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HomeMy WebLinkAboutR-92-0508J--92-540 7/8/92 9 2 " 51,08 RESOLUTION NO. A RESOLUTION, WITH ATTACHMENTS, AUTHORIZING THE CITY MANAGER TO EXECUTE AN AMENDMENT TO THE PROMISSORY NOTE, IN SUBSTANTIALLY THE ATTACHED FORM, THEREBY INCREASING SAID PROMISSORY NOTE WITH THE PRINCIPALS OF Z-MART DISCOUNT DEPARTMENT STORE, INC., ("Z-MART"), IN AN AMOUNT NOT TO EXCEED $200,000 FOR THE PURPOSE OF PURCHASING INVENTORY AND INCREASING SAID DEPARTMENT STORE'S MARKETING AND ADVERTISING CAMPAIGN; ALLOCATING FUNDS THEREFOR FROM THE COMMUNITY DEVELOPMENT BLOCK GRANT FUND. WHEREAS, the City Commission is committed to economic development and the expansion of trade and commerce; and WHEREAS, the promotion of economic revitalization in the neighborhoods of the City of Miami is an important part of the City's economic development strategy; and WHEREAS, the opening of Z-Mart provided employment opportunities for local residents as well as goods and services not readily available in the target area; and WHEREAS, Z-Mart opened with approximately $1.75,000 less than its original cost projection; and WHEREAS, the aforementioned deficit impacted on the projected revenue from operations; and 'ATTAC6lMEAfT (S)� CQF9iAli5ED CITY COmMSSION MEETING OF J u i. 1 6 1992 Resolution No. WHEREAS, the additional loan funds will be used to purchase inventory and to support an expanded and aggressive advertising campaign; and WHEREAS, said loan funds will be committed under the terms of the original Promissory Note and loan agreement between the City of Miami and Z-Mart; NOW, THEREFORE, BE IT RESOLVED BY THE COMMISSION OF THE CITY OF MIAMI, FLORIDA: Section 1. The recitals and findings contained in the Preamble to this Resolution are hereby adopted by reference thereto and incorporated herein as if fully set forth in this Section. Section 2. The City Manager is hereby authorized to execute an amendment to the existing Promissory Note, in substantially the attached form, between the City and Z-Mart for the purpose of increasing purchasing inventory and increasing said Department Store's marketing and advertising campaign, with funds in the amount of $200,000 therefor hereby allocated from the City's Community Development Block Grant Fund. Section 3. This Resolution shall become effective immediately upon its adoption. - 2 - 92- 508 PASSED AND ADOPTED this 16th day of July 1992. ATTES XAVIER L. UARE , MAYOR MATTY HIRAI CITY CLERK COMMUNITY DEVEld0PME0T REVIEW AND APPROVAL: L DA, DIRECTOR OF COMMUNITY DEVELOPMENT FINANCIAL REVIEW AND APPROVAL: CARLOS E. GARCfJfi, DIRECTOR DEPARTMENT OF TINANCE BUDGETARY REVIEW AND APPROV MANOHAR S. SURANA, DIRECTOR DEPARTMENT OF BUDGET PREPARED AND APPROVED BY: 4 e_,r CARMEN L. LEON ASSISTANT CITY ATTORNEY APPROVED AS TO FORM AND CORRECTNESS: • M3067 3 — 92— 508 E, AMENDMENT NO. 1 11 Z-MART DISCOUNT DEPARTMENT STORE, INC. An Amendment to the term Promissory Note between the City of Miami, herein after referred to as the "CITY/LENDER", and Z-Mart Discount Department Store, Inc., a Florida For -Profit Corporation, referred to as "BORROWER" Whereas, the City Commission passed Resolution No. 91-374 approving the allocation of $325,000 to BORROWER as a low - interest loan, for the lease acquisition, renovation, purchase of inventory, capital equipment and working capital expenditures. Whereas, the City Manager executed an agreement with BORROWER on June 30,1991, in accordance with the aforementioned Resolution; and Whereas, the City of Miami executed a Promissory Note and Unconditional and Irrevocable Guaranty with the BORROWERS, in accordance with the aforementioned Resolution; and Whtreas, said Note and Guaranty has been filed and properly recorded with the Clerk of the County Court and State of Florida; and Whereas, the principal amount of the City loan is three hundred twenty-five thousand dollars ($325,000). Therefore, in Mutual consideration of the Covenants made herein and the Promissory Note of which this is an Amendment, the parties hereto understand and agree as follows: 92- 508 Section 1. The City shall allocate an