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12-18-2007 Council Economic Development Committee
AGENDA City of Iowa City City Council Economic Development Committee Tuesday, December 18, 2007 8:30 a.m. Lobby Conference Room Iowa City City Hall 1. Call to Order 2. Consider approval of the minutes of the November 13, 2007 Economic Development Committee Meeting 3. Discussion of CDBG Economic Development Funds Applications a. Wedge Pizzeria b. Home Ec. Workshop 4. Discussion of requests for funding a. University of Iowa Small Business Development Center b. Entrepreneurial Development Center 5. Downtown Market Niche Analysis - discuss next action steps 6. Staff time a. TIF project update memos 7. Committee time 8. Adjournment MINUTES PRELIMINARY CITY COUNCIL ECONOMIC DEVELOPMENT COMMITTEE NOVEMBER 13, 2007 CITY HALL, LOBBY CONFERENCE ROOM, 1:30 P.M. Members Present: Regenia Bailey, Connie Champion, Bob Elliott Staff Present: Wendy Ford, Jeff Davidson Others Present: Nancy Quelhorst, Craig Gustaveson, Irvin Pfab, Greg Hennigan, Gigi Wood, and by phone, Mary Bosch, Eleanor Matthews, and Melissa Mailloux CALL MEETING TO ORDER Chairperson Regenia Bailey called the meeting to order at 1:30 P.M. APPROVAL OF MINUTES OF OCTOBER 9 AND OCTOBER 25, 2007 Elliott moved and Champion seconded the minutes of both the October 9 and October 25, 2007, meetings be approved as presented. Motion carried 3-0. DOWNTOWN MARKET NICHE ANALYSIS DRAFT REPORT (Marketek via conference call Mary Bosch and Eleanor Matthews of Marketek joined the Committee via phone conference. Mary stated that she would first like to cover some highlights, and then take questions from those present. Marketek's charge was determining how downtown Iowa City could improve its economic health, and what the potential opportunities are within a variety of sectors, but mainly focusing on retail, residential, office, and lodging. They also took a look at how Iowa City could promote the downtown, and ways to show the creative class all that Iowa City has going for it. Bosch noted that one thing that stands out about Iowa City's downtown is that it is lively 24 hours a day, 7 days a week. She also noted that Iowa City is one of the few cities that still has a functional pedestrian mall, and that the city looks healthy due to low vacancies in retail. The challenges, then, for Marketek are to explain how they can help Iowa City optimize this mix, and sustain the growth that has been occurring in Iowa City. Bosch noted too, that the role of downtown has changed over the past ten to fifteen years, and that people need to understand that they cannot go back to the way things were previously. In Chapter one, Bosch briefly touched on the customer base of downtown Iowa City, noting the high student population. She talked about the types of businesses that bring in "convenience" purchases, such as hardware and grocery. Bosch continued her presentation, stating that they also were able to get feedback from community members about their reflections on downtown Iowa City, what they wanted, what they would support in terms of retails, goods and services, and entertainment. They received over one thousand responses to their survey. She stated that they also conducted some focus groups, and that the town hall meeting was well received. Bosch noted that the Iowa City residents are very engaged in their community. Bosch next summarized the process, stating that they look first at current situation — a snapshot based on existing retail sales compared to potential retail sales from the residential population of how much money is being spent by folks locally, what's being spent elsewhere and what the Council Economic Development Committee November 13, 2007 Page 2 gap is. Some examples of gaps in retail were home furnishing stores, and food and beverage stores. Bosch further explained the methodology that Marketek used in gaining the information for this report. She stated that they looked at potential demand from visitors, in addition to residents. Bosch then stated that on page 99 is a projection of the downtown retail demand over the next ten-year period, by key retail categories. She stated this evaluates demand from residents and visitors, and projected demand Iowa City could capture. She briefly went through some of the square footages that are a part of this, and noted that this includes the new mixed use projects coming online. The discussion next turned to housing with Eleanor Matthews presenting to the Committee. She stated that one thing that stood out the limited non -student housing, both rental and for -sale units. Matthews added that one comment they heard a lot was, `We need more housing, particularly non -student housing downtown.' She stated that this was due to a population of young professionals living in Iowa City. Matthews also covered the Iowa City rentals in the area, and stated that it is a healthy market, and that there is more room for higher end, non - student housing. In the 'for sale' market, Matthews stated that they did not have much to evaluate, other than Plaza Towers and some projects in Coralville. She further explained how Marketek looked at a 20-mile radius from the center of Iowa City when gathering their information. She spoke about the upcoming Hieronymus Square project and the projected cost of housing in the downtown area. Matthews stated that from their market research and analysis, they feel that the opening downtown price points for condos should be from $150,000 to $230,000, which, she stated, is lower than Plaza Towers. She noted that Plaza Towers sold units for much higher, but that many of these sold to investors. Matthews also noted that the Iowa City Realtors were extremely helpful in providing information for their report. . Bosch next covered office space. She noted that the Technology Corridor is projected to increase by 3,500 jobs annually, which will result in demand for more office space. One of the comments the team heard during their research was a need for larger space, and how hard it is to find in the downtown area. Smaller office spaces that are for sale are also scarce. Matthews noted that they spoke with the Iowa City Area Development Group during their research, as well, and that this provided them with good information. Bosch then discussed lodging, noting that things are very positive in this area — occupancies are up, rates are up, etc. She noted that the information they gleaned was primarily anecdotal and that they spoke to business owners and hotel/motel operators to get most of their information. Of particular note, was that meeting and exhibit space is limited in Iowa City. The presentation then turned back to Bosch, who spoke about towns like Austin, Texas, that is attempting to attract and retain the creative class; and also towns like Portland, Oregon and Memphis, Tennessee, who are both in various stages of their recruitment toward the same. Bosch noted that the move around the country is to attract and retain this "creative class" of workers who are often occupied in creative types of positions. She noted that arts, culture, and entertainment are important to this demographic, as well. Bosch noted that in Austin, Texas, one of the main focuses has been arts and culture, and definitely their downtown. She stated that Austin is the "poster child" for economic development of their downtown. In Portland, Bosch stated that they have a full-time employee that focuses on the whole economic development issue and keeping that in focus. Bosch next talked about Council Economic Development Committee November 13, 2007 Page 3 communities promoting themselves, noting that Memphis had a large event where they brought in people from other states to help them think outside of the box on how they could bring people to their town. She then spoke about Iowa City's strengths and how marketing these can get the message out to people. For implementation recommendations, Bosch noted that they are feeling very positive about the opportunities that Iowa City has, about the future for strengthening the downtown economic base, business mix, the addition of housing, and some of the other issues — office and lodging. After a lot of thought on what would it take for Iowa City to move forward to capitalize on this success, Bosch noted that the last chapter of their report outlines a plan. One of the first things is organization. There needs to be a cohesive, focused, and well supported management team and staff to begin to work on the business mix for downtown Iowa City, and all of the issues that go along with that. She noted that Iowa City is definitely under -promoted, and that they need to get "better known" in order to bring in the businesses that are desired. Bosch reiterated that a partnership needs to be formed of organizations and stakeholders, both public and private, with strong involvement that will focus on development. She noted that Iowa City's downtown needs to run more as a business would, with full time management involved. Marketek has outlined a plan for the City, that includes everything from business retention to business recruitment to business expansion, property development, and finding creative ways to influence a business mix. Bosch ended the presentation by stating that they need to hear from those in attendance now, to which Bailey asked if anyone had any questions or comments for Bosch or Matthews. Elliott brought up the topic of young professionals and attracting them to the area. He asked if she were referring to young professionals that are single, and not married or partnered, as safety and schools were not mentioned in Marketek's report. Bosch noted that typically "young professionals" means early 20's to early 30's, and not married. Quelhorst asked Bosch to speak more to the business mix, and asked if this refers to a mix of things like toy stores and apparel, or families with young children type of services. Bosch stated that their findings were based on what they heard from the community, wanting more "every day" type stores. The mix is to cluster businesses together that would draw in those residents in the immediate area. Champion then stated that she was somewhat alarmed by the list of potential businesses included in the report, as they are chain stores, and not specialty type stores, which Iowa City is known for. Bosch noted that this is not a comprehensive list, but simply the results of a query she made on national chains that are considering expansions or new locations in areas such as Iowa City's downtown. Davidson then asked for a clarification on the clustering concept, stating that he was somewhat confused by this. He asked if this issue is really that critical, as Iowa City tends to have "clusters" in the downtown area. Bailey noted that she has a question along the same line. She asked if clustering were more successful in a small downtown. Bosch noted that the current clusters need to be cross - promoted. She noted that on the City Plaza, for example, they need more retail. Otherwise, you are left with mainly single -destination businesses. Gustaveson illustrated how the concept works by telling about how his business improved once they left the City Plaza with no other men's store, and moved to Clinton Street right next to another men's store. Champion noted that she totally agrees with this. She spoke about the women's stores downtown and how they have helped each other survive. Elliott next brought up how expensive downtown living typically is. He asked for more information on this. Bosch noted that cities have been pushing urban renewal with the basis of Council Economic Development Committee November 13, 2007 Page 4 making sure the housing in downtown areas meets all levels of income, and not just high end. Mailloux noted that they looked in the immediate downtown area. Bailey noted that it would be helpful to know the boundaries they used, as the City is also expecting a housing study soon. Mailloux stated that a footnote in this section will further explain this data. Elliott then asked about the City Plaza, asking if they have any suggestions on how to keep it viable without adding more restaurants and bars. Bosch stated that this can be part of the prime retail core, and that they need to have more active retailers. She noted that they looked specifically at certain areas of the City Plaza, and it is noted that they do not have any active retailers in these areas. Some aesthetic issues were noted, especially, that some areas seem too dark in the City Plaza. Bosch again noted business mix, the physical environment, and perceptions around safety — such as more active uses, more residential, brighter environment — can contribute to a better downtown. Bailey stated that the business mix issue is definitely a complex one. She asked how other cities have approached this issue. Bosch stated that the recommended partnership would help keep the "vision" for the City — what does it take to be successful, what is the expectation or goal that's trying to be reached — in order to make changes. Gustaveson then talked to Bosch about the retail issue. He talked of larger stores, national chains, and how they will never come to Iowa City due to so many regulations, such as parking, square footage, etc. Bosch stated that she feels Iowa City could entice these national chains to the area. The discussion turned to how Iowa City does not really have stores that cater to students, and that there are 30,000 students in the downtown area — stores such as Gap or Old Navy. Gustaveson noted about housing, that a builder he knows has stated that to keep Chicago students from coming in and buying up the condos, the price has to stay high. He asked if Marketek's research indicates who would be buying these — young professionals or Chicago parents for their U of I students to live in. Matthews noted that the local market is what drives this as far as price, and what people are willing to pay. Quelhorst then spoke to the methodology being presented in this report, asking if they could cull out small parts and work on those. As an example, it was stated how many of these suggestions are dependent on each other — which are stand-alone type recommendations, and could they be done over a ten-year period. Bosch noted that the most important piece is professional management, and a group of people that are focused on nothing but enhancing the business base. Quelhorst brought the conversation back to who the members of this group should be. The conference call ended so the group could continue with the meeting. Bailey then spoke to what needs to be in the public presentation for this report. Gustaveson noted that three years ago they stated that a full-time person was needed to manage —just as is being suggested here. It was noted that many business owners downtown do not want to see any changes, and that for this to occur, there is going to need to be the right group leading this. Bailey noted that any other suggestions should go to Ford to further expedite this report. Ford noted that they need to have another meeting in about a week. Monday, November 1 gth at 8:00 A.M. was suggested. Davidson then spoke briefly about the Comprehensive Plan, as well as the District Plans for each area, such as the downtown. It was noted that the Plan, as well as this study, help to show what the needs are for both retail and residential in the downtown area, in an overall view. Council Economic Development