CREW: SBA: Regarding Rogers-Related Non-Profits: 3/15/11 - SBA Hal Rogers Disbursement

8/7/2019 CREW: SBA: Regarding Rogers-Related Non-Profits: 3/15/11 - SBA Hal Rogers Disbursement

1/28

U.S. SMALL BUSINESS ADMINISTRATIONWASHINGTON,D.C.20416

AUG 1 6 2010

The Honorable Harold RogersU.S. House ofRepresentativesWashington, DC 20515. DearRepresentativeRogers:Thank you for your recent letter on behalfof your constituent, James D. Hamilton, President,Lee's Ford[bock, Inc. Mr. Hamilton contacted your office seekingyour assistance in obtainingan increase to his disaster loan from the u.s. Small BusinessAdministration (SBA) for losses hisbusiness sustained as a result ofthe U.S. Army Corps ofEngineers lowering Lake Cumberland.More specifically,Mr. Hamilton requested that the SBA designate Lee's FordDock a MajorSource o f E m p l ~ e n t (MSE) allowing the SBA to waive the statutory $1.5 million loan limit.After receiptof your letter, Jerome Edwards, SeniorLoan Officer onmystaffmet with.Mr.Hamilton at yourWashington office. This meeting's outcomewas relayed to our Processingand Disbursement Center (pDC) in Ft. Worth, Texas. After a thorough review ofLee's FordDock's loan file, it is my pleasure to inform you that Lee's Ford Dockwas designated as an -_ .... . .. ~ l ? - " - Q ~ g u . . . L Q , 2010,_we.E-PQIQy.Yda $2.5 million increase to Lee'sFordDock existinK_ ~ _ . _ ~

m ~ . _ - - = - = - = - - - $t5 m1l1JOn loan. MOdlfiedloan closing documentswill be issued very soon, and once wereceive the required executed loan documents we will begin disbursement ofthe newly approved$2.5 million proceeds.Thank you for yourcontinued supportof the small business community. Your interest in thismatter on behalfofyour constituent is appreciated. I f you or your staffhave additional questions,please contact our Office ofCongressionaland Legislative Affairs at (202) 205-6700. I fMr. Hamilton has any additional questions regarding this loan, he should contact Cynthia Steed,SupervisoryLoan Specialist, atthePDC at (800) 366-6303, ext. 5127.

S i n ~ ~ l Y ' 9 (-::-James .R iveraAssociate Administratorfor Disaster.Assistance


2/28

WASH!NGTONOfF{CE:o 2406RAYBURNHOUSE OFFICEBUILDINGWASHfNGTON,DC20515-17051202)22$-4601HAROLD ROGERS5THDISlNCT. : ~ 4 4 , . A O ( ) 9 . ~ e t ) y ( J - Y e ~ ~ y ~ ~ g y p f 1 : l j s ~ : \ :..........o r i ~ n Q t e . ( A t c ) : l . 7 ) ,Thedec!inanciri 1.efter:$teq that SBAwpu1d no t consider .aloan increase. - . " . . . " . ' -, .....: . .

-.:' .' ".". ': ;' ~ ' . ' :

'. - '. .' '. H

Mr. James E. RiveraAssociate AdministratorOffice ofDisaster AssistanceU.S. Small Business Administration499 Third St., SW, Suite 6050Washington, DC 20416

July 13,2010

----_.-: ...._;-" '. - ~ ~ - ~ - ~ ~ -- - - - - - - --ram writingon behalfof a constituent, . M i . T a n l e s ~ D : Hamilton, President, Lee's Ford Dock,Ine., located in Nancy, Kentucky.'Mr.Hamilton's marina business has suffered significantlysince January 2007 when the U.S. Army Corps ofEngineers' (USACE) lowered the summerpool ofLake Cumberland in conjunction with emergency repairs necessary to mitigate the risk ofstructural failure at WolfCreek Dam. The severe economic impact of this43-foot reduction inwater level on the Lake Cumberland business community was certified by the Governor ofKentucky. Based on this certification, the Small Business Administration (SBA) issued adisaster declaration for a select number of counties in the Commonwealth. CAtch1) As a result,Lee's Ford Dock applied for and received an SBA Economic Injury Disaster Loan (EIDL) in theinitial amount of$830,400--revised upward 13months later to $1,500,000. (Atchs 2-5)When Lee's Ford Dock applied for the increase to its EIDL in 2008, there was still hope that theCorps' use of an accelerated groutingprocess would safely allow for a r ise in the water level inthe very near future. However, despite additional funding provided by Congress, unforeseencomplications have slowed completion of the grouting curtain, and Lake Cumberland continuesto be maintained at the grievously lower level. Most. notably, based O my March 23,2010conversationwith theUSACE Nashville District CommanderMitchell, the situation will no tsoon improve. Faced with a more prolonged disaster and a $250,000 reduction in Lee's Ford'sline ofcredit by its financing bank, Mr. Hamilton requested that SBA designate Lee's Ford Dockas a Major Source ofEmployment (MSE) in order to establish eligibility for consideration of awaiver to the $1,500,000 limitation on its EIDL. (Atch 6)

," .., , D e a rMr.Rivera:


3/28

for this reason unless "in the sole discretion ofSBA, there are extraordinary and unforeseeablecircumstances beyond the control of the borrower." The May 6, 2010 letter went on to state that"there [were] no reconsideration/reacceptance rights associated with this decline." However, in asubsequent email, dated May 14, 2010, an SBA supervisory loan officer in the Fort Worth, TX,office said he would "reviewany information"Mr. Hamilton provided.In response to the loan officer's offer, Mr. Hamilton addressed.the SBA declination letter pointby-point and requested clarifications regarding several of the assertions that formed the basis forits conclusions. (Atch 8) SBA responded by once again declining his reconsideration request.(Atch 9)As a long-standing MemberofCongress, let me assure you the conditions at Lake Cumberlandand the inability ofUSACE to close the primary grout line or its unwillingness to makeconcessions to raise the summerpool constitute conditions which warrant SBA to exercise thisdiscretion. Having been notionally promised three times by the USACE that the summer poolwould be moderately increased, three years later, no action has been taken. In the meantime,regional businesses have dried up, visitors have sought otherdestinations, and revenues haveplummeted across the region. In summary, Lee's FordDock and other marina owners aresufferingunder a government-induced hardship, through no fault of their own, necessitatingthought.ft1lconsideration ofU;S:federalassis$ice.' ' -. - - - - - ,,'.'- - - -- - - -_.__ .---_.__ ..

~ - . _ c ; - ' - - - - ------ -- - ---------.. ----,-A.fter liavillgreviewed theSEA d e c f u l ~ r t i " o n letters, I do not b e l i ~ v e MSE determination has been

sufficiently and adequately examined by SBA. I respectfully request SBA aDA immediatelyand fairly revisit Lee's FordDock's denial ofMSE status and subsequent loan increase.Specifically, I would encourageyou to personally meet with Mr.Hamilton as soon as possible toaddress the concerns outlined above. Please have a member ofyourstaffcontaetmy office toprovide the dates and times for the meeting that your schedule will permit. We will providethese to Mr. Hamilton and promptly reply with his acceptance..Thank you fo r yourconsideration.

