Silver Dollar Cantina CDBG LoanTHE CITY OF
DUB E MEMORANDUM
Masterpiece on the Mississippi
September 25, 2007
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: CDBG Economic Development Loan
MM&H Corp. (Silver Dollar Cantina)
Economic Development Director Dave Heiar is recommending a $100,000 Community
Development Block Grant Economic Development Loan Program forgivable loan to
assist in the establishment of the Silver Dollar Cantina Restaurant in the German Bank
Building at 342 Main, Dubuque, Iowa.
The City of Dubuque has provided incentives for the rehabilitation of the German Bank
Building, which had a fire in 2004 that made this historical building unusable. Local
developers John Gronen and Mike Steele have purchased the building, with assistance
from Dubuque Initiatives, and are currently rehabilitating the structure to its historical
significance.
The German Bank rehabilitation project needs to secure a tenant for the building to
make the project cost feasible. The owner of the Silver Dollar Cantina, Steve Althoff,
would like to relocate inside the building but needs assistance to get started. He has
asked to utilized $100,000 in CDBG funds from the Economic Development Financial
Assistance Program to assist in purchasing furniture and fixtures for the restaurant in
the building. He has committed to create 10 full time equivalent positions of which at
least 51 % will be made available to low to moderate income people.
The $100,000 CDBG loan will be fully forgiven if these goals are met.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
6 Y / ~ Z/'~
Michael C. Van Milligen
MCVM/jh
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
David Heiar, Economic Development Director
THE CITY OF
DUB E MEMORANDUM
Masterpiece on the Mississippi
September 21, 2007
TO: Michael Van Milligen, City Manager
FROM: David Heiar, Economic Development Director
SUBJECT: CDBG Economic Development Loan for MM ~ H Corporation
(D/B/A Silver Dollar Cantina)
INTRODUCTION
This memorandum presents for City Council consideration a resolution approving a loan
request from MM & H Corporation for funding through the City's Community
Development Block Grant (CDBG) Economic Development Loan Program to assist in
the company's reestablishment in the German Bank Building.
BACKGROUND
The CDBG Economic Development Loan Program provides forgivable loans to
businesses creating new job opportunities that will be made available to low and
moderate income persons. This program was first authorized in FY 1995 and currently
has a budget of $183,000 in CDBG funds.
The German Bank Building at 342 Main Street had a fire in 2004 which made the
historical building unusable. Local developers John Gronen and Mike Steele have
purchased the building with assistance from Dubuque Initiatives and are currently
rehabilitating the structure back to its historical significance.
A development agreement was approved on August 6, 2007 by the City Council with
German Bank Building LLLP to provide assistance in the rehabilitation of the German
Bank building. The agreement provided TIF benefits, a Downtown Rehabilitation Loan
commitment, Facade Grant, and Design Grant. At this same time, City staff had already
had discussions about the need for additional funding to assist a possible restaurant.
DISCUSSION
The German Bank rehabilitation project also needs to secure a tenant for the building to
make the project cost feasible. The owner of the Silver Dollar Cantina, Steve Althoff,
would like to relocate inside the building but needs assistance to get started. He has
asked to utilize $100,000 in CDBG funds from the Economic Development Financial
Assistance program to assist in purchasing furniture and fixtures for the restaurant in
the building. He has committed to create 10 full time equivalent (FTE) positions of which
at least 51 %~will be made available to low to moderate income people.
The $100,000 CDBG loan will be fully forgiven if job creation goals are met and the
requirement to make at least 51 % of the jobs available to low and moderate income
persons is fulfilled. Should the company not create the 10 new FTE Positions within
three years, the principal will be credited $10,000 per FTE created and then the first
three years of deferred interest will be capitalized into the remaining principal of the loan
and then amortized over the remaining seven years. Also, should the number of low and
moderate income persons not meet or exceed fifty-one (51) percent of all those hired,
the entire principal balance will be due and payable to the City with accrued interest.
If the loan is approved by the City Council, a commitment letter will be executed by the
Mayor and the owners. The commitment letter is attached with details of the financing
terms.
RECOMMENDATION
Staff has reviewed the loan request and finds it to be in keeping with the requirements
of the Economic Development Loan Program. It is my recommendation that the City
Council adopt the attached resolution approving the forgivable loan request of $100,000
and authorizing the preparation and execution of all necessary loan documents by the
City Manager.
ACTION STEP
The action step for the City Council is to adopt the attached resolution.
attachments
F:\USERS\Adejong\CDBG\Silver Dollar ED Forgivable Loan\Silver Dollar Council Memo.doc
RESOLUTION NO 505-07
A RESOLUTION AUTHORIZING A COMMITMENT LETTER AND THE
EXECUTION OF A COMMUNITY DEVELOPMENT BLOCK GRANT LOAN OF
ONE HUNDRED THOUSAND DOLLARS ($100,000) TO MM ~ H CORP.
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 MM & H Corp. 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 MM & H Corp. 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 Silver Dollar Cantina, 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 1st day of October, 2007.
Roy D. Buol
Mayor
Attest:
Jeanne F. Schneider
City Clerk
F:\USERSWdejong\CDBG\Silver Dollar ED Forgivable Loan\Silver Dollar Council Resotution.doc
Economic Development Department
City Hall -Second Floor
50 West 13th Street
Dubuque, Iowa 52001-4864
(563) 589-4393 office
(563) 589-1733 fax
(563) 690-6678 TDD
MM & H Corp.
Attn: Steve Althoff
P.O. Box 1866
Dubuque, IA 52004-1866
RE: Letter of Commitment
Dear Mr. Althoff:
THE CITY OF
S
October 1, 2007
am pleased to inform you that your request 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: Three percent (3%) per annum
Term of Loan: Ten (10) years
Payment Schedule: Fully forgiven after 3 years if job creation goals are met.
Should the company not create the 10 new FTE Positions
within three years, the principal will be credited $10,000 per
FTE created and then the first three years of deferred
interest will be capitalized into the principal of the loan and
then amortized over the remaining seven years.
Should the number of low and moderate income persons not
meet or exceed fifty-one (51) percent of all those hired, the
entire principal balance will be due and payable to the City
with accrued interest.
Form of Security: UCC-1 Financing Statement
Purpose of the Loan: To purchase furniture and fixtures to support the start up of
Service People Integrity Responsibility Innovation Teamwork
a restaurant in the German Bank Building.
Special Conditions of this Commitment:
(a) Ten (10) new full time equivalent positions must be created within a five (3) 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.
If the terms offered do not meet your approval, or if you have any questions regarding
the conditions of this commitment, please contact Aaron DeJong, Economic
Development Department, at 563/589-4393.
Sincerely,
Roy D. Buol
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.
MM & H Corp.
Steve Althoff
Date
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