate of nearly 30% annually since 1990. We have no
that this growth rate will continue into the future.
Nelson Fabricators has expanded sales on the most basic of business principles. We provide our products at
a reasonable cost with timely deliver and personalized service. Our employees have benefits unsurpassed in
the screenprinting industry. The benefits package includes the company Employee Stock Ownership Plan in
which an employee accrues 15% of gross their gross income every year without having to make a contribution
to the plan. We believe the success of our business relies not only on the treatment customers receive, but the
way we treat our employees. By combining these traditional values with cutting edge printing technology
Nelson Fabricators is guaranteed to be a successful company.
We are very excited about our future and we hope that both Nelson Fabricators and the City of Elgin can
maintain a successful relationship in the future. Please feel free to contact Erik Landrowski or myself if you
should have any questions concerning our business in general or the proposed Industrial Revenue Bond
financing.
Sincerely,
k
I' r'
Gerhard G. Landrowski
President
9
High Duality Screen Printing & Precision Fabrication
•
City of Elgin Industrial Revenue Bond Application
Business Name: N.D. Nelson Fabricators, Inc.
(To be renamed Nelson Graphic Screenprint on 1/1/2000)
Current Address: 926 Lunt Avenue
Schaumburg, IL 60193
Future Address: 1400 Crispin Drive (Building under contract)
Elgin, IL 60123 (Closing Date 9/17/1999)
Business Contact: Erik Landrowski, CFO
(847) 352-8866 Office
(847) 352-2209 Fax
(630) 816-5904 Cellular
Amount of Proposed
Bond Issue: $ 3,200,000.00
Form of Organization
of Borrower: "C" Corporation
Placement Agent: Harris Trust and Savings Bank
Nicholas E. Knorr, V.P. Financial Advisory Services
111 West Monroe Street
Chicago, IL 60603
(312) 461-7605 Office
(312) 765-8251 Fax
) Bond Council: To be determined
)
Corporate Lawyer: George C. Moravcik, Attorney at Law
42 W 225 Silver Glen Road
4 St. Charles, IL 60174
(630) 377-2122 Office
(630) 377-2163 Fax
4
� 1
Proposed Use of Proceeds:
N.D. Nelson Fabricators, Inc. ("Nelson") wishes to use the Industrial Revenue Bond ("IRB")
proceeds to expand its' operations. Nelson currently has made plans to purchase a new,
revolutionary, six-color, large format, screenprinting press and a 25,000 sq.ft. building
commonly known as 1400 Crispin in Elgin. In addition, at least two other machines will also
be needed to facilitate increased capacity.
The first use of the IRB proceeds is the acquisition of a new, revolutionary, six color, large
format, screenprinting press. This press will put Nelson at the edge of screenprinting
technology. The screenprinting press and the benefits Nelson will derive need to be
explained:
In the past, screenprinting on plastics, metal, paper and glass required each individual sheet
to run through a press for each and every color screened.
Example: 4000 sheets x 6 colors - 1-color press = 24,000 press cycles
Nelson has already purchased revolutionary, small format, screenprinting press that allows
the printing of six colors per machine cycle. Thus changing the equation.
Example: 4000 sheets x 6 colors _ 6-color press = 4,000 press cycles
Each press cycle costs Nelson production time, capacity and employees wages. The six-
color press has revolutionized the graphic screenprinting industry just as it has the garment
screenprinting and lithography industries. For the traditional single-color, flatbed printer it is
virtually impossible to compete against the six-color press. Customers are demanding rapid
production & delivery schedules that cannot be completed by traditional screenprinting
presses. A six-color press reduces prices by as much as 20% while increasing margins to as
much as 35%. The press also allows Nelson to operate at higher quality level, while
reducing rejection rates. Nelson has experienced the future of screenprinting and has proven
it a major success.
