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Cuyahoga County staff seek council reapproval of $2 million loan to Famous Supply after underwriting change
Summary
County development staff presented a revised underwriting arrangement for a $2,000,000 economic development loan to Famous Supply and said protections were added after a senior lender requested extra borrowing authority for the company's parent. Council did not vote in committee; the item was scheduled for council consideration later that night.
Cuyahoga County Department of Development staff on Tuesday asked the Committee of the Whole to reapprove a previously authorized $2,000,000 economic development loan to Famous Distribution Inc., doing business as Famous Supply, saying the county's protections remain in place despite a change in the parent company's credit arrangements.
The loan was originally authorized by resolution 2024-0368 on Nov. 12, 2024. Paul Hertig, speaking for the Department of Development, told the committee the amount, term, interest rate and security of the loan to Famous Supply are unchanged; the county sought reapproval because a senior lender to Famous Enterprises, the parent company, asked for additional borrowing authority on the parent's existing line of credit.
Hertig said county attorneys and the lender negotiated guardrails that preserve Cuyahoga County's ability to call on the parent guarantee. "Most important change we negotiated was we are still able to call upon our loan guarantee," Hertig said. He added the county will receive, quarterly, the same financial package that the senior lender receives so county staff can monitor the guarantor's borrowing and compliance with those guardrails.
Why it matters: the loan supports renovation of a former vacant building at 5700 Lee Road South in Maple Heights into a distribution and training center. County staff said the project is underway and has already hired employees tied to the facility expansion.
Matthew Carey of the Department of Development said the loan includes a one-year interest-only period followed by 10 years of full amortization. Hertig said the project has already hired 36 of about 83 anticipated jobs at the site; a separate consultant said roughly two-thirds of hires are from Cuyahoga County.
Council members questioned the county's remedies if the guarantor's financial condition weakened. Hertig described a stepped process: county servicing staff would first meet with Famous Supply and the senior lender, then issue formal notices of noncompliance if needed, and ultimately could declare the loan due and invoke the guarantee after legal consultation. He also confirmed the county's loan will be secured by a second position lien on equipment in the distribution and training center.
The Department identified Anthony Taverhill, volunteer chair of the county loan review committee, as having convened a special loan-review meeting with local bankers and county fiscal staff; the committee moved unanimously to recommend reapproval after executive-session review, Hertig said. Staff said the revised underwriting standards and the quarterly reporting arrangement were reviewed and recommended by that committee.
Representatives of Famous Supply were present for questions. Kevin Carney identified Bruce Construction as the general contractor; Melissa Furchill of MCM Company described the broader project as a $60 million renovation and equipment installation that includes a goods-picking system and a training center.
No vote was taken in the Committee of the Whole; the item was stated to be on the council meeting agenda later that evening for consideration.
Ending: The committee heard the presentation and asked staff technical questions about monitoring and remedies. Councilmembers postponed formal action to the full council meeting later the same day.
