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HomeMy WebLinkAbout07-24-2007 Council Economic Development Committee AGENDA City of Iowa City City Council Economic Development Committee Tuesday, July 24, 2007 8:30 a.m. Lobby Conference Room City Hall 1. Call to Order 2. Approval of Economic Development Committee Minutes, July 10, 2007 3. Alpla Expansion TIF Application - Ford 4. Gluten Evolution CDBG Economic Development Funds Request 5. Nile Valley Restaurant CDBG Economic Development Funds Request 6. Staff time a. Bankruptcy wording on CDBG loan application b. Loan portfolio management 7. Committee time 8. Adjournment MINUTES CITY COUNCIL ECONOMIC DEVELOPMENT COMMITTEE JULY 10,2007 CITY HALL, LOBBY CONFERENCE ROOM Preliminary Members Present: Regenia Bailey, Connie Champion, Bob Elliott Members Absent: none Staff Present: Wendy Ford, Tracy Hightshoe, Jeff Davidson Others Present: Carmen and Alex Legaspi with La Reyna, Jill Pitcher with Alpla, Joe Raso RECOMMENDATIONS TO CITY COUNCIL: None. CALL MEETING TO ORDER: Bailey called the meeting to order at 8:32 AM. APPROVAL OF MINUTES OF MAY 29.2007: Champion moved that the minutes be approved, Elliott seconded. Motion carried 3-0. LA REYNA - CDBG APPLICATION: According to legal, the City can't fully secure the loan as the building was purchased under contract. The deed holder granted an interest in the building to West Chester Bank for the start up loan. West Chester also placed a blanket lien on all equipment for the business. Staffs recommendation is for $60,000, unsecured. The City will place a mortgage on the building with La Reyna and will file a blanket lien on all equipment; however it will not fully secure the loan. In the case of default we may recover some of the loss, however there is no guarantee that any amount will be recovered. Many of our previous CDBG loans have been secured or partially secured. In cases of default, the City has not recovered significant amounts, except for The Rack where all funds were recovered. La Reyna requested $100,000; however upon discussions with the applicant and their current lender, $60,000 would greatly assist their cash flow. Elliot asked how much would be recovered in case of default, worst case scenario. Hightshoe stated there is a possibility that the entire $60,000 could be lost in the worst case scenario. The City's lien would not take precedence over the existing liens in such an event. Hightshoe stated that the recommendation to fund was also in part due to the grocery store serving a low income neighborhood where there are limited places to by grocery store items. CDBG funds can be used to fund businesses that provide necessary goods and service (non-luxury items) to low-income residents. Elliot is uneasy with this proposal as this is the second unsecured loan in a row. Bailey commented that with this form of micro- enterprise the City exercises excellent due diligence. Champion moved to continue with the $60,000 loan, Bailey seconded. Motion carried 2 - 1. Alpla Expansion Tax Abatement Request: Alpla is considering a $5 million expansion to their production and warehousing facilities and are requesting Partial Industrial Property Tax Exemption (PIPTE) or TIF to aid in this expansion. They have indicated that Iowa City is competing for the expansion with their Jefferson, Missouri location. PIPTE amounts to about a 45% break on taxes due on the new, improved part of the property. PIPTE can be automatically done through the City Assessor's office unless City Council would rather implement a TIF agreement. Alpla is seeking one or both, PIPTE and TIF, which is applicable in this case. One of Alpla's main customers is Procter and Gamble also located in Iowa City. The current TIF that Alpla has will expire in three years. Economic Development Committee June 21,2007 Page 2 To address concerns of noise associated with Alpla, ambient noise readings were taken north of the plant in the residential zone and compared with the Pedestrian Mall, City Park, and the intersection of Court Street and 1st Avenue, all of which were higher than those taken near Alpla. HUD's ambient noise standards for residential areas rates 65 to 70 dB as undesirable and above 70 dB as unacceptable; the ambient noise near Alpla averaged around 55 to 57 dB. Registered complaints were from 2 years ago since which Alpla has made investments to mitigate the noise. Current perceptions of noise are more likely due to quality of noise as opposed to intensity as suggested by the ambient noise readings. Alpla has made efforts to ascertain whether there have been any further noise complaints. Champion supports a shorter tax abatement period since they currently have a TIF. Elliot supports helping Alpla as it has flourished here and the City has benefited from their presence. Alpla reports that the expansion will add 25 new permanent positions at an average wage of $14 per hour plus benefits. While Elliot and Champion are willing to help Alpla, they noted a preference for using TIF as it protects the debt of the taxing bodies. Ford will run some scenarios and produce them to Committee members in memo format for review prior to including them into a draft agreement. Motion for this issue will be considered at the next Economic Development Committee meeting on July 24th. DOWNTOWN MARKET NICHE ANALYSIS - STAFF UPDATE: Surveys concluded the previous day at midnight at which time there were more than 1,100 consumer surveys and only 31 business surveys; additional telephone surveys are being conducted by Marketek. This response rate is considered particularly low in light of the amount of publicity; Bailey is concerned about the implications of this turnout rate. Champion commented that with regards to small businesses, the issue may be that time is in short supply and thus a lack of willingness to devote the time to engage in the survey. Of the consumer surveys there is a good distribution of age ranges. Marketek is currently analyzing data and planning a site visit in September. Committee Time: Elliot wants to keep bankruptcy questions on the application for financial assistance. Bailey commented about circumstances that lead to bankruptcy, this is especially the case for women and women business owners. Elliot indicated that he is thinking on the abstract rather than with regards to The Discerning Eye bankruptcy which was tied to personal rather than business circumstances. Bailey disagreed with Elliot, stating concern over judging long past personal problems as businesses issues. Champion mentioned that few small businesses make enough money to live on in the first five years unless they get some help or significant business. Bailey is comfortable with using the 7 year window standard that banks do with regard to bankruptcy; Hightshoe reminded the committee that she uses an entire spectrum of due diligence tools to examine applications. ADJOURNMENT: Bailey adjourned the meeting at 9:25 AM. Next meeting is scheduled for Tuesday, July 24, 8:30 AM, in the City Hall Lobby Conference Room. Submitted by John Dawson s/pcd/mins/ecodev/2007/7 -1 0-07ed.doc Q) Q) ~ E E o u .... C Q)"C E ~ Q.U o CI) -0:: Q)CI)..... >UO Q)CO QCUN U"g .- CI) E= 0< c o U w - .- U C ~ o U (;) or- t::: >< >< >< or- ~ >< >< >< (Q or- W C'? - - >< >< 0 &I) en S; >< >< >< ('II or- - >< >< >< ~ (Q ~ >< >< >< ('II or- - >< >< >< C'? (Q (;) - >< >< >< C'? ..... ('II N >< >< >< (;) ('II - >< >< >< ('II en ~ >< >< >< ('II C'? ~ >< >< >< or- co co co VI 0 e 0 ~ - - N N N E.- 0 e 0 ~o. - - OJ X ..- ..- ..- I-W 0 0 0 c 0 >- 'a .! E 'j; IV III ::: .c ,!! g 0 OJ C W ,!!! Q) c E C) .Q C ro Q) 0 0 z 0:: III 0 "C OJ VI ::l (,) X W --:g c:: c:: OJ OJ OJ VI VI 1/).0. ~.o.<( 0..<( .. II II II >. W OJ - ~><oo July 24, 2007 Council Economic Development Committee Gluten Evolution LLC Working Capital Staff Recommendation: The applicant has a history of paying loan obligations and is current with all supplier and bank payments. The owner has made a significant investment into the company. She is knowledgeable in her field, has experience with research and development and the product has a growing market. She has had a great team of advisors assisting her and has a strong lender recommendation in terms of her commitment to the business, repaying the loan and remaining in business. She has received and will continue to receive advice and consultation through the Entrepreneurial Development Center (EDC) in Cedar Rapids. The EDC helped recruit a chief operating officer knowledgeable in sales and financial operations. Since 2005 the cost of goods over sales (margins) is stable and the SGA/sales (overhead) have decreased. Estimated sales appear high, however lender believes if the business watches expenses and has increasing sales - the business will be successful. Staff recommendation: $50,000, partially secured by a mortgage on the private residence. Job creation would require 1.5 FTEs. Would not advise creating additional jobs until cash flow improves. Deferred payment allowed not exceeding 6 months; however term would remain at 7 years, 3% interest rate. Nile Valley Restaurant Staff Recommendation: The applicant disclosed that the co"'owner filed for bankruptcy in 1997; however the credit report indicates no past due amounts and demonstrates that the applicants have a current history of paying loan obligations. The owner is willing to make a significant financial investment in the business and has experience with food preparation, storage and handling. A start up business is inherently more risky than a business that has been in operation. There,is no security for this loan. The wage for three of the positions would be over $10.50/hour. Any funds used for construction would require that the applicant comply with federal labor provisions, including Davis Bacon prevailing wages. This could potentially limit what contractors the applicant could use and would increase the time the applicant must spend with complying with the regulations. It also has the potential of increasing the price of the work. Staff recommendation: $25,000 for working capital only to limit risk/exposure and not subject the project to additional federal regulations. Maximum term of 7 years at 4% interest and new cash projections completed prior to award. Job creation would require three FTE positions that are paid $10.50/hour or more. Staff recommends as a condition of the award the owner receive additional business assistance regarding items such as loss prevention, portion control, personnel and financial management. The training required would be based on an evaluation by the Small Business Development Center. (Note: The City funded Oasis Falafel with CDBG-Economic Development Funds. The loan was for $25,000,4% interest, 5-year term) I ~ 1 -~ = -....!t -.---.... ~~~!i ~ ~_.~ -,: CITY OF IOWA CITY MEMORANDUM Date: To: From: Re: July 20, 2007 City Council Economic Development Committee Wendy Ford Alpla Expansion TIF request Alpla, a plastic container manufacturer on Heinz Rd. in Iowa City is seeking a financial assistance package for a $5 million expansion of their facility. They are requesting a 4 year $600,000 Tax Increment Financing Rebate. Alpla is a growing plastic bottle manufacturer in our industrial area supplying packaging to, among others, Procter and Gamble in the same vicinity. The expansion will enable them to do additional manufacturing and warehousing facilities as their business grows. In 2003, the City agreed to provide Alpla with a 5 year, $510,000 maximum TIF rebate (including a $35,000 grant) to aid in an expansion providing an additional 86,000 square feet to the original building. In exchange, Alpla was to maintain at least 35 full time jobs. Each year since certifying completion, Alpla has been in compliance, and expanded operations and added employees. Since the initial expansion, Alpla purchased the old General Mills building on adjacent property, expanded operations at that building and now, would like to expand again with an 82,200 square foot addition at that location. Alpla now employs more than 200 people full time (most permanent, some temporary) and they will commit to maintaining 180 permanent full time jobs as well as adding an additional 25 permanent full time jobs with an average wage of at least $14.00 per hour plus benefits. Construction would begin in the fall of 2007 and be complete in 2008. They would certify for completion in November of 2009 and their first rebate would be distributed in June of 2011. The final rebate, provided they had not reached the $600,000 maximum, would be in June of 2014. Details of the Development Agreement include the following: . Making Minimum Improvements consisting of an 82,200 square foot addition and increasing assessed value on Jan. 1 2009 by at least 15% over Jan. 1, 2007 assessment. . Alpla would receive 4 annual 1 00% TIF rebates with a $600,000 cap. . Alpla would agree to not seek Partial Industrial Property Tax Exemptions on the new building. · Alpla would agree to maintain 180 permanent full time positions at an average of $14.00 per hour wage or above, benefits. . Alpla would agree to adding 25 additional permanent full time positions at an average of $14.00 per hour wage or above, plus benefits. · Alpla would agree to fully cooperate with the City in the resolution of any traffic, parking, trash removal, noise or public safety problems which may arise in connection with the construction and operation of the Minimum Improvements. AGREEMENT FOR PRIVATE REDEVELOPMENT By and Between THE CITY OF IOWA CITY, IOWA AND ALPLA OF IOWA, INC. AGREEMENT FOR PRIVATE REDEVELOPMENT THIS AGREEMENT FOR PRIVATE REDEVELOPMENT (hereinafter called "Agreement"), is made on or as of the day of ,2007, by and among the CITY OF IOWA CITY, IOWA, a municipality (hereinafter called "City"), established pursuant to the Code of Iowa of the State of Iowa and acting under the authorization of Chapter 403 of the Code of Iowa, 2007, as amended (hereinafter called "Urban Renewal Act") and Alpla of Iowa, Inc., having an office for the transaction of business at 2258 Heinz Road, Iowa City, Iowa 52240 (the "Developer"). WITNESSETH: WHEREAS, in furtherance of the objectives of the Urban Renewal Act, the City has undertaken a program for the revitalization of an economic development area in the City and, in this connection, is engaged in carrying out urban renewal project activities in an area known as the Heinz Road Urban Renewal Plan Area, which area is described in the Urban Renewal Plan approved for such area by Resolution No. 02-195 dated May 21, 2002; and WHEREAS, a copy of the foregoing Urban Renewal Plan has been recorded among the land records in the office of the Recorder of Johnson County, Iowa; and WHEREAS, the Developer owns or has the right to occupy certain real property located in the foregoing Urban Renewal Area as more particularly described in Exhibit A annexed hereto and made a part hereof (which property as so described is hereinafter referred to as the "Development Property"); and WHEREAS, the Developer will cause certain improvements to be constructed on the Development Property and will cause the same to be operated in accordance with this Agreement; and WHEREAS, the City believes that the development and continued operation of the Development Property pursuant to this Agreement and the fulfillment generally of this Agreement, are in the vital and best interests of the City and in accord with the public purposes and provisions of the applicable State and local laws and requirements under which the foregoing project has been undertaken and is being assisted. - 1 - NOW, THEREFORE, in consideration of the premises and the mutual obligations of the parties hereto, each of them does hereby covenant and agree with the other as