City Council Packet 2020 05-19-20 supplemental packet 2
Have a question or comment about this agenda item?
Call us Monday-Friday, 8:00am to 4:30pm at 630-553-4350, email us at agendas@yorkville.il.us, post at www.facebook.com/CityofYorkville,
tweet us at @CityofYorkville, and/or contact any of your elected officials at http://www.yorkville.il.us/320/City-Council
Agenda Item Summary Memo
Title:
Meeting and Date:
Synopsis:
Council Action Previously Taken:
Date of Action: Action Taken:
Item Number:
Type of Vote Required:
Council Action Requested:
Submitted by:
Agenda Item Notes:
Reviewed By:
Legal
Finance
Engineer
City Administrator
Human Resources
Community Development
Police
Public Works
Parks and Recreation
Agenda Item Number
Business - A
Tracking Number
Resolution Approving the Issuance of a Non-Recourse Promissory Note - DSBSP
Special City Council – May 19, 2020
Majority
Approval
Please see attached.
Bart Olson Administration
Name Department
Supplemental Information – distributed 05/19/20
1
Lisa Pickering
From:Bart Olson
Sent:Tuesday, May 19, 2020 2:10 PM
To:Bart Olson
Cc:John Purcell; kfo@kfoassoc.com; Erin Willrett; James Jensen; Eric Dhuse; Rob Fredrickson; Tim Evans;
Krysti Barksdale-Noble; Lisa Pickering
Subject:RE: Supplemental City Council packet #2 - Promissory note
Attachments:Promissory Note Yorkville FINAL 5192020 with highlights of new section.docx; RLF Recapture
Strategy 12-03 (003).pdf
Importance:High
Hello all (elected officials blindcopied),
The Kendall County Board met this morning, and approved a promissory note in the form that is attached to this
email. The only change to this document from the one that was in the special City Council meeting packet on Thursday
is a new section on the County’s revolving loan fund recapture strategy. I have highlighted the section in this
attachment for your ease of use; again, this highlighted section is the only addition or change to the loan document from
what was originally sent to you on Friday.
The highlighted section generally says that our use of the County’s funds for the downstate grant will comply with the
County’s strategies on the use of revolving loan funds. The County’s revolving loan strategy document is also attached
to this email. Attorney Orr has reviewed the change to the loan document and the recapture strategy and has opined
that our use of the downstate funds will be in line with County’s strategy document. In parallel, I also have discussed
the matter with County Administrator Scott Koeppel, who has relayed that the State’s Attorney Office (SAO) has opined
that our use of the funds for the downstate grants should be acceptable too. While there is language within the
agreement related to job creation and low‐to‐moderate income individuals, both Attorney Orr and the SAO (secondhand
to me) have said that the benefit could be in jobs and/or the simple availability of goods and services provided by the
business.
Finally, to recap the risk of the City under the downstate grant program, both with the first round 18 applications for
$430,000+ approved at the May 12th City Council meeting, and the second round 8 applications for $200,000 to be
considered at the May 26th City Council meeting:
1) The total amount of grants or grants in waiting is ~$630,000. The loan document from the County is $400,000.
a. In a most realistic scenario ‐ both Lynn and I have confirmed that the State has received many grant
applications from around the state, and we both think that only a handful of Yorkville businesses will
receive downstate grant funds. The actual grant program simply requires the funds to be used for
working capital, which includes, salaries, rent, and all of the other things mentioned in the public
hearing on May 12, and stay open for 60 days after receipt of grant funds. We are guessing 4 or 5
businesses will get the grant, which means only $125,000 worth of grants against $400,000 in County
backstop. We don’t think any businesses will default, as the requirements are relatively low. In this
scenario, even if all 4 of 5 businesses default, the City would use the County loan to pay the state, and
the County would decide whether they want to pursue recovery of funds from the businesses.
b. In an extreme scenario – all 26 first and second round Yorkville businesses receive a grant, and all 26
businesses default. At that point, the City would pay the state $400,000 from the County loans, and the
County would decide whether they want to pursue recovery of funds from $400,000 worth of business
grants. Also, the City would be on the hook for sending ~$230,000 to the state and then deciding
whether we want to pursue recovery of funds from the businesses.