Sincerel ,~ , ,6/2 ~ ~ ~ , .a L D R ~ { R SMember ofCongr s


4/28

Chronology of Lee's Ford Dock'sRequests to Increase.its SBA:r;cop.omic Tnjury Disaster Loan (EIDL)- -- - --- ---------_.- - - - - - - - - - - - - - - - - - ~ ~ - - ~ ~ - - ~ ~ - - - - - - ~ - ~

Atch 1: SBA Disaster Declaration Due to the Governor ofKentucky's Certification ofEconomicInjury (Undated)Atch 2: Lee's Ford Dock's Initial Applicationfor EIDL, July 9, 2007Atch 3: SBA Approval ofLee's Ford Dock'sApplication, August IS, 2007Atch 4; Lee's FordDock's Request for EIDL Increase, July 25,2008Atch 5: SBA Approval ofLee's Ford Dock's Request for EIDL Increase, September 24,2008Atch 6: Lee's Ford Dock's, Request for Designation as aMajor Source ofEmployment (MSE)For the Purpose ofHaving its EIDLLimit Increased, March 30, 2010Atch 7: SBA Denial ofLee's Ford Dock's Request for Designation as anMSE, May 6, 2010Atch 8: Lee's Ford Dock's Request fat Reconsideration ofSBA'sDeclination for Designationas an MSE, May 17,2010Atch 9; SBA Denial ofLee's Ford Dock's Request for Reconsideration ofSBA's Declination,JUne 18,2010

..

. . :- ':.: :


5/28


6/28

CREDIT REQUIREMENTS: These are loans 8 n d ' a p p l i ~ ' : i I i U S t ~ t 1 l a t . t h e y have repayriierit ability. Loam in excessof 55,000 must be secured with c o ~ ;Generally. this Will .includea lien on theapplicant's business a n d I o r p C : r s o n a r r e a l e s t a i e ~ : ' I f < ; l ~ ; I O a n S W i 1 1 notbedeclined for lackofa fixed amoUnt of collateral. .. " ' ~ . .... . . ,INTERESTRAtES: . interest rate fur I n l s b l e s s e s ~ sifiail agneU1tuta1 coopetativesunable to obtain ..aedit elsewhere is 4.000% . ." : ': :--:" , . , :; . ". '.LOANAMOUNT: , ~ ',",

, ; , : ~ f a t I l ' l o o i i ~ t O " .. ". " & i e ' ~ .entity 'f .hunng f f i l : ' " " ~ } ~ ' ~ ~ ~ , ~ ~ ~ . i l ~ ~ ~ i ~ : : : ~ ~ ~ ~ ". .,.:''\;,.'(:... ;-;;...; -J';.' ; ' - ~ " ~ .' > . .....-.. . .. : : : ~ ":. L O ~ T E R M : .-':.' ~ < - - r : - : . : . : ~ : ~ " ; ' : ; : ; .. ' . .:' ' : : ; - t . ~ . . J ... : p . . . . . . .

.- ~ L 6 a n t e n n S n o t toexceed 30 years a f e a v a i i s b ~ ~ ' L ~ T ~ ' 8 r e indiVidually c L . . . . '.: based what is r e 8 S O n a b ~ in ~ n s i d e r m o n : o f ~ ~ U ~ f ! , , ~ ~ l J ~ . ; ' : ' - .', '...; _ : _ ~ . __ n ~ n . _ .. _FLOOD INSURANcE REQUIREMENTS: Appbts with SBA loanswinch themto f 1 ~ ~ a r e - ~ ' .

~ I i g i b l , ~ i f . t b ; y J l l ~ ~ ~ l D ~ : ! ~ ~ ~ : ~ ; t l ~ ~ :;'" :' :a.::. .:-. :;'.' '.-__.. ,........ _. ,. GeMrallYp' i f ~ 1 1 8 t e r a l ~ t h c l ~ : ' d i ~ ' i I i ~ a ~ f 1 O < ) d : : l 1 & i k a - . m ~ \ the

~ l i c a n t may be required to pUrchase and maintain f i o o d ) ~ ~ ~ , f . S < : ~ . ; ~ o { " ~loan. . . . ' .."'. ~ ' ." . .'. , --",' .:.., -,.,.'.:". ,', - ... , .- . -, .

'" , -:

. :, :- ..


7/28

..-,.FORD- '. - ~ . - " . -: HES(tRT,451 Lee's FordDockRoadNancy, Kentucky42544

606-636-6426Fax606-636-6872www.1eesfordmarina.com7/9/2007

. .:. :: : .... ..: ".:': .. : ...'. i ":, -:'; -. '...

Towhonl it mayconcern.

U.S. Small B u s i n ~ s s AdmiIllstrationDisaster.Loan Processingand Disbursement Center1425KingsportRoad . ..FortWort:h; Texa:i16155.,.2243". ' . '. , . .

,Thisactionhas alreadyhad a d ~ v a s t a t i n g effecton the assetsandcash flow ofHamiltonCapital,LLClLee's FordDock; Inc andme personally.

, The United StatesArmyCorpsofEngineers (USACE) announced on 1119/2007 thatitconsiders WolfCreekDam which impounds LakeCumberland to be at 'high risk' ofstructural failure. TheUSACEbeganloweringthe operating poolofLake Cumberland43'to anelevation6f680\ Thiswasdone to reducepressureon the dam structureand. facilitate SeepageControl andMajor Rehabilitation. TheUSACE has notifiedmunicipalities that their intakesshouldbe lowered to 650' by December31st 2007because the 'real possibility' exists thattheymay haveto furtherreduce the operatingpoolduringconstruction, They estimatethese repairswill takeseven years to complete.Based onhistoricalpool reductions on otherlakesit is estimated the visitationlevelsatLakeCumberlandmay havea recoveryperiodof one and baIfto three years following .projectcompletion. Thismeans the visitationlevelsmaynot returnto normal for 8.5 to10years.

1::.: ..: :\ : .. '.-: ., , :.


8/28

Thebusinessmodel is such thatmostof thebusinessexpenses are fixed indirect costs.Thelargestof'the indirect expensesis debt service. Other indirect costs include utilities,maintenance,management and generaloverhead.Since the directcosts for the basicbusiness modelare lowmanagementhas little flexibilityin its ability to loweroperatingexpensesanyfurther tomaintain necessarycash flow needed to maintain operations.Consequently the business is unable to serviceits debtmuch lessmaintain the debtcoverageratio of 1.29required by its lenderBB&T.Additionally,the timing of thisunfortunate event comeswhen its debtwithBB&Ton all three notes of bothprincipleand interest comes fully dueand payableon SeptemberIs t 2007withoutmentioningothersubstantialobligations includedin our application. _Tf1e MarketValue of the assets hasdecreasedsubstantiallyand theirmarketability ishighlyquestionable and furthermore, extremelydoubtful.TheMarinaproperty valuehas substantiallydecreaseddue to the nature ofvaIuations ofinvestmentgrademarinas and the tremendous amount of uncertainty surrounding theongoingMajorRehabilitationProject by the USACE.Investment grade marinavaluesarebasedon cash flow asanincome producingproperty similar to apartmentbuildings,shoppingcenters or other commercial buildings.They arevalued on a capitalizationrate.Currently investment grademarinas trade at a capitalizationrate of 10and sometimes 8 in'astablemarket. - .