follows: ARTICLE I. DEFINITIONS Section 1.1. Definitions. In addition to other definitions set forth in this Agreement, all capitalized terms used and not otherwise defined herein shall have the following meanings unless a different meaning clearly appears from the context: Agreement means this Agreement and all appendices hereto, as the same may be from time to time modified, amended or supplemented. Certificate of Completion means a certification in the form of the certificate attached hereto as Exhibit C and hereby made a part of this Agreement, provided to the Developer pursuant to Section 3.2 of this Agreement. City means the City of Iowa City, Iowa, or any successor to its functions. Code means the Code of Iowa, 2007, as amended. Construction Plans means the plans, specifications, drawings and related documents reflecting the construction work to be performed by the Developer on the Development Property and the other properties upon which the Public Improvements will be located; the Construction Plans shall be as detailed as the plans, specifications, drawings and related documents which are submitted to the building inspector of the City as required by applicable City codes. County means the County of Johnson, Iowa. Developer means Alpla of Iowa, Inc., a corporation. Development Property means that portion of the Heinz Road Urban Renewal Plan Area of the City described in Exhibit A hereto. Economic Development Grants mean the Tax Increment payments to be made by the City to the Developer under Article VIII of this Agreement. - 2- Event of Default means any of the events described in Section 10.1 of this Agreement. First Mortgage means any Mortgage granted to secure any loan made pursuant to either a mortgage commitment obtained by the Developer from a commercial lender or other financial institution to fund any portion of the construction costs and initial operating capital requirements of the Minimum Improvements, or all such Mortgages as appropriate. ALPLA OF IOWA, INC. - Alpla TIF Account No.2 means a separate account within the Heinz Road Urban Renewal Tax Increment Revenue Fund of the City, in which there shall be deposited all Tax Increments received by the City with respect to the Minimum Improvements on the Development Property described in Exhibit A. Minimum Improvements shall mean the construction of improvements to the existing structure and the construction of a new commercial building, together with all related site improvements as outlined in Exhibit B hereto. Minimum Improvements shall not include increases in assessed or actual value due to market factors. Mortgage means any mortgage or security agreement in which the Developer has granted a mortgage or other security interest in the Development Property, or any portion or parcel thereof, or any improvements constructed thereon. Net Proceeds means any proceeds paid by an insurer to the Developer under a policy or policies of insurance required to be provided and maintained by the Developer, as the case may be, pursuant to Article V of this Agreement and remaining after deducting all expenses (including fees and disbursements of counsel) incurred in the collection of such proceeds. Ordinance means Ordinance No. 02-195 of the City, under which the taxes levied on the taxable property in the Project Area shall be divided and a portion paid into the Iowa City Urban Renewal Tax Increment Revenue Fund. Proiect shall mean the construction and operation of the Minimum Improvements on the Development Property, as described in this Agreement. State means the State of Iowa. - 3 - Heinz Road Urban Renewal Tax Increment Fund means the special fund of the City created under the authority of Section 403.19(2) of the Code and the Ordinance, which fund was created in order to pay the principal of and interest on loans, monies advanced to or indebtedness, whether funded, refunded, assumed or otherwise, including bonds or other obligations issued under the authority of Section 403.9 or 403.12 of the Code, incurred by the City to finance or refinance in whole or in part projects undertaken pursuant to the Urban Renewal Plan for the Project Area. Tax Increments means the property tax revenues with respect to the Minimum Improvements that are divided and made available to the City for deposit in the Heinz Road Urban Renewal Tax Increment Revenue Fund under the provisions of Section 403.19 of the Code and the Ordinance. Termination Date means the date of termination of this Agreement, as established in Section 12.8 of this Agreement. Unavoidable Delays means delays resulting from acts or occurrences outside the reasonable control of the party claiming the delay including but not limited to storms, floods, fires, explosions or other casualty losses, unusual weather conditions, strikes, boycotts, lockouts or other labor disputes, delays in transportation or delivery of material or equipment, litigation commenced by third parties, or the acts of any federal, State or local governmental unit (other than the City). Urban Renewal Plan means the Urban Renewal Plan, as amended, approved in respect of the Heinz Road Urban Renewal Area, described in the preambles hereof. ARTICLE II. REPRESENTATIONS AND WARRANTIES Section 2.1. Representations and Warranties of the City. The City makes the following representations and warranties: (a) The City is a municipal corporation and political subdivision organized under the provisions of the Constitution and the laws of the State and has the power to enter into this Agreement and carry out its obligations hereunder. - 4 - (b) The execution and delivery of this Agreement, the consummation of the transactions contemplated hereby, and the fulfillment of or compliance with the terms and conditions of this Agreement are not prevented by, limited by, in conflict with, or result in a breach of, the terms, conditions or provisions of any contractual restriction, evidence of indebtedness, agreement or instrument of whatever nature to which the City is now a party or by which it is bound, nor do they constitute a default under any of the foregoing. Section 2.2. Covenants, Obligations, Representations and Warranties of Developer. The Developer makes the following representations and warranties: (a) Developer is a corporation duly organized and validly existing under the laws of the State of Georgia and has all requisite power and authority to own and operate its properties, to carry on its business as now conducted and as presently proposed to be conducted, and to enter into and perform its obligations under the Agreement. (b) This Agreement has been duly and validly authorized, executed and delivered by the Developer and, assuming due authorization, execution and delivery by the City, is in full force and effect and is a valid and legally binding instrument of the Developer enforceable in accordance with its terms, except as the same may be limited by bankruptcy, insolvency, reorganization or other laws relating to or affecting creditors' rights generally. ( c) The execution and delivery of this Agreement, the consummation of the transactions contemplated hereby, and the fulfillment of or compliance with the terms and conditions of this Agreement are not prevented by, limited by, in conflict with, or result in a violation or breach of, the terms, conditions or provisions of the certificate of incorporation and bylaws of Developer or its parents or subsidiaries of any contractual restriction, evidence of indebtedness, agreement or instrument of whatever nature to which the Developer is now a party or by which it or its property is bound, nor do they constitute a default under any of the foregoing. (d) There are no actions, suits or proceedings pending or threatened against or affecting the Developer in any court or before any arbitrator or before or by any governmental body in which there is a reasonable possibility of an adverse decision which could materially adversely affect the business (present or prospective), financial position or results of operations of the Developer or which in any manner raises any questions affecting the validity of the Agreement or the Developer's ability to perform its obligations under this Agreement. - 5 - (e) Developer has not received any notice from any local, State for federal official that the activities of Developer with respect to the Development Property mayor will be in violation of any environmental law or regulation (other than those notices, if any, of which the City has previously been notified in writing). Developer is not currently aware of any State or federal claim filed or planned to be filed by any party relating to any violation of any local, State or federal environmental law, regulation or review procedure applicable to the Development Property, and Developer is not currently aware of any violation of any local, State or federal environmental law, regulation or review procedure which would give any person a valid claim under any State or federal environmental statute with respect thereto. (f) Developer will fully cooperate with the City in resolution of any traffic, parking, trash removal, excessive noise or public safety problems which may arise in connection with the construction and operation of the Minimum Improvements. (g) Developer would not undertake its obligations under this Agreement without the payment by the City of the Economic Development Grants being made to the Developer pursuant to this Agreement. (h) The Developer will cause the Minimum Improvements to be constructed in accordance with the terms of this Agreement and when constructed will comply with the Urban Renewal Plan and all local, State and federal laws and regulations, except for variances that may be necessary to construct the Minimum Improvements. (i) The Developer will use its best efforts to obtain, or cause to be obtained, in a timely manner, all required permits, licenses and approvals, and will meet, in a timely manner, all requirements of all applicable local, State, and federal laws and regulations which must be obtained or met in connection with the Project. U) The Developer shall not, prior to the expiration of this agreement, cause or voluntarily permit the Development Property and/or Minimum Improvements to become other than taxable property by applying for or seeking any industrial property tax exemption, by being owned by a utility or any other entity of a type where the assessed value of taxable property of such entity is not treated as located within the Development Property, by being owned by any entity having tax exempt status or by applying for or seeking for a deferral, abatement or exemption from property tax pursuant to any present or future statute or ordinance. - 6 - ARTICLE III. DEVELOPMENT AND OCCUPANCY REQUIREMENT Section 3.1. Minimum Improvements. The Developer agrees to complete Minimum Improvements generally consisting of improvements to an existing 100,255 square foot freestanding Alpla building through the construction of additional manufacturing, warehousing or distribution space totaling approximately 82,200 square feet for industrial uses on the Development Property, all as more fully described on Exhibit B hereto. The construction of the Minimum Improvements must increase the actual assessed value of the Development Property by at least 15% over the actual assessed value on January 1,2007. Section 3.2. Certificate of Completion. Upon written request of the Developer after issuance of an occupancy permit for the Minimum Improvements, or any discreet portion thereof, the City will furnish the Developer with a Certificate of Completion for such portion in recordable form, in substantially the form set forth in Exhibit C attached hereto. Such Certificate of Completion shall be a conclusive determination of satisfactory termination of the covenants and conditions of this Agreement solely with respect to the obligations of the Developer to construct such portion of the Minimum Improvements~ A Certificate of Completion may be recorded in the proper office for the recordation of deeds and other instruments pertaining to the Development Property at the Developer's sole expense. If the City shall refuse or fail to provide a Certificate of Completion in accordance with the provisions of this Section 3.2, the City shall within twenty (20) days after written request to the Developer, provide the Developer with a written statement indicating with adequate detail, in what respects the Developer has failed to complete the Minimum Improvements in accordance with the provisions of this Agreement, or is otherwise in default under the terms of this Agreement, and what measures or acts will be necessary in the opinion of the City, to obtain such Certificate of Completion. ARTICLE IV. RESERVED - 7 - ARTICLE V. INSURANCE Section 5.1. Insurance Requirements. (a) Upon completion of construction of the Minimum Improvements and at all times prior to the Termination Date, the Developer shall maintain, or cause to be maintained, at its cost and expense (and from time to time at the request of the City shall furnish proof of the payment of premiums on) insurance as follows: (i) Insurance against loss and/or damage to the Minimum Improvements under a policy or policies covering such risks as are ordinarily insured through property policies against risk by similar businesses, including (without limitation the generality of the foregoing) fire, extended coverage, vandalism and malicious mischief, explosion, water damage, demolition cost, debris removal, and collapse in an amount not less than the full insurable replacement value of the Minimum Improvements, but any such policy may have a deductible amount of not more than $250,000. No policy of insurance shall be so written that the proceeds thereof will produce less than the minimum coverage required by the preceding sentence, by reason of co-insurance provisions or otherwise, without the prior consent thereto in writing by the City. The term "full insurable replacement value" shall mean the actual replacement cost of the Minimum Improvements (excluding foundation and excavation costs and costs of underground flues, pipes, drains and other uninsurable items) and equipment, and shall be determined from time to time at the request of the City, but not more frequently than once every three years, by an insurance consultant or insurer selected and paid for by the Developer and approved by the City. (ii) Comprehensive general public liability insurance, including personal injury liability for injuries to persons and/or property, including any injuries resulting from the operation of automobiles or other motorized vehicles on or about the Development Property, in the minimum amount for each occurrence and for each year of $1,000,000. (iii) Such other insurance, including worker's compensation insurance respecting all employees of the Developer, in such amount as is customarily carried by like organizations engaged in like activities of comparable size and liability exposure; provided that the Developer may be self-insured with respect to all or any part of its liability for worker's compensation. - 8 - (b) All insurance required by this Article V to be provided prior to the Termination Date shall be taken out and maintained in responsible insurance companies selected by the Developer which are authorized under the laws of the State of Iowa to assume the risks covered thereby. The Developer will deposit annually with the City copies of policies evidencing all such insurance, or a certificate or certificates or binders of the respective insurers stating that such insurance is in force and effect. Unless otherwise provided in this Article V, each policy shall contain a provision that the insurer shall not