Committee November 13, 2007 Page 5 STAFF TIME No report. COMMITTEE TIME No report. ADJOURNMENT Meeting adjourned at approximately 3:00 P.M. CO) T x x x LO N 0 x x X T o T X X c x x x T M T x X X rn N X X X CD X X X m as n Em X X X O c� M X X wO w N x x x O w M U O CD N p� Q 04 x x x EZ w x X X N X w •O T X X C M O x X x C0j M � N X x X N E N x x x E O U NY c E CL N x X X o N Oti N X X X U p T E cli c M co O co O w O w W xo 0 0 a`) _� w� ~ U E� O O O > > rn Uza w O o c O •Q Z w O ca O O t oCmm UU INITIAL REVIEW OF THE WEDGE PIZZERIA, INC. WORKING CAPITAL Business Proposed: Steve Harding, owner of The Wedge Pizzeria, Inc. is requesting funds to expand his operations by opening a second location in the pedestrian mall in downtown Iowa City. The Wedge at 517 S. Riverside, founded in 1999, offers pizza by the slice and pizza delivery service, however has no seating capacity. The new downtown location will have seating and anticipates that 80-90% of the business will be pizza by the slice. The 517 S. Riverside will continue to provide pizza by the slice, but will provide all delivery service for the two locations. The owner requests $60,000 for working capital, construction and equipment expenses Budget & Private Financial Contribution The applicant has secured private loans with First American Bank for up to $150,000 and will have a 50% SBA guaranty on this loan. The owner will contribute $5,000, towards the expansion. First American Bank has placed liens on all equity available from the owner's private residence and rental property; however assistance is necessary to cover the collateral shortfall. Owner estimates the total cost of the expansion is $215,000. This amount includes $125,000 to purchase prior leasehold improvements, $20,000 for additional build -out of the leased space, $30,000 in new equipment and $40,000 for permanent working capital. Comprehensive Plan/CITY STEPS Plan The project does not require public infrastructure and is located in a CB-10 zone (central business). CITY STEPS notes a high priority for the expansion and/or retention of business that pay at least the living wage. Quality of Jobs The existing location employs 27 employees (including 5 full time positions). The expansion will create new employment for approximately 31 persons, primarily all low - moderate income persons. Of the positions created, there will be 9 managers, four full- time and five part-time. Management will make between $10-12 per hour. The part- time positions will make between $8-10 per hour. No fringe benefits are paid. Economic Impact The proposed CDBG funds will provide a small business with access to low interest working capital. Due to the collateral shortfall and the bank's underwriting guidelines, CDBG assistance is requested. The downtown location is favorable for this type of expansion and the existing and proposed business do not sell alcohol. Environmental/Community Involvement The business has a history of supporting local non -profits through free pizza and gift certificates to various charity groups, non-profit organizations and local schools. Items to Address: 1. The projected annual sales for the pedestrian mall location are estimated at $600,000. How was this figure estimated? December 2007 December 18, 2007 Council Economic Development Committee The Wedge Pizzeria, Inc. Staff Recommendation: The Wedge Pizzeria was founded in 1999. The owner has made a significant investment into the company and has managed the existing business well. The business cost of goods over sales (margins) is stable and the business controls overhead expenses. Although sales have been stable to slightly lower over the past two years, the business has seen rising operating profit. The business has maintained little to no debt. The applicant has an excellent credit history and is current with all supplier and bank payments. Due to the collateral shortfall, the bank requests outside financing to mitigate the risk for the expansion. The loan through First American Bank has a 50% SBA guaranty. The business anticipates $600,000 in annual sales from the pedestrian mall location. The location is favorable and they will not sell alcoholic beverages. The anticipated revenue and cash flow generated will exceed debt service. Staff funding recommendation: $40,000 loan with a maximum term of seven years at 3% interest for working capital only to limit risk/exposure and not subject the project to additional federal regulations. Any funds used for construction would require that the applicant comply with federal labor provisions, including Davis Bacon prevailing wages. Using the CDBG funds for permanent working capital requires that all other financing, including owner investment, is used first. The line of credit from First American Bank could be moved into permanent financing to cover the cost of build -out and equipment. Job creation would require four full-time positions that are paid $10.00 per hour or more. The loan would be partially secured by a second mortgage on the owner's rental property and a UCC financing statement filed on both business locations. December 2007 Iowa Cliv CDBG Economic Development Funds Application for Business Financial Assistance Business Requesting Financial Assistance: Individua"teve Harding Home Address-4625 Sharon Center Rd Iowa City, IA 62240 Name of Applicant Business - The Wedge Pizzeria, Inc. Full Street Address of Business-517 S Riverside Dr. Iowa City, IA 52246 Phone Number & Email Address - 319-936-7532 shardingl23@yahoo.com DUNS Number (If awarded funds, applicant must obtain a DUNS number): Type of Business- Pizzeria Date Business Established- 6/4/1999 Bank of Business Account and Address (if applicable): First American Bank 640 Highway 1 West Iowa City IA 52246 NOTE: The City will not provide assistance in situations where it is determined that any repre- sentation, warranty or statement made in connection with this application is incorrect, false, misleading or erroneous in any material respect. If assistance has already been provided by the City prior to discovery of the incorrect, false or misleading representation, the City may initiate legal action to recover City funds. Revised 11/15/06 Section 1: Description of Business and Proposed Project 1.1. Describe the proposed "project" (for example, company relocation, building expansion, remodeling, new product line, number of new jobs, amount of investment in machinery and equipment) and the expected benefits it will receive from the financial assistance requested: Borrower is requesting funds to purchase $126,000 in prior leasehold improvements of the location that will house a new restaurant, The Wedge Downtown, Inc. in the Iowa City Ped Mall. The borrower is also requesting funds to initiate an additional $20,000 of build -out and $30,000 to purchase equipment for the new location. This new restaurant will employ 4 full time managers, 5 part time managers, and up to 22 service workers. Management will make between $10-$12/hr. Most employees are expected to be low to moderate income individuals. First American Bank and SBA are supportive of this venture if financial assistance from the City of Iowa City is awarded. 1.2. Provide a brief history of your company: Steve Harding founded The Wedge Pizzeria, Inc. in 1999. The Wedge is known for their specialty pizzas and was voted Iowa City's Best Pizza just 6 months after they opened their doors. The Wedge Pizzeria, Inc currently offers pizza by the slice and delivery service. They have no seating in their location on Riverside. The Wedge Downtown, Inc. will have seating, which should bring a large lunch crowd. Steve predicts that 80-90% of his business will be pizza by the slice. 1.3. Describe the organizational structure of the business: Steve Harding owns and manages The Wedge Pizzeria, Inc. A long time employee, Jaqlene Drulis will manage The Wedge, Downtown. 1.4. Management (Proprietor, partners, officers, directors, all holders of outstanding stock, 100% of ownership must be shown) Name & PositioNTitle Complete Address % Owned Steve Harding- Owner 4625 Sharon Center Rd Iowa City, IA 52240 100% Revised 11/15/06 Attach a brief description similar to a resume of the education, technical and business background for all the people listed under Management. See Attachment 1.5. Will the project involve a transfer of operations or jobs from any other Iowa City or Johnson County facility or replace operations or jobs currently being provided by another Iowa City or Johnson County company? If yes, please indicate the facility(s) and/or company(s) affected. Jaqlene Drulis, a manager at the Riverside location, will transfer to the downtown location. Revised 11/15/06 Section 2: Financial Contributions to the Proposed Project 2.1. Use of Proceeds USE OF Proceeds Activity Loan Requested (Enter gross dollar amount rounded to the nearest hundreds) Land acquisition $ New Construction/Expansion Repair $ 175,000 Acquisition and/or Repair of Machinery and Equipment $ Inventory Purchase $ Working Capital (including accounts payable) $ 40,000 Acquisition of Existing Business $ All Other (provide description) $ Total Loan Requested (All Sources): $ 2.2. Terms of Proposed Financing (Sources) Proposed Financing Amount Monthly Payment Type �'� Rate Term Financial Institution: First American (1) $ $110,000 $1,742 direct 8.5% See below Financial Institution: First American (2) $ 40,000 $279 LOC 8.5% See below Other: Owner contribution $ 5,000 Iowa City CDBG Economic Dev. Fund $ 60,000 $792 3.00% 7 years TOTAL: $ 216,000 (')For example: forgivable loan, direct loan, or grant. First American Bank loan # 1 will be a variable interest rate of Prime + 1% (Prime is 7.5% currently) The term will be 5 years with a 7 year amortization. First American Bank will have a 60% SBA guaranty on this loan. First American Bank loan # 2 will be a variable interest rate of Prime + 1%. This will be a revolving operating line of credit and will renew annually. Payment on this loan will be interest only, due monthly. First American Bank will have a 60% SBA guaranty on this loan. 2.3. Explain why assistance is needed from the City, and why it cannot be obtained elsewhere. If the applicant did not apply for a loan through a private financial institution, Revised 11/15/06 please explain why. If denied assistance through a financial institution, please attach the letter of denial. First American Bank is supportive of Steve and his business. Assistance from the City would help to cover the collateral shortfall in this loan. 2.4. Indicate the owner's contribution (cash, assets for the operation of the business, etc.) to this project. Steve will contribute $5,000 of his own cash towards this purchase. He will also give all business assets as collateral, as well as 2"d mortgages on 2 properties. 2.5. Identify all agencies or institutions involved in the project (financial, technical assistance, etc.) and what their involvement is: First American Bank, Small Business Administration 2.6. What type of security will the assisted business provide the City? If no security or less than the dollar amount requested is offered, an explanation must be provided. Corporate Guaranty UCC Financing Statement ✓ Irrevocable Letter of Credit Personal Guarantee Surety Bonds Mortgage on Real Estate (2) Escrow Account Other: Before execution of a CDBG agreement, if the collateral consists of machinery and equipment, inventory, or other, the applicant must provide an itemized list that contains serial and identification numbers for all articles that had an original value of greater than $5,000. Include a legal description of real estate offered as collateral. 1612 Broadway St 4625 Sharon Center Rd Legal descriptions attached 2.7 If the City did not provide financial assistance, could the project proceed? The bank is still in the underwriting process, but believes that city assistance will be necessary to proceed with this project. Revised 11/16/06 Section 3: Jobs to Be Created/Retained Special Note: The Community Development Block Grant (CDBG) program requires that at least 51 % of the jobs created or retained must be held by or made available to low - moderate income persons. The business acknowledges that if it fails to create and/or retain the jobs identified below by the end of the project period and maintain them for a period of time (usually 12 months from the date of the award; it may be required to reimburse City funds for the employment shortfall. 3.1 If an existing business, how many employees are currently employed at your Iowa City location? Please attach a copy of the company's quarterly Iowa "Employer's Contribution and Payroll Report" for the most recent quarter. The Wedge Downtown, Inc will be a new entity. The Wedge Pizzeria, Inc currently employs 27 employees, including 5 FTE, all low to moderate income individuals. 3.2 Complete the following chart identifying the number of jobs to be created and/or retained based on this specific project. Type of Job and Hourly Rate for Created and/or Retained Positions in First 12 Months of Project Award (please see attached Job Category Definitions) # of Jobs Created # of Jobs Retained Type of Job No. Hours Per Week Hourly Rate of Pay Fringe Benefits* 9 Officials & Managers 20-40 $10-12/hr Professional Technicians Sales Office & Clerical Craft Workers (Skilled) Operatives (semi -skilled) Laborers (unskilled) 22 Service Workers 20-40 $8-10/hr *If fringe benefits are provided, please attach a description of all employee benefits provided by and paid for (in full or in part) by the business. 