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HomeMy WebLinkAbout01-27-20 City Commission Packet Materials - C12. Amend 2 to Sub-recipient agreement for CDBG RLF with ProsperaCommission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Brit Fontenot, Director of Economic Development SUBJECT: Second amendment of the 2017 – 2019 Sub-Recipient Agreement for the City of Bozeman’s Community Development Block Grant (CDBG) Revolving Loan Fund (RLF) with the Gallatin Development Corporation, DBA the Prospera Business Network. MEETING DATE: January 27, 2020 AGENDA ITEM TYPE: Consent RECOMMENDATION: Authorize the Interim City Manager to sign a second amendment of the 2017 – 2019 Sub-Recipient Agreement for the City of Bozeman’s Community Development Block Grant Revolving Loan Fund with the Gallatin Development Corporation, DBA the Prospera Business Network. BACKGROUND: City staff is requesting an additional six-month extension to the existing sub-recipient agreement with the Prospera Business Network to continue to manage the City’s revolving loan fund while staff prepare the appropriate solicitation documents to put this contracted service out for public procurement in the spring of 2020. On September 9, 2019 the City Commission authorized a four month extension to the sub-recipient agreement with Prospera. Staff requires additional time to prepare and publish an RFQ for contracted services to manage the City’s revolving loan fund. (Attachments 1 and 2) On June 26, 2017, the Bozeman City Commission approved the 2017 – 2019 Sub-Recipient Agreement for the City of Bozeman’s Community Development Block Grant Revolving Loan Fund. (Attachments 3 and 4) Prospera’s 2 year CDBG RLF sub-recipient agreement to manage the City’s RLF funds expired on June 1, 2019. Ideally, staff would have run an RFP process for this service in advance of the contract expiration and presented a new sub-recipient agreement to the Commission for approval. Since the ideal did not happen, and in order to deliver consistent and 230 predictable service to the loan recipients, City staff is seeking a second extension to the agreement in order to service the existing loans while the City conducts a selection process. (Attachment 5) The Legal team, at the request of the Economic Development staff, reviewed the proposed second amendment which extends the contract, under the same terms, until July 31, 2020. (Attachment 6) UNRESOLVED ISSUES: The Economic Development Department will draft, release, review and select an RLF partner prior to the conclusion of the term of this second extension on July 31, 2020. ALTERNATIVES: As proposed by the City Commission FISCAL EFFECTS: As reflected in Section 2. of the proposed second amendment “[a]ll remaining terms and provisions of the Agreement remain valid”. ATTACHMENTS: 1) September 9,2019 City Commission Packet Material; 2) Signed contract Amendment 1; 3) June 26, 2017 City Commission packet material considering the 2017 – 2019 sub-recipient agreement; 4) Executed 2017 – 2019 sub-recipient agreement; 5) Correspondence from the Executive Director of the Prospera Business Network; and 6) Proposed contract amendment. Report compiled on Thursday, January 9, 2020. 231 For the best experience, open this PDF portfolio in Acrobat X or Adobe Reader X, or later. Get Adobe Reader Now! 232 Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Brit Fontenot, Director of Economic Development SUBJECT: Extension of the 2017 – 2019 Sub-Recipient Agreement for the City of Bozeman’s Community Development Block Grant (CDBG) Revolving Loan Fund (RLF) with the Gallatin Development Corporation, DBA the Prospera Business Network, and authorize the City Manager to Sign the extension agreement. MEETING DATE: September 9, 2019 AGENDA ITEM TYPE: Consent RECOMMENDATION: Authorize the City Manager to sign an extension of the 2017 – 2019 Sub- Recipient Agreement for the City of Bozeman’s Community Development Block Grant Revolving Loan Fund with the Gallatin Development Corporation, DBA the Prospera Business Network. BACKGROUND: On June 26, 2017, the Bozeman City Commission approved the 2017 – 2019 Sub-Recipient Agreement for the City of Bozeman’s Community Development Block Grant Revolving Loan Fund. (Attachments 1 and 2) Prospera’s 2 year CDBG RLF sub-recipient agreement to manage the City’s RLF funds expired on June 1, 2019. Ideally, staff would have run an RFP process for this service in advance of the contract expiration and presented a new sub-recipient agreement to the Commission for approval. Since the ideal did not happen, and in order to deliver consistent and predictable service to the loan recipients, Prospera has requested a temporary extension to the agreement in order to service the existing loans while the City conducts a selection process. (Attachment 3) The Legal team, at the request of the Economic Development staff, drafted the proposed amendment which extends the contract, under the same terms, until January 31, 2020 while staffs conduct a selection process. (Attachment 4) UNRESOLVED ISSUES: The Economic Development Department plans to draft, release, review and select an RLF partner prior to the conclusion of the term of this extension, January 31, 2020. ALTERNATIVES: As proposed by the City Commission FISCAL EFFECTS: As reflected in Section 2. of the proposed amendment “[a]ll remaining terms and provisions of the Agreement remain valid”. ATTACHMENTS: 1) June 26, 2017 City Commission packet material considering the 2017 – 2019 sub-recipient agreement; 2) Executed 2017 – 2019 sub-recipient agreement; 3) Correspondence from the Executive Director of the Prospera Business Network requesting a contract extension; and 4) Proposed contract amendment. Report compiled on Tuesday, August 27, 2019. Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Brit Fontenot, Director of Economic Development SUBJECT: Approval of the 2017 – 2019 Sub-Recipient Agreement for the City of Bozeman’s Community Development Block Grant Revolving Loan Fund with the Gallatin Development Corporation, DBA the Prospera Business Network, and authorize the Interim City Manager to Sign the Agreement. MEETING DATE: June 26, 2017 AGENDA ITEM TYPE: Consent RECOMMENDATION: Authorize the Interim City Manager to Sign the 2017 – 2019 Sub-Recipient Agreement for the City of Bozeman’s Community Development Block Grant Revolving Loan Fund with the Gallatin Development Corporation, DBA the Prospera Business Network. (EXHIBITS 1 - 3) BACKGROUND: Loan payments from recipients of Economic Development Block Grants received from the City through the State of Montana Department of Commerce are placed into the City’s Community Development Block Grant Revolving Loan Fund as a continuing source of funds for furthering economic development. The Prospera Business Network is uniquely qualified and suited to administer the City’s Community Development Block Grant Revolving Loan Fund due to their long-standing community economic development relationship, extensive experience with the current borrowers and ability to service the existing loan portfolio with qualified, full-time staff. In May 2006, the City first entered into a sub-recipient agreement, placing overall management of the City’s revolving loan fund with Prospera. The current, two-tear agreement expires July 1, 2017. General information about the fund, as reported by Prospera on May 31, 2017, includes the following: 44 Total dollars disbursed: $2,940,323.09 Current balance of loans out: $524,586.38 Current Loan Loss reserve: $199,500 Current RLF Account Balance: $648,151.99 Number of loans in portfolio: 7 Number of loans in arrears: 2 Collection activity, if any: Default Loan # 1: Debt discharged in Bankruptcy. Collateral sold. Balance to be charged off. Default Loan # 2: Demand letter sent to borrower and personal guarantors on May 2, 2017. Borrower submitted payment proposal; currently pending Bozeman RLF Committee meeting and decision. All other loans are paid as agreed. Scheduled total monthly repayment into the fund (principal and interest) is $8,712.87. Actual total monthly repayment into the fund (principal and interest) is $5,942.42. UNRESOLVED ISSUES: None at this time. FISCAL EFFECTS: There are no direct fiscal impacts. Prospera will maintain custody and administrative duties over the Community Development Block Grant Revolving Loan Fund. Up to $34,000, or 18% of interest and principal loan repayments, whichever is greater, will be retrained by Prospera in the form of fees for services. The only substantive change in the contract for 2017 – 2019 is that the maximum amount of fees associated with managing the fund were increased from $32,000 to $34,000. ALTERNATIVES: As determined by the Commission. EXHIBITS: 1) 2017 – 2019 Sub-Recipient Agreement; 2) City Commission Memo and 2015 – 2017 Sub-Recipient Agreement; and 3) Executed 2015 – 2017 Sub-Recipient Agreement. 45 SUB-RECIPIENT AGREEMENT FOR COMMUNITY DEVELOPMENT BLOCK GRANT REVOLVING LOAN FUND June 2017 – June 2019 THIS AGREEMENT is entered into this ___ day of June, 2017 by the CITY OF BOZEMAN, MONTANA, whose address is 121 N Rouse, Bozeman MT 59715, herein referred to as the “City”, and the GALLATIN DEVELOPMENT CORPORATION, doing business as PROSPERA BUSINESS NETWORK, whose address is 2015 Charlotte Street, Suite 1, Bozeman MT 59718, a nonprofit economic development corporation, herein referred to as the “Sub-Recipient.” WITNESSETH THAT: WHEREAS, the City has applied to and has been approved by the Montana Department of Commerce (MTDOC) for the receipt of grant funds under the Montana Community Development Block Grant Economic Development (CDBG) Program; and WHEREAS, the City wishes to use present and future CDBG grants and loan fund revenue to further develop the “CDBG Revolving Loan Fund” (RLF) which is designed to leverage private investment in new business for the purpose of generating new jobs within the City of Bozeman; and WHEREAS, the City has previously entered into an Agreement with the Sub-Recipient to sub-grant the CDBG funds to the Sub-Recipient and engage the Sub-Recipient to administer the City of Bozeman (RLF) jointly on their behalf for a period of twenty-four months; and WHEREAS, to maintain accountability, professional management and program performance, it is deemed to be in the best interests of the City to extend the Agreement with the Sub-Recipient for two additional years, as hereinafter provided; and WHEREAS, the City desires to continue to sub-grant the CDBG funds to the Sub-Recipient and engage the Sub-Recipient to administer the RLF on the City behalf; and WHEREAS, there exists City of Bozeman Economic Development Revolving Loan Fund Guidelines, established pursuant to Commission Resolution 3488 which are hereby included in this agreement; and WHEREAS, pursuant to Resolution 3488 there exists a City of Bozeman Revolving Loan Fund Committee (the “RLF Committee”); to evaluate the feasibility and investment potential of proposed economic development projects; and WHEREAS, the parties to this Agreement understand that neither of them has in any way, expressly or impliedly, abrogated any of its individual powers, and further agree that this Agreement does not create any new organization or legal entity. 46 NOW, THEREFORE, in consideration of the mutual covenants and conditions set out in this Agreement, the parties agree that the foregoing statements of fact are true and correct and further agree as follows: A. SPECIAL PROVISIONS. The City agrees, under the terms and conditions of this Agreement, to sub- grant to the Sub-Recipient the CDBG loan funds as a grant for gap financing and technical assistance to eligible borrowers and does hereby transfer, assign and convey to Sub-Recipient all of the City’s interest in and to its existing RLF loan portfolio. B. INDEPENDENT CONTRACTOR. It is understood by the parties hereto that the Sub-Recipient is an independent contractor and that neither its principals nor its employees, if any, are employees of the City for purposes of tax, retirement system, or social security (FICA) withholding. It is further understood that pursuant to section 39-71-401, MCA, the Sub-Recipient has obtained, and will maintain at its expense for the duration of this Contract, coverage in a workers' compensation plan for its principals and employees for the services to be performed hereunder. C. SCOPE OF SERVICES. The Sub-Recipient will perform the following services: 1. The Sub-Recipient will be responsible for all facets of the CDBG financing program as described in the Management Plan for the CDBG project, a copy of which the City has delivered or will deliver to Sub- Recipient prior to execution of this Agreement. The Sub-Recipient will also be responsible for all aspects of the Revolving Loan Fund program, including the following: (a) Develop, apply and enforce written Policies and Procedures as they relate to the City of Bozeman RLF program and/or administering the RLF program under the local CDBG grant program, including the creation and operation of an RLF Loan Committee to review and act upon loan requests. (b) Application process through approval: a. Assist prospective borrowers in completing loan application materials; b. Conduct UCC lien searches, if applicable and pertinent to the proposed loan collateral c. Provide a project analyses to the RLF Loan Committee; d. Coordinate monthly RLF Loan Committee meetings; and e. Present proposed projects to RLF Loan Committee for loan approval or denial. Decisions as to loan approval or denial are the sole responsibility of the RLF Loan Committee, and the City shall have no authority or ability to intervene in the loan approval or denial process. (c) Loan Closing and Documentation: a. Completion of loan documentation using loan documentation software; b. Loan closing, to be conducted by a title company or by Sub-Recipient; c. Funds disbursement and payment processing, utilizing the GMS Loan Accounting software; and d. Collection and retention, for Sub-Recipient’s use, of loan fees and charges, as provided in Sub-Recipient’s Policies and Procedures. (d) Loan Servicing Oversight: a. Gather and analyze monthly or quarterly financial reports from borrowers as required by the applicable loan agreement; 47 b. Track and monitor status of borrower insurance policies; c. Track and monitor UCC financing statement filings and renewals; and d. Provide monthly loan updates to RLF Loan Committee. (e) Process monthly loan payments a. Track, receive, process and account for all monthly loan payments b. Track late payments – mailing late notices and calling delinquent borrowers, as needed c. Work with delinquent borrowers to cure defaults and, where appropriate, develop a work-out plan, subject to approval of the RLF Loan Committee. (f) Monitor and process all forfeitures of loan collateral and use commercially reasonable efforts to collect delinquent and defaulted loans, including the filing of creditor’s claims in bankruptcy, where applicable, subject to the approval of the RLF Loan Committee. 2. The Sub-Recipient shall maintain eligibility as a Community-Based Development Organization pursuant to Title 24, Part 504, CFR, and shall ensure all activities conducted pursuant to this Agreement comply with all federal and state regulations regarding community development block grants. 3. During the term of this Agreement, the Sub-Recipient will maintain reasonable records of its performance under this Agreement in a manner consistent with generally accepted accounting principles. The Sub-Recipient will provide the City (or its authorized representatives) access to these records at any time during normal business hours. Upon written request of the City, the Sub-Recipient will submit to the City, in the format prescribed by the City, semi-annual status reports on its performance under this Agreement. 4. Except as set forth in Section (4) below, the Sub-Recipient will retain, administer, manage, record, and account to the City for all RLF loan fund revenue received subsequent to the date of this Agreement, including principal and interest received from borrowers. Sub-Recipient will use such revenue to enhance the RLF program for the benefit of all eligible borrowers located within the City of Bozeman. 