cancel or modify it without giving written notice to the Developer and the City at least thirty (30) days before the cancellation or modification becomes effective. Not less than fifteen (15) days prior to the expiration of any policy, the Developer shall furnish the City evidence satisfactory to the City that the policy has been renewed or replaced by another policy conforming to the provisions of this Article V, or that there is no necessity therefor under the terms hereof. In lieu of separate policies, the Developer may maintain a single policy, or blanket or umbrella policies, or a combination thereof, which provide the total coverage required herein, in which event the Developer shall deposit with the City a certificate or certificates of the respective insurers as to the amount of coverage in force upon the Minimum Improvements. ( c) The Developer agrees to notify the City immediately in the case of damage exceeding $250,000 in amount to, or destruction of, the Minimum Improvements or any portion thereof resulting from fire or other casualty. Net Proceeds of any such insurance shall be paid directly to the Developer, and the Developer will forthwith repair, reconstruct and restore the Minimum Improvements to substantially the same or an improved condition or value as they existed prior to the event causing such damage and, to the extent necessary to accomplish such repair, reconstruction and restoration, the Developer will apply the Net Proceeds of any insurance relating to such damage received by the Developer to the payment or reimbursement of the costs thereof. (d) The Developer shall complete the repair, reconstruction and restoration of the Minimum Improvements, whether or not the Net Proceeds of insurance received by the Developer for such purposes are sufficient. ARTICLE VI. COVENANTS OF THE DEVELOPER Section 6.1. Maintenance of Properties. The Developer will maintain, preserve and keep its properties (whether owned in fee or a leasehold interest), including but not limited to the Minimum Improvements, in good repair and working order, ordinary wear and tear accepted, and from time to time will make all necessary repairs, replacements, renewals and additions. - 9- Section 6.2. Maintenance of Records. The Developer will keep at all times proper books of record and account in which full, true and correct entries will be made of all dealings and transactions of or in relation to the business and affairs of the Developer in accordance with generally accepted accounting principles, consistently applied throughout the period involved, and the Developer will provide reasonable protection against loss or damage to such books of record and account. Section 6.3. Compliance with Laws. The Developer will comply with all laws, rules and regulations relating to the Minimum Improvements, other than laws, rules and regulations the failure to comply with which or the sanctions and penalties resulting therefrom, would not have a material adverse effect on the business, property, operations, or condition, financial or otherwise, of the Developer. Section 6.4. Non-Discrimination. In operating the Minimum Improvements, the Developer shall not discriminate against any applicant, employee or tenant because of race, creed, color, religion, sex, national origin, sexual orientation, age, disability, marital status or gender identity. The Developer shall ensure that applicants, employees and tenants are considered and are treated without regard to their race, creed, color, religion, sex, national origin, sexual orientation, age, disability, marital status or gender identity. Section 6.5. Continued Operation and Employment. Commencing upon the signing of the Agreement, the Developer agrees that it will operate a manufacturing plant at the Development Property and will continue operation of this business until at least the Termination Date set forth in Section 12.8 hereof. From September 1,2007 until November 1,2009 the Developer will maintain a minimum of 180 Full Time Employment Units at the Development Property. Commencing with the first certification, on November 1, 2009, Developer agrees to employ, on average, an additional 25 new full time positions at an average hourly wage of$14.00 per hour plus a competitive benefit package until at least the Termination Date set forth in Section 12.8 hereof. A Full Time Employment Unit means the equivalent of employment of one (1) person for eight (8) hours per day for a five (5) day, forty (40) hour workweek for fifty-two (52) weeks per year. Section 6.6. Annual Certification. To assist the City in monitoring and performance of the Developer hereunder, a duly authorized officer of the Developer shall annually provide to the City: (a) a written statement from the County Auditor showing the amount of Tax Increments (as defined in Section 1.1 of this Agreement) in respect of the Minimum Improvements (excluding increases in assessed or actual value due to market - 10 - factors) for the following fiscal year; (b) proof that all ad valorem taxes on the Development Property have been paid for the prior fiscal year; and (c) certification that such officer has re-examined the terms and provisions of this Agreement and that at the date of such certificate, and during the preceding twelve (12) months, the Developer is not, or was not, in default in the fulfillment of any of the terms and conditions of this Agreement and that no Event of Default (or event which, with the lapse of time or the giving of notice, or both, would become an Event of Default) is occurring or has occurred as of the date of such certificate or during such period, or if the signer is aware of any such default, event or Event of Default, said officer shall disclose in such statement the nature thereof, its period of existence and what action, if any, has been taken or is proposed to be taken with respect thereto. Such statement, proof and certificate shall be provided not later than November 1 of each year, commencing November 1,2009, and ending on November 1,2012 both dates inclusive. Upon certification by the Developer on or before November 1,2009, the City will certify to establish a base value as of January 1,2007. Section 6.7 Taxation of Development Property. The Developer shall not, prior to the expiration of this agreement, cause or voluntarily permit the Development Property and/or Minimum Improvements to become other than taxable property by applying for or seeking any industrial property tax exemption, by being owned by a utility or any other entity of a type where the assessed value of taxable property of such entity is not treated as located within the Development Property, by being owned by any entity having tax exempt status or by applying for or seeking for a deferral, abatement or exemption from property tax pursuant to any present or future statute or ordimince. ARTICLE VII. ASSIGNMENT AND TRANSFER Section 7.1. Status of the Developer; Transfer of Substantially All Assets. As security for the obligations of the Developer under this Agreement, the Developer represents and agrees that, prior to the issuance of the Certificate of Completion and prior to the Termination Date, the Developer will maintain existence as an adequately capitalized corporation and will not wind up or otherwise dispose of all substantially all of the Development Property and Minimum Improvements, or assign its interest in this Agreement to any other party unless (i) the transferee partnership, corporation, limited liability company or individual assumes in writing all of the obligations of the Developer under this Agreement and (ii) the City consents thereto in writing in advance thereof. Notwithstanding the foregoing, however, or any other provisions of this Agreement, (a) Developer may transfer its interest in and to this Agreement to any affiliate which is controlled by, under common control with or controls Developer or to any entity that - 11 - acquires all or substantially all of the assets of the Developer or to any corporate successor to Developer by consolidation, merger, or otherwise, and (b) the Developer may (1) pledge any and/or all of its assets as security for any financing of the Minimum Improvements; (2) assign its rights under this Agreement to a third party, provided such assignment shall not release the Developer of its obligations hereunder, and the City agrees in writing that Developer may assign its interest under this Agreement for such purpose; and (3) the Developer may transfer its ownership interest to a third-party under an arrangement whereby Developer will lease the Development Property back and continue to satisfy the requirements of this Agreement. ARTICLE VIII. ECONOMIC DEVELOPMENT GRANTS Section 8.1. Economic Development Grants. (a) For and in consideration of the obligations being assumed by the Developer hereunder, and in furtherance of the goals and objectives of the Urban Renewal Plan for the Project Area and the Urban Renewal Act, the City agrees to make up to four annual grants to the Developer, subject to the Developer having received a Certificate of Completion and being and remaining in compliance with the terms of this Agreement and subject to the terms of this Article VIII. The annual grants shall commence on June 1, 2011 and end on June 1, 2014, or when the total of all grants is equal to $600,000. All annual grants shall be equal to one hundred percent (100%) per fiscal year of the Tax Increments (unless the total grant amount of $600,000 is reached first) collected by the City with respect to the Minimum Improvements on Development Property pursuant to Section 403.9 of the Urban Renewal Act under the terms of the Ordinance (without regard to any averaging that may otherwise be utilized under Section 403 .19( 6) and excluding any interest that may accrue thereon prior to payment to the Developer) during the preceding twelve-month period in respect of the Development Property and the Minimum Improvements, but subject to adjustment and conditions precedent as provided in this Article (such payments being referred to collectively as the "Economic Development Grants"). (b) The obligation of the City to make an Economic Development Grant to the Developer in any year as specified above shall be subject to and conditioned upon the timely filing by the Developer of all previous annual statements, proofs and certifications required under Section 6.6 hereof and the City Manager's approval thereof. Beginning with the November 1, 2009 certification, ifthe Developer's annual statement, proof and certification is timely filed and contains the information required under Section 6.6 and the City Manager approves of the same, the City shall certify to the County prior to December 1 of that year its request for the available Tax Increments resulting from the assessments imposed by the County as of January 1 of that year, to be collected by the - 12 - City as taxes are paid during the following fiscal year and which shall thereafter be disbursed to the Developer on June 1 of the following fiscal year. (For example, if the Developer and the City each so certify on November and December 2009, respectively, the first Economic Development Grant would be paid to the Developer on June 1,2011). (c) In the event that the annual statement, proof or certificate required to be delivered by the Developer under Section 6.7 is not delivered to the City by November I of any year, the Developer recognizes and agrees that the City may have insufficient time to review and approve the same and certify its request for Tax Increments to the County and that, as a result, no Economic Development Grant may be made to the Developer in respect thereof. The City covenants to act in good faith to appropriately review and consider any late certification on the part of the Developer, but the City shall not be obligated to make any certification to the County for the available Tax Increments or make any corresponding payment of the Economic Development Grant to the Developer if, in the reasonable judgment of the City, it is not able to give appropriate consideration (which may include, but not be limited to, specific discussion before the City Council at a regular City Council meeting with respect thereto) to the Developer's certification due to its late filing. In the event Developer fails to timely file an annual statement, proof or certificate due to an Unavoidable Delay and, as a result, an Economic Development Grant cannot be make, Developer may give written notice to the City and, if the City finds that Developer's failure is due to an Unavoidable Delay, the missed Economic Development Grant shall be made in the year succeeding the last scheduled Economic Development Grant under Section 8.1, subject to Developer's filing under Section 6.6 and all other provisions of this Article VIII with respect to such grant, it being the intention of the parties to allow four (4) annual Economic Development Grants if Developer is in compliance with this Agreement. (d) The total, aggregate amount of all Economic Development Grants under this Agreement shall not exceed $600,000. Each Economic Development Grant shall be equal to one hundred percent (100%) of all Tax Increments collected per fiscal year in respect of the assessments imposed on the Development Property and Minimum Improvements as of January 1, 2007, and on January 1 of each of the following four (4) years, until the total, aggregate of all such Economic Development Grants equals no more than the sum of $600,000. The final grant shall be adjusted, if necessary, if payment of 100% of Tax Increments for that grant would result in total, aggregate Economic Development Grants in an amount exceeding $600,000. Such Economic Development Grants shall at all times be subject to termination in accordance with the terms of this Article VIII and Article X. Thereafter, the taxes levied on the Development Property and Minimum Improvements shall be divided and applied in accordance with the - 13 - Urban Renewal Act and the Ordinance. It is recognized by all parties that the total aggregate amount set forth above is a maximum amount only and that the actual payment amounts will be determined after the Minimum Improvements are completed and the valuations of said Improvements have been determined by the City Assessor. (e) In the event that any certificate filed by the Developer under Section 6.6 or other information available to the City discloses the existence or prior occurrence of an Event of Default that was not cured or cannot reasonably be cured under the provisions of Section 10.2 (or an event that, with the passage of time or giving of notice, or both, would become an Event of Default that cannot reasonably be cured under the provisions of Section 10.2), the City shall have no obligation thereafter to make any further payments to the Developer in respect of the Economic Development Grants and may proceed to take one or more of the actions described in Section 10.2 hereof. Section 8.2. Source of Grant Funds Limited. (a) The Economic Development Grants shall be payable from and secured solely and only by amounts deposited and held in the ALPLA OF IOWA. INC. - Alpla TIF Account No.2 of the City. The City hereby covenants and agrees to maintain the Ordinance in force during the term hereof and to apply the incremental taxes collected in respect of the Minimum Improvements and allocated to the ALPLA OF IOWA. INC. - Alpla TIF Account No.2 to pay the Economic Development Grants, as and to the extent set forth in Section 8.1 hereof. The Economic Development Grants shall not be payable in any manner by other tax increment revenues or by general taxation or from any other City funds. (b) Notwithstanding the provisions of Section 8.1 hereof, the