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Genuine Genius Solutions Financial EVA ApplicationTHE CITY OF DuB E MEMORANDUM ~-~~ May 1, 2007 TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: Application for Financial Assistance for Genuine Genius Solutions, LLC Economic Development Director David Heiar is recommending submission of an Entrepreneurial Ventures Assistance (EVA) program application to the Iowa Department of Economic Development on behalf of Genuine Genius Solutions, LLC. Genuine Genius Solutions is an idea architecture firm that targets specific industries. They have an impressive list of Fortune 500 Company customers. Genuine Genius Solutions is currently located in Minneapolis, Minnesota, and intends to move to Dubuque, expanding their company with a commitment to have 13 employees in Dubuque averaging over $45,000, plus benefits, in the first year. The $200,000 EVA loan application with a $25,000 technical assistance grant requires a local match. The City would provide a $40,000 Community Development Block Grant loan. Brian Dalziel of the Northeast Iowa Business Accelerator is seeking local investors to provide $300,000 in financial assistance. The company is looking to move into the Northeast Iowa Community College (NICC) downtown facility in June 2007. The initial space will be 1,000 square feet, expandable to 3,000 square feet in six to nine months. The company will then begin to look for a permanent facility on a lease or lease-to-own basis with expected square footage of 10,000 square feet in three years. I concur with the recommendation and respectfully request Mayor and City Council approval. ~'~ /~ Michael C. Van Milligen MCVM/jh Attachment cc: Barry Lindahl, City Attorney Cindy Steinhauser, Assistant City Manager David Heiar, Economic Development Director CITY OF DUBUQUE, IOWA MEMORANDUM April 20, 2007 TO: Michael Van Milligen, City Manager FROM: David Heiar, Economic Development Director SUBJECT: Application for Financial Assistance for Genuine Genius Solutions, LLC INTRODUCTION This memorandum presents for City Council review and approval a resolution authorizing the submission of an EVA (Entrepreneurial Ventures Assistance) program application to the Iowa Department of Economic Development on behalf of Genuine Genius Solutions, LLC, an idea architecture firm that targets specific interests. The Entrepreneurial Ventures Assistance (EVA) application is attached. BACKGROUND This project was brought to the City of Dubuque by Karen Adams with Prosperity Eastern Iowa. This is a direct result of our resent efforts at regional economic development. Company representatives have been in Dubuque on three occasions and have been assisted by Prosperity Eastern Iowa, GDDC, the Northeast Iowa Business Accelerator (Brian Dalziel), NICC, and City staff. Genuine Genius Solutions, LLC has announced its intent to relocate its operations in downtown Dubuque. The Company, which is currently located in Minneapolis, will create 13 new positions in Dubuque as a part of this relocation and expansion process. Genuine Genius Solutions, LLC is an idea architecture firm that targets specific industries. The Company identifies, protects and designs reusable tools into marketable solutions delivered via a channel marketing strategy in conjunction with Circle Partners, who are established companies with specific expertise that have shared risk and aligned financial goals. The initial channel, VerticalT"" has built an impressive set of Fortune 500 customers over the past three years which includes Hewlett Packard, EMC, Marmon Group and Thomson Companies. Open Road®, the Company's second channel, provides a complete automotive dealer technology solution. Open Road® has released its first product, Open Road CRM powered by Car IT, an international software partner (www.audev.com). Genuine Genius leverages technology to coordinate critical resources at strategic business partners from around the world to power their product channels. Using a shared reward model provides partners with recurring revenue and a steady stream of new products in return for their market expertise, human capital, established customer channels and capital infrastructure. Investors in Genuine Genius benefit from a diversified revenue stream that requires less capital for growth with minimal downside risk. The Company principals have over 18 years of experience creating and improving businesses in several industries. These experiences range from start up experience at the Bucket Boss Company which created, branded and promoted an entirely new consumer product line that grew from zero to $20 million in annual revenue in six years to large scale business solutions for companies such as Xcel Energy, Oshkosh Truck and Hewlett Packard. The Company's collective experience has created a superb network of inventors, engineers, artists, scientists and generally creative folks that create a vibrant energy that is critical to maintaining a steady flow of new ideas. These people are Genuine Genius. The company has spent much of its time, and profits, on developing its core technology for the Open Road Vertical. Near the end of 2006, this project was completed and sales have commenced. Coupled with their other verticals, Consumer Product and Vertical, the company needs to expand its sales, technical support and application development employment base. The company began exploring communities for expansion throughout the Midwest in February 2007. The stated goal is to have a community chosen and a relocation package established in June of 2007. The company is looking to move into the Northeast Iowa