5. As payment for the services rendered by Sub-Recipient, the Sub-Recipient shall retain either $34,000 or eighteen percent (18%) of the total of payments on interest and principal from loan repayments and interest earned on the principal balance, whichever is greater. The Sub-Recipient may retain and pay such compensation to itself in installments, not more frequently than monthly. In no case, except for the Sub-Recipient’s expenses for attorney fees and attorney costs related to collection efforts as described in subsection 6 of this section, shall the payment for services to the Sub-Recipient result in a decrease in the base principal amount of the fund as determined on a yearly basis. 6. Sub-Recipient is entitled to use RLF funds for any costs incurred by Sub-Recipient in connection with the collection of delinquent or defaulted loans, including but not limited to any filing fees or legal fees and costs. It is specifically agreed and understood that any such use of RLF funds in this manner by the Sub-Recipient is separate and distinct from the payment Sub-Recipient will be receiving for its services; that is to say, costs and fees incurred in connection with the collection of delinquent or defaulted loans will be paid by RLF Funds and not by the Sub-Recipient. D. EFFECTIVE DATE AND TIME OF PERFORMANCE. This Agreement supersedes all previous agreements, whether written or oral, between the City and the Sub-Recipient dealing with the City of Bozeman RLF program. The term of this Agreement shall be twenty four (24) months, commencing on the date of execution by the parties. This Agreement will terminate upon expiration of its initial term, unless extended in writing by mutual agreement of the parties, or if either party fails to meet the conditions of this 48 Agreement or if an Event of Default occurs, after notice and opportunity to cure as provided in Section N below. E. CONFLICT OF INTEREST. The Sub-Recipient covenants that it presently has no interest and will not acquire any interest, direct or indirect, in the CDBG project that would conflict in any manner or degree with the performance of its services hereunder. The Sub-Recipient further covenants that, in performing this Agreement, it will employ no person who has any such interest. F. CIVIL RIGHTS ACT OF 1964. The Sub-Recipient will abide by the provisions of the Civil Rights Act of 1964, which states that under Title VI, no person may, on the grounds of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving federal financial assistance. G. SECTION 109 OF THE HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1974. The Sub-Recipient will comply with the following provision: No person in the United States may on the grounds of race, color, national origin, or sex be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity funded in whole or in part with the funds made available under this title. Any prohibition against discrimination on the basis of age under the Age Discrimination Act of 1975 or with respect to an otherwise qualified handicapped individual as provided in Section 504 of the Rehabilitation Act of 1973 will also apply to any such program or activity. H. NONDISCRIMINATION. In addition to the requirements of subseciton G, above, the Sub- Recipient will not discriminate against any employee or applicant for employment on the basis of race, color, religion, creed, political ideas, sex, age, marital status, or national origin, or because of actual or perceived gender sexual orientation or gender identity or disability., The Sub-Recipient agrees this provision will apply to the hiring and treatment of the Sub-Recipient’s employees and shall be included in all loan agreements with borrowers and apply to the use and expenditure of RLF funds. I. REPORTS AND INFORMATION. The Sub-Recipient will maintain accounts and records, including personnel, property and financial records, adequate to identify and account for all costs pertaining to this Agreement and such other records as may be deemed necessary by the City to assure proper accounting for all project funds. These records will be made available for audit purposes to the City or its authorized representative, and will be retained for three years after receipt of final payment for the services rendered under this Agreement unless permission to destroy them is granted by the City. J. ADMINISTRATION 1. For purposes of implementing this Agreement, the City will appoint a local government project representative that will work with the Sub-Recipient. The parties will meet as necessary to provide for the efficient and smooth implementation of this Agreement and the activities contained herein. 2. The parties agree the RLF Committee shall have final decision making authority regarding the loaning of RLF funds and shall follow guidelines set forth in Commission Resolution No. 3488 except that this Agreement supersedes the requirements of Commission Resolution 3488 only in so far as it relates to any provision in Resolution 3488 in conflict with this Agreement. 49 3. To ensure the composition of the RLF Committee complies with applicable federal regulations, the Committee shall consist of seven members, two of which shall be appointed by the City Commission, with the remaining five to be appointed by the Sub-Recipient. 4. The Sub-Recipient will comply with the “Certifications for Application” signed by the City and submitted with the application for economic development assistance to the Montana Department of Commerce. 5. The Sub-Recipient shall ensure that all borrowers, to whom Sub-Recipient lends RLF funds after the effective date of this Agreement, comply with the State of Montana Department of Commerce’s Community Development Block Grant-Economic Development Program Application Guidelines pertaining to low and moderate income persons. 6. The Sub-Recipient will comply with Procurement Standards as outlined in Chapter 3 and Chapter 8 of the CDBG Administration Manual before entering into any agreements to remodel, to purchase equipment or material, or to retain the services of a consultant or Sub-Recipient. 7. The Sub-Recipient will contract with an independent accounting firm to conduct an annual audit sufficient to obtain an unqualified opinion of the RLF loan fund and program as conducted by Sub- Recipient under this Agreement. K. TERMINATION - DISPOSITION OF REAL PROPERTY OR EQUIPMENT ACQUIRED. Upon the expiration or termination of this Agreement, the Sub-Recipient will transfer to the City the then- existing RLF loan portfolio and all related loan records, together with the then-existing balance in the Sub- Recipient’s RLF loan fund, less any unpaid portion of Sub-Recipient’s compensation under this Agreement to the date of expiration or termination. L. INDEMNIFICATION. The parties agree to waive any and all claims and recourse against one another, including the right of contribution of loss or damage to person or property arising from, growing out of, or in any way connected with or incidental to the parties’ performance of this Agreement. Each party shall indemnify, defend and hold harmless the other party (including such other party’s affiliates, partners, officers, directors, employees, agents and representatives) against any claims and/or liabilities of any nature, including reasonable attorneys’ fees, arising out of the performance of this Agreement. The City specifically agrees that RLF loan decisions are the prerogative of the RLF Loan Committee, and that the Sub-Recipient has no liability of any kind for decisions and actions related thereto, including loan decisions that were made prior to this Agreement. M. TERMINATION OF AGREEMENT. If any of the following events occur, the City may, in its sole discretion, declare such event a default under this Agreement (“Event of Default”): 1. Any representation or warranty made by the Sub-Recipient in this Agreement, or in any request or certificate or other information furnished to the City under this Agreement, proves to have been incorrect in any material respect; or 2. The Sub-Recipient fails in any material respect to carry out its obligations under its proposal to the City for the assistance provided under this Agreement. If the Sub-Recipient fails to perform any of its duties under this Agreement or if any Event of Default occurs, the City may declare the Sub-Recipient to be in default and thereafter give the Sub-Recipient written notice setting forth the action or inaction that constitutes the default and giving the Sub-Recipient 45 days in 50 which to correct the default. If the Sub-Recipient fails to correct the default within 45 days of receipt of such notice, the City may terminate this Agreement without further notice, subject to the terms of Section L above. The parties agree that this Agreement provides for reasonable and sufficient notice to be given to the Sub- Recipient in case of the Sub-recipient’s failure to comply with any of its covenants and that this notice is sufficient for the Sub-Recipient to rectify its actions or inactions of default. The waiver by the City of any default by the Sub-Recipient does not constitute a waiver of a continuing breach or a waiver of a subsequent breach. Any agreement contrary to this Agreement is not binding upon either party unless it is in writing and signed by both parties. N. CONSTRUCTION AND VENUE This Agreement will be construed under and governed by the laws of the State of Montana. The City and the Sub-Recipient agree that performance of this Agreement is in the County of Gallatin, State of Montana, and that in the event of litigation concerning it, venue is in the District Court of the Judicial District in and for the City of Bozeman, Montana. This Agreement has been approved by City Commission and by Sub-recipient’s Board of Directors, each of which has authorized the undersigned persons to execute this Agreement on its behalf. O. ATTORNEY’S FEES. In the event that either party incurs legal expenses, including the costs, expenses, salary and fees of the in-house counsel, to include City Attorney, to enforce the terms and conditions of this Agreement, the prevailing party is entitled to recover reasonable attorney's fees and other costs and expenses, whether the same are incurred with or without suit, including fees on appeal. P. PUBLIC MEETINGS AND ACCESS TO PUBLIC RECORDS. The Sub-Recipient’s RLF Loan Committee shall comply with the open meeting requirements of Montana law, including those set forth in Title 7, Chapter 1, Part 41, MCA and Title 2, Chapter 3, MCA. To help ensure compliance, the Sub- Recipient shall provide RLF Committee meeting agendas to the City Clerk’s office no later than 72 working hours prior to meeting for notice on the City’s official posting board and any other sites deemed reasonable by the Clerk’s office. In addition, meeting minutes will be kept by the Sub-Recipient and provided to the City Clerk’s office no later than 45 days after the meeting. These minutes shall be posted and made available to the public by the City Clerk’s office except for those minutes taken during a closed meeting in accordance with 7-1-4144, MCA. Minutes taken during a closed meeting shall also be provided to the City Clerk’s office but shall be handled in accordance with the City Clerk’s regular executive session protocol and kept private in a secured cabinet. In accordance with 7-1-4144, MCA and subject to any applicable legal obligation to protect and preserve individual confidential or private information, upon reasonable request and at reasonable times during normal business hours, Sub-Recipient shall make such RLF loan documents and records available for inspection and copying by members of the public. Sub-Recipient may charge for such copying in accordance with the policies of the city, which Sub-Recipient hereby adopts for such purposes. To determine whether a meeting or part of a meeting may be closed to the public and to determine whether information contained in RLF loan documents is protected by law from disclosure, the Sub-Recipient may consult with and seek the advice of the City Attorney at no cost to Sub-Recipient. The advice and consultation shall be on behalf of the RLF Committee and not Gallatin Development Corporation. 51 Q. ELIGIBILITY. The Sub-Recipient certifies that the Sub-Recipient and the Sub-recipient's principals are not debarred, suspended, voluntarily excluded, or otherwise ineligible for participation in federally assisted contracts under Executive Order 12549, "Debarment and Suspension". (24 CFR 24.505) IN WITNESS WHEREOF, the parties hereto have executed this Sub-Recipient Agreement on the _______ day of June, 2017. SUB-RECIPIENT: CITY: Paul Reichert Date Date Dennis Taylor Executive Director Interim City Manager Gallatin Development Corporation, City of Bozeman DBA Prospera Business Network Attest: Attest: Date Date City Clerk Lilia Tyrrell, Board of Directors City of Bozeman Gallatin Development Corporation, DBA “Prospera Business Network Approved as to Form: _________________________________________ Greg Sullivan Date Bozeman City Attorney 52 1 Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Brit Fontenot, Director of Economic Development SUBJECT: Approval of the 2015 – 2017 Sub-Recipient Agreement for the City of Bozeman’ s Community Development Block Grant Revolving Loan Fund with the Gallatin Development Corporation, DBA the Prospera Business Network, and Authorize the City Manager to Sign the Agreement. MEETING DATE: June 1, 2015 AGENDA ITEM TYPE: Consent RECOMMENDATION: Approve the 2015 – 2017 Sub-Recipient Agreement for the City’s Community Development Block Grant Revolving Loan Fund with the Gallatin Development Corporation, DBA the Prospera Business Network, and Authorize the City Manager to Sign the Agreement. EXHIBITS 1 - 3) BACKGROUND: Loan payments from recipients of Economic Development Block Grants received from the City through the State of Montana Department of Commerce were placed into the City’s Community Development Block Grant Revolving Loan Fund as a continuing source of funds for furthering economic development. Prospera is uniquely suitable to administer the City’s Community Development Block Grant Revolving Loan Fund due to their long-standing community economic development relationship, extensive experience with the current borrowers, and ability to service the existing loan portfolio. In May, 2006, the City entered into a Sub-Recipient Agreement, placing overall management of the City’s revolving loan fund (“ the Fund”) with Prospera. The current two-year agreement expires on July 9, 2015. General Information about the Fund (As reported by Prospera as of April 30, 2015): Total loans disbursed: $ 2,847,288.55 Current balance of loans out: $582,289.20 216 53 2 Current loan loss reserve: $ 107,836.83 Current RLF account balance: $271,238.18 Number of loans in portfolio: 8 Scheduled total monthly repayment into Fund (principal + interest): $7,816.52 Actual total monthly repayment into Fund (principal + interest): $5,990.06 (discrepancy from scheduled amount is due to timing, with two clients April payments submitted at the end of March.) UNRESOLVED ISSUES: One loan is matured and Prospera is in the process of restructuring the loan with the loan recipient. FISCAL EFFECTS: None directly to the City. Prospera will continue to have custody of and administration of the Fund. $32,000 or 18% of interest and principal loan repayments (whichever is greater) will be retained by Prospera, in the form of a fee for services rendered. Exhibits: 1. 2015-2017 Sub-recipient agreement between the City of Bozeman and Prospera for administering the Community Development Block Grant Revolving Fund; 2. July 8, 2013 Memo and Sub-recipient agreement between the City of Bozeman and Prospera for administering the Community Development Block Grant Revolving Fund; and 3. 