City shall have no obligation to make an Economic Development Grant to the Developer if at any time during the term hereof the City receives an opinion of its legal counselor a controlling decision of an Iowa court having jurisdiction over the subject matter hereof to the effect that the use of Tax Increments resulting from the Minimum Improvements to fund an Economic Development Grant to the Developer, as contemplated under said Section 8.1, is not authorized or otherwise an appropriate project activity permitted to be undertaken by the City under the Urban Renewal Act or other applicable provisions of the Code, as then constituted. Upon receipt of such an opinion or decision, the City shall promptly forward a copy of the same to the Developer. If the circumstances or legal constraints giving rise to the opinion or decision continue for a period during which two (2) Economic Development Grants would otherwise have been paid to the Developer under the terms of Section 8.1, the City may terminate this Agreement, without penalty or other liability to the Developer, by written notice to the Developer. - 14 - (c) The City makes no representation with respect to the amounts that may finally be paid to the Developer as the Economic Development Grants, and under no circumstances shall the City in any manner be liable to the Developer so long as the City timely applies the Tax Increments actually collected and held in the ALPLA OF IOWA, INC. - Alpla TIF Account No.2 (regardless of the amounts thereof) to the payment of the Economic Development Grants to the Developer, as and to the extent described in this Article. Section 8.3. Use of Other Tax Increments. Subject to this Article VIII, the City shall be free to use any and all Tax Increments collected in respect of increases in valuation on the Development Property unrelated to construction of the Minimum Improvements (Le. increases in assessed or actual value due to market factors) any other properties within the Project Area, or any available Tax Increments resulting from the suspension or termination of the Economic Development Grants under Section 8.1 hereof, for any purpose for which the Tax Increments may lawfully be used pursuant to the provisions of the Urban Renewal Act, and the City shall have no obligations to the Developer with respect to the use thereof. ARTICLE IX. INDEMNIFICATION Section 9.1. Release and Indemnification Covenants. (a) The Developer releases the City and the governing body members, officers, agents, servants and employees thereof (hereinafter, for purposes of this Article IX, the "indemnified parties") from, covenants and agrees that the indemnified parties shall not be liable for, and agrees to indemnify, defend and hold harmless the indemnified parties against, any loss or damage to property or any injury to or death of any person occurring at or about or resulting from any defect in the Minimum Improvements. (b) Except for any willful misrepresentation or any willful or wanton misconduct or any unlawful act of the indemnified parties, the Developer agrees to protect and defend the indemnified parties, now or forever, and further agrees to hold the indemnified parties harmless, from any claim, demand, suit, action or other proceedings whatsoever by any person or entity whatsoever arising or purportedly arising from (i) any violation of any agreement or condition of this Agreement (except with respect to any suit, action, demand or other proceeding brought by the Developer against the City to enforce his rights under this Agreement), (ii) the acquisition and condition of the Development Property and the construction, installation, ownership, and operation of the Minimum Improvements or - 15 - (Hi) any hazardous substance or environmental contamination located in or on the Development Property relating to conditions caused by Developer after the effective date of this Agreement. (c) The indemnified parties shall not be liable for any damage or injury to the persons or property of the Developer or its officers, agents, servants or employees or any other person who may be on or about the Minimum Improvements due to any act of negligence of any person, other than any act of negligence on the part of any such indemnified party or its officers, agents, servants or employees. (d) All covenants, stipulations, promises, agreements and obligations of the City contained herein shall be deemed to be the covenants, stipulations, promises, agreements and obligations of the City, and not of any governing body member, officer, agent, servant or employee of the City in the individual capacity thereof. (e) The provisions of this Article IX shall survive the termination of this Agreement. ARTICLE X. DEFAULT AND REMEDIES Section 10.1. Events of Default Defined. The following shall be "Events of Default" under this Agreement and the term "Event of Default" shall mean, whenever it is used in this Agreement, any one or more of the following events: (a) Failure by the Developer to cause the construction of the Minimum Improvements to be commenced and completed pursuant to the terms, conditions and limitations of Article III of this Agreement; (b) Transfer of any interest in this Agreement or the assets of the Developer in violation of the provisions of Article VII of this Agreement; (c) Failure by the Developer to substantially observe or perform any covenant, condition, obligation or agreement on its part to be observed or performed under this Agreement; (d) If the holder of any Mortgage on the Development Property, or any improvements thereon, or any portion thereof, commences foreclosure proceedings as a result of any default under the applicable Mortgage documents; - 16- (e) If the Developer shall: (A) file any petition in bankruptcy or for any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under the United States Bankruptcy Act of 1978, as amended, or under any similar federal or state law; or (B) make an assignment for the benefit of its creditors; or (C) admit in writing its inability to pay its debts generally as they become due; or (D) be adjudicated a bankrupt or insolvent; or if a petition or answer proposing the adjudication of the Developer as a bankrupt or its reorganization under any present or future federal bankruptcy act or any similar federal or state law shall be filed in any court and such petition or answer shall not be discharged or denied within ninety (90) days after the filing thereof; or a receiver, trustee or liquidator of the Developer or the Minimum Improvements, or part thereof, shall be appointed in any proceedings brought against the Developer, and shall not be discharged within ninety (90) days after such appointment, or if the Developer shall consent to or acquiesce in such appointment; or (f) If any representation or warranty made by the Developer in this Agreement, or made by the Developer in any written statement or certificate furnished by the Developer pursuant to this Agreement, shall prove to have been incorrect, incomplete or misleading in any material respect on or as of the date of the issuance or making thereof. Section 10.2. Remedies on Default. Whenever any Event of Default referred to in Section 10.1 of this Agreement occurs and is continuing, the City, as specified below, may take anyone or more of the following actions after (except in the case of an Event of Default under subsections (d) or (e) of said Section 10.1 in which case action may be taken immediately) the giving of thirty (30) days' written notice by the City to the Developer and the holder of the First Mortgage (but only to the extent the City has been informed in writing of the existence of a First Mortgage and been provided with the address of the holder thereof) of the Event of Default, but only if the Event of Default has not been cured within said thirty (30) days, or if the Event of Default cannot reasonably be cured within thirty (30) days and the Developer does not provide assurances reasonably satisfactory to the City that the Event of Default will be cured as soon as reasonably possible: - 17 - (a) The City may suspend its performance under this Agreement until it receives assurances from the Developer, deemed adequate by the City, that the Developer will cure its default and continue its performance under this Agreement; (b) The City may terminate this Agreement; ( c) The City may withhold the Certificate of Completion; (d) The City may take any action, including legal, equitable or administrative action, which may appear necessary or desirable to enforce performance and observance of any obligation, agreement, or covenant of the Developer, as the case may be, under this Agreement; or (e) The City shall be entitled to recover from the Developer, and the Developer shall re-pay to the City, an amount equal to the most recent Economic Development Grant previously made to the Developer under Article VIII hereof, and the City may take any action, including any legal action it deems necessary, to recover such amount from the Developer. Section 10.3. No Remedy Exclusive. No remedy herein conferred upon or reserved to the City is intended to be exclusive of any other available remedy or remedies, but each and every remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. Section 10.4. No Implied Waiver. In the event any agreement contained in this Agreement should be breached by any party and thereafter waived by any other party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other concurrent, previous or subsequent breach hereunder. Section 10.5. Agreement to Pay Attorneys' Fees and Expenses. Whenever any Event of Default occurs and the party who is not in default shall employ attorneys or incur other expenses for the collection of payments due or to become due or for the enforcement or performance or observance of any obligation or agreement on the part of the party in default herein contained, the party in default agrees that it shall, on demand therefor, pay to the part not in default the reasonable fees of such attorneys and such other - 18 - expenses as may be reasonably and appropriately incurred by the party not in default in connection therewith. ARTICLE XI. OPTION TO TERMINATE AGREEMENT Section 11.1. Option to Terminate. This Agreement may be terminated by the Developer if (i) the Developer is in compliance with all material terms of this Agreement and no Event of Default has occurred which has not been cured in accordance with the provisions of Section 10.2 hereof; and (ii) the City fails to comply with any material term of this Agreement, and, after written notice by the Developer of such failure, the City has failed to cure such noncompliance within ninety (90) days of receipt of such notice, or, if such noncompliance cannot reasonably be cured by the City within ninety (90) days of receipt of such notice, the City has not provided assurances reasonably satisfactory to the Developer that such noncompliance will be cured as soon as reasonably possible. Section 11.2. Effect of Termination. If this Agreement is terminated pursuant to this Article XI, this Agreement shall be from such date forward null and void and of no further effect; provided, however, that the City's rights to indemnification under Article IX hereof shall in all events survive and provided further that the termination of this Agreement shall not affect the rights of any party to institute any action, claim or demand for damages suffered as a result of breach or default of the terms of this Agreement by another party, or to recover amounts which had accrued and become due and payable as of the date of such termination. In any such action, the prevailing party shall be entitled to recover its reasonable attorneys fees and related expenses incurred in connection therewith (but only, in the case of the City, to the extent permitted by applicable law). Upon termination of this Agreement pursuant to this Article XI, the Developer shall be free to proceed with the construction and operation of the Minimum Improvements at its own expense and without regard to the provisions of this Agreement. - 19 - ARTICLE XII. MISCELLANEOUS Section 12.1. Conflict of Interest. The Developer represents and warrants that, to its best knowledge and belief after due inquiry, no officer or employee of the City, or its designees or agents, nor any consultant or member of the governing body of the City, and no other public official of the City who exercises or has exercised any functions or responsibilities with respect to the Project during his or her tenure, or who is in a position to participate in a decision-making process or gain insider information with regard to the Project, has had or shall have any interest, direct or indirect, in any contract or subcontract, or the proceeds thereof, for work or services to be performed in connection with the Project, or in any activity, or benefit therefrom, which is part of the Project at any time during or after such person's tenure. Section 12.2. Notices and Demands. A notice, demand or other communication under this Agreement by any party to the other shall be sufficiently given or delivered if it is dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered personally, and (a) In the case of the Developer, is addressed or delivered personally to the Developer at 2258 Heinz Road, Iowa City, Iowa 52240. (b) In the case of the City, is addressed to or delivered personally to the City at Civic Center, 410 E. Washington Street, Iowa City, Iowa, 52240, Attn: City Manager; or to such other designated individual or to such other address as any party shall have furnished to the other in writing in accordance herewith. Section 12.3. Titles of Articles and Sections. Any titles of the several parts, Articles, and Sections of this Agreement are inserted for convenience of reference only and shall be disregarded in construing or interpreting any of its provisions. Section 12.4. Counterparts. This Agreement may be executed in any number of counterparts~ each of which shall constitute one and the same instrument. Section 12.5. Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of Iowa. - 20- Section 12.6. Entire Agreement. This Agreement and the exhibits hereto reflect the entire agreement between the parties regarding the subject matter hereof, and supersedes and replaces all prior agreements, negotiations or discussions, whether oral or written. This Agreement may not be amended except by a subsequent writing signed by all parties hereto. Section 12.7. Successors and Assigns. This Agreement is intended to and shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns. Section 12.8. Termination Date. This Agreement shall terminate and be of no further force or effect on and after December 31, 2014. IN WITNESS WHEREOF, the City has caused this Agreement to be duly executed in its name and behalf by its Mayor and its seal to be hereunto duly affixed and attested by its City Clerk, the Developer has caused this Agreement to be duly executed in its name and behalf by Alpla of Iowa, Inc. (SEAL ) CITY OF IOWA CITY, IOWA By: Mayor ATTEST: By: City Clerk - 21 - ALPLA OF IOWA, INC. By: ATTEST: By: (title) STATE OF IOWA ) ) SS COUNTY OF ) On this day of , 2007, before me a Notary Public in and for said County, personally appeared Ross Wilburn and Marian Karr to me personally known, who being duly sworn, did say that they are the Mayor and City Clerk, respectively of the City of Iowa City, Iowa, a Municipal Corporation, created and existing under the laws of the State of Iowa, and that the seal affixed to the foregoing instrument is the seal of said Municipal Corporation, and that said instrument was signed and sealed on behalf of said Municipal Corporation by authority and resolution of its City Council and said Mayor and City Clerk acknowledged said instrument to be the free act and deed of said Municipal Corporation by it voluntarily executed. Notary Public in and for Johnson County, Iowa - 22- ) ) SS ) STATE OF COUNTY OF On this day of , 2007, before me the undersigned, a Notary Public in and for said County, in said State, personally appeared and , to me personally known, who, being by me duly sworn, did say that they are the and of Alpla of Iowa, Inc. and that said instrument was signed on behalf of said corporation; and that the said and , as such officers acknowledged the execution of said instrument to be the voluntary act and deed of said corporation, by them voluntarily executed. Notary Public in and for County and State - 23 - EXHIBIT A DEVELOPMENT PROPERTY The Development Property is described as consisting of all that certain parcel or parcels of land located in the City of Iowa City, County of Johnson, State of Iowa, more particularly described as follows: LEGAL DESCRIPTION The real property located in the County of Johnson, State of Iowa, and legally described as follows: Lot 4, BDI Second Addition to Iowa City, Johnson County, Iowa, as filed in Book 19, Page 80 of the Johnson County Recorder's Office; and Lot 1, BDI Fifth Addition to Iowa City, Johnson County, Iowa, as filed in Book 29, Page 74 of the Johnson County Recorder's Office. A-I EXHIBIT B MINIMUM IMPROVEMENTS The Developer agrees to complete Minimum Improvements generally consisting of improvements to an existing 100,255 square foot freestanding Alpla building through the construction of additional manufacturing, warehousing and distribution space totaling approximately 82,200 square feet for industrial uses on the Development Property. The construction of the Minimum Improvements must increase the actual assessed value of the Development Property by at least 15% over the actual assessed value on January 1, 2007. EXHIBIT C CERTIFICATE OF COMPLETION WHEREAS, the City of Iowa City, Iowa (the "City") and ALPLA OF IOWA, INC., having an office for the transaction of business at 2258 Heinz Road, Iowa City, Iowa (the "Developer"), did on or about the day of , 2007, make, execute and deliver, each to the other, an Agreement for Private Redevelopment (the "Agreement"), wherein and whereby the Developer agreed, in accordance with the terms of the Agreement, to develop and maintain certain real property located within the City and as more particularly described as follows: LEGAL DESCRIPTION Lot 4, BDI Second Addition to Iowa City, Johnson County, Iowa, as filed in Book 19, Page 80 of the Johnson County Recorder's Office; and Lot 1, BDI Fifth Addition to Iowa City, Johnson County, Iowa, as filed in Book 29, Page 74 of the Johnson County Recorder's Office. WHEREAS, the Agreement incorporated and contained certain covenants and restrictions with respect to the development of the Development Property, and obligated the Developer to construct certain Minimum Improvements (as defined therein) in accordance with the Agreement; and WHEREAS, the Developer has to the present date performed said covenants and conditions insofar as they relate to the construction of said Minimum Improvements in a C - 1 manner deemed by the City to be in conformance with the approved building plans to permit the execution and recording of this certification. NOW, THEREFORE, pursuant to Section 3.2 ofthe Agreement, this is to certify that all covenants and conditions of the Agreement with respect to the obligations of the Developer, and its successors and assigns, to construct the Minimum Improvements on the Development Property have been completed and performed by the Developer and are hereby released absolutely and forever terminated insofar as they apply to the land described herein. The County Recorder of Johnson County is hereby authorized to accept for recording and to record the filing of this instrument, to be a conclusive determination of the satisfactory termination of the covenants and conditions of said Agreement with respect to the construction of the Minimum Improvements on the Development Property. All other provisions of the Agreement shall otherwise remain in full force and effect until termination as provided therein. (SEAL) CITY OF IOWA CITY, IOWA By: Mayor ATTEST: By: City Clerk C-2 STATE OF IOWA ) ) SS COUNTY OF JOHNSON ) On this day of ,2007, before me a Notary Public in and for said County, personally appeared Ross Wilburn and Marian Karr, to me personally known, who being duly sworn, did say that they are the Mayor and City Clerk, respectively of the City of Iowa City, Iowa, a Municipal Corporation, created and existing under the laws of the State of Iowa, and that the seal affixed to the foregoing instrument is the seal of said Municipal Corporation, and that said instrument was signed and sealed on behalf of said Municipal Corporation by authority and resolution of its City Council and said Mayor and City Clerk acknowledged said instrument to be the free act and deed of said Municipal Corporation by it voluntarily executed. Notary Public in and for Johnson County, Iowa C - 3 INITIAL REVIEW OF GLUTEN EVOLUTION LLC WORKING CAPITAL Business Proposed: Gluten Evolution LLC is a test kitchen and creator of the bread mixes, Breads from Anna. The business started as a personal chef service in 2002 to help persons live on a gluten free diet. Since that time the business has expanded to offer bread and pie mixes made of gluten-free and all-natural ingredients. The market for the mixes include those with Celiac disease, the failure of one's body to produce the enzyme that breaks down the protein in gluten, found in wheat, barley and rye, and others who desire all-natural ingredients. In 2004 their products become available for sale online. Only about 5% of their products are sold to Iowa City customers. The overwhelming majority of their products are shipped throughout the United States. They also have an international market with shipments going to United Kingdom, Australia and New Zealand. The owner request funds for working capital. Sales increased by 71 % from 2005 to 2006. There is an 11 % increase in sales in the first half of 2007 compared to the first half of 2006. Budget & Private Financial Contribution The applicant requests a $105,000 Iowa City CDBG low interest loan (7-year maximum, 6 month deferred payment). Applicant has invested $50,000 in business operations. Owner withdrawals (owner salary) have been sporadic over the past three years, but not considered excessive. Comprehensive Plan/CITY STEPS Plan The project does not require public infrastructure and is located in a CI-1 zone (intensive commercial). CITY STEPS notes a high priority for the expansion and/or retention of business that pay at least the living wage and increases full- time, permanent jobs with benefits. Quality of Jobs The business is a woman owned business. The three positions proposed are two at $12/hour and one at $15/hour with medical benefits. The business provides goods and services to a segment of the population that require a gluten-free diet by medical reasons or by preference. Economic Impact The proposed CDBG funds will provide a woman owned business access to low interest working capital. The business is in need of low cost capital to achieve profitability. July 2007 Environmental/Community Involvement The owner provides educational consultation to individuals, non-profit organizations, schools, hospitals and restaurants in the preparation of gluten-free foods. She has published articles/recipes for the Celiac Disease Foundation and others. Items to Address: 1. The business has been open since 2002, however has not been profitable to date. Estimated 2008 sales appear high. Business needs to watch expenses and increase sales to achieve profitability. Expanding by three positions could potentially delay when the business may become profitable. 2. Business is accumulating credit card debt to pay for business expenses. 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 owner will accept a mortgage on her personal home. She estimates that approximately $30,000 could be secured by the home. Will need to discuss collateral situation and how much of the loan may be secured. 4. Business continues to receive support and guidance through the Entrepreneurial Development Center in Cedar Rapids and has had knowledgeable advisors. Staff encourages the business to continue utilizing this service. July 2007 Iowa City CDBG Economic Development Funds Application for Business Financial Assistance Business Requesting Financial Assistance: IndMdual Anna Sobaski Home Address 358 Westside Drive, Iowa City, IA 52246 Name of Applbant Business Gluten Evolution, LLC Full Street Address of Business 1630 Willow Creek Drive, #7, Iowa City, IA 52246 Phone Number & Email Address 319-358-9967, glutenevolutior@earthlink.net DUNS Number (If awarded funds, applbant must obtah a DUNS number): Type of Business Gluten Free Bread Mix Manufacturer with National Distribution Date Business Established January 2002 Bankof Business Account and Address (if applbable): Cedar Rapids Bank & Trust NOTE The aty w ill not provoe assistance in situctions w here it is detemined that any repre- sentction, warranty or statement made in connection with this applcation is incorrect, false, msleading or erroreous in any material respect. If assistance has alrea:ty been provced by the City prior to discOlery of the incorrect, false or msleading representation, the aty may initiate legal actim to recover aty funds. Section 1: Description of Business and Proposed Project 1.1. Describe the proposed "project" (fa exal1l>le, cOl1l>any relocation, building expansion, rermdeling, new product line, number of new jobs, alTDunt of investment in machinery and equip1'1ent) and the expeced benefits it w ill receive from the financial assistance requested: The funds are required to add staff and purchase equipment. All of the positions to be created are LMI eligible with the exception of the Olief Operating Officer. New positions to be added over the next two years include: Chief Operating Officer (1), Salesrrrade Show Manager (1), PackinglShippingJWarehouse (2) personnel The addition of new staff he~ the company scale-up its sales and operations; as well as allow the founder to spend more time on the R & D associated with developil1J new products. Funds are also needed to purchase warehouse computers and a fork 1ft, as well as upgrade the shopping cart portion cI the corporate website. 12 A-ovi::.le a brief history r:J your corrpany: Gluten Evolution TM began as a personal chef service in 2002. Today Gluten Evolution TM is primarily a test kitchen and creator of the bread mixes Breads From Anna TM, available in stores across the United States and online as of March 2004. The personal chef service continues to be an educational force for helping others learn to live very well on the gluten-free diet. . 1.3. Describe the organizational structure of the business: Iowa Limited Liability Corporation 1.4. Management (A-op-ietor, partners, officers, drectors, all holders of outsta1ding stock, 100%of ownership mustbe shown) Name & PositionITitle Compete Add ress % Owned Anna Sobaski, CEO 358 Wests ide Drive, Iowa City, IA 100% 52246 DarinVig will be joining the company as COO if the company receives this want. His CV is included in the attachments along with Ms. Sobaski's. Attach a brief descriptioo sirTilarto a resu/'TB of the education, technical and business backgroond for all the people listed under Management. 1.5. Will the project involve a transfer of operations or jobs from any other Iowa City or Johnson County facility or replace operations or jobs currently being provided by another Iowa City or Johnson County company? If yes, please indicate the facility(s) and/or company(s) affected. No Section 2: Financial Contributions to the Proposed Project 2.1. Use of Proceeds USE OF Proceeds Loan Requested (Enter gross dollar amourt rounded to Activity the nearest hundreds) Land acquisition $0 New O:mstruction/Expansion Repair $0 Acquisition and/or Repairof Machinery $10,000 and Equipment Inventory Purchase $0 Workhg Capital (marketing, website) $95,000 Acquisition of Existing Business $0 Salaries $0 Total Loan Requested (All Sources): $105,000 Equipnent Explanation - We will purchase the following with these funds Used Bectric FOrklift - $1 ,000 - Computer Equipment - $5,000 - Web site re-design - $4,000 W orkilg Capital Explanation - The $97,000 wit be used to help pay the sa laries for three new full-time positions, fund the purchase of addtional inventory to support the projected ilcrease in sales, and fund the. additional general and administrative expenses associated with hiring addtional personnel. 2.2. Terms of Proposed Financing (Sources) Monthly Type(1) Proposed Financing Amount paym ent Rate Term Financiallnstlution: $ Financiallnstlution : CR Bank & Trust $ 60,000 $600 LOC 7.2% Indefinite Other: A-iva1e Loans $ 33,000 None Loan 0% Indefinite Iowa City COBG Economic l:ev. Fund $105,000 , ... .... ..... TOTAL: $198,000 >. ;. '..!'..' ...... < > 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. Gluten Evolution is already highly leveraged and incurring additional bank debt would not be prudent Gluten Evolution is committed to supporting the economic growth of Iowa City and being a good corporate citizen. This low-interest, deferred loan will help the company undertake the marketing initiatives and fill key staff positions it needs to accelerate its growth. 2.4. Indicate the owner's contribution (cash, assets for the operation of the business, etc.) to this project. Anna Sobaski has invested over $50,000 in the company since its inception and does not draw a regular salary from the business. 2.5. Identify all agencies or institutions involved in the project (financial, technical assistance, etc.) and what their i~volvement is: · The Entrepreneurial Development Center (EDC) is providing business guidance to the company. · Story Lounge is a marketing firm that will help the company build and expand its brand. 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. X Corporate Guaranty UCC Financing Statement Irrevocable letter of Credit X Personal Guarantee Surety Bonds Mortgage on Real Estate Escrow Account Other: Before execution of a COBG 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 provDe financial assistance, could the project proceed? No Section 3: Jobs to Be CreatedIRetained 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 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 Cityfundsfor the employment shortfall. 3.1 If an existing business, how many erTl>loyees a-e currenlly errployed at your bw a aty location? Rease attach a copy of the corrpany's quarterly bw a 'ErT1:>loyer's Contribution and AJyroll Report" fa the ITDst recent quarter. 2 part-time + the ownerlfounder 32 Corrpete the fdlow ing chart identfying the nurrber 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 A ward (please see attached Job Category Definitions) # of Jobs # of Jobs No. tburs Hourly Fringe Created Retained TVDe of Job Per V.ek Rate of Pay Benefits* 1 0 Officials & Managers 40 $35 tJedical A"ofessional Techlicians 1 0 Sales 40 $15 tJedical Office & Clerical Craft Workers (Skiled) Opera:ives (sem-skilled) 2 0 Laborers (unskilled) 40 $12 tJedical Servce Workers *If fringe benefits are p-ovided, pease attach a description of all errployee benefi1s provided by and paid for (in full or in part) by the rosiness. NOTE: The OfflCiallManager positim will be created as part of this expansion, but funds are not being requested for this position. 