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HomeMy WebLinkAbout05-29-2007 Council Economic Development Committee AGENDA City of Iowa City City Council Economic Development Committee Tuesday, May 29,2007 10:30 a.m. Commerce Center - 325 East Washington Street Large Conference Room 1. Call to Order 2. Approval of Minutes from April 6 and April 12, 2007. 3. CDBG Economic Development Fund Applications a. Extend the Dream Lease b. Extend the Dream Property Acquisition c. La Reyna Working Capital d. Discerning Eye Working Capital 4. Dowhtown Market Niche Analysis - Consultant report 5. Staff time 6. Committee time 7. Adjournment MINUTES CITY COUNCIL ECONOMIC DEVELOPMENT COMMITTEE April 6, 2007 LOBBY CONFERENCE ROOM Preliminary Members Present: Regenia Bailey, Connie Champion, Bob Elliott Members Absent: None Staff Present: Wendy Ford, Karin Franklin Mark Nolte (ICAD Group), Gigi Wood (Corridor Business Journal), Tom Brandt (PSO), Nancy Quellhorst (Iowa City Area Chamber) Others Present: CALL MEETING TO ORDER Chairperson Regenia Bailey called the meeting to order at 9:30 a.m. Prep Sports Online Application for CEBA and HQJC funds throuQh IDEO Ford indicated that she was approached by Joe Raso of ICAD regarding the possible headquarters relocation by Prep Sports Online (PSO) to Iowa City. Tom Brandt, a representative of PSO, introduced the company founded by Nile Anderson to help fund high school athletic programs. Part of the company is a not-for-profit organization which provides money to participating schools via website marketplaces created at no cost to the schools by PSO. The company generates its revenue through advertising, content licensing, and multimedia sales. Participating schools benefit from a revenue sharing program. Elliott asked what percent of the revenues goes to the schools. Brandt was unable to give an exact percent as each school varies some although he estimated that about 11 % of th~ revenues would go back to schools. Bailey asked how the amount the schools receive is determined. Brandt responded that it is through the individual agreements, but each school is guaranteed $2,500. He added that next year the non-profit side of the company will have need-based funds that can be applied for. Bailey asked about the corporate structure of the company. Brandt responded that they are a LLC; previously the not-for-profit was PSO, now it will be Prep Sports Foundation retaining the same structure just with a new name. Bailey asked for clarification from Brandt on a third revenue source - multimedia sales. Each school would have their own online store where people can purchase uploaded images; schools receive 15% of the revenue from those sales. Bailey asked how proprietorship over the images of athletes is handled. Brandt responded that they own the rights to the images as designated in the contract; this is similar to how newspapers own the rights to images taken and printed. Franklin asked about the plan for collateralizing the requested $100,000. Brandt responded that they will obtain an irrevocable letter of credit. Bailey indicated that the projection for job creation and salaries is rather ambitious which was echoed by Champion. Because a loan would be contingent on those projections, they wanted to know if the projections were feasible. Brandt indicated that they spent a lot of time setting up their model and that they are often told that their program sounds too good to be true. The model is based on what PSO believes to be necessary to set up the minimum of 500 websites they are committed to. The headcount and salaries in the application would be based in Iowa City. Bailey asked who PSO's major competitors are. Brandt indicated that PSO does not have any major competitors in part due to the strength of their Foundation and the value that schools find in that. Competitors are relatively unattractive to schools as they cannot claim to give back money to schools like PSO does. In addition, Mr. Anderson is dedicated to covering not only the star players, but also the whole team and other individual athletes. The committee determined it did not have enough information to make a recommendation either way to the Council and would meet again to further discuss the PSO application after application materials had been distributed and after staff had had a chance to review the business plan and financials. Buy Here! Campaiqn Quellhorst indicated that after being approached by members of different sectors of the local economy, a taskforce was assembled to look at a way of promoting local purchasing. The campaign resulting from the taskforce's recommendation is a business-to-business purchasing initiative and is voluntary. Businesses are requested to shift 5% of what they spend outside the county back into Johnson County. There will be accountability through self-reporting, but the program does not include policing. Local is being defined as businesses that pay property taxes in Johnson County. A study was conducted by Dave Swenson, economist with Iowa State University, looking at total goods and services produced within the county and how that would be impacted by this campaign. The gains for the County would be $92 million in goods, $27 million in labor, and 859 new jobs from business impacts alone. The study included impacts of household and public sector spending for a gain of $125.6 million and 1,015 direct jobs as a result of this shift of 5%. This campaign is modeled on a similar one in Des Moines which has been very successful. Quellhorst anticipates that once it becomes clear what is not locally produced some entrepreneurial opportunities would arise Bailey asked what the Chamber of Commerce is asking for from the city. Quellhorst responded that they are asking for $1,500 to be able to say that there is public sponsorship of this campaign in addition to the interest from businesses. The current Chamber website will host a database to coordinate the need with the local supply. Elliott expressed satisfaction in the Chamber's attempt to get a lot of people involved with smaller amounts of money rather than a few people with a lot of money. Ford indicated that she has set up a meeting with Chairperson Bailey and the legal department to discuss implications and the legality of supporting this program. Bailey asked how this would affect the relationship within the Corridor since it would just be Johnson County. Quellhorst responded that she believes there is potential to expand it to the region, but Johnson County is a start. She indicated that the Chamber of Commerce in the northern part of the Corridor is aware of this initiative. Bailey is concerned that by focusing on Johnson County initially i,s a step backward since so much has been done with the Corridor so far. Champion expressed that she does not think that this would be a step bCjlckward. Elliott expressed that while he agrees that this would be good for the community, he is aware of the concern about stepping back from the Corridor concept. He wants to ensure that the Iowa City Chamber of Commerce makes it clear that this is the first step in the direction of a regional buy local program. Quellhorst offered to obtain data and other information from Des Moines as to how they were able to work their program to help allay concerns that Committee members have regarding the legalities. Adiournment Bailey moved the meeting be adjourned, Champion seconded. Motion carried. Q) CP ~ E E o o ... C Q)"'C E 0 Q.U o 0) -~ CPO)"" >UO Q)CO C C'lSN (.)"g .- 0) E= 0<( c o (.) w - .- (.) c = o o \C ~ ~ ~ ~ ...,. M ,..; ~ ~ ~ ....... l") \C = ~ ~ ~ ....... l") r-- t! ~ ~ ~ M = t! ~ ~ ~ M 0\ ~ ~ ~ ~ M l") t! ~ ~ ~ ,..; C/l 00 00 00 E ,~ 0 52 52 -- N N N V ~ 0 52 52 -- r-<~ .- .- .- 0 0 0 = .S - .... Cl. ~ e '; t: ~ = -= ~ ~ U 'c rz ~ C1) 'c 8 ~ bJl .Q = C':$ ~ 0 0 Z ~ = U "'C C1) ell ::s (,,) :>< i:ii:i~"'C ~ ~ ~ ~ ~,L:l,L:l ::s ~<<~ 11 11 II ~ . , d) .... r:e ell ~~OO~ MINUTES CITY COUNCIL ECONOMIC DEVELOPMENT COMMITTEE April 12, 2007 LOBBY CONFERENCE ROOM Preliminary Members Present: Regenia Bailey, Connie Champion, Bob Elliott Members Absent: None Staff Present: Wendy Ford Others Present: Joe Raso RECOMMENDATIONS TO CITY COUNCIL: Champion moved, Elliott seconded that the committee recommends to the council the support of an application on behalf of Prep Sports Online for funding from the Iowa Department of Economic Development's Community Economic Betterment Account funds and a local match. Motion carried. CALL MEETING TO ORDER Chairperson Regenia Bailey called the meeting to order at 10:04 AM. Prep Sports Online Application for CEBA and HQJC funds throuah IDED Raso gave an overview of the application. Prep Sports Online contacted Raso 6 - 8 weeks ago considering locating headquarters in Iowa City. Real estate in Iowa City is considered better than other regions company is considering and there is a strong desire to be located near the University of Iowa. The nature of the project is noted in the application. Elliott asked how long the tax credits from the state would be for. Raso explained the credits are determined by hard assets, not working capital; and are formula-based and would yield 1-7% of qualifying investment on a one time basis which must be applied to the firm's State corporate tax liability. The High Quality Job Creation Credit is not yet determined. Kirkwood may sell bonds to fund the creation of a job training program for Prep Sports Online provided that jobs are created; this program has been in place for 23 years or so. If the company were to leave before bonds are paid off, a skilled workforce would remain. 79 jobs are expected to be created with the locating of Prep Sports Online within three years. Bailey asked for clarification on whether the agreement is for 79 jobs after three years or some increasing scale up to 79 in year three. Raso indicated that the State requires that the jobs be created within three years, they do not monitor year to year for employment number targets. At the end of those three years, if those jobs are not created, the State may consider circumstances and may extend contract by 12 months or prorated paybacks. Bailey asked why this company is looking to locate in Iowa City given that the capitalization here is relatively small. Raso pointed out that Lear Corporation and Procter and Gamble have good access to capitalization and yet located in Iowa City. Bailey expressed the sense that Economic Development groups get criticized for awarding incentives to businesses that do not need them. Champion responded that such requests are a matter of competition. Bailey asked why this firm would want to locate in Iowa City with its higher cost of living and lower unemployment. Raso commented that he asked the firm's representative this as well, why Iowa City and not Chicago or Los Angeles or some other media center. The rep responded that there is an image that Iowa and further Iowa City conveys on the business that is desired. Elliott pointed out that 'the current location has a relatively lower educated workforce while this company is relatively high tech. Raso added that high tech firms provides a draw for other businesses and people including spouses of employees, etc. He further pointed out that if this venture were to fail, the public entities would be protected. Bailey commented that they [the public entities] are smart and thus would protect their interests. She indicated that Senator Grassley is very interested in the accountability of non-profits. There is concern though with Prep Sports Online's business structure; will the profits be "skirted" away to a non-profit? Elliott indicated that other than the potential risk, he is concerned over the money that schools would get. Bailey indicated that she wants to keep due diligence as the responsibility of the Committee and hence the rigorous questioning of this project since the City would be associating with this company. Elliott expressed concern that schools would only receive a small percentage while the firm would be bringing in large amounts of money. Bailey responded that this is not bad so long as the funding is transparent and appropriately structured. She wants to ensure reporting and public accountability; information which schools would then have access to. Elliott mentioned that he maintains his concerns, but is satisfied that they have been answered; the risk is virtually nothing while high quality jobs and a better trained workforce is created. Elliott indicated that he would like to see a letter of guarantee from a financial institution to support this application. Bailey said she wants to make sure that the Committee anticipates the questions that would be raised in public meetings. Champion moved to support the application to the State for CEBA funds with a local match of $100,000 no interest loan, secured with an irrevocable letter of credit from an FDIC insured financial institution. Raso asked if there is anything else that he could ask for from the company to make the Committee more comfortable. Champion indicated that she is comfortable. Elliott seconded. Bailey asked if there was any further discussion; there was none. Motioned carried. Adiournment Bailey moved the meeting be adjourned, Elliot seconded. Motion carried Q) Q) ~ E E o (.) .... C Q)"C E 0 Q.(,) o Q) -It: Q)Q)"'" >(,)0 Q)CO CnsN U'g .- Q) E= O~ c o u W - .- u C :::J o (.) N .... >< >< >< ....... ..,. \Q = >< >< >< ....... ..,. M ~ >< >< >< ........ l") \C ~ >< >< >< l") r--- ~ >< >< >< M = ~ >< >< >< M =" ~ >< >< >< M l't') ~ >< >< >< ..... '" 00 00 00 E .