2013-2015 Sub-recipient agreement between the City of Bozeman and Prospera for administering the Community Development Block Grant Revolving Fund. Report compiled on: May 21, 2015 217 54 Page 1 of 7 SUB-RECIPIENT AGREEMENT FOR COMMUNITY DEVELOPMENT BLOCK GRANT REVOLVING LOAN FUND July 2015 – July 2017 THIS AGREEMENT is entered into this ___ day of June, 2015 by the CITY OF BOZEMAN, MONTANA, whose address is 121 N Rouse, Bozeman MT 59715, herein referred to as the “ City”, and the GALLATIN DEVELOPMENT CORPORATION, doing business as PROSPERA BUSINESS NETWORK, whose address is 2015 Charlotte Street, Suite 1, Bozeman MT 59718, a nonprofit economic development corporation, herein referred to as the “ Sub-Recipient.” WITNESSETH THAT: WHEREAS, the City has applied to and has been approved by the Montana Department of Commerce MTDOC) for the receipt of grant funds under the Montana Community Development Block Grant Economic Development (CDBG) Program; and WHEREAS, the City wishes to use present and future CDBG grants and loan fund revenue to further develop the “ CDBG Revolving Loan Fund” ( RLF) which is designed to leverage private investment in new business for the purpose of generating new jobs within the City of Bozeman; and WHEREAS, the City has previously entered into an Agreement with the Sub-Recipient to sub-grant the CDBG funds to the Sub-Recipient and engage the Sub-Recipient to administer the City of Bozeman (RLF) jointly on their behalf for a period of twenty four months; and WHEREAS, to maintain accountability, professional management and program performance, it is deemed to be in the best interests of the City to extend the Agreement with the Sub-Recipient for two additional years, as hereinafter provided; and WHEREAS, the City desires to continue to sub-grant the CDBG funds to the Sub-Recipient and engage the Sub-Recipient to administer the RLF on the City behalf; and WHEREAS, there exists City of Bozeman Economic Development Revolving Loan Fund Guidelines, established pursuant to Commission Resolution 3488 which are hereby included in this agreement; and WHEREAS, pursuant to Resolution 3488 there exists a City of Bozeman Revolving Loan Fund Committee the “ RLF Committee”); to evaluate the feasibility and investment potential of proposed economic development projects; and WHEREAS, the parties to this Agreement understand that neither of them has in any way, expressly or impliedly, abrogated any of its individual powers, and further agree that this Agreement does not create any new organization or legal entity. 218 55 Page 2 of 7 NOW, THEREFORE, in consideration of the mutual covenants and conditions set out in this Agreement, the parties agree that the foregoing statements of fact are true and correct and further agree as follows: A. SPECIAL PROVISIONS. The City agrees, under the terms and conditions of this Agreement, to sub- grant to the Sub-Recipient the CDBG loan funds as a grant for gap financing and technical assistance to eligible borrowers and does hereby transfer, assign and convey to Sub-Recipient all of the City’s interest in and to its existing RLF loan portfolio. B. INDEPENDENT CONTRACTOR. It is understood by the parties hereto that the Sub-Recipient is an independent contractor and that neither its principals nor its employees, if any, are employees of the City for purposes of tax, retirement system, or social security (FICA) withholding. It is further understood that pursuant to section 39-71-401, MCA, the Sub-Recipient has obtained, and will maintain at its expense for the duration of this Contract, coverage in a workers' compensation plan for its principals and employees for the services to be performed hereunder. C. SCOPE OF SERVICES. The Sub-Recipient will perform the following services: 1. The Sub-Recipient will be responsible for all facets of the CDBG financing program as described in the Management Plan for the CDBG project, a copy of which the City has delivered or will deliver to Sub- Recipient prior to execution of this Agreement. The Sub-Recipient will also be responsible for all aspects of the Revolving Loan Fund program, including the following: a) Develop, apply and enforce written Policies and Procedures as they relate to the City of Bozeman RLF program and/ or administering the RLF program under the local CDBG grant program, including the creation and operation of an RLF Loan Committee to review and act upon loan requests. b) Application process through approval: a. Assist prospective borrowers in completing loan application materials; b. Conduct UCC lien searches, if applicable and pertinent to the proposed loan collateral c. Provide a project analyses to the RLF Loan Committee; d. Coordinate monthly RLF Loan Committee meetings; and e. Present proposed projects to RLF Loan Committee for loan approval or denial. Decisions as to loan approval or denial are the sole responsibility of the RLF Loan Committee, and the City shall have no authority or ability to intervene in the loan approval or denial process. c) Loan Closing and Documentation: a. Completion of loan documentation using loan documentation software; b. Loan closing, to be conducted by a title company or by Sub-Recipient; c. Funds disbursement and payment processing, utilizing the GMS Loan Accounting software; and d. Collection and retention, for Sub-Recipient’s use, of loan fees and charges, as provided in Sub-Recipient’s Policies and Procedures. d) LoanServicingOversight: a. Gather and analyze monthly or quarterly financial reports from borrowers as required by the applicable loan agreement; 219 56 Page 3 of 7 b. Track and monitor status of borrower insurance policies; c. Track and monitor UCC financing statement filings and renewals; and d. Provide monthly loan updates to RLF Loan Committee. e) Process monthly loan payments a. Track, receive, process and account for all monthly loan payments b. Track late payments – mailing late notices and calling delinquent borrowers, as needed c. Work with delinquent borrowers to cure defaults and, where appropriate, develop a work-out plan, subject to approval of the RLF Loan Committee. f) Monitorandprocessall forfeitures of loan collateral and use commercially reasonable efforts to collect delinquent and defaulted loans, including the filing of creditor’s claims in bankruptcy, where applicable, subject to the approval of the RLF Loan Committee. 2. The Sub-Recipient shall maintain eligibility as a Community-Based Development Organization pursuant to Title 24, Part 504, CFR, and shall ensure all activities conducted pursuant to this Agreement comply with all federal and state regulations regarding community development block grants. 3. During the term of this Agreement, the Sub-Recipient will maintain reasonable records of its performance under this Agreement in a manner consistent with generally accepted accounting principles. The Sub-Recipient will provide the City (or its authorized representatives) access to these records at any time during normal business hours. Upon written request of the City, the Sub-Recipient will submit to the City, in the format prescribed by the City, semi-annual status reports on its performance under this Agreement. 4. Except as set forth in Section (4) below, the Sub-Recipient will retain, administer, manage, record, and account to the City for all RLF loan fund revenue received subsequent to the date of this Agreement, including principal and interest received from borrowers. Sub-Recipient will use such revenue to enhance the RLF program for the benefit of all eligible borrowers located within the City of Bozeman. 5. As payment for the services rendered by Sub-Recipient, the Sub-Recipient shall retain either $32,000.00 or eighteen percent (18%) of the total of payments on interest and principal from loan repayments and interest earned on the principal balance, whichever is greater. The Sub-Recipient may retain and pay such compensation to itself in installments, not more frequently than monthly. In no case, except for the Sub-Recipient’s expenses for attorney fees and attorney costs related to collection efforts as described in subsection 6 of this section, shall the payment for services to the Sub-Recipient result in a decrease in the base principal amount of the fund as determined on a yearly basis. 6. Sub-Recipient is entitled to use RLF funds for any costs incurred by Sub-Recipient in connection with the collection of delinquent or defaulted loans, including but not limited to any filing fees or legal fees and costs. It is specifically agreed and understood that any such use of RLF funds in this manner by the Sub-Recipient is separate and distinct from the payment Sub-Recipient will be receiving for its services; that is to say, costs and fees incurred in connection with the collection of delinquent or defaulted loans will be paid by RLF Funds and not by the Sub-Recipient. D. EFFECTIVE DATE AND TIME OF PERFORMANCE. This Agreement supersedes all previous agreements, whether written or oral, between the City and the Sub-Recipient dealing with the City of Bozeman RLF program. The term of this Agreement shall be twenty four (24) months, commencing on the date of execution by the parties. This Agreement will terminate upon expiration of its initial term, unless extended in writing by mutual agreement of the parties, or if either party fails to meet the conditions of this 220 57 Page 4 of 7 Agreement or if an Event of Default occurs, after notice and opportunity to cure as provided in Section N below. E. CONFLICT OF INTEREST. The Sub-Recipient covenants that it presently has no interest and will not acquire any interest, direct or indirect, in the CDBG project that would conflict in any manner or degree with the performance of its services hereunder. The Sub-Recipient further covenants that, in performing this Agreement, it will employ no person who has any such interest. F. CIVIL RIGHTS ACT OF 1964. The Sub-Recipient will abide by the provisions of the Civil Rights Act of 1964, which states that under Title VI, no person may, on the grounds of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving federal financial assistance. G. SECTION 109 OF THE HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1974. The Sub-Recipient will comply with the following provision: No person in the United States may on the grounds of race, color, national origin, or sex be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity funded in whole or in part with the funds made available under this title. Any prohibition against discrimination on the basis of age under the Age Discrimination Act of 1975 or with respect to an otherwise qualified handicapped individual as provided in Section 504 of the Rehabilitation Act of 1973 will also apply to any such program or activity. H. NONDISCRIMINATION. In addition to the requirements of subseciton G, above, the Sub- Recipient will not discriminate against any employee or applicant for employment on the basis of race, color, religion, creed, political ideas, sex, age, marital status, or national origin, or because of actual or perceived gender sexual orientation or gender identity or disability., The Sub-Recipient agrees this provision will apply to the hiring and treatment of the Sub-Recipient’s employees and shall be included in all loan agreements with borrowers and apply to the use and expenditure of RLF funds. I. REPORTS AND INFORMATION. The Sub-Recipient will maintain accounts and records, including personnel, property and financial records, adequate to identify and account for all costs pertaining to this Agreement and such other records as may be deemed necessary by the City to assure proper accounting for all project funds. These records will be made available for audit purposes to the City or its authorized representative, and will be retained for three years after receipt of final payment for the services rendered under this Agreement unless permission to destroy them is granted by the City. J. ADMINISTRATION 1. For purposes of implementing this Agreement, the City will appoint a local government project representative that will work with the Sub-Recipient. The parties will meet as necessary to provide for the efficient and smooth implementation of this Agreement and the activities contained herein. 2. The parties agree the RLF Committee shall have final decision making authority regarding the loaning of RLF funds and shall follow guidelines set forth in Commission Resolution No. 3488 except that this Agreement supersedes the requirements of Commission Resolution 3488 only in so far as it relates to any provision in Resolution 3488 in conflict with this Agreement. 221 58 Page 5 of 7 3. To ensure the composition of the RLF Committee complies with applicable federal regulations, the Committee shall consist of seven members, two of which shall be appointed by the City Commission, with the remaining five to be appointed by the Sub-Recipient. 4. The Sub-Recipient will comply with the “ Certifications for Application” signed by the City and submitted with the application for economic development assistance to the Montana Department of Commerce. 5. The Sub-Recipient shall ensure that all borrowers, to whom Sub-Recipient lends RLF funds after the effective date of this Agreement, comply with the State of Montana Department of Commerce’s Community Development Block Grant-Economic Development Program Application Guidelines pertaining to low and moderate income persons. 6. The Sub-Recipient will comply with Procurement Standards as outlined in Chapter 3 and Chapter 8 of the CDBG Administration Manual before entering into any agreements to remodel, to purchase equipment or material, or to retain the services of a consultant or Sub-Recipient. 7. The Sub-Recipient will contract with an independent accounting firm to conduct an annual audit sufficient to obtain an unqualified opinion of the RLF loan fund and program as conducted by Sub- Recipient under this Agreement. K. TERMINATION - DISPOSITION OF REAL PROPERTY OR EQUIPMENT ACQUIRED. Upon the expiration or termination of this Agreement, the Sub-Recipient will transfer to the City the then- existing RLF loan portfolio and all related loan records, together with the then-existing balance in the Sub- Recipient’s RLF loan fund, less any unpaid portion of Sub-Recipient’s compensation under this Agreement to the date of expiration or termination. L. INDEMNIFICATION. The parties agree to waive any and all claims and recourse against one another, including the right of contribution of loss or damage to person or property arising from, growing out of, or in any way connected with or incidental to the parties’ performance of this Agreement. Each party shall indemnify, defend and hold harmless the other party ( including such other party’s affiliates, partners, officers, directors, employees, agents and representatives) against any claims and/ or liabilities of any nature, including reasonable attorneys’ fees, arising out of the performance of this Agreement. The City specifically agrees that RLF loan decisions are the prerogative of the RLF Loan Committee, and that the Sub-Recipient has no liability of any kind for decisions and actions related thereto, including loan decisions that were made prior to this Agreement. M. TERMINATION OF AGREEMENT. If any of the following events occur, the City may, in its sole discretion, declare such event a default under this Agreement (“ Event of Default”): 1. Any representation or warranty made by the Sub-Recipient in this Agreement, or in any request or certificate or other information furnished to the City under this Agreement, proves to have been incorrect in any material respect; or 2. The Sub-Recipient fails in any material respect to carry out its obligations under its proposal to the City for the assistance provided under this Agreement. If the Sub-Recipient fails to perform any of its duties under this Agreement or if any Event of Default occurs, the City may declare the Sub-Recipient to be in default and thereafter give the Sub-Recipient written notice setting forth the action or inaction that constitutes the default and giving the Sub-Recipient 45 days in 222 59 Page 6 of 7 which to correct the default. If the Sub-Recipient fails to correct the default within 45 days of receipt of such notice, the City may terminate this Agreement without further notice, subject to the terms of Section L above. The parties agree that this Agreement provides for reasonable and sufficient notice to be given to the Sub- Recipient in case of the Sub-recipient’s failure to comply with any of its covenants and that this notice is sufficient for the Sub-Recipient to rectify its actions or inactions of default. The waiver by the City of any default by the Sub-Recipient does not constitute a waiver of a continuing breach or a waiver of a subsequent breach. Any agreement contrary to this Agreement is not binding upon either party unless it is in writing and signed by both parties. N. CONSTRUCTION AND VENUE This Agreement will be construed under and governed by the laws of the State of Montana. The City and the Sub-Recipient agree that performance of this Agreement is in the