HomeMy WebLinkAboutMemo - Economic Development Loan (05/09/13)CITY OF MIAMI, FLORIDA
INTER -OFFICE MEMORANDUM
TO:
FROM:
Members of the Housing and
Commercial Loan Committee
DATE:
SUBJECT:
REFERENCES:
April 19th, 2013
FILE :
Wynwood Brewing Company
Economic Development Loan
or
Com. and Econ. Dev. ENCLOSURES:
BORROWER
Wynwood Brewing Company, LLC is a start-up brewery in Wynwood with Mr. Luis G.
Brignoni and Mr. Luis C. Brignoni, a father and son team as majority members. Mr. G.
Brignomi holds a Bachelor Degree in Business Administration but his passion has been
making craft beer. In the past five years, he has used his interest in brewing in various
capacities to understand all aspects of the brewing industry from procurement of raw
materials and dealing with suppliers to understanding the behavior of different yeast
strains necessary for a successful micro -brewery.
Mr. C. Brignoni is a retired senior executive in the pharmaceutical industry. He is
experienced in all aspects of sales and marketing, including staff allocation, public
relations, working with distributers and new market penetration.
The Brignoni s will be joined in management of the brewery by an experienced Master
Brewer, Dr. James "Jin3' K. Patton. Dr. Patton has successfully designed and operated a
micro -brewery in Louisiana which started from 1,000 barrels a year operations to 20,000
barrels a year.
BACKGROUND
On June 18th, 2009, the Miami City Commission by resolution number 09-0302 approved
the Economic Development Loan Program policy which provides financial assistance to
businesses for the creation or retention of jobs to low and moderate income persons.
BORROWERS REQUEST:
Whereas the borrowers continue to prepare for the opening of the brewery, unforeseen
rehabilitation expenses to the main factory has meant that the public tasting part of the
operation cannot be constructed without additional capital for equipment and
infrastructural updates required by the County's Water and Sewer department. The
borrowers are therefore requesting a grant of $420,000 to purchase equipment necessary
for the public events which are important for marketing purposes and critical for the
brewery to meet its projected growth.
FINANCIAL ANALYSIS
To assist in making a decision, the business provided a business plan and projected
financials for the next three years.
Market: A review of the business plan and industry information shows that Wynwood in
Miami is a prime location for the business based on the demographics of the area and the
type of businesses in the area. In addition, the micro -brewery industry as a whole has
seen a tremendous growth in the last few years domestically and in the export market.
Accoiding-to-the Brewers A-ssociation; the-Ameiican-craft beer -industry -set -anew -record
for exports in 2012 based on results from a recently completed industry survey. The
Association reported that craft beer export volume increased by 72% compared to 2011,
with a value estimated at $49.1 million.
Financial: A review of the financial plan shows that the direct cost of the beer is more
than approximately 16%. This is above the industry average of 10%. This could be due to
perhaps the lower projected revenue per pint or an usually high cost of materials.
Nevertheless, it means that there is a potential to earn more revenue by reducing the cost
to industry average.
Based on the breakeven analysis (attached), the business should become profitable in
year two.
DEPARTMENTAL RECOMMENDATION
The Department of Community and Economic Development has reviewed the financials
of the business, the use of the requested loan and the possibility of creating the required
number of jobs as required by regulations and recommends the Housing and Commercial
Loan Committee recommends the approval of the amount of $420,000 in CDBG funds
subject to the following conditions and terms:
1. Funds to be used only for the purchase of equipment and furnishings.
2. No funds will disbursed until the completion of environmental clearance
3. 12 Jobs must be created/ according to the following schedule:
a. 3 jobs within 6 months of the loan closing and complete disbursement of
the loan.
b. Additional 3 jobs within one year from the complete disbursement of the
loan.
c. All 12 jobs to be created within 2 years of the complete disbursement of
the loan.
4. The loan will be at zero percent (0%) for a term of 5 years with quarterly
payments beginning 24 months from loan closing.
5. Officers and Directors of the Applicant shall sign Unlimited Guaranties.
6. Commercial Insurance Policies naming the City of Miami as loss payee in an
amount acceptable to the City of Miami Risk Department. All policies shall
provide the City with mandatory 30 days written notices in cases of cancellation
or material change.
7. Requires a collateral position of any and all real property or equipment pledge as
security for the loan.
8 Loans for equipment w l require UCC-1-filings.
9. Once the loan is closed, recipient may not pledge, transfer, hypothecate,
encumbrance or dispose of any asset purchased, in whole or in part, with funds
from the City of Miami, without the written approval from the City of Miami.