~ ~ 0 0 ....... ....... N N N Q) 0.. ~ ~ 0 f-o >< ....... - - - W 0 0 0 = Q ~ 'Q.. ~ e '; .... = c:Q .... -= = ~ U '; ~ CIl (I) '; ~ CIl bll ..Q = ~ Q Q Z c:Q U "1::l (I) '" ;:l u >< ==~"1::l ~ ~ ~ ~ ~ ..0..0 ;:l ~<<~ 1\ 1\ II ~ ;>. (I) (I) ~15 :::.G><oo< INITIAL REVIEW OF EXTEND THE DREAM FOUNDATION - LEASE Business Proposed: Extend the Dream Foundation (EDF) requests funds to partially fund the lease at 401 S. Gilbert Street (Uptown Bill's Small Mall). Uptown Bill's Small Mall houses four micro-enterprises operated by persons with disabilities: Uptown Bill's Ice Cream and Coffee Bar, Bills Bookmark, The Mad Hatter Room and Mr. Ed's Super Graphics. CDBG funds have assisted this location since 2001. $106,750 was provided for the first three-year lease and $60,000 was provided for the subsequent three- year lease. The applicant anticipates a $10,000 deficit for the 2007-08 lease. Budget & Private Financial Contribution Applicant is requesting funds to meet the one year lease cost of $40,200: $20,200 EDF micro-enterprise earnings $10,000 Johnson County $10,000 City of Iowa City CDBG funds Comprehensive Plan/CITY STEPS Plan The project does not require public infrastructure and is located in a CB-5 zone (central business support). CITY STEPS notes a high priority for employment training and education skills and micro-enterprise assistance. The focus at EDF is on improving the lives of persons with disabilities through employment training and ownership opportunities. Quality of Jobs The project is an eligible activity under economic development as it provides financial support for the establishment, stabilization and/or expansion of micro- enterprises. (A micro-enterprise is a commercial enterprise that has five or fewer employees, one or more of whom owns the enterprise.) There are no employees as each person is considered an owner or a 1099 subcontractor. Economic Impact The proposed CDBG funds will,assist a non-profit agency stabilize and retain a property that will incubate micro-enterprises for persons with disabilities. Environmental/Community Involvement EDF provides opportunities for businesses and works to enhance the incomes of persons with disabilities. In addition to operating six potential micro-enterprises at Uptown Bill's Small Mall and at 2203 F Street, EDF also operates an e- commerce center that trains persons with disabilities to buy and sell products on the internet to expand into home based businesses. May 2007 .. Extend the Dream has been working with several community partners through referrals for micro-enterprise or e-commerce training and hosting meeting spaces for organizations such as AA meetings, Johnson County Coalition on Disability and the Brain Injury Group. EDF works with Like Skills, Systems Unlimited, MECCA, CMHC, Elder Services and STAR homeless outreach. Items to Address: 1. EDF is run entirely through volunteers. The organization has not had consistent financial management during its years in operation. EDF must have a financial system that provides control and accountability over funds and assets, identifies the source and application of federal funds, provides source documentation, has basic accounting records, and ensures an adequate separation of financial duties. EDF has worked to resolve some of these issues; however the organization must incorporate a financial management system operated on a long term basis that will meet federal minimal standards. 2. The balance sheet does not contain any fixed assets under the Assets category. CDBG funds were used to acquire 912 2nd Ave. (2203 F. Street). The purchase price was $245,000 ($122,000 CDBG conditional occupancy loan, $75,000 HOME no interest loan, $48,000 private lender/owner equity). All fixed assets should be included in the balance sheet as well as their corresponding liability. Profit and loss statement for Uptown Bill's shows an annual net income of $33,231.40 in 2006. 3. Since this is an organization completely run by volunteers, please discuss a plan for succession if the director leaves the organization for any reason. 4. EDF provides the accounting and fiscal management for the businesses incubated at Uptown Bill's Small Mall. Individual profit/loss statements and cash flow statements were not provided. There is a profit/loss statement for Uptown Bill's for the 2006 calendar year. 5. The applicant is a non-profit organization so technical assistance at the Small Business Development Center may be difficult to obtain. The organization may have to rely on donated financial management or through consultant fees. May 2007 ,\ ' Iowa City CDBG Economic Development Funds Application for Business Financial Assistance Business Requesting Financial Assistance: Individual: Thomas Walz on behalf of the Extend the Dream Foundation Home Address: 915 E. Davenport St., Iowa City, Iowa 52245 Name of Applicant Business: Extend the Dream Foundation Full Street Address of Business: 401 S, Gilbert St., Iowa City, Iowa 52240 Phone Number & Email Address: 530-8765 (or office 339-0401), thomas-walz@uiowa.edu DUNS Number (If awarded funds, applicant must obtain a DUNS number): 421465808 Type of Business Non-Profit: Incubator of Micro-Enterprises Owned and Operated by Persons with Disabilities, Date Business: Established 1974 (original coffee shop founded), current program (2001) Bank of Business Account and Address (if applicable): Accounts are divided between Iowa State Bank and Trust (e,g. Sackter House, Documentary, Escrow) and Hills Bank (Uptown Bill's Ice Cream and Coffee Bar, Bookmark, ML Ed's Super graphics, Mad Hatter Room, Vintage Shop/Mick's Workshop, The Framery, Ramp, Inc, and the Workshop Account. NOTE: The City will not provide assistance in situations where it is determined that any representation, 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 1 '1- f 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: The project involves the retention of jobs for persons with disabilities associated with four micro-enterprises co-located in the small Mall at 401 Gilbert St. The "jobs" include four handicapped persons as (4) owners of small businesses and (11 ) persons who work with these owners (along with some abte volunteers) in operating their shops and programs. The four micro-enterprises include: Uptown Bill's Ice Cream and Coffee Bar, Bills Bookmark, the Mad Hatter Room and Mr. Ed's Super Graphics. The request is for some partial continuation of the CDBG subsidy for rent and utilities at their 401 location to help these owners meet the rising costs of rent and utilities. In addition to protecting their own jobs, this downtown location is crucial to accessibility of both employment and social support by a large number of disabled and elderly persons who live in the downtown area and the Ralston Creek area where the small Mall is located. For the first three years (2001-2004) the Extend the Dream Foundation received full subsidy for the rent and utilities at 401 S. Gilbert; from 2004-2007 EDF received 50% of the rental costs, while bearing the other 50% rent and all of the utilities. EDF has attempted to pay as much of the operating costs as it can from the micro enterprise eaming profits. In our projected 2007-2010 budget, we believe we will experience a shortfall of $10.000 per year in meeting our rental costs. It is this amount that we are requesting from the Economic Development funds to meet the deficit. In anticipation of the end of the previous CDBG subsidy, we sought grant support from Johnson County and community support from two student groups River Run and the 1- Envision entrepreneurial group. The County has committed $10,000 for 2006-7 and the student groups believe they will raise enough to cover the rising utility costs ($10,000/yr). These sources, along with the additional 10,000 requested from the Economic Development fund, would assure our ability to remain in our present location. 1.2. Provide a brief history of your company: The Extend the Dream Foundation (EDF) dates back to the founding of Wild Bill's Coffee Shop on the U of I campus in 1974. Its current community based history began in 2001 with the formation of Uptown Bill's Small Mall at 401 S. Gilbert St. and the opening of micro-enterprises owned and operated by persons with disabilities. In its early years Bill's Coffee Shop was operated by the International Bill Foundation until its 1999 merger with the Extend the Dream Foundation. 1.3. Describe the organizational structure of the business: EDF is a 501 C-3 non-profit corporation governed currently by a 13 member board of directors most of whom are notable local business, academic and community leaders.. EDF is administered by a retired experienced administrator volunteer and network of approximately fifty community volunteers. Revised 11/15/06 2 The financial management is handled by Executive Director with paid assistance through a service contract With Marlene Perrin at Taxes Plus. The Board meets quarterly and the Executive Committee meets monthly. Other standing committees include: Community- University Relations, Futures and Planning and an Endowment Committee meet as needed. See Organization Chart. 1.4. Management (Proprietor, partners, officers, directors, all holders of outstanding stock, 100% of ownership must be shown) - non-profit Name & Position/Title Complete Address % Owned Thomas Walz, Executive Director* 915 E. Davenport St, Iowa City Allan Young, Chairperson 3248 Hastings Ave, Iowa City Dale Hankins, Vice Chair Solon, Iowa Mercedes Bern-Klug, Secretary 1803 CSt, Iowa City Charles Skaugstad, Jr, Chair, 602 S. Summit St, Iowa City Communty Relations Committee Dr. Phillip Jones, co-chair, 3201 Muscatine, Iowa City Endowment Committee David Maeglin, Treasurer, Chair of 20 N. Lowell St., Iowa City Finance Committee Jeff Larsen 2201 Dubuque Rd., Iowa City Rabbi Jeffery Portman 3030 Friendship Ave, Iowa City Carol Fisher 1208 Guilford Crt, Iowa City Marilyn Austen Williamsburg, Iowa Barry Morrow Santa Barbara, Calif. Josh Gersten 79 Primrose Crt, Iowa City Rev. Eugene Mathews 3113 Court St., Iowa City Attach a brief description similar to a resume of the education, technical and business background for all the people listed under Management. EDF Management Resumes: Revised 11/16/06 3 Dr. Walz has a lengthy administrative experience: Director, Community Rehabilitation Center, Mpls. 1959-61, Director Living Learning Center, U of Minn, 1964-68, Director of Community Design Center of Minn, Mpls, 1971-73. Planning consultant to Mpls Model Cities (1969-71), Peace Corps Director, Honduras, CA (1962-64), Director of the School of Social Work (1973- 78), Director of the U of I Gerontology Center (1977-81), Director of the Des Moines Graduate Center (1991-1999), and founder Director of Extend the Dream Foundation since 2001. Dale Hankens, former Director of Training for Accenture (formerly Arthur Anderson) International Division, 20 years. David Maeglin, President of Muscatine Storage (1994-2004), currently an international investor. Jeff Larsen, former owner of several Iowa City businesses, investor. Phillip Jones, Vice President for Student Affairs, U of Iowa, 25 years. 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? No 1.6. Iowa City or Johnson County company? If yes, please indicate the facility(s) and/or company(s) affected. . No Revised 11115/06 4 Section 2: Financial Contributions to the Proposed Project 2.1. Use of Proceeds USE OF Proceeds Loan Requested (Enter gross dollar amount rounded to the nearest Activity hundreds) Land acquisition New Construction/Expansion Repair Acquisition and/or Repair of Machinery $ and Equipment Inventory Purchase $ Working Capital (including accounts $ payable) . Acquisition of Existing Business $ All Other - subsidy for rent 2007-8 $ $10,000 Total Loan Requested (All Sources): $ 10,000 2.2. Terms of Proposed Financing (Sources) Proposed* Amount Monthly Pay Type(1 ) Rate Term Financing Financial Financial Institution Other: Iowa City $10,000 CDBG Economic Dev. Fund Total $10,000 * Other income sources to meet rent and utility obligations for 7/1/07-6/31/08 will come from EDF micro-enterprise eamings ($20,000), Johnson County ($10,000), River Run ($7,000) and I-Envision ($3,000). Monthly rent is $3350/mo and utilities average about $650/mo. 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. Revised 11/16/06 5 Successful efforts have been made to explore other areas of subsidy, but a shortfall of approximately $10,000 for 2007-2008 remains. Given the CDBG support to date and our ability to take over a large part of the past subsidy through earnings over the past three years, we felt the City might be willing to continue its support again at a reduced level. EDF would continue to explore the avenue of county and community funding to take over this operating cost in the future. Revised 11/15/06 6 2.4. Indicate the owner's contribution (cash, assets for the operation of the business, etc.) to this project. EDF from micro-enterprise earnings will contribute a minimum of $20,000 and an additional $10,000 from its community (student) donors. . 2.5. Identify all agencies or institutions involved in the project (financial, technical assistance, etc.) and what their involvement is: Extend the Dream Foundation - $20,000 Johnson County govemment - $10,000 River Run (beneficiary of race) - $7,000 I-Envision student organization (golf tournament) - $3,000 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. o Corporate Gu~ranty o UCC Financing Statement o Irrevocable Letter of Credit o Personal Guarantee o Surety Bonds Mortgage on Real Estate o Escrow Account o Other: this has to do with a building lease payment ($3,350/month) 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. We would have about $10,000 of inventory among the small Mall micro-enterprises, but nothing of value greater than $5,000. 2.7 If the City did not provide financial assistance, could the project proceed? It would be difficult, we would need to borrow from our modest endowment funding that has been set aside to eventually hire a full time director to replace our current "volunteer" director. Walz, while in good health, is 74 years old. 