2
c. Additional procedural risk for any scenario – the City did ask for the language related to the Kendall
County revolving loan fund recapture strategy to be struck from early forms of the promissory note
agreement because we felt it was unclear and maybe was in opposition to use of the funds for the
downstate grant. A committee of the County Board initially agreed with the City’s request, only to be
advised by the State’s Attorney Office that the language needs to be included in order to meet various
codes and policies, and that our use of the funds for this purpose should be acceptable. In an extremely
unlikely scenario where the County Board or the State’s Attorney Office change their interpretation of
the revolving loan fund document, the City could be at risk for the amount of funds in the County loan.
This email and the attachments will be distributed in a second supplemental special City Council packet very shortly, and
I will walk everyone through this email and its attachments at tonight’s meeting.
Thanks,
Bart Olson
City Administrator
United City of Yorkville
630‐553‐8537 direct
630‐553‐4350 City Hall
630‐308‐0582 cell
bolson@yorkville.il.us
City of Yorkville 2.0: Facebook, Twitter, and YouTube
From: Bart Olson
Sent: Monday, May 18, 2020 5:50 PM
To: Bart Olson <BOlson@yorkville.il.us>
Cc: John Purcell <jpurcell@yorkville.il.us>; kfo@kfoassoc.com; Erin Willrett <ewillrett@yorkville.il.us>; James Jensen
<JJensen@yorkville.il.us>; Eric Dhuse <edhuse@yorkville.il.us>; Rob Fredrickson <rfredrickson@yorkville.il.us>; Tim
Evans <tevans@yorkville.il.us>; Krysti Barksdale‐Noble <knoble@yorkville.il.us>
Subject: Supplemental City Council packet ‐ letter to Governor
Hello all (elected officials blindcopied),
Here is the draft letter to the Governor up for consideration at tomorrow night’s Special City Council meeting. The
attached letter will be sent out in a supplemental City Council packet shortly.
Thanks,
Bart Olson
City Administrator
United City of Yorkville
630‐553‐8537 direct
630‐553‐4350 City Hall
630‐308‐0582 cell
bolson@yorkville.il.us
City of Yorkville 2.0: Facebook, Twitter, and YouTube
Exhibit A
1
PROMISSORY NOTE FOR YORKVILLE, ILLINOIS, TO BORROW $400,000 FROM THE
KENDALL COUNTY REVOLVING LOAN FUND TO SECURE EMERGENCY WORKING
CAPITAL GRANT FUNDING, UNDER THE DOWNSTATE SMALL BUSINESS
STABILIZATION PROGRAM, FOR LOCAL BUSINESSES FACING HARDSHIP DUE TO
THE COVID-19 PANDEMIC
Yorkville, Illinois, (“Borrower”) will borrow a total amount of $400,000 (“Loan Amount”) from
the Kendall County Revolving Loan Fund, held and managed by Kendall County, Illinois,
(“Lender”) for the sole purpose of repaying Downstate Small Business Stabilization Program
(“DSBSP”) Grant Funds to the State of Illinois (“State”). This loan is subject to the following
terms and conditions contained in this Promissory Note (“Note”):
1. INCORPORATION: Kendall County Resolution 20-__ and the recitals set forth
therein are incorporated as if fully set forth herein.
2. HOLDING OF LOAN AMOUNT: Within 7 calendar days of receiving the Loan
Amount, Borrower shall place the Loan Amount in a separate, interest-bearing
account with an FDIC-insured commercial banking institution. No other funds shall
be placed in the account holding the Loan Amount, and the Loan Amount shall not
be intermingled with any others funds owned, controlled, or distributed by Borrower.