3.3 What is the estimated annual payroll for the new employees resulting from this project? $250,000 Revised 11/15/06 3.4 If an existing business, will any of the current employees lose their jobs if the project does not proceed? If yes, how many? Explain why: Section 4: Economic & Environmental Impact 4.1. What other Johnson County companies could be considered to be your competitors? Pizza restaurants in downtown Iowa City. 4.2. Please describe the energy and resource efficiency programs, waste reduction, waste exchange, and recycling programs at your Iowa City operation. The Wedge currently recycles all cardboard, aluminum and plastic waste. Section 5: Community Involvement, Compliance with Law 5.1 In addition to your normal business activities, does your business contribute or have plans to contribute to the community through volunteer work, financial contributions, or through other means? Please describe. See attached 5.2 Has the business been cited or found to violate any federal or state statute or regulation within the last five years (including, but not limited to environmental regulations, payroll taxes, Occupational Safety and Health Administration laws, Fair Labor Standards, the National Labor Relations Act, the Americans with Disabilities Act)? If yes, please explain the circumstances of the violation(s). m 5.3 Has the company or any officer of your company been involved in bankruptcy or insolvency proceedings during the past 7 years from the date of this application? If so, provide the details. No 5.4 Are you or your business involved in any pending lawsuits? If yes, provide the case name of the lawsuit, docket number, and city and state where it is pending. Revised 11/16/06 IM Section 6: Summary of Required Attachments Check off each attachment submitted. If not submitted, explain why. [ I Business plan (if start-up business) [ Balance Sheet (3 year historical if an existing business. Start-ups must provide a pro - forma balance sheet) Profit and loss statements (3 year historical if an existing business, 3 year projection for start-ups) 12 month cash flow statement (if the business does not expect to turn profitable within the first 12 months, provide a cash flow statement extended to the year the business expects to turn profitable) L J Description of fringe benefits provided to employees, if applicable [ ] Brief description of the education, technical and business background for all the persons listed under Management (Question #1.4) [ Please provide the social security numbers for all the persons listed under Management (Question #1.4) [ If an existing company, copy of the company's quarterly Iowa "Employer's Contribution and Payroll Report" for the most recent quarter. [ Construction loans only: Cost estimates for construction and a statement of the source of any additional funds [ Include a list of any machinery or equipment or other non -real estate assets to be purchased with the financial assistance and the cost of each item as quoted by the seller. Include the seller's name and address. Upon review of a submitted application, the City reserves the right to request additional information in order to assist the City with its evaluation of an application. Revised 11/16/06 Please provide the social security numbers for all the persons listed under Management (Question #1.4) If an existing company, copy of the company's quarterly Iowa "Employer's Contribution and Payroll Report" for the most recent quarter. Construction loans only: Cost estimates for construction and a statement of the source of any additional funds Include a list of any machinery or equipment or other non -real estate assets to be purchased with the financial assistance and the cost of each item as quoted by the seller. Include the seller's name and address. Upon review of a submitted application, the City reserves the right to request additional information in order to assist the City with its evaluation of an application. Release of Information and Certification NOTE: Please read carefully before signing I hereby give permission to the City of Iowa City (the City) to research the company's history, make credit checks, contact the company's financial institution, and perform other related activities necessary for reasonable evaluation of this proposal. I understand that all information submitted to the City relating to this application is subject to the Open Records Law (1994 Iowa Code, Chapter 22) and that confidentiality may not be guaranteed. I hereby certify that all repre- sentations, warranties or statements made or furnished to the City in connection with this application are true and correct in all material respects. I understand that it is a criminal violation under Iowa law to engage in deception and knowingly make, or cause to be made, directly or indirectly, a false statement in writing for the purpose of procuring economic development assistance from a state agency or political subdivision. If applicant is a proprietor or general partner, sign below. 2 If applicant is a Corporation, sign below: Corporate ame and Seal Date By: Signature of President Attested by: Date: Signature of CorpotXe Secretary Revised 11/16/06 Section 1.4 Steve Harding graduated from high school in 1986 and completed one year of school at the University of Florida. He started working in the pizza industry in 1987, and has been involved in opening three pizzerias. His most recent project, the Wedge Pizzeria, opened on June 4, 1999, and has become both a local favorite and a profitable endeavor. Section 5.1 The Wedge donates pizza each year to groups like The Dance Marathon, Systems Unlimited, local schools including The City High Party After Prom, West High, Regina, and Grantwood Elementary, the Iowa City Homeless Shelter on N. Gilbert, University affiliated groups including the Univ. Parent's Care Collective Daycare, Univ. of Iowa Homecoming Council, Dept. of Nursing, School of Law, and the Gay Lesbian Bisexual Transgender Union, the Evert Conner Center for Independent Living, the American Diabetes Association, the Leukemia and Lymphoma Society, the Women's Resource and Action Center, the Rape Victim's Advocacy Program, the Iowa Midwives Association, Hills Elementary, the Just Us Girls Charity Golf Tournament, and many more. Our policy is to donate two pizzas or gift certificates to any charity group or local school who asks for help. (Page 7 of 7) STATE OF ) SS: COUNTY OF _ ) On this day of before me, the undersigned, a Notary Public in and for said county and state, personally appeared — to me personally known, who being by me duty swom, did say that they are the respectively, of said corporation executing the within and foregoing instrument that said instrument was signed on behalf of said corporation by authority of its Board of Directors; and that the said �— as such officers acknowledged the execution of said Instrument to be the voluntary act and deed of said corporation by It and by them voluntarily executed. Notary Public in and for said County and State 15111 151�of 1 o) 2 , ADWAY) STRENT IOWA CITY, IA 52240 The permanent tax Idendficalon number of the Property is: The following described real property located in dre County of Jolmson State of Iowa LOT ONE (1) IN BLOCK NINE (9) IN SUNNYSIDE ADDITION TO IOWA CITY, IOWA, ACCORDING TO THE RECORDED PLAT THEREOF. LPIA44OG 0 Harland Financial Solullom, Ina (M)04)(800) 837{i788 Papa 7 :-- (Page 3 of 17) (0) 'RESPA" means the Real Estate Settlement Procedures Act (12 U.S.C. Section 2601 et seq.) and its implementing regulation, Regulation X (24 C.F.R. Part 3500), as they might be amended from time to time, or any additional or successor legislation or regulation that governs the same subject matter. As used in this Security Instrument, "RESPA" refers to all requirements and restrictions that are imposed in regard to a "federally related mortgage loan" even if the Loan does not qualify as a "federally related mortgage loan" under RESPA. (P) "Successor in Interest of Borrower" means any party that has taken title to the Property, whether or not that party has assumed Borrower's obligations under the Note and/or this Security Instrument. TRANSFER OF RIGHTS IN THE PROPERTY This Security Instrument secures to Lender: (i) the repayment of the Loan, and all renewals, extensions and modifications of the Note; and (ii) the performance of Borrower's covenants and agreements under this Security Instrument and the Note. For this purpose, Borrower irrevocably mortgages, grants and conveys to Lender, with power of sale, the following described property located in the COUNTY of JOHNSON [Type of Recording Jurisdiction] [Name of Recording Jurisdiction] COMMENCING AT THE INTERSECTION OF THE CENTER LINE OF PUBLIC HIGHWAY #1 AND THE WEST LINE OF THE EAST 37.14 ACRES OF THE NORTHEAST FRACTIONAL QUARTER OF THE NORTHWEST FRACTIONAL QUARTER OF SECTION 2, TOWNSHIP 78 NORTH, RANGE 7 WEST OF THE 5TH P.M., ALSO DESCRIBED AS STATION 350+45.5 ON SAID PUBLIC HIGHWAY #1, THENCE EASTERLY ALONG THE CENTER LINE OF SAID HIGHWAY 625.02 FEET TO THE POINT OF BEGINNING; FROM SAID POINT OF BEGINNING; THENCE NORTH 905 FEET, THENCE EAST 554.31 FEET, THENCE SOUTH 1 DEGREE 41 MINUTES EAST 654.75 FEET TO THE CENTER LINE OF SAID HIGHWAY, THENCE SOUTHWESTERLY ALONG THE CENTER LINE OF SAID HIGHWAY 625.1 FEET TO THE PLACE OF BEGINNING. Parcel ID Number: which currently has the address of 4625 SHARON CENTER RD SW [Street] IOWA CITY [city], Iowa 52240 [Zip Code] ("Property Address"): TOGETHER WITH all the improvements now or hereafter erected on the property, and all easements, appurtenances, and fixtures now or hereafter a part of the property. All replacements and additions shall also be covered by this Security Instrument. All of the foregoing is referred to in this Security Instrument as the "Property." BORROWER COVENANTS that Borrower is lawfully seised of the estate hereby conveyed and has the right to grant and convey the Property and that the Property is unencumbered, except for encumbrances of record. Borrower warrants and will defend generally the title to the Property against all claims and demands, subject to any encumbrances of record. THIS SECURITY INSTRUMENT combines uniform covenants for national use and non -uniform covenants with limited variations by jurisdiction to constitute a uniform security instrument covering real property. InitiaW (n-B(IA) c0005j Page of 15 Form 3016 1101 3:04 PM Wedge Pizzeria, Inc. 11/27/07 Balance Sheet Accrual Basis As of October 31, 2007 Oct 31, 07 ASSETS Current Assets Checking/Savings First American Bank -7,970.14 First American Credit Card Acco 4,087.15 Savings Account 483.52 Total Checking/Savings -3,399.47 Accounts Receivable Accounts Receivable 1,197.72 Total Accounts Receivable 1,197.72 Other Current Assets Inventory Food 2,100.00 Inventory - Other -200.00 Total Inventory 1,900.00 WR - The Pit 5,000.00 Total Other Current Assets 6,900.00 Total Current Assets 4,698.25 Fixed Assets Fixed Asset Cost Equipment 62,703.88 Furniture 6,361.04 Leasehold Improvements 19,470.60 Vehicles 3,760.00 Total Fixed Asset Cost 92,295.52 Total Fixed Assets 92,295.52 Other Assets Accumulated Depreciation AID - Furniture & Fixtures -6,361.00 AID - Improvements -10,111.00 AID - Machinery & Equipment -59,590.00 AID - Vehicle -7,051.00 Total Accumulated Depreciation -83,113.00 Organizational Costs A/A - Organizational Costs -937.10 Organizational Costs - Other 937.10 Total Organizational Costs 0.00 Total Other Assets -83,113.00 TOTAL ASSETS 13,880.77 LIABILITIES & EQUITY Liabilities Current Liabilities Accounts Payable Accounts Payable 1,141.47 Total Accounts Payable 1,141.47 Other Current Liabilities Gift certificates -130.60 Payroll Liabilities 5,801.40 Sales Tax Payable 2,649.19 Total Other Current Liabilities 8,319.99 Total Current Liabilities 9,461.46 Total Liabilities 9,461.46 Page 1 3:04 PM Wedge Pizzeria, Inc. 11/27/07 Balance Sheet Accrual Basis As of October 31, 2007 Oct 31, 07 Equity Additional Paid in Capital 1,328.00 Capital Stock (Capital Stock) 14,000.00 Retained Earnings (Retained Earnings) 49,728.40 Steve Harding Equity Steve's Dividends -86,418.44 Steve Harding Equity - Other -9,524.51 Total Steve Harding Equity -95,942.95 Net Income 35,305.86 Total Equity 4,419.31 TOTAL LIABILITIES & EQUITY 13,880.77 Page 2 4:02 PM Wedge Pizzeria, Inc. 12/05/07 Balance Sheet Accrual Basis As of December 31, 2006 Dec 31, 06 ASSETS Current Assets Checking/Savings First American Bank 2,083.24 First American Credit Card Acco -1,101.35 Hills Bank 673,82 Total Checking/Savings 1,655.71 Accounts Receivable Accounts Receivable 760.39 Total Accounts Receivable 760.39 Other Current Assets Inventory Food 2,100.00 Inventory - Other -200.00 Total Inventory 1,900.00 NUR - The Pit 5,000.00 Undeposited Funds 835.30 Total Other Current Assets 7,735.30 Total Current Assets 10,151.40 Fixed Assets Fixed Asset Cost Equipment 61,534.63 Furniture 6,361.04 Leasehold Improvements 19,470.60 Vehicles 3,760.00 Total Fixed Asset Cost 91,126.27 Total Fixed Assets 91,126.27 Other Assets Accumulated Depreciation AID - Furniture & Fixtures -6,361.00 AID - Improvements -10,111.00 AID - Machinery & Equipment -59,590.00 AID - Vehicle -7,051.00 Total Accumulated Depreciation -83,113.00 Organizational Costs AIA - Organizational Costs -937.10 Organizational Costs - Other 937.10 Total Organizational Costs 0.00 Total Other Assets -83,113.00 TOTAL ASSETS 18,164.67 LIABILITIES & EQUITY Liabilities Current Liabilities Accounts Payable Accounts Payable -180.30 Total Accounts Payable -180.30 Other Current Liabilities Payroll Liabilities 4,509.85 Sales Tax Payable 1,748.01 Total Other Current Liabilities 6,257.86 Total Current Liabilities 6,077.56 Total Liabilities 6,077.56 Page 1 4:02 PM Wedge Pizzeria, Inc. 12105/07 Balance Sheet Accrual Basis As of December 31, 2006 Dec 31, 06 Equity Additional Paid in Capital 1,328.00 Capital Stock (Capital Stock) 14,000.00 Retained Earnings (Retained Earnings)-4,461.03 Steve Harding Equity Steve's Dividends-39,855.29 Total Steve Harding Equity-39,855.29 Net Income 41,075.43 Total Equity 12,087.11 TOTAL LIABILITIES & EQUITY 18,164.67 Page 2 4:02 PM Wedge Pizzeria, Inc. 12/05/07 Balance Sheet Accrual Basis As of December 31, 2005 Dec 31, 06 ASSETS Current Assets Checking/Savings Credit Card Income 361.18 Hills Bank -6,412.79 Total Checking/Savings -6,051.61 Accounts Receivable Accounts Receivable 449.47 Total Accounts Receivable 449.47 Other Current Assets Employee Advances (Employee Advances) 2,378.71 Inventory Food 2,100.00 Total Inventory 2,100.00 N/R - The Pit 5,000.00 Total Other Current Assets 9,478.71 Total Current Assets 3,876.57 Fixed Assets Fixed Asset Cost Equipment 59,826.98 Furniture 6,361.04 Leasehold Improvements 19,470.60 Vehicles 7,260.00 Total Fixed Asset Cost 92,918.62 Total Fixed Assets 92,918.62 Other Assets Accumulated Depreciation AID - Furniture & Fixtures -5,972.00 AID - Improvements -9,203.00 AID - Machinery & Equipment -54,642.00 AID - Vehicle -6,785.00 Total Accumulated Depreciation -76,602.00 Organizational Costs A/A - Organizational Costs -937.10 Organizational Costs - Other 937.10 Total Organizational Costs 0.00 Total Other Assets -76,602.00 TOTAL ASSETS 20,193.19 LIABILITIES & EQUITY Liabilities Current Liabilities Accounts Payable Accounts Payable 3,197.79 Total Accounts Payable 3,197.79 Other Current Liabilities Payroll Liabilities 4,490.43 Sales Tax Payable 1,638.00 Total Other Current Liabilities 6,128.43 Total Current Liabilities 9,326.22 Total Liabilities 9,326.22 Equity Additional Paid in Capital 1,328.00 Page 1 4:02 PM Wedge Pizzeria, Inc. 12105/07 Balance Sheet Accrual Basis As of December 31, 2005 Capital Stock (Capital Stock) Retained Earnings (Retained Earnings) Steve Harding Equity Steve's Dividends Total Steve Harding Equity Net Income Total Equity TOTAL LIABILITIES & EQUITY Dec 31, 06 14,000.00 25,997.26 -62,500.00 -62,500.00 32,041.71 10,866.97 20,193.19 Page 2 4:01 PM Wedge Pizzeria, Inc. 12/06/07 Balance Sheet Accrual Basis As of December 31, 2004 Dec 31, 04 ASSETS Current Assets Checking/Savings Hills Bank 16,855.11 Total Checking/Savings 16,855.11 Accounts Receivable Accounts Receivable 1,434.21 Total Accounts Receivable 1,434.21 Other Current Assets Inventory Food 2,476.00 Total inventory 2,476.00 Total Other Current Assets 2,476.00 Total Current Assets 20,765.32 Fixed Assets Fixed Asset Cost Equipment 57,004.95 Furniture 6,361.04 Leasehold Improvements 19,470.60 Vehicles 7,260.00 Total Fixed Asset Cost 90,096.59 Total Fixed Assets 90,096.59 Other Assets Accumulated Depreciation AID - Furniture & Fixtures -5,199.00 A/D - Improvements -8,267.00 A/D - Machinery & Equipment -45,793.00 A/D - Vehicle -6,362.00 Total Accumulated Depreciation -65,621.00 Organizational Costs A/A - Organizational Costs -937.10 Organizational Costs - Other 937.10 Total Organizational Costs 0.00 Total Other Assets -65,621.00 TOTAL ASSETS 45,240.91 LIABILITIES & EQUITY Liabilities Current Liabilities Accounts Payable Accounts Payable 557.80 Total Accounts Payable 557.80 Other Current Liabilities Payroll Liabilities 1,481.13 Sales Tax Payable 1,876.72 Total Other Current Liabilities 3,357.85 Total Current Liabilities 3,915.65 Total Liabilities 3,915.65 Equity Additional Paid in Capital 1,328.00 Capital Stock (Capital Stock) 14,000.00 Retained Earnings (Retained Earnings) -5,772.07 Net Income 31,769.33 Page 1 4:01 PM Wedge Pizzeria, Inc. 12/06/07 Balance Sheet