3.3 What is the estimated annual payrol for the new empl~ees resuling from this project? $154,000 3.4 If an existing business, w ill any d the current employees lose 1heir jobs if the prqect does not p-oceed? If yes, how many? Explain why: No Section 4: Economic & Environmental Impact 4.1. V\lhat other Johnson County cOll1'anies could be considered to be your corrpetitors? None 4.2. Rease describe the energy and resource efficiency progarns, waste reducti<J1, waste exchCl'lge, and recycling p-ograrns at your Iowa aty operation. We recycle boUles, cans, and paper. Our company's operations are such that other energy or resource efficiency programs are not really meaningful to us. Section 5: Community Involvement, Compliance with Law 5.1 In actJition to your normal business activities, does YOJr business contriblie or have plans to contribute to 1he comnmly through volunteer work, financial cortributions, or through other means? Rease describe. Anna has been an active member of the Celiac community since she was diagnosed with Celiac disease in 1999. Since the inception of Gklten Evoh.tion in 2002, she has been an active financial and product contrib~r to the Iowa CitytCoraM11e Celiac Support group. As the company expands, we wll become more active with other support groups that could benefit from a gluten-free diet 52 Has 1he business been ciEd or foun:! to violae any federal or state statue or regulation w ithn the lastfive years (includng, but nct lirritedto envirormental regulations, payrolltaxes, Occuj:litional Saety and Haalth Adrri1istration law s, Far Labor S1andards, 1he National Labor Relations Act, the Americans w ith Disalilities Act)? If yes, please explain the circum- stances of theviolation(s). No 5.3 Has 1he corrpany or any officer of your corrpallf ever been involved in bankr~tcy or insowency proceedings? If so, please provide the details. No 5.4 Are you or your business involved n any pendng lawsuls? If yes, provide the case name of the law suit, docket nuni>er, and city and state w here it is pendirg. No Release of Information and Certification NOTE: Please read carefully before signng I here~ give perrrission to the City of Iowa City (the City) to resea-ch the corrpa'lY's histay, make credt checl~, conta:t the COfTl)a'lY's finan:ial insttution, and perfam other relaEd activities necessary for reasalable evaluation of this proposal. I understand that all infonnation subrrtted to the City relating to this applcation is subject to the Open Records Law (1994 Iowa Code, Chapter 22) and that confcentiality may not be guara'lteed. I here~ certly that all representaions, warranties or statements made or furnshed to the City in connection with this applcation are true and correct in all material respects. I understand that it is a crimal violaion under Iowa law to engage in decel1ion and know ilgly make, or cause to be made, directly or indirectly, a false statement in w ritilg for the purpcse of procuring econooic devebpment assistance from a state agency or political subdwision. If ap~r-~t is a proprietor or general partner, ~ign below. By:LP<1.;L~ $v ~~ Date:~ <r S If applicant is a Corporation, sign below: '07 Corpaate Name and Seal Date By: Sigmture of A"escent Attested by: Signaure of Corpaate Secretary Description of Fringe Benefits The company currently does not offer fringe beneits to it employees. After receMng this grant the company will begin offering f\Iled ica I and Dental cO\lerage to all current and future employees. Otherbeneits will be added as the company has the resources to add them. Anna Sobaski CV - Work Experience: Gluten Evolution, LLC, Iowa City, IA: Owner and operator of company, which creates and distributes nation wide a line of gluten-free bread mixes. Mixes are purchased in stores and through the website www.glutenevolution.com. Gluten Evolution, LLC also provides educational consultation to individuals, non-profit organizations, schools, hospitals and restaurants in the preparation of gluten- free foods. Established in 2002. Natural Gourmet Cookery School, Institute for Food and Health, New York, NY. Adjunct faculty teaching cooking classes on gluten-free foods. 2005-Present. Wellness Foods, Toronto, Canada: Recipe developer for gluten, dairy-free foods to be manufactured on a mass-market scale. 2002 James Beard Foundation, New York, NY: Assisting in the kitchen for visiting chefs from around the United Sates. 2001-2002 Beaver Country Day School, Chestnut Hill, MA: Acting Department Chair. Guided department with nine full-time faculty. Responsible for department budget, gallery exhibition schedule and artwork installation while maintaining a full teaching load. 1998-2000 McDonough School, Baltimore, MD: Full-time faculty, member of the Art Department. Taught foundation as well as advanced courses in photography, environmental design, drawing and mixed media. 1994-1998 Education: Chef Training Program, Natural Gourmet Cookery School, Institute for Food and Health, New York, NY. Additional course work in gluten free recipe development. 2002 Master of Fine Arts Degree in Photography, Maryland Institute College of Art. Baltimore, MD. Awarded the Patricia Harris Fellowship (full scholarship). Also awarded to one graduating graduate student the Walter's Traveling Fellowship with additional support from the Kodak Corporation for expenses and photographic supplies for travel throughout Eastern Europe. 1992 Bachelor of General Studies, University of Iowa, Iowa City, IA. Interdepartmental degree in Film and American Studies, 1984 Publications: The Gazette Newspaper, Cedar Rapids, IA. The Edge business section. Profile on Gluten Evolution as a female owned business. Sunday, June 4, 2006 University of Chicago Celiac Research Center Newsletter. Featured article on Gluten Evolution and the Breads From Anna TM products. Spring 2006 The Gazette Newspaper, Cedar Rapids, IA. New Product Profile in the business section. Wednesday, February 25, 2004 The Catalyst, Iowa City/Coralville New Pioneer Co-op Newsletter. Interview about gluten-free products and the gluten free diet. May/June 2004 Vegetarian Times, Published recipe. March 2002. Memberships: Celiac Disease Foundation Celiac Sprue Association of America Gluten Intolerance Group of North America Darin Vig CV PROFESSIONAL EXPERIENCE OverCoffee Productions; Cedar Rapids, IA July 2006 - March 2007 OverCoffee is a web design and hosting company focused on the gift and home industry. Director of Operations Challenge Drive growth and improve operations while keeping tight control over corporate finances. Accomplishments included: Introduced new project tracking processes and tools to provide better information for staff and management Engaged all team members to encourage open sharing of ideas to improve service delivery Reviewed and reset standard pricing for all products to improve profit margin Negotiated favorable re-payment plans with various creditors to provide some financial flexibility Created first ever annual strategic plan and financial projections BIR Training Center; Chicago, IL November 2002 - July 2006 BIR is a post-secondary school with current enrollment of about 1,500 students. Director of Operations, Marketing, and Customer Service Challenge Increase enrollment while controlling marketing spend and improve operations to support a growing student body while maintaining headcount and cost discipline. Major accomplishments included: Increased enrollment by over 400% in 3 years from 275 to almost 1,500 Increased revenue per employee from about $70,000 per employee to over $100,000 per employee Built and led multilingual sales and support staff that served students in 8 languages Improved communication and processes between all major business functions including Registrar, Academics, Financial Aid, International Students, Bursar, and Facilities Centerpost Corporation; Chicago, IL October 2000 - July 2002 Centerpost is a pioneer in the field of improving customer and employee communications through proactive, multi-channel messaging. Director - Business Development Challenge Joined the business development team to help the co-founders tackle strategic problems in order to help Centerpost reach profitability. Some of the major projects and responsibilities were: Negotiated deals with channel partners to help increase the reach of Centerpost's products Created the first pricing model and base pricing for Centerpost's product line Performed detailed financial and quantitative analysis to ensure pricing would generate sufficient profitability Created standard pricing sheets for field sales staff and special pricing models for sales management team Created methodology for conducting pre-sales consulting engagements, which included standard presentations and financial models USatWork.com; Rolling Meadows, IL January 2000 - May 2000 USatWork provided web site creation and hosting services to small businesses using a proprietary, cutting-edge web site creation technology. Director - Business Development Challenge Joined the business development team to tackle any and all projects necessary to help USatWork reach profitability. Led the Builders and Contractors industry vertical. Managed a team of 7 web developers and sales people. Created go-to-market strategy and drove the implementation. My industry vertical led the company in sales and profitability. Created and led a corporate strategy group responsible for enhancing the overall brand of USatWork and reducing costs by centralizing redundant functions in the 20 market verticals. Cost reducing initiatives reduced the burn rate by 25% while improving the overall image of USatWork in the marketplace. Ernst & Young, LLP - Strategic Advisory Services; Chicago, IL Sept 1998 - December 1999 Ernst & Young - Strategic Advisory Services (E&Y SAS) was the strategic consulting arm of Ernst & Young. Senior Consultant Challenge Help E&Y SAS clients refine their strategies to grow profitably. Helped a consumer products manufacturer understand the impact of new Internet procurement alternatives. Created the business plan for what is. now Integres, a joint venture that aims to revolutionize the heavy freight market. Created a new product strategy for an annuity provider that created new revenue far exceeding expectations. EARLY CAREER HISTORY Independent IT Consultant; Chicago, IL April 1995 - September 1996 Andersen Consulting (now Accenture); Chicago, IL June 1990 - April 1995 EDUCATION University Of Chicago, Graduate School Of Business; Chicago, IL June 1998 Master of Business Administration (MBA) - Strategic Management and Finance Graduated with Honors Grinnell College; Grinnell, IA May 1990 Bachelor of Arts - Mathematics Captain - Grinnell Golf Team; 1990 NCAA Division III Academic All-American Golf Team co o o N I Il) o o N CU ... 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"_ (1) ~o ~ g>~ ~ ffi~~t) ::;~(1)~..... U5roffi2~ .s~C).sQ:: o o o ld CO r- Eft o o o ld N r- Eft o o o ld o r- Eft o o o o r- r- Eft o o 1.0" N N r- Eft o o 1.0 o o 0" r- Ol Eft o Eft o o o N r- ~ o o o ~ Eft , o o 1.0 ld ..- Eft o o 1.0 c0 '<t ~ ..- Ol Eft o o o ld N Eft o o ~ '<t '<t Eft o o o ld LO Eft o o o Ol- C') Eft o o o N 1.0 Eft o o o 1.0 ..- Eft o o o N Eft o o o ld Eft o o o N ~ o o o N Eft o o o ai '<t Eft o o o o o o ld ..- Eft , o o o ~ r- ~ r- 1.0 Eft o o o <.0 C') Eft o o o. r- r- Eft o o o o o o ~ Eft o o o ~ ..- Eft o o o o r- ~ ..- C') Eft en (1) en c (1) 0.. X W ro o I- (1) E o u c Q) Z 5:00 PM 07/12/07 Gluten Evolution, LLC Profit & Loss January through June 2007 Accrual Basis Ordinary Income/Expense Income 4000 . MIX SALES 4010 . Mix 1 - Gluten Free 4015 . Mix 2 - G, C, & D Free 4020 . Mix 3 - G,C,D & Y Free 4025 . Mix 4 - Banana Bread 4030 . Mix 5 - Pumpkin Bread 4035 . Mix 6 - Pie Crust 4000 . MIX SALES - Other Total 4000 . MIX SALES 4500 . SHOW INCOME 4800 . Related Item Sales 4801 . Bread Machines 4802 . Covered Baker 4803 . Brick Oven 4814. Apron Total 4800, Related Item Sales 4820 . Consulting & Teaching 4900 . Customer Shipping Charged 4950 . OVER/SHORT Total Income Cost of Goods Sold 5000 . Cost of Mixes 5010. Mix 1 CGS - Gluten Free 5015. Mix 2 CGS - G, C, & D Free 5020 . Mix 3 CGS - Yeast Free 5025 . Mix 4 CGS - Banana Bread 5030 . MIX 5 CGS - Pumpkin Bread 5035 . MIX 6 CGS - Pie Crust 5100. FREIGHT 5000 . Cost of Mixes - Other Total 5000 . Cost of Mixes 5001 . Cost of Labels & Packaging 5800 . Related Item CGS 5810 . Bread Machine CGS 5900 . Shipping Costs Total COGS Gross Profit Jan - Jun 07 25,182.88 12,359.13 6,397.79 10,374.85 9,534.25 3,724.71 24.70 67,598.31 1,489.11 4,163.00 92.00 92.00 4,347.00 2,015.00 10,352.48 (10.74) 85,791.16 7,259.30 4,141.94 3,394.26 3,283.20 3,620.56 2,192.55 1,739.00 25,630.81 199.50 1,132.40 7,991.32 34,954.03 50,837.13 Page 1 5:00 PM 07/12/07 Gluten Evolution, LLC Profit & Loss January through June 2007 Accrual Basis Expense 6010, PROMOTIONAL DISCOUNTS 6040 . Life Insurance 6000 . WAGES - STORE 6030 . Medical Insurance 6070 . Travel 6075 . Meals & Entertainment 6100 . Advertising & Promotion 6105. Product Shows 6150 . Office Supplies & Postage 6152. Cooking Supplies 6160. Telephone 6165. Internet Expense 6167. Website Expense 6170. Dues, Subscriptions & Licenses 6200 . Bank Charges 6225 . Credit Card Processing Costs 6200 . Bank Charges - Other Total 6200 . Bank Charges 6250 . Interest Expense 6350 . Professional Fees 6360 . Accounting Fees 6355 . Legal Fees Total 6350, Professional Fees 6600 . Vehicle Expense 6620 . General & Liability Insurance 6700 . Rent Expense 6730 . Computer Repairs & Maintenance 6750 . Repairs & Maintenance 6800 . Utilities Total Expense Net Ordinary Income Net Income Jan - Jun 07 21.00 112.84 3,450.00 1,328.44 468.79 786.24 652.50 503.09 427.47 676.43 1,538.19 299.20 850.00 24.70 1,169.55 10.50 1,180.05 2,188.97 2,065.00 200.00 2,265.00 541.09 554.44 3,210.00 200.00 18.90 547.62 21,844.96 28,992.17 28,992.17 Nut 1\U e~ ~~S: 'we~ ~.W-f ~cA/Vf 01 Page 2 4:54 PM Gluten Evolution, LLC Profit & Loss January through December 2006 07/12/07 Accrual Basis Ordinary Income/Expense Income 4000 . MIX SALES 4010 . Mix 1 - Gluten Free 4015 . Mix 2 - G, C, & D Free 4020. Mix 3 - G,C,D & Y Free 4025 . Mix 4 - Banana Bread 4030 . Mix 5 - Pumpkin Bread 4035 . Mix 6 - Pie Crust 4000 . MIX SALES - Other Total 4000 . MIX SALES 4500 . SHOW INCOME 4800 . Related Item Sales 4801 . Bread Machines 4802 . Covered Baker 4803 . Brick Oven 4804 . Garlic Baker 4810 . Cookbook 4815. T-Shirt Sales 4800 . Related Item Sales - Other Total 4800. Related Item Sales 4820 . Consulting & Teaching 4900 . Customer Shipping Charged 4950 . OVER/SHORT Total Income Cost of Goods Sold 5000 . Cost of Mixes 5010. Mix 1 CGS - Gluten Free 5015. Mix 2 CGS - G, C, & D Free 5020. Mix 3 CGS - Yeast Free 5025 . Mix 4 CGS - Banana Bread 5030 . MIX 5 CGS - Pumpkin Bread 5035 . MIX 6 CGS - Pie Crust 5100 . FREIGHT 5000 . Cost of Mixes - Other Total 5000 . Cost of Mixes 5001 . Cost of Labels & Packaging 5700 . Product Development Costs 5800 . Related Item CGS 5815 . T-Shirt CGS 5800 . Related Item CGS - Other Total 5800 . Related Item CGS 5810. Bread Machine CGS 5900 . Shipping Costs Total COGS Gross Profit Jan - Dee 06 59,538.06 30,270.41 17,668.75 22,721.50 21,591.05 9,974.89 (436.01) 161,328.65 1,066.68 3,660.00 500.00 300.00 60.00 8.00 10.14 150.00 4,688.14 743.79 17,705.79 (6.88) 185,526.17 31,722.03 11,652.84 6,486.82 15,020.73 17,433.22 6,248.06 4,537.72 93,101.42 3,241.30 35.00 100.80 1,499.95 1,600.75 2,371.20 21,898.01 122,247.68 63,278.49 Page 1 4:54 PM 07/12/07 Accrual Basis Gluten Evolution, LLC Profit & Loss January through December 2006 Expense 6030. Medical Insurance 6050 . Contract Labor 6070 . Travel 6075 . Meals & Entertainment 6100 . Advertising & Promotion 6105. Product Shows 6150. Office Supplies & Postage 6152. Cooking Supplies 6160. Telephone 6165. Internet Expense 6167. Website Expense 6170 . Dues, Subscriptions & Licenses 6180 . Education