Community College (NICC) downtown facility in June 2007. The initial space will be 1,000 sq ft, expandable to 3,000 sq ft in 6-9 months. The company will then begin to look for a permanent facility on a lease or lease-to-own basis with expected sq footage of 10,000 sq ft in 3 years. An EVA application will provide additional financial assistance to enable the company to relocate and expand in Dubuque. The application to the Iowa Department of Economic Development requires a commitment of City funds to the project. A proposed $40,000 CDBG loan would meet this local match requirement. An Enterprise Zone application is also being considered pending the permanent location site. DISCUSSION Genuine Genius Solutions, LLC will commit to employ 13 new employees in Dubuque averaging over $45,000 plus benefits in the first year. The Company will be seeking $300,000 from a Local Angel Investor. Brian Dalziel with the Northeast Iowa Business Accelerator is seeking and coordinating local equity investors to meet this financing need. To assist this project, Genuine Genius Solutions, LLC has requested an EVA loan of $200,000 and a technical assistance grant of $25,000. City assistance as public match for the EVA application is proposed to be a $40,000 CDBG low interest loan. The loan would be a five year 0% interest loan with principal payments beginning in year 2. RECOMMENDATION I recommend that the City Council authorize the submission of an EVA application for a $200,000 loan and a $25,000 technology grant on behalf of Genuine Genius Solutions, LLC with a commitment of local matching funds. This project is consistent with the City's goals to help businesses locate and expand in the community, increase the number of good paying jobs and further diversify our economic base. ACTION STEP The action step for the City Council is to adopt the attached resolution. attachments F:\USERS\DHeiar\Genuine Genius Solutions\Financial Assistance App Memo.doc RESOLUTION NO. 271-07 A RESOLUTION AUTHORIZING THE FILING OF AN ENTREPRENEURIAL VENTURES ASSISTANCE (EVAj APPLICATION ON BEHALF OF GENUINE GENIUS SOLUTIONS, LLC Whereas, Genuine Genius Solutions, LLC has proposed to relocate and expand its operation to Dubuque; and Whereas, the City Council of Dubuque, Iowa has considered said proposal and has determined that the proposed project will contribute to the local economy through the creation of 13 new jobs in the first year for area residents; and Whereas, the Iowa Department of Economic Development's Entrepreneurial Ventures Assistance (EVA) was designed to assist in the economic development efforts of local jurisdictions; and Whereas, the City of Dubuque, Iowa is eligible to apply for funding from the Entrepreneurial Ventures Assistance (EVA) program; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF DUBUQUE, IOWA: Section 1. That the filing of an application for participation in the Iowa Entrepreneurial Ventures Assistance (EVA) program on behalf of Genuine Genius Solutions, LLC is approved. Section 2. That the local match as identified in the application is hereby approved, subject to the EVA application approval. Section 3. That the Mayor is hereby authorized to execute, and the City Manager is hereby directed to submit said application to the State of Iowa Economic Development Commission together with such documents as may be required. Passed, approved, and adopted this 7th day of May, Roy D.~uol, Mayor Attest Jeanne Schneider, City Clerk F:IUSERS\DHeiarlGenuine Genius Solutions\Resolution approving EVA app.doc April 19, 2407 Laura Stein Program Manager Entrepreneurial Venture Assistance Program Iowa Department of Economic Development 200 East Grand Avenue Des Moines, IA 50309-1819 Dear Ms. Stein: 13ui{Ciro; Cr;rnriur; 'Nea6th. & Emnlo~mc [ am writing to express my support for Genuine Genius Solutions, LLC (GGS), a Minnesota company looking to relocate to, and subsequently expand in, Dubuque, Iowa. As I understand their needs, they are applying to the Iowa Department of Economic- Development for an entrepreneurial Venture Assistance technical assistance grant in the_ amount of $25,000 and an Entrepreneurial Venture Assistance Loan of $200,000• if this project receives IDED approval, Northeast Iowa Community College will be committing $158,499 of 260E job training funds to this project and the City of Dubuque will be participating with $40,004 through its revolving loan fund. I am working with Rob Daniels, GGS founder, to secure $300,000 in local equity participation from the Dubuque business community. took the opportunity to meet twice with Mr. Daniels. 1 have reviewed his growth plan in detail, have challenged him on his revenue assump#ions, understand his competitive advantage and am confident in his success. GGS focuses on vertically-integrated technology solutions for markets with which it enjoys inside understanding of wants and needs. Open Road is the strongest product offering developed by GGS. A complete turnkey solution for the $2 billion automotive dealerships channel, Open Road was integrated by GGS utilizing bes#-in-class component technologies exclusively licensed from GGS technology partners. This solution was completed fall 2006, was deployed an automotive dealership early 2007 and has received high marks for user satisfaction and overall effectiveness. GGS is leveraging this success with a second installation that will take place in May 2007. Based on open Road's broad commercial potential, I am writing to reques# that Iowa Department of Economic Development award to Genuine Genius Solutions an EVA technical assis#ance grant of $25,000 and an EVA loan of $200,000. Please feet free to contact me at 563.557.8271 ext. 250 with your questions. Thank you for your #houghtful consideration of this important opportunity. B/es~t personal regards, ~~..