The graphic screenprinting industry has made yet another technological breakthrough.... the
large format, six-color screenprinting press. Screenprinting press manufacturers have finally
developed the technology to make a large format, six-color screenprinting press. There are
currently only 15 large format, six-color presses in the U.S. Nelson has recognized this
tremendous opportunity and has entered an order to purchase one. Delivery is expected in
March 2000.
We cannot over emphasize the revolutionary leap the screenprinting industry is making. The
new generation of presses reduces labor costs, production times, and lead times while
increasing production capacity and profitability. It is Nelson's belief and the industry
association, the S.G.I.A., that multiple color technology is the future of screenprinting. Nelson
strives to place ourselves at the edge of the screenprinting technology revolution and plan to
reap the gains until the mainstream of the screenprinting industry adopts it. We are
encountering a window of opportunity that will allow Nelson to expand rapidly and develop a
reputation as a leader in the screenprinting industry.
2
The second use of the IRB proceeds is the acquisition of the 25,000 sq.ft. building known as
1400 Crispin Drive in Elgin. The purchase of this building is necessitated by the six-color,
large format, screen press just described and the increased material storage, pre-press and
finishing space demanded by this machine as well as our existing operations. The machine
itself measures 65 feet in length and 35 feet in width for a total of 2275 sq.ft.
This building will also allow us to combine our main, 10,000 sq.ft. facility and a smaller, 3,350
sq.ft. facility. This combination of buildings will lower our overhead costs and reduce pre-
press time and management time demands.
The third use of the IRB funds will be for machinery to facilitate increased capacity. The
machinery includes both a large format material cutter and a large format lamination
machine. The material cutter will allow Nelson to purchase material in larger stock sizes,
which will lower overall material costs. The lamination machine will reduce the need for
Nelson to rely on third party vendors. Both machines will allow Nelson to reduce costs and
production time while increasing profitability.
Is proposal a new facility?:
No, the facility is an existing, 25,000 sq.ft building in the Fox Bluff Corporate Center. The
building is approximately three years old and is unoccupied.
Is the proposal Industrial / Commercial / Retail?:
Nelson is both an Industrial and Commercial manufacturer.
What is the principle product of the company?:
Nelson's principle product is the screenprinting and fabrication of plastics, metal, paper and
glass.
What are the financing arrangements?:
Harris Trust and Savings Bank has committed itself to the financing of this project.
' Give approximate dates of construction:
The building will be acquired in September 1999 and Nelson will relocate in December 1999.
The new machinery will be acquired in early 2000.
3
Economics
A. Project Costs
Building Costs: $ 1,200,000
Financing I Rehab Costs: 180,000
Equipment Costs: • 1,347,500
Land: 352,500
Architectural: 5,000
) Legal:
75,000
Other: 40,000
Total $ 3,200,000
p
1
B. Financial Stability
1. Five years independently audited financial statements: Section 3
2. Most recent interim financial report: Section 4
3. Dun & Bradstreet Report: Section 5
4. Commitment letter for financing: Section 6
5. Letter of Credit Bank: Harris Trust and Savings Bank
Rod A. Murray, Vice President
500 East Devon Avenue
Elk Grove Village, IL 60007
(847) 640-3526 Office
(847) 593-0370 Fax
6. Estimated tax yield to City of Elgin:
Property Taxes: - $ 35,000.00
7. Estimated increased payroll:
a Estimated Payroll: = $ 800,000.00 to $850,000.00 depending on Sales
8. Estimated assessed value of additional and total real property:
Value of 1400 Crispin Drive: = $ 1,575,000.00
a 9. Number of years in business:
N. D. Nelson Fabricators, Inc. was founded in 1957. (42 years in business)
4
10. Is any litigation pending by or against company?:
I— Yes F No
11. Type of product:
Value Added Service
12. Description of product:
Screenprinting & fabrication of plastics, metal, paper and glass for the
Advertising and Gaming industries.
13. Market area served:
Nelson customer base is spread throughout the U.S., but focuses on the
Midwest.