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 anP/or retain the jobs identifled 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. Revised 11/16106 7 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 quarter1y Iowa "Employer's Contribution and Payroll Report" for the most recent quarter. Listed are only those low-income persons with disabilities: Uptown Bill's Ice Cream and Coffee Bar - (1) owner, (2 assistants), (4) volunteers. Bill's Bookmark (2 co-owners), (3) assistants. Mad Hatter Room (1) owner, (1) coordinator of music outreach Mr. Ed's Computer Graphics (1) owner 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) Hourly # of Jobs # of Jobs No. Hours Rate of Pa Fringe Created Retained Type of Job Per Week y Benefits* 5 Owner/managers 100 I Profit share Professional Technicians Sales Office & Clerical 50 Stipend Craft Wokers (Skilled) Operatives (semi-skilled) 1 Laborers (unskilled) 20 houtslwk $50/wk 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? N/A 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: No Section 4: Economic & Environmental Impact 4.1. What other Johnson County companies could be considered to be your competitors? RevIsed 11115106 8 We are the only business in the downtown area that can cope with persons with mild to severe disability and in which adult members of this constituency can feel comfortable and accepted. In addition,we are the only alcohol and smoke free environment that provides an adult family atmosphere in the southeast section of downtown. The competitors for the student residents in the area are the bars, liquor stores and upscale coffee shops. The rnajorit of our existing student costumers are book buyers, musicians and volunteers. 4.2. Please describe the energy and resource efficiency, waste reduction, waste exchange, and recycling programs at your Iowa City operation. We recycle all hazardous materials through the county facility at the landfill. One of our volunteers is a waste management specialist (engineer) and is planning to do a study of our facility at the end of April. 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. EDF and its micro-enterprises recruit, train and utilize a large number of volunteers annually (more than 100 different persons) per year, most of whom are assigned to one another small business in the small Mall. The small Mall annually sponsors the Ralston Creek Labor Day Fair and Flea Market which is entering Its sixth year with annual attendance of over (1000) persons. The businesses of the small Mall provide an important supportive resource to low-income elderly and disabled persons in the community 365 days a year. The Mad Hatter Room provides downtown space for 8-11 AA meetings per week, in addition to offering many supportive services to persons in recovery, including temp employment. 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 ever been involved in bankruptcy or insolvency proceedings? If so, please 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 11/15106 9 No Section 6: Summary of Required Attachments Check off each attachment submitted. If not submitted, explain why. [ 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 N/A [ x] Brief description of the education, technical and business background for all the persons listed under Management (Question #1.4) Micro-enterprise owners in the small Mall: Tim C, 36, owner of Uptown Bills Ice Cream and Coffee Bar, some college, worked in restaurants as a cook or cooks helper prior to illness, on disability, has both MI and substance abuse background. Dave M, 57, college grad, local poet, has variable work history; mainly white collar, is a published poet and writer, has MI background. Allisa W, 18, high school grad (07), being reunited with mother in recovery, has some MI problems as well. Del A, 52, some college, veteran, PTSD and severe diabetes, has varied background, Has a disability pension. Ed G, 57, AA degree accounting, has cerebal palsy and is deaf, disability pension. Revised 11/15/06 10 [x] Please provide the social security numbers for all the persons listed under Management (Question #1.4) DaveM l.,DeIA-~TimC-",EdG (] If an existing company, copy of the company's quarterly Iowa "Employer's Contribution and Payroll Report" for the most recent quarter. N/A [] 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. None 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 ass' ~e from a state agency or political subdivision. t./ Iso )0 7 :r::;-- Date: If applicant is a Corporation, Ig" below: ~. .----P' \~ r') () ~ ;;u.~~~ ~ rate Name and Seal Date By: Lt~~ . . natu of President Attested by: Signature of Corporate Secretary Revised 11/15106 11 INITIAL REVIEW OF EXTEND THE DREAM FOUNDATION - PROPERTY ACQUISITION Business Proposed: Extend the Dream Foundation (EDF) requests funding to purchase a property they currently lease at 2218-20 F Street to house two micro-enterprises. Currently the property houses Mick's Workshop, an antique furniture refinishing and wood working shop that is run by a person with disabilities. Applicant also proposes to initiate a new business called RAMP UP that provides design and construction of minor renovations in homes and apartments for low-income disabled persons and for the elderly. Applicant currently pays $1 ,200/month to lease the proposed property. With a forgivable loan and a partial private loan, applicant estimates their mortgage could be reduced to $350/month. Budget & Private Financial Contribution $99,000 Iowa City CDSG forgivable loan (no repayment unless sold or in default) $50,000 Private lender loan (30 year loan - 7.5% interest rate) $6,000 Applicant contribution to upgrade the property Comprehensive Plan/CITY STEPS Plan The project does not require public infrastructure and is located in a CC-2 zone (community commercial). Applicant proposes to upgrade an existing property that needs rehabilitation. CITY STEPS notes a high priority for employment training and education skills and micro-enterprise assistance. The focus at EDF is on improving the lives of persons with disabilities through employment training and ownership opportunities. Quality of Jobs The project is an eligible activity under economic development as it provides financial support for the establishment, stabilization and expansion of one existing micro-enterprise and will create one additional micro-enterprise. (A micro-enterprise is a commercial enterprise that has five or fewer employees, one or more of whom owns the enterprise.) Mick's Workshop has one owner and RAMP UP will have a volunteer coordinator with independent contractors. None of the persons identified in the application are employees, each is considered 1099 subcontractors. Economic Impact The proposed CDSG funds will assist a non-profit agency stabilize and expand a property that will incubate micro-enterprises. All the businesses are operated by persons with disabilities. May 2007 Environmental/Community Involvement EDF provides opportunities for businesses and also works to enhance the incomes of persons with disabilities. In addition to operating six potential micro- enterprises at Uptown Bill's Small Mall and at 2203 F Street, EDF also operates an e-commerce center that trains persons with disabilities to buy and sell products on the internet to expand into home based businesses. Extend the Dream has been working with several community partners through referrals for micro-enterprise or e-commerce training and hosting meeting spaces for organizations such as AA meetings, Johnson County Coalition on Disability and the Brain Injury Group. EDF works with Like Skills, Systems Unlimited, MECCA, CMHC, Elder Services and STAR homeless outreach. Items to Address: 1. EDF is run entirely through volunteers. The organization has not had consistent financial management during its years in operation. EDF must have a financial system that provides control and accountability over funds and assets, identifies the source and application of federal funds, provides source documentation, has basic accounting records, and ensures an adequate separation of financial duties. EDF has worked to resolve some of these issues; however the organization must incorporate a financial management system operated on a long term basis that will meet federal minimal standards. 2. Zoning Issues: The home on the property is a non-conforming, single family property in a commercial zone. The home has a rental permit with an active tenant; last housing inspection was 4/11/2007. The application did not reference the property as a rental unit. The property can be changed to a commercial use; however it may involve substantial upgrades to bring it up to commercial standards. The work required to bring the property to code would be subject to Davis Bacon (prevailing) wages. If conversion of the property to a commercial use occurs and the tenant is displaced, then Uniform Relocation Assistance requirements would apply. If the applicant maintains the rental unit and operates the businesses in the workshop, then lead based paint regulations apply (the home was built in 1930). 3. EDF provides the financial management and accounting for Mick's Workshop. Uptown Bill's profit and loss statement, calendar year 2006, shows an annual net income of $33,231.40 in 2006. Does this contain the lease expense of $1,200 or tenant rent received? 4. Since this is an organization completely run by volunteers, please discuss a plan for succession if the director leaves the organization for any reason. May 2007 5. The applicant is a non-profit organization so technical assistance at the Small Business Development Center may be difficult to obtain. The organization may have to rely on donated financial management or through consultant fees. 6. CDBG funds were used to purchase the building at 912 2nd Ave. (2203 F. Street) in 2005. A few items remain from the building permit issued in October of 2005 in regards to electric and riser height issues and must be reinspected. May 2007 Iowa City CDBG Economic Development Funds Application for Business Financial Assistance Business Requesting Financial Assistance: Individual: Thomas Walz on behalf of the Extend the Dream Foundation Home Address: 915 E. Davenport St., Iowa City, Iowa 52245 Name of Applicant Business: Extend the Dream Foundation Full Street Address of Business: 401 S. Gilbert St., Iowa City, Iowa 52240 Phone Number & Email Address: 530-8765 (or office 339-0401), thomas-walz@uiowa.edu DUNS Number (If awarded funds, applicant must obtain a DUNS number): 421465808 Type of Business Non-Profit: Incubator of Micro-Enterpnses Owned and Operated by Persons with Disabilities. Date Business: Established 1974 (onginal coffee shop founded), current program (2001) Bank of Business Account and Address (if applicable): Accounts are divided between Iowa State Bank and Trust (e.g. Sackter House, Documentary, Escrow) and Hills Bank (Uptown Bills lee Cream and Coffee Bar, Bookmark, Mr. Ed's Super graphics, Mad Hatter Room, Vintage ShoplMicks Workshop, The Framery, Ramp, Inc, and the Workshop Account. NOTE: The City will not provide assistance in situations where it is determined that any representation, 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 t~ recover City funds. Revised 11/15106 1 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: The project involves the purchase of a property (two buildings) at 2218-2220 F. St to house two micro-enterprises: Mick's Workshop and RAMP UP. The first of these specializes in furniture refinishing and antique restoration for the general public and the second specializes in the design and construction of minor renovations in homes and apartments for the low income disabled and elderly to help them improve the physical accessibility of their domiciles. In addition will provide some "chores" services may be offered to low income elderly persons and persons with disabilities.. The proposed purchase is attractively priced, the landlord has upgraded the building with new siding, a new heating plant and cooling plant. The building is located across the street from one of our other buildings (the Ecommerce Center at 2203 F St) and has a functional tie to the buildings to be purchased ( refinishing antiques for our vintage shop, frame making for the Framery and the shared use of equipment, office and storage space for the new RAMP UP micro enterprise). Another benefit is the enhanced value that can be expected from building through sweat equity upgrades (similar to what we did with the F street building across the street). 1.2. Provide a brief history of your company: The Extend the Dream Foundation (EDF) dates back to the founding of Wild Bill's Coffee Shop on the U of I campus in 1974. Its current community based history began in 2001 with the formation of Uptown Bill's Small Mall at 401 S. Gilbert St. and the opening of micro-enterprises owned and operated by persons with disabilities. In its early years Bill's Coffee Shop was operated by the International Bill Foundation until its 1999 merger with the Extend the Dream Foundation. 1.3. Describe the organizational structure of the business: EDF is a 501 C-3 non-profit corporation governed currently by a 13 member board of directors most of whom are notable local business, academic and community leaders.. EDF is administered by a retired experienced administrator volunteer and network of approximately fifty community volunteers. The financial management is handled by Executive Director with paid assistance through a service contract With Marlene Perrin at Taxes Plus. The Board meets quarterly and the Executive Committee meets monthly. Other standing committees include: Community- University Relations, Futures and Planning and an Endowment Committee meet as needed. See Organization Chart. 