-~.-~%.a~i Brian Dalziel Regional Director, Northeast Iowa Business Accelerator Bc~sir~~ss R+ . r:apT}~~R„ !vv Tpvan CIOCk Center for Professional Development - 680 Main Street - Dubuque, Iowa 52001 ;3.551.8271 EXi: 250. (:563.557.0319 _ •,vurw.BusAccel.org IOWA ,~f~ ~~°~ c~artg~n~ Michael Tramontma, Interim Director Iowa Department of Economic Development Application for Financial Assistance Section A -Applicant & Project Information Business Development Division Iowa Department of Economic Development 200 East Grand Avenue Des Moines, Iowa 50309 www.iowalifechan~ inq.com January 22, 2007 Instructions 1. All applicants shall complete Section A of the Application for Financial Assistance and attach o~ those section(s) for the program(s) to which the applicant is applying. Program Download and Complete Community Economic Bettermeant Account (CEBA) Section B Enterprise Zone Program (EZ) Section C High Quality Job Creation Program (HQJC) Section D Entrepreneurial Ventures Assistance Program (EVA) Section E Value Added Agricultural Products & Processes Financial Assistance Program (VAAPFAP) Section F Economic Development Set-Aside Program (EDSA) Section G 2. Please visit the IDED Web site, http://www.iowalifechanging.com/applications/bus dev/index.html or contact IDED at (515) 242-4819 to see if this version of the application is still current. 3. Before filling out this application form, please read all applicable sections of the 2005 Iowa Code and Iowa Administrative Code (rules). http://www4.legis.state.ia.us/IAChtml/261.htm 4. Only tyged orcomputer-generated applications will be accepted and reviewed. Any material change to the fomtaf, questions, or wording of questions presented in Phis application, will render the application invalid and it will not be accepted. 5. Complete the applicable sections of the application fully; if questions are left unanswered or required attachments are not submitted, an explanation must be included. 6. Use clear and concise language. Attachments should only be used when requested or as supporting documentation. 7. Any inaccurate information of a significant nature may disqualify the application from consideration. 8. Upon completion of the application, please submit the following to the Business Finance Team at IDED: • The original, signed application form and all required attachments • One copy of the application form and all required attachments from which additional copies can easily be made. If electronic copies of the application and required attachments are available, please a-mail these documents to businessfinancena.iowalifechanging.com in addition to submitting the original plus one copy. Business Finance Team Iowa Department of Economic Development 200 East Grand Avenue Des Moines IA 50309 Application Due Dates IDED Board Meetin A lication Due Date A ril 19, 2007 March 26, 2007 Ma 17, 2007 Aril 23, 2007 June 13, 2007 Ma 21, 2007 Jul 19, 2007 June 25, 2007 Au ust 16, 2007 Jul 23, 2007 Se tember 20, 2007 Au ust 27, 2007 October 18, 2007 Se tember 24, 2007 November 15, 2007 October 22, 2007 December 20, 2007 November 26, 2007 "EVA applications will be acted upon every other month starting in March. Section A -Applicant & Project Information Public Records Policies Information Submitted to IDED. The Iowa Department of Economic Development (IDED) is subject to the Open Records law (Iowa Code, Chapter 22). Treatment of information submitted to IDED in this application is governed by the provisions of the Open Records law. All public records are available for public inspection. Some public records are considered confidential and will not be disclosed to the public unless ordered by a court, the lawful custodian of the record, or by another person duly authorized to release the information. Confidential Records. IDED automatically treats the following records as confidential and they are withheld from public disclosure: • Tax Records • Quarterly Iowa Employer's Confribufion and Payroll Reporf prepared for the Iowa Workforce Development Department • Payroll Registers • Business Financial Statements and Projections • Personal Financial Statements Other information supplied to IDED as part of this application may be treated as confidential under Iowa Code section 22.7. Following are the classifications of records which are recognized as confidential under Iowa law and which are most frequently applicable to business information submitted to IDED: • Trade secrets [Iowa Code §22.7(3)] • Reports to governmental agencies which, if released, would give advantage to competitors and serve no public purpose. [Iowa Code §22.7(6)] • Information on an industrial prospect with which the IDED is currently negotiating. [Iowa Code §22.7(8)) • Communications not required by law, rule or regulation made to IDED by persons outside the government to the extent that IDED could reasonably believe that those persons would be discouraged from making them to the Department if they were made available for general public examination. [Iowa Code §22.7(18)] Information supplied to IDED as part of this application that is material to the application andlor the state program to which the applicant is applying including, but not limited to the number and type of jobs to be created, wages for those jobs, employee benefit information, and project budget, are considered open records and will not be treated as confidential. Additional Information Available. Copies of Iowa's Open Record law and