HomeMy WebLinkAbout20131370.tiffColorado
Office of Economic
Development and
International
Trade
May 23, 2013
Robert Hinderaker, Administrator
Upstate Colorado Economic Development
822 Seventh Street, Suite 550
Greeley, CO 80631
John W. Hickenlooper, Governor
Kenneth W. Lund, Executive Director
Re: Appropriate Determination Submitted for Approval Under Community
Development Block Grant (CDBG) Contract #11-582/Innovative Switchqear
Solutions, Inc. Daniel Blackburn (46%), Roger Schafer (33%), and Lisa
Blackburn (21%), owners and Principals.
Dear Bob:
The Office of Economic Development and International Trade ("OEDIT") staff and the
Governor's Financial Review Committee (FRC) have completed their review of the
information you submitted in support of the request of Innovative Switchgear Solutions,
Inc., (the "Borrower") for Community Development Block Grant funding of Equipment
and working capital for a portion of the start up of their manufacturing facility. The
acquisition of machinery and equipment for the new location and the provision of
working capital may hereinafter be referred to as the "Project" which will be located at
5073 Silver Peaks Ave, Dacono, CO 80514 in Weld County Colorado. Daniel and Lisa
Blackburn and Roger Schafer, owners and managers, may hereinafter be referred to as
the "Principals".
The Appropriate Determination was initially submitted on May 7, 2013. Your submittal
of the Appropriate and subsequent additional information presented on May 13, 2013,
provided the necessary information required for OEDIT's review and approval of the
Project. Our office recognizes the local Loan Fund Loan Committee's support of the
Project and the importance of the retention and creation of businesses and jobs in the
Loan Fund service area.
The Loan Fund's Loan Committee and staff have considered the level of risk and have
recognized the Project's weaknesses in the approval of the loan. OEDIT approves the
request under the terms and conditions listed below:
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Robert Hinderaker, Weld County BLF
May 23, 2013
2IPage
Conditions to be met before this loan approval is effective are:
1. This loan commitment is null and void until a environmental evaluation and Davis
Bacon review is completed and a finding of ' no significant impact' is determined
2. The Weld County Loan Fund must agree that in the event that sufficient funds
are not available from the open contract in amounts necessary to fund the
entirety of this approved amount, or the previously approved loans, that then in
that event they further agree to provide the necessary funding from the Revolved
Funds on hand or seek additional Open contract funds by amendment to their
open contract prior to the commencement of the loan to fund their commitment
to the Borrower on this loan.
1. Terms
• $400,000 Open CDBG Contract funds to provide start up working capital
and Machinery and Equipment purchases.
• Original Note is to be a Five (5) year amortization period, with monthly
payments of principal and interest commencing 30-45 days after closing
• 5.25% Fixed Rate of Interest on said Note.
• National Objective: Job Creation — the business will create Twenty (20)
Full-time Equivalent (FTE) employees, of which 51% or more of all jobs
created for the project must be of low -to -moderate -incomes in Weld
County, Colorado. Created Job Income Certifications must be completed
by the employees at the time they are hired, and must be provided to the
Loan Fund and retained in file during the contract period.
2. Collateral and Terms of the Note to be taken by the Loan Fund
• The Loan Fund will be secured with a blanket UCC filing on all business
assets and money purchase lien position for equipment purchased and on
the business accounts receivable, intellectual property, contract rights,
incomes and issues, equipment, inventory and furniture and fixtures of the
Robert Hinderaker, Weld County BLF
May 23, 2013
3IPage
project taken as available subject to a subrogated first to Celtic Bank of
Salt Lake City, Utah, who shall have a first lien in all accounts receivable
and inventory of Innovative created by their SBA Capline advances for
Cost of Goods Sold (COGS) financing of this manufacturing process
under their separate non -recourse factoring agreement which will be in
effect simultaneously with this loan.
• Loan shall first require a valid purchase order from PG&E
• Valid Assignment of the Purchase Order from PG&E as applicable
• Principals shall have key man life insurance ad assignment of those
policies to the Weld county BLF Loan Fund.
• Applicant will be required to furnish business financial statements
(Balance sheet and Income and Expense Statement) quarterly for the first
year, then annually thereafter on the project. Applicant shall provide
business tax returns on an annual basis for Innovative Switchgear
Solutions, Inc. Additionally, applicant to provide annual tax returns for any
business owned by them now or in the future including by not limited to
Innovative Switchgear Solutions, Inc.
• Applicant shall provide business and liability insurance covering Upstate
Colorado's interest
• No funds are to leave the company during start-up period without first
obtaining Loan fund approval
• Principals shall personally, severally, and unconditionally guarantee the
loan
• Applicant Principals shall provide personal financial statements and tax
returns annually during the life of the loan or at any other time requested.
• Complete collateral documentation shall be obtained prior to
disbursement of any proceeds from the Loan Fund. Standard credit
and collateral documentation shall be executed as necessary to perfect
the above referenced loan conditions.
3. Disbursement
• $400,000 for machinery and equipment purchases for the borrower and
subsequent operating capital as needed following closing of the loan. The
Guidebook for Public Facilities and Construction Projects [and Revolving
Loan Funds] (the "Guidebook') requires that all closing costs be itemized
on the settlement sheet or as appropriate and supported by appropriate
documentation. This supporting documentation, including invoices,
Robert Hinderaker, Weld County BLF
May 23, 2013
4'Page
receipts and related documents, should be held in the Loan Fund file and
made available to OEDIT/DOLA representatives during on -site monitoring
visits.
• The Loan Fund shall verify that all business licenses, permits, correct
zoning and other municipal, county, state or federal requirements for the
operation of the business entity are in place at loan closing and that they
remain in effect during the term of the loan
If you have any questions, please call me at (303) 892-3824.
Sincerely,
Robert Todd
Manager, CDBG Business Programs
t- Weld County
File
K:\Finance\KOF\W ELDlnnovativeSwitchgearSolutions5-23-13Ltr.doc
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