County of Gallatin, State of Montana, and that in the event of litigation concerning it, venue is in the District Court of the Judicial District in and for the City of Bozeman, Montana. This Agreement has been approved by City Commission and by Sub-recipient’s Board of Directors, each of which has authorized the undersigned persons to execute this Agreement on its behalf. O. ATTORNEY’S FEES. In the event that either party incurs legal expenses, including the costs, expenses, salary and fees of the in-house counsel, to include City Attorney, to enforce the terms and conditions of this Agreement, the prevailing party is entitled to recover reasonable attorney's fees and other costs and expenses, whether the same are incurred with or without suit, including fees on appeal. P. PUBLIC MEETINGS AND ACCESS TO PUBLIC RECORDS. The Sub-Recipient’s RLF Loan Committee shall comply with the open meeting requirements of Montana law, including those set forth in Title 7, Chapter 1, Part 41, MCA and Title 2, Chapter 3, MCA. To help ensure compliance, the Sub- Recipient shall provide RLF Committee meeting agendas to the City Clerk’s office no later than 72 working hours prior to meeting for notice on the City’s official posting board and any other sites deemed reasonable by the Clerk’s office. In addition, meeting minutes will be kept by the Sub-Recipient and provided to the City Clerk’s office no later than 45 days after the meeting. These minutes shall be posted and made available to the public by the City Clerk’s office except for those minutes taken during a closed meeting in accordance with 7-1-4144, MCA. Minutes taken during a closed meeting shall also be provided to the City Clerk’s office but shall be handled in accordance with the City Clerk’s regular executive session protocol and kept private in a secured cabinet. In accordance with 7-1-4144, MCA and subject to any applicable legal obligation to protect and preserve individual confidential or private information, upon reasonable request and at reasonable times during normal business hours, Sub-Recipient shall make such RLF loan documents and records available for inspection and copying by members of the public. Sub-Recipient may charge for such copying in accordance with the policies of the city, which Sub-Recipient hereby adopts for such purposes. To determine whether a meeting or part of a meeting may be closed to the public and to determine whether information contained in RLF loan documents is protected by law from disclosure, the Sub-Recipient may consult with and seek the advice of the City Attorney at no cost to Sub-Recipient. The advice and consultation shall be on behalf of the RLF Committee and not Gallatin Development Corporation. 223 60 Page 7 of 7 Q. ELIGIBILITY. The Sub-Recipient certifies that the Sub-Recipient and the Sub-recipient's principals are not debarred, suspended, voluntarily excluded, or otherwise ineligible for participation in federally assisted contracts under Executive Order 12549, "Debarment and Suspension". ( 24 CFR 24.505) IN WITNESS WHEREOF, the parties hereto have executed this Sub-Recipient Agreement on the day of June, 2015. SUB-RECIPIENT: CITY: Nick Zelver Date Chris Kukulski Date President, Board of Directors City Manager Gallatin Development Corporation, City of Bozeman DBA “Prospera Business Network” Attest: Attest: Lilia Tyrell Date Stacy Ulmen, CMC Date Secretary, Board of Directors City Clerk Gallatin Development Corporation, City of Bozeman DBA “Prospera Business Network Approved as to Form: Greg Sullivan Date Bozeman City Attorney 224 61 SUB-RECIPIENTAGREEMENTFOR COMMUNITYDEVELOPMENTBLOCKGRANTREVOLV/NGLOANFUND July 2013-July 2015 THIS AGREEMENT is entered into this ~ day of July, 2013 by the CITY OF BOZEMAN, MONTANA, whose address is 121 N Rouse, Bozeman MT 59715, herein referred to as the "City", and the GALLATIN DEVELOPMENT CORPORATION , doing business as PROSPERA BUSINESS NETWORK, whose address is 222 East Main Street, Suite 102, Bozeman MT 59715, anonprofit economic development corporation, herein referred to as the "Sub-Recipient ." WITNESSETH THAT: WHEREAS, the City has applied to and has been approved by the Montana Department of Commerce MTDOC) for the receipt of grant funds under the Montana Community Development Block Grant Economic Development (CDBG) Program; and WHEREAS, the City wishes to use present and future CDBG grants and loan fund revenue to further develop the "CDBG Revolving Loan Fund" (RLF) which is designed to leverage private investment in new business for the purpose ofgeneratingnew jobs within the City ofBozeman; and WHEREAS, the City has previously entered into an Agreement with the Sub-Recipient to sub-grant the CDBG funds to the Sub-Recipient and engage the Sub-Recipient to administer the City of Bozeman (RLF) jointly on their behalf for a period oftwenty four months; and WHEREAS, to maintain accountability, professional management and program performance, it is deemed to be in the best interests of the City to extend the Agreement with the Sub-Recipient for two additional years, as hereinafter provided; and WHEREAS, the City desires to continue to sub-grant the CDBG funds to the Sub -Recipient and engage the Sub-Recipient to administer the RLF on the City's behalf; and WHEREAS, there exists City of Bozeman Economic Development Revolving Loan Fund Guidelines, established pursuant to Commission Resolution 3488 which are hereby included in this agreement; and WHEREAS, pursuant to Resolution 3488 there exists a City ofBozemanRevolvingLoanFundCommittee the " RLF Committee"); to evaluate the feasibility and investment potential of proposed economic development projects; and WHEREAS, the parties to this Agreement understand that neither of them has in any way, expressly or impliedly, abrogated any ofits individual powers, and further agree that this Agreement does not create any new organization or legal entity. Pagel of7 225 62 NOW, THEREFORE, in consideration of the mutual covenants and conditions set out in this Agreement, the parties agree that the foregoing statements of fact are true and correct and further agree as follows: A. SPECIAL PROVISIONS. The City agrees, under the terms and conditions ofthisAgreement, to sub- grant to the Sub-Recipient the CDBG loan funds as a grant for gap financing and technical assistance to elig1ble borrowers and does hereby transfer, assign and convey to Sub-Recipient all of the City's interest in and to its existing RLF loan portfolio. B. INDEPENDENT CONTRACTOR. It is understood by the parties hereto that the Sub-Recipient is an independent contractor and that neither its principals nor its employees, ifany, are employees of the City for purposes of tax, retirement system, or social security (FICA) withholding. It is further understood that pursuant to section 39-71-401, MCA, the Sub-Recipient has obtained, and will maintain at its expense for the duration of this Contract, coverage in a workers' compensation plan for its principals and employees for the services to be performed hereunder. C. SCOPEOFSERVICES. The Sub-Recipient will perform the following services: 1. The Sub-Recipient will be responsible for all facets of the CDBG financing program as described in the Management Plan for the CDBG project, a copy ofwhich the City has delivered or will deliver to Sub- Recipient prior to execution of this Agreement. The Sub-Recipient will also be responsible for all aspects oftheRevolvingLoan Fund program, including the following: a) Develop, apply and enforce written Policies and Procedures as they relate to the City of Bozeman RLF program and/ or administering the RLF program under the local CDBG grant program, including the creation and operation ofan RLF Loan Committee to review and act upon loan requests. b) Application process through approval: a. Assist prospective borrowers in completing loan application materials; b. Conduct UCC lien searches, ifapplicable and pertinent to the proposed loan collateral c. Provide a project analyses to the RLF Loan Committee; d. Coordinate monthly RLF Loan Committee meetings; and e. Present proposed projects to RLF Loan Committee for loan approval or denial. Decisions as to loan approval or denial are the sole responsibility oftheRLFLoan Committee, and the City shall have no authority or ability to intervene in the loan approval or denial process. c) Loan Closing and Documentation: a. Completion ofloan documentation using loan documentation software; b. Loan closing, to be conducted by a title company or by Sub-Recipient; c. Funds disbursement and payment processing, utilizing the GMS Loan Accounting software; and d. Collection and retention, for Sub-Recipient's use, ofJoan fees and charges, as provided in Sub-Recipient's Policies and Procedures. d) Loan Servicing Oversight: a. Gather and analyze monthly or quarterly financial reports from borrowers as required by the applicable loan agreement; Page 2 of7 226 63 b. Track and monitor status ofborrower insurance policies; c. Track and monitor UCC financing statement filings and renewals; and d . Provide monthly loan updates to RLF Loan Committee. e) Process monthly loan payments a. Track, receive, process and account for all monthly loan pay1nents b. Track late payments - mailing late notices and calling delinquent borrowers, as needed c. Work with delinquent borrowers to cure defaults and, where appropriate, develop a work -out plan, subject to approval ofthe RLF Loan Committee. f) Monitor and process all forfeitures ofloan collateral and use commercially reasonable efforts to collect delinquent and defaulted loans, including the filing ofcreditor'sclaimsin bankruptcy, where applicable, subject to the approval oftheRLFLoanCommittee. 2. The Sub-Recipient shall maintain eligibility as a Community-Based Development Organization pursuant to Title 24, Part 504, CFR, and shall ensure all activities conducted pursuant to this Agreement comply with all federal and state regulations regarding community development block grants. 3. During the term of this Agreement, the Sub-Recipient will maintain reasonable records of its performance under this Agreement in a manner consistent with generally accepted accounting principles. The Sub -Recipient will provide the City ( or its authorized representatives) access to these records at any time during normal business hours. Upon written request of the City, the Sub-Recipient will submit to the City, in the format prescribed by the City, semi-annual status reports on its performance under this Agreement. 4 . Except as set forth in Section (4) below, the Sub -Recipient will retain, administer, manage, record, and account to the City for all RLF Joan fund revenue received subsequent to the date of this Agreement, including principal and interest received from borrowers. Sub-Recipient will use such revenue to enhance the RLF program for the benefit ofall eligible borrowers located within the City ofBozeman. 5. As payment for the services rendered by Sub-Recipient, the Sub-Recipient shall retain either $32,000.00 or eighteen percent (18%) ofthe total of payments on interest and principal from loan repayments and interest earned on the principal balance, whichever is greater. The Sub-Recipient may retain and pay such compensation to itself in installments, not more frequently than monthly. In no case, except for the Sub-Recipient's expenses for attorney fees and attorney costs related to collection efforts as described in subsection 6 of this section, shall the payment for services to the Sub -Recipient result in a decrease in the base principal amount ofthe fund as determined on a yearly basis. 6. Sub-Recipient is entitled to use RLF funds for any costs incurred by Sub-Recipient in connection with the collection of delinquent or defaulted loans, including but not limjted to any filing fees or legal fees and costs. It is specifically agreed and understood that any such use ofRLF funds in this manner by the Sub-Recipient is separate and distinct from the payment Sub-Recipient will be receiving for its services; that is to say, costs and fees incurred in connection with the collection of delinquent or defaulted loans will be paid by RLF Funds and not by the Sub-Recipient. D. EFFECTIVE DATE AND TIME OF PERFORMANCE. This Agreement supersedes all previous agreements, whether written or oral, between the City and the Sub-Recipient dealing with the City of Bozeman RLF program. The term ofthisAgreement shall be twenty four (24) months, commencing on the date of execution by the parties. This Agreement will terminate upon expiration of its initial term, unless extended in writing by mutual agreement of the parties, orifeither party fails to meet the conditions of this Page 3 of7 227 64 Agreement or if an Event ofDefault occurs, after notice and opportunity to cure as provided in Section N below. E. CONFLICT OF INTEREST. The Sub-Recipient covenants that it presently has no interest and will not acquire any interest, direct or indirect, in the CDBG project that would conflict in any manner or degree with the performance of its services hereunder. The Sub-Recipient further covenants that, in performing this Agreement, itwill employnopersonwhohas any such interest. F. CIVIL RIGHTS ACT OF 1964. The Sub-Recipient will abide by the provisions of the CiYil Rights Act of 1964, which states that under Title Vl, no person may, on the grounds of race , color, or national origin, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving federal financial assistance. G. SECTION 109 OF THE HOUSINGANDCOMMUNITYDEVELOPMENT ACT OF 1974. The Sub-Recipient will comply with the following provision: No person in the United States may on the grounds of race, color, national origin, or sex be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity funded in whole or in part with the funds made available under this title. Any prohibition against discrimination on the basis of age under the Age Discrimination Act of 1975 or with respect to an otherwise qualified handicapped individual as provided in Section 504 of the Rehabilitation Act of 1973 will also apply to anysuch program or activity. H. NONDISCRIMINATION. In addition to the requirements of subseciton G, above, the Sub- Recipient will not discriminate against any employee or applicant for employment on the basis of race, color, religion, creed, political ideas, sex, age, marital status, or national origin, or because of actual or perceived gender sexual orientation or gender identity or disability., TheSub-Recipient agrees this provision will apply to the hiring and treatment of the Sub-Recipient's employees and shall be included in all loan agreements with borrowers and apply to the use and expenditure ofRLF funds. l. REPORTS AND INFORMATION. The Sub-Recipient will maintain accounts and records, including personnel, property and financial records, adequate to identify and account for all costs pertaining to this Agreement and such other records as may be deemed necessary by the City to assure proper accounting for all project funds. These records will be made available for audit purposes to the City or its authorized representative, and will be retained for three years after receipt of final payment for the services rendered under this Agreement unless permission to destroy them is granted by the City. J. ADMINISTRATION 1. For purposes of implementing this Agreement, the City will appoint a local government project representative that will work with the Sub-Recipient. The parties will meet as necessary to provide for the efficient and smooth implementation ofthisAgreementand the activities contained herein. 2. The parties agree the RLF Committee shall have final decision making authority regarding the loaning of RLF funds and shall follow guidelines set forth in Commission Resolution No. 3488 except that this Agreement supersedes the requirements ofCommission Resolution 3488 only in so far as it relates to any provision in Resolution 3488 in conflict with this Agreement. Page 4 of7 228 65 3. To ensure the composition of the RLF Committee complies with applicable federal regulations, the Committee shall consist of seven members, two of which shall be appointed by the City Commission, with the remaining five to be appointed by the Sub-Recipient. 4. The Sub-Recipient wm comply with the " Certifications for Application" signed by the City and submitted with the application for economic development assistance to the Montana Department of Commerce. 