IDED's administrative rules relating to public records are available from the Department upon request or at http://www. iowalifechanginq.com/downloadslchap169openrecords.doc. Section A -Applicant & Project Information 3 Applicant Information 1. Name of Business: Genuine Genius Solutions, LLC Address: 100 West Franklin Avenue City, State & Zip Code: Minneapolis, MN 55403 Contact Person: Rob Daniels Title: President Phone: 612-605-5353 Email: rdaniels@genuinegenius.com 2. SIC or NAICS Code: NAICS 541512 3. Federal ID Number: 20-0020353 Does the Business file a consolidated tax return under a different tax ID number? ^ Yes X No If yes, please also provide that tax ID number: 4. Is the contact person listed above authorized to obligate the Business? X Yes ^No If no, please provide the name and title of a company officer authorized to obligate the Business: 5. If the application was prepared by someone other than the contact person listed above, please complete the following: Name: Title: Organization: Address: City, State, & ZIP Code: Phone: Fax: Email: Sponsor Information Please review the following table to determine who needs to sponsor this application. Depending on the programs being applied for, more than one sponsor may be necessary. Pro ram Acce table Sponsor CEBA Ci or Count or Communit Colle a in which the Project Site is Located EZ Local Enter rise Zone Commission HQJC Ci or Coun in which the Project Site is Located EVA City or County in which the Project Site is Located; Local Development Entity; John Pappajohn Entrepreneurial Center; a Small Business Develo ment Center; Business Accelerator; or similar entit VAAPFAP Cit or Coun in which the Project Site is Located or Local Develo ment Entit EDSA Cit or Coun in which the Project Site is Located 1. Sponsor Organization: City of Dubuque Official Contact (e.g. Mayor, Chairperson, etc.): Roy D. Buol Title: Mayor Address: 50 West 13~ Street City, State & ZIP Code: Dubuque, IA 52001 Phone:563-589-4110 Fax:563-589-4149 E-mail: 2. If IDED needs to contact the sponsor organization with questions, should we contact the person listed above? ^ Yes X No, please contact the following person: Name: David J. Heiar Title: Economic Development Director Address: 50 West 13~" Street City, State & ZIP Code: Dubuque, IA 52001 Phone: 563-589-4393 Fax: 563-589-1733 E-mail: dheiar@cityofdubuque.org If necessary, please list information on additional sponsors in an attachment. Section A -Applicant & Project Information 4 Certification & Release of Information I hereby give permission to the Iowa Department of Economic Development (IDED) to research the Business' history, make credit checks, contact the Business' financial institutions, insurance carriers, and perform other related activities necessary for reasonable evaluation of this application. I also hereby authorize the Iowa Department of Revenue to provide to IDED state tax information pertinent to the Business' state income tax, sales and use tax, and state tax credits claimed. I understand that all information submitted to IDED related to this application is subject to Iowa's Open Record Law (Iowa Code, Chapter 22). I understand this application is subject to final approval by IDED and the Project may not be initiated until final approval is secured. (High Quality Job Creation Program applications may be submitted up to 12 months following the completion of the project.) I understand that IDED reserves the right to negotiate the financial assistance. Furthermore, I am aware that financial assistance is not available until an agreement is executed within a reasonable time period following approval. I hereby certify that all representations, warranties, or statements made or furnished to IDED in connection with this application are true and correct in all material respect. 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 subdivision. For the Business: Signature Date Rob Daniels, President For the Sponsor(s): Signature Date Name and Title (typed or printed) Please use fhe following if more than one sponsor is required. (For example, use this if a signature from fhe local Enterprise Zone Commission is required in addition fo the signature from the Mayor of the sponsoring city.) Signature Date Name and Title (typed or printed) IDED 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 prior to discovery of the incorrect, false, or misleading representation, IDED may initiate legal action to recover incentives and assistance awarded to the Business. Section A -Applicant & Project Information Project Information Provide a brief description and history of the Business. Include information about the Business' products or services and its markets and/or customers. Genuine Genius Solutions, LLC is an idea architecture firm that targets specific industries. The Company identifies, protects and designs reusable tools into marketable solutions delivered via a channel marketing strategy in conjunction with our Circle Partners, who are established companies with specific expertise that have shared risk and aligned financial goals. Our initial channel, VerticalT"" has built an impressive set of Fortune 500 customers over the past three years which includes Hewlett Packard, EMC, Marmon Group and Thomson Companies. Open Road, our second channel, provides a complete automotive dealer technology solution. Open Road® has released its first product, Open Road CRM powered by Car IT, an international software partner (www.audev.com). The company has used the profits from Vertical to develop the software platform for Open Road. It is this product, Open Road, that is now ready for full market