•
C. Employment
1. Number of Current Employees:
a. Full Time:
17
b. Part Time: 0
► c. Managers: 5
d. Employees living in Elgin: 7
1
Of the ten employees who do not live in Elgin, 4 have plans of moving to Elgin.
Of the three principles of Nelson, one lives in Elgin and one has plans to move.
2. Number of new jobs created / retained:
a. Permanent Full Time:
5
b. Permanent Part Time: 1
c. Seasonal / Temporary: Out-sourced Locally in Elgin (Marketstaff, Inc.)
3. Type of new jobs created / retained:
a. Clerical: 1
b. Labor: 4
c. Supervisory: 1
d. Managerial: 0
5
•
r 4. Average Employee Salary (present):
1
From 8/1/1998 to 7/31/1999 the average employee salary was $ 31,363.63
► Annually or $ 15.08 Hourly.
i
) 5. Yearly Payroll (present):
1
) From 8/1/1998 to 7/31/1999 the yearly payroll was $ 690,000.00.
11
1 6. Employee Skills Required:
)
) The only skills required at Nelson are dedication, ambition & effort. Screenprinting
) is an art that can be learned by individuals possessing these qualities.
)
)
) D. Environmental
)
1
) 1. Plant
1400 Crispin Drive, Elgin
� a. Location: p
1 b. Land Size:
2.00 Acres
0 Square Feet: 87,154.55
9 c. Present Plant: 10,000 owned and 3,350 leased
D D New Plant: 25,000 expandable to 40,000
e d. Land Coverage: 28.7
0/0
e
e 2. Pollution
0
O a. Water/ Sewer effluent Domestic: 499 gallons per day
e Industrial: >_ 1 gallon per day
e e Unusual Wastes: None
0
18 b. Air / foreign or toxic substances: Minimal (EPA inspected)
18 c. Odors: Minimal
e d. Glare: None
e. Noise: Minimal
f. Pollution devises required: None
g. According to City Engineer, are there adequate number of Water and Sewer
1 Connection to the site?:
' F Yes* I— No
• *As per Joe Evers, City Engineer and Raul Johnston, Plans Examiner
11, 6
10
E. Community Services
1. Traffic
a. Number of Vehicles into Site per day: Trucks: 4 - 6
Cars: 20 - 25
Other: 2 - 4 Vans
b. Ability of Street to Carry Additional Land:
1. Access: Existing Building, Access planned and approved by City of Elgin
2. Safety: No substantial traffic movement to be caused
) 2. Utility Requirements
day
a. Water used per day: 600 gallonsper
)
9fully sprinklered.
Yes, Buildin
� Fire Protection Adequate?:
Additional water or sewer requirements: Not Needed
b. Type of Sewage: Sanitary
All rules and guidelines of the Fox River Water
Reclamation District will be strictly followed.
)t
c. Electrical
1. Projected annual electrical usage: 310,000 KWH annually
2. Projected annual gas usage: 26,500 therms annually
d. Schools
1. Will your project significantly increase school enrollment?
I— YesFNo
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Civic Awareness
A. Provide evidence of past civic activity:
Donations & contributions have been made to the following:
Starlight Foundation
Open Door Rehabilitation Center
Schaumburg Police Department
Rotary Club of Schaumburg
The Breakfast Club Foundation
Schaumburg Boy Scouts & Girl Scouts
The New Apostolic Church
B. How will your company support local civic activities:
While Nelson has given to many charities in the past, it is the feeling of the principles of
Nelson that more can be done. It is the feeling of Nelson that the Village of Schaumburg
has no interest in the small to mid size business community. This belief and the fact that
no principle lives in Schaumburg has held back our involvement in the community.
It is the goal of Nelson Fabricators to help and support any and all worthwhile charities,
but Nelson would like to involve itself more with the local community. Whether it be
supporting a local baseball team or participating in the Chamber of Commerce of Elgin,
Nelson would like to be an active part of the Elgin community.
In the near future, Nelson will have over ten employees living in Elgin. It is not just our
obligation, but our responsibility to become an active member in the Elgin community.
D
D
e
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