5. The Sub-Recipient shall ensure that all borrowers, to whom Sub-Recipient lends RLF funds after the effective date of this Agreement, comply with the State of Montana Department of Commerce's Community Development Block Grant-Economic De,relopment Program Application Guidelines pertaining to low and moderate income persons. 6. The Sub-Recipient will comply with Procurement Standards as outlined in Chapter 3 and Chapter 8 of the CDBG Administration Manual before entering into any agreements to remodel, to purchase equipment or material, or to retain the services ofaconsultantorSub-Recipient. 7. The Sub-Recipient will contract with an independent accounting firm to conduct an annual audit sufficient to obtain an unqualified opinion of the RLF loan fund and program as conducted by Sub- Recipient under this Agreement. K TERMINATION - DISPOSITION OF REAL PROPERTY OR EQUIPMENT ACQUIRED. Upon the expiration or termination of this Agreement, the Sub-Recipient will transfer to the City the then- existing RLF loan portfolio and all related loan records, together with the then-existing balance in the Sub- Recipient's RLF Joan fund, Jess any unpaid portion of Sub-Recipient's compensation under this Agreement to the date ofexpiration or termination. L. INDEMNIFICATION. The parties agree to waive any and all claims and recourse against one another, including the right of contribution of loss or damage to person or property arising from , growing out of, or in any way connected with or incidental to the parties' performance of this Agreement. Each party shall indemnify, defend and hold harmless the other party ( including such other party's affiliates, partners, officers, directors, employees, agents and representatives) against any claims and/ or liabilities of any nature, including reasonable attorneys' fees, arising out oftheperformanceofthisAgreement. The City specifically agrees that RLF loan decisions are the prerogative of the RLF Loan Committee, and that the Sub-Recipient has no liability of any kind for decisions and actions related thereto, including loan decisions that were made prior to this Agreement. M. TERMINATION OF AGREEMENT. If any of the following events occur, the City may, in its sole discretion, declare such event a default under this Agreement ("Event ofDefault"): 1. Any representation or warranty made by the Sub-Recipient in this Agreement, or in any request or certificate or other information furnished to the City under this Agreement, proves to have been incorrect in any material respect; or 2. The Sub-Recipient fails in any material respect to can)' out its obligations under its proposal to the City for the assistance provided under this Agreement. If the Sub-Recipient fails to perform any of its duties under this Agreement or if any Event of Default occurs, the City may declare the Sub-Recipient to be in default and thereafter give the Sub-Recipient written notice setting forth the action or inaction that constitutes the default and giving the Sub-Recipient 45 days in Page 5 of7 229 66 which to correct the default. lf the Sub-Recipient fails to correct the default within 45 days of receipt of such notice, the City may terminate this Agreement without further notice, subject to the terms ofSection L above. The parties agree that this Agreement provides for reasonable and sufficient notice to be given to the Sub- Recipient in case of the Sub-recipient's failure to comply with any of its covenants and that this notice is sufficient for the Sub-Recipient to rectify its actions or inactions ofdefault. The waiver by the City of any default by the Sub-Recipient does not constitute a waiver of a continuing breach or a waiver ofa subsequent breach. Any agreement contrary to this Agreement is not binding upon either party unless it is in writing and signed by both parties. N. CONSTRUCTION AND VENUE This Agreement will be construed under and governed by the laws oftheStateofMontana. The City and the Sub-Recipient agree that performance ofthisAgreementis in the County of Gallatin, State ofMontana, and that in the event oflitigation concerning it, venue is in the District Court of the Judicial District in and for the City ofBozeman, Montana. This Agreement has been approved by City Commission and by Sub -recipient's Board ofDirectors, each ofwhich has authorized the undersigned persons to execute this Agreement on its behalf. 0. ATTORNEY'S FEES. In the event that either party incurs legal expenses, including the costs, expenses, salary and fees of the in-house counsel, to include City Attorney, to enforce the terms and conditions ofthisAgreement, the prevailing party is entitled to recover reasonable attorney's fees and other costs and expenses, whether the same are incurred with orwithoutsuit, including fees on appeal. P. PUBLIC MEETINGS AND ACCESS TO PUBLIC RECORDS. The Sub-Recipient's RLF Loan Committee shall comply with the open meeting requirements of Montana law, including those set forth in Title 7, Chapter 1, Part 41, MCA and Title 2, Chapter 3, MCA. To help ensure compliance, the Sub- Recipient shall provide RLF Committee meeting agendas to the City Clerk's office no later than 72 working hours prior to meeting for notice on the City's official posting board and any other si tes deemed reasonable by the Clerk's office. In addition, meeting minutes will be kept by the Sub-Recipient and provided to the City Clerk's office no later than 45 days after the meeting. These minutes shall be posted and made available to the public by the City Clerk's office except for those minutes taken during a closed meeting in accordance with 7-1-4144, MCA. Minutes taken during a closed meeting shall also be provided to the City Clerk's office but shall be handled in accordance with the City Clerk's regular executive session protocol and kept private in a secured cabinet. In accordance with 7-1-4144, MCA and subject to any applicable legal obligation to protect and preserve individual confidential or private information, upon reasonable request and at reasonable times during normal business hours, Sub-Recipient shall make such RLF loan documents and records available for inspection and copying by members of the public. Sub-Recipient may charge for such copying in accordance with the policies ofthecity, whkl1 Sub-Recipient hereby adopts for such purposes. To determine whether a meeting or part ofameetingmay be closed to the public and to determine whether information contained in RLF loan documents is protected by law from disclosure, tl1e Sub-Recipient may consult with and seek the advice of the City Attorney at no cost to Sub-Recipient. The advice and consultation shall be on behalfoftheRLFCommitteeand not Gallatin Development C01poration. Q. ELIGIBILITY. The Sub-Recipient certifies that the Sub-Recipient and the Sub-recipient's Page 6 of7 230 67 principals are not debarred, suspended, Yolunrarily excluded, or othen\isc ineligible for participation in federally assisted contracts under Execuri,·e Order 125~9 . "Debarment and Suspension". ( 2~ CFR 2~. 505) lN \\' JTNESS \\.] lEREOF, the parties hereto ha,·e executed this Sub-Recipient . \greement on the I 7+. dayofJuly, 2013. Kathleen )obnso1 President, Board Gallatin De,·clopment Corporation , DB.\ "Prospera Business lctwork" nest: l om Kelly Secretary, Boar Directors Gallatjn DevelopmentCorporation, DB.r\ " Prospera Business Network CITY: c~A~'t Chris Kukulski City !\tanager City ofBozeman nest: J>~ gc 7 of7 7 -IJ Date p II 7-- 13 Date 231 68 1 Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Brit Fontenot, Director of Economic Development SUBJECT: Approval of the 2013 – 2015 Sub-Recipient Agreement for the City of Bozeman’ s Community Development Block Grant Revolving Loan Fund with the Gallatin Development Corporation, DBA the Prospera Business Network and Authorize the City Manager to Sign the Agreement. MEETING DATE: July 8, 2013 AGENDA ITEM TYPE: Consent RECOMMENDATION: Approve the 2013 – 2015 Sub-Recipient Agreement for the City’s Community Development Block Grant Revolving Loan Fund with the Gallatin Development Corporation, DBA the Prospera Business Network and Authorize the City Manager to Sign the Agreement. (ATTACHMENT 1) BACKGROUND: Loan payments from recipients of Economic Development Block Grants received from the City through the State of Montana Department of Commerce were placed into the City’s Community Development Block Grant Revolving Loan Fund as a continuing source of funds for further economic development grants. Prospera is uniquely suitable to administer the City’s Community Development Block Grant Revolving Loan Fund because of their long-standing community economic development relationship, extensive experience with the current borrowers, and ability to service the existing loan portfolio. In May of 2006, the first City entered into a Sub-Recipient Agreement, placing overall management of the City’s Revolving Loan Fund (“ the Fund”) with Prospera. The most recent agreement expired on June 20th, 2013. A letter temporarily extending the contract was executed on June 12, 2013 until the Commission was able to approve the renewal of the contract for a two year period. (ATTACHMENT 2) General Information about the Fund (As reported by Prospera on May 31, 2013): Total loans disbursed: $2,428,698.55 Current balance of loans out: $239,950.44 Current loan loss reserve: $93,336.15 Current RLF account balance: $638,868.04 Number of loans in portfolio: 3 Scheduled total monthly repayment into Fund (principal + interest): $4,579.98 27232 69 2 Actual total monthly repayment into Fund (principal + interest): $3,663.01 UNRESOLVED ISSUES: One loan is matured and Prospera is in the process of restructuring the loan with the loan recipient. FISCAL EFFECTS: None directly to the City. Prospera will continue to have custody of and administration of the Fund. $ 32,000 or 18% of interest and principal loan repayments whichever is greater) will be retained by Prospera, in the form of a fee for services rendered. Attachments: 1. Sub-recipient agreement between the City of Bozeman and Prospera for administering the Community Development Block Grant Revolving Fund; and 2. June 12, 2013 letter from the City of Bozeman to Prospera temporarily extending the sub- recipient contract until the Commission approves the renewal of the new contract. Report compiled on: June 26, 2013 28233 70 Page 1 of 7 SUB-RECIPIENT AGREEMENT FOR COMMUNITY DEVELOPMENT BLOCK GRANT REVOLVING LOAN FUND July 2013 – July 2015 THIS AGREEMENT is entered into this ___ day of July, 2013 by the CITY OF BOZEMAN, MONTANA, whose address is 121 N Rouse, Bozeman MT 59715, herein referred to as the “ City”, and the GALLATIN DEVELOPMENT CORPORATION, doing business as PROSPERA BUSINESS NETWORK, whose address is 222 East Main Street, Suite 102, Bozeman MT 59715, a nonprofit economic development corporation, herein referred to as the “ Sub-Recipient.” WITNESSETH THAT: WHEREAS, the City has applied to and has been approved by the Montana Department of Commerce MTDOC) for the receipt of grant funds under the Montana Community Development Block Grant Economic Development (CDBG) Program; and WHEREAS, the City wishes to use present and future CDBG grants and loan fund revenue to further develop the “ CDBG Revolving Loan Fund” ( RLF) which is designed to leverage private investment in new business for the purpose of generating new jobs within the City of Bozeman; and WHEREAS, the City has previously entered into an Agreement with the Sub-Recipient to sub-grant the CDBG funds to the Sub-Recipient and engage the Sub-Recipient to administer the City of Bozeman (RLF) jointly on their behalf for a period of twenty four months; and WHEREAS, to maintain accountability, professional management and program performance, it is deemed to be in the best interests of the City to extend the Agreement with the Sub-Recipient for two additional years, as hereinafter provided; and WHEREAS, the City desires to continue to sub-grant the CDBG funds to the Sub-Recipient and engage the Sub-Recipient to administer the RLF on the City’s behalf; and WHEREAS, there exists City of Bozeman Economic Development Revolving Loan Fund Guidelines, established pursuant to Commission Resolution 3488 which are hereby included in this agreement; and WHEREAS, pursuant to Resolution 3488 there exists a City of Bozeman Revolving Loan Fund Committee the “ RLF Committee”); to evaluate the feasibility and investment potential of proposed economic development projects; and WHEREAS, the parties to this Agreement understand that neither of them has in any way, expressly or impliedly, abrogated any of its individual powers, and further agree that this Agreement does not create any new organization or legal entity. 29234 71 Page 2 of 7 NOW, THEREFORE, in consideration of the mutual covenants and conditions set out in this Agreement, the parties agree that the foregoing statements of fact are true and correct and further agree as follows: A. SPECIAL PROVISIONS. The City agrees, under the terms and conditions of this Agreement, to sub- grant to the Sub-Recipient the CDBG loan funds as a grant for gap financing and technical assistance to eligible borrowers and does hereby transfer, assign and convey to Sub-Recipient all of the City’s interest in and to its existing RLF loan portfolio. B. INDEPENDENT CONTRACTOR. It is understood by the parties hereto that the Sub-Recipient is an independent contractor and that neither its principals nor its employees, if any, are employees of the City for purposes of tax, retirement system, or social security (FICA) withholding. It is further understood that pursuant to section 39-71-401, MCA, the Sub-Recipient has obtained, and will maintain at its expense for the duration of this Contract, coverage in a workers' compensation plan for its principals and employees for the services to be performed hereunder. C. SCOPE OF SERVICES. The Sub-Recipient will perform the following services: 1. The Sub-Recipient will be responsible for all facets of the CDBG financing program as described in the Management Plan for the CDBG project, a copy of which the City has delivered or will deliver to Sub- Recipient prior to execution of this Agreement. The Sub-Recipient will also be responsible for all aspects of the Revolving Loan Fund program, including the following: a) Develop, apply and enforce written Policies and Procedures as they relate to the City of Bozeman RLF program and/ or administering the RLF program under the local CDBG grant program, including the creation and operation of an RLF Loan Committee to review and act upon loan requests. b) Application process through approval: a. Assist prospective borrowers in completing loan application materials; b. Conduct UCC lien searches, if applicable and pertinent to the proposed loan collateral c. Provide a project analyses to the RLF Loan Committee; d. Coordinate monthly RLF Loan Committee meetings; and e. Present proposed projects to RLF Loan Committee for loan approval or denial. Decisions as to loan approval or denial are the sole responsibility of the RLF Loan Committee, and the City shall have no authority or ability to intervene in the loan approval or denial process. c) Loan Closing and Documentation: a. Completion of loan documentation using loan documentation software; b. Loan closing, to be conducted by a title company or by Sub-Recipient; c. Funds disbursement and payment processing, utilizing the GMS Loan Accounting software; and d. Collection and retention, for Sub-Recipient’s use, of loan fees and charges, as provided in Sub-Recipient’s Policies and Procedures. d) Loan Servicing Oversight: a. Gather and analyze monthly or quarterly financial reports from borrowers as required by the applicable loan agreement; 30235 72 Page 3 of 7 b. Track and monitor status of borrower insurance policies; c. Track and monitor UCC financing statement filings and renewals; and d. Provide monthly loan updates to RLF Loan Committee. e) Process monthly loan payments a. Track, receive, process and account for all monthly loan payments b. Track late payments – mailing late notices and calling delinquent borrowers, as needed c. Work with delinquent borrowers to cure defaults and, where appropriate, develop a work-out plan, subject to approval of the RLF Loan Committee. f) Monitorandprocessall forfeitures of loan collateral and use commercially reasonable efforts to collect delinquent and defaulted loans, including the filing of creditor’s claims in bankruptcy, where applicable, subject to the approval of the RLF Loan Committee. 