and Training 6200 . Bank Charges 6225 . Credit Card Processing Costs 6200 . Bank Charges - Other Total 6200 . Bank Charges 6250 . Interest Expense 6300 . Bad Debts / Returned Checks 6350. Professional Fees 6360 . Accounting Fees 6355. Legal Fees 6350 . Professional Fees - Other Total 6350 . Professional Fees 6600 . Vehicle Expense 6620 . General & Liability Insurance 6700 . Rent Expense 6730 . Computer Repairs & Maintenance 6750 . Repairs & Maintenance 6800 . Utilities Total Expense Net Ordinary Income Other Income/Expense Other Income 000000 . other income Total Other Income Net Other Income Net Income Jan - Dec 06 4,996.66 5,549.00 3,329.43 820.97 2,330.95 7,805.32 3,203.60 2,419.98 4,673.85 1,202.10 4,923.86 628.98 150.00 2,508.45 323.85 2,832.30 7,361.32 8.95 5,573.00 325.00 480.00 6,378.00 2,881.42 2,495.43 6,070.00 1,049.10 1,067.51 72,178.73 (8,900.24) 112.50 112.50 112.50 (8,78774) Page 2 4:54 PM 07/12/07 Accrual Basis Gluten Evolution, LLC Profit & Loss January through December 2005 Ordinary Income/Expense Income 4000 . MIX SALES 4010. Mix 1 - Gluten Free 4015 . Mix 2 - G, C, & D Free 4020. Mix 3 - G,C,D & Y Free 4025 . Mix 4 - Banana Bread 4030 . Mix 5 - Pumpkin Bread 4035 . Mix 6 - Pie Crust 4000 . MIX SALES - Other Total 4000 . MIX SALES 4500 . SHOW INCOME 4800 . Related Item Sales 4801 . Bread Machines Total 4800 . Related Item Sales 4820 . Consulting & Teaching 4900 . Customer Shipping Charged 4950 . OVER/SHORT Total Income Cost of Goods Sold 5000 . Cost of Mixes 5010 . Mix 1 CGS - Gluten Free 5015. Mix 2 CGS - G, C, & D Free 5020 . Mix 3 CGS - Yeast Free 5025 . Mix 4 CGS - Banana Bread Total 5000 . Cost of Mixes 5001 . Cost of Labels & Packaging 5800 . Related Item CGS 5815. T-Shirt CGS Total 5800 . Related Item CGS 5810. Bread Machine CGS 5900 . Shipping Costs Total COGS Gross Profit Expense 6030 . Medical Insurance 6050 . Contract Labor 6070 . Travel 6075 . Meals & Entertainment 6100 . Advertising & Promotion 6105 . Product Shows 6125 . Charitable Contributions 6150 . Office Supplies & Postage 6152 . Cooking Supplies 6160. Telephone 6165. Internet Expense 6167. Website Expense 6170. Dues, Subscriptions & Licenses Jan - Dec 05 57,466.91 18,767.00 7,146.05 5,181.70 1,297.15 838.55 686.77 91,384.13 1,020.00 5,508.00 5,508.00 675.00 9,537.29 (0.30) 108,124.12 28,107.48 10,698.51 3,723.45 2,460.15 44,989.59 12,891.55 86.14 86.14 3,728.48 18,099.20 79,794.96 28,329.16 4,030.39 562.37 3,166.50 1,105.70 2,031.28 1,835.95 485.28 1,300.12 1,180.89 2,618.89 7,814.12 1,990.95 35.00 Page 1 4:54 PM 07/12/07 Accrual Basis Gluten Evolution, LLC Profit & Loss January through December 2005 6200 . Bank Charges 6225 . Credit Card Processing Costs 6200 . Bank Charges - Other Total 6200 . Bank Charges 6250 . Interest Expense 6350 . Professional Fees 6360 . Accounting Fees 6355 . Legal Fees 6350 . Professional Fees - Other Total 6350 . Professional Fees 6400 . Depreciation 6600 . Vehicle Expense 6620 . General & Liability Insurance 6700 . Rent Expense 6730 . Computer Repairs & Maintenance 6750 . Repairs & Maintenance 6800 . Utilities Total Expense Net Ordinary Income Other Income/Expense Other Income 000000 . other income Total Other Income Net Other Income Net Income Jan - Dec 05 1,744.00 147.38 1,891.38 3,678.79 3,233.75 1,030.93 71 5.00 4,979.68 2,878.00 2,179.10 2,632.47 1,000.00 144.90 264.98 1,510.99 49,317.73 (20,988.57) 15,000.00 15,000.00 15,000.00 (5,988.57) Page 2 10:48 AM Gluten Evolution, LLC Balance Sheet As of July 5, 2007 07/05/07 Accrual Basis ASSETS Current Assets Checking/Savings 1010. CRB&T Checking 1012. WIRE ACCT. CRB&T Total Checking/Savings Accounts Receivable 1100 . Accounts Receivable Total Accounts Receivable Other Current Assets 1120 . I nventory Asset 1150 . labels & Packaging 1400. Undeposited Funds Total Other Current Assets Total Current Assets Fixed Assets 1610. Equipment & Furniture 1699. Accumulated Depreciation 1600 . Auto Total Fixed Assets TOTAL ASSETS LIABILITIES & EQUITY Liabilities Current Liabilities Accounts Payable 2000 . Accounts Payable Total Accounts Payable Credit Cards 1035 . ADV ANT A CARD 1030. CITI CARD 1025 . Bank of America 1020 . Chase Visa Card Total Credit Cards Other Current Liabilities 2105. PAYROll L1ABILlTES 2190. lOC Payable - CRB&T 2200 . Iowa Sales Tax Payable 2400. Due To/Due (From) Shareholder Total Other Current Liabilities Total Current Liabilities Jul 5, 07 20,221.78 (5.02) 20,216.76 11,437.21 11,437.21 15,766.51 2,744.89 12,465.09 ------. -. ~---_._------ 30,976.49 62,630.46 3,512.25 (5,838.00) 15,723.00 13,397.25 76,027.71 11,315.04 11,315.04 7,279.69 6,710.84 11,314.75 (2,173.10) 23,132.18 338.93 59,496.68 (28.94) 8,420.10 68,226.77 102,673.99 Page 1 ~ . 10:48 AM 07/05/07 Accrual Basis Gluten Evolution, LLC Balance Sheet As of July 5, 2007 Long Term Liabilities 2600. GREG JESSON LOAN 011005. Betty Sobaski 2500 . Auto Loan-Capital One Total Long Term Liabilities Total Liabilities Equity 3100. Member Equity - AS 3110. Owner's Draws 3900 . Retained Earnings Net Income Total Equity TOTAL LIABILITIES & EQUITY Ju15,07 8,000.00 25,000.00 7,140.29 40,140.29 142,814.28 (53,242.94) (42,953.25) (8,787.74) 38,197.36 (66,786.57) 76,027.71 Page 2 10;48 AM 07/05/07 Gluten Evolution, LLC Balance Sheet As of July 5,2006 Accrual Basis ASSETS Current Assets Checking/Savings 1010 . CRB& T Checking Total Checking/Savings Accounts Receivable 1100 . Accounts Receivable Total Accounts Receivable Other Current Assets 1120. Inventory Asset 1150 . Labels & Packaging 1400. Undeposited Funds 1499. DO NOT USE - Old Undep. Funds Total Other Current Assets Total Current Assets Fixed Assets 1610. Equipment & Furniture 1699. Accumulated Depreciation 1600 . Auto Total Fixed Assets TOTAL ASSETS LIABILITIES & EQUITY Liabilities Current Liabilities Accounts Payable 2000 . Accounts Payable Total Accounts Payable Credit Cards 1020 . Chase Visa Card Total Credit Cards Other Current Liabilities 2190. LaC Payable - CRB&T 2200 . Iowa Sales Tax Payable 2400 . Due To/Due (From) Shareholder Total Other Current Liabilities Total Current Liabilities Long Term Liabilities 011005 . Betty Sobaski 2500 . Auto Loan-Capital One Total Long Term Liabilities Total Liabilities Ju15,06 (5,935.63) (5,935.63) 3,136.38 3,136.38 4,451.47 2,744.89 469.06 192.00 7,857.42 5,058.17 3,512.25 (5,838.00) 15,723.00 13,397.25 18,455.42 1,920.00 1,920.00 18,706.98 18,706.98 49,996.68 (38.89) 7,724.77 57,682.56 78,309.54 9,000.00 10,243.89 19,243.89 97,553.43 Page 1 10;48 AM 07/05/07 Gluten Evolution, LLC Balance Sheet As of July 5, 2006 Accrual Basis Equity 3100. Member Equity - AS 3110. Owner's Draws Net Income Total Equity TOTAL LIABILITIES & EQUITY Ju15,06 (53,242.94) (11,740.87) (14,114.20) (79,098.01 ) 18,455.42 Page 2 '10:49 AM 07/05/07 Gluten Evolution, LLC Balance Sheet As of July 5, 2005 Accrual Basis ASSETS Current Assets Checking/Savings 1010. CRB&T Checking Total Checking/Savings Accounts Receivable 1100 . Accounts Receivable Total Accounts Receivable Other Current Assets 1120 ' I nventory Asset 1150 ' Labels & Packaging 1499. DO NOT USE - Old Undep. Funds Total Other Current Assets Total Current Assets Fixed Assets 1610, Equipment & Furniture 1699. Accumulated Depreciation 1600 . Auto Total Fixed Assets TOTAL ASSETS LIABILITIES & EQUITY Liabilities Current Liabilities Accounts Payable 2000 . Accounts Payable Total Accounts Payable Other Current Liabilities 2190. LaC Payable - CRB&T 2200 . Iowa Sales Tax Payable 2400, Due To/Due (From) Shareholder Total Other Current Liabilities Total Current Liabilities Long Term Liabilities 011005 . Betty Sobaski 2500 . Auto Loan-Capital One Total Long Term Liabilities Total Liabilities Ju15,05 1,751.08 1,751.08 3,974.68 3,974.68 5,154.95 2,744.89 308.58 8,208.42 13,934.18 1,013.86 (2,960.00) 16,034.03 14,087.89 28,022.07 1,920.00 1,920.00 25,850.00 (35.11) 6,663.49 32,478.38 34,398.38 9,000.00 12,868.12 21,868.12 56,266.50 Page 1 07/05/07 Gluten Evolution, LLC Balance Sheet As of July 5,2005 '10:49 AM Accrual Basis Ju15,05 Equity 3100. Member Equity - AS 3110. Owner's Draws 3900 . Retained Earnings Net Income Total Equity 2,000.00 (28,712.89) (6,454.59) 4,923.05 (28,244.43) 28,022.07 TOTAL LIABILITIES & EQUITY Page 2 INITIAL REVIEW OF SUMMA ENTERPRISES, LLC (NILE VALLEY RESTAURANT) WORKING CAPITAL Business Proposed: Nile Valley is a new restaurant that will serve Middle Eastern/Mediterranean food and gourmet coffee. The business hopes to open late summer/early fall of 2007 at 335 S. Gilbert Street on the ground floor of a multi-unit complex that consists of 300 apartments. The owner request funds for working capital, construction and inventory. Budget & Private Financial Contribution The applicant initially requested $110,000, but has reduced their request to $50,000. U.S. Bank has committed to providing a $50,000 5-year loan for equipment and will secure their loan with a UCC filing statement. Applicant will invest $70,000 in personal funds to this business. 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 the expansion and/or retention of business that pay at least the living wage. Quality of Jobs The applicant proposes to create 9 jobs, 3 full-time and six part-time. The three full-time jobs will pay $10.50/hour or more, the part time wage is $7.00/hour. No fringe benefits are paid. Economic Impact The proposed CDBG funds will provide a minority owned business access to low interest working capital. The business is in need of low cost capital for start up costs. Environmental/Community Involvement The business will support Neighborhood Centers of Johnson County, the Sudanese Association of Iowa City and the Out Reach program for Girl Scouts with cash contributions/fund raising events. Items to Address: 1. 100% of the loan for a start up business is unsecured. US Bank would take a lien on all equipment. The applicant will lease t,he space. 2. The owner has experience in the preparation, storage and handling of food, however lacks experience in financially operating a for-profit business. 3. The monthly payment for the US Bank loan should be approximately $1,001, not $766.67 as stated in the application; however the estimated total loan July 2007 payment with the requested City funds is accurate in the cash flow projection. 4. The cash flow projection for gross wages is lower than the amount of payroll generated under the question 3.2. Annual payroll under 3.2 would be $9,620; the cash flow projection indicates $8,000 by month 12. July 2007 Iowa City CDBG Economic Development Funds Application for Business Financial Assistance Business Requesting Financial Assistance: Individual: IIham. B. Mohamed and Bedrelddin B. Ahmed Home Address: 628 12m Ave. Apt# 2 Coralville AI 52241 Name of Applicant Business: SUMMA Enterprises, LLC / Nile Valley Restaurant Full Street Address of Business: 335 S. Gilbert St, Iowa City, IA 52240 Phone Number & Email Address: (319) 354-6546- (319) 594-0439, bederelddin@yahoo.com DUNS Number (If awarded funds, applicant must obtain a DUNS number): Type of Business: Restaurant or Retail Date Business Established: August 2007 Bank of Business Account and Address (if applicable): U.S Bank Washington St, Iowa City, IA 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. Section 1: Description of Business and Proposed Project 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: Our project is starting a new Middle Eastern food restaurant, Nile Valley, in South Gilbert Street, Iowa City. To make The Nile Valley Restaurant a reality we request financial assistance to cover the construction and inventory costs. IIham Mohamed and Bedrelddin Ahmed, the owners, will put down $70.000 from their own savings. The vital assistance from the City will help us meet the building renovations costs of $90,000. Since we have no collateral assets to help us in obtaining the loans from the commercial banks, we would be enormously helped by the financial assistance we could get from the City. 2. Provide a brief history of your company: NA. 3. Describe the organizational structure of the business: IIham Mohamed and Bedrelddin Ahmed will own and manage the restaurant, EI- fatih AI-Siddig Chef/Shift Manager; eight new employees will work on the counter and meeting the customers. 4. Management (Proprietor, partners, officers, directors, all holders of outstanding stock, 100% of ownership must be shown) Name & PositionlTitle Complete Address % Owned 628 12th Ave, # 2, Coralville, IA 52241 51% IIham Mohamed owner/director 628 12th Ave,# 2, Coralville, IA 52241 49% Bedrelddin Ahmed owner/director Attach a brief description similar to a resume of the education, technical and business background for all the people listed under Management. Attached 5. Will the project involve a transfer of operations or jobs from any other Iowa City or Johnson County facility or replace operations or jobs currently being provided by another Iowa City or Johnson County company? If yes, please indicate the facility(s) and/or company(s) affected. NO Section 2: Financial Contributions to the Proposed Project 1. Use of Proceeds USE OF Proceeds Loan Requested (Enter gross dollar amount rounded to the nearest Activity hundreds) Land acquisition $0,000.00 New Construction/Expansion Repair $90,000.00 Acquisition and/or Repair of Machinery $30,000.00 and Equipment Inventory Purchase $15,000.00 Working Capital (including accounts $35,000.00 payable) Acquisition of Existing Business $0,000.00 All Other (provide description) $0,000.00 Total Loan Requested (All Sources): $170,000.00 2. Terms of Proposed Financing (Sources) Monthly Proposed Financing Amount Payment Type(11 Rate Term Financial $ 50.000 766.67 7.49% 5 years Financial Institution : $ Other : $ 70.000 0 owners 0 0 Iowa City CDBG Economic Dev. Fund $ 50.000 TOTAL: $ 170.000 (1lFor example: forgivable loan, direct loan, or grant. 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. U. S bank will lend us money to purchase the equipment which is considered as collateral. Since we do not own a home or any property other than our own savings, the need for the city assistance is vital for us to make the Nile Valley Restaurant a reality. 4. Indicate the owner's contribution (cash, assets for the operation of the business, etc.) to this project. The owners will contribute 70,000.00 cash, IIham resigned from her job as a Site Director at the Neighborhood Center, to devote her entire time to managing the Nile Valley Restaurant. 5. Identify all agencies or institutions involved in the project (financial, technical assistance, etc.) and what their involvement is: The technical assistance is provided by Paul Heath of the Small Businesses Center, Attorney Ann Tompkins represents SCORE, Joni Thornton from the Women's Business Center, Amy Greazel Accountant, Attorney Julie Pulkrabek for legal advice and US Bank as the financial institution. 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. Personal Guarantee 410 Corporate Guaranty 411 UCC Financing Statement 412 Irrevocable Letter of Credit 413 Personal Guarantee 414 Surety Bonds 415 Mortgage on Real Estate 416 Escrow Account 417 Other: Before execution of a COBG 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? It will almost be impossible for the Nile Valley Restaurant to proceed without the assistance, but we will keep trying. 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. NA 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 40 $12 Professional Technicians 3 Sales 20 $7 Office & Clerical Craft Wokers (Skilled) Operatives (semi-skilled) 3 Laborers (unskilled) 20 $7 1 Service Workers 40 $10.50 *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? We will hire Three full time employees at $12 and $10.50 per hour. 