- - - - ~ : : : = - - TheMarinapr6j5ertY was- valued-byfutegraRea1.ty ResourcesforBB&T ~ I July 31 st --2006for $14million basedon a capitalizationrate of 10.Thiswas based a ona projectedCash flowof51.4million. The cashflow for the 2007yearis now estimated to be5993,000, $948,890 for 2008, and$824,000for the followingfive years2009,2010,2011,2012 and 2013. Theseprojectionsare based on iliepremise that the USACEwillnot further lower the operatingpool below680'and the business will be able to retainannual/seasonal slip customers.As mentionedabove theUSACEhas stated that a furtherloweringto 650' is a 'real possibility'.Thecore businessof slip rentalcould begin to rapidlyerode if the operatingpool weretobe further reduced at all.Weare unable to project the effect theUSACE repair projectand its associatedUncertainties will haveon the businessesability to retain slip -customers._This threat ofpossible loweringcouldcause slip customers to seekmooragefortheirboatselsewhere wherethese uncertainties do not exist.Annual slip renewalsbegin December of2007. I fthe operatingpoolwasreduced to 650 the marinawould havenowaterand the entire marinawould have to bemoved to a completely new site. No sitehasyet beenidentified withthe USACBand thereforeno cost projections have beenmadefor such amove. Thecost would he very substantial.The feesimpleproperty owned by theentities after road andsewage improvementsscheduled for completion this summerwasappraisedby Childers FinancialServices Incfor BB&Ton August 2nd2006 for $2,510,000. Since this appraisal oneof the buildingswassoldwhich would changethe Childersappraisal to approximately $2.1 million.

T h e ~ a p p r a i s a l s were c o I I l , p l ~ t e d a p ' p r o x i I n a t ~ I y sixmonths before the USACE's actions -. --- ~ t a k ~ n qn V19a.OO7. Thes.eproperrles high appraisalvalue was due to their location -

. a i ~ e n t r a n c f o f i h e I D . a r i n a n e a r the lake.Needless to Say property salessurrounding2

. ".. . ".. '-.. .. . ' .- . .


9/28

LakeCumberland have slowed dramaticallymore than thegeneralhousingsectorandpropertyvaluesare beginningto declinerapidly. Giventhedecline in visitationanduncertainties associatedwith the USACE possible futurenecessary actionsinvolving therepairstoWolfCreek DB.!Jl thebusinesses assets marketability is in avery questionablestate..... Mypersonal :financial conditionis nowprecarious. I'm currently ingreat.dangerof notbeingable topaymypersonalbills.[purchasedthemarina in Octoberof2D03 andmovedtothearea to run the business inthespringof2004. The first twoyears weredifficultfromamanagement and financialperspective. Therewas a leaming curveformyself. Thebusiness was lackinginternalcontrols, managementsystems,routinesand information systems. Thepropertywas inneedofmanyrepairs and improvements whichwerenot disclosed by the seller.Consequently thebusiness didnotmeet its debt serviceratios the first two yearsofoperation andBB&Tmoved theinterestrate from US to 1overprime.In 2006 thenecessary improvements to the facilitiesandsystems were in place and thebusiness was operatingwell. Itwas certain thatthe businesswould financially perform in2006to meetits targetdebt coverage rarios; Howeverthe business needed additionaloperatingcapital,BB&T allowedsomeprinciplepayments to be deferredbutchangedtheir commitmentto oneyear. I advancedthebusinessmyremaining liquidityto operatethrough 2006. The planwas torefinance in early2007onceitwasveritie4by theannual".. . ......... independent review that the bUsmess wasperformmg asbelieved andmy personal-liqUiditywouldbe returned throughthe refinancing.Thebusiness did financiallyperformas expectedandmet thedebt coverageratio of1.29in2006.Thiswas verifiedby theannualreviewof thefinancials byRadwan,BrownandCompany, PSC the independentaccounting firm. Howeveron1/19/07 beforetlIereviewwas completed ora refinancingcould begin theUSACEissuedtheir emergencyorderarid beganloweringthe operatingpool ofLake Cumberland.TheUSACEconcessionairesincludingLee's FordOIl LakeCumberland weregivenbut10 days notice. The businesshad to immediately spendalmost $300,000 to reposition all873slips to continueoperationsandpreserveits slipcustomerbase.Wewere able toaccomplish this enormous taskand preserveourslipcustomerbase.However theensuingnegativepress, rumors and speculationhave drivenvisitation levelsdown.Currently ourLodgingis down 40%,Boat reritals 400ti, Restaurantsales 20%, Ship Storesales 37%,Transientslips50% andSeasonalslips 1'JOh.,Theseevents havecausedour current.financial crisis.Wehave encloseda letter fromthe SomersetPulaski County ChamberofCommercestating the business is oneofthe top 15employers in the region. This is not surprisingsincethe regionis verydependent on tourism.It has nomajortransportation arteries,industrial baseor natural resourcesother thanLakeCumberland which used to draw5millionvisitorsper year.

G i v ~ $ e current stateofaffairs, currentobligations, risk to the businessdue to the~ 4 I t y o f sittiation and its effects on thebusiness,the business must finda way to3

" '>: :..- :- : --: .'... ".


10/28

reduce its total debt service to nomore than $500,000 per year.It is highlyunlikely anyconventional financing optionswillbemade available to the business byany entity in thecommercial market.I sincerely hopeSBAcanbe ofimmediate assistance in a meaningful way to achieve thiscrucial needconsideringwehaveno otheroptions. Thevery survival of the business andits employees are at stake.

4


11/28

us, SMAlL BUSINESS ADMINISTRATlONDisasterAssistance,Processing'and DisbursementCenterP.O.Box 156119FortWorth,Texas76155

817-868-2300.800-366-6303Hearing Impaired817-267-4688

- -,

August 15.2007

JamesD.Hamilton,PresidentLee's Ford Dock, Inc.451Lee'sFord-DockRoad-Nancy, 42544RE: SBA Disaster Loan A p p I i c a t i o ~ N O -.....- .DearApplicant:SBA ispleased to advise you thatyour Ioaareqnest has been approved for$830,400.00for 30years ataninterest rate of4.000 ~ ~ ~ , , ~ ? ~ m ~ . p a y m e n t s ofS4,178.00. .The loanapprovalis subjectto thef Q n ~ - d 1 i J ~ ; i M q ; r ; : '

, ' .----'-----'-----your loan amounfinaybe i e v i e w e d f u r t h ~ ' t d c o ~ d ; ' ~ ~ ~ ~ ; ~ ~ m ; ; ~ ; i ~ ~ c ecompany. FEMA. AmericanRed Crossor othersources, Yourloan amount maybereduced forany recoveries thatmay duplicate theSBAdisasterIoan, P I adviseSBAifyouhave receivedadditional funds sincethetimeyousubmitted your loanapplication or communicatedwith yourSBAloanofficer. SBAmustconfirm your loanrequestis in accordance withfederal regulationsand SDApo/icies.' .Beforeproceeding with preparation ofyour loan closingdocuments, weneed specificdocumentation to confirmyour eligibility. Pleaseprovide the following:

. ~ .. , ~ . . . . . ~ ' .J. A copy of the deed that includes a cOIDp1ete legal description, for the property locatedat, 21 Lee'ifFord Dock R Nancy, KY 42544 and 81 Lee's Ford Dock: Road, Nancy, KY42544 reflecting ownership iiI the name(s) ofLee'sFordHotels, LLC.2. A eompleee copy of theOperatingAgreementand ArticlesofOtganization forLee'sFordHotels, LLC and Lee's Ford Woods,LLC. . ,3. A complete copyof theRecorded lease!Rgreement for theproperty located at 451 Lee'sFord Dock Road ':.... . . ',. ' : , l : < ~ ~ ~ : ":,:..'