Accrual Basis As of December 31, 2004 Total Equity Dec 31, 04 41,325.26 TOTAL LIABILITIES & EQUITY 46,240.81 Page 2 3:01 PM Wedge Pizzeria, Inc. 11/27/07 Profit & Loss Accrual Basis January through October 2007 Jan - Oct 07 Ordinary Income/Expense Income Arts Fest Income 1,659.00 Hobo Income 2,624.68 Sales (Sales) Catering Income 4,090.60 Food 381,750.28 Sales (Sales) - Other -63.92 Total Sales (Sales) 385,776.96 Total Income 390,060.64 Cost of Goods Sold Food 132,188.04 Total COGS 132,188.04 Gross Profit 257,872.60 Expense Advertising 14,879.17 Bad Checks 187.32 Bank Service Charges (Bank Service Charges) 797.77 Catering Expenses 4,317.98 Credit Card Fees 8,385.98 Fees (Fees) 1,335.00 Garden 451.54 Insurance (insurance) Work Comp (Workman's Compensation) 79.16 Insurance (Insurance) - Other 5,551.78 Total Insurance (Insurance) 5,630.94 Interest Expense (interest Expense) Finance Charge (Finance Charge) 13.39 Total Interest Expense (interest Expense) 13.39 Mileage Reimbursement 5,791.52 Office Supplies (Office Supplies) 791.97 Officer Wages 19,800.00 Over/Short -7,797.82 Payroll Expenses 125,931.13 Payroll Taxes 13,596.87 Postage and Delivery (Postage and Delivery) 139.48 Professional Fees (Professional Fees) Accounting (Accounting Fees) 2,295.82 Total Professional Fees (Professional Fees) 2,295.82 Reconciliation Discrepancies 293.29 Rent (Rent) 17,217.50 Repairs (Repairs and Maintenance) 621.73 Signage 2,085.99 Small Equipment 2,224.60 Soda Reimbursement 664.50 Supplies 1,780.98 Taxes (Taxes) Federal (Federal Taxes) -404.00 State (State Taxes) 34.26 Total Taxes (Taxes) -369.74 Telephone (Telephone) 3,961.00 Travel & Ent (Travel and Entertainment) Entertainment (Entertainment) 547.13 Meals (Meals) 109.39 Travel & Ent (Travel and Entertainment) - Other 1,755.08 Total Travel & Ent (Travel and Entertainment) 2,411.60 Uniform 1,103.73 Page 1 3:01 PM 11/27/07 Accrual Basis Wedge Pizzeria, Inc. Profit & Loss January through October 2007 Jan - Oct 07 Total Expense 228,543.24 Net Ordinary Income 29,329.36 Other Income/Expense Other Income Other Income (Other Income) 6,303.50 Total Other Income 6,303.50 Other Expense Other Expenses (Other Expenses) 370.00 suspense -48.00 Total Other Expense 327.00 Net Other Income 5,976.50 Net Income 36,306.86 Page 2 3:01 PM Wedge Pizzeria, Inc. 11/27/07 Profit & Loss Accrual Basis January through December 2006 Jan - Dec 06 Ordinary Income/Expense Income Hobo Income 5,368.80 Sales (Sales) Food 438,020.57 Total Sales (Sales) 438,020.57 Total Income 443,389.37 Cost of Goods Sold Discounts 21.43 Food 133,572.66 Total COGS 133,594.09 Gross Profit 309,795.28 Expense Advertising 19,962.82 Automobile Expense (Automobile Expense) 10,424.04 Bad Checks 458.84 Bank Service Charges (Bank Service Charges) 605.66 Contributions (Contributions) 10.00 Credit Card Fees 5,994.26 Depreciation Expense (Depreciation Expense) 6,511.00 Equipment Rental (Equipment Rental) 287.25 Fees (Fees) 1,285.00 garbage 275.00 Garden 1,462.49 Insurance (insurance) 10,068.30 Interest Expense (Interest Expense) Finance Charge (Finance Charge) 31.05 Interest Expense (interest Expense) - Other 57.52 Total Interest Expense (Interest Expense) 88.57 lawn care 110.00 Licenses and Permits (Licenses) 38.72 Mileage Reimbursement 13,171.82 Miscellaneous (Miscellaneous) 1,362.89 Office Supplies (Office Supplies) 881.27 Officer Wages 22,050.00 Over/Short -8,181.59 Payroll Expenses 140,156.34 Payroll Taxes 15,204.40 Postage and Delivery (Postage and Delivery) 181.16 Professional Fees (Professional Fees) Accounting (Accounting Fees) 2,401.14 Total Professional Fees (Professional Fees) 2,401.14 Rent (Rent) 21,300.00 Repairs (Repairs and Maintenance) Equipment Repairs (Equipment Repairs) 411.08 Repairs (Repairs and Maintenance) - Other 1,269.01 Total Repairs (Repairs and Maintenance) 1,680.09 Salaries and wages -564.81 Small Equipment 877.14 Soda Reimbursement 1,070.99 Supplies 1,236.58 Telephone (Telephone) 5,144.28 Trash/Snow Removal 203.00 Travel & Ent (Travel and Entertainment) Entertainment (Entertainment) 163.50 Travel & Ent (Travel and Entertainment) - Other 350.02 Total Travel & Ent (Travel and Entertainment) 513.52 Total Expense 276,268.17 Page 1 3:01 PM 11/27/07 Accrual Basis Wedge Pizzeria, Inc. Profit & Loss January through December 2006 Net Ordinary Income Other Income/Expense Other Income Gain/Loss on Sale of Fixed Asse Other Income (Other Income) Total Other Income Net Other Income Net Income Jan - Dec 06 33,527.11 599.16 6,949.16 7,548.32 7,548.32 41,076.43 Page 2 3:02 PM Wedge Pizzeria, Inc. 11/27/07 , Profit & Loss hccruai Basis January through December 2005 Ordinary Income/Expense Income Hobo Income Sales (Sales) Food Sales (Sales) - Other Total Sales (Sales) Total Income Cost of Goods Sold Cost of sales Food Total COGS Gross Profit Expense Advertising Automobile Expense (Automobile Expense) Bad Checks Bank Service Charges (Bank Service Charges) Contributions (Contributions) Depreciation Expense (Depreciation Expense) Equipment Rental (Equipment Rental) Fees (Fees) Garden Insurance (insurance) Interest Expense (Interest Expense) Finance Charge (Finance Charge) Total Interest Expense (Interest Expense) Mileage Reimbursement Miscellaneous (Miscellaneous) Office Supplies (Office Supplies) Officer Wages Over/Short Payroll Expenses Payroll Taxes Postage and Delivery (Postage and Delivery) Professional Fees (Professional Fees) Accounting (Accounting Fees) Legal Fees (Legal Fees) Total Professional Fees (Professional Fees) Rent (Rent) Repairs (Repairs and Maintenance) Small Equipment Soda Reimbursement Supplies Telephone (Telephone) Travel & Ent (Travel and Entertainment) Entertainment (Entertainment) Travel & Ent (Travel and Entertainment) - Other Total Travel & Ent (Travel and Entertainment) Uniform Total Expense Jan - Dec 06 2,651.21 443,847.61 0.00 443,847.61 446,498.82 376.00 149,137.04 149,513.04 296,985.78 10,594.01 6,949.17 1,451.98 7,249.98 110.00 10,981.00 689.40 700.00 607.48 10,988.27 8.05 ,leer 8,586.21 194.16 84.46 16,996.13 -4,135.24 146,961.40 15,513.85 88.32 3,368.00 645.00 4,013.00 18,000.00 1,999.30 180.14 1,217.92 1,088.13 4,988.06 1,761.29 1,347.98 3,109.27 120.73 269,335.18 Net Ordinary Income 27,650.60 Other IncomelExpense Other Income Other Income (Other Income) 4,391.11 Total Other Income 4,391.11 Page 1 3:02 PM Wedge Pizzeria, Inc. 11/27/071 Profit & Loss 'Accrual Basis January through December 2005 Net Other Income Net Income Jan - Dec 05 4,391.11 32,041.71 Page 2 3:02 PM Wedge Pizzeria, Inc. 11/27/07 Profit & Loss Accrual Basis January through December 2004 Jan - Dec 04 Ordinary Income/Expense Income Sales (Sales) Food 474,528.49 Sales (Sales) - Other 70.55 Total Sales (Sales) 474,599.04 Total Income 474,599.04 Cost of Goods Sold Discounts 39.25 Food 143,755.96 Total COGS 143,795.21 Gross Profit 330,803.83 Expense Advertising 24,374.25 Amortization Expense (Amortization Expense) 80.10 Automobile Expense (Automobile Expense) 4,758.20 Bad Checks 2,335.02 Bad Debt 148.82 Bank Service Charges (Bank Service Charges) 5,439.65 Depreciation Expense (Depreciation Expense) 16,599.00 Dues and Subscriptions (Dues and Subscriptions) 419.19 Equipment Rental (Equipment Rental) 962.90 Fees (Fees) 200.00 Insurance (Insurance) 9,550.62 Interest Expense (Interest Expense) Finance Charge (Finance Charge) 6.58 Interest Expense (Interest Expense) - Other 140.42 Total Interest Expense (Interest Expense) 147.00 Mileage Reimbursement 8,696.89 Miscellaneous (Miscellaneous) 818.58 Office Supplies (Office Supplies) 620.62 Officer Wages 8,397.01 Over/Short -2,595.79 Payroll Expenses 165,492.33 Payroll Taxes 15,190.45 Postage and Delivery (Postage and Delivery) 257.58 Professional Fees (Professional Fees) Accounting (Accounting Fees) 3,713.00 Professional Fees (Professional Fees) - Other 160.00 Total Professional Fees (Professional Fees) 3,873.00 Rent (Rent) 18,000.00 Repairs (Repairs and Maintenance) Building Repairs (Building Repairs) 2,839.28 Equipment Repairs (Equipment Repairs) 165.49 Repairs (Repairs and Maintenance) - Other 6,566.66 Total Repairs (Repairs and Maintenance) 9,571.43 Soda Reimbursement 1,633.26 Supplies 1,861.43 Taxes(Taxes) Federal (Federal Taxes) 233.63 State (State Taxes) 1,046.00 Total Taxes (Taxes) 1,279.63 Telephone (Telephone) 3,453.34 Travel & Ent (Travel and Entertainment) Entertainment (Entertainment) 1,574.12 Total Travel & Ent (Travel and Entertainment) 1,574.12 Total Expense 303,138.63 Page 1 3:02 PM 11/27107 Accrual Basis Wedge Pizzeria, Inc. Profit & Loss January through December 2004 Net Ordinary Income Other Income/Expense Other Income Gain/Loss on Sale of Fixed Asse Other Income (Other Income) Total Other Income Net Other Income Net Income Jan - Dec 04 27,665.20 2,457.00 1,647.13 4,104.13 4,104.13 31,769.33 Page 2 7 FIRST AM E RICAN BANK CASH FLOW ANALYSIS: The Wedge Pizzeria, Inc. 10 months Traditional Cash Flow: Net Income Add: Depreciation/Amort. Interest Expense Rent Expense Less: Withdrawals Gain on Asset Sale Cash Flow Available for D/S Debt Service: 2004 2005 2006 10/31/2007 $31,770 $33,955 $45,202 $36,324 11,949 8,181 4,808 0 147 8 89 0 (30,199) (58,039) (39,855) (38,5 affil $13,667 ($15,895) $10,244 Interest' 1,350 1,350 1,35fi,,, IJ25 Total Debt Service 1,350 1,350 1,350. Cash Flow Available After D/S $12,317 ($17,245) $8,894 Debt Coverage Ratio 10.12 7.59 'Value includes full utilization of $15K RLOC at 9.50% (rate shocked 1.50%) -8- Commercial and Industrial Loan Application FIRST AMERICAN BANK PROJECTIONS: Monthly Annualized Monthly Sales 50,000 600,000 Cost of Food 15,000 30.0% 180,000 30.0% -4- Commercial and Industrial Loan Application INITIAL REVIEW OF HOME EC WORKSHOP LLC WORKING CAPITAL Business Proposed: Applicants, Alisa Weinstein and Codi Josephson, owners of Home Ec. Workshop are requesting funds for a new business startup. The business is a retail craft supply store, workshop space and kitchenette. Besides the retail portion of the business, the owners will provide classes, party packages, a workshop for rental use with sewing machines, printing materials, utility sink, cutting table, book making equipment, etc. and will sell their own line of artistic products called Home Ec. Handmade. The business also proposes a kitchenette for drinks, tea and baked goods. The owner requests $35,000 for working capital and equipment. The business qualifies as a micro -enterprise under the CDBG program. Both owners qualify as low -to -moderate income persons. A micro -enterprise is a commercial enterprise that has five or fewer employees, one or more whom owns the enterprise. Budget & Private Financial Contribution The applicant has secured a $15,000 private loan with Hills Bank through the State of Iowa Treasurer LIFT Program and a $20,000 loan from a private investor. The collateral for the Hills loan consists of a business security agreement on all business assets and the unlimited guaranty(ies) of the owners. The owners estimate that start up expenses will total $90,000. This includes build out, machinery and equipment, inventory and working capital. The owners will contribute $20,000 to the project. Comprehensive Plan/CITY STEPS Plan The project does not require public infrastructure and is located in a CB-2 zone (central business service). CITY STEPS notes a high priority for micro -enterprise assistance. Quality of Jobs The two owners will operate the business. No additional employees will be hired. Job creation/retention is not required under micro -enterprise assistance. Economic Impact The proposed CDBG funds will provide a small, women owned business with access to low interest working capital. The owners will pay themselves $9.00 per hour with the anticipation of increasing their wage as sales and operating profits rise. The business will be located in the northside marketplace and offers creative services and products in the Old Capitol Cultural district. Hills bank referred the owners to the CDBG fund in order to access additional working capital. Environmental/Community Involvement The business anticipates supporting public radio and plans to participate in the gallery walk. They will also donate items from the business for targeted community fund-raising events such as for senior citizens, disadvantaged youth, IC Hospice and Mercy Hospital. Items to Address: 1. Collateral. If awarded funding, a UCC financing statement will placed on all business assets, however the City will be in second position and little to no collateral will be available. Are any other forms of collateral available? Please discuss if owner will accept a lien on her private residence. December 2007 December 18, 2007 Council Economic Development Committee Home Ec. Workshop LLC Home Ec. Workshop is a new business start-up. The owners are willing to make a significant investment into the company and combined they have over 20 years experience in arts education and making crafts. Both owners have an excellent credit history. The owners qualify as low -to -moderate income and the business qualifies as a micro -enterprise. One of the owners previously had a home -based business. The owners have been working with Paul Heath, Small Business Development Center, and have solicited input and advice from professional advisers. Staff recommendation: $15,000 for working capital to limit risk/exposure with a maximum term of 7 years at 2% interest. A start up business is inherently more risky than a business that has been in operation. Staff recommends as a condition of the award the owners receive additional business assistance regarding items such as financial management, merchandising and marketing. The training required would be based on an evaluation by the Small Business Development Center. A UCC statement will be filed for all business assets. December 2007 Iowa City CDBG Economic Development Funds Application for Business Financial Assistance Business Requesting Financial Assistance: Individual: Alisa Weinstein & Codi Josephson Home Address: 232 S. Summit St. #C2, Iowa City, IA 52240 & 1912 D Street, Iowa City, IA 52245 Name of Applicant Business: Home Ec. Workshop LLC Full Street Address of Business: 207 North Linn Street, Iowa City, 52245 Phone Number & Email Address: homeecworkshop@yahoo.com DUNS Number (If awarded funds, applicant must obtain a DUNS number): Type of Business :Craft supply boutique and Workshop Date Business Established: 11/20/07 Bank of Business Account and Address (if applicable): Hills Bank,1401 South Gilbert Street, Iowa City, IA 52240 NOTE: The City will not provide assistance in situations where it is determined that any repre- sentation, warranty or statement made in connection with this application is incorrect, false, misleading or erroneous in any material respect. If assistance has already been provided by the City prior to discovery of the incorrect, false or misleading representation, the City may initiate legal action to recover City funds. Revised 11/15/06 Section 1: Description of Business and Proposed Project 1.1. Describe the proposed "project" (for example, company relocation, building expansion, remodeling, new product line, number of new jobs, amount of investment in machinery and equipment) and the expected benefits it will receive from the financial assistance requested: We are seeking start-up assistance for a retail craft supply store, workshop space and kitchenette where people can purchase select fabric, yam, threads, patterns and other fine craft supplies, work on creative projects using our tools and equipment, and relax and enjoy coffee, tea and fresh baked goods. 