deployment. In order to successfully market, sell, implement and service the product line's customers, the company is needing to expand operations. As mentioned, a successful implementation took place in late 2006 and a few are slated for the first half of 2007, though the company will need to expand its employment base to facilitate a full rollout. Our management team combines over 18 years of experience creating and improving businesses in several industries. These experiences range from start up experience at the Bucket Boss Company which created, branded and promoted an entirely new consumer product line that grew from zero to $20 million in annual revenue in six years to large scale business solutions for companies such as Xcel Energy, Oshkosh Truck and Hewlett Packard. Our collective experience has created a superb network of inventors, engineers, artists, scientists and generally creative folks that create a vibrant energy that is critical to maintaining a steady flow of new ideas...these people are Genuine Genius. 2. Business Structure: ^ Cooperative ^ Corporation X Limited Liability Company ^ Not for Profit ^ Partnership ^ S-Corporation ^ Sole Proprietorship State of Incorporation: Minnesota 3. 4. 5. Identify the Business' owners. Rob Daniels, President - 74.6% Paul Maire - 15% Employee Management - 10.4% 5 employees Does a woman, minority, or person with a disability own the Business? ^ Yes X No If yes, is the business certified as a Targeted Small Business? ^ Yes ^ No List the Business' Iowa Locations and the Current Number of Employees at each Location. None currently in Iowa. What is the Business' worldwide employment? (Please include employees of parent company, subsidiaries, and other affiliated entities in this figure.) 8 Full time employees located in the Minneapolis, MN location and use of outside contractors as projects demand. 6. Briefly describe the proposed project for which assistance is being sought. (Include project timeline with dates, facility size, infrastructure improvements, proposed products/services, any new markets, etc.) Section A -Applicant & Project Information The company has spent much of its time, and profits, on developing it's core technology for the Open Road Vertical. By using profits from the current Vertical business, the company was able to develop and ready the Open Road product line for market. Near the end of 2006, this project was completed and the first implementation was completed. Coupled with their other verticals, Consumer Product and Vertical, the company is needing to expand its sales, implementation, technical support and application development employment base. The company began exploring communities for expansion throughout the Midwest in February 2007. The stated goal is to have a community chosen and a relocation package established in June of 2007. The company is looking to move into the North Iowa Community College (NICC) facility in June 2007. The initial space will be 1,000 sq ft, expandable to 3,000 sq ft on 6-9 months. The company will then begin to look for a permanent facility on a lease or lease-to-own basis with expected sq footage of 10,000 sq ft in 3 years. Upon successful relocation, the company will continue to focus on their successful Consumer Product and Vertical channels, as well as on their main growth channel, the Open Road software and service package for mid-to-small automotive dealers. It should be noted that the company, while established with their Vertical and Consumer Product verticals, is needing to expand to facilitate the launch of their Open Road platform, which is an earlier stage venture than the other two verticals, but drives a majority of the future growth of the company. 7. Project Address (Street Address, City, and County): North Iowa Community College (NICC) Town Clock Center for Professional Development 680 Main Street Dubuque,lA 52001 8. Type of Business Project: ^ Startup ^ Expansion of Iowa Company X New Location in Iowa ^ Relocation from another State 9. Please identify the management at the project location and his/her/their experience. Several key management positions will be staffed in Dubuque. In addition, Rob Daniels, President of Genuine Genius, will be located in Dubuque. His bio is as follows: Rob is a fifteen year business professional with broad experience with small businesses and technology solutions. Prior to founding Genuine Genius Rob spent several years working with Fortune 500 companies implementing new technologies and streamlining business processes. Rob took his successful consulting practice, Malec, Inc. and combined it through the acquisition of Virtual Information Systems, Inc., a twenty year old consulting business that was losing money. At the new combined entity Rob revamped existing client relationships, developed a recurring revenue support program and expanded the client base to include Excel Energy, Weisman Enterprises, Kawasaki, Polaris and Oshkosh Truck. During his tenure Rob turned the organization around to experience 50% annual revenue growth and 15% net profits during a recessionary period. Rob received his foundation for successful start up entities as part of the core team that established Portable Products, Inc., a DIY tool carrier company specializing in new products. This organization grew from zero to $18 million dollars in annual revenue in seven years selling every major retailer in North America prior to being acquired by Fiskars, Inc. Rob experienced all aspects of the business spending the majority of his tenure managing the operations of the organization which included manufacturing, warehousing, customer service, importing and a retail catalog division with 70 staff members in total. 