4. A copy of the.associetionBy-Laws'and CGR!s: '.. . - ' "'. ' ' ' '

1


12/28

Inorderto assure prompt disaster loanassistance, werequest that you forward thein.formation assoon as possible bu t 110 later than 21 days from the date of this letter. Ifyou feel that youmay have difficultyproviding the infbrmarion, or i fyouhave questions about yourdisaster loanpleasecallus at 1-800-366-6303. Youmay fax;t1ichequested information to 1 - 2 0 2 - 7 4 1 ~ 8 9 3 .Please return a copy ofthisletterwith yoUr response,'Sincerely,LegalCommitments Team

" .. :'. ...: ..

-' . - - ~ - -_.. .. -- ..._. ,..... .. -.....- ....- ...---- .-- - ---._: ..:.. .... ..':.. : . . : : . _ ~ ...--. -..

....;.

2' ; ' .:.


13/28

This letter is to serve as Lee's Fords written request for additional funding under the SBA's disaster reliefprogram. Our Loan # is E I D ~The business has incurred additional expenses associated with reconfiguring the marina and estimate wewill haveadditional expenses as well. In addition the business is experiencing lower than expected sales. While wemakeevery effort to reduce expenses to help offset lower revenue; it is critical thatwe continue to keep our property ingood condition with necessary repair arid maintenance. Equally it is critical thatwe retain qualityemployees andmanagement to continue providingcustomers with a positive experience. Without these continued measures ourcustomers will choose other competitors causingour core business to erode beginning a vicious downward spiral.

July 25, 2008

I'm proud ofmy staffbecause we have responded and managed the business very well under the circumstances.Notwithstandingwe will need an additional $871,000.00 from the Disaster ReliefProgram to properly finance thebusiness and enable us to continue to managing through this unfortunate event I have attached form 8821's for allentities and the cash flow projections for the remainder of the year and 2009 which demonstrate the need foradditional funds.

JohnW.SchoenthalerSmall Business Administration14925 Kingsport RoadFortWorth, TX 76155

= ~ : : - I J ] .'. uIfj...----, .- .Iil:JI'1"= - ' ,--451Lee's FordDock.RoadNancy, KY42544Phone: (606) 636-6426 Fax: (606) 636-6872wwwleesfordmarina.com

Please fe d free to contactme or our CFO Steven Brans (606-636-6426ext 233 or 606-383-3702)with anyqUtrtions you may have.

~ _ ! ! ~ . ~ _ ~ A g ~ s ~ a ~ ~ ~ f : : ' : : ? ~ " : _ : ~ ~ f 1 1 - ? = ~ ! : I I D ~ :John,

Siz:rereIy,< ~ ~ - ~ , .:JD Hamilton .' . ' - - - : - " ~ " '\.pz.eskI6ht ... ;":.:'


14/28

U . S ~ SMALL BUSINESSADMINlSTRAOONDisU1er AssIstanceProcessing and DisbursementCenter14925 KingsportRoad

Fort Wortft, Texas 76155

(811}868-23001(800)366-6303HearingImpaIfttdTOO (800) 871-333i

September 24, 2008

'. :. -', ~ ....

:,..

. . ;c.; ...." ....;......

-', .:,".

Lees FordDock, fne.James D. Hamilton, Presidentand Steven Brans, Secretary451 Lees FOrd DockRdNancy, KY 42544RE: SBA Disaster loan N u m b e ~'- .. - .. _- ' - . ~ - ~ . , j ~ _ . , . : , " - , " .-.. ..... . . : . . I . ~ _ -

DearMr. Hamilton andMr. Brans:

: :" . .

C, Approximately $238,100;00 as payment on a;count{s) ~ y a b l e to To pay elIgibleaccounts payable aged 50 days. and greater. .Paragraph 19, DistributiOns andCompensation, o fyour Loan Authorization and Agreement isamended as follows: . . : . " .

B o . ~ r willO,ot, .witho.ut the prior written consent of SBA,make aoy d i s t r i ~ n of_, :..'._~ r r c W e r s a ~ ~ t h ~ ! l r e a s o n a . b ~ compensation fo ( serVices; or give ~ r i y " ,.,'-' . .;..'prefetential-treatment; m l : I I ( ~ any advam:e,.direc:try or indirectly, .bY ~ ' Of[oar(gift," .. '" . bonus, or o t h ~ e ; ' to"any"owner o r p a r t r i ~ o r any . o f i t S e m p l g y ~ . or to any" .... ' t>~ p a n y direct&';Qf indirectfy c o n t r o l l i n g o r a f f l U a t e d : w i t f ' l ( ) r : , ~ l l e c t b y ~ ~ r . or: -.a n Y ( ) ~ c p Q l ~ r i y . : ' .... '........... '. .; " ; . i : \ . . \ ; .< \ ; .""- ;

. 'B. Approximately $219,800,00 as payment on note payable to Branch Banking & TrustCompany.A Approximately $1,044,100.00 for working capital.

, '. -'; . ... ' .

We received your requestfo r an increase inyour disasterloanfor economic injurylosses. Aftera thorough re-evafuation of your disasterlosses,we arepleased to inform you that an increaseof $669,600,00 is approved,As a r e s u l t , y o ~ r a p p r o v E 3 d disaster: loan is increased to $1.500,000.00,. ThSil'!terestrateis.......:..: ~ = = - - - WiChangedand WiIlaccruEFat thEfrate o f4.000%-Perannum. Installment payments-remain at$4,178.00for the m'onths of October. November an.d ~ C e m b e r 2 o b 8 and Wiu i n C r e a ~ t o theamount Of$7:49.00 beginning-January 24,2009. The maturity term is uricliarigedat 30 years.. '. .- . . ' . . '. .' ~ . '.(Note: If y o ~ r payment is madethroughanautomaticwithdraWal from a checking or savingsaccount, please contact our CustomerService Center at 1-8D0-659-2955 for assistance inchanging the amount o fyourwithdrawaO, .Paragraph 4, Useof Proceeds, of yoor Loan.AuthorizationandAgreement is amended asfollows: . . .


15/28

B. Borrowerand its affiliates agree to Umit annualcompensation (including salaries.withdra'Nals. fees.bonuses. commissions. and anyother payments, whether direct oriildirect, inmoneyor otherwise) to the following named personsand positions in theamountsetopposite the respectiVe namewithoutthe prior writtenconsent of SBA.

James 0 Hamilton, President $100,000.00C. Borroweragreesthat in theeventany fundsare raised 1hrough a securitiesoffering

teither aPublicoffering or private placement of common or preferred stock, or long tennd'ebtW!thaneqUity feature). SBAwilt have the immediate right to requirefuIJ payment ofthe loan balanceor reqUire that a portionof proceeds be applied to the Loan balance.D. In addition to installmentpayments established herein, Borrowerwill makea supplement-'" - - - . . ~ - a M u a l - p e y m e n t ~ t G - 5 % ~ $ A e t - e a m i r l g s . f S Q r t f : I e . p u ~ d ~ : ~ .... - - .-NetEarnings- Isdefined as net profit after taxplus depreciation less scheduled principalpayments on aD indebtedness ofBorrowerat the timeof th e application less principalpaymentsagainstthis loan. Borrowerwill makesupplemental annualpayment no laterthan days fOllowing the close of Borrower's fiscal yearending December 31. Thedetermination of net earnings willbemade by reviewing either auditedfinancialstatements; or if there areno audited financial statements, federal tax returns.