1.2. Provide a brief history of your company: This is a new business aimed at serving the needs of textile artists and crafty people in Iowa City and surrounding areas. The owners, Codi Josephson and Alisa Weinstein have over 20 years collective experience in Arts Education and making unique crafts. Codi Josephson previously had her own home -based business, Codirodeo, where she produced handmade gift items and sold them seasonally in Iowa City. Additionally, she has been an Arts Programming Specialist at United Action for Youth in Iowa City for seven years. She earned a B.S.S. from Cornell College and is currently earning her M.A. in Arts Education at the University of Iowa, where she also teaches undergraduate classes in addition to teaching part-time at Cornell College. Alisa Weinstein has a B.F.A. in Drama and M.A. in Educational Theatre from New York University. She taught drama at the Robert A. Lee Recreation Center, and planned and taught after -school workshops in drama and art at Hills Elementary School. Since 2000, Alisa has worked part-time as a costume stitcher on dance and opera productions. Alisa spent the last two years in Delhi, India, where she took M.A. courses in Indian Arts and Aesthetics at Jawaharlal Nehru University and worked as a scriptwriter for the Sesame Street India TV show, GO Galli Sim Sim. 1.3. Describe the organizational structure of the business: Home Ec. Workshop is an LLC. 1.4. Management (Proprietor, partners, officers, directors, all holders of outstanding stock, 100% of ownership must be shown) Name & Position/Title Complete Address Owned Alisa Weinstein 232 S. Summit Street, #C2, Iowa City, IA 52240 50 Codi Jose hson 1912 D Street, Iowa City, IA 52245 50 Revised 11/15/06 Attach a brief description similar to a resume of the education, technical and business background for all the people listed under Management. 1.5. Will the project involve a transfer of operations or jobs from any other Iowa City or Johnson County facility or replace operations or jobs currently being provided by another Iowa City or Johnson County company? If yes, please indicate the facility(s) and/or company(s) affected. No. Section 2: Financial Contributions to the Proposed Project 2.1. Use of Proceeds USE OF Proceeds Activity Loan Requested (Enter gross dollar amount rounded to the nearest hundreds) Land acquisition $ New Construction/Expansion Repair $ 4,325 Acquisition and/or Repair of Machinery and Equipment $17,685 Inventory Purchase $ 46,600 Working Capital (including accounts payable) $21,390 Acquisition of Existing Business $ All Other (provide. description) $ Total Loan Requested (All Sources): $T01000 2.2. Terms of Proposed Financing (Sources) Proposed Financing Amount Monthly Payment Typei'i Rate Term Financial Institution: Hills Bank $ 15,000 $ 216 Loan 5.5% 7 Owners: $ 20,000 Other. Private Lender: Michael Brockman $ 20,000 $ 212 Loan 5% 10 Iowa City CDBG Economic Dev. Fund $ 35,000 $ 447 Loan 20/9 7 TOTAL: $ g0,000 $ 875 Revised 11/15/06 (')For example: forgivable loan, direct loan, or grant. 2.3. Explain why assistance is needed from the City, and why it cannot be obtained elsewhere. If the applicant did not apply for a loan through a private financial institution, please explain why. If denied assistance through a financial institution, please attach the letter of denial. We were referred by Hills Bank because they could only fund a portion of our loan request. 2.4. Indicate the owner's contribution (cash, assets for the operation of the business, etc.) to this project. $20,000 2.5. Identify all agencies or institutions involved in the project (financial, technical assistance, etc.) and what their involvement is: Hills Bank is providing financial assistance with the help of the LIFT Small Business Program. Paul Heath at the Small Business Development Center has provided assistance with our Business Plan. 2.6. What type of security will the assisted business provide the City? If no security or less than the dollar amount requested is offered, an explanation must be provided. € Corporate Guaranty € UCC Financing Statement € Irrevocable Letter of Credit X Personal Guarantee € Surety Bonds € Mortgage on Real Estate € Escrow Account X Machinery, Equipment and Inventory valued at $17,000 Before execution of a CDBG agreement, if the collateral consists of machinery and equipment, inventory, or other, the applicant must provide an itemized list that contains serial and identification numbers for all articles that had an original value of greater than $5,000. Include a legal description of real estate offered as collateral. 2.7 If the City did not provide financial assistance, could the project proceed? Without financial assistance from the City, we would hope to still proceed with the project, but we would not be able to carry it out with the quality and quantity of inventory, equipment and services that we feel are essential to making our shop outstanding and unique. Section 3: Jobs to Be Created/Retained Special Note; The Community Development Block Grant (CDBG) program requires that at least 51 % of the jobs created or retained must be held by or made available to low - moderate income persons. The business acknowledges that if it fails to create and/or Revised 11/15/06 retain the jobs identified below by the end of the project period and maintain them for a period of time (usually 12 months from the date of the award); it may be required to reimburse City funds for the employment shortfall. 3.1 If an existing business, how many employees are currently employed at your Iowa City location? Please attach a copy of the company's quarterly Iowa "Employer's Contribution and Payroll Report" for the most recent quarter. 3.2 Complete the following chart identifying the number of jobs to be created and/or retained based on this specific project. Type of Job and Hourly Rate for Created and/or Retained Positions in First 12 Months of Project Award (please see attached Job Category Definitions) # of Jobs Created # of Jobs Retained Type of Job No. Hours Per Week Hourly Rate of Pay Fringe Benefits* 2 Officials & Managers 40 + ** Professional Technicians Sales Office & Clerical Craft Wokers (Skilled) Operatives (semi -skilled) Laborers (unskilled) Service Workers *If fringe benefits are provided, please attach a description of all employee benefits provided by and paid for (in full or in part) by the business. 3.3 What is the estimated annual payroll for the new employees resulting from this project? $15,800 for the first year, *Starting at $9.00 per hour with hopes of increasing depending on sales and profits brought in by the business. **Will add fringe benefits and pay as business can afford it. 3.4 If an existing business, will any of the current employees lose their jobs if the project does not proceed? If yes, how many? Explain why: Revised 11115/06 Section 4: Economic & Environmental Impact 4.1. What other Johnson County companies could be considered to be your competitors? Jo -Ann Fabrics, Hobby Lobby, Ben Franklin, Crazy Girl Yarn, The Knitting Shoppe. 4.2. Please describe the energy and resource efficiency programs, waste reduction, waste exchange, and recycling programs at your Iowa City operation. We will keep our energy and resource use to a minimum by using a programmable thermostat, florescent lights and recycling. Section 5: Community Involvement, Compliance with Law 5.1 In addition to your normal business activities, does your business contribute or have plans to contribute to the community through volunteer work, financial contributions, or through other means? Please describe. We plan to have "make and take" craft activities that people can come in and do free of cost. We hope to support public radio, and participate in the Gallery Walk. We would like to donate handmade goods, craft supplies and workshop space to community fund-raising events. We would like to reach out to Senior Citizens, disadvantaged youth, IC Hospice and Mercy Hospital and do special programs with these populations. 5.2 Has the business been cited or found to violate any federal or state statute or regulation within the last five years (including, but not limited to environmental regulations, payroll taxes, Occupational Safety and Health Administration laws, Fair Labor Standards, the National Labor Relations Act, the Americans with Disabilities Act)? If yes, please explain the circumstances of the violation(s). No. 5.3 Has the company or any officer of your company been involved in bankruptcy or insolvency proceedings during the past 7 years from the date of this application? If so, provide the details. am 5.4 Are you or your business involved in any pending lawsuits? If yes, provide the case name of the lawsuit, docket number, and city and state where it is pending. No. Section 6: Summary of Required Attachments Check off each attachment submitted. If not submitted, explain why. Revised 11/15/06 [ x ] Business plan (if start-up business) [ x ] Balance Sheet (3 year historical if an existing business. Start-ups must provide a pro - forma balance sheet) [ x] Profit and loss statements (3 year historical if an existing business, 3 year projection for start-ups) [ x] 12 month cash flow statement (if the business does not expect to turn profitable within the first 12 months, provide a cash flow statement extended to the year the business expects to turn profitable) [ ] Description of fringe benefits provided to employees, if applicable [ x] Brief description of the education, technical and business background for all the persons listed under Management (Question #1.4) Revised 11/16/06 x ] Please provide the social security numbers for all the persons listed under Management (Question #1.4) If an existing company, copy of the company's quarterly Iowa "Employer's Contribution and Payroll Report" for the most recent quarter. Construction loans only: Cost estimates for construction and a statement of the source of any additional funds x l Include a list of any machinery or equipment or other non -real estate assets to be purchased with the financial assistance and the cost of each item as quoted by the seller. Include the seller's name and address. Upon review of a submitted application, the City reserves the right to request additional information in order to assist the City with its evaluation of an application. Release of Information and Certification NOTE: Please read carefully before signing I hereby give permission to the City of Iowa City (the City) to research the company's history, make credit checks, contact the company's financial institution, and perform other related activities necessary for reasonable evaluation of this proposal. I understand that all information submitted to the City relating to this application is subject to the Open Records Law (1994 Iowa Code, Chapter 22) and that confidentiality may not be guaranteed. I hereby certify that all representations, warranties or statements made or furnished to the City in connection with this application are true and correct in all material respects. I understand that it is a criminal violation under Iowa law to engage in deception and knowingly make, or cause to be made, directly or indirectly, a false statement in writing for the purpose of procuring economic development assistance from a state agency or political subdivision. If applicant is a ropnetor or general partner, sign below. By: Date: 12 ' 3 ' 0 4- If applicant is a 6 rpora on, sign below: Corporate Name and Seal Date In Signature of President Attested by: Revised 11/15/06 Home Ec. Workshop LLC December 2007 Business Plan Prepared by: Alisa Weinstein & Codi Josephson Table of Contents 1. Executive Summary ....................................................... 3 2. Objectives......................................................... i..............3 3. Mission............................................................................3 4. Keys to Success...............................................................4 5. Company Ownership.......................................................4 6. Marketing Plan ................................................................4-8 7. Start-up Costs..................................................................8-10 8. Sales Rationale.......................................................:,.......11 9. Products...................................................................:.......11-15 10. Professional Advisors....................................................15 11. Year One Financial Statements.....................................1-11 12. Year Two Financial Statements .................................... 1- 12 13. Year Three Financial Statements ................................. 1- 10 2 1. Executive Summary Home Ec. Workshop plans to open its doors in early January 2007, at 207 N. Linn Street in Iowa City, IA. This unique shop will have eight main features: 1.) a craft supply boutique selling select fabrics, yarns, threads, patterns, notions, books and other fine quality craft supplies with sample projects displayed throughout the space. 2.) a workshop for rental use with sewing machines, a cutting table, industrial iron, washer/dryer, printing materials, utility sink, book -making equipment, and project storage space. 4.) an inspiring public area with comfortable seating, craft books and'a kitchenette serving Espresso drinks, tea and fresh baked goods. 5.) Home Ec. Workshop will sell its own line of artistic products called Home Ec. Handmade including fashion accessories and items for the home. 6.) Classes, workshops, and guest artists will offer instruction in making projects using the following skills: sewing, knitting, crochet, embroidery, screen -printing, book making and more. Additionally free make and take events and regular themed gatherings such as Knitter's Breakfast on Saturday mornings. 7.) Party packages at Home Ec. Workshop will be available for craft-themed entertainment gatherings of all occasions including birthday parties for kids and adults, wedding and baby showers, holiday parties for families, friends, community groups, and offices. 8.) Home Ec. Workshop will offer a small range of custom sewing and artistic services including some alterations and screen -printing orders. 2. Objectives We will provide friendly and knowledgeable customer service highlighting"the THREE most important features of Home Ec. Workshop: 1. Select, high quality materials and supplies including yarns, fabrics, thread, patterns, needles, scissors, kits, etc. 2. Scheduled classes and workshops, and anytime in -the -shop guidance for adults and young people renting the workshop to make a project. . 3. A comfortable, inspiring community space where you can relax, work on a project, brainstorm your next craft ideas and take breaks while enjoying coffee, tea and fresh baked goods from our kitchenette. 3. Mission The mission of Home Ec. Workshop is to provide an inspiring and supportive environment filled with unique, high quality craft supplies, tools and equipment for making creative projects. 