1.4. Management Revised 11/16/08 2 (Proprietor, partners, officers, directors, all holders of outstanding stock, 100% of ownership must be shown) - non-profrt Name & Position!Title Complete Address % Owned Thomas Walz, Executive Director* 915 E. Davenport St, Iowa City Allan Young, Chairperson 3248 Hastings Ave, Iowa City Dale Hankins, Vice Chair Solon, Iowa Mercedes Bern-Klug, Secretary 1803 CSt, Iowa City Charles Skaugstad, Jr, Chair, 602 S. Summit St, Iowa City Communty Relations Committee Dr. Phillip Jones, co-chair, 3201 Muscatine, Iowa City Endowment Committee David Maeglin, Treasurer, Chair of 20 N. Lowell St., Iowa City Finance Committee Jeff Larsen 2201 Dubuque Rd., Iowa City Rabbi Jeffery Portman 3030 Friendship Ave, Iowa City Carol Fisher 1208 Guilford Crt, Iowa City Marilyn Austen Williamsburg, Iowa Barry Morrow Santa Barbara, Ca\lf. Josh Gersten 79 Primrose Crt, Iowa City Rev. Eugene Mathews 3113 Court St., Iowa City Attach a brief description similar to a resume of the education, technical and business background for all the people listed under Management. Management Resume: Walz Dr. Walz has a lengthy administrative experience: Director, Community Rehabilitation Center, Mpls. 1959-61, Director Living Learning Center, U of Minn, 1964-68, Director of Community Design Center of Minn, Mpls, 1971-73, Planning consultant to Mpls Model Cities (1969-71), Peace Corps Director, Honduras, CA (1962-64), Director of the School of Social Work (1973- 78), Director of the U of I Gerontology Center (1977-81), Director of the Des Moines Graduate Center (1991-1999), and founder Director of Extend the Dream Foundation since 2001. Dale Hankens, former Director of Training for Accenture (formerly Arthur Anderson) International Division, 20 years. Revised 11/16/06 3 David Maeglin, President of Muscatine Storage (1994-2004), currently an international investor. Jeff Larsen, former owner of several Iowa City businesses, investor. Phillip Jones, Vice.President for Student Affairs, U of Iowa, 25 years. 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? No 1.6. Iowa City or Johnson County company? If yes, please indicate the facility(s) and/or company(s) affected. No Revised 11/16/06 4 Section 2: Financial Contributions to the Proposed Project 2.1. Use of Proceeds USE OF Proceeds Loan Requested (Enter gross dollar amount rounded to the nearest Activity hundreds) Land acquisition $ part of property New Construction/Expansion Repair $ Acquisition and/or Repair of Machinery $ and Equipment Inventory Purchase $ Working Capital (including accounts $ payable) Acquisition of Existing Business $ All Other (provide description)- $ 99,000 property acquisition (two buildings) Total Loan Requested (All Sources): $ 149,000 2.2. Tem'1s of Proposed Financing (Sources) Monthly Type(1) Proposed Financing Amount Payment Rate Term Financial $ Financial Institution <8>direct loan $ 50,000 Other : $ Iowa City COBG Economic Dev. Fund $ 99,000 TOTAL: $149,000 (11Forgiveable loan requested".. 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. Financial assistance has been explored with Iowa State Bank and Trust and Hills Bank, both were supportive of the project and agreed to a loan of $50,000 (pending outcome of our other applications). A letter from Iowa State bank confirms their loan Revised 11/16106 6 willingness. We need to limit the direct bank loan to reduce costs of housing the two aforementioned micro-enterprises. A loan of $50.000 at prime would leave us with about $350 (monthly cash flow) mortgage payment over 30 years. Currently we are paying monthly lease payments of $1200 for this property. Revised 11/16/06 6 2.4. Indicate the owner's contribution (cash, assets for the operation of the business, etc.) to this project. It is our intention to use our recent donations of $6,000 to immediately upgrade the property. This property (along with the building we recently purchased) had been neglected for many years to the point of impacting community appearances. 2.5. Identify all agencies or institutions involved in the project (financial, technical assistance, etc.) and what their involvement is: Extend the Dream Foundation - underwrite cost of upgrades Iowa State Bank and Trust - provide a direct loan of $50,000 Economic DevelopmentlCDBG Council- provide a forgiveable loan of $99,000. 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. o Corporate Guaranty o UCC Financing Statement o Irrevocable Letter of Credit o Personal Guarantee o Surety Bonds X Mortgage on Real Estate o Escrow Account o 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. We also own about 7,000 worth of equipment and materials that could be used as collateral. 2.7 If the City did not provide financial assistance, could the project proceed? No, unless our Director wins the 2007 Purpose Prize for which he was a "finalist" in 2006. There are several prize winners to be selected whose organizations would each be given $100,000. It would be self-defeating even if conventional bank loans were available for the full amount since the mortgage payments would be no different than the lease payments. With our partial rent subsidy from the City for our downtown small Mall project completing its sixth and final year , we woulc:i not be able to handle the current lease levels for both sets of property from micro enterprise earnings supplemented by our savings for very long. 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 falls to create and/or retain the Jobs identlfled below by the end of the project period and maintain them for a Revised 11116106 7 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. Micks Workshop - 2 full handicapped employees, 2-4 independent contract workers. RAMP UP - estimate one half time coordinator, 2-4 independent contract workers. None of the above are employees, each are 1099 sub-contractors. 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 andlor Retained Positions in First 12 Months of Project Award (please see attached Job Cmgory Definitions) Hourly # of Jobs # of Jobs No. Hours Rate of Pa Fringe Created Retained Type of Job Per Week y Benefits. 1 1 Officials & Managers #1 60, #2 20 Open n/a Professional Technicians Sales Office & Clerical Craft Wokers (Skilled) 2 n/a Operatives (semi-skilled) Laborers (unskilled) 6-8 $1 ()"12hr nla 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? Difficult to estimate since one of the projects will be just starting out. Hourly rate will be approximately $15/hr on a project by project timetable. The RAMP UP coordinator will be a volunteer. 3.4 If an existing business, will any of the current employees lose their jobs if the project does not proce~d? If yes, how many? Explain why: No Revised 11116106 8 Section 4: Economic & Environmental Impact 4.1. What other Johnson County companies could be considered to be your competitors? Mick's Workshop is one of three furniture refinishing and repair shops listed in the yellow Pages, though we know of a few others like Knock on Wood that do essentially what Mick does. Mick's also does a variety of odd jobs for low-income persons with disabilities (e.g. we moved many elderly residents at the Ecumenical Towers during the construction of the new elevator and other type of chore services for persons who couldn't afford to hire at regular rates). The workers at Mick's also keep up our properties on F Street (mowing, snow removal, etc.) From our knowledge of local building contractors, the kind of "accessibility remodeling" at affordable prices that many low income handicapped and elderly are able to pay is hard to find. Most contractors are not interested in small scale projects of this type. The small home repair individuals take up some of the need, but there are without the expertise to assess and design what needs to be done. None of the local contractors have the knowledge of ADA standards held by Jordan Pettus, the owner (coordinator) of RAMP. 4.2. Please describe the energy and resource efficiency, waste reduction, waste exchange, and recycling programs at your Iowa City operation. We recycle all hazardous materials through the county facility at the landfill. One of our volunteers is a waste management specialist (engineer) and is planning to do a study of our facility at the end of April. Part of our intended building upgrade is to increase the energy efficiency of both of the buildings on the property we want to purchase. The Workshop building has just had a new energy efficient heating unit installed and siding added (as insulation as well as cosmetic improvement). Our upgrade will include replacement of windows and frames In the 2220 F St.storage facility. Both Mick's Workshop and RAMP UP will share the same furniture refinishing and small home repair equipment as well as an interchange of expertise. Mick has construction and masonry background and Jordan was construction and sheet metal worker until his accident. 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. EDF and its micro-enterprises recruit, train and utilize a large number of volunteers annually (more than 100 different persons) per year, some of these will be involved in the Workshop and RAMP micro-enterprises. The new businesses along with the old sponsor the Ralston Creek Labor Day Fair and Flea Market entering Its sixth year with annual attendance of over 1000 persons). As noted many of the projects the two micro- Revised 11/15106 9 enterprises will undertake will involve assisting persons who could not otherwise pay for such services. 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 ever been involved in bankruptcy or insolvency proceedings? If so, please 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. No Section 6: Summary of Required Attachments Check off each attachment submitted. If not submitted, explain why. [ 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 N/A [ x] Brief description of the education, technical and business background for all the persons listed under Management (Question #1.4) Jordan Pettus, Coordinator, RAMP - AA degree in architectural drafting, 20 years experience in the trades as a sheet metal worker and construction worker. Has a consulting firm thru which he provides ADA consults for local developers on projects. Mick Vevera is the owner of Mick's Workshop (which operates financially as part Of the Vintage Shop. Mick has a high school degree, was in the masonry business with his father Bob Vevera for many years, was disabled in a fall, but has for the past six years worked as a subsidized volunteer for EDF until 2004 when we helped him Revised 11/15/06 10 open his own shop. Revised 11/16/06 11 [x ] Please provide the social security numbers for all the persons listed under Management (Question #1.4) Mick Vevera - r (] If an existing company, copy of the company's quarterly Iowa "Employer's Contribution and Payroll Report" for the most recent quarter. N/A (] 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. None 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 Infonnation 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 proprietor or general partner, sign below. By: Date: If applicant is a Corporation, sign below: ~,e~1~ 4407 Co porate Nam and Seal Date By: Attested by: Signature of Corporate Secretary Revised 11/16106 12 10:00 AM Uptown Bill's 04I28J07 Balance Sheet Cash Basis As of April 26, 2007 Apr 26, 07 ASSETS Current Assets Checking/Savings Bill's Book Mart 2,847.24 Bill's Coffee Shop 5,912.53 BIU's Documentory 4,636.68 Computer Graphics 365.94 Escrow 65,681.14 Extend The Dream Foundation 7,411.21 Framery 507.44 Mad Hatter Room -795.49 RAMP 39.75 Sackter House -182.50 Vintage Shoppe 7,983.78 Workshop 547.11 Total Checking/Savings 94,954.83 Total Current Assets 94,954.83 TOTAL ASSETS 94,954.83 LIABILITIES & EQUITY Liabilities Current Liabilities Credit Cards American Express 627.13 Total Credit Cards 627.13 Total Current Liabilities 627.13 Total Liabilities 627.13 Equity Opening Bal Equity 63,905.15 Retained Earnings 26,605.59 Net Income 3,816.96 Total Equity 94,327.70 TOTAL LIABILITIES & EQUITY 94,954.83 Page 1 , -....... .( .... 11:28 AM Uptown Bill's 04120101 Profit & Loss Cash Basis January through December 2006 Jan 06 Feb 06 Mar 06 Apr06 May 06 Jun 06 JulO6 Inc~r OR 718.91 500.00 544.56 609.93 600.00 608.24 624.95 I 26,775.05 16,770.72 17,545.70 16,686.05 26,104.04 14,668.96 24,072.76 Total Income 27,493.96 17,270.72 18,090.26 17,295.96 26,704.04 15,277 .20 24,697.71 Expense Account Expense -74.00 85.11 0.00 0.00 0.00 0.00 0.00 AD 43.74 0.00 146.70 189.25 0.00 15.00 17.75 Auto 0.00 319.48 220.11 0.00 0.00 0.00 0.00 C 616.95 657.14 636.00 520.13 765.93 506.41 896.99 car purchase 0.00 0.00 0.00 0.00 0.00 0.00 0.00 CC 350.00 500.00 350.00 600.00 600.00 600.00 600.00 FC 8.13 3.49 8.08 8.97 9.83 9.71 10.86 Garbage 25.00 37.71 232.00 0.00 0.00 0.00 0.00 IN 2,902.31 3,991.97 3,337.00 327.55 327.55 0.00 608.55 Insurance 0.00 0.00 327 .55 0.00 0.00 0.00 0.00 interest -0.21 -0.14 0.00 -0.22 O.QO 0.00 0.00 IR 1,778.31 1,569.32 1,467.13 1,958.96 3,280.37 2,639.39 2,705.00 L 0.00 0.00 0.00 320.00 320.00 320.00 320.00 M 1 ,525.82 583.89 2,382.57 5,215.19 6,575.30 5,703.83 6,789.23 mise 187.20 61.50 403.41 0.00 0.00 0.00 0.00 OS 0.00 O.QO 0.00 72.50 31.13 168.33 64.99 Parking 15.00 0.00 0.00 0.00 0.00 0.00 0.00 PAY 1,000.00 1,115.00 2,424.69 2,541.53 3,676.87 3,357.03 2,576.00 Payroll Expenses 1,997.50 2,135.75 1,856.76 0.00 0.00 0.00 0.00 POST 119.90 316.35 346.65 399.92 229.75 222.53 284.68 R 4,292.00 8,492.00 6,567.00 2,492.00 8,217.00 4,945.00 2,392.00 S.H. 0.00 0.00 0.00 0.00 0.00 0.00 0.00 S.H. Mort 250.00 500.00 250.00 0.00 0.00 0.00 0.00 S.H. OPER 200.00 425.00 200.00 0.00 0.00 0.00 0.00 Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 U 925.85 949.79 831.07 140.53 1,351.94 1,081.81 1,647.87 UI work study 0.00 0.00 0.00 0.00 0.00 0.00 0.00 UI work study 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Total Expense 16,163.50 21,743.36 22,191.52 14,786.31 25,385.67 19,569.04 18,913.92 Net Income 11,330.46 -4,412.64 -4,101.26 2,509.67 1,318.31 -4,291.84 5,783.79 Page 1 >".J '..