ALL 0Tf:iSR n:RM$ AND ,CQNOITIONS REMAINUNCHANGED.':-. - ~ ' ~ " ' T h i s J a t t e r s f i o u l d I:lEfa t t a c f f i i i ~ i o y o u r [ O a n A U f f i o n z a t i o r i a n d A Q r e e m e n t ' ; a s i t l s a ~ n t 'amendmentto it. 'If youhaveanyquestionsabout thisaction. pleasecontact ourofficeat theabove addressor toll free number. . . .

Sincerely.

Supervisory t,.oan OfficerSBAAppllcation Number: 00031330261 LM: 04


16/28

451 Lees FordDock RoadNancy, KY42544

Tel: 606.636.64261 Fax: 606.636.6872www.leesfordmarfna.com

Ma!'fh 30,2010Fully Disbursed TeamSmall Business Administration14925 Kingsport RoadFort Worth, TX 76155RE: SBA Disaster Loan Number: E I D L ~ ,Fully Disbursed Team,The United StatesArmy Corps ofEngineers (USACE) has made another announcement onMarch 10,2010 stating a partial suspension ofwork on theWolfCreek Dam SafetyMajorRehabilitation Project due to slightmaterial movement in critical area 1. Before thisannouncement it was projected that lake levelswould rise for the 2011 (originally 2009) vacationseason which would have greatly aided in returning visitation to Lake Cumberlandtherefore,retumingcash to the business. This announcement has most likely wiped away any chance ofthis occurring in 20n . Also, it is unknown if the project completion date ofDecember2012 willbe obtained or extended.In 2007, when we originated our disaster loan with the SBA, our financial impact was calculatedonly through 2009. As the paragraph above explains, it is takingmuch longer to complete theproject-and ou r financial situation it now back to a state wherewe need assista..l1ce to make itthrough the remainder ofthe project. Due to the negative impact of the lower than normal waterlevels we continue to see a decrease in income. We have cut expenses to the maximum we canto helpoffset the lower income but this is not enough. Also,'the business is in despite need'ofsome necessary capital improvements to maintain the business and without assistance we willnot be able to complete them.In addition, since this latest announcement, our financing bank, Branch Banking and Trust, hasnow decided to pull back their exposure. They have informed us that theywill not considerinterest only on our notes and are going to Q ~ c r e a s ~ 2 p r J i n ~ o f F ~ i t f r o m $ 5 ( ) { ) , Q o . O O ~ ~ , ~ f t o~ d ~ ~ ~ ~ ~ ~ r ~ : ~ ~ a v ~ g i v , ~ l f , ~ s u n t a } ~ e ~ , ~ ( ) i O ' t 6 ~ ~ " i ~ e . a p l i U 1 b e f o r e ~ i s 'line . ~ r ~ u c ~ ..


17/28

Also. I believe wequalify for theMajor SourceofEmployment (MSE) designation for ourindustry for the typeof loanwecurrentlyhavewith the SBA. Weneedtoget our debt costdown. This could be accomplished by replacingbank debtwith disasterassistance funds sincetheamortizationperiod is much longer.ram attaching a copyof the announcementreferencedabove andalsocopiesof IRS form 8821for all entities involvedin our loanwith this letter.Unfortunatelywe havea short widowof time to find solutions. Pleasecontactme at yourearliestconvenience. YoumayalsocontactSteven Brans, Secretary/Treasurer, shouldyou haveanyquestions or need additional information. His contact information is:[email protected], (606) 636-6426 ext. 233 - office or (606) 383-3702 - cellular.Sincerely,

JamesD, HamiltonOwner/President-(Q)il:i__ ~ ! ' - e x t . 2 3 4 - offiCe

~ ~ ~ ~ ~ - . - - - - ( 8 S 9 ) 8 0 6 ~ 2 6 3 6 - = - c e l 1 U 1 a r - - - - [email protected]


18/28

BIanlStory

US Army Corps of EngineersNashville District BUILDING S T R O N G ~Horne Newsroom Who WeAre MissIons History-

NEWS STORTESNEWSROOM

--

Corps announces partiar suspension ofwork at Worf Creek DamRelease 10-08 -Posted March 10, 2010NASHVILLE, TENN. - The U.S. Army Corps of Engineers Nashville District announcedtoday a partial suspension of work on the Wolf Creek Dam Safety Major RehabifitatlonProject In Jamestown, Ky. Instrumentation used to monitorthe foundation has indicatedmovement and increased hydrostatic pressure since work began In the area adjacent tothe concrete section of the darn, which includes Critical Area 1."As a precautionary measure, we have suspended construction in Critical Area 1 whilewe evaluate the most recent monitoring and instrumentation data," stated Barney Davis,Chief of Engineering and Construction Division fo r the NashviJIe District. Critical Area 1is the portion of the dam where the earthen embankment ties into the concrete sectionand has been the major source of seepage dUring the history- of the dam's operatlon.-"We want t6 ensure that ou r treatmentmethods are effective and that we can safelylnstalLthe rernalnderct the.concrete.berrter w a l l t ~ D a v i s continued;:..________cc - - - - --The suspension affects only 600 feet of the 4400-footlong, 275-foot deep concrete.barrier wall, which Is the major structural component of the $584 million rehabilitationproject. Work is continuing in the non-critical areas of the dam, and Davis indicatedthat the Corps does not foresee any changes to the lake operation plan at this time.Instrumentation used to monitor the dam's foundation is one of the Inter im RiskReduction Measures {IRRM} in place at Wolf Creek. IRRM are designed to minimize riskto public safety in the short term while pursuing long-term permanent fixes, such as theongoing rehabilitation project."Wolf Creek Dam is one of the most heavily monitored dams in the country,If stressedDavis. "Our instrumentation is doing its jo b and giv ing us the information we need toprotect public safety and effectively rehabilftate the dam."

Points of Contact:Questions about thIs page: public Affairs Otf!c"cQuestions about this website: Webmaster

Page Last Updated:11 February 2010Privacy lind Secyrity NotIceIoformatlgoOuallty Act CIOA)Ea:edom of Infonnatioo Act (fOIA).Disclaimer


19/28

U.s. SMALL BUSINESS ADMINfSTRATIONDisasterAssistanceProcessing andDisbursementCenter14925KingsportRoadFortWorth, Texas 76155-2243

(817}858-23001(SOO}366-0303Hearing fmpairedroo (SOO) 877-8339

MayS, 2010

.' Lee'sFord Dock, Inc.JamesD. Hamilton" President451 Lee'sFordDock RoadNancy, KY 42544

--- - R E ; . . S S A O ~ L O a n N u m b e r ; ~. . . . - - - - _ . ~ ' - - ' ' ' - - - - - - ' - - ..__ .. _- .------ . . -- .

." - ' , . : .