4. Keys to Success Quality Supply Availability: Offering to the customer those supplies and instruction, which they currently cannot obtain anywhere else locally will make Home Ec. Workshop the number one place to purchase craft supplies and to learn how to make quality handmade goods. Handmade items: For those who are not as crafty, we will sell unique homemade items for the home, self, family and friends. Workshops, Classes and Anytime In -Shop advice: Offering scheduled classes and anytime workshop rental space, tools, and equipment. We will also be one of the few places in downtown Iowa City where adults and kids can come in and do a fun, creative activity together without a mess to clean up at home. Services: We will also do some alterations, such as mending and hemming of garments. Custom design orders for screen -printing and home decorating. Kitchenette: Offering espresso drinks, tea and fresh baked goods in a comfortable atmosphere. Location: Our shop is located in the fast-growing, eclectic North side neighborhood of Iowa City. 5. Company Ownership Home Ec. Workshop is an LLC. The co -owners are investing $20,000 of their own money to start the business. 6. Marketing Plan Market Analysis Summary There is an all over resurgence in craft -making and a flourishing market of hip Do-It- Yourselfers and novice needle workers, eager to learn and be creative. More and more people are rejecting the manufactured, generic aesthetic of poorly made store-bought goods in favor of making their own unique, quality, handcrafted products or buying those handmade by others. In January 2006, Marilyn Murphy from Interweave Press reported that active US needle artists spent and estimated $1.07 billion in 2004—about $760 million on knitting and crochet supplies, $230 million on needlepoint, and $80 million on counted thread and 4 embroidery. Nearly 1 in 3 US women know how to knit or crochet according to the Craft Yam Council of America's consumer research study, released in February 2005. This change represents a 51 percent increase in the past ten years and significant gains since 2002. The biggest gains are in the 25-34 age group, where the percentage jumped from 13 percent to 33 percent between 2002 and 2004, more than a 150 percent increase in two years. The 25-34 age range is the second highest in Iowa City at 10,218 and growing with the largest population being 20-24 year olds numbering 14,872. Statistics show that craft making hobbies are primarily enjoyed by women. With the Iowa City population totaling 62,220, 31,712 are female. This gives our business an estimated 51 percent of the total potential market. The average "Home Ec." crafters are women from the age of 20 to 35 years old (and up.) Along with this group, Home Ec. Workshop will target the teen, pre -teen, and youth market. With special classes and special discounts on supplies families can afford, Home Ec. Workshop hopes to draw this group into Home Ec.'s range of activities. Home Ec. Workshop believes. this will also service the community by teaching them craft -making and showing them how to be proud of what they accomplish and building self-esteem. Additionally, we would like to offer a weekly early morning toddler hour where little ones can make crafts and young moms can mingle. The over 45 age group will also be targeted, urging them to brush up on those skills they may not have used in a while, or never learned in order to make things for themselves and heirlooms for the younger generations in their families. Home Ec. Workshop aims to provide inspiring and quality materials and instruction to encourage positive experiences in sewing, knitting, embroidery, screen -printing, and bookmaking for both women and men. We will be able to retain customers because our quality supplies, comfortable workspace, and knowledgeable instruction will. help people have a pleasurable creative process resulting in a successful handmade product. Home Ec. Workshop will also be a gift destination where customers will be able to purchase gift cards for craft supplies, classes and finished handmade products. The people most likely to buy our products and services are those who want to learn how to make things and those who are already make things and want to broaden their range of projects using unique, high quality materials. These kind of Do -It -Yourself types include University students lacking creative workspace and sewing machines in their home situation, parents/grandparents looking to spend quality time with their kids, and women of all ages and levels of experience. We would also like to pursue the goal of bringing men into these activities. Although quite far from Home Ec. Workshop in location and merchandise, an overlapping need is being met by Crazy Girl Yam Shop in Coralville, The Knitting Shop on the Eastside of Iowa City, and Common Threads in North Liberty. We would like to differentiate our products from those found at Hobby Lobby, Wal-mart, Jo-Ann's, and Ben Franklin, by our superior quality materials and customer service, instruction, and 5 trendy displays full of refreshing, colorful, inspiring, stylish projects and materials, previously unavailable in Iowa City. People will buy our products and services because we are going to make these age-old work/crafts modern, hip, fun, low -stress and empowering for all people, not just women. People will be using their creativity and gaining the skills needed to bring their visions to life. The space itself will display sample craft items in an inviting way and offer baked goods, coffee, and tea in a cozy place to hang out. There will be sewing machines and tools that customers can rent to use in the shop and storage where people can keep their projects -in -progress. Parent/kid classes and parties will provide creative recreation that is educational, skill -building and quality family time. Bookmaking, embroidery, and screen -printing classes are not being offered anywhere else in Iowa City (outside UI). We will reach our customers by our great location and storefront window on N. Linn Street that is approachable by foot and car, with metered parking on the block and across the street. We will have a website, blog, brochures, mailing list and a calendar of classes. MARKET SEGMENTATION The following groups are most likely to offer the best opportunity for current and new market segmentation: Teen, Pre -Teen and Youth (ages 8 -18) University students (ages 19-25) Avid crafters (ages 25-34) Families Over 35 Hipster Males The only group currently targeted is the avid knitters, quilters, and needle workers, but they do not have local access to quality, innovative supplies. This group already knows the basics of their hobbies and what most of the products are used for. However, they are also most likely to want to learn new techniques and to branch out into new craft areas. We would like to make Home Ec. Workshop inviting to beginners, including the new market segmentation of hip DIYers including University students and younger populations who will need to buy tools along with their yarn and fabric or rent our workshop space. TARGET MARKET SEGMENT STRATEGY Potential Customers Teen, Pre -Teen, Youth: We plan on staying in touch with this age group on a regular basis by keeping up to date on teen activities going on in the community, such as Spring Break, a great time for craft classes, or school proms where girls can embellish store 2 bought dresses with personal touches or accessories. We will use the information about youth activities in special mailings and classes geared for their specific age group. All class registrants will receive a discount coupon for their supplies. University Students: We will target these customers by offering them a space to work and hang out, filled with supplies, equipment, and workshops and classes offering instruction for beginners that includes working with the latest design trends. Avid crafters, 25 and up: We will target these customers by staying up to date on the newest craft trends and more advanced techniques to keep these customers informed and to offer classes to demonstrate new techniques and materials, often with guest artists. Families: We will target families by providing a creative space and materials for parents and kids to come in and work on project kits together by purchasing Do It Yourself Kits like Make Your Own Teddy Bear Kit or Dream Pillow kit. Over 65: This group will be targeted by special programming that emphasizes sharing their craftwork and skills with the younger generations and seeing what new spins they can put on their potentially more traditional craft -making. We will also have great project ideas for them to do with grandchildren. Male Hipsters: More men than ever before are knitting and sewing and we will attract men by having special workshops just for men! Strategy and Implementation Summary The main financial goal for Home Ec. Workshop is to increase sales by 33% in year two and then an additional 10% for year three. This will be accomplished through regular advertising and mailings to our target markets, plus monitoring our competitor's pricing and our supplier's costs to help maintain a competitive edge. Competitive Edge Larger craft supply chains in Iowa City like Jo -Ann Fabrics and Ben Franklin may be able to offer the customer lower prices and a large selection, BUT Home Ec. Workshop will offer: 1.) A wider selection of higher quality, specialty craft supplies, and tools not available at big chain stores. 2.) Feature designs and kits by other independent artists, which are also not available in chain stores. 3.) A comfortable workshop space with tools and equipment available for rental use 7 4.) A community living room space (filled with craft books) and a kitchenette serving coffee, tea and fresh baked goods. 5.) Superior customer services including free advice (like how to bind -off your knitting) and fee -based classes and workshops often offered on weekends and evenings. (Learn how to screen -print that T-Shirt design you've imagined.) 6.) A prime location accessible by both car and foot near downtown. 7.) Our customers will have more influence on Home Ec. Workshop than they can at a major chain retailer. We can respond to the demands of our customers and anticipate new trends in craft -making through reading craft blogs, websites and magazines and introducing our customers to these inspiring resources. Our own blog and website updated weekly, featuring new products, Home Ec. Handmade work, the work of our customers, class information and links to other craft sites. 8.) Take special interest in the children of our community by offering special classes and projects tailored to their age group and interests. Both owners of Home Ec. Workshop have many years of experience creating creative programming in art and drama for young people. Marketing Strategy We will be promoting the store via the local newspaper. We will also have a grand opening "Make and Take" party where we will offer our fresh baked goods and refreshments, introduction to our staff, and tours of our store and workshop. We keep in touch with our customers by collecting emails, and sending out monthly e- mailings and class offers to promote our services and products. Our website and blog will be updated weekly featuring new products and projects. Our large storefront window will have a regular makeover with displays that will entice passersby, even if they have never done craft -making before. In the future, we will be pursuing mailings to our regular customers and special mailings to potential customers in our target market areas. We plan to donate handmade items to fundraisers for non -profits such as Riverside Theatre's Diamonds or Denim annual event. We would like to offer special promotions to clients, families, and staff at Mercy Hospital since activities such as knitting, due to their repetitive nature cause relaxation and promote health and overall wellbeing. We plan to carry a selection of wool and yarn from Iowa wool and sheep growers in order to support our local industries. N. 7. Start-up Summary Home Ec. Workshop requires $70,000 for start-up capital to design the space, acquire equipment and inventory, and provide sufficient working capital for the new venture. A listing of start-up costs are provided below: Start -Up Costs: Initial capital requirements Advertising Grand Opening S00 Newspaper 100 Signs 700 Brochures 300 Website 100 1700 Building 2634 2634 Deposits phone/internet 100 Rent 2000 Utilities 250 2350 Insurance 350 350 Licenses Name Registration 5 Food Service 50 Food Retail 50 105 Professional Services legal accounting 200 Graphic Designer 500 700 Remodeling Ceiling 1000 Plumbing 250 Snack bar/Cabinets 1000 Bathroom 200 Convection oven 1000 electric 340 Paint 575 4325 Working Capital 10,000 10,000 Equipment 6 4 Sewing Machines 3000 Industrial Iron 750 Ironing board 200 workshop sink 100 board shear 350 book press 300 light box 300 button maker 300 Computer 1000 Printer 150 business software 4900 espresso machine 700 tea percolator 35 12,085 Furniture/Fixtures Cutting Table 250 Workshop Table 700 6 sewing machine tables 600 Couch 350 2 chairs 300 check-out counter 250 15 workshop chairs 300 table/4 chairs 350 Lighting 500 Shelving/display 2000 5600 Inventory 100 Bolts of Fabric 18000 Yarn 18000 Bookmaking 1000 Embroidery and Crewel 1500 knitting supplies 2500 Notions 2000 Patterns 1400 Craft Books 700 Batting/Stuffing/interfacing 500 Handmade retail items 1000 46600 Supplies Office 750 Workshop 1000 Kitchen 300 2050 TOTAL 88,499 Cost estimates for furnishing the space and equipment were obtained from vendors in Iowa City and Chicago as listed below. Estimates for the other start-up costs were obtained from quotes of wholesale suppliers over the internet. The company will require capital for improving the space including the installation of a kitchenette with convection oven, utility sink, home -style furnishings, application of fresh paint, signage, etc. 10 Equipment 4 Sewing Machines (Bernina) 3000 Industrial Iron, (Naomoto) 750 Ironing board (will build) 200 workshop sink (will find used) 100 board shear kutrimmer 2035 (www.onlineskyline.com) 350 book press (www.Hollanders.com) 300 light box (Dick Blick) 300 button maker (ebay.com) 300 Computer (Best Buy, Coralville Mall) 1000 Printer (Best Buy, Coralville Mall) 150 Convection oven (Sears) 350 espresso machine (ebay.com) 700 tea percolator (apothecary, IC) 35 Sources of Initial Capital The owners of Home Ec. Workshop will inject $20,000 in the venture. The money comes from personal savings from the owners. The company will seek a $70,000 loan for the remainder of the capital requirements. The equipment will serve as a portion of the collateral for the bank loan. The owners will guarantee the remainder of the loan with personal assets. The company is seeking a 7-year note of $15,000 at the rate of 5.5 percent per annum from Hills Bank, a 7-year note for $35,000 from Iowa City CDBG Economic Dev. Fund at the rate of 2% per annum and a 10-year note for $20,000 at the rate of 5 percent per annum from Michael Brockman. Payments on the interest will begin the first month of operation. Payments on the principal of the loans will start after six months of operation, with the exception of the payments to Michael Brockman, which will also begin the first month of operation. The company will have the option to pre -pay the note if sufficient cash flow exists prior to the stated maturity date. 8. Sales Rationale These projections are based on an average sale of 25 dollars, the average number of customers each day (10 at the beginning of year 1, 15-20 by the beginning of year two) and the number of days open each month (average 30). The projections also include the income from the number of classes being taught per month (an average of 3-6 classes per month) and an average of five participants per class. The increase and decrease in sales reflects an increase in the purchases of supplies and classes during September -December. In March, June and July we expect to increase our children's classes in anticipation of Spring and Summer Breaks. 