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: NA Section 4: Economic & Environmental Impact 1. What other Johnson County companies could be considered to be your competitors? . Oasis Falafel Restaurant 206 Linn St, Iowa City . Aladdin Restaurant, 2419 2nd St, Coralville. . Pita Pit 113 Iowa Ave, Iowa City. 2. Please describe the energy and resource efficiency programs, waste reduction, waste exchange, and recycling programs at your Iowa City operation. We are planning on using Energy STAR bulbs, LED exit signs, to change HVAC units filters and we contacted the utility company in our area for more assistance. 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. YES, we have been involved with many community organizations and we, as owners are planning on continuing this practice. Restaurant will make regular cash contributions/ fund raising events for the Neighborhood Centers of Johnson County, the Sudanese Association of Iowa City and the Out Reach program for Girls Scouts. 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. Yes Bedrelddin Ahemd had file for bankruptcy in 1997, ten years ago, but he reestablished his credit worthiness by paying-off and settling all the his debts. His current credit score is over 690 the last time we checked our credit reports. 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) [na] 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) IIham Mohamed ~ Bederelddin Ahmed [na] If an existing company, copy of the company's quarterly Iowa "Employer's Contribution and Payroll Report" for the most recent quarter. [ x ] Construction loans only: Cost estimates for construction and a statement of the source of any additional funds [x ] Include a list of any machinery or equipment or other non-real estate assets to be purchased with the financial assistance and the cost of each item as quoted by the seller. Include the seller's name and address. Upon review of a submitted application, the City reserves the right to request additional information in order to assist the City with its evaluation of an application. Release of Information and Certification NOTE: Please read carefully before signing I hereby give permission to the City of Iowa City (the City) to research the company's history, make credit checks, contact the company's financial institution, and perform other related activities necessary for reasonable evaluation of this proposal. I understand that all information submitted to the City relating to this application is subject to the Open Records Law (1994 Iowa Code, Chapter 22) and that confidentiality may not be guaranteed. I hereby certify that all representations, warranties or statements made or furnished to the City in connection with this application are true and correct in all material respects. I understand that it is a criminal violation under Iowa law to engage in deception and knowingly make, or cause to be made, directly or indirectly, a false statement in writing for the purpose of procuring economic development assistance from a state agency or political subdivision. If applicant is a proprietor or general partner, sign below. By: IIham B. Mohamed_ Date: 6/14/2007_ If applicant is a Corporation, sign below: Corporate Name and Seal Date By: IIham B. Mohamed Signature of President Attested by: Signature of Corporate Secretary 1 \ Strate~ic & Tactical Business Plan 'I 'l,. Strategic & Tactical Business Plan For Nile Valley Restaurant 335 S. Gilbert St. Iowa City, IA 52240 Phone: (319) 594-0439 Fax: (319) 354-6546 Email : ilhamfadul~yahoo.com Nile Valley Restaurant EXECUTIVE SUMMARY: There is an opportunity in Iowa City to open and operate a successful Middle Eastern! Mediterranean restaurant that will serve food and gourmet coffee. Ilham Mohamed and Bederelddin Ahmed have recognized this opportunity and have decided to go forward with a new company named SUMMA ENTERPRICES, LLC, which will penetrate the market in the business of operating a Middle Eastern! Mediterranean restaurant to be named Nile Valley. It will serve a variety of delicious food at competitive prices. Planning to open August or September of 2007, the building has 2,500 sq. ft, and will be equipped with one long elegant customer counter to serve all products. The total seating capacity would be around 50-60 seats. Nile Valley Restaurant is proud of its main product line, the features, and the benefits that make up its attractiveness to this ever-growing market. The main features of its core product include pita wrapped sandwiches of omelets (for breakfast), falafel, fava beans, gyros, kufta, or complete entrees of shish kebabs served in a traditional style for dine-in customers. Some of the strengths and capabilities of its core products as it and availability include the fact that our falafel is made with fresh ingredients such as chickpeas, which are high in protein, calcium and iron. The Nile Valley Restaurant will promise to provide an affordable, delicious, healthy and exotic home style meal. To make this restaurant a reality, the financial need is $170,000. The owners will put down $60,000 towards the loan. Starting on the building renovations will cost $ 90,000 and $30,000 for the equipments, the rest will go towards three month rent, employees, utilities, phones, advertising, inventory, supplies and insurance. MISSION STATEMENT: The Nile Valley Restaurant will strive to excel in the business of operating a Middle Eastern! Mediterranean restaurant that serves a variety of delicious food and coffee at highly competitive prices. What makes our restaurant unique is that we will offer a courteous and knowledgeable staff of well trained personnel dedicated to providing exceptional service and we will be open 6:00 am to 9:00 pm to serve our customers hot meals all day. LOCATION: Because of the nature of this business the company has learned that the best place to locate its restaurant is 335 S. Gilbert St, Iowa City, IA 52240. On the ground floor of a multi-unit complex that consists of 300 apartments, just half a block away from Burlington St, near a major parking ramp for downtown Iowa City and the Pedestrian Mall and only two blocks away from the Iowa City Public Library and one block from the Robert Lee Recreation Center of Iowa City. This location will give many advantages to Nile Valley Restaurant such as: residents and business personnel do not need to drive or leave downtown for a hot meal and the restaurant will generate more revenue. 1 ORGANIZATIONAL STRUCTUE: Ilham Mohamed and Bederelddin Ahmed will own and manage the restaurant. Ilham has been a flight attendant for over thirteen years and has gained a profound experience in dealing will all kind of passengers all around the world. After immigrating to the United States with her husband Bederelddin Ahmed, Ilham worked in many odd jobs which contributed to her learning experience and helped her to appreciate the value of affordable restaurants. She went back to school and earned an AA degree and a diploma in Early Childhood Education from Kirkwood Community College and worked in a child care center for four years. As a lead teacher in Pheasant Ridge Neighborhood Center, She helped and implemented a monthly menu for 180 children and learned how to order food from different suppliers and how to maintain proper food storage, as well as how to handle and comply with the Iowa State health codes. Ilham was promoted to be a Youth Programs Coordinator, and then to the position of Site Director. EI-Fatih AI-Siddig, Chef/shift Manager: He has spent five years running his family restaurant in Sudan, gained ability to supervise and train employees, including scheduling work assignments and organizing shifts to meet the work need and employees' needs. He planned the menu through the entire five years of running the business. EI- Fatih has gained knowledge of the needed supplies, ordering and controlling inventory, understanding of food safety and storage. Since he immigrated, with his family, to the United States he worked at Papa Johns Pizza in Texas and Iowa, currently as a store manager, this experience helped him to learn new skills and equipped him with the knowledge that he will implement in Nile Valley Restaurant. Nine new employees: Nile Valley will have nine employees, two chefs (52 hrs/week) one full time employee (40 hrs/week) and six part time employees (104 hrs/week). We know how important the organizational structure is to the success of the restaurant, so each position has a detailed job description as well as a defined relationship to the whole. Ilham Mohamed will manage the employees. THE MARKET: According to the 2003 census the population ofIowa City/ Coralville, was 82,123 people, and during the school year it increases by 29,745. Median household family income is $57,568. Downtown Iowa City, where Nile Valley is located, is the most condensed and populated area. Residents are mostly students and staff of the University of Iowa. Nile Valley Restaurant has done an exhaustive study of the State's restaurant industry. We found that it is one of the most exciting industries in the United States. It presents an ever increasing market, a very healthy bottom line, and an excellent opportunity for growth. The restaurant has all this to offer and its management team will keep its finger on the pulse of market demand. The demand is: quality delicious food, vegetarian or non-vegetarian selection, served by attentive personnel who provide superior customer service, in a clean comfortable atmosphere in which the customer can eat and relax. 2 As owners we feel that the Nile Valley Restaurant will meet the demand and will fit perfectly in this industry. Iowa City has many unique restaurants and always busy, the city has a highly diverse population and they like to taste international gourmet. It appears to the observer all over the United States people are too busy to cook or don't want to cook and if the neighborhood food places are good with great service they will come and tell about their experience. Nile Valley Restaurant will use its talent to position itself in the future markets serving a variety of delicious Middle Eastern and Mediterranean food and coffee at a highly competitive prices and sufficient in today's demanding market. In addition to this, we will develop and enhance as well as creating new products and services to keep our position in the marketplace. PROMOTION STRATEGY: The management on Nile Valley Restaurant believes very strongly that promotion is a crucial part of any business success. Our focus will be on extensive mailing to the residence of Iowa City and Coralville, online Internet exposure through search engine optimization, Yellow Pages, press releases, special promotions and coupons and eventually word of mouth. COMPETITIION: 1. Oasis Falafel Joint Restaurant - 206 N. Linn Street- downtown Iowa City 2. Aladdin Restaurant - 2419 2nd St - Coralville 3. Pita Pit- 113 Iowa Ave - Iowa City Oasis is seven blocks away from Nile Valley Restaurant, has a smaller building, and customers often complain about the uninviting atmosphere. Pita Pit is also somewhat similar but does not use fresh ingredients especially for its main product, the falafel. Aladdin restaurant also is a small place, highly priced and has an unfriendly staff that costumers often complain about. What sets Nile Vallev Restaurant apart from other competitor is: What sets Nile Valley Restaurant apart from other competitors is its unique location as visible for the traffic in Gilbert St, has 2,500 sq. ft of well designed space. It is also a few steps away from a highly condensed students' residence area, and students do not prefer to travel long distances when they are hungry. The location is also very convenient to many businesses around the area such as the phone company and the new Greyhound bus station to name a few. We are better because we intend to make our restaurant a very welcoming and inviting place. We noticed this is lacking at other places due to their small area or unwelcoming environment. We will pay very special and utmost regard for the quality of the services and food we deliver. Our focus on fresh food and meat will no doubt make a big different. We observed that our competitors are using ready made mixture for falafel, which does not taste the same as the fresh mixtures. The same can be said with many 3 other items such as shish-kebab. Weare also better because we offer better prices, knowing that most our customers are students who cannot afford expensive food. Proiection of Sales: We need a least 150 customer per day (in all three meals) with average customer spending at $6 for food and drink, which will generate sales of $ 900 per/day for the first six months (150 customers X 30days X $6 = 27,000). We expect customer numbers to increase to 200 people for the next six months to generate sales of $1200 per/day (200 X 30 X 6= 36,000). Our goal is to reach 400 customers per/day by the end of the 3rd year. More details in the attached Monthly Cash Flow Projection. 4 PROJECTED BALANCE SHEET YEAR ONE ASSETS Current Assets Cash On Hand Accounts Receivable Inventory Prepaid Expenses Suppliers TOTAL CURRENT ASSETS AMOUNT $ 25,940.00 $ $ 5,500.00 $ $ 480.00 $ 31,920.00 Fixed Assets Equipment &Improvements Land and Building Less Depreciation ( 6 , 000 . 00 NET FIXED ASSETS $ 120,000.00 $ ) $ 114,000.00 TOTAL ASSETS: $ 145,920.00 LIABILITIES Current Liabilities Accounts Payable Notes Payable - Bank Current Portion L TD TOTAL CURRENT LIABILITIES $ $ 97 , 942. 00 $ $ 97,942.00 Long Term Debt Officer's Debt $ $ TOTAL LIABILITIES Common Stock Paid in Capital Retained Earnings (Less) Treasury Stock $ $ 45,000.00 $ 2,978.00 $ TOTAL NET WORTH TOTAL LIABILITIES AND NET WORTH $ $ 145,920.00 PROJECTED PROFIT AND LOSS STATEMENT YEAR ONE Sales ANNUAL $ 298,000.00 Less: Cost of Goods Sold $ 76,600.00 Gross Profit $ 221,400.00 Operating Expenses Payroll (excluding owner's draw) $ 93,000.00 Payroll Taxes $ 5,580.00 Outside Services $ Supplies (office & operating) $ 2,805.00 Repairs & Maintenance $ 500.00 Advertising $ 13,000.00 Car Delivery & Travel $ Accounting & Legal $ 1,800.00 Rent $ 48,000.00 Telephone $ 1,350.00 Utilities $ 12,000.00 Insurance $ 3,500.00 Taxes (Real Estate, etc) $ Interest $ 7,628.00 Depreciation $ 6,000.00 Health Permit & Dumpster $ 1,240.00 Total Operating Expenses $ 196,403.00 Profit or (Loss) $ 14,997.00 PROJECTED BALANCE SHEET YEAR TWO ASSETS Current Assets Cash On Hand Accounts Receivable Inventory Prepaid Expenses Supplies TOTAL CURRENT ASSETS AMOUNT $ 57,422.00 $ $ 5,500.00 $ $ 250.00 $ 63,172.00 Fixed Assets Equipment & Improvements Land and Building Less Depreciation ( 6,000.00 NET FIXED ASSETS $ 114,000.00 $ ) $ 108,000.00 TOTAL ASSETS: $ 171,172.00 LIABILITIES Current Liabilities Accounts Payable Notes Payable - Bank Current Portion L TD TOTAL CURRENT LIABILITIES $ $ 84,920.00 $ $ 84,920.00 Long Term Debt Officer's Debt $ $ TOTAL LIABILITIES Common Stock Paid in Capital Retained Earnings (Less) Treasury Stock $ $ 45,000.00 $ 41,252.00 $ TOTAL NET WORTH TOTAL LIABILITIES AND NET WORTH $ $ 171,172.00 PROJECTED PROFIT AND LOSS STATEMENT YEAR TWO Sales ANNUAL $ 370,000.00 Less: Cost of Goods Sold $ 81,400.00 Gross Profit $ 288,600.00 Operating Expenses Payroll (excluding owner's draw) $ 102,000.00 Payroll Taxes $ 6,120.00 Outside Services $ Supplies (office & operating) $ 3,500.00 Repairs & Maintenance $ 400.00 Advertising $ 12,000.00 Car Delivery & Travel $ Accounting & Legal $ 1,450.00 Rent $ 48,000.00 Telephone $ 1,200.00 Utilities $ 12,000.00 Insurance $ 4,000.00 Taxes (Real Estate, etc.) $ Interest $ 7,363.00 Depreciation $ 6,000.00 Heath Permit & Dumpster $ 1,064.00 Total Operating Expenses $ 205,097.00 Profit or (Loss) $ 83,503.00 ~ :I: 2l en 3 o z ~ l: o Z -I :I: m Z o ... ... o o o cn .... o o o o o ... 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