. - - - - - - - --.. T C f c o ~ i c f e r a " 1 5 I 1 s m e s S ' a s - aMajorSource-ofEmpfoyment, SOPPafagraph-42a(2) -;'-Abusiness applicantqualifiesas anMSE if, atthe time the disastercommences, it is aconcernwhichhas oneormore locations in the disasterarea, employees 5 percentormoreof thework force in'an indUstry within the disasterarea and hasno lessthan 50 employeesin the disasterarea. ToWaivethe legislative loariHmit,SOPParagraph 42 b (1)...,Thelocationof theMSEisout of business or in imminentdangerof going outof business andthewaiveris necessaryto permitthe location to. reopenor stayopento avoid substantial.unemployment in the disasterarea.. ,","' ' ' ' ....". , '

..... .':.'.: .'..' : .:, -c" : ' : . ; .

DearMr.Hamilton:We received your requesttcccnslcer y o ~ r company as aMajor Source of Employment for thepurpose of increasingyour roan above the legislative limits. After a thoroughanalysisof yourloaninformaijonwe areunable to grantyour requestfor the foJlowingreason(s): .:c-.. ' .' .-, " ,>. ' - " .. , . . .

After receivingthe payroll statistics for2006and2007 for Lee'sFordDqck, Inc. andcomparing themwith the Bureau of LaborStatisticsfor PulaskiCounty, Kentucky, wehavedetermined that Lee's DockFord, Inc.couldpotentiallybe considered to beMaJorSource.ofEmployment. However, Lee'sFordDock, Inc.is still in full operation anddoesnot appear- ---to be in inlmi-nent danger of-going outofbusiness - a s - - a ~ 1 t of the disaster: effects.' -A.-s-a- --.-result becauseLee'sFord Dock, inc. isnotclosed'or in imminentdangerof closing due tothe ongoingdisaster,a waiverof the legislative limits has beendeclined.Hadwebeenable toqualify the businessunder theMajor Source" of Employment guidelines,your requestwould have beendenieddue to the following: .

Thesole purpose of an Economic InjuryDisasterLoan' (EIDL) is to helpa small businessmeet itsworking capital 'requirements duringthe disaster-affected period untff normaloperationsresume or in the case ofa prolonged disaster incident, the business hashadanopportunityto adjust its operationsto thenewoperating environment. Economic injuryis achangein the financial condition of a smallbusiness.concern that is directlyattributable tothe effects of the declareddisaster, This c h ~ r 1 9 ~ j T l f . i n a r : ' l c j ~ l C ( } n g i ~ ..C l [ l m U ~ r ~ ~ L . ! l t in # 1 .business; ~ i q Q l l t i ~ ~ P . ' ~ , t c > m ~ ~ c ) . b H g a ~ 9 ~ .. ~ S f ! 1 E ! Y I l 1 ~ 4 ~ C ' r t O ; p a Y 9 r 9 i ~ ~ ~ d ' " .n e c e s s a r y o ~ r a n g ~ n s e s , " '.

. " ".


20/28

Generally, wemeasure economic injuryby comparing the grossmarginsgenerated bythebusinessduringthe period affectedby thedisasterto thosegenerated in similar, nondisasterperiods. Thedifferences showthe disaster's financial impacton the business'.operatlone. Next, we'detennine the amountof fundsthe business and its owners needuntilnormal operations resume. Finally, wecomparethediscister's impacton operationswiththe identifiedfinancial needs: The smallerof these two amounts is the business' maximum,economic injuryeligibility. Economicinjury disaster loanscannotexceed the financialrequirements the business and its ownerscouldhave covered hadthere beennodisaster.BasSet on our reviewof t/':le financial information submitted, we are unableto establishi3dditional eligibilityabovethe approved loanamount. Although revenuesdo lndicate acontinueddepressed leyel. the business has .continued to operatewlth positive cash flowsfrom operations." Additionally. the financialstatements do not indicate that the business hasItiade allY-SUbStantial adjusflllent in Its expenselevelsover the'thteevea'rsslrJcetriedeclareddisastercommenced. ' .Additionally. thespecificrequestfor fundsto refinance existing debts or for capitalimprovements areineligible for consideration underthe disasterloan program as these are-p r o h ~ b i t e d uses ofeconomic injury disaster loan funds: '

If you haveany questions aboutthis action, pleasecontactour officeat the above'address ortoll free number.Sincerely,Paul SaJick --- ---- - , - _ . _ - - - - ~ - - - , - - _ . _ - - - - ' ---'------Superviso'iY Loah-6ffieer'--SBA.ApplicationNumber:The FedeiaJ EqualCreditOpportunityActprohibits creditors from discriminating a ~ 3 i n S t ~ e c U t applicants on t ~ basisof race,color, religion,national origin,sex,marital status, age (provided that the applicant has the capacity to-enter .into a binding c o n ~ c t ) ; because all or part of the applicant's income derives from any publicassistance program; or .becausethe applicanthas Ingood faithexercisedanyright underthe ConsumerProtection Act. TheFederal agency .that administers compliancewiththis lawconceming thiscreditoris the Consumer Response Center, Federnl TradeCommisslon, Washington, D.C. 20580.

-. -,' --Thedeadf ine to requestan increase in your loan a m Q u r l t e ~ Q i r e d o n ' ~ R ! e m b e r 2.4, 2 Q . Q ~ ! ~ _ . ------Stafed - l n ~ P a r a g r a p h 6 G of yourLoan A u t h O r i ~ t i o n aridAgreement. ''TheSBAwillnot considera requestfor a loanincreasereceived more them two (2) years fromthe date ofthe original Loan .Authorizationand Agreement unless,in thesole discretionof theSBA,there areextraordinaryand unforeseeable cirCUmstances beyondthe control ofthe Borrower." As a result, therearenoreconsideration/reacceptance rightsassociatedwith thisdecfine.


21/28

451 Lees FordDockRoadNancy,KY42544Tel: 6 0 6 . 6 3 6 . 6 4 ~ 6 1 Fax: 606.636.6872

wwwdeesfcrdmarina.com

Mr. Paul SaIickU.S.Small Business AdministrationDisasterAssistanceProcessingand D i s b u r s e m ~ n t Center14925KingsportRoad ,Fort Worth.. TX 76155-2243Mr. Salick:I am responding to your May 14th email whereinyou reiterated that I haveno appeal rights toSBA's May6th letter informingme of its decision todecline issuinga waiver of the legislativelimitsof myEconomicInjuryDisasterLoan (EIDL) but thatyouwould review any information I provided. Thankyoufor the"

~ f g ~ ~ ~ - ~ J ( ) \ V J T I e t o ( ) ~ C ~ ~ ~ ~ ~ ~ _ e . _ m l 5 ~ ~ ' : ' ~ ' , ~ . _I will address the May 6th letter point by pointPoint One: Whether Lee's Ford Dockqualifiesas a Major Sourceof Employment (MSE)underSOPParagraph42M a. (2) .. .The letter states, "Afterreceiving the payroll statistics for2006and 2007 for Lee's FordDock. Inc.andcomparingthem with the Bureau of LaborStatisticsfor PulaskiCounty, Kentucky, wehavedeterminedthat Lee'sDock Ford, Inc.couldpotentially be considered to beMajor Source ofEmployment."The SOP states:42M MAJOR SOURCE OF EMPLOYMENT WAIVER OF LENDING LIMIT

The Agency may waive the $1,500,000 legislative limit if a business is a MSE. This is tominimize unemployment of largenumbers of people in a disaster-impacted community.a.MSEEligibility. A business applicant qualffies asan MSE i f it is a concern which hasone or

more locations in the disaster area,which locations individually, or in the aggregate:(1) Employed 10 percent or more of the entire work force within the commuting

area of a geographically identifiable community, no larger than a county;provided that the commutlngarea does ~ o ~ ) ( ' ! ~ n ~ ~ Q r e than?O m H ~ s f ~ o m ,suchcommunity; or"


22/28

(2) Employed 5 percent or more of the work force in an industry within th e disasterarea and, if th e concern is a nonmanufacturing concern, employed no lessthan 50 employees in the disaster area or , if the concern is a manufacturingconcern, employed no less than 150 employees in th e disaster area; or

(3) Employed no less than 250 employeeswithin the disaster area.Wemeet the criteriaunder42Ma. (2)and have sincetheorigination ofthis loan.Consequently, wedorightfullyqualifyas anMSE, and this fact should beacknowledged. Thus, I donot understand yourstatementthat our requestwould have beendeniedevenhadyou"been able to qualify the business undertheMSE guidelines."