2. The Sub-Recipient shall maintain eligibility as a Community-Based Development Organization pursuant to Title 24, Part 504, CFR, and shall ensure all activities conducted pursuant to this Agreement comply with all federal and state regulations regarding community development block grants. 3. During the term of this Agreement, the Sub-Recipient will maintain reasonable records of its performance under this Agreement in a manner consistent with generally accepted accounting principles. The Sub-Recipient will provide the City (or its authorized representatives) access to these records at any time during normal business hours. Upon written request of the City, the Sub-Recipient will submit to the City, in the format prescribed by the City, semi-annual status reports on its performance under this Agreement. 4. Except as set forth in Section (4) below, the Sub-Recipient will retain, administer, manage, record, and account to the City for all RLF loan fund revenue received subsequent to the date of this Agreement, including principal and interest received from borrowers. Sub-Recipient will use such revenue to enhance the RLF program for the benefit of all eligible borrowers located within the City of Bozeman. 5. As payment for the services rendered by Sub-Recipient, the Sub-Recipient shall retain either $32,000.00 or eighteen percent (18%) of the total of payments on interest and principal from loan repayments and interest earned on the principal balance, whichever is greater. The Sub-Recipient may retain and pay such compensation to itself in installments, not more frequently than monthly. In no case, except for the Sub-Recipient’s expenses for attorney fees and attorney costs related to collection efforts as described in subsection 6 of this section, shall the payment for services to the Sub-Recipient result in a decrease in the base principal amount of the fund as determined on a yearly basis. 6. Sub-Recipient is entitled to use RLF funds for any costs incurred by Sub-Recipient in connection with the collection of delinquent or defaulted loans, including but not limited to any filing fees or legal fees and costs. It is specifically agreed and understood that any such use of RLF funds in this manner by the Sub-Recipient is separate and distinct from the payment Sub-Recipient will be receiving for its services; that is to say, costs and fees incurred in connection with the collection of delinquent or defaulted loans will be paid by RLF Funds and not by the Sub-Recipient. D. EFFECTIVE DATE AND TIME OF PERFORMANCE. This Agreement supersedes all previous agreements, whether written or oral, between the City and the Sub-Recipient dealing with the City of Bozeman RLF program. The term of this Agreement shall be twenty four (24) months, commencing on the date of execution by the parties. This Agreement will terminate upon expiration of its initial term, unless extended in writing by mutual agreement of the parties, or if either party fails to meet the conditions of this 31236 73 Page 4 of 7 Agreement or if an Event of Default occurs, after notice and opportunity to cure as provided in Section N below. E. CONFLICT OF INTEREST. The Sub-Recipient covenants that it presently has no interest and will not acquire any interest, direct or indirect, in the CDBG project that would conflict in any manner or degree with the performance of its services hereunder. The Sub-Recipient further covenants that, in performing this Agreement, it will employ no person who has any such interest. F. CIVIL RIGHTS ACT OF 1964. The Sub-Recipient will abide by the provisions of the Civil Rights Act of 1964, which states that under Title VI, no person may, on the grounds of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving federal financial assistance. G. SECTION 109 OF THE HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1974. The Sub-Recipient will comply with the following provision: No person in the United States may on the grounds of race, color, national origin, or sex be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity funded in whole or in part with the funds made available under this title. Any prohibition against discrimination on the basis of age under the Age Discrimination Act of 1975 or with respect to an otherwise qualified handicapped individual as provided in Section 504 of the Rehabilitation Act of 1973 will also apply to any such program or activity. H. NONDISCRIMINATION. In addition to the requirements of subseciton G, above, the Sub- Recipient will not discriminate against any employee or applicant for employment on the basis of race, color, religion, creed, political ideas, sex, age, marital status, or national origin, or because of actual or perceived gender sexual orientation or gender identity or disability., The Sub-Recipient agrees this provision will apply to the hiring and treatment of the Sub-Recipient’s employees and shall be included in all loan agreements with borrowers and apply to the use and expenditure of RLF funds. I. REPORTS AND INFORMATION. The Sub-Recipient will maintain accounts and records, including personnel, property and financial records, adequate to identify and account for all costs pertaining to this Agreement and such other records as may be deemed necessary by the City to assure proper accounting for all project funds. These records will be made available for audit purposes to the City or its authorized representative, and will be retained for three years after receipt of final payment for the services rendered under this Agreement unless permission to destroy them is granted by the City. J. ADMINISTRATION 1. For purposes of implementing this Agreement, the City will appoint a local government project representative that will work with the Sub-Recipient. The parties will meet as necessary to provide for the efficient and smooth implementation of this Agreement and the activities contained herein. 2. The parties agree the RLF Committee shall have final decision making authority regarding the loaning of RLF funds and shall follow guidelines set forth in Commission Resolution No. 3488 except that this Agreement supersedes the requirements of Commission Resolution 3488 only in so far as it relates to any provision in Resolution 3488 in conflict with this Agreement. 32237 74 Page 5 of 7 3. To ensure the composition of the RLF Committee complies with applicable federal regulations, the Committee shall consist of seven members, two of which shall be appointed by the City Commission, with the remaining five to be appointed by the Sub-Recipient. 4. The Sub-Recipient will comply with the “ Certifications for Application” signed by the City and submitted with the application for economic development assistance to the Montana Department of Commerce. 5. The Sub-Recipient shall ensure that all borrowers, to whom Sub-Recipient lends RLF funds after the effective date of this Agreement, comply with the State of Montana Department of Commerce’s Community Development Block Grant-Economic Development Program Application Guidelines pertaining to low and moderate income persons. 6. The Sub-Recipient will comply with Procurement Standards as outlined in Chapter 3 and Chapter 8 of the CDBG Administration Manual before entering into any agreements to remodel, to purchase equipment or material, or to retain the services of a consultant or Sub-Recipient. 7. The Sub-Recipient will contract with an independent accounting firm to conduct an annual audit sufficient to obtain an unqualified opinion of the RLF loan fund and program as conducted by Sub- Recipient under this Agreement. K. TERMINATION - DISPOSITION OF REAL PROPERTY OR EQUIPMENT ACQUIRED. Upon the expiration or termination of this Agreement, the Sub-Recipient will transfer to the City the then- existing RLF loan portfolio and all related loan records, together with the then-existing balance in the Sub- Recipient’s RLF loan fund, less any unpaid portion of Sub-Recipient’s compensation under this Agreement to the date of expiration or termination. L. INDEMNIFICATION. The parties agree to waive any and all claims and recourse against one another, including the right of contribution of loss or damage to person or property arising from, growing out of, or in any way connected with or incidental to the parties’ performance of this Agreement. Each party shall indemnify, defend and hold harmless the other party ( including such other party’s affiliates, partners, officers, directors, employees, agents and representatives) against any claims and/ or liabilities of any nature, including reasonable attorneys’ fees, arising out of the performance of this Agreement. The City specifically agrees that RLF loan decisions are the prerogative of the RLF Loan Committee, and that the Sub-Recipient has no liability of any kind for decisions and actions related thereto, including loan decisions that were made prior to this Agreement. M. TERMINATION OF AGREEMENT. If any of the following events occur, the City may, in its sole discretion, declare such event a default under this Agreement (“ Event of Default”): 1. Any representation or warranty made by the Sub-Recipient in this Agreement, or in any request or certificate or other information furnished to the City under this Agreement, proves to have been incorrect in any material respect; or 2. The Sub-Recipient fails in any material respect to carry out its obligations under its proposal to the City for the assistance provided under this Agreement. If the Sub-Recipient fails to perform any of its duties under this Agreement or if any Event of Default occurs, the City may declare the Sub-Recipient to be in default and thereafter give the Sub-Recipient written notice setting forth the action or inaction that constitutes the default and giving the Sub-Recipient 45 days in 33238 75 Page 6 of 7 which to correct the default. If the Sub-Recipient fails to correct the default within 45 days of receipt of such notice, the City may terminate this Agreement without further notice, subject to the terms of Section L above. The parties agree that this Agreement provides for reasonable and sufficient notice to be given to the Sub- Recipient in case of the Sub-recipient’s failure to comply with any of its covenants and that this notice is sufficient for the Sub-Recipient to rectify its actions or inactions of default. The waiver by the City of any default by the Sub-Recipient does not constitute a waiver of a continuing breach or a waiver of a subsequent breach. Any agreement contrary to this Agreement is not binding upon either party unless it is in writing and signed by both parties. N. CONSTRUCTION AND VENUE This Agreement will be construed under and governed by the laws of the State of Montana. The City and the Sub-Recipient agree that performance of this Agreement is in the County of Gallatin, State of Montana, and that in the event of litigation concerning it, venue is in the District Court of the Judicial District in and for the City of Bozeman, Montana. This Agreement has been approved by City Commission and by Sub-recipient’s Board of Directors, each of which has authorized the undersigned persons to execute this Agreement on its behalf. O. ATTORNEY’S FEES. In the event that either party incurs legal expenses, including the costs, expenses, salary and fees of the in-house counsel, to include City Attorney, to enforce the terms and conditions of this Agreement, the prevailing party is entitled to recover reasonable attorney's fees and other costs and expenses, whether the same are incurred with or without suit, including fees on appeal. P. PUBLIC MEETINGS AND ACCESS TO PUBLIC RECORDS. The Sub-Recipient’s RLF Loan Committee shall comply with the open meeting requirements of Montana law, including those set forth in Title 7, Chapter 1, Part 41, MCA and Title 2, Chapter 3, MCA. To help ensure compliance, the Sub- Recipient shall provide RLF Committee meeting agendas to the City Clerk’s office no later than 72 working hours prior to meeting for notice on the City’s official posting board and any other sites deemed reasonable by the Clerk’s office. In addition, meeting minutes will be kept by the Sub-Recipient and provided to the City Clerk’s office no later than 45 days after the meeting. These minutes shall be posted and made available to the public by the City Clerk’s office except for those minutes taken during a closed meeting in accordance with 7-1-4144, MCA. Minutes taken during a closed meeting shall also be provided to the City Clerk’s office but shall be handled in accordance with the City Clerk’s regular executive session protocol and kept private in a secured cabinet. In accordance with 7-1-4144, MCA and subject to any applicable legal obligation to protect and preserve individual confidential or private information, upon reasonable request and at reasonable times during normal business hours, Sub-Recipient shall make such RLF loan documents and records available for inspection and copying by members of the public. Sub-Recipient may charge for such copying in accordance with the policies of the city, which Sub-Recipient hereby adopts for such purposes. To determine whether a meeting or part of a meeting may be closed to the public and to determine whether information contained in RLF loan documents is protected by law from disclosure, the Sub-Recipient may consult with and seek the advice of the City Attorney at no cost to Sub-Recipient. The advice and consultation shall be on behalf of the RLF Committee and not Gallatin Development Corporation. Q. ELIGIBILITY. The Sub-Recipient certifies that the Sub-Recipient and the Sub-recipient's 34239 76 Page 7 of 7 principals are not debarred, suspended, voluntarily excluded, or otherwise ineligible for participation in federally assisted contracts under Executive Order 12549, "Debarment and Suspension". ( 24 CFR 24.505) IN WITNESS WHEREOF, the parties hereto have executed this Sub-Recipient Agreement on the day of July, 2013. SUB-RECIPIENT: CITY: Kathleen Johnson Date Chris Kukulski Date President, Board of Directors City Manager Gallatin Development Corporation, City of Bozeman DBA “Prospera Business Network” Attest: Attest: Tom Kelly Date Stacy Ulmen, CMC Date Secretary, Board of Directors City Clerk Gallatin Development Corporation, City of Bozeman DBA “Prospera Business Network Approved as to Form: Greg Sullivan Date Bozeman City Attorney 35240 77 36241 78 SUB -RECIPIENT AGREEMENT FOR COMMUNITY DEVELOPMENT BLOCK GRANT REVOLVING LOAN FUND July 2015 —July 2017 THIS AGREEMENT is entered into this day of June, 2015 by the CITY OF BOZEMAN, MONTANA, whose address is 121 N Rouse, Bozeman MT 59715, herein referred to as the " City", and the GALLATIN DEVELOPMENT CORPORATION, doing business as PROSPERA BUSINESS NETWORK, whose address is 2015 Charlotte Street, Suite 1, Bozeman MT 59718, a nonprofit economic development corporation, herein referred to as the " Sub -Recipient." WITNESSETH THAT: WHEREAS, the City has applied to and has been approved by the Montana Department of Commerce MTDOC) for the receipt of grant funds under the Montana Community Development Block Giant Economic Development (CDBG) Program; and WHEREAS, the City wishes to use present and future CDBG giants and loan fund revenue to further develop the " CDBG Revolving Loan Fund" ( RLF) which is designed to leverage private investment in new business for the purpose of generating new jobs within the City of Bozeman; and WHEREAS, the City has previously entered into an Agreement with the Sub -Recipient to sub -grant the CDBG funds to the Sub -Recipient and engage the Sub -Recipient to administer the City of Bozeman (RLF) jointly on their behalf for a period of twenty four months; and WHEREAS, to maintain accountability, professional management and program performance, it is deemed to be in the best interests of the City to extend the Agreement with the Sub -Recipient for two additional years, as hereinafter provided; and WHEREAS, the City desires to continue to sub -grant the CDBG funds to the Sub -Recipient and engage the Sub -Recipient to administer the RLF on the City behalf; and WHEREAS, there exists City of Bozeman Economic Development Revolving Loan Fund Guidelines, established pursuant to Commission Resolution 3488 which are hereby included in this