Precision Tool CDBG Loan
.
.
.
of
: .
RESOLUTION 329-00
A RESOLUTION AUTHORIZING A COMMITMENT LETTER AND THE
EXECUTION OF A COMMUNITY DEVELOPMENT BLOCK GRANT LOAN
OF ONE HUNDRED THOUSAND DOLLARS ($100,000) TO PRECISION TOOL
& ENGINEERING, INC.
Whereas, under provisions of Title I of the Housing and Community Development Act of
1974, as amended, the City of Dubuque has received Community Development Block Grant
Funds for the purpose of stimulating economic development activities within the community; and
Whereas, the City of Dubuque, Iowa desires to assist the further expansion of Precision
Tool & Engineering, Inc. and to create new permanent employment opportunities for low and
moderate income citizens; and
Whereas, a Commitment Letter, hereto attached and by this reference made a part hereof,
sets forth the terms and conditions of Precision Tool & Engineering Inc.'s participation in the
City's CDBG Economic Development Loan Program.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
DUBUQUE, IOWA:
Section 1. That the Mayor is hereby authorized to execute, on behalf of the City
Council of the City of Dubuque, Iowa, the attached Commitment Letter and to forward said letter
to Precision Tool & Engineering, Inc.
Section 2. That the City Manager be and he is hereby directed to prepare, upon
receipt and acknowledgment of the attached Commitment Letter by the Company, the necessary
loan documents in accordance with the terms and conditions set forth in said Commitment Letter.
Section 3. That the City Manager is hereby authorized to execute, on behalf of the
City Council of the City of Dubuque, Iowa, all necessary loan documents and is further
authorized to disburse loan funds from the CDBG Economic Development Loan Program, in
accordance with the terms and conditions of the executed agreement.
Passed, approved and adopted this 17th day of July, 2000.
Terrance M. Duggan, Mayor
Attest:
Jeanne F. Schneider, City Clerk
.
.
.
RESOLUTION 330-00
A RESOLUTION AUTHORIZING ECIA BUSINESS GROWTH, INC. TO
PROCEED WITH A LOAN FROM THE CITY OF DUBUQUE'S PORTION OF
THE EDA REVOLVING LOAN FUND OF TWO HUNDRED FOUR THOUSAND
DOLLARS ($204,000) TO PRECISION TOOL & ENGINEERING, INC.
Whereas, the City of Dubuque has funded a portion of the Economic Development
Administration's (EDA) Revolving Loan Fund (RLF) which is administered by ECIA Business
Growth, Inc.; and
Whereas, Precision Tool & Engineering, Inc. has requested financial assistance from
ECIA Business Growth, Inc. of $204,000 for the further expansion of their business in the
Dubuque Industrial Center; and
Whereas, ECIA Business Growth,Inc. has reviewed the request and asked that the City
Council authorize the use ofloan funds from the City of Dubuque's portion of the EDA
Revolving Loan Fund; and
Whereas, the City of Dubuque, Iowa desires to assist Precision Tool & Engineering, Inc.
in this expansion.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
DUBUQUE, IOWA:
Section 1. That ECIA Business Growth, Inc. is hereby authorized to proceed with a loan
to Precision Tool & Engineering, Inc. from the City of Dubuque's portion of the EDA Revolving
Loan Fund.
Section 2. That the City Clerk is hereby directed to notify ECIA Business Growth, Inc. of
said authorization by transmitting a certified copy of this Resolution.
Terrance M. Duggan, Mayor
Attest:
Jeanne F. Schneider, City Clerk
I'
.
CITY OF DUBUQUE, IOWA
MEMORANDUM
July 13, 2000
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Economic Development Financing Package: Precision Tool &
Engineering, Inc.
.
Community and Economic Development Director Jim Burke is recommending that
the City support an economic development package for the expansion of Precision
Tool and Engineering. The package consists of a low-interest Community
Development Block Grant Loan of $100,000 and a $204,000 Economic
Development Administration Revolving Loan Fund Agreement.