11 From year one to year two we increased sales by 32 percent and then an additional ten percent in year three. We increased expenses by 5 percent each year. Our sales projections also include income from the rental of our workshop space, machine rentals, kitchen rental, and alterations and custom sewing work. The income from these venues is also increased approximately 10% each year. 9. Products and Services Home Ec. Workshop will continually strive to offer the highest quality and unique selection of craft supplies as well as instruction and guidance to achieve the project design that the customer has envisioned. Products: The following is a list of some of the supply categories that will be stocked for sewing, knitting, crochet, embroidery, screen -printing, book -making, etc. projects: Yarns Fabrics A variety of weights and fibers for knitting and crochet: Wool Cotton Bamboo Soy Acrylic (From India) Alpaca Mohair Needles Tercel -Circular Clover Apple Cable Crochet hooks Notions - Stitch holders Needle cases Point protector Pom-porn maker Row counter Ring markers Knit and woven fabrics in a range of natural fibers and weights: 12 Cotton Prints Linen Organics Silk Bamboo Wool Felt Embroidery Crewel Wool Pearl Cotton Silk Ribbon Patterns Sublime Stitching Wool and Hoop Wee Wonderfuls Hoops Needles Linen Mark Be Gone Pens Transfer Paper Patterns Felting Knitting Sewing Amy Butler Oliver + S Wee Wonderfuls Betsy Ross Favorite Things Indigo Junction Wool Roving Felting Needles Felting Foam Felting Kits Chronicle Books Potter Craft Interweave Press Magazines Adorn 13 Craft Simply Sewing Interweave Press Vogue Knitting Notions Pins Scissors Batting Stuffing Marking Pens Nippers Buttons Trims Measuring Tape Rotary cutters Cutting Mats Zippers Screen Printing/Dyeing Screens Procion Dyes Sodium Alginate Squeegees Emulsion Bookmaking Decorative Paper Glue Brushes Book Board Mohawk Paper Bone Folders Dividers Awl Children's Kits. Harrisvilie Designs Home Ec. Handmade Consigned Handmade Goods Home Ec. Handmade Gypsy Cat 14 Blue Thimble Codirodeo Kitchenette Baked Goods Coffee Tea Classes Knitting Sewing Screen Printing Yarn Dyeing Fabric Dyeing Bookmaking Children's Classes Children and Adult Parties 10. Professional Advisors Barry Weinstein, Lawyer Gene Anderson, Lawyer Paul Heath, Iowa Small Business Development Center Ryan Olson, Building Inspector Beth Weber, Public Health Dept. Cindy Kubu, Costume Shop Supervisor, UI Michael Hampton, Fashion Designer Don Naughton, Farmer's Insurance Karina Cutler Lake, Graphic Designer Latta Harris Hanon & Penningroth, LLP: Payroll and Bookkeeping Services with Mike Molzen. 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F § § ■\ §w��- _ ) 44-{ 4\)fa k)k\\ ( �» OR \ % ± § \}\d L § \ \ w § d ■ \ CN clq k \ f® f k\ )o / fk \7@ E }/]\ %25 _ /\ a kklf 09iLU %s kffk § Eƒ — « �§ o ff E�� /� $)\/ \ U)l cm/{�{f� \ /CID \ z . . �� co m _ LL L J J| _ — ! x x x ! / 0 o 0 0 k § | ƒ! | § | m | 2 | - k e f /|? )5� o a| /|7 ��� 7'} @|a \/ ƒ� � � §a ■ #§ as 5 2r )f �� ■ i = 7 %, g \ z k§ } z| > p 7 , J\ o; / / / / ��_.---r.® CITY OF IOWA CITY N .;;gill* it -Matt MEMORANDUM Date: December 14, 2007 To: Economic Development Committee From: Wendy Ford Re: Requests for Economic Development funding Small Business Development Center, $2,000. The University of Iowa Small Business Development Center (SBDC) has requested $2,000 in local match funds for a $20,000 increase in funding available to them through the Iowa Values Fund. Paul Heath, Director, and his office have been of substantial assistance to both the Economic Development and Community Development Divisions at the City. They provide on - on -one business development counseling, training, and access to information for start-ups and expanding local businesses. The services they provide include working with clients to develop business plans; assistance to more thoroughly develop commercial loan applications; assistance with financial projections; keeping unfeasible concepts from approaching the for city assistance; saving loan officers' time and effort; keeping existing clients businesses profitable and growing; maintaining realistic expectations; education about compliance with EPA, IRS, and OSHA regulations. The return on this investment can be measured in hours of staff time saved discussing underdeveloped business plans and requests for city assistance for underdeveloped projects. Additionally, there is assurance that projects coming forth from the SBDC have had at least a minimum of the counseling they need to be more successful as a business, and in some cases, in their requests for Economic Development Assistance funding. Entrepreneurial Development Center, $15,000. The Entrepreneurial Development Center, Inc. (EDC) is a community sponsored non- profit business accelerator based in Cedar Rapids. The EDC's vision is to provide economic growth in the Cedar Rapids/Iowa City Technology Corridor through the development and expansion of entrepreneurial enterprise, especially for businesses than can scale to $10 million in annual sales and beyond. The EDC's function is to connect entrepreneurial needs with qualified community and state resources and to provide guided professional and business direction. They have access to the $1.25 million Iowa Seed Fund and the $22 million Iowa Farm Bureau venture capital fund (for rural communities), along with other capital resources. The EDC helps entrepreneurs navigate resources, strengthen knowledge, improve skills, form strategic alliances, and secure proper capitalization. The Iowa City Economic Development Division has had one opportunity to work with the organization in the past year. EDC was assisting an Iowa City business in an application for state funding. In this case, neither the client nor EDC had addressed the issue of collateral with in advance, a key component of the state application. The application was postponed. Currently, 16% of EDC clients are from the Iowa City area. They include businesses such as Breads by Anna, Asoyia, and Bochner Chocolates. In a discussion with Curt Nelson, he explained that EDC staff is eligible for incentives, which are tied to capital they can raise for their clients and the performance of client companies. He suggested if the incentive program was an issue for a government funder, then government funds could be earmarked. EDC suggests one return on investment measurement should be the report back from Iowa City -based companies who have sought the expertise and services of EDC. Nelson has also indicated the $15,000 request is a suggested amount and what is more important than the amount is the participation of the City of Iowa City at any level. SBDC IOWA SMALL BUSINESS DEVELOPMENT CENTER, Monday, November 26, 2007 Mr. Dale Helling, Interim City Manager City of Iowa City 410 E. Washington Street Iowa City, IA 52240 Dear Mr. Helling: The University of Iowa Small Business Development Center IOWA Centers for Enterprise 2660 University Capitol Centre, Suite 2673 Iowa City, IA 52242-5500 (319) 335-3742 Fax: (319) 353-2445 On behalf of The University of Iowa Small Business Development Center and its Advisory Board I would like to thank the City of Iowa City for its financial support. The SBDC is a unique program that requires local financial match. Most of our funding comes from the federal and state governments. To maximize this funding, however, The University of Iowa SBDC must come up with $20,000 in local match each year. With the $2,000 from the Cities of Iowa City and Coralville in addition to the help from some of the area banks and an area economic development agency we hope to meet this requirement for state fiscal year 2008. If you have any questions, please give me a call. Iowa City is blessed with a very entrepreneurial environment that includes its competitive banks, well educated citizens, diversified population, competitive spirit and desirable amenities. The result is that this office has the most clients per area population of any of the 15 Small Business Development Centers in the state. I have enjoyed working with Wendy Ford and Tracy Hightshoe in the City's Economic Development office and with the Community Development Block Grant program. If there is anym^re the SBDC can help with as far as start-ups or exist ng businesses, please let me know. Sincerely,f 'iv� 6 Paul Heath Director L The University of Iowa • IOWA Centers for Enterprise • Iowa City, Iowa s6C)C, a G N) 1�. a W U) U) W f� V O a W Z O CO) W J 2 a E o � n GCoo v 6 O LQ O a g a 0 8 o in E €t s o s a E C u 3m t a a £ S E U U V w col W h N M N O m m I, In u ^ O O O fA N �+ 7 J Om N ao MO N I � N W n OY O n m O N Uf aD N to IA 1� Cl) CA fD 1A Na N O to A 0) O iy n m o 0 o In a o m I+ r; S � M N J o N m a � o N n LI)i N a Lf) o O c { J 3 4 �+ ti act W O M N O N N Cl)00 DD 3a o rn ¢ x cc am o =FHmccc3oUm[CtE U 0 0 3 H c c m W W Imo- Z �;g bG a V O o M O 0R 0 0 0 0` 0 0 0 0 0 0) O N m p V co O M N N O N O O O 0p W W 0 O n N m O N N N M m N or vno Cl) co o 0 0 oe o a) mo 7 O O V W O m V W O O V O N a)0 0 W 0 O n c,N O m Q N M M m N W N 0 N t00 N tV0 N N V M 0 M n O 0 0 0 0 0 0 o W m 0 m NM M v) m M O M en- O W m N N O W W O O n p o O N m m '- V m N N m M m N T n c 117 m 0 m °D 'n O �n p N a n o W o 0 0 o W W o 7 m N N co .- o W O n W m CD O N O n W po O N m M Na N m N m M m N n 0 0 0 0 0 m p p W) N m n O N cl) m N � 0 m N m o V O n m 000 O N !0n M m V N m N N Cl) m N m NLo .- QO W fN0 N N N N �W, M f P.- W o N co Ln o m n n 0 N" Oni N N M Cl) m N o 0 0 r- o_ 0ol 0 (p M 0 BD M W� M N N M" N N N N f00 N Nv .- co m o n N N 0 0 0 0 0 a LL m fn0 w N N M N m m M 'T� W o o) CD O N r to N p (O N W N N N M m fV r. 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O co o co N w O^ M n � m N N n (O N M co (V N� N N co O O N O N_ M 0) CD N N f0 (O N (gyp (D� O� O� O ooO O^ LO (O 01 M M_ O O p N O 0) (D n n pN op� O MT L, N cmN o N N O O In N O m 0 0 cli 0 O O (D (ny aD 0 (onmN ODo M M o fO aMo� o v��n 000('Cyo v o n o g p Q O (MO (D N� m m o N w V C) S 0 • O) Ol �- (ff) O o o N O O p C) w j w V O Q 0 � 0 0 0 t4 S6D(, 250 200 150 100 50 0 600 500 400 300 200 100 0 Univ. of Iowa SBDC Milestones FY07 Client Goals YTD Oct Nov Dec Jan Feb Mar Apr May Jun Jul Univ. of Iowa SBDC Milestones FY07 Client Hours YTD Oct Nov Dec Jan Feb Mar Apr May Jun Jul Clients YTD LT Clients YTD Client Milestone YTD LT Clients Milestone YrD Client Hours YTD LT Client Hours YTD Client Hours Milestone YrD — — LT Client Hours Milestone YrD 56 b c 12 10 8 6 4 2 0 300 250 200 150 100 50 0 Univ. of Iowa SBDC Milestones FYO7 Training Session Goals YTD Oct Nov Dec Jan Feb Mar Apr May Jun Jul Univ. of Iowa SBDC Milestones FY07 Training Attendees Goals YTD Oct Nov Dec Jan Feb Mar Apr May Jun Jul Training Sessions YTD Training Mlestone YTD Attendees YTD - 0 Attendees Milestone YTD Entrepreneurial Deuelopment Center, Inc: "building wealth in our community" December 3, 2007 Mr. Dale Helling, City Manager City of Iowa City 410 E. Washington Street Iowa City, IA 52240 Dear Mr. Helling: I am writing to request a time when we can present a $15,000 request to the City Council for funding support of the Entrepreneurial Development Center (EDC). About the EDC: As you may be aware, the EDC is a non-profit 501(c)(6) founded in 2003 as a Corridor and Iowa Department of Economic Development (IDED) initiative to focus assistance on interstate commerce businesses that can scale to $10M and beyond. With a staff of seven recruited directly out of the private sector, we provide very high-level, hands-on business acceleration services to existing and start-up businesses and fit a niche that otherwise is not addressed in the corridor. Our staff includes: Two business specialists, a marketing specialist, a capital formation specialist, a market researcher, a business plan consultant and a business development consultant. We focus primarily on life sciences, software/information technology, advanced manufacturing, and value-added agriculture companies. Our services are free to the client. Our vision is to: • increase the number of successful Corridor targeted business start-ups; • improve the expansion rate of existing targeted businesses; • increase company revenues that result in Corridor business reinvestment; and • increase the executive -level talent pool in the region. To date the EDC has helped clients: • raise over $20M in debt, grant and equity capital; • create over 250 jobs; • secure 12+ key client employees including CEOs; • create 22 new companies; and • commercialize over 26 new products. Our clients also have a direct link to the $1.25M Iowa Seed Fund LLC and the $22M Iowa Farm Bureau VC fund. Our current $1.2M annual operating budget is partially funded by the City of Cedar Rapids ($40,000), Marion ($5,000), Hiawatha ($10,000), Cedar Rapids Chamber ($75,000), Cedar Rapids Downtown District ($10,000) and Linn County ($5,000). We also receive funding from the Iowa Farm Bureau, USDA, area banks, law firms, businesses as well as the IDED. 222 Third Ave. SE, Suite 290 0 Cedar Rapids, IA 52401 0 T: 319.369.4955 ■ F: 319.364.8914 0 W: www.edcinc.org It is our sincere hope that you will support our organization as our efforts are positively impacting Iowa City and Johnson County. Sixteen percent of our clients are located in Iowa City and/or Johnson County. Our clients include VIDA, Bochner Chocolates, Asoyia, Atlas Ergonomics, K2 Technologies, and Bio Neos. We also are scheduled to present to Johnson County and the City of Coralville for funding support yet this year. We lobk forward to making a formal request to you and the City Council at your earliest convenience. Sincerely Curt Nelson President/CEO cnelson@edcinc.org tfntrepreneurial Beuelepment Center, Inc. Locally Founded M&A's • Collins Avionics • Amana Refrigeration (Rockwell) (Maytag)(Whidpool)_ • Life Investors (Aegon) • Square D (Schneider) • Norand (Intermec) • North Star Oatmeal' (Quaker) • Lease America (GE .Access Direct (PR ) Capital) Pars'ones Technoio y. • Corn Sweeteners (ADM) , (Intuit) Who's focused on the replacements? Enhepreneerial hod npment ' Centar.lnr.. Recruitment Community • Priority One / ICAD / IDED: —Successful established programs Primarily focused on operational facilities ��gi". 6iheprgneurfal Beuelnpaum entm, Inc. Expansion (Strategic) • For those that CAN'T: Community — SBDC's — bandwidth / experience - JPEC's — campus focus - SCORE - ltd entrepreneurial experience I ? 