-. 11:28 AM Uptown Bill's 04120/07 Profit & Loss Cash Basis January through December 2006 Aug 06 Sep06 Oct 06 Nov06 Dee 06 TOTAL Income CR 738.11 795.53 800.00 0.00 0.00 6,540.23 I 21,830.88 30,111.72 32,035.62 25,660.41 19,957.04 272,218.95 Total Income 22,568.99 30,907.25 32,835.62 25,660.41 19,957.04 278,759.18 Expense Account Expense 0.00 0.00 143.91 0.00 32.50 187.52 AD 197.27 167.53 415.19 267.42 190.00 1,649.85 Auto 0.00 0.00 981.44 0.00 0.00 1,521.03 C 793.31 700.54 1 ,535.01 1,149.30 1,055.12 10,034.83 car purchase 0.00 0.00 0.00 600.00 0.00 600.00 CC 700.00 775.00 800.00 450.00 468.65 6,793.65 FC 11.04 8.71 11.63 0.00 0.00 90.45 Garbage 0.00 0.00 59.75 59.75 59.75 473.96 IN 567.89 221 .00 1,238.01 4,440.00 2,650.79 20,612.62 Insurance 0.00 0.00 655.13 327.57 59.46 1,369.71 interest 0.00 0.00 0.00 0.00 0.00 -0.57 IR 2,181.96 1,917.24 1,941.45 0.00 0.00 21,439.73 L 320.00 320.00 0.00 0.00 0.00 1,920.00 M 5,022.53 7,682.26 2,068.77 577 .68 79.23 44,206.30 misc 0.00 0.00 250.85 748.75 166.45 1,818.16 OS 15.98 133.87 0.00 0.00 0.00 486.80 Parking 0.00 0.00 0.00 0.00 15.00 30.00 PAY 3,309.50 3,418.75 2,532.50 1,198.98 2,288.77 29,439.62 Payroll Expenses 0.00 0.00 1 ,635.00 1 ,076.75 6,918.34 15,620.10 POST 283.46 237.81 273.94 124.29 0.00 2,841.48 R 8,292.00 6,667.00 3,881.50 4,867.00 2,467.00 63,571.50 S.H. 0.00 0.00 225.00 425.00 495.00 1,145.00 S.H. Mort 0.00 0.00 250.00 . 500.00 500.00 2,250.00 S.H. OPER 0.00 0.00 0.00 0.00 0.00 825.00 Tax 0.00 0.00 0.00 600.00 200.00 800 .00 U 1,246.00 1,501.38 1 ,639.21 1,515.63 2,444.96 15,276.04 UI work study 0.00 0.00 143.75 0.00 0.00 143.75 UI work study 0.00 0.00 381.25 0.00 0.00 381.25 Total Expense 22,940.94 23,751.09 21,063.29 18,928.12 20,091.02 245,527.78 Net Income -371.95 7,156.16 11,772.33 6,732.29 -133.98 33,231.40 Page 2 . . PROFIT AND LOSSES 2006-2007 EXTEND THE DREAM FOUNDATION MICK'S WORKSHOPNINT AGE SHOPPE Month Expenses Revenues 06 Aug $5, 229.51 $5,307.85 Sept $4,086.81 $4,392.63 Oct $5,166.66 $5,017.63 Nov $5,084.54 $6,219.40 Dec $3,501.93 $5,156.43 07 lan $8,267.81 $4,440.97 Feb $4,413.81 $3,425.46 Mar $3,860.45 $4,785.55 Total $39,611.52 $38,745.55 Revenues minus expenses+ -$865.60 RAMP (new business start up scheduled for March 1 st) Total of $140 expenses for administrative start up; no revenue. <' BUSINESS PLAN 2007 RAMP UP Description: the following business plan addresses a start up micro-enterprise called RA11P UP. RAMP was accepted as a non-profit start up enterprise on January 1 st, 2007 under the Extend the Dream Foundation. It is officed at 2203 F St. in the EDF Ecommerce Building and works out the properties across the street 2218&2220 F St. The mission of RAMP is provide design, consultation and construction services for improving the accessibility of the domiciles of low-income handicapped and elderly or buildings frequently used by them. Staffing Plan: RAMP will be coordinated ("owned") by Jordan Pettus, a person with disability and a background in architectural drafting and design. He will be assisted by Mick Vevera (owner ofMick's Workshop) and other sub-contract employees (1099's) on a project by project basis. To the extent possible all persons associated with RAMP will be low-income, handicapped or elderly retired. Management Plan: RAMP will have its own checking account at Hills Bank and will be the sole determiner of the projects it accepts. The accounting and fiscal management of the enterprise will be handled by the parent EDF organization. The insurance liabilities of projects will be subsumed under the EDF comprehensive plan that covers all entities managed by EDF. RAMP will work with an advisory committee of representatives from EDF board, Elderly Services board, the Johnson County Coaltion on Disability and a like representative from a local consumer aging group. RAMP has successfully applied for a Federal contractors license and is currently applying for a state license (both are needed to do business with Federal agencies, such as the VA oflowa City). Projected Work Flow: in its first year, RAMP anticipates responding to approximately one request a month with about 30% requiring some construction follow through (two referrals in late 2006 from the VA oflowa City are pending). The other 70% will involve some household rearrangements, minor changes in lighting or design and estimates of more major modifications (e.g. addition of a ramp). These projects will be invoiced at an average of $15-20 per hour with an understanding that pro bono services may often be expected. Design services will be carried out exclusively by RAMP's owner, Jordan Pettus. Minor construction services will be handled through a sub contract with Mick's Workshop, major construction services will be handled through small scale local contractors working under the general contract supervision of RAMP. Marketing: RAMP intends to grow slowly during its first year. The principal marketing will be through referrals from EDF and Elderly Services. A pamphlet describing the program will be produced and distributed through a variety of local sources (e.g. senior center, Independent Living, etc.) Later in the year a feature article will be arranged with the local press. Budget Summary: RAMP will operate out of its own checkbook. Start up capital of$150 (from EDF) was used to open the account. A grant application to the Mary 0 Cauldron fund requesting $7000 start up capital was submitted. In the interim, EDF will use its internal resources to support small projects. RAMP will have no rental obligations for either its office or work space, until it is fiscally able to contribute. The owner will work without pay as a volunteer until financial developments allow a profit share. Expenses and Revenues: it is estimated that after a ninety day start up, by April 1 st, RAMP can expect a cash/expense flow of $10,000 annually. Annual expense breakdown: * Rent and equipment. . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .00 Transportation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .00 Office supports (consumables, telephone)... ........................ ..00 Project supplies......................................................... .$4,000 Project sub contracts... ... ...... ... ...... .... ........... ...... ......... $6,000 Total $10,000 . Most of the actual cash flow and revenue will come via a major contract to build ramp(s) for veterans (one already approved at $5000). Annual Revenue breakdown: Service fees from projects... ... ... ... ... ... ... ... ... ... ...... ... ... $.6,000 Grants and loans - EDF .......................................... $ 1,000 Mary 0 Cauldron... ...... ...... ... ... ... ......... ...... ...... .., ... $ 3,000 Total $ 10,000 ) BUISNESS PLAN 2006-2007 MICK'S WORKSHOP STAFFING PLAN 1. Ownership will remain as before, Mick Vevera is the owner. His staff includes one regular part-time worker (JW) and several on-call independent contract workers (LW, BB, JC, JV). 2. EDF Executive Director will provide oversight and will be responsible for inventory purchases and approval of chore service requests. PROJECTED WORK FLOW 1. Eighty percent of activity will involve refinishing and repairing furniture, mainly antiques. 2. Ten percent of activity will involve chore services ("small home repairs)".. 3. Ten percent of activity will involve "buying", assessing, securing voluntary contributions of in-kind donations. 4. The above activities combined will require 100 hours of paid or voluntary work weekly. - -- .. - MARKETING 1. Regular ads will be placed in local newspapers associated with monthly summer yard sales and special events (the Ralston Creek Fair and Flea Market). 2. Signage will be redesigned and placed on lawns of2220 & 2203 F Street noting the workshop hours and activities. 3. A link to Mick's Workshop will be designed for the new Uptown Bills website (uptownbills.org) BUDGET SUMMARY 1. Mick's Workshop is fiscally a part of The Vintage Shoppe (operate out of one checkbook). It is anticipated that the combined micro enterprises will maintain an average monthly revenue flow of $5000/month for 2006-2007. Total Income............ $60,000 2. Expenses for this calendar year include: a) consumable supplies..... ..... .. . ..... ...... ... ........ . $1800/mo or 21 ,600/yr b) inventory replacement................................. $600/mo or $7,200/yr c) transport (gas, insurance, repair)...... ............... $200/mo or $2400/yr d) stipends and sub contracts............ .................... $10,000/yr r e) lease payments and utilities (based on current lease) $18,000/yr Total Expense............ $59,20 PROJECTED DEVELOPMENTS 1. Prepare CBDG public facility grant ~request $99,000) to buy the property (two buildings at 2218 and 2220 F S 1. ) 2. Pursue bank loan with local bank to cbmplete financing ($50,000) ofthe purchase price of$149,000. An earnest money contract to buy the building will be signed shortly (Feb., 2007). 3. If the property is purchased, $6000 donation in the escrow account will be used to cover costs of the energy upgrade of both buildings on the property. 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' ~l!l ~ il , ~...I':::':"f "..1i.i'i. ...'i./.... i...'~";{ :'; ; ..~ 8.';, :><.::/: e e.,. 'fA . "'4:"'" i'~1 ~r~ , - INITIAL REVIEW OF LA REYNA, INC. WORKING CAPITAL Business Proposed: La Reyna is a family owned specialty grocery store and restaurant specializing in Latin American products and cuisine. The business was established in March 2004. The owners previously owned and managed a store and restaurant in Columbus Junction, Iowa. The owners request funds for working capital. The store and recent restaurant addition has increased sales significantly. From 2005 to 2006 there was a 30% increase. It is anticipated that the projected sales for 2007, based on the first four months of operation, will be 39% higher than 2006. Budget & Private Financial Contribution $100,000 Iowa City CDBG low interest loan (7-year loan, 3.2% interest) Applicant has invested $25,000 in business operations. The business purchased the building on contract. The contract agreement requires monthly installments for 10 years, 6.5% interest rate on the unpaid balance. Comprehensive Plan/CITY STEPS Plan The project does not require public infrastructure and is located in a CC-2 zone (community commercial). CITY STEPS notes a high priority for the expansion and/or retention of business that meet the State's CEBA wage thresholds. Quality of Jobs The business is a minority owned business. The statements provided state the owners, Carlos and Carmen, receive a combined wage of $51,600. The Legaspi family, household size of 4, qualify as low-to-moderate income (LMI). The three positions proposed are at $7.25-$8/hour with no benefits. The wages for the owners, who qualify as low-moderate income, is above the CEBA wage threshold. The business provides goods and services to a segment of the population that buys latino products and cuisine. The owners are bilingual. There is only one other latino grocery store, EI Paso, in Iowa City. Economic Impact The proposed CDBG funds will provide a minority owned business access to low interest working capital. The business is experiencing a financial crunch with significant sales increases. Environmental/Community Involvement The business has supported local community organizations with donations and plans to join the Iowa City Chamber of Commerce. May 2007 Items to Address: 1. The financial information presented was not complete. Business needs to address financial reporting and management. Recommend if funded, an amount be directed to accounting services for financial management and reporting. 2. Business has significant credit card debt. Business was denied a business line of credit and it appears to be financing working capital with credit card debt. Permanent working capital is a long term use, the source of funds, such as a line of credit, must be long term as well. 3. The owners will accept a mortgage on the real estate. The owners have had a recent appraisal of the property and the appraised value was $640,000. Staff must confirm the amount of collateral available to place a lien on the property if approved for funding. May 2007 Iowa City COSO Economic Development Funds Application for Business Financial Assistance Business Requesting Financial Assistance: Individual Carmen Legaspi Home Address 26545 Hwy 92, Columbus Jet, Iowa, 52738 Name of Applicant Business La Reyna, Ine Full Street Address of Business 1937 Keokuk St. Iowa City, Iowa, 52240 Phone Number & Email Address 319-358-8182, raeastil@roekwelleollins.eom DUNS Number (If awarded funds, applicant must obtain a DUNS number): 187547695 Type of Business Restaurant, Grocery Store Date Business Established 3/24/2004 Bank of Business Account and Address (if applicable): Hills Bank, 1401 South Gilbert St., Iowa City, Iowa, 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. 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: Leasehold improvement, Increased working capital, and larger inventory. Recently opened a restaurant in conjunction with a grocery store. Need to upgrade facility to support increased customer traffic. 1.2. Provide a brief history of your company: The business started in March 2004. It is organized as a sub's' corporation, family-owned business. Two family members are employed. 1.3. Describe the organizational structure of the business: '5' corporation. Iowa company. Carmen and Carlos Legaspi are co-owners. Both, Carmen and Carlos work full-time in the business. 