10. Has any part of the project started? ^ Yes X No Section A -Applicant & Project Information 11 Project Budget: AMOUNT BUDGETED Use of Funds Cost Source A Source B Source C Source D Source E Source F Source G Source H Land Ac uisition $ $ $ $ $ $ $ $ $ Site Pre aration $ - $ $ $ $ $ $ $ $ Buildin Ac uisition $ $ $ $ $ $ $ $ $ Buildin Construction $ $ $ $ $ $ $ $ $ Buildin Remodelin $ $ $ $ $ $ $ $ $ Mf .Machine & E ui . $: $ $ $ $ $ $ $ $ Other Machine & E ui . $ $ $ $ $ $ $ $ $ Rackin , Shelvin , etc. $ $ $ $ $ $ $ $ $ Com uter Hardware $15,00 $ $15,000 $ $ $ $ $ $ Com uter Software $ $ $ $ $ $ $ $ $ Furniture & Fixtures $25,000 $ $25,000 $ $ $ $ $ $ Workin Ca ital $2'00,000 $50,000 $ $240,000 $ $ $ $ $ Research & Develo ment $ $ $ $ $ $ $ $ $ Job Trainin ''$158,499 $ $ $ $158,499 $ $ $ $ Sales/Mkt IA Dev `'$210flQ0 $150,000 $ $60,000 $ $ $ $ $ Technical Assistance :$25,000 $ $ $ $ $25,000 $ $ $ _ ___ "COTAL -_ X723,499 5200,400 _ $40,0 $300,000 `$158,499 $25U00 _~ $ $ $ J ~ Racking, Shelving and Conveyor Equipment used in Warehouse or Distribution Center Projects Does the Business plan to lease the facility? X Yes ^ No If yes, please provide the Annual Base Rent Payment (lease payment minus property taxes, insurance, and operating/maintenance expenses) and the length of the lease agreement. Estimated at $666/month per 1 K sq ft PROPOSED FINA NCING Source of Funds (List tax benefits separately; not as a source of funds.) Amount Form of Funds (Loan, Grant, In-Kind Donation, etc.) Rate Term Conditions 1 Additional Information Include when funds will be disbursed; if loan, whether payments are a level term, balloon, etc. Source A: IDED $200,000 Low Interest Loan -EVA TBD TBD Source B: Local Government $40,000 Dubu ue-based RLF Source C: Local E uit $300,000 Local An el Investor E uit Source D: 260 a Job Trainin $15$,499 Administered throw h NICC Based on 25 sitions hired over 24 months. Source E: Technical Assistance $25,000 Technical Assistance Grant -IDED/EVA Covers Site selection and relocation assistance. Source F: $ Source G: $ Source H: TOTAL $ $723,499 Please list below any tax benefits (e.g. Investment Tax Credit, Sales 7 ax Ketuntl, K&U I ax Cretllt, New Jobs I ax Cretllt, rroperry I ax txempnon~Abatement, etc.) mat the rjusmess expects to receive and included the estimated value of each tax benefit: TBD but none expected at this point. Section A -Applicant & Project Information 8 12. Employee Benefits: Please identify all employee benefits provided by and paid for (in full or in part) by the Business. Employee Benefits Total Annual Cost Portion of Total Plan Provisions Provided by the (show on a per Annual Cost Paid by (Include deductibles, coinsurance %, office visit Business employee basis) the Business'` co-payments, annual out-of-pocket maximums, face amounts, etc. --- Em to ee Famil Em to ee Famil $4,193.14 $10,333.99 $3,354.51 $8,267.19 Deductible: 500/1000 Medical/Health Coinsurance: Insurance Out of Pocket Max: 1800/5000 Office Co-pay: 25130 Emergency Co-pay: 75 Dru :5/30/45 $497.26 $1,225.51 $397.81 $980.40 Dental Insurance Included in Medical Vision Insurance $250.00 $250.00 $50,000 Employee Life Insurance Accidental Death & Dismemberment Dependant Coverage $ NA Spouse $ NA Each Child Short Term Disability (STD) Company will provide and pay 2/3 of Long Term Disability premium. Estimates not available without (LTD) identifying personnel. TBD for 07/08 Other- Profit Sharing " If the business's plan isself-insured, please use the amount paid by the business for costs associated with employee and family coverage during the past three years and then, determine the business' average annual contribution per employee for that three year period. Does the Business offer a pension plan, 401 (k) plan, and/or retirement-plan? ^ Yes X No If yes, please indicate the amount contributed on a per employee basis by the Business to the plan. For 401(k) plans, please provide information on the company match and indicate the average annual match per employee (show average as a percentage of salary). Does the Business offer aprofit-sharing plan? X Yes ^ No If yes, please indicate total amount paid out each year for the past three years and then, determine the average annual bonus or contribution per employee for that three year period. The profit sharing plan will be established in 2007 to benefit the employees hired in Dubuque. Does the Business offer child care services? ^ Yes X No Section A -Applicant & Project Information Child care services include child care services on-site at the facility in which the project will occur oroff-site child care subsidized by the business at the rate of 50% or more of the costs incurred by an employee. 13. Identify the Business' competitors. If any of these competitors have Iowa locations, please explain the nature of the competition (e.g. competitive business segment, estimated market share, etc.) and explain what impact the proposed project may have on the Iowa competitor. • The business has large IT service and software providers that compete for business with larger automotive dealers with respect to the Open Road platform. The small to medium automotive dealerships are an underserved market, hence the development of Open Road and opportunity to exists. 