24�Intreprenepnal " PROPIRPMent Center.Inc. Community • Recruitment • Expansion (Retention) i • Creation i'a,,:, f ntrepremurial Beoelapmenl Center. Inc. Expansion (Logistical) Community • For those that CAN expand revenue on their own: —P1,ICAD,'IDED, etc: Help with City Hall Workforce development • Financial incentives Other lo91stio61 support 6dreprenenrial Oeuelnpmenl Center. Inc Creation • Educational support & small community business mentoring: — SBDC, JPEC, SCORE • Experienced support of high - impact bbusinesses? T — Business mentoring i — Resource guidance — Networking &education 2 ,4i�il�!, fntreprenem sal ' Ueueleymenl Center. Inc. Historically Unbalanced • Strong recruitment community • Partial expansion • Partial creation The focus has been fast JOB creation! I; Cener, Inc EDC's Function (1) Connect entrepreneurial needs with ' fiilieprenemial Oenelcpmenl Center. Inc. Stool With EDC c�� • Improved balance: -Recruitment Expansion EDC ' Eo —Creation enC Ne Cen�nlbl eatl111�11•I1.Oenmlw 100] Ali �fnhepreueunal Geaetepment .. .Censer, Inc. � r fMrepreneunal i. "Beuelepmem rendr, Inc EDC Organization 501c6 Not For Profit • 12 person board of directors • 12 full-time or contract staff members • Annual operating budget > $1 million • Scope is corridor & statewide .. PMAncrcN uA#h IIZ nn'rRRIA n ewor'm'' " l hihepreneunal Ueeelsymenl Center, Inc. Performance to Date •. Over 300 businesses assisted • 22new companies created: Over $20MM debt, grant and equity capital —!Over 250 new jobs —Over $75 million in new revenue -Over 25 new products • Nearly 300 referrals to area vendors • 40, networking & educational events 3 eoeprenaurdI ueuelapmenl Confer, Inc. Examples _. S;=NSR express Inat,umente that make aenae _._ _.. UTO DEUVER� The Skytory e S�Cl1i1f�VeT'�le Fac G not �rrl imp U r eM�t •rr n • GE0NETRIc - ✓,fie � � i�,_ flohileDemaed n. Entrepreneurial penelapm¢nt Center, Inc, Iowa's Challenge Embrace the diversity of an entrepreneurial culture • Balancing the use of economic development resources �� `r. htlreprrnenrfal ' center, Inc tenter; Inc. i �N�t" fnhepteneunal 'Oeuel Rent confer. Inc, To build a solid economic foundation for generations to come, we must plant the seeds for this growth in our own soil �iEnhepieaeunel Ueuelairepnf 7� Canter Inc. Board of Directors • Mary 4uass David Rusch - Pr..ld.rd l CEO, Now Radio Gratin - Pru 11 COo, CRST • Larry Melling Charles Masson -."midst& CEO, CRUT. - CEo,crvoo • Charles Rohde • Steve Schoenauer - Pml"M Won Mabei.b - M• eas Pa— aeeown," • JortDusek Paul Rhinos,, Arnk•nR pm.arWq bay. µ Pitn.Ip.y MWn VarWr. Paraaan • Bill McCartenr EliotProtaGi T P.rRw, &adbyil RlNy r11R.ar 4SMAM, , Carroll Reasoner • Lee Glancey ; hM•r, aawNwwrw►agrwa ' Papw.nk QItOMm"r 4 CITY OF IOWA CITY MEMORANDUM DATE: December 1, 2007 RE: United Natural Foods Developer's Agreement Status (Heinz Rd. URA) The following table provides a review of the United Natural Foods Inc. (a.k.a. Blooming Prairie) TIF project, associated property values, taxes collected and taxes rebated. The Council, by resolution, adopted the United Natural Foods Inc. Agreement for Private Redevelopment on July 1, 2003. The agreement rebates the value of property taxes paid in excess of the base year's assessed value. The January 1, 2003 assessment is the base year for this agreement. Valuation Year Fiscal Year Assessed Value Property Taxes Paid Taxes Rebated Rebate Pay dates Net Taxes Paid Jan-02 2003-04 $4,351,170 $142,426 NA NA Jan-03 a 2004-05 $4,653,740 b $155,308 NA NA Jan-04 2005-06 $6,203,550 $227,272 NA NA Jan-05 2006-07 $12,947,600 $486,067 $169,784 c 6/1/07 $316,283 Jan-06 2007-08 $12,947,600 $494,932 $267,577 de 6/1/08 $227,355 Jan-07 2008-09 $13,094,510 $500,548 $270,612 f 6/1/09 $229,936 Total $707,973 773,574 Property Taxes Paid Include the City, County and School District. Rebate Schedule: 6 Year-100%, $1,000,000 maximum The original United Natural Foods TIF agreement was to reach employment of 300 full time equivalents with an average wages of at least $11.75/hour. Prior to the development project, they employed 218 full-time equivalents. The agreement was amended on April 4, 2006, to a) extend the time frame to reach employment levels and b) to institute a clawback provision if employment levels fell short of 300. As of Nov. 2007, there were 249 full time equivalents. A new count will be taken June 1, 2008 to determine clawback on the June, 2008 rebate. United Natural Foods Iowa City annual payroll exceeds $8.19 million. Parcel # as of 2004: 10-24-178-012 a Base year. b Each year the base value will be modified to remove the increased assessed value due to the original investment. The original investment accounts for 35.94% of the full assessed value. At the time of the first rebate in June, 2007, 100% of the rebate would have been $256,468, but actual employment was at 248. Caawback was instituted as per agreement: 300-248 = 52 x $1667 = reduction of 100% rebate by $86,684, for $169,784. d Estimate. Calculated (($12,947,600 — 4,653,740 [base])/1,000 * Est. 08-09 TIF Debt Levy of 32.26199). Estimate does not factor in clawback. e Does not include anticipated clawback figure. Will more likely be a similar rebate to year prior. f Estimate. Calculated (($13,094,510 — 4,706,544 [adjusted base])/1,000 * Est. 08-09 TIF Debt Levy of 32.26199). Estimate does not factor in clawback. CITY OF IOWA CITY MEMORANDUM DATE: December 1, 2007 RE: Owens -Brockway (formerly Graham Packaging) Developer's Agreement Status (Scott Six Urban Renewal Area) The following table provides a review of the Owens -Brockway (formerly Graham Packaging) TIF project, associated property values, taxes collected and taxes rebated. The Council, by resolution, adopted the Owens -Brockway Agreement for Private Redevelopment on October 8, 2001. The agreement rebates the value of property taxes paid in excess of the base year's assessed value. The January 1, 2001 assessment is the base year for the Scott Six Urban Renewal area and this redevelopment agreement. Valuation Fiscal Assessed Property Taxes Rebate Net Taxes Year Year Value Taxes Paid Rebated Pay dates Paid Jan-01 a 2002-03 $30,010 $858 NA NA Jan-02 2003-04 $2,398,650 $89,342 NA NA Jan-03 2004-05 $5,037,870 $186,536 $150,656 6/1/05 $35,880 Jan-04 2005-06 $5,346,840 $205,080 $167,442 6/1/06 $37,638 Jan-05 2006-07 $5,471,100 $209,137 $170,786 6/1/07 $38,351 Jan-06 2007-08 $5,510,030 $210,625 $176,796 6/1/08 $33,830 Jan-07 2008-09 $5,816,790 $222,351 $29,871 b 6/1/09 $192,480 Total $695,550 $338,179 Property Taxes Paid Include the City, County and School District. The January 1, 2007 assessment is a $5.7 million increase from the January 1, 2001 assessment. Owens Brockway agreed to maintain 22 full time equivalent positions at an average of at least $13.43/hour when the agreement was written. In Nov. 2007, they employed 56 full time equivalents and the average hourly wage was $16.75. Owens Brockway's annual payroll in Iowa City for the preceding twelve months was more than $1.9 million. Owens Brockway elected to forego the rebate for the January 1, 2002 assessment, as they had not completed all proposed improvements. They requested that the 5-year 100% rebate apply to the full value of the proposed Minimum Improvements. The contract specifies that the City will make five consecutive annual payments commencing June 1, 2005. Rebate Schedule 5 Yrs — 100% with a $695,550 maximum Parcel # 09-19-327-016 a Base Year. b Final Rebate Estimate. Calculated (($5,816,790-30,010)/1,000)* Est. 08-09 TIF Debt Levy of 32.26199). However, the final rebate is estimated at $29,871, the maximum rebate allowable without surpassing the cap of $695,550. CITY OF IOWA CITY MEMORANDUM DATE: December 1, 2007 RE: Plamor property (Gerry Ambrose) Developer's Agreement Status (Sycamore & First Avenue Urban Renewal Area) The following table provides a review of the Plamor property TIF project, associated property values, taxes collected and taxes rebated. The Council, by resolution, adopted the Ambrose Agreement for Private Redevelopment on September 10, 2002. The signed agreement rebates the value of property taxes paid on the Minimum Improvements. Valuation Fiscal Assessed Property Taxes Rebate Net Taxes Year Year Value Taxes Paid Rebated Pay dates Paid Jan-00 2001-02 $951,973 Jan-02 a 2003-04 $972,150 $36,210 NA NA Jan-03 2004-05 $966,070 $35,504 NA NA Jan-04 2005-06 $1,847,110 $70,848 $27,555 6/1/06 $43,293 Jan-05 2006-07 $2,008,020 $76,106 $32,514 6/1/07 $43,592 Jan-06 2007-08 $2,008,020 $76,758 $34,025 6/1/08 $42,733 Jan-07 2008-09 $1,992,840 $76,178 $32,929 b 6/1/09 $43,248 Total $126,418 $130,224 Property Taxes Paid Include the City, County and School District. The January 1, 2000 assessment is the base year for the Sycamore & First Ave. Urban Renewal Area. The Agreement states the City will rebate the taxes only on the Minimum Improvements listed in the Developer's Agreement. The Agreement was executed 9/10/2002. The 2002 assessment reflects the assessed value before any improvements and will be used to calculate increment for this project. The January 1, 2007 assessment is an approximate $1.0 million increase from the 2002 assessment. Rebate Schedule 7 Years — 100%, $400,000 maximum 2003 forward — 2 new parcels 10-14-486-007 10-14-486-008 a Base Year. b Estimate. Calculated (($1,992,840 — 972,150)/1,000) x Est. 08-09 TIF Debt Levy (32.26199). .®4 - CITY OF IOWA CITY ,iwil MEMORANDUM DATE: December 1, 2007 RE: Seabury & Smith Developer's Agreement Status (Northgate Corporate Park Urban Renewal Area) The following table provides a review of the Seabury and Smith (Mercer) TIF project, associated property values, taxes collected and taxes rebated. The Council, by resolution, adopted the Seabury & Smith and Southgate Agreement for Private Redevelopment on December 11, 2001. The agreement rebates the value of property taxes paid in excess of the base year's assessed value. The January 1, 2002 assessment is the base year for the Northgate Corporate Park Urban Renewal Area and this redevelopment agreement. Valuation Fiscal Assessed Property Taxes Rebate Net Taxes Year Year Value Taxes Paid Rebated Pay dates Paid Jan-01 2002-03 $208,250 $9,248 NA NA Jan-02 a 2003-04 $264,520 $9,852 NA NA Jan-03 2004-05 $4,722,360 $173,554 $134,109 6/1/05 $39,445 Jan-04 2005-06 $5,205,680 $199,666 $140,050 6/1/06 $59,616 Jan-05 2006-07 $5,881,350 $222,910 $141,042 6/1/07 $81,869 Jan-06 2007-08 $5,922,890 $226,407 $127,785 6/1/08 $98,622 Jan-07 2008-09 $6,040,690 $230,910 $111,810 b 6/1/09 $119,110 Total $654,796 $398,651 Property Taxes Paid Include the City, County and School District. The January 1, 2007 assessment is an approximate $5.8 million increase from the January 1, 2002 assessment. Rebate Schedule: 1st Year 100% 6" Year 50% 2Id Year 90% 7' Year 40% 3rd Year 80% 8t" Year 30% 4t" Year 70 % 9t" Year 20 % 5t" Year 60 % 10t" Year 10 % $781,200 maximum: Parcel #: 07-36-303-003 07-36-303-004 a Base year b Estimate. Calculated ((($6,040,690-264,520)/1,000) x Est. 08-09 TIF Debt Levy of 32.26199 x 60% CITY OF IOWA CITY MEMORANDUM DATE: December 1, 2007 RE: Alpla of Iowa Inc. Developer's Agreement Status (Heinz Rd. Urban Renewal Area) The following table provides a review of the Alpla TIF project, associated property values, taxes collected and taxes rebated. The Council, by resolution, adopted the Alpla of Iowa Inc. Agreement for Private Redevelopment on March 19, 2003. The agreement rebates the value of property taxes paid in excess of the base year's assessed value. The January 1, 2003 assessment is the base year for the Heinz Road Urban Renewal Area and this specific redevelopment agreement. Valuation Fiscal Assessed Property Taxes Rebate Net Taxes Year Year Value Taxes Paid Rebated Pay dates Paid Jan-02 2003-04 $6,966 150 NA NA Jan-03a 2004-05 $3,594,340b $39,242 NA NA Jan-04 2005-06 $6,358,420 $166,110 $87,049 6-1-06 $79,061 Jan-05 2006-07 $6,760,750 $199,652 $92,247 6-1-07 $107,405 Jan-06 2007-08 $6,760,750 $222,714 $94,815 6-1-08 $122,713 Jan-07 2008-09 $6,842,210 $261,549 $95,957c 6-1-09 $165,592 Total $370,068 479,957 + grant in fy04 $35,000 Total $405,068 Property Taxes Paid Include the City, County and School District. The January 1, 2007 assessment is an approximate $3.24 million increase from the January 1, 2003 assessment. Alpla agreed to maintain or retain 35 full time jobs. As of Nov. 2007, they reported 158 full time equivalents. Their total Iowa City payroll exceeds $4.3 million per year. Rebate Schedule: 5 Year — 100% Maximum $510,000 including the $35,000 Grant Parcel #: 10-24-151-002 a Base year. b Each year the base value is modified to remove value included in partial property tax exemption (to avoid giving tax rebate on already exempted value) and to remove increased value over proportion of the original investment. The original investment accounts for 56.53% of the full assessed value. c Estimate. Calculated using ((6,842,210-3,821,772)/1,000)* Est. 08-09 TIF Debt Levy of 32.26199). CITY OF IOWA CITY MEMORANDUM DATE: December 1, 2007 RE: MGD L.C. (Sycamore Mall) Developer's Agreement Status (Sycamore & First Avenue Urban Renewal Area) The following table provides a review of the MGD L.C. (a.k.a. Sycamore Mall) TIF project, associated property values, taxes collected and taxes rebated. The Council, by resolution, adopted the MGD L.C. Agreement for Private Redevelopment on September 19, 2000. The signed agreement rebates the value of property taxes paid in excess of the base year's assessed value. The January 1, 2000 assessment is the base year for the Sycamore & First Avenue Urban Renewal Area and this specific private redevelopment agreement. Rebate Valuation Fiscal Assessed Property Taxes Pay Net Taxes Year Year Value Taxes Paid Rebated dates Paid Jan-98 99-2000 $9,879,450 317,256 NA NA Jan-99 2000-01 $7,500,000 $245,238 NA NA Jan-00 a 2001-02 $4,662,900 $152,958 NA NA Jan-01 2002-03 $4,662,900 $163,000 NA NA Jan-02 2003-04 $10,168,280 $378,736 $167,957 6/1/04 $210,779 Jan-03 2004-05 $11,073,730 $406,796 $192,862 6/1/05 $213,934 Jan-04 2005-06 $11,457,180 $439,444 $213,971 6/1/06 $225,473 Jan-05 2006-07 $12,696,150 $481,200 $252,149 6/1/07 $229,050 Jan-06 2007-08 $14,610,400 $558,494 $320,926 6/1/08 $237,568 Jan-07 2008-09 $15,051,730 $575,634 $335,164 b 6/1/09 $240,200 Total Rebate $1,483,030 1,357,004 Property Taxes Paid Include the City, County and School District. After the adoption of the Sycamore and First Avenue Urban Renewal Area, over $7.1 million in building permits were issued for the Sycamore Mall. The January 1, 2007 assessment is an approximate $10.3 million increase from the January 1, 2000 assessment. Parcel #: 10-14-457-004 Rebate Schedule: 7 Years — 100%, $2,000,000 maximum a Base year. b Estimate. Calculated (($15,051,730-4,662,900)/1,000) x Est. 08-09 TIF Debt Levy of 32.26199). r -�,h.®,, CITY OF IOWA CITY � cF 4 =s, m -T1 a 1, MEMORANDUM DATE: December 1, 2007 RE: Southgate Development Company (Pepperwood) Developer's Agreement Status (Hwy 6 Commercial URA) The following table provides a review of the Southgate Development Company's Pepper Plaza TIF project, associated property values, taxes collected and taxes rebated. The Council, by resolution, adopted the Southgate Development Company Agreement for Private Redevelopment on August 19, 2003. The agreement rebates the value of property taxes paid on the Minimum Improvements. Valuation Year Fiscal Year Assessed Value Property Taxes Paid Jan-02 03-04 $8,653,870 $322,328 Jan-03 a 04-05 $8,677,520 $318,912 Jan-04 05-06 $8,677,520 $332,830 Jan-05 06-07 $10,896,530 $412,992 Jan-06 07-08 $11,773,880 $450,066 Jan-07 08-09 $11,824,170 $451,988 Totals Taxes Rebated Rebate Pay dates Net Taxes Paid NA NA NA NA NA NA $69,637 6/1/07 $343,355 $99, 895 6/1 /08 $350,171 $101,517 b 6/1/09 $350,471 $271,049 $693,526 Property Taxes Paid Include the City, County and School District. The January 1, 2003 assessment is the base year for the Hwy 6 Commercial Urban Renewal Area. The agreement states the City will rebate the taxes only on the Minimum Improvements listed in the Developer's Agreement. Parcel #s: 1022101003 1022101018 1022101015 1022101017 1023236002 Rebate Schedule 7 Years — 100%, $1,725,000 maximum Base year. b Estimate. Calculated (((11,824,170 - 8,677,520)/1,000) x Est. 08-09 TIF Debt Levy of 32.26199)