1.4. Management (Proprietor, partners, officers, directors, all holders of outstanding stock, 100% of ownership must be shown) Name & PositionlTitle Complete Address % Owned Carmen Legaspi, Vice-President 26545 Hwy. 92, Columbus Jct, lA, 52738 50 Carlos Legaspi, President 26545 Hwy. 92, Columbus Jct, lA, 52738 50 Attach a brief description similar to a resume of the education, technical and business background for all the people listed under Management. Attached 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, the project will enable the company to become profitable. We anticipate hiring four additional full-time employees: 1 cook, 2 waitstaff, one stock clerk. Section 2: Financial Contributions to the Proposed Project 2.1. Use of Proceeds USE OF Proceeds Loan Requested (Enter gross dollar amount rounded to Activity the nearest hundreds) Land acquisition $0 New Construction/Expansion Repair $0 Acquisition and/or Repair of Machinery $0 and Equipment Inventory Purchase $10,000 Working Capital (including accounts $90,000 payable) Acquisition of Existing Business $0 All Other (provide description) $0 Total Loan Requested (All Sources): $100,000 2.2. Terms of Proposed Financing (Sources) Monthly Proposed Financing Amount Payment Type(1) Rate Term Financial Institution: WestChester Bank $200,000 $2200 Fixed 7.0 11 yrs Financial Institution : Mr. Dave Moss $364,000 $2700 Fixed 6.0 10yrs Other: $ Iowa City CDBG Economic Dev. Fund $100,000 1321 Fixed 3.2 7 TOTAL: $664,000 6221 (1)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. Attached 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 # of Jobs No. Hours Hourly Fringe Created Retained Type of Job Per Week Rate of Pay Benefits* 2 Officials & Managers 140 25,000/yr Professional Technicians Sales Office & Clerical Craft Wokers (Skilled) Operatives (semi-skilled) 1 laborers (unskilled) 40 7.25 2 Service Workers 40 7.25 (waiter, cook) 40 8.00 *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? $96800 = Total 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: No, current employees will lose their job if project is not funded. Section 4: Economic & Environmental Impact 4.1. What other Johnson County companies could be considered to be your competitors? Other restaurants, especially Mexican restaurants. Mexican restaurants close by include: EI Ranchero, Los Portales, EI Dorado. 4.2. Please describe the energy and resource efficiency programs, waste reduction, waste exchange, and recycling programs at your Iowa City operation. Company recycles all bottles and cans for the restaurant La Reyna, Inc. will be purchasing an energy efficient freezer. 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. The business has a budget for civic groups of $500. The company plans on joining the Iowa City Area Chamber of Commerce. 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 ever been involved in bankruptcy or insolvency proceedings? If so, please 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. No Section 6: Summary of Required Attachments Check off each attachment submitted. If not submitted, explain why. [] 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) [] 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) [] 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. 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 i . a criminal violation under Iowa law to engage in deception and knowingly make, or ca e to be e, directly or indirectly, a false statement in writing for the purpose of procuring conomic development assistance from a state agency or political subdivision. If applicant is a proprietor or general partner sign below. By: If applicant is a Corporation, si L Re na Inc Corporate Name and By: Attested by: Date: tn - s::: . 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N <D 0 0 '" co .... '" .... '" 0 0 ...:: ..; 0 ~ .... .... '" ..... r:::. ~ '" 0 .... '" 0 0 ..; ..; 0 ~ .... .... N .... 0 0> '" 0 "': '" .... .... 0 0 ..; 0 ~ ~ .... ::;: <Xl r:::. 0 0 '" '" 0 0 ..; ..; 0 ~ gJ t3 :;: ~ r:::. 0> .... 0 0 0 ~ 'i =i I i!l -< fi~1\i i~~ ::J 0 0 .. E E j.a.a ~8!.&! :lS ~ "- il!!l!! N ::J ~ ~~~ ~8!.&!J!3 ~~i~~ l!.s.e_:;; ~j!Jij~o.. "'51lJll-l!! :I<<.B~ fi'1\ialjj!ll j~~c'}J8!. " lD :I ~ '" ~ '0. 13 ! c ~ '" (..) Carlos & Carmen Legaspi 26545 Hwy 92, Columbus Junction, lA, 52738 319.358.8182 carloslegaspilarey9@yahoo.com BUSINESS EXPERIENCE: La Reyna Restaurant & Grocery, LLC 2004 - Present 1937 Keokuk 8t, Iowa City, IA A specialty grocery store and restaurant specializing in Latin American products and cuisine. Established in March 2004 with the premise of bringing the 'La Reyna' business model to Iowa City. Family- owned. Managing Owners · Own and operate specialty grocer and cafe with sales projected to exceed $675K in 2007 · Anticipate a revenue increase of50% over 2005's sales · Responsibility for managing day to day operations and 5 employees · In 2007, expanded business to include restaurant (seating for 49people) La Reyna Restaurant & Grocery 1991 - 2006 225 Main St., Columbus Junction, IA A specialty grocery store and restaurant specializing in Latin American products and cuisine. Established in May, 1991 with the goal of tapping an emerging Latino market. Influx of the Latino population, in this town of 2,000 people, was due to the employment opportunities at the local meat-packing plant Initially, store opened as a 2 shelf operation occupying 250 sq ft on Main St. Grew to encompass 1800 sq ft, having never obtained a business line of credit. Family-owned. Owners · Owned and operated specialty grocer and cafe with sales (in 2005) of $450K · Responsibility for managing day to day operations and 6 employees · Increased revenue significantly, year over year Gerardo's Grocery Store 1985 - 1991 2390 S. Pulaski, Chicago, IL Specialty grocery store in Chicago's 'Little Village,' a predominantly Mexican neighborhood. Owned by David Gerardo (Carmen's brother). It was thru working with her brother that Carmen determined that she would move to Iowa and open her own store; to accommodate the growing population that was leaving the south side of Chicago to re-locate there. Assistant Manager (Carmen Legaspi) · Head Cashier · Responsible for bank deposits · Responsible for vendor relationships and managing store's inventory · Store employed 4 people with sales of approximately $175K,yr Community Involvement: Advisory Committee Members, The Louisa County Development Group, Group aimed at increasing sales of local businesses in Louisa County V.O.C.E.S Members, Community Group for Latinos in Louisa County Relevant Skills: Bilingual- fluent in Spanish and English Education: Carlos Legaspi - Bachelor of Arts, Architecture, Universidad Autonoma de Puebla, Mexico Carlos & CanllCll Legaspi ..-- Q) C> ro 0.. I.() <:::> <:::> C\I \.. Q) .Q E: Q) l> Q) Q 2 :S ..c::: LO ~ 0 0 C\l 0 0 ~~ 0 0 ('i) E: 0 0 I'- C\I ex> 0 0 ('i) e '<;f" I'- 0 w- <0;;:: w- w- ~ 0> ~ ('i) :+:i (/) ro () ro 10 0) .... en ~ >- ~ CD .0 ., ..... 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Income Statement For the Period Ended December 31, 2005 12 Months Ended 12 Months Ended Dec. 31, 2005 Dec. 31, 2005 Revenue 301 - Supermarket Sales $ 313,477.14 $ 313,477.14 305 - Money Services Income 9,748.41 9,748.41 Total Revenue 323,225.55 323,225.55 Cost of Sales 401 - COGS 176,349.31 176,349.31 Total Cost of Sales 176,349.31 176,349.31 Gross Profit 146,876.24 146,876.24 Operating Expenses 501 - Advertising 3,546.00 3,546.00 505 - Bank Charges 1,956.03 1,956.03 510 - Commissions 1,366.85 1,366.85 515 - Contract Labor 5,371.68 5,371.68 525 - Depreciation Expense 18,068.00 18,068.00 535 - Legal and Accounting 2,885.00 2,885.00 540 - Insurance 654.50 654.50 545 - Interest Expense 15,097.38 15,097.38 548 - Meals 94.53 94.53 549 - Office Cleaning 658.93 658.93 550 - Office Supplies 883.87 883.87 555 - Licenses and Permits 630.09 630.09 560 - Rent 8,100.00 8,100.00 565 - Repairs 4,114.47 4,114.47 566 - Telephone 2,771.94 2,771.94 567 - Tax Sales 3,761.49 3,761.49 569 - Security Services 602.71 602.71 570 - Supplies 4,989.37 4,989.37 571 - Taxes Payroll 3,850.24 3,850.24 573 - Trash Removal 1,016.68 1,016.68 580 - Utilities 6,409.37 6,409.37 581 - Vehicle Expense 463.18 463.18 591 - Wages 47,074.19 47,074.19 Total Operating Expenses 134,366.50 134,366.50 Net Income (Loss) $ 12.509.74 $ 12.509.74 La Reyna, Inc. Balance Sheet December 31, 2005 ASSETS Current Assets 105 - Hills Bank - Supermarket 106 - Hills Bank - Services 107 - Hills Bank - Intermex 108 - WCSB XXXX7832 110 - Cash on Hand 125 - Inventory $ Total Current Assets Fixed Assets 160 - Prop, Plant, Equipment 165 - Accumulated Depreciation Total Fixed Assets Total Assets 1,907.62 (3,299.20) 94.20 132.74 402.95 117,024.81 212,309.00 ( 18,068.00) $ $ 116,263.12 194,241.00 310.504.12 Current Liabilities 205 - AlP to Distributors 228 - FICA W/H 229 - State W /H 237 - Current Port ofL T Debt 240 - Money Services Liability Total Current Liabilities Long Term Liabilities 247 - WCSB Loan #4598571 248 - WCSB Loan #4599071 Total Long Term Liabilities Equity 280 - CIS 281 - APIC 285 - Owner Withdrawals Current Income (Loss) Total Equity Total Liabilities & Equity La Reyna, Inc. Balance Sheet December 31, 2005 LIABILITIES AND EQUITY $ 22,250.00 1,487.41 333.89 12,221.00 4.895.59 237,079.17 14.408.00 100.00 6,119.32 (900.00) 12509.74 $ $ 41,187.89 251,487.17 17.829.06 310.504.12 La Reyna, Inc Income Statement For the Period Ended December 31, 2006 12 Months Ended 12 Months Ended Dec. 3 L 2006 Pct Dec. 31. 2006 Pct Revenue 301 - Supennarket Sales $ 409,099.28 97.02 $ 409,099.28 97.02 305 - Money Services Income 12,560.57 2.98 12.560.57 2.98 Total Revenue 421,659.85 100.00 421,659.85 100.00 Cost of Sales 401 - COGS 277.119.92 65.72 277.119.92 65.72 Total Cost of Sales 277.119.92 65.72 277.119.92 65.72 Gross Profit 144,539.93 34.28 144,539.93 34.28 Operating Expenses 501 - Advertising 3,638.16 0.86 3,638.16 0.86 505 - Bank Charges 4,146.56 0.98 4,146.56 0.98 510 - Commissions 4,102.60 0.97 4,102.60 0.97 515 - Contract Labor 1,062.50 0.25 1,062.50 0.25 517 - Contributions 95.00 0.02 95.00 0.02 525 - Depreciation Expense 31,344.00 7.43 31,344.00 7.43 530 Equipment Lease 629.96 0.15 629.96 0.15 535 - Legal and Accounting 1,821.00 0.43 1,821.00 0.43 540 - Insurance 528.00 0.13 528.00 0.13 545 - Interest Expense 21,996.44 5.22 21,996.44 5.22 548 - Meals 122.14 0.03 122.14 0.03 549 - Office Cleaning 5,731.50 1.36 5,731.50 1.36 550 - Office Supplies 1,607.84 0.38 1,607.84 0.38 555 - Licenses and Penn its 1,579.54 0.37 1,579.54 0.37 557 - Postage 95.91 0.02 95.91 0.02 560 - Rent 10,800.00 2.56 10,800.00 2.56 565 - Repairs 5,824.13 1.38 5,824.13 1.38 566 - Telephone 2,604.90 0.62 2,604.90 0.62 567 - Tax Sales 5,386.53 1.28 5,386.53 1.28 569 - Security Services 581.65 0.14 581.65 0.14 570 - Supplies 6,919.45 1.64 6,919.45 1.64 571 - Taxes Payroll 3,167.74 0.75 3,167.74 0.75 573 - Trash Removal 1,463.03 0.35 1,463.03 0.35 578 - Unifonns 833.60 0.20 833.60 0.20 580 - Utilities 10,891.18 2.58 10,891.18 2.58 581 - Vehicle Expense 2,854.46 0.68 2,854.46 0.68 591 - Wages 25.320.49 6.00 25.320.49 6.00 Total Operating Expenses 155.148.31 36.79 155.148.31 36.79 Net Income (Loss) $ (10.608.38) (2.52) $ (10.608.38) (2.52) La Reyna, Inc Balance Sheet December 31, 2006 ASSETS Current Assets 105 - Hills Bank - Supermarket 106 - Hills Bank - Services 107 - Hills Bank - Intermex 110 - Cash on Hand 125 - Inventory $ Total Current Assets Fixed Assets 160 - Prop, Plant, Equipment 165 - Accumulated Depreciation Total Fixed Assets Total Assets (153.46) (2,302.13) 1.12 309.57 118,045.36 232,108.10 ( 49,412.00) $ $ 115,900.46 182,696.1 0 298.596 56 Current Liabilities 205 - AlP to Distributors 228 - FICA W/H 229 - State W /H 241 - John Khainallah 242 - Maria Gerardo Total Current Liabilities Long Term Liabilities 247 - WCSB Loan #4598571 Total Long Term Liabilities Equity 280 - CIS 281 - APIC 284 - RIE Current Income (Loss) Total Equity Total Liabilities & Equity La Reyna, Inc Balance Sheet December 31, 2006 LIABILITIES AND EQUITY $ 9,283.00 985.04 11.20 5,000.00 2.500.00 227.1 15.60 100.00 52,600.36 11,609.74 00.608.38) $ $ 17,779.24 227,115.60 53.701.72 298.596.56 Hills Bank and Trust Clmpanv Member FDIC Hills Bank and Trust Company 131 Main Street Hills, IA 52235 (319) 338-1277 "LENDER" Carmen Legaspi Iowa City, IA 52240 TEl.E!PHQNIONo. IOIONTIFICATIONNO. NOTICE OF ACTION TAKEN AND STATEMENT OF REASONS (BUSINESS CREDIT) Description of Account, Transaction or Requested Credit: Business line of credit Application Date Today's Date 11/16/06 03/16/crf Description of Action Taken: Request Denied Thank you for applying to us for credit. We have given your request careful consideration, and regret that we are unable to extend credit to you at this time for the following reasons: Excessive obligations in relation to income. Unable to verify income. Insufficient financial information. NOTICE: The Federal Equal Credit Opportunity Act prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status, age (provided that the applicant has the capacity to enter into a binding contract); because all or part of the applicant's income derives from any public assistance program; or because the applicant has in good faith exercised any right under the Consumer Credit Protection Act. The Federal agency that administers compliance with this law concerning this creditor is: FDIC Consumer Response Center 2345 Grand Boulevard, Suite 100 Kansas City, MO 64108 Should you have any additional information which might assist us in evaluating your creditworthiness, please let us know. Thank you for applying. Notice: I!J Mailed D Delivered Dated: March 16, 2006 LENDER: Hills Bank and Trust Company By, ,~M '~. . .lace . a1ley Comm. Banking Offi CALIFORNIA AND MASSACHUSETTS RESIDENTS: See important information on the reverse. MASTCMCD (!) Harland Financial Solutions. Inc. (4/27/04) (800) 937-3799 INITIAL REVIEW OF DISCERNING EYE WORKING CAPITAL Business Proposed: Discerning Eye is a full service optical store founded in December 2005. The store provides high end eyewear and lenses in a retail establishment in downtown Iowa City. In addition to frames, the store also carries clothing accessories, purses and jewelry. The owner requests funds for working capital. The initial build out of the existing space used more capital than expected and significantly reduced the amount of working capital available to the business. Budget & Private Financial Contribution $35,000 Iowa City CDBG low interest loan (7-year loan, 1 % interest) Applicant has invested $40,000 in cash and approximately $10,000 in credit card debt for the business. ISB& T has a mortgage on the owner's personal residence as collateral for their loan. The owner has a significant commitment to the business. 