10. The City of Miami may impose late fees if the business does not pay on a timely
manner.
11. If a business does not meet its minimum employment requirements, then the City
shall call the loan payable within 30 days.
Housing and Commercial Loan Committee Decision:
Approved as Recommended by Staff
To Include Additional Conditions or Restrictions
Disapproved
To Include Further Action
Specify any further action, conditions or restrictions:
Yes❑ No ❑ N/A ❑
Yes[ No ❑ N/A ❑
Yes❑ No 11 N/A ❑
Yes❑ No ❑ N/A ❑
I
Chairperson or Representative
Attachments:
l . Loan Application
2. 3 year Financial Statements
3. Resume of Key Management
4. Wells Fargo Commitment (unsigned)
5. Industry Cost Analysis
6. Beer Awards at Miami Spring! Festival
11-3
Stamp Date
HOUSING LOAN COMMITTEE
APR 192013
APPROVED
CA, M N',F1, • Cyx01.1w t
Community
Development
LOAN APPLICATION
ECONOMIC DEVELOPMENT LOAN PROGRAM
Information About You and Your Business
Legal Name of Business/Applicant: Wynwood Brewing Company. LLC
Business Address: 565 NW 24th Street
City: Miami
E-Mail: BGomez@RedvGroup.com
Business Phone: (305) 490-7371 Business Tax ID Number: 27-5016453
Business Fax Number: (305)260-6265
Is this a new Business? ® Yes Li No
Zip Code: 33127
Type of Organization: CJ S Corporation 0 C Corporation C] Proprietorship C i Limited Partnership
CD General Partnership liJ Limited Liability Company C=Other:
Principal Product/Service: Brewing Company
Year Business Established: 2011 Length of Time Current Ownership in Place: 2 Years 1 Months
Owner/Authorized Signers Name: Luis G Brignoni
Home Address: 8850 West Flagler St.: Apt #11
City: Miami Zip Code: 33174
Telephone: (305)434-0323 Social Security Number:
Principals/Owner Owning 20% or More of the Business — Provide Title(s) and Percentage of Ownership:
Name: Luis G. Brignoni
Name: Luis C. Brignoni
Title: President/Founder % Ownership: 46.25
Title: Co -Founder % Ownership: 46.25
*IMPORTANT*
Should the Business/Loan Applicant answer yes to any of the following questions, he/she must provide any and all
details under separate cover and submit it with this application. The Business Loan Applicant must provide all
pertinent information including names, dates, times, types, dollar amounts, circumstances, status and dispositions
relevant to the appropriate question(s):
Does the Owner/Authorized-Signer own any interest in any other business(s)?
Is the business a franchise or license company?
Does the business have any other affiliates, subsidiaries, or parents? 0 Yes
Are there any tax liabilities outstanding from previous reporting periods? Yes
Does the business have any contingent liability? 0 Yes
Is the business/loan applicant presently a party to any claim or lawsuit? 0 Yes
Has the business Loan Applicant or any proposed guarantor ever declared bankruptcy? 0 Yes
Yes
No
gel No
,..E No
u No
L' No
Ef No
Is the business Loan Applicant an endorser, guarantor or co maker for obligations not listed on the finan ial
statements? Yes No
Information About Your Proiect
Size of Current Facility: 7,000 Sq. Ft. 0 Own Q Term of Current Lease: 5 years
Is the funding going to be used for construction or rehabilitation? Yes
No 0
Loan Purpose: The purpose of the loan is for equipment purchases and contruction.
Describe how the funds will be used: $48,500 will be utilized for construction costs with the remainder
$371,500 going towards the purchase of machinery and equipment.
Briefly Describe the Assets to be acquired (if applicable): Some of the assests to be aquired include the following:
kegs 2-30 BBL Tasks. Mobile Pump. Yeast Tank. Walk-1n Cooler, Malt Mill & Handling EQ, Keg filler, Growler
Filler, Forklift, Pallet Jack, Bottling Line, Labling Machine, CO2 Tank, Air Compressor, Water Filter, Barrels,
POS System, Computers, 3 Compartment Sink, CIP, Barrel Filler, Pallet Wraper, Pressure Washer
Guarantor(s):Wynwood Brewing Company. LLC- Luis G. Brignoni Name
Title/Relationship to Applicant Founder/President- Self
2
Project Sources and Use of Funds
PROJECT USE OF FUNDS
Building (Renovation
&Improvements): $ 310,648
Building Expansion $
Machinery & Equipment: $ 624,120
Furniture & Fixtures $
Technology Infrastructure: $
Other: $ 325,832
TOTAL PROJECT COSTS $ 1,260,600
OTHER SOURCE OF PROJECT FUNDS
Equity Investment: $ 253,900 Source:
Bank Loan: $586,700 Rate: 6% Term: 112 Mths
Government Grants: $ 420,000 Rate: Term:
Government Loans: $ Rate: Term:
Other: $ Rate: Term:
TOTAL PROJECT SOURCES: $1,260,600
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* PLEASE SEE TAB #3
Job Creation/Retention Information
List the number of new employees to be hired as a result of this loan within the next three years.
