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Communication from the City Manager with a Request to APPROVE an Amendment to the REVOLVING LOAN FUND AGREEMENT with AFHS PEORIA, LLC and to Authorize the City Manager to Execute the Necessary Documents. (Council District 5)
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BACKGROUND: Mike and Sheila Bruegge, owners of AFHS PEORIA LLC (Ashley Furniture) located at 8727 Knoxville Avenue, have submitted a request (attached) to extend their current loan with the City for an additional five (5) years.
On December 2010, the City Council approved a $150,000 loan to Ashley Furniture to attract the furniture retailer to a 44,000 sf vacant store front at North Pointe Shopping Center. A total of $1.35 million was invested for leasehold improvements, inventory, and delivery trucks. The loan commenced on April 1, 2011, with a repayment schedule based on a 10 year amortization at 4% interest with a five year balloon payment of $83,702.42 due March 1, 2016.
As of March 1, 2016 the principal balances of loans from the original lenders was $717,787, inclusive of the $83,702.42 owed to the City. All payments are current. All the original lenders have approved the extension of their loans, including the County which approved their extension April 14, 2016. Ashley Furniture has hired 29 full-time and 2 part-time individuals at the Peoria store.
Sources and Uses of Funds
Below is the sources and uses of funds from the original loan of April 1, 2011:
Loan Parameters
Upon review of the loan extension request and financial structure of the loan, the Loan Review Panel on April 15, 2016 advised (see attached) the loan amendment be approved based on and according to the following:
1. Loan Terms - The original loan of $150,000 at an interest rate of 4% for a term of 5 years, amortized over 10 years, would be extended an additional 5 years. Monthly payments will be 60 payments of principal and interest. The loan will be subordinated to bank loans.
2. Collateral - The loan will continue to b...
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