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 meet the State's CEBA wage thresholds. Quality of Jobs The job to be retained is a job for a low-to moderate income person. The optician position requires a high school diploma, but does not require any specialized degrees or certifications. The retained position is paid above the CEBA wage threshold and receives benefits. Economic Impact The proposed CDBG funds will assist a downtown business strengthen their cash flow during the year to obtain profitability in late 2008 or 2009. Sales are significantly skewed to the end of the year and the business will need to address month to month cash flow issues to remain in business. Environmental/Community Involvement The business utilizes regulated interior lighting and a programmable thermostat. The business has supported local community organization with donations of cash, gift certificates and eyewear. Items to Address: 1. Due to limited cash flow, would recommend not employing additional staff until cash flow improves or delaying until the end of the year when sales are significantly higher. 2. Limited collateral is available. Applicant requests a personal guarantee. May 2007 Iowa CilV COBB Economic Development Funds Application for Business Financial Assistance Business Requesting Financial Assistance: Individual: Joni Schrup Home Address: 2119 Mallory St SW Cedar Rapids IA 52404 Name of Applicant Business: Discerning Eye Full Street Address of Business: 119 E. Washington Street Iowa City IA 52240 Phone Number & Email Address: 319.338.6800 jschrup@discerningeyeoptical.com DUNS Number (If awarded funds, applicant must obtain a DUNS number): Type of Business: Optical Retail Date Business Established: December 2005 Bank of Business Account and Address (if applicable): Iowa State Bank and Trust 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 1 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: Discerning Eye currently employs two full-time opticians and an independently contracted optometrist. Our optometrist currently offers eye exams one day per week. We would like to retain the full-time optician as well as expand our optometric services and coverage. An optician adjusts and dispenses glasses and contact lenses usually in conjunction with a licensed doctor of optometry. An optician in the State of Iowa does not need to be licensed or certified. A high school education is necessary for this position. These funds would help us retain the full-time optician and allow us to increase the number of days the optometrist would be in the office performing exams. This would allow Discerning Eye to provide better, more comprehensive service to our customers as well as increase our overall revenue. 1.2. Provide a brief history of your company: Discerning Eye is a distinctive full-service optical store founded in December 2005. Discerning Eye has the look of an upscale optical boutique often found in large metropolitan areas such as Chicago, with a unique frame selection that is not currently available elsewhere in the surrounding area. Discerning Eye employs two full-time opticians and an independently contracted optometrist. Located in Iowa City, lA, Discerning Eye offers high- end, high-tech luxury eyewear and cutting-edge lenses for both men and women. Discerning Eye provides the Iowa City population with unique, individual eyewear. Our goal is to provide for our customers the experience of purchasing a deluxe product which will leave them feeling special, pampered and thoroughly convinced that they have made the best possible choice in their purchase. Discerning Eye achieved $380,000 in sales during the first year of operation. We were able to achieve these sales figures with an optometrist on staff only 45 days of the year. This allows Discerning Eye excellent sales growth potential. Sales in December of 2006 were especially strong and exceeded $100,000 because many customers utilized their flexible medical spending benefits. The proximity of the University of Iowa to Discerning Eye allows us to fully maximize our end-of-year sales. We have worked hard to cut costs and increase sales in order to maximize profits. The first quarter of 2007 resulted in a 49.7% sales increase over the previous year. The second quarter has shown similar sales figures so far. We have drastically reduced our controllable expenses. Discerning Eye has been able to reduce its advertising expenses and still show an increase in sales. Revised 11/15/06 2 1.3. Describe the organizational structure of the business: Discerning Eye is a Corporation taxed under subchapter S. The primary shareholder is Joni Schrup. 1.4. Management (Proprietor, partners, officers, directors, all holders of outstanding stock, 100% of ownership must be shown) Name & Positionmtle Complete Address % Owned Joni Schrup - President 2119 Mallory St SW 100 Cedar Rapids IA 52404 Joni Schrup, President and Managing Owner Joni has been dedicated to the optical business since 1976 and ABO certified in 1992. She earned a B.S. degree from the University of Iowa in 1987. She has worked in both private optometric practice and corporate optical retail settings. For the past 13 years, prior to opening Discerning Eye, Joni was the frame buyer for a four-store retail optical company and on-site manager of two of the stores. Joni is responsible for hiring, training and overseeing all aspects of the business including frame buying, purchasing all inventory and developing and maintaining relationships with all vendors. 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, there will be no transfer of operations or jobs. Revised 11/15/06 3 Section 2: Financial Contributions to the Proposed Project 2.1. Use of Proceeds USE OF Proceeds Loan Requested (Enter gross dollar amount rounded to Activity the nearest hundreds) Land acquisition $ New Construction/Expansion Repair $ Acquisition and/or Repair of Machinery $ and Equipment Inventory Purchase $ Working Capital (including accounts $ 35,000 payable) Acquisition of Existing Business $ All other (provide description) $ Total Loan Requested (All Sources): $35,000 2.2. Terms of Proposed Financing (Sources) Monthly Type(1) Proposed Financing Amount Payment Rate Term Financial Institution: $ Financial Institution : $ Other: $ Iowa City CDBG Economic Dev. Fund $35,000 $430 Direct 1% 7 years TOTAL: $35,000 (1)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. Our business is seasonal due to large amount of medical flex spending benefits that are used at the end of the year by many of our customers. Sales in December 2006 were 25 % of the gross sales for 2006 and provided a net profit of over $70,000. 2007 first quarter sales have increased 50% over the same period in 2006. As Revised 11/15/06 4 encouraging as these sales figures are, our current cash flow situation requires that we find financial assistance to in order to reach the 4th quarter of 2007. Discerning Eye has applied for additional financing through Iowa State Bank. We current have a SBA loan through ISB&T and discussed refinancing that loan as well as establishing a line of credit. However, both requests for funds were denied. 2.4. Indicate the owner's contribution (cash, assets for the operation of the business, etc.) to this project. Joni Schrup has contributed $40,000 in cash and approximately $10,000 on personal credit cards to establish Discerning Eye. 2.5. Identify all agencies or institutions involved in the project (financial, technical assistance, etc.) and what their involvement is: DE received help before we opened from Joni Thornton of the Iowa Business Center to fine tune our business plan. We have consulted with Paul Heath from Small Business Development Center for assistance with cash flow and other financing issues. Kurt Kastendick at Iowa State Bank and Trust provided assistance in obtaining the SBA loan for the business. 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. o Corporate Guaranty o UCC Financing Statement o Irrevocable Letter of Credit o Personal Guarantee o Surety Bonds o Mortgage on Real Estate o Escrow Account o 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. 2.7 If the City did not provide financial assistance, could the project proceed? At this time, without the financial assistance, Discerning Eye would have to let the full- time optician go and reduce the hours of operation of the business. This would result in a reduction in quality of service for our customers. Any plans for an optometrist would have to be put on hold. We may even have to layoff my part-time clerical & sales staff. This would have a dramatic negative impact on future sales and the overall success of Discerning Eye. Revised 11/15/06 5 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. There are two full-time employees and two part-time employees. 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 # of Jobs No. Hours HourlyRate Fringe Created Retained Type of Job Per Week of Pay Benefits* Officials & Managers 1 Professional 16 $40 none Technicians 1 Sales 40 $17 See attached 2 Office & Clerical 10 $8-10 none 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. Revised 11/15/06 6 3.3 What is the estimated annual payroll for the new employees resulting from this project? Expanding our optometric coverage would result in $33,280 in new annual payroll. 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: It is likely that our full-time optician will lose her job in order to improve our cash flow situation. This would result in a reduction in quality of service for our customer as well as Discerning Eye's hours of operation. Of the two part-time employees, one position would also likely be eliminated. If the project proceeds, we will not only retain our full-time and part-time employees, but we would have the opportunity to expand our optometric coverage. This would result in higher quality of service for our customers as well as increased revenue. Section 4: Economic & Environmental Impact 4.1. What other Johnson County companies could be considered to be your competitors? There are 3 other optical stores in downtown Iowa City: Alberhasky Eye, Advanced Eyecare and McDonald Optical. 4.2. Please describe the energy and resource efficiency programs, waste reduction, waste exchange, and recycling programs at your Iowa City operation. All of our interior lighting is regulated by dimmer switch panels. Our furnace and AC are on a programmable thermostat. We also have plans to replace much our interior lighting with energy-efficient florescent lighting within the next couple of years. 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. Discerning Eye has supported several local organizations including ICare, Iowa City Food Bank, Johnson County I Club, Shelter House, University of Iowa Law Students, and the Englert Theater with donations of cash, gift certificates and eyewear. Discerning Eye is fully committed to giving back to the Iowa City community and would like to continue to do so for many years to come. Revised 11/15/06 7 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 ever been involved in bankruptcy or insolvency proceedings? If so, please 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. No Revised 11/15/06 8 Section 6: Summary of Required Attachments Check off each attachment submitted. If not submitted, explain why. [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) ~ 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) [ X ] 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) [ X ] Please provide the social security numbers for all the persons listed under Management (Question #1.4) [ X ] 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 11/15/06 9 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. By: Date: If applicant is a Corporation, sign below: \)' By: Attested by: Revised 11/15/06 10 , , 1 :35 PM 04/28/07 Accrual Basis Discerning Eye Balance Sheet As of December 31, 2005 ASSETS Current Assets Other Current Assets Inventory. Frames Prepaid Expense Undeposlted Funds Inventory. Accessories Inventory. Lenses Total Other Current Assets Checking/Savings Checking. ....2674 Checking Cash Total Checking/Savings Accounts Receivable .Accounts Receivable Total Accounts Receivable Total Current Assets Fixed Assets Leasehold Improvements Furniture and Equipment Optical Equipment / Tools Furniture and Equipment. Other Computer Equip / Software Display Items Total Furniture and Equipment Organization Costs Accumulated Amortization Accumulated Depreciation Total Fixed Assets TOTAL ASSETS LIABILITIES & EQUITY Liabilities Long Term Liabilities SBA Loan Stockholder Loan Refracting Lane Loan Total Long Term Liabilities Current Liabilities Accounts Payable Accounts Payable Total Accounts Payable Credit Cards American Express .21004 Advanta MasterCard .7782 Sam's Club Discover .8210 Total Credit Cards Other Current Liabilities 941 Payable Iowa Withholding Payable .Sales Tax Payable