NUMBER OF NEW
EMPLOYEES
(FULL TIME/PART TIME)
JOB TITLE
DESCRIPTION
HOURLY
RATE
1
FT/PT
Assistant Brewmaster
$ 11.54
Per Hour
3
FT/PT
Marketing Coordinator
$ 14.42
Per Hour
7
FT/PT
Cellar Person
$ 9.00
Per Hour
1
FT/PT
Taproom Manager
$ 14.42
Per Hour
-* In addition 7 PT Beer Tenders & a Security Guard, Please see Tab #3
Number of Existing * Full Time Employees: 1 Current Annual Payroll: $ 30 ,0 00
* Full time employee is one employee working at least 40 hours a week, year round. Part time employees should be
converted to full time equivalents.
Third Year Projected Full Time Employees: 19
Third Year Projected Annual Payroll: $355,165,60
List the number of existing employees to be retained as a result of this loan within the next three years.
RETAINED
EMPLOYEES
(FULL TIME/PART TIME)
JOB TITLE
DESCRIPTION
HOURLY
RATE
1
FT/PT
Brewmaster
$ 17.
0 0
Per Hour
FT/PT
$
Per Hour
FT/PT
$
Per Hour
FT/PT
$
Per Hour
4
Authorization
The information contained herein is true, complete and correct to the best of my knowledge. I certify that I have
authority to apply for this loan on behalf of the business described herein. I understand that this information may
be made available for public review and is subject to the terms of the Florida Public Records Act. In the event of
loan approval, the undersigned grants permission to the City to release publicity articles regarding the financing of
the project. The City may also check the personal credit history of the principal owner(s) and/or key individuals.
By signing below, the undersigned agrees that the loan will be used for business purposes only and not for
household. personal, or consumer usage. I understand that any willful misrepresentation on this statement could
result in a fine and/or imprisonment under provision of the United States Criminal Code U.S.C. Title 18, Section
1001.
Applicant:
Luis G. Bri9noni
Print Name
Applicant:
President/ Founder
Title
3 11
Date
Print Name Title
Signature Date
5
COMPLETE YOUR APPLICATION
Please attach the following items and information to complete this application package:
REQUIRED INFORMATION
0—One of tttrfotlowingfi►raTrciaaMocnments (mark -one) -must -be -submitted:
0 Previous Three (3) Years of Historical Business Financial Statements
Corporate Tax Returns (Balance Sheet, Profit & Loss, Cash Flow)
Current and Previous Year Comparative Interim Business Financial Statement (Balance Sheet,
Profit & Loss, Cash Flow current within 90 days) Please See Tab #5
Ei Two (2) Years of Projected Business Financial Statements (Balance Sheet, P & L, Cash Flow) showing that the
business can continue to operate in the next two years after this assistance. Please See Tab #5
Resumes of Officers and Key Management Personnel for the Business Please See Tab #6
Uv Authorization to release credit information Please See Tab #7
Gz
Governing Instruments for Business Including Articles of Incorporation, Partnership Agreement(s), Articles of
Organization and Operating Agreement(s) for Limited Liability Companies, Sate of Florida Certificate of Good
Standing Please See Tab #8
CONTINGENT INFORMATION (to be provided after application approval, if applicable)
O Copy of the Construction/Rehabilitation Cost Estimates and the Scope of Work (if applicable)
Ei List of Equipment and Fixtures to be purchased including three (3) detailed quotations for each item listed.
Executed Tenant(s) Letter of Commitment or Copy of the Lease Agreement (if applicable)
CI Environmental Clearance Evidence — Phase I/ Phase II Environmental Review Reports (if applicable)
ED List of Current Employees and copy of payroll documents including job title, salary information and whether
position is part time or full time.
El Commercial Insurance Policy
The City reserve the right to request additional information about the business, Business Owner(s) and or
Applicant that may be needed to process the loan application.
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