{

Point Two: WhetherwemeetthecriteriaallowingSBAdiscretiontoWaive the legislative loanlimitunderSOP Paragraph 42M b.(1).. .The SOP states42M MAJOR SOURCE OF EMPLOYMENT WAIVEROF LENDING LIMIT

b. DiscretiontoVllaive legislative ~ a Limit. TheSBAmaywaivethe $1,500,000 limit if:(iJTnedarnagedlocaHon(s)of t ~ ~ ~ E are ou t of business or in imminent danger of

- ~ g o i n g o u t o f business and the-waiver Isnecessaryfo -permifth-e location(s)toreopenor stay open inorder to avoidsubstantial unemployment inthe disaster area; and

The letter states. "However.Lee'sFord Dock, [nco is stilI infull operationanddoesnotappearto be inimminentdanger ofgoing outof businessas a resultof thedisastereffects. As a result,becauseLee'sFordDock, Inc is not closedor in imminentdangerof closingdue to the ongoing disaster, waiver of thelegislativelimits has beendeclined."I respectfully, butvociferously, disagreewith thisassertionand have attachedthe cashflowprojectionswesentto you onMay6 th lbelieve theseprojections speakfor themselves. Mostassuredly, 'We areinimminentdanger ofclosing.Point Three: Whetherwe wouldhave beengranteda waiverto the legislativeloan limit i fwe hadbeenqualifiedas an MSE...As notedabove, we do not understand thestatement,"Had webeen.able to qualify the business undertheMSEguidelinesyour-request wouldhave been denieddue to the following:"Notwithstanding this fact. Iwould like to addressyour reasonsfor denial.-The first paragraphbelowthis statementexplainsthat thesole purpose of anEIDListo help a smaIlbusinessmeet itsworkingcapital requirements during the disaster-affectedperiod untilnormal operationsresumeor, inthe caseofa prolonged disaster incident,the business has had an opportunity to adjust itsoperations to the newoperatingenvironment.


23/28

I assureyou the "disaster-affectedperiod" is notoverand "normal operations" have not resumed.Theywill notuntil the water level of LakeCumberland is raised,which is totally beyondour controlandcontinuesto severelyaffect operations, expensesand revenue. Oursituation is certainlya "prolongeddisaster incident."The businessand everyoneassociatedwithit havesparedno effort to adjust our operationsto the new -operatingenvironment,and weare doinga tremendousjob giventhe many challengesweface. Yourletter states that, "The financial statements do not indicatethat the business hasmade anysubstantial

_adjustment in its expense levels over the threeyears since the declared disastercommenced." I canassure you wehavemade manyadjustments. It's notas simple as laying everyoneoff becausewearetrying to.retain asmany ofour customersas possiblethrough this crisis. Then.too, we haveencounteredunforeseenexpensesas described below. .Our harbordepth usedto averageabout SO feet in our pre-disasterdays. Now, however,it averages about36 feet-less than halfits norma!depth. Somemarinasare still in 120 feet ofwater and buildingnewslips in very wide areas of the lake.Ourmarinais atthe headof a tributary creek, andourharbor isshallowand narrower. At our currentdepthour customers are lookingat a 40-footmud bankwheretheyused to look at trees, birds and fish.Ourwater is not as clean as it once was becauseit takeslonger for thesilt andmud to settleafter a, rainfall.Moreover, the lowwater level has createda marsh-typeland aroundand near the marinawhich previouslydid not exist Themarsh-typeland has becomea breedinggroundforinsects which.in tum, has causedspiderinfestations. Weneverhad to combat these iS$UeS befureandhave actually lost customersover it


24/28

-The third paragraph notesthat a reviewof the financial Information we submitteddoes not establishadditional eligibilityabovethe approved Joan amount Not havingbeenfurnishedwiththe results of thereview(the onesforwhichrhave submitted a separate Freedomof InformationAct request). Iamaskedto accept its conclusionwithout benefit ofhaving access to the analyses that formthe basis upon whichthe conclusion is reached. Furthermore, I'm asked to accept it withoutbenefit ofbaving it reconsideredbecause ofan arbitrarytirneline, Wouldyou pleaseprovidean explanationof whythis is so?

-T h e fourth paragraphstates"The specific requestfor funds to refinanceexistingdebts or for capitalimprovements are ineligiblefor consideration underthe disaster loan programas these are prohibited usesofEIDL funds. AlthoughI note in CFR123.303belowunder (bXI) where loan proceedsmaynot beused to refinance indebtedness incurred prior to thedisaster event, it doesn't prohibit useof the funds torefinance indebtedness incurreddurjng an ongoingdisasterevent. Furthermore, I do not see anyprohibitioncited oncapital improvements. (In realityour capital improvementsare really ordinary andnecessaryoperatingexpenses. The fact is that all this is forworkingcapital which isnecessary to carryonand manage the business concern until resumptionof normal operations.The business wouldhavehadthese funds and neverneededan SBA EIDL ifit werenot for the disasterand its continuation.)ntle 13: Business Credit and Assistance?ARTi23-DISASTERLOANPROGRAMSUbp,art ~ E c a n 9 m i c Injury DlsasterLeans 123.303Ho w can my business spend my economic iojurydisaster loan?-- - -- _. - - - ~ - c - ... _ - - - ~ - , - _ . __. , . . , - - - : - . - - - - - - - - ; - ~ . - ..,--,--- - - - - - - - -- - --(a) You can only use the loanproceeds forworking capital necessary to cany yourconcernuntil resumptiono fnormal operations and for expendituresnecessary toalleviate thespecificeconomic rrywy, but not to exceedthat which the businesscould haveprovided had the injwynot occurred.(b) Loan proceedsmay not beused to:( l) Refinance indebtednesswhichyou incurred prior to the disasterevent;(2) Make paymentson loansowned by another federalagency (includingSBA)or aSmall Business InvestmentComMI1Y licensed underthe SmallBusinessInvestmentAct;(3)Pay, directly or indirectly,any obligations resultingfroma federal, stateorlocal tax penalty as a resultofnegligence or fraud, or anynon-tax criminalfine,civil fire, or penalty for non-compliancewith a Jaw, regulation, or order o fafederal, state, regional, or local agency or similarmatter;(4) Repairphysica1 damage;or(5) Pa ydividends or otherdisbursements to owners,partners, officers orstockholders,.except forreasonable remuneration direct!y relatedto theirperformance o fservices for the business.