14. Will any of the current Iowa employees lose their jobs if this project does not proceed in Iowa? ^ Yes X Not Applicable - no current Iowa location If yes, please explain why and identify those jobs as "retained jobs" in the following question. Section A -Applicant & Project Information 10 15. List the jobs that will be retained and/or created as the result of this project. (A retained job is an existing job that would be eliminated or moved to another state if the project does not proceed in Iowa.) For retained jobs, include the current hourly wage rate. For jobs to be created, including the starting hourly wage rate. Job Title Skills, Education, or Experience Required Number of Jobs Retained (R) or Created C Starting or Current Hourly Wage Rate Year 1 of the Project Mana ement 1 C $67,500 Administrative 1 C $33,000 Inside Sales & Marketin 3 C $39,000 Customer Su ort 1 C $33,000 Pre-Sales Su ort 1 C $52,500 Im lementation/Gust Trainin 4 C $47,500 Software Develo ment 2 C $60,000 Year 1 Subtotal 13 Total Number of Retained Jobs: 0 Total Number of Created Jobs: 13 Section A -Applicant & Project Information 16. Discuss each of the following items with respect to the proposed project: a) the current employment conditions in the community, include any business closures, unemployment rates, etc. and if applicable, the community's need for assistance in attracting the Business. • Unemployment Rate: 3.9% as of February 2007 annualized at 3.5%. • Recent Business closings and downsizings: o Closed: Regency Thermography -137 jobs lost o Closed: Unique Balance - 80 jobs lost o Downsized: Flexsteel - 250 jobs over past 24 months b) impact of the proposed project on the community and the state, include projections that reflect the impact on local and state tax revenue and any additional costs the community will incur as the result of the proposed project; • The company is projected to create 13 jobs in the first twelve months of operation. • The impact of the project is continued momentum in the Greater Downtown Urban Renewal District which is also an enterprise zone. This is a critical investment in the future of Dubuque and for the overall region. This project is in an early stage of development and has potential growth beyond the two year projections. c) impact the proposed project will have on current employees, including the potential for increased skills and wages; and • All current employees are located in Minneapolis, MN. Up to 3 positions will relocate in Dubuque, including company President Rob Daniels. Some operations will remain in Minneapolis. There are currently no employees working or located in Iowa. d) impact the investment will have on the ability of the business to expand, upgrade, or modernize its capabilities. • The company has used profits from other verticals of the business to develop the Open Road software platform. In order to grow their marketing, sales, implementation and service capabilities, they are requiring investment. These monies will help establish the company in Dubuque, allow for a quick rollout (much quicker than using the profits of the company) and allow for the necessary staffing of the office. As noted in the financials, the company is slated to break-even in Month 9 of the project, after which the company's profits will sustain and drive future growth. 17. Is the Business actively considering locations outside of Iowa? X Yes ^ No If yes, where and what assistance is being offered? In addition to Dubuque, IA, the Company is considering locations in South Dakota and North Dakota. Proposed financial assistance from other communities include a blended package of low interest loans, preferred stock investments, job training grants and tax incentives. 18. There are three general justifiable reasons for assistance. Check the box next to the reason why assistance is needed to complete this project X Financing Gap -The Business can only raise a portion of the debt and equity necessary to complete the project. A gap between sources and uses exists and state and/or federal funds are needed to fill the gap. ^ Rate of Return Gap -The Business can raise sufficient debt and equity to complete the project, but the returns are inadequate to motivate an "economic person" to proceed with the project. Project risks outweigh the rewards. ^ Locational Disadvantage (Incentive) -The Business is deciding between a site in Iowa (site A) and a site in another state (site B) for its project. The Business argues that the project will cost less at site B and will require a Section A -Applicant & Project Information t2 subsidy to equalize costs in order to locate at site A. The objective here is to quantify the cost differential between site A and site B. What measures were analyzed to determine the amount and form of assistance needed? Genuine Genius analyzed the project costs including start up expenses of the facility in Dubuque along with the initial hiring and training of new employees to determine the total amount of the financial package required. In terms of financing structure, the company analyzed their current and projected collateral base and balance sheet to determine the appropriate blend of loans, equity and grants, along with financial assistance offered by different cities and states. Based on the structure as proposed, all lenders should be sufficiently collateralized given their current guidelines. Additionally, the company's key balance sheet ratios are will in line with standard lending ratios. 19. What amount of state assistance is requested based on the above-identified need? $225,000 What type/form of assistance is preferred (e.g. loans, forgivable loans, tax incentives, etc.)? A Low Interest Loan of $200,000 through the EVA program and Technical Assistance of $25,000. 