An 18,880 square foot addition will be put on the building and 14 employees will
be added.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
f11J1 ~ iJtl
Michael C. Van Milligen '-
MCVM/dd
Attachment
.
cc: Barry Lindahl, Corporation Counsel
Tim Moerman, Assistant City Manager
Jim Burke, Community/Economic Development Director
M ~
M <(
~-=:
0 N ~ --,
0
W :lC ,r) 9,)
'--> 0- '0-,1.., ..-!
~ r \
....... :s
ll-! M -~.~
C .~,....
W __.I -,..,0
~ ........
0: -; G
<:::;)
0
.
.
.
owners will provide $67,500 in equity for a total project cost of$1,204,000. The new addition
will cost $525,000 and the milling machine cost is $675,000.
The City of Dubuque has been asked to support the project in two ways: 1) to execute a
$100,000 low interest CDBG Economic Development Loan with the company; and 2) to
authorize the use of the City's portion of ECIA Business Growth Inc.'s EDA Revolving Loan
Fund for the $204,000 noted above.
The use of the CDBG Economic Development Loan continues our practice to loan money to
projects that create new job opportunities for low and moderate income persons. The requested
loan for fourteen new jobs represents an investment of approximately $7000 per new job.
Sufficient funds are available in the Community and Economic Development Department budget
to provide this economic development loan.
ECIA Business Growth, Inc. administers the EDA Revolving Loan Fund and uses the City's
portion of the pool to provide financial assistance to businesses located in the city of Dubuque
that meet program requirements. The loan committee overseeing this fund has approved a loan
of $204,000 for Precision based on their underwriting requirements; however, the City Council
must concur with their approval.
Information on the specific terms and conditions of the proposed loans are included here as
Attachment A.
RECOMMENDATION
The Community and Economic Development Department staff, having reviewed the proposed
project in conjunction with ECIA, have determined that the project would allow the expansion of
a local company that offers good employment benefits and career opportunities for both existing
employees and future employees. The company has continued in a growth mode and has been
well managed, with reinvestment of profits back into the company. The cash flow position of the
company requires public financing assistance in order to make this expansion possible and to
provide the "substitute equity" required by bank.
It is my recommendation that the City Council adopt the attached Resolutions authorizing a
commitment letter and execution of a CDBG Economic Development Loan ($100,000) and
authorizing a loan from the EDA Revolving Loan Fund ($204,000) to support this project.
ACTION STEP
The Action Step for the City Council is to adopt the attached Resolutions.
attachments
Prepared by: Pamela Myhre, Economic Development Planner
F:\USERS\Pmyhre\ WPDOCS\LOANDOC\PRECISIO\PRECISIO.MEM
.
FINANCIAL ASSISTANCE
FACT SHEET
LENDER:
City of Dubuque, Iowa
LOAN PROGRAMS:
Attachment A
CDBG Economic Development Loan Program
ECIA EDA/Revolving Loan Fund
BORROWER:
Precision Tool & Engineering, Inc.
Kevin and Lee Ann Freiburger, Owners
PROJECT DESCRIPTION:
This project will involve the construction of an 18,880 square foot building addition ($525,000)
and the purchase of a specialty milling machine ($675,000).
JOB CREATION:
Fourteen (14) new FTE within three years of approval.
LOW/MOD JOBS:
At least fifty-one percent (51 %) of new jobs created must be made
available to low and moderate income persons.
.
COMPENSATION:
CNC Machine Operators
Fabrication & Press Operators
Production Supervisor
Sales Person
BENEFIT PACKAGE:
$9.50-10.50/hour
$8.95-9.95/hour
$19.00/hour
$30,000/yr + Commission
Includes seven paid holidays, paid vacation, health insurance, and
10% match for 401 (K) plan.
EQUITY INVESTMENT: $67,500
FINANCING PACKAGE: Dubuque Bank & Trust
ECIA Revolving Loan Fund (RFL)
City of Dubuque CDBG Loan
Equity
$ 832,500
$ 204,000
$ 100,000
$ 67.500
$1,204,000
CDBG ECONOMIC DEVELOPMENT LOAN:
Loan Amount: One Hundred Thousand Dollars ($100,000)
Loan Terms: 4% interest per annum
Seven (7) year term
Payback Schedule: Monthly principal and interest payments
.