Point Four: Whywehave beenafforded no reconsideration rights.. .The fetterstates, "The SBAwill not consider a requestfor a loan increase received more than two yearsfrom the date of the original Loan Authorization and Agreement unless, in ~ h ~ dispre!!onofthe SBA.t l t ~ r e a r e ' e x t r f 1 o r d . i n a f ' ) ' andlinfl!resei!ablecircumstancesbeyondthe controlo fthe Borrower." I find it


25/28

difficult to understand howanyonecouldhonestly saythecircumstanceswehave confronted andcurrentlyconfrontare notextraordinaryand unforeseeable. I see no evidence that the SBAhas exercisedits discretion. I can onlydeducethatit has optednot todo so since I am toldthat [ havenoreconsideration/reacceptance rights associated with thedeclinationofthe waiver.

The SBA EIDLs and the MSEdesignation werecreatedto help folksjust likeus. I'm certainly thankfulfor the loanI have receivedsince it haskept usopen. I don't wantto borrowmoremoney; but,unfortunately, 1don't haveany other option. All ofmyproblemscontinueto stem fromthewaterlowering. Wehave cut costswherewecan but are, alsodesperatelytryingto retainourcustomers bykeepingthefacilities in reasonableconditionunderthecircumstances so theydon't leavebefore thewateris again raised.Especiallysinceour disasterwas occasionedby theactions ofanotherFederal agency, I askthatyoupleasereconsideryourdeclinationof'our request

Sincerely,

JDHamilton

. - ..._--.._..,.. -

:.u


26/28

Youalso providedinformation regarding construction of upgraded facilities at othermarinaswhichsubsequentlyresulted ina loss of revenuefor Lee'sFord Dock, Inc. Theimpactof any nOn-disasterevent, suchas increasedcompetition, must be e x c l u d ~ frofntheana lys is . ... .'. .. .. . ,:(./.: . . .

..~ - - - _ . _ - - _ . - . - -

::i

( S 1 ~ 2 3 0 0 1(SOO}36U303Hearing ImpalredTOO (BOO) 877-8339U.S.SMAU BUSINESSADMINISTRATIONDisaster AssistanceProcessingand Disbursement Center14925 KingsportRoadFort Worth., Texas 76155-2243

June 18,2010

Lee'sFordDock, Inc.James D. Hamilton, President451 lee's FordDOck RoadNancy, KY 42544

RE:S8A DisasterLoan N u m b e ~DearMr.Hamilton:

After a thoroughreviewof your file,we determined that,whilelee's Ford Dock, Inc.may bean MSEdue to employment of 5%or greaterof the industryworkforcewithin the disasterarea, it does notmeet thecriteria for a waiverofthe legislativeloanlimit. Lee's FordDock,Inc. is not closed, nor is therean imminent dangerof closureresulting directly from thedeclareddisaster. As a result, a waiverof the legislative limitscannotbe recommended.Because a waiver is notwarranted,no increasecanbe considered. Your loan is at themaximumavailable underthe legislativelimit.

Furthermore, we determined that, if a waiverwere allowed, no increase ineligibility wouldbewarrantedfor the fol/owing reasons:Economic iiijuif is a changein the financial condition of a business which is directJyattributableto thedeclareddisasterandwhich results inan inabilityto coverobligationsas theymature orto pay ordinaryandnecessary operatingexpenses. Funding for capitalimprovements and refinancing isstrictfy'prohibitedundertheeconomic injul)'program."A thoroughrevieW 6fthe Borrower's flnCllncial statements indicatesthat the aJreadyapproved loanamount is sufficient to coverall eligibleneedsdirectly resulting.fromthedeclared disasterincident.

We receivedyour requestfora waiverof the legislative limitsand for an increase in youreconomic injury loan. Aflera thoroughanalysisof your loan information weare unableto grantyourrequestfor the foUowing reasons:The l e g i s ! $ l ~ J i n 1 i t m a y be waived for aMajor Sourceof Employment ( M S ~ L o n l y j ( t h e

.......- - .. -----------.. BOrrower hasexnaaste


27/28

Our Loan Servicing offlce granted lee's FordDock, Inc. a four (4)monthdeferralof paymentsfrom July 24,2009throughOctober24,2009 andinterestaccruedon the outstanding principalbalance dUring that time. Althoughsomeinterestpaymentsweremade, they didnot fully coverthe interest accrued. Thecurrent loan installment paymentswill not fullyamortizeyour loan bythematurity dateof your Joan. SBApolicy prohibitsa balloonpayment.Therefore,we revisedyourmonthlyinstallmentpaymentsto providefor paymentwithinthe loan term.As a result, yourapproveddisaster loan is unchangedat $1.500 1000 .00 . The interestrateisunchanged and will accrue at the rateof4.0q9% per annum. Installmentpaymentsare.increased to theamountof$7.595.00 beginning September 24.2010. Yourpaymentremains$7,459,&2 for themonthsof June. Ju'y and August. ThematuritY term is unchangedat'years.ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.The Code of FederalRegulations(13 CFR 123.202) definesthe legislative limitandprovidescriteriafor considerationof a waiver of the limit. The legislative limit at the time your loan wasapprovedwas $1,500,000.00. The definitionof a Major Sourceof Employment andthe criteriaunderwhich a waiverof the "mit may be considered are contained in the following excerpt frpm.theCFR: '.

(a) Disasterbusiness loans, includingbothphysicaland economic injuryloans to the .Csame,borrower, together w i t b i t ~ _ a f f i ! @ t ~ s , cannotexceedthe lesserofthe-.... -...- -_._, . . c ~ - - - - = : : : c _ : : , : - : u h C 6 f i i p e n s a t e d p h y s l c a l l o s s and-economicinjuryor $1.5 -miliiorCPhysiCal- ._-" ,-disasterloans mayinclude amounts tomeetcurrentbuilding code requirements. Ifyourbusinessis a major sourceof employment, SBA m'aywaivethe $1.5millionlimitation. A major source of employmentis abusiness concernwhich has one ormore locationsin the disaster areawhich:(1) Employed 10percent ormore of the entirework force within the commuting area

of thegeographicallyidentifiablecommunity(no larger thana county)providedthatthe commutingarea doesnot extendmore than 50 milesfromsuchcommunity; or(2) Employed5 percent of the work force in an industrywithin thedisasterareaand,if theconcern is a non-manufacturingsma'l business, employedno less than 50employeesin the disaster area.or if the small business is a manufacturingconcern, employed no less than 150employeesin the disasterarea;or(3)Employedno less than 250employeeswithin the disaster area

(b) ",SBA will considerwaiving the$1.5million loan limitonly if:1. Yourdamaged location or locations are out of business or in imminentdanger ofgoingout of businessas a resultof thedisaster, a loan inexcessof $1.5millionis necessary to reopenor keep open the damaged locationsin order toavoidsubstantialunemployment in thedisasterarea: and2. You haveused all reasonablyavailablefunds from your business, its affiliatesand its principal owners (20%or g r e a , t ~ r ChVnsrship i l l ~ e s t ) a n d a U a v a i ~ ., '. .... ." : . '.", "-. -" .:. ". , ;-'. -... ", ", ' , "', : . ' .- .... : '., ;.'. "


28/28

Documents

CREW: SBA: Regarding Rogers-Related Non-Profits: 3/15/11 - SBA Hal Rogers Disbursement