agreement; and WHEREAS, pursuant to Resolution 3488 there exists a City of Bozeman Revolving Loan Fund Committee the " RLF Committee"); to evaluate the feasibility and investment potential of proposed economic development projects; and WHEREAS, the parties to this Agreement understand that neither of them has in any way, expressly or impliedly, abrogated any of its individual powers, and further agree that this Agreement does not create any new organization or legal entity. Page 1 of 7 79 NOW, THEREFORE, in consideration of the mutual covenants and conditions set out in this Agreement, the parties agree that the foregoing statements of fact are true and correct and further agree as follows: A. SPECIAL PROVISIONS. The City agrees, under the terms and conditions of this Agreement, to sub - giant to the Sub -Recipient the CDBG loan funds as a grant for gap financing and technical assistance to eligible borrowers and does hereby transfer, assign and convey to Sub -Recipient all of the City' s interest in and to its existing RLF loan portfolio. B. INDEPENDENT CONTRACTOR. It is understood by the parties hereto that the Sub -Recipient is an independent contractor and that neither its principals nor its employees, if any, are employees of the City for purposes of tax, retirement system, or social security ( FICA) withholding. It is further understood that pursuant to section 39- 71- 401, MCA, the Sub -Recipient has obtained, and will maintain at its expense for the duration of this Contract, coverage in a workers' compensation plan for its principals and employees for the services to be performed hereunder. C. SCOPE OF SERVICES. The Sub -Recipient will perform the following services: 1. The Sub -Recipient will be responsible for all facets of the CDBG financing program as described in the Management Plan for the CDBG project, a; copy of which the City has delivered or will deliver to Sub - Recipient prior to execution of this Agreement. The Sub -Recipient will also be responsible for all aspects of the Revolving Loan Fund program, including the following: a) Develop, apply and enforce written Policies and Procedures as they relate to the City of Bozeman RLF program and/ or administering the RLF program under the local CDBG grant program, including the creation and operation of an RLF Loan Committee to review and act upon loan requests. b) Application process through approval: a. Assist prospective borrowers in completing loan application materials; b. Conduct UCC lien searches, ifapplicable and pertinent to the proposed loan collateral c. Provide a project analyses to the RLF Loan Committee; d. Coordinate monthly RLF Loan Committee meetings; and e. Present proposed projects to RLF Loan Committee for loan approval or denial. Decisions as to loan approval or denial are the sole responsibility of the RLF Loan Committee, and the City shall have no authority or ability to intervene in the loan approval or denial process. c) Loan Closing and Documentation: a. Completion of loan documentation using loan documentation software; b. Loan closing, to be conducted by a title company or by Sub -Recipient; c. Funds disbursement and payment processing, utilizing the GMS Loan Accounting software; and d. Collection and retention, for Sub -Recipient's use, ofloan fees and charges, as provided in Sub -Recipient' s Policies and Procedures. d) Loan Servicing Oversight: a. Gather and analyze monthly or quarterly financial reports from borrowers as required by the applicable loan agreement; Page 2 of 7 80 b. Track and monitor status of borrower insurance policies; c. Track and monitor UCC financing statement filings and renewals; and d. Provide monthly loan updates to RLF Loan Committee. e) Process monthly loan payments a. Track, receive, process and account for all monthly loan payments b. Track late payments — mailing late notices and calling delinquent borrowers, as needed c. Work with delinquent borrowers to cure defaults and, where appropriate, develop a work-out plan, subject to approval of the RLF Loan Committee. f) Monitor and process all forfeitures of loan collateral and use commercially reasonable efforts to collect delinquent and defaulted loans, including the filing of creditor' s claims in bankruptcy, where applicable, subject to the approval of the RLF Loan Committee. 2. The Sub -Recipient shall maintain eligibility as a Community -Based Development Organization pursuant to Title 24, Part 504, CFR, and shall ensure all activities conducted pursuant to this Agreement comply with all federal and state regulations regarding community development block giants. 3. During the term of this Agreement, the Sub -Recipient will maintain reasonable records of its performance under this Agreement in a manner consistent with generally accepted accounting principles. The Sub -Recipient will provide the City ( or its authorized representatives) access to these records at any time during normal business hours. Upon written request of the City, the Sub -Recipient will submit to the City, in the format prescribed by the City, semi-annual status reports on its performance under this Agreement. 4. Except as set forth in Section (4) below, the Sub -Recipient will retain, administer, manage, record, and account to the City for all RLF loan fund revenue received subsequent to the date of this Agreement, including principal and interest received from borrowers. Sub -Recipient will use such revenue to enhance the RLF program for the benefit of all eligible borrowers located within the City of Bozeman. 5. As payment for the services rendered by Sub -Recipient, the Sub -Recipient shall retain either $32,000. 00 or eighteen percent ( 18%) of the total of payments on interest and principal from loan repayments and interest earned on the principal balance, whichever is greater. The Sub -Recipient may retain and pay such compensation to itself in installments, not more frequently than monthly. In no case, except for the Sub -Recipient' s expenses for attorney fees and attorney costs related to collection efforts as described in subsection 6 of this section, shall the payment for services to the Sub -Recipient result in a decrease in the base principal amount of the fund as determined on a yearly basis. Sub -Recipient is entitled to use RLF funds for any costs incurred by Sub -Recipient in connection with the collection of delinquent or defaulted loans, including but not limited to any filing fees or legal fees and costs. It is specifically agreed and understood that any such use of RLF funds in this manner by the Sub -Recipient is separate and distinct from the payment Sub -Recipient will be receiving for its services; that is to say, costs and fees incurred in connection with the collection of delinquent or defaulted loans will be paid by RLF Funds and not by the Sub -Recipient. D. EFFECTIVE DATE AND TIME OF PERFORMANCE. This Agreement supersedes all previous agreements, whether written or oral, between the City and the Sub -Recipient dealing with the City of Bozeman RLF program. The term of this Agreement shall be twenty four (24) months, commencing on the date of execution by the parties. This Agreement will terminate upon expiration of its initial term, unless extended in writing by mutual agreement of the parties, or if either party fails to meet the conditions of this Page 3 of 7 81 Agreement or if an Event of Default occurs, after notice and opportunity to cure as provided in Section N below. E. CONFLICT OF INTEREST. The Sub -Recipient covenants that it presently has no interest and will not acquire any interest, direct or indirect, in the CDBG project that would conflict in any manner or degree with the performance of its services hereunder. The Sub -Recipient further covenants that, in performing this Agreement, it will employ no person who has any such interest. F. CIVIL RIGHTS ACT OF 1964. The Sub -Recipient will abide by the provisions of the Civil Rights Act of 1964, which states that under Title VI, no person may, on the grounds of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving federal financial assistance. G. SECTION 109 OF THE HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1974. The Sub -Recipient will comply with the following provision: No person in the United States may on the grounds of race, color, national origin, or sex be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity funded in whole or in part with the funds made available under this title. Any prohibition against discrimination on the basis of age under the Age Discrimination Act of 1975 or with respect to an otherwise qualified handicapped individual as provided in Section 504 of the Rehabilitation Act of 1973 will also apply to any such program or activity. H. NONDISCRIMINATION. In addition to the requirements of subseciton G, above, the Sub - Recipient will not discriminate against any employee or applicant for employment on the basis of race, color, religion, creed, political ideas, sex, age, marital status, or national origin, or because of actual or perceived gender sexual orientation or gender identity or disability., The Sub -Recipient agrees this provision will apply to the hiring and treatment of the Sub -Recipient' s employees and shall be included in all loan agreements with borrowers and apply to the use and expenditure of RLF funds. I. REPORTS AND INFORMATION. The Sub -Recipient will maintain accounts and records, including personnel, property and financial records, adequate to identify and account for all costs pertaining to this Agreement and such other records as may be deemed necessary by the City to assure proper accounting for all project funds. These records will be made available for audit purposes to the City or its authorized representative, and will be retained for three years after receipt of final payment for the services rendered under this Agreement unless permission to destroy them is granted by the City. J. ADMINISTRATION 1. For purposes of implementing this Agreement, the City will appoint a local government project representative that will work with the Sub -Recipient. The parties will meet as necessary to provide for the efficient and smooth implementation of this Agreement and the activities contained herein. 2. The parties agree the RLF Committee shall have final decision making authority regarding the loaning of RLF funds and shall follow guidelines set forth in Commission Resolution No. 3488 except that this Agreement supersedes the requirements of Commission Resolution 3488 only in so far as it relates to any provision in Resolution 3488 in conflict with this Agreement. Page 4 of 7 82 3. To ensure the composition of the RLF Committee complies with applicable federal regulations, the Committee shall consist of seven members, two of which shall be appointed by the City Commission, with the remaining five to be appointed by the Sub -Recipient. 4. The Sub -Recipient will comply with the " Certifications for Application" signed by the City and submitted with the application for economic development assistance to the Montana Department of Commerce. 5. The Sub -Recipient shall ensure that all borrowers, to whom Sub -Recipient lends RLF funds after the effective date of this Agreement, comply with the State of Montana Department of Commerce' s Community Development Block Grant -Economic Development Program Application Guidelines pertaining to low and moderate income persons. 6. The Sub -Recipient will comply with Procurement Standards as outlined in Chapter 3 and Chapter 8 of the CDBG Administration Manual before entering into any agreements to remodel, to purchase equipment or material, or to retain the services of.a consultant or Sub -Recipient. 7. The Sub -Recipient will contract with an independent accounting firm to conduct an annual audit sufficient to obtain an unqualified opinion of the RLF loan fund and program as conducted by Sub - Recipient under this Agreement. K. TERMINATION - DISPOSITION OF REAL PROPERTY OR EQUIPMENT ACQUIRED. Upon the expiration or termination of this Agreement, the Sub -Recipient will transfer to the City the then - existing RLF loan portfolio and all related loan records, together with the then -existing balance in the Sub - Recipient' s RLF loan fund, less any unpaid portion of Sub -Recipient' s compensation under this Agreement to the date of expiration or termination. L. INDEMNIFICATION. The parties agree to waive any and all claims and recourse against one another, including the right of contribution of loss or damage to person or property arising from, growing out of, or in any way connected with or incidental to the parties' performance of this Agreement. Each party shall indemnify, defend and hold harmless the other party ( including such other party' s affiliates, partners, officers, directors, employees, agents and representatives) against any claims and/ or liabilities of any nature, including reasonable attorneys' fees, arising out of the performance of this Agreement. The City specifically agrees that RLF loan decisions are the prerogative of the RLF Loan Committee, and that the Sub -Recipient has no liability of any kind for decisions and actions related thereto, including loan decisions that were made prior to this Agreement. M. TERMINATION OF AGREEMENT. If any of the following events occur, the City may, in its sole discretion, declare such event a default under this Agreement (" Event of Default"): 1. Any representation or warranty made by the Sub -Recipient in this Agreement, or in any request or certificate or other information furnished to the City under this Agreement, proves to have been incorrect in any material respect; or 2. The Sub -Recipient fails in any material respect to carry out its obligations under its proposal to the City for the assistance provided under this Agreement. If the Sub -Recipient fails to perform any of its duties under this Agreement or if any Event of Default occurs, the City may declare the Sub -Recipient to be in default and thereafter give the Sub -Recipient written notice setting forth the action or inaction that constitutes the default and giving the Sub -Recipient 45 days in Page 5 of 7 83 which to correct the default. If the Sub -Recipient fails to correct the default within 45 days of receipt of such notice, the City may terminate this Agreement without further notice, subject to the terms of Section L above. The parties agree that this Agreement provides for reasonable and sufficient notice to be given to the Sub - Recipient in case of the Sub -recipient's failure to comply with any of its covenants and that this notice is sufficient for the Sub -Recipient to rectify its actions or inactions of default. The waiver by the City of any default by the Sub -Recipient does not constitute a waiver of a continuing breach or a waiver of a subsequent breach. Any agreement contrary to this Agreement is not binding upon either party unless it is in writing and signed by both parties. N. CONSTRUCTION AND VENUE This Agreement will be construed under and governed by the laws of the State of Montana. The City and the Sub -Recipient agree that performance of this Agreement is in the County of Gallatin, State of Montana, and that in the event of litigation concerning it, venue is in the District Court of the Judicial District in and for the City of Bozeman, Montana. This Agreement has been approved by City Commission and by Sub -recipient's Board of Directors, each of which has authorized the undersigned persons to execute this Agreement on its behalf. O. ATTORNEY'S FEES. In the event that -either party incurs legal expenses, including the costs, expenses, salary and fees of the in-house counsel, to include City Attorney, to enforce the terms and conditions of this Agreement, the prevailing party is entitled to recover reasonable attorney' s fees and other costs and expenses, whether the same are incurred with or without suit, including fees on appeal. P. PUBLIC MEETINGS AND ACCESS TO PUBLIC RECORDS. The Sub -Recipient' s RLF Loan Committee shall comply with the open meeting requirements of Montana law, including those set forth in Title 7, Chapter 1, Part 41, MCA and Title 2, Chapter 3, MCA. To help ensure compliance, the Sub - Recipient shall pro dde RLF Committee meeting agendas to the City Clerk' s office no later than 72 working hours prior to meeting for notice on the City' s official posting board and any other sites deemed reasonable