.'
.
Attachment A
Use of Proceeds:
Collateral:
Acquisition of milling machine
Shared second DCC position with ECIA Business Growth Inc. on
the Mitsubishi Vertical Milling Machine and shared DCC Security
interest on Accounts Receivable, inventory, contract rights, general
intangibles, machinery and equipment (excluding automotive),
furniture and fixtures, subject only to prior liens by Dubuque Bank
& Trust Co. and the SBA. Personal guarantees of owners.
Payback Schedule:
Use of Proceeds:
Collateral:
ECIA BUSINESS GROWTH, INC. EDA REVOLVING LOAN FUND (RLF):
Loan Amount: Two Hundred Four Thousand Dollars ($204,000)
Loan Terms: 4% interest per annum
Seven (7) year term
Monthly principal and interest payments
Acquisition of milling machine
Shared second DCC position with City on the Mitsubishi Vertical
Milling Machine and shared DCC Security interest on Accounts
Receivable, inventory, contract rights, general intangibles,
machinery and equipment (excluding automotive), furniture and
fixtures, subject only to prior liens by Dubuque Bank & Trust Co.
and the SBA. Personal guarantees of owners.
.
.
Prepared by the Community and Economic Development Department
City of Dubuque, Iowa
. .
-'
.
.
Community and Economic
Development Department
50 West 13th Street
Dubuque, Iowa 52001-4864
DUB~E
~~~
July 17,2000
Kevin and Lee Ann Freiburger
Precision Tool & Engineering, Inc.
1500 Radford Road
Dubuque, Iowa 52002
RE: Letter of Commitment
Dear Mr. and Mrs. Freiburger:
I am please to inform you that your application for financial assistance has been accepted and
approved by the Dubuque City Council.
. The following offer is made:
Source of Funds: CDBG Economic Development Loan Program
Amount of Commitment: One Hundred Thousand Dollars ($100,000)
Interest Rate: Four percent (4%) per annum
Term of Loan: Seven (7) years
Payment Schedule: Monthly interest and principal payments. You may prepay this
loan in whole or in part at any time without penalty.
Form of Security: Shared second DCC position with ECIA Business Growth Inc. on a
Mitsubishi Vertical Milling Machine. Shared DCC Security
interest on Accounts Receivable, inventory, contract rights, general
intangibles, machinery and equipment (excluding automotive),
furniture and fixtures, subject only to prior liens by Dubuque Bank
& Trust Co. and the SBA. Personal guarantees of owners.
Purpose of the Loan:
To purchase a $675,000 milling machine as part of an expansion of
Precision Tool & Engineering, Inc.
.
Service
People
Integrity
Responsibility
Innovation
Teamwork
.
.
.
.A
;
. '
~
Special Conditions of this Commitment:
(a) Fourteen (14) new positions must be created within a three year period and with at least
51 % of those jobs made available to persons of low and moderate income.
This commitment is valid for twenty-one (21) days from the date of this letter. If you wish to
accept the offer, you must return the acknowledgment below. Failure to return written
acknowledgment will be cause for the commitment to lapse. This commitment offer shall lapse
if construction on the proposed project does not start within ninety (90) days of the loan closing.
If the terms offered do not meet your approval, or if you have any questions regarding the
conditions of this commitment, please contact Pamela Myhre, Community and Economic
Development Department, at 319/589-4393.
Sincerely,
13:::::: C)jjf/r
Mayor
ACKNOWLEDGMENT
We have reviewed the above offer and accept the CDBG Economic Development Loan of
$100,000 and all of the terms of this commitment letter.
PRECISION TOOL & ENGINEERING, INC.
Kevin Freiburger, Owner
Date
Lee Ann Freiburger, Owner
Date
F:\USERS\Pmyhre\ WPDOCS\LOANDOC\PRECISIO\commit2