All interest that accrues on the Loan Amount shall be paid to the Lender; Borrower
shall not use said interest to repay DSBSP grant funds to the State or for any other
purpose.
3. PROMISE TO PAY: In return for receiving the Loan Amount, Borrower agrees to the
following repayment terms:
3.1 Early Repayment of Unused Amount: Within 30 calendar days of, (1) receiving
notice that the State will not be distributing any additional funds under the
DSBSP or (2) Borrower’s determination that it will no longer seek additional
grant funds on behalf of Benefitting Businesses, whichever is sooner, Borrower
shall notify Lender of same and must return any portion of the Loan Amount,
in addition to any interest accrued thereon, which exceeds the total amount of
grant funding secured by the Borrower on behalf of Benefitting Businesses.
3.2 Repayment Due Date: The Borrower shall return the full remaining Loan
Amount, in addition to any interest accrued, less any amount paid to the State
under the DSBSP, to Lender within 30 calendar days of the last day the State
can assert its right to have the DSBSP grant funding repaid by Borrower
(“Repayment Due Date”).
3.3 Recovery of Amounts Paid to State: If Lender is unable, after reasonable efforts,
to recover any portion of the Loan Amount paid to the State on behalf of a
Benefitting Business (“DSBSP Repayment”) from that Benefitting Business on
whose behalf that payment was made to the State, Borrower shall not be
required to reimburse Lender for the DSBSP Repayment. Lender need not
pursue collection efforts against a Benefitting Business that is dissolved,
Exhibit A
2
insolvent, in receivership, or the subject of proceeding under Title 11 of the
United States Code.
4. METHOD OF PAYMENT: All payments shall be sent to Lender in accordance with
the Notice provision of this Note.
5. PREPAYMENT: Borrow has the right to repay the Loan Amount, or any portion
thereof, at any time prior to the Repayment Due Date, without charge or penalty,
except that Lender is entitled to any interest amount accrued at the time of
prepayment.
6. INTEREST: Borrower shall not be required to pay interest on the Loan Amount,
beyond any interest incidentally accrued, until the Repayment Due Date has passed.
After that date, Borrower will be required to pay interest at a rate of 0.25% per year
on any amount not returned to Lender.
7. LIMITED USE: Borrower may use the Loan Amount for the sole purpose of paying
to the State any 2020 DSBSP grant funds the State demands be repaid as a result of
a Benefitting Business’s failure to comply with the conditions of the DSBSP.
Borrower is prohibited from using any of the Loan Amount for any purpose other
than repayment of any 2020 DSBSP grant funds the State demands be repaid to the
State as result of a Benefitting Business failing to comply with the conditions of the
DSBSP. Further, Borrower shall only use the Loan Amount in relation to Benefitting
Business within Kendall County. Any contract, note, obligation, loan, or other
appropriation to utilize the Loan Amount for any other purpose is and shall be void.
Any attempt by Borrower to use any of the Loan Amount for any purpose beyond
repayment of any 2020 DSBSP grant funds to the State shall be a default under this
Note and shall entitle Lender to demand the immediate return of the entire Loan
Amount from Borrower.
8. COMPLIANCE WITH RECAPTURE STRATEGY: This distribution of the Loan
Amount to Borrower is subject to the 2006 Kendall County RF Recapture Strategy
(“Recapture Strategy”) and must comply therewith. The Recapture Strategy is
incorporated as if fully set forth herein.
8.1 Forgoing Procedural Requirements: Pursuant to the Illinois Emergency
Management Agency Act, 20 ILCS 3305/10(j), and in the interest of obtaining
emergency funding for Benefitting Businesses as quickly as possible, the
procedural requirements set forth in Section C(1) of the Recapture Strategy are
suspended for the purposes of processing this loan.
8.2 Mandatory Substantive Provisions: To ensure compliance with the substantive
provisions of the Recapture Strategy, Borrower will ensure the Benefitting
Businesses use the grant funding in a manner that satisfies all other
requirements of the Recapture Strategy, including, but not limited to the
following: (1) the grant funds must be used for working capital, including
salaries, and (2) jobs created or retained with the grant funding must benefit
51% low- to moderate-income individuals.