20. Please indicate what program(s) the Business is applying to and download and submit those applicable sections: ^ CEBA (Complete Section B) ^ EZ (Complete Section C) ^ HQJC (Complete Section D) X EVA (Complete Section E) ^ VAAPFAP (Complete Section F) ^ EDSA (Complete Section G) The Department reserves the right to review this application and determine, based on the proposed project and available program funds, which financial assistance program(s) is best suited for the Business' project. The actual program(s) utilized may vary from the programs indicated above. Section A -Applicant & Project Information 13 21. Return on Investment Information -Business Taxes IDED is required to calculate the return on sfate and local government investments in this project. Dafa from otherparts of the application will be combined w-th the estimates requested below to calculate the required return on investment information. Instructions for Question 21 - IDED is asking for a best estimate on the increase in taxes associated with this project. - Estimates should only include the expected increase in tax liability resulting from this project. - At minimum, IDED needs estimates for the first three years of the project. - Show data as if no tax abatements or tax credits awarded for this project were taken. - For partnership forms of ownership (e.g. limited partnerships, s-corporations, LLC, etc.), please estimate the partners' increase in Iowa tax liability due to this project. - Sales and use taxes refer to the taxes paid on materials, etc. that the Business purchases, not taxes you collect from sales to your customers. - Applicants will not be held to these numbers with respect to any award from or contract with IDED. - This page of the application will automatically be treated as confidential. Increase in Tax Collections Associated with this Project State Business Taxes Year 1 Year 2 Year 3 Year 4 Year 5 State Corporate Income Tax* $ 0 $100,000 $ 240,000 $ 330,000 $ 390,000 State Business Sales and Use Tax $ 750 $ 2,900 $ 4,000 $ 6,800 $ 8,100 * Insurance Companies: Provide State Insurance Premium Tax Local Business Taxes Year 1 Year 2 Year 3 Year 4 Year 5 Local Real Estate Property Tax $ 0 $ 0 $ 0 $ 0 $ 0 Local Option Sales Tax $150 $ 150 $ 200 $ 250 $ 250 Section A -Applicant & Project Information 14 Attachments Please attach the following documents: Al Business Plan At a minimum, include: • marketing study, • feasibility study, • projected profit and loss statements for three years into the future, • project budget, • production operations, • management structure, • personnel needs, • descriptions of product or process, • status of product/process development, and • patent status (if applicable). (Any information outlined above not included in the business plan should be submitted as supplemental information via a separate attachment.) A2 Copies of the Business' Quarterly Iowa Employer's Contribution and Payroll Report Summary Page (Page 1) for the past year and a copy of the most recent payroll report for one pay period. A3 Affidavit that states the Business has not, within the last five years, violated state or federal statutes, rules, and regulations, including environmental and worker safety regulations, or, if such violations have occurred, that there were mitigating circumstances or such violations did not seriously affect public health or safety or the environment. A4 Financial Information (Existing Businesses Only) • Profit and loss statements and balance sheets for past three year-ends; • Current YTD profit and loss statement and balance sheet; • Schedule of aged accounts receivable; • Schedule of aged accounts payable; and • Schedule of other debts. Application Checklist Section A -Applicant & Project Information 15 Application Checklist For each section the Business is required to submit, please indicate with a `/' that items needed for that section are included when submitting the application to IDED. If an item listed is not included, please indicate in the corresponding box the date on which IDED can expect to receive it or explain in the space provided below why it has not peen mciuueu: Section B Section C Section D Section E Section F Section G Section A CEBA EZ HCJC EVA VAAPFAP EDSA Ori final lus 1 Co _ NIA NlA NlA / NIA NIA Si ned b the Business Nof heeded Signed by the Sponsor(s) N!A NlA NIA for EVA, available if NIA NIA nested Business Plan w/ 3- ear Pro ections NIA NIA NIA ~ NIA NIA No Quarterly Employer's Contribution and Payroll Reports NIA N!A NIA employees currently in NIA NIA bwa No Current Payroll Report NIA NlA NIA employees currentty in NIA N!A Iowa Affidavit re: Violations NIA NlA NIA / NIA N/A 2004 and 20D5 P/L statements & Balance Sheets (3 years) NIA NIA NIA a~c~hse~d. N!A NIA available 'I 5115107. Current YTD Financials NIA NIA NIA / NIA NIA Aged Accounts Receivables _ NIA NIA N(A / NIA NIA Aged Accounts Payable N!A N/A NIA J NIA NIA Schedule of Other Debts N/A NIA 'N/A / NIA NIA Resolution from Sponsor N/A _ / NIA NIA Project address Legal Description of Project Site N!A NIA l~l~ ~n N!A N/A no leas si ned et. Application Checklist Map N/A NfA _ / NIA City approval not needed for Meeting I Public Hearing Notice NIA NIA " NIA EVA, but resolution N!A for May 7 meeting attached. Meeting on May 7, Meeting Minutes NIA N/A NIA minutes available NIA thereafter if r u Listed in Technical Assistance Budget NIA NIA N/A NIA appl cat on - NIA NIA Section E Quotes, & Estimates Bids NIA N/A NIA NIA N/A NIA , Em to er Certification Form NIA NIA NIA NIA NIA NIA Commitment Letters NIA NIA NIA NlA NIA N1A Comm. Develo ment & Housin Needs Assessment NIA NIA N!A N!A NIA N/A Assurances Pa a N/A NIA NIA NIA NIA NIA Applicant/Recipient Disclosure/Update form N/A NIA NIA N!A NIA N1A Explanation for Items Not Included: Application Checklist 2