Unemployment Payable Sales Tax Payable Total Other Current Liabilities Total Current Liabilities Total Liabilities Equity Dec 31,05 26,723.23 7,211.00 5,737.25 1,104.41 210.00 40,985.89 18,847.57 6,522.50 432.05 25,802.12 13,131.00 13,131.00 79,919.01 105,362.97 27,791.05 13,550.80 3,302.39 1,534.67 46,178.91 1,880.00 (10.00) (1,683.00) 151,728.88 231,647.89 162,489.17 28,107.31 21,985.00 212,581.48 23,714.77 23,714.77 2,732.96 2,364.12 968.60 6,065.68 1,473.78 219.00 137.55 109.15 2.80 1,942.28 31,722.73 244,304.21 Page 1 l 1:35 PM 04/28/07 Accrual Basis Discerning Eye Balance Sheet As of December 31, 2005 Capital Stock Opening Bal Equity Net Income Total Equity TOTAL LIABILITIES & EQUITY Dec 31, 05 1,000.00 (145.05) (13,511.27) (12,656.32) 231,647.89 Page 2 , 1:34 PM Discerning Eye 04/28/07 Balance Sheet Accrual Basis As of December 31, 2006 Dec 31, 06 ASSETS Current Assets Other Current Assets Inventory - Frames 45,220.68 Undeposlted Funds 16,916.75 Inventory - Accessories 2,291.45 Total Other Current Assets 64,428.88 Checking/Savings Checking - ***2674 23,437.32 Capital One. Money Market 1,030.00 Cash 81.48 Total Checking/Savings 24,548.80 Accounts Receivable *Accounts Receivable 13,852.28 Total Accounts Receivable 13,852.28 Total Current Assets 102,829.96 Fixed Assets Leasehold Improvements 120,258.11 Furniture and Equipment Optical Equipment / Tools 27,791.05 Furniture and Equipment. Other 14,777.86 Computer Equip / Software 3,302.39 Display Items 1,534.67 Total Furniture and Equipment 47,405.97 Organization Costs 1,880.00 Accumulated Amortization (135.00) Accumulated Depreciation (24,271.00) Total Fixed Assets 145,138.08 TOTAL ASSETS 247,968.04 LIABILITIES & EQUITY Liabilities Long Term Liabilities SBA Loan 149,900.58 Stockholder Loan 23,695.16 Refracting Lane Loan 18,510.81 Oldham Loan 15,000.00 Investor Loan 4,501.10 Total Long Term Liabilities 211,607.65 Current Liabilities Credit Cards Advanta MasterCard *7782 9,753.45 Sam's Club Discover *8210 7,461.19 American Express *21004 7,311.00 Capital One Visa *9328 6,910.00 Clti MC Platinum *3450 6,227.85 Bank of America 5,838.23 Clti MC Preferred *3578 5,695.22 American Express Blue 5,687.31 Clti MC Dividend *8045 4,155.64 WaMu *0198 2,021.56 Capital One Visa *3784 1,586.90 American Express Blue Cash 958.09 Dell Credit 436.46 Total Credit Cards 64,042.90 Accounts Payable Accounts Payable 39,458.71 Total Accounts Payable 39,458.71 Other Current Liabilities 941 Payable 2,078.60 Iowa Withholding Payable 917.54 Page 1 "\ Discerning Eye Balance Sheet As of December 31, 2006 1 :34 PM 04/28/07 Accrual Basis Gift Certificates Collected Exam Fees .Sales Tax Payable Unemployment Payable Total Other Current Liabilities Total Current liabilities Total liabilities Equity Capital Stock Retained Earnings Net Income Total Equity TOTAL LIABILITIES & EQUITY Dec 31, 06 895.00 633.00 433.38 50.26 5,007.78 108,509.39 320,117.04 1,000.00 (13,511.27) (59,637.73) (72,149.00) 247,968.04 Page 2 1 :35 PM Discerning Eye 04f28f07 Balance Sheet Accrual Basis As of March 31, 2007 Mar 31,07 ASSETS Current Assets Other Current Assets Inventory. Frames 54,284.07 Undeposlted Funds 3,171.54 Inventory. Accessories 2,588.12 Prepaid Expense (955.78) Total Other Current Assets 59,087.95 Accounts Receivable *Accounts Receivable 8,730.26 Total Accounts Receivable 8,730.26 ChecklngfSavlngs Checking. ***2674 4,863.24 Cash 324.95 HSBC Direct 3.26 Total ChecklngfSavings 5,191.45 Total Current Assets 73,009.66 Fixed Assets Leasehold Improvements 120,425.09 Furniture and Equipment Optical Equipment I Tools 27,791.05 Furniture and Equipment. Other 15,284.62 Computer Equip f Software 3,739.82 Display Items 1,732.06 Stereo f Music 68.41 Total Furniture and Equipment 48,615.96 Organization Costs 1,880.00 Accumulated Amortization (135.00) Accumulated Depreciation (24,271.00) Total Fixed Assets 146,515.05 TOTAL ASSETS 219,524.71 LIABILITIES & EQUITY Liabilities Long Term Liabilities SBA Loan 144,837.34 Stockholder Loan 22,195.16 Refracting Lane Loan 17,558.41 Oldham Loan 15,000.00 Investor Loan 3,093.21 Total Long Term Liabilities 202,684.12 Current Liabilities Credit Cards Advanta MasterCard *7782 12,100.61 Sam's Club Discover *8210 11,123.74 Clti MC Preferred *3578 6,460.78 Capital One Visa *9328 6,358.00 American Express Blue Cash 6,212.59 Cili MC Platinum *3450 6,091.87 American Express Blue 5,753.12 Bank of America 5,488.23 American Express *21004 4,569.00 Clti MC Dividend *8045 2,524.76 WaMu *0198 1,955.38 Capital One Visa *3784 1,675.14 Dell Credit 290.92 Total Credit Cards 70,604.14 Accounts Payable Accounts Payable 35,200.05 Total Accounts Payable 35,200.05 Other Current Liabilities Page 1 1 :35 PM 04/28/07 Accrual Basis Discerning Eye Balance Sheet As of March 31, 2007 941 Payable Gift Certificates Iowa Withholding Payable Unemployment Payable .Sales Tax Payable Collected Exam Fees Sales Tax Payable Total Other Current Liabilities Total Current Liabilities Total Liabilities Equity Capital Stock Net Income Retained Earnings Total Equity TOTAL LIABILITIES & EQUITY Mar 31, 07 2,780.26 1,155.00 1,072.54 423.23 303.81 140.00 (8.22) 5,866.62 111,670.81 314,354.93 1,000.00 (22,681.22) (73,149.00) (94,830.22) 219,524.71 Page 2 The Discerning Eye Income Statement Vertical January 1, 2005 through December 31, 2005 Analysis Income Sales - Lenses $17,794 53.3% Sales - Frames $15,982 47.9% Sales - Accessories $898 2.7% Sales - Contacts $140 0.4% Sales - Discount -$1,433 4.3% Total Income $33,380 100.0% Cost of Goods Sold Cost of Lenses $6,673 20.0% Cost of Frames $5,537 16.6% Cost of Contacts $399 1.2% Cost of Accessories $77 0.2% Total COGS -$12,685 38.0% Gross Profit $20,694 62.0% Operating Expenses Wages $6,064 18.2% Rent $4,125 12.4% Office Supplies $1,337 4.0% Marketing $1,195 3.6% Graphic Design / Materials $982 2.9% Travel $583 1.7% Payroll Tax Expense $573 1.7% Shipping $285 0.9% Banking Fees $266 0.8% Telephone $235 0.7% CC Processing Fees $230 0.7% Utilities $216 0.6% Office Food & Beverage $208 0.6% Employee Bonus $185 0.6% Professional Services $145 0.4% Training $130 0.4% Insurance - Business $29 0.1% Computer / Software Support $25 0.1% Total Operating Expense -$16,812 50.4% Operating Income $3,882 11.6% Other Expenses Interest Expense $4,025 12.1% Net Income -$143 0.4% The Discerning Eye Income Statement Vertical January 1, 2006 through December 31, 2006 Analysis Income Sales - Lenses $198,363 52.0% Sales - Frames $180,758 47.4% Sales - Accessories $9,368 2.5% Sales - Contacts $7,698 2.0% Sales - Discount -$14,863 3.9% Total Income $381,323 100.0% Cost of Goods Sold Cost of Lenses $75,550 19.8% Cost of Frames $70,913 18.6% Cost of Contacts $5,181 1.4% Cost of Accessories $3,051 0.8% Total COGS $154,695 40.6% Gross Profit $226,627 59.4% Operating Expenses Wages $99,957 26.2% Rent $49,800 13.1% Marketing $19,905 5.2% Payroll Tax Expense $8,4 70 2.2% Insurance - Employee Health $8,005 2.1% Computer I Software Support $7,282 1.9% CC Processing Fees $5,604 1.5% Shipping $5,104 1.3% Office Supplies $4,500 1.2% Legal and Accounting $3,829 1.0% Travel $3,750 1.0% Retail Packaging Supplies $3,719 1.0% Insurance - Business $3,462 0.9% Utilities $2,580 0.7% Telephone $2,529 0.7% Professional Services $2,520 0.7% Parking $2,090 0.5% Office Food & Beverage $1,660 0.4% Cleaning and Maintenance $1,151 0.3% Graphic Design I Materials $590 0.2% Repairs and Maintenance $498 0.1% Doctor Fees $460 0.1% Banking Fees $416 0.1% Charity Donation $392 0.1% Insurance Processing $380 0.1% Total Operating Expense -$238,654 62.6% Operating Income -$12,026 -3.2% Other Expenses Interest Expense $19,912 5.2% Net Income -$31,939 -8.4% The Discerning Eye Projected Income Statement Vertical January 1, 2007 through December 31,2007 Analysis Income Sales - Lenses $242,016 50.3% Sales - Frames $221,961 46.1% Sales - Accessories $12,315 2.6% Sales - Contacts $12,414 2.6% Sales - Discount -$7,134 1.5% Total Income $481,571 100.0% Cost of Goods Sold Cost of Lenses $94,531 19.6% Cost of Frames $87,521 18.2% Cost of Contacts $6,601 1.4% Cost of Accessories $5,886 1.2% Total COGS -$194,539 40.4% Gross Profit $287,032 59.6% Operating Expenses Wages $100,954 21.0% Rent $53,175 11.0% Marketing $11,224 2.3% Payroll Tax Expense $8,826 1.8% CC Processing Fees $8,463 1.8% Insurance - Employee Health $8,028 1.7% Computer I Software Support $5,839 1.2% Shipping $4,937 1.0% Retail Packaging Supplies $4,937 1.0% Utilities $4,545 0.9% Professional Services $4,474 0.9% Office Supplies $3,383 0.7% Insurance - Business $2,573 0.5% Telephone $2,573 0.5% Parking $2,090 0.4% Office Food & Beverage $1,954 0.4% Cleaning and Maintenance $1,151 0.2% Banking Fees $1,002 0.2% Cleaning and Maintenance $999 0.2% Legal and Accounting $865 0.2% Travel $638 0.1% Charity Donation $535 0.1% Repairs and Maintenance $498 0.1% Insurance Processing $420 0.1% Banking Fees $416 0.1% Total Operating Expense $234,501 48.7% Operating Income $52,532 10.9% Other Expenses Interest Expense $22,912 6.0% Net Income $29,619 7.8% - 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III lL (,) c .3 -; z #- .... ... ai a'i N .... c;j III .... ....: Ii @ ~ I It) ,... o .; ~ ~ I N co Ol M Ol ~ S ; It) o ~ c; ~ g ; co c; ,..: N ~ g ; ~ v M It) ~ I C') o co M ~ g ; V N o It'i C') ~ I N ,... q i S "" ; co It) N ci It) ~ I co N N It) ~ S ; ~ Ol co ci ~ I co CD N. ;0 ~ l! L! Cl ... ~ iii ~ o !l t.. ~lL ~ c z.3 c o :;::; 'iij o a. ~ = o -; c u:: Employee Benefits Health Insurance Parking Eye Exams 2 pair of eye glasses/ year at no charge or cost 13 days PTO (Paid Time Off)/year Question #1.4 Joni Schrup, President and Managing Owner Joni has been dedicated to the optical business since 1976 and was ABO certified in 1992. She earned a BS degree from the University of Iowa in 1987. She has worked in both private optometric practice and corporate optical retail. For the past 13 years, prior to opening Discerning Eye, Joni was the frame buyer for a four store retail optical company and on-site manager of two of the stores. Joni is responsible for hiring, training and overseeing all aspects of the business including frame buying, purchasing all inventory and developing and maintaining relationships with all vendors. Monthly Sales # Month Sales Rank $ Change 0/0 Change 12 December-05 $33,430 3 1 January-06 $17,963 17 2 February-06 $21,220 15 3 March-06 $26,123 10 4 April-06 $24,718 12 5 May-06 $19,883 16 6 June-06 $33,393 4 7 July-06 $28,054 8 8 August-06 $22,732 13 9 September-06 $21,677 14 10 October-06 $28,594 7 11 November-06 $33,133 5 12 December-06 $104,394 1 $70,964 212.28% 1 January-07 $32,172 6 $14,220 79.16% 2 February-07 $25,152 11 $4,151 19.56% 3 March-07 $40,673 2 $14,551 55.70% 4 April-07 $27,739 9 $3,021 12.22% Sales v. Last Year 2006 2007 $ Change % Change 1st Quarter Sales Lenses $33,292 $49,859 $16,567 49.760/0 Frames $32,044 $47,211 $15,167 47.330/0 Accessories $1,342 $2,266 $924 68.850/0 Contact Lenses $1,635 $4,267 $2,632 160.980/0 Discounts -$2,959 -$5,606 -$2,647 89.46% Total $65,354 $97,997 $32,643 49.950/0 2nd Quarter Sales To Date Lenses $31,147 $45,240 $14,093 45.250/0 Frames $26,773 $40,806 $14,033 52.410/0 Accessories $2,251 $2,117 -$134 -5.950/0 Contact Lenses $1,035 $3,943 $2,908 280.97% Discounts -$2,874 -$3,939 -$1,065 37.06% Total $58,332 $88,167 $29,835 51.150/0 Year to Date $123,686 $186,164 $62,478 50.51% r--. o o N + ... en ... ..... ... 8 o N f II) ... C") ... 0 N - en ~ CI) ~ ... ... en CI) C; en >. ::;: en CI) ~ ..... II) C") a 8 ~ ~ ~ ~ ~ ~ ~ ~ ~ - ~ i ~ ~ a $ ~ ~ ~ ; ;it tit IiH IOWA STATE BANK &TRUST COMPANY 319. 356'5800 . www.isbt.com April 18, 2007 Joni Schrup Discerning Eye, Inc 119 E Washington St Iowa City, IA 52240 Dear Joni: Thank you for your interest in obtaining a $40,000 small business loan for working capital. Unfortunately, we are unable to approve your credit request for the following reasons: . Lack of sufficient collateral. . Insufficient equity. . Lack of secondary repayment source independent of the business. Our decision was based in whole or in part on information obtained in a report from the consumer reporting agency listed below. You have a right under the Fair Credit Reporting Act to know the information contained in your credit file at the consumer reporting agency. The reporting agency played no part in our decision and is unable to supply specific reasons why we have denied credit to you. You also have a right to a free copy of your report from the reporting agency, if you request it no later than 60 days after you receive this notice. In addition, if you find that any information contained in the report you receive is inaccurate or incomplete, you have the right to dispute the matter with the reporting agency. Name: Address: Phone: CSC Credit Services, Inc. P.O. Box 619054, Dallas, TX 75261-9054 1-800-392-7816 If YOU have any questions regarding this notice please contact: Contact Name: Kurt Kastendick Lender's Name: Iowa State Bank & Trust Company Address: 102 S. Clinton St., Iowa City, IA 52240 Phone: 319-356-5800 P.O. Box 1700, Iowa City, IA 52244. 1-800-247-4418 Member FDIC . Equal Housing Lender NOTICE: The federal Equal Credit Opportunity Act prohibits creditors from discriminating against credit applicants on the basis ofrace, color, religion, national origin, sex, marital status, age (provided the applicant has the capacity to enter into a binding contract); because all or part of the applicant's income derives from any public assistance program; or because the applicant has in good faith exercised any right under the Consumer Credit Protection Act. The federal agency that administers compliance with this law concerning this creditor is: Federal Deposit Insurance Corporation 2345 Grand Avenue, Suite 1500 Kansas City, MO 64108 We appreciate your interest in working with Iowa State Bank & Trust Company and wish you well. s~ Kurt Kastendick Senior Vice President