by the Clerk' s office. In addition, meeting minutes will be kept by the Sub -Recipient and provided to the City Clerk' s office no later than 45 days after the meeting. These minutes shall be posted and made available to the public by the City Clerk's office except for those minutes taken during a closed meeting in accordance with 7- 1- 4144, MCA. Minutes taken during a closed meeting shall also be provided to the City Clerk' s office but shall be handled in accordance with the City Clerk' s regular executive session protocol and kept private in a secured cabinet. In accordance with 7- 1- 4144, MCA and subject to any applicable legal obligation to protect and preserve individual confidential or private information, upon reasonable request and at reasonable times during normal business hours, Sub -Recipient shall make such RLF loan documents and records available for inspection and copying by members of the public.'Sub-Recipient may charge for such copying in accordance with the policies of the city, which Sub -Recipient hereby adopts for such purposes. To determine whether a meeting or part of a meeting may be closed to the public and to determine whether information contained in RLF loan documents is protected by law from disclosure, the Sub -Recipient may consult with and seek the advice of the City Attorney at no cost to Sub -Recipient. The advice and consultation shall be on behalf of the RLF Committee and not Gallatin Development Corporation. Page 6 of 7 84 Q. ELIGIBILITY. The Sub -Recipient certifies that the Sub -Recipient and the Sub -recipient's principals are not debarred, suspended, voluntarily excluded, or otherwise ineligible for participation in federally assisted contracts under Executive Order 12549, " Debarment and Suspension". ( 24 CFR 24.505) IN WITNESS WHEREOF, the parties hereto have executed this Sub -Recipient Agreement on the day ofJune, 2015. SUB -RECIPIENT: k) , L CS- cs Nick Zelver Date President, Board of Directors Gallatin Development Corporation, DBA "Prospera Business Network" Attest: Lilia Tyrell Date Secretary, Board of Directors Gallatin Development Corporation, DBA "Prospera Business Network CITY: v Chris Kukulski Date City Manager City of Bozeman Attest: 0 3' r Sta _y ' fin, CMC e _ '- t- :; _I_late - <' , City Clerk` City of Bozeman qTI co Approved as to Form: L& L/ 7 Greg van Date Bozeman City Attorney Page 7 of 7 85 AMENDMENT TO SUB-RECIPIENT AGREEMENT THIS AMENDMENT TO THE SUB-RECIPIENT AGREEMENT FOR COMMUNITY DEVELOPMENT BLOCK GRANT REVOLVING LOAN FUND made effective on the date last executed on July 24, 2017 (the “Agreement”) is made and entered effective the 24th day of July, 2019 (“Effective Date”), by and between the CITY OF BOZEMAN, MONTANA, a self governing municipal corporation organized and existing under its Charter and the laws of the State of Montana, 121 North Rouse Street, Bozeman, Montana, with a mailing address of PO Box 1230, Bozeman, MT 59771, hereinafter referred to as “City,” and PROSPERA BUSINESS NETWORK, whose address is 2015 Charlotte Street, Suite 1, Bozeman MT 59718, a nonprofit economic development corporation, hereinafter referred to as “Sub-Recipient.” In consideration of the mutual covenants and agreements herein contained, the receipt and sufficiency whereof being hereby acknowledged, the parties hereto agree to amend the Agreement as follows: 1. Extension of Term. Section D of the Agreement is amended to extend the term of the Agreement from the Effective Date until January 31, 2020. The Agreement shall terminate on January 31, 2020 unless earlier terminated as provided in the Agreement. 2. Agreement still valid. All remaining terms and provisions of the Agreement remain valid. **** END OF AGREEMENT EXCEPT FOR SIGNATURES **** IN WITNESS WHEREOF, the parties hereto have executed this instrument the day and year first above written. CITY OF BOZEMAN, MONTANA PROSPERA BUSINESS NETWORK By________________________________ By_____________________________ Andrea Surratt, City Manager Paul Reichert, Executive Director APPROVED AS TO FORM By_______________________________ Greg Sullivan, Bozeman City Attorney 233 234 1 Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Brit Fontenot, Director of Economic Development SUBJECT: Approval of the 2017 – 2019 Sub-Recipient Agreement for the City of Bozeman’s Community Development Block Grant Revolving Loan Fund with the Gallatin Development Corporation, DBA the Prospera Business Network, and authorize the Interim City Manager to Sign the Agreement. MEETING DATE: June 26, 2017 AGENDA ITEM TYPE: Consent RECOMMENDATION: Authorize the Interim City Manager to Sign the 2017 – 2019 Sub-Recipient Agreement for the City of Bozeman’s Community Development Block Grant Revolving Loan Fund with the Gallatin Development Corporation, DBA the Prospera Business Network. (EXHIBITS 1 - 3) BACKGROUND: Loan payments from recipients of Economic Development Block Grants received from the City through the State of Montana Department of Commerce are placed into the City’s Community Development Block Grant Revolving Loan Fund as a continuing source of funds for furthering economic development. The Prospera Business Network is uniquely qualified and suited to administer the City’s Community Development Block Grant Revolving Loan Fund due to their long-standing community economic development relationship, extensive experience with the current borrowers and ability to service the existing loan portfolio with qualified, full-time staff. In May 2006, the City first entered into a sub-recipient agreement, placing overall management of the City’s revolving loan fund with Prospera. The current, two-tear agreement expires July 1, 2017. General information about the fund, as reported by Prospera on May 31, 2017, includes the following: 44 235 2 Total dollars disbursed: $2,940,323.09 Current balance of loans out: $524,586.38 Current Loan Loss reserve: $199,500 Current RLF Account Balance: $648,151.99 Number of loans in portfolio: 7 Number of loans in arrears: 2 Collection activity, if any: Default Loan # 1: Debt discharged in Bankruptcy. Collateral sold. Balance to be charged off. Default Loan # 2: Demand letter sent to borrower and personal guarantors on May 2, 2017. Borrower submitted payment proposal; currently pending Bozeman RLF Committee meeting and decision. All other loans are paid as agreed. Scheduled total monthly repayment into the fund (principal and interest) is $8,712.87. Actual total monthly repayment into the fund (principal and interest) is $5,942.42. UNRESOLVED ISSUES: None at this time. FISCAL EFFECTS: There are no direct fiscal impacts. Prospera will maintain custody and administrative duties over the Community Development Block Grant Revolving Loan Fund. Up to $34,000, or 18% of interest and principal loan repayments, whichever is greater, will be retrained by Prospera in the form of fees for services. The only substantive change in the contract for 2017 – 2019 is that the maximum amount of fees associated with managing the fund were increased from $32,000 to $34,000. ALTERNATIVES: As determined by the Commission. EXHIBITS: 1) 2017 – 2019 Sub-Recipient Agreement; 2) City Commission Memo and 2015 – 2017 Sub-Recipient Agreement; and 3) Executed 2015 – 2017 Sub-Recipient Agreement. 45 236 Page 1 of 7 SUB-RECIPIENT AGREEMENT FOR COMMUNITY DEVELOPMENT BLOCK GRANT REVOLVING LOAN FUND June 2017 – June 2019 THIS AGREEMENT is entered into this ___ day of June, 2017 by the CITY OF BOZEMAN, MONTANA, whose address is 121 N Rouse, Bozeman MT 59715, herein referred to as the “City”, and the GALLATIN DEVELOPMENT CORPORATION, doing business as PROSPERA BUSINESS NETWORK, whose address is 2015 Charlotte Street, Suite 1, Bozeman MT 59718, a nonprofit economic development corporation, herein referred to as the “Sub-Recipient.” WITNESSETH THAT: WHEREAS, the City has applied to and has been approved by the Montana Department of Commerce (MTDOC) for the receipt of grant funds under the Montana Community Development Block Grant Economic Development (CDBG) Program; and WHEREAS, the City wishes to use present and future CDBG grants and loan fund revenue to further develop the “CDBG Revolving Loan Fund” (RLF) which is designed to leverage private investment in new business for the purpose of generating new jobs within the City of Bozeman; and WHEREAS, the City has previously entered into an Agreement with the Sub-Recipient to sub-grant the CDBG funds to the Sub-Recipient and engage the Sub-Recipient to administer the City of Bozeman (RLF) jointly on their behalf for a period of twenty-four months; and WHEREAS, to maintain accountability, professional management and program performance, it is deemed to be in the best interests of the City to extend the Agreement with the Sub-Recipient for two additional years, as hereinafter provided; and WHEREAS, the City desires to continue to sub-grant the CDBG funds to the Sub-Recipient and engage the Sub-Recipient to administer the RLF on the City behalf; and WHEREAS, there exists City of Bozeman Economic Development Revolving Loan Fund Guidelines, established pursuant to Commission Resolution 3488 which are hereby included in this agreement; and WHEREAS, pursuant to Resolution 3488 there exists a City of Bozeman Revolving Loan Fund Committee (the “RLF Committee”); to evaluate the feasibility and investment potential of proposed economic development projects; and WHEREAS, the parties to this Agreement understand that neither of them has in any way, expressly or impliedly, abrogated any of its individual powers, and further agree that this Agreement does not create any new organization or legal entity. 46 237 Page 2 of 7 NOW, THEREFORE, in consideration of the mutual covenants and conditions set out in this Agreement, the parties agree that the foregoing statements of fact are true and correct and further agree as follows: A. SPECIAL PROVISIONS. The City agrees, under the terms and conditions of this Agreement, to sub- grant to the Sub-Recipient the CDBG loan funds as a grant for gap financing and technical assistance to eligible borrowers and does hereby transfer, assign and convey to Sub-Recipient all of the City’s interest in and to its existing RLF loan portfolio. B. INDEPENDENT CONTRACTOR. It is understood by the parties hereto that the Sub-Recipient is an independent contractor and that neither its principals nor its employees, if any, are employees of the City for purposes of tax, retirement system, or social security (FICA) withholding. It is further understood that pursuant to section 39-71-401, MCA, the Sub-Recipient has obtained, and will maintain at its expense for the duration of this Contract, coverage in a workers' compensation plan for its principals and employees for the services to be performed hereunder. C. SCOPE OF SERVICES. The Sub-Recipient will perform the following services: 1. The Sub-Recipient will be responsible for all facets of the CDBG financing program as described in the Management Plan for the CDBG project, a copy of which the City has delivered or will deliver to Sub- Recipient prior to execution of this Agreement. The Sub-Recipient will also be responsible for all aspects of the Revolving Loan Fund program, including the following: (a) Develop, apply and enforce written Policies and Procedures as they relate to the City of Bozeman RLF program and/or administering the RLF program under the local CDBG grant program, including the creation and operation of an RLF Loan Committee to review and act upon loan requests. (b) Application process through approval: a. Assist prospective borrowers in completing loan application materials; b. Conduct UCC lien searches, if applicable and pertinent to the proposed loan collateral c. Provide a project analyses to the RLF Loan Committee; d. Coordinate monthly RLF Loan Committee meetings; and e. Present proposed projects to RLF Loan Committee for loan approval or denial. Decisions as to loan approval or denial are the sole responsibility of the RLF Loan Committee, and the City shall have no authority or ability to intervene in the loan approval or denial process. (c) Loan Closing and Documentation: a. Completion of loan documentation using loan documentation software; b. Loan closing, to be conducted by a title company or by Sub-Recipient; c. Funds disbursement and payment processing, utilizing the GMS Loan Accounting software; and d. Collection and retention, for Sub-Recipient’s use, of loan fees and charges, as provided in Sub-Recipient’s Policies and Procedures. (d) Loan Servicing Oversight: a. Gather and analyze monthly or quarterly financial reports from borrowers as required by the applicable loan agreement; 47 238 Page 3 of 7 b. Track and monitor status of borrower insurance policies; c. Track and monitor UCC financing statement filings and renewals; and d. Provide monthly loan updates to RLF Loan Committee. (e) Process monthly loan payments a. Track, receive, process and account for all monthly loan payments b. Track late payments – mailing late notices and calling delinquent borrowers, as needed c. Work with delinquent borrowers to cure defaults and, where appropriate, develop a work-out plan, subject to approval of the RLF Loan Committee. (f) Monitor and process all forfeitures of loan collateral and use commercially reasonable efforts to collect delinquent and defaulted loans, including the filing of creditor’s claims in bankruptcy, where applicable, subject to the approval of the RLF Loan Committee. 2. The Sub-Recipient shall maintain eligibility as a Community-Based Development Organization pursuant to Title 24, Part 504, CFR, and shall ensure all activities conducted pursuant to this Agreement comply with all federal and state regulations regarding community development block grants. 3. During the term of this Agreement, the Sub-Recipient will maintain reasonable records of its performance under this Agreement in a manner consistent with generally accepted accounting principles. The Sub-Recipient will provide the City (or its authorized representatives) access to these records at any time during normal business hours. Upon written request of the City, the Sub-Recipient will submit to the City, in the format prescribed by the City, semi-annual status reports on its performance under this Agreement. 4. Except as set forth in Section (4) below, the Sub-Recipient will retain, administer, manage, record, and account to the City for all RLF loan fund revenue received subsequent to the date of this Agreement, including principal and interest received from borrowers. Sub-Recipient will use such revenue to enhance the RLF program for the benefit of all eligible borrowers located within the City of Bozeman. 5. As payment for the services rendered by Sub-Recipient, the Sub-Recipient shall retain either $34,000 or eighteen percent (18%) of the total of payments on interest and principal from loan repayments and interest earned on the principal balance, whichever is greater. The Sub-Recipient may retain and pay such compensation to itself in installments, not more frequently than monthly. In no case, except for the Sub-Recipient’s expenses for attorney fees and attorney costs related to collection efforts as described in subsection 6 of this section, shall the payment for services to the Sub-Recipient result in a decrease in the base principal amount of the fund as determined on a yearly basis. 6. Sub-Recipient is entitled to use RLF funds for any costs incurred by Sub-Recipient in connection with the collection of delinquent or defaulted loans, including but not limited to any filing fees or legal fees and costs. It is specifically agreed and understood that any such use of RLF funds in this manner by the Sub-Recipient is separate and distinct from the payment Sub-Recipient will be receiving for its services; that is to say, costs and fees incurred in connection with the collection of delinquent or defaulted loans will be paid by RLF Funds and not by the Sub-Recipient. D. EFFECTIVE DATE AND TIME OF PERFORMANCE. This Agreement supersedes all previous agreements, whether written or oral, between the City and the Sub-Recipient dealing with the City of Bozeman RLF program. The term of this Agreement shall be twenty four (24) months, commencing on the date of execution by the parties. This Agreement will terminate upon expiration of its initial term, unless extended in writing by mutual agreement of the parties, or if either party fