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he did some internet research and found it is about 90 %. In addition, this proposes a new <br />concept in that realm which, to him, makes it more of a risk. Councilmember McGlone stated at <br />the EDA meeting, Mr. Mulrooney had said this was a business owner who wanted to teach his <br />daughter business, but that is not what the City does and if the balance sheet of the silent partner <br />is so great, he should add another $30,000. Councilmember McGlone stated he is in the <br />liquidation business, had sold four fitness businesses this year, and knows this equipment is <br />valueless and there is no ability to recoup costs from the flooring or equipment. Councilmember <br />McGlone stated he did not find this to be a good risk, and the City should not use public money <br />to teach someone's daughter how to run a business. <br />Councilmember Tossey asked what is the failure rate and City's loan position. <br />Mr. Mulrooney advised the City's loan would be a junior position. He clarified that he is not <br />saying this is a "daddy teaching daughter" situation. Rather, the father is guiding his daughter on <br />business matters in things he is experienced in and that is why he is included in this business. <br />Mr. Mulrooney noted that partner is financially invested in this transaction, providing capital and <br />personal guarantee that any financing will be paid, placing confidence in his daughter's ability. <br />Councilmember Backous stated since the EDA recommends approval, he assumes this request <br />meets RLF requirements so he will support that recommendation. <br />Mayor Ramsey stated the Council got "crucified" for loaning to Flaherty & Collins, a <br />multimillion - dollar business that created tax base with a new building constructed and providing <br />a benefit for 50 years or more. He noted this is an existing structure that is already paying taxes <br />and is taking $87,000 in working capital. Mayor Ramsey felt, basically, the City would be <br />loaning them a portion of operating capital. He stated his position that this is a bad deal and not <br />something the City should do for this type of a business so he will oppose it. <br />Councilmember Backous felt there were a couple differences between the Flaherty & Collins <br />consideration and this application. He agreed there was history of LLC and bankruptcies and <br />that some personal guarantees do not mean a lot as mentioned by Councilmember Wise. <br />However, in this case, the applicants have an excellent credit history and the application fits <br />inside the RLF guidelines. <br />Councilmember Strommen stated she does not put this request in the same league as Flaherty & <br />Collins because this is a request for $34,500 and the owners are putting in $34,000, so it is <br />almost equal. This loan would result in incubating a business with the hope it will grow and <br />move out of a leased space. Councilmember Strommen pointed out that this is the purpose of the <br />EDA Revolving Loan Program and asked EDA Chair Riley if the EDA had discussed any other <br />issues related to this application. <br />Councilmember -Elect and EDA Chair Riley stated the EDA found this request did meet the <br />program criteria. In addition, it falls under the mission of the EDA because it promotes <br />economic development and the purpose of this fund, to help local businesses. He felt that was <br />the big distinction between the two loans being compared. Councilmember -Elect Riley stated <br />City Council Work Session / November 13, 2012 <br />Page 8 of 10 <br />