Exhibit A
3
9. RECORD KEEPING AND REPORTING:
9.1 Notice of DSBSP Grant Funds Obtained: Within 7 calendar days of obtaining
DSBSP grant funds on behalf of a Benefitting Business, Borrower shall provide
Lender a copy of the Participation Agreement with the Benefitting Business,
and documentation identifying the last date upon which the State can seek
return of the DSBSP grant funds.
9.2 Quarterly Reporting: Borrower shall provide quarterly reports to Lender which
must include, (1) a complete account statement for the Loan Amount, showing
interest earned and any transactions, (2) an updated list of all Benefitting
Businesses that have received DSBSP grant funds through Borrower, including
the last date upon which the State can seek return of the DSBSP grant funds
for each Benefitting Business, and (3) a list of any DSBSP Repayments made to
the State, identifying the Benefitting Business on behalf of which it was paid.
9.3 Notice of Demand from State: Within 7 calendar days of receiving notice from
the State that it is seeking return of any DSBSP grant funds, Borrower must
forward a copy of that notice to Lender.
10. PURSUIT OF DSBSP REPAYMENT FROM BENEFITING BUSINESS:
10.1 Assignment of Rights: Borrower must include language in all Participation
Agreements with Benefitting Businesses preserving its authority to assign its
rights under the Participation Agreement to Lender. By executing this Note,
Borrower assigns to Lender Borrower’s rights under all of Borrower’s
Participation Agreements with Benefitting Businesses located within Kendall
County to recover any amounts, including any DSBSP Repayment paid to the
State, from the Benefitting Business in default under the Participation
Agreement, attorney fees and court costs.
10.2 Assist in Recovery of DSBSP Repayment: Borrower must take all necessary
and appropriate action to assist Lender in recovering the DSBSP Repayment
from the Benefitting Businesses. This includes all actions permitted by law and
as set forth in the DSBSP and the Participation Agreements with the
Benefitting Businesses. Any amount recovered from the Benefitting Businesses
shall be retained by the Lender.
11. DEFAULT: If Borrower defaults by failing to comply with the terms of this Note,
Lender may, to the extent permitted by law, demand immediate return of the full
Loan Amount, including interest accrued thereon, or pursue any other lawful
remedies.
12. REMEDIES: In any action with respect to this Note, the parties are free to pursue
any legal remedies at law or in equity. If Lender is required to take legal action to
enforce performance of any of the terms, provisions, covenants and conditions of this
Note, including payment of the Loan Amount, Lender shall be entitled to reasonable
attorneys’ fees, court costs, expenses and expert witness fees incurred by Lender
Exhibit A
4
pertaining thereto and in enforcement of any remedy, including costs and fees
relating to any appeal.
13. WAIVERS: Borrower and any other person who has obligations under this Note
waive the rights of presentment and notice of dishonor, “Presentment” means the
right to require Lender to demand payment of amounts due. “Notice of dishonor”
means the right to require Lender to give notice to other persons that amounts due
have not been paid. Lender’s waiver of any term, condition, or covenant or breach of
any term, condition, or covenant, shall not constitute a waiver of any other term,
condition, or covenant, or the breach thereof.
14. SEVERABILITY: This Note shall be construed in accordance with the law and
Constitution of the State of Illinois and if any provision is invalid for any reason such
invalidations shall not render invalid other provisions which can be given effect
without the invalid provision.
15. NOTICE: Any notice required or permitted to be given pursuant to this Agreement
shall be duly given if sent by fax, certified mail, or courier service and received, at
the addresses set forth below or such other address as the party to be served
may from time to time designate in a Notice to the other party.
If to the Lender: Kendall County
Attn: County Administrator
111 W. Fox Street
Yorkville, IL 60560
With Copy to: Kendall County State’s Attorney’s Office
807 W. John Street
Yorkville, IL 60560
If to the Borrower: ____________________________
800 Game Farm Rd
Yorkville, IL 60560
16. NON-DISCRIMINATION: Borrower, its officers, employees, and agents
agree not to commit unlawful discrimination and agree to comply with all
applicable provisions of the Illinois Human Rights Act, Title VII of the Civil
Rights Act of 1964, as amended, the Americans with Disabilities Act, the Age
Discrimination in Employment Act, Section 504 of the Federal Rehabilitation
Act, and all applicable rules and regulations.
17. AUTHORITY TO EXECUTE AGREEMENT: Borrower hereby warrants and
represents that its signature set forth below has been and is on the date of
Exhibit A
5
this Note duly authorized by all necessary and appropriate governmental
action to execute this Note.
Yorkville, Illinois, hereby accepts and agrees to the terms and conditions set forth herein,
and this Promissory Note is approved and adopted this ___ day of ________________, 2020.
United City of Yorkville, Illinois: Attest:
___________________________ ___________________________
Mayor City Clerk
COUNTY OF KENDALL
REVOLVING LOAN PROGRAM
RECAPTURE STRATEGY
Revised: December, 2003
Kendall County
Economic Development Commission
111 West Fox Street ·
Yorkville, IL 60560
Phone: 630.553.4142
Office of County Administrator
H:\i\S-AdminScrvices\Rcvolving Loan Fund\COUNT'/ OF KENDALL -Revolving Loan Program Recapture
Strategy 2003.doc
' .
A.
KENDALL COUNTY
RLFRECAPTURESTRATEGY
Revolving Loan Fund Goals and Objectives
1. Stimulate economic growth in the County of Kendall, Illinois, by
assisting with the retention and growth of the existing industrial and
commercial base, providing needed equity to new start-up businesses,
encouraging the development of minority and female owned
businesses and providing an incentive for established businesses to
relocate to the County of Kendall.
2. Assist new or existing Kendall County businesses to create and retain
jobs.
3. Ensure that jobs are created or retained by business applicants benefit a
.. minimum of 51 % low-to-moderate income persons in the area;
4 . •Increase the County of Kendall property tax and sales base.
5. Provide businesses with the opportunity to expand.
6. Encourage and leverage loans to businesses by area private financial
institutions.
B. Revolving Loan Fund Strategy
1. Eligible use of funds.
a. Site development/infrastructure extension costs.
b. Construction of new faciiity or additions.
c. Renovation of existing facilities.
d. Leasehold improvements.
e. Purchase of new or used machinery or equipment.
f. Working Capital
g. For every $15,000 of revolving loan funds provided, one full time
equivalent (FTE) job should be created or retained. (FTE jobs are
positions consisting of a minimum of 1,950 hours worked per
year). Kendall County participation will not exceed 30% or
$500,000, whichever is less, subject to availability of funds.
H:\i\S-i\drninServiccs\Rcvoiving Loan Fund\COUNTY Of KENDALL -Revolving Loan Program Recapture
Strategy 2003 .doc
·1
h. Projects of a speculative nature are ineligible for funding.
2. The geographic area served by the fund will be within the boundaries of
the County of Kendall.
3. The funds will be targeted to assist existing industrial and commercial
base, start up businesses, female and minority owned finns and
established businesses that will relocated to Kendall County, Illinois, on
a first come, first serve basis as the County of Kendall expects to
receive more applicants than available funding will cover. Applications
that demonstrate the greatest potential for job creation and meeting the
goals and objectives of the fund will be given the highest priority.
4. Applications will be generated by:
a. Sending RLF information to the County's existing businesses.
b. Including RLF information in the County's marketing package.
c. Provide information to municipal economic development
commissions and area chamber of commerce associations to be
included in their marketing information.
d. Staff participation in business related seminars, workshops or
meetings held in the County.
e. Provide RLF information to local chapter of NAACP, Urban
League and other organizations representing minority groups and
offer to speak at meetings periodically.
f. Provide information to area women's associations and service
organizations.
g. Publicize approved loan projects by sending news releases to area
media and holding ribbon cuttings and ground breaking
ceremonies to encourage media coverage.
h. Area lending institutions will be provided with information about
the RLF and asked to inform potential borrowers of fund
availability.