additional two hundred thousand dollars ($2001000) to the existing loan with Z- Ma rt Discount Department Store, Inc. Section 2. The additional two hundred thousand dollar ($200,000) loan shall be used exclusively for the purchase of inventory and advertising. Section 3. It is further understood that all terms and conditions outlined under the Promissory Note will remain in full force and effect without modification except as herein stated. Section 4. This Amendment shall become effective immediately upon its adoption. In witness whereof, the parties hereto have caused this instrument to be executed by the respective official thereunto duly authorized. WITNESS our hands and seals on this day of 1992. ATTEST: MATTY HIRAI, CITY CLERK City of Miami a Municipal Corporation of the State of Florida: BY: CESAR H. ODIO CITY MANAGER 92-- 508 r] WITNESS: 2 BORROWER(S): Charles Howze, President John Kilby, Executive Vice President and Joan Donaldson, Vice President individually and as owners of Z-Mart Discount Department Store, Inc. Charles Howze, President John Kilby, Executive Vice President Joan Donaldson, Vice President 92-- 508 CITY OF MIAMI, FLORIDA INTER -OFFICE MEMORANDUM Honorable Mayor and Members TO- of the City Commission FROM t� Cesar H. Odio City Manager RECOMMENDATION: DATE V V L M `J �v�` FILE Resolution Authorizing suBJEcthe City Manager to Amend Note with Z-Mart eD}iscount Department REFERENA,pre, Inc. ENCLOSURES It respectfully recommended that the City Commission adopt the attached Resolution authorizing the execution of an amendment in a form acceptable to the City Attorney, to the Promissory Note between the City of Miami and Z-Mart Discount Department Store, Inc., for the purpose of providing additional loan funds in the amount of two hundred thousand dollars ($200,000). The said funds will be used exclusively to purchase inventory and advertising and promotions. BACKGROUND: The Department of Community Development (DCD) has analyzed the need to obligate additional funding in the amount of two hundred thousand dollars ($200,000) to Z-Mart Discount Department Store, Inc., in conjunction with Miami Capital Development, Inc., the Department of Community Development has made an assessment of Z- Mart's financial performance to date. The need for these funds is due to two (2) basic factors: (1) to facilitate the closing on the financing to launch this business the principals opted to accept an aggregate loan amount which was approximately $175,000 less than the original projection. Originally Z-Mart was to commence operations with start up funding totalling $1,733,000. However, Z-Mart actually commenced operation with funding totalling $1,558,000; and (2) Z-Mart actual financial performance has fallen significantly below its projection. The firm projected first year gross sales of $5.375 million. Z- Mart's Quarterly Management Report as of September 30,1991 is projecting a reduced sales volume of $4.461 million for the first year ( a 17% decrease from it original projection). Actual gross sales for the initial operating period of August 17, 1991 through December 31, 1991 totalled $1,481,348. Projected forward, these sales figures would indicate total sales of $3.950 million annually for the first year. 92- 508 10� -� , Honorable Mayor anb ` embers r of the City Commission Page 2 Z-Mart's Management plans to achieve profitable operations within the next twelve (12) months, include a new advertising campaign that is better focused to its primary trade area. Also, the addition of new leased department within the store and the reduction of operating expenses to reflect the local retail consumer should increase revenues. The City's infusion of additional loan funds will provide Z-Mart with the necessary resources to enhance and increase its present operations and ability to be competitive. The additional loan funds will increase the City's total loan amount to five hundred twenty five thousand dollars ($525,000). The present loan commitment will be amended to include the additional funds with all other terms and conditions remaining in full force and effect. 92- 508 Z-.