Laserfiche WebLink
Mayor Ramsey suggested holding a public hearing or neighborhood meeting in the old City Hall <br />to give residents information on this use. <br />City Administrator Ulrich suggested an informal open house during which Connexus can present <br />this use. <br />The consensus of the Council was to direct staff to continue to explore developing the old City <br />Hall site as a data center site; hold an informal open house with area residents; and, invite <br />Connexus and the School District. <br />2.03: Consider EDA Revolving Loan Fund (RLF) Application <br />Mr. Mulrooney presented the loan request of Koru Fitness to develop a new fitness center in the <br />City. Koru Fitness will be owned equally by Nicole Kutches and Gary Nereson. He explained <br />the financing plan, noting it would include an EDA revolving loan at 3.25% with a seven -year <br />term for equipment purchases. Mr. Mulrooney stated there is not an operating history to <br />determine sufficient cash flow to support the proposed debt but an extensive business plan has <br />been submitted and the worth and credit ratings of the borrowers would be considered. It was <br />noted the EDA had recommended approval of this loan request. <br />Councilmember Wise asked who is providing the personal guarantees. <br />Mr. Mulrooney advised that each partner would provide a personal guarantee of 50 %. <br />Councilmember Wise stated personal guarantees are required but oftentimes LLCs are created to <br />protect personal assets. He asked what would happen to recover funds should this business fail. <br />He stated his concern is that this is a non -brand fitness center operating with used equipment that <br />does not hold resale value, which he thinks is a bigger risk. <br />Mr. Mulrooney explained that in the event the business defaults, the collateral would be <br />liquidated and the shortage would be pursued from the personal guarantees. He assured the <br />Council that he has complete confidence in the business owner being able to perform on the <br />personal guarantee based on his worth and businesses formerly owned and sold. Mr. Mulrooney <br />stated the owner is a very strong guarantor and not the typical business start up. <br />Councilmember Tossey asked about the life of the fitness equipment. <br />Mr. Mulrooney stated it depends on which piece of equipment and there are also staging and <br />flooring. He stated this is not the type of equipment you would see at a LifeTime Fitness and <br />should have a 7 -10 year term prior to needing replacement. <br />Councilmember Tossey noted the loan term is seven years and if the equipment life is more than <br />five years, it is not as much of a problem. <br />Councilmember McGlone stated he had opposed this loan request during the EDA meeting. He <br />stated he had asked about the failure rate for this type of business but not received an answer so <br />City Council Work Session / November 13, 2012 <br />Page 7 of 10 <br />