C. RLF Management Plan
1. The County of Kendall shall appoint Kendall County Board members
to the Kendall County Economic Development Commission. As
H:\AS<\dminServices\Rcvolving Loan Fund\C:OUNTY OF KENDALL -Revolving Loan Program Recapture
Strategy· 2003.doc
·'
needed the Business Loan Review Committee shall consist of the
Kendall County Economic Development Commission, State's
Attorney, County Economic Development Director, County Treasurer
and an experiynced area financial institution lender. The committee
shall review all applications to the revolving loan fund after the
County Economic Development Director and a local financial
institution lender have packaged the application and it is referred to the
Kendall County Economic Development Commission. The
Commission will meet with the applicant, meet with the representative
of the participating lending institution, visit the site if necessary,
negotiate terms, length, and security of loans and ensure compliance
with the RLF goals and objectives. A recommendation will be
prepared for the County Board's review for approval or denial which
will include a description of the project, project costs, and source of
funds, security required, special conditions, and reasons for approval
or denial. All other application information is kept confidential. The
County Board will formally approve or deny the application.
2. The RLF will be staffed by the County's Economic Development
Director, State's Attorney and County Treasurer.
3. The loan documents, including commitment agreements, liens, title
policies, security recordings, transfer tax declarations, amortization
schedules and security releases, shall be obtained and completed by
the State's Attorney. The County Treasurer and Economic
Development Director shall monitor repayments of the loan, job
creation and/or retention reports required to be provided semi-annually
until commitment is met, monitor other special conditions required by
the loan and submit semi-annual reports on the status of the RLF to the
Department of Commerce and Economic Opportunity.
4. Delinquent Loans: When an RLF payment becomes 10 days past due,
the fund administrator will place a telephone call to the borrower and
request payment. At 30 days past due the County will send a formal
letter requesting payment. Should the payment become 45 days past
due the matter will be turned over to the State's Attorney to pursue.
All legal rights will be exercised by the county to reclaim funds. The
County State's Attorney will be consulted during foreclosure and
liquidation proceedings if events warrant.
D. Assurances
1. Not more than 10 percent of the annual revenue to the RLF will be
used for administration of the RLF fund. Administrative expenses will
be documente d via receipts, bills, invoices, etc.
H :\AS -AdminScr vic e s\Rcvo lv ing Lo an Fund\COU NTY OF KENIMLL -R e vol v ing Loan Program R ec apture
Strategy 200.3 .d o c
·I
.,
'·
2. Assistance provided from the RLF will result in at least 51 percent
benefit to low-to-moderate income persons and these benefits will be
documented by utilizing Job Training Partnership Act (JTPA) service
providers, Illinois Employment and Training Centers, Workforce
Investment Boards or the employee certification forms found in the
RLF handbook.
3. The County of Kendall agrees to report semi-annually on the status of
the RLF to the Department of Commerce and Economic Opportunity.
4. Any changes to the recapture strategy will be submitted to the
Department of Commerce and Economic Opportunity.
5. The grantee shall agree to pursue legal remedy to recover delinquent
loans. Legal action shall include that authorized by federal and state
law, including, but not limited to, efforts to collect and pursue the
interests of the RLF through bankruptcy court.
6. A minimum leverage ration of $1 non-CD AP funds to $1 CDAP RLF
funds must be obtained for each project. RLF funds may not comprise
more than 50% of the financing for any project.
7. The grantee shall assure that environmental reviews will be completed
for each project funded, as well as prevailing wages paid if applicable.
H:\AS-AdminServices\.Revolving Loan Funcl\COUNTY OF KENDALL -Revolving Loan Program Recapture
Strategy 2003.doc