Local Option Review Team

LOCAL OPTION REVIEW TEAM Thursday, January 6, 2022 – 12:30 p.m. 400 East Military, Fremont, Nebraska and Zoom Topic: Local Option Review Team Time: Jan 6, 2022 12:30 PM Central Time (US and Canada) Join Zoom Meeting https://us06web.zoom.us/j/82234108572 Meeting ID: 822 3410 8572 One tap mobile +12532158782,,82234108572# US (Tacoma) +13462487799,,82234108572# US (Houston) Dial by your location +1 253 215 8782 US (Tacoma) +1 346 248 7799 US (Houston) +1 720 707 2699 US (Denver) +1 301 715 8592 US (Washington DC) +1 312 626 6799 US (Chicago) +1 646 558 8656 US (New York) Meeting ID: 822 3410 8572 Find your local number: https://us06web.zoom.us/u/kxc0ZcYgS 1 of 14  LOCAL OPTION REVIEW TEAM Thursday, January 6, 2022 – 12:30 p.m. 400 East Military, Fremont, Nebraska and Zoom 1. Call to Order 2. Approval of minutes from May 27, 2021 meeting. 3. Review Fund Balance. 4. Consider Application from Wheelhouse Solutions, LLC, dba My Central Supply. 5. Adjourn. This agenda was posted at the Municipal Building and was distributed to the members of the Local Option Review Team on December 28, 2021. The official current copy is a vailable at City Hall, 400 East Military Avenue. A copy of the Open Meeting Law is post ed for review by the public. 2 of 14  CITY OF FREMONT LOCAL OPTION REVIEW TEAM MAY 27, 2021 – 12:00 p.m. A meeting of the Local Option Review Team was held on May 27, 2021 at 12:00 p.m. at 400 East Military Avenue, Fremont, Nebraska. The meeting was preceded by publicized notice in the Fremont Tribune and the agenda displayed in the Municipal Building. The meeting was open to the public. A continually current copy of the agenda was available for public inspection at the office of the City Administrator, 400 East Military Avenue. The agenda was distributed to the Local Option Review Team on May 19, 2021 and posted, along with the supporting documents on the City’s website. A copy of the open meeting law is posted continually for public inspection. ROLL CALL Roll call showed Members George, Horeis, Jensen, Mueller, and Gibson. Oliva and Meister absent. 5 present, 2 absent. Others in attendance included Lottie Mitchell, Plan Administrator; Joey Spellerberg, Mayor; Brian Newton, City Administrator; and Nate Johnson. APPROVAL OF MINUTES FROM MAY 27, 2021 MEETING. Moved by Member Gibson and seconded by Member Mueller to approve the minutes of the January 28, 2021 meeting. Ayes: George, Mueller, Horeis, Jensen, and Gibson. Motion carried 5-0. REVIEW FUND BALANCE. Mitchell gave overview. No motion received. CONSIDER APPLICATION FROM NATE JOHNSON FOR LOCAL OPTION ECONOMIC DEVELOPMENT FILM INCENTIVE REBATE. Mitchell gave overview. Nate Johnson gave overview of film and project and answered questions. Moved by Member Gibson and seconded by Member Jensen to recommend City Council approve Local Option Economic Development Film Incentive Rebate of 30% of local expenditures, in an amount not to exceed $1,000.00. Ayes: George, Mueller, Horeis, Jensen, and Gibson. Motion carried 5-0. ADJOURNMENT Moved by Member Jensen and seconded by Member Mueller to adjourn at 12:32 p.m. Ayes: George, Mueller, Horeis, Jensen, and Gibson. Motion carried 5-0. 1 3 of 14 Agenda Item 2 City of Fremont Nebraska Status of LB 840 Funds 11/30/2021 Premilinary Estimate Assets: Checking 205,987.39 Money Market 442,502.26 Investments 2,000,000.00 2,648,489.65 Capital Transfers 0.00 2,648,489.65 Known Committed Funds: Tech/Bus Park Res 2011-047 0.00 Tech/Bus Park Res 2013-095 0.00 Morningside Business Park Res 2013-095 172,675.14 New Horizons Cold Storage Res 2021-015 500,000.00 505 Main Street Group, LLC Res 2021-021 310,000.00 Tech/Bus Park Resolution 2011-047 975,392.00 1,958,067.14 Uncommitted Funds 690,422.51 4 of 14 Agenda Item 3  STAFF REPORT TO: Local Option Review Team FROM: Angie Olson, Plan Administrator DATE: January 6, 2022 SUBJECT: Local Option Economic Development Fund Application for Wheelhouse Solutions, LLC, dba My Central Supply. Recommendation: Consider application from Wheelhouse Solutions, LLC, dba My Central Supply (MCS) for a Local Option Economic Development Fund loan. Background: The City of Fremont has a Local Option Economic Development (LB840) Plan (the Plan) and loan fund for the purposes of creating new jobs, retaining existing jobs, expanding the labor market, attracting new capital investment, broadening the tax base, and providing economic diversification to ensure economic stability and vitality for the City of Fremont and surrounding areas. Applications are submitted to the plan administrator (City of Fremont) for review. Once the plan administrator has reviewed and determined the application is eligible for LB840 funds, the application is reviewed by the Citizens Advisory Review Committee (CARC) and the Local Option Review Team (LORT). The CARC reviews the application from the standpoint of compliance with the Plan. The LORT reviews the application from the standpoint of project feasibility and the potential future economic benefit to the community of Fremont. Both committees make recommendations to the City Council. The City Council will then consider the overall benefits to the community and will have final authority on approval of the application. Amy and Justin Brown, owners of MCS, recently sold their company, Bluffs Sanitary Supply, Inc., in Scottsbluff, NE. They have relocated to eastern Nebraska and have leased property in Fremont to start their new company, My Central Supply (MCS). Eventually, Amy and Justin Brown plan to buy or build a facility in Fremont to house MCS. MCS offers over 60,000 products including janitorial supplies, chemicals and equipment, food service products, office furniture, print, imaging and technology supplies. MCS has the ability to ship nationwide. The MCS customer base includes healthcare facilities, educational facilities, correctional institutions, manufacturing plants, hotels, governmental agencies and churches among others. MCS has committed to creating a minimum of 8 new, full-time positions and retaining 4 full- time positions within 5 years of executing an LB840 loan agreement. Excluding owner salaries, annual salaries range between $40,000 to $75,000 plus commission, bonuses, car allowance and cell phone costs for sales reps. MCS will provide the following benefits to employees: Health & Dental Insurance, 401K, Vacation, Paid Holidays and Sick Leave. The estimated cost for the first year is $1,126,300. MCS has secured $500,000 in commercial lending, is requesting $200,000 from the LB840 fund, and will provide the remaining funds from their own savings. MCS projects gross sales of over $1 million in year 2. By year 5 MCS projects $4 million in gross sales. MCS is an eligible business under Fremont’s Local Option Economic Development Plan as their principal source of income is derived from the processing, storage, transport or sale of 5 of 14 Agenda Item 4 goods or commodities which are sold or traded in interstate commerce. Staff recommends an award of $200,000 with 100% forgiveness based on the performance measures below:  Retain 4 full-time jobs for a period of five years; and,  Create 8 new, full-time jobs and retain for a period of five years from the date of creation. The fund balance is estimated at $690,422.51 (as of November 30, 2021) and generates between $75,000-$90,000 monthly. Fiscal Impact: Local Option Economic Development Fund - $200,000. 6 of 14 Agenda Item 4 City of Fremont LB840- Local Option Economic Development Fund Eligibility Guidelines Tier One Tier Two Tier Three Tier Four Tier Five Tier Six Wages* 125% (or greater) of Dodge County Average Hourly Wage Job Creation 1 to 5 6 to 25 26 to 50 51 to 100 101 to 500 501 and up Capital Investment** $50,000 and up $1 million and up Over $10 million Sales Tax Gross sales of $50,000 to $499,999 Gross sales of $500,000 to $999,999 Gross sales over $1 million Project must meet at least two of the four criteria to be eligible for that tier. For each criteria met, 25% of the loan will be considered for forgiveness. Program Features Tier One Tier Two Tier Three Tier Four Tier Five Tier Six Interest Rate 0 to 6 % Up to 25% of annual Up to 25 % of annual Up to 20% of annual Up to 20% of annual Up to 15% of annual Up to 15% of annual payroll of new jobs or payroll of new jobs or payroll of new jobs or payroll of new jobs or payroll of new jobs or payroll of new jobs or Assistance Caps $50,000, whichever is $200,000, whichever is $350,000, whichever is $500,000, whichever is $750,000, whichever is $1,000,000, whichever least least least least least is least Additional portions of loan forgiveness may be considered in certain circumstances where the job creation requirement has been met and the Forgiveness applicant has demonstrated significant benefit to the community. Recommendations of contract terms will be made by City staff based on application information, credit analysis, and available funds. Additional Items *Positions must receive health insurance and other benefits. The Dodge County "annual average weekly wage"is found here: http://data.bls.gov/cew/apps/data_views/data_views.htm#tab=Tables (NAICS Industries by Geography, All Industry Levels, One Area, Dodge County, Nebraska, Prior Year/Quarter Annual Averages, All Establishment Sizes; Source: Quarterly Census of Employment and Wages – Bureau of Labor Statistics) and divided by 40 hours to determine hourly wage.) **Participation in other local programs like tax increment financing or Economic Enhancement Fund will be taken into consideration. 7 of 14 Agenda Item 4 Local Option Economic Development Loan Fund and Economic Enhancement Fund Application The purpose of the Local Option Development Plan Loan and Economic Enhancement Fund is to encourage population growth, new industries, and investment in the community. Funds are offered to businesses in the form of low or 0% interest loans and performance-based forgivable loans (grants), based upon creation of new jobs and investment in Fremont. Businesses must provide matching funds for the project. Potential City uses include land improvements; public infrastructure; building acquisition and improvements; retail industry; service industry; other new industry; equipment, working capital, job training and buy-down leases for Primary Industry; equipment, job training, buy-down leases, land improvements, building acquisition and improvements and infrastructure for Non-primary Industry; and other economic development activities allowed by statue. Eligible activities under the Economic Development Plan may include the following to attract new and existing business and industry development in Fremont. • Land purchase/options • Infrastructure to new or existing business and industry • Site improvements • Construction for new or existing business or industry or on a speculative basis The matrix for the two programs include: Interest Rate Qualification Criteria: Jobs Investment Compensation Interest Rate City Participation Interest Rate > $25.00/hour and benefits 0% <10% 0% > $20.00/hour and benefits 2% 10% - 19.99% 2% < $20.00/hour and benefits 4% 20% - 29% 4% No benefits offered 6% 30% + 6% Benefits = 50% of the cost of health insurance paid by the employer Sales Tax - Based on initial years taxable sales Taxable Sales Interest Rate >$999,999 0% $500,000 - $999,999 2% $250,000 - $499,999 4% $50,000 - $249,999 6% Businesses will be given the benefit of the category under which they meet the requirements for the lowest interest rate. Based on staff discretion, up to a 2% reduction will be provided if multiple categories are met. The interest rate will never be less than 0%. Loans will be structured as at-risk or performance based forgiveness. To qualify for a performance based forgiveness loan, the applicant must: Pay employees at 125% of the Dodge County average wage; and Have taxable investment greater than $2.5 million dollars, or Have taxable sales greater than $2.5 million dollars. 8 of 14 Agenda Item 4 9 of 14 Agenda Item 4 10 of 14 Agenda Item 4 11 of 14 Agenda Item 4 Ownership Identification: List all officers, directors, partners, owners, co-owners and all stakeholders with 20% or more of the stock. Name Title Ownership % Amy Brown Member 51 Justin Brown Member 49 Employment Information Personnel (Full-Time Equivalent, FTE is based upon 2,080 hours per year) Existing number of FTE Positions: 4 (excluding owners) _____months of Application Approval: 8 FTE Positions to be created within 60 If jobs would be lost without loan approval, total number of FTE jobs retained: 4+ What is the average wage for employees? $27/hr Please describe all benefits which the business provides to employees: Health, Dental, 401K, Vacation, Paid Holidays, PTO and sick leave. Sales reps make a base pay + commission + bonuses Sales reps also receive car and cell phone allowance B. Project Information Use of Funds Total Project Cost Loan Funds Requested Total Funds Land Acquisition Building Acquisition 58,600 (incl utilities) Renovation New Facility Construction Acquisition of Machinery/Equipment 197,100 Acquisition of Furniture/Fixtures 15,000 Working Capital (Includes Inventory) 767,400 200,000 Other (Specify) Advert, insur, prof svcs 88,200 Total 1,126,300 200,000 Project Schedule: 12 of 14 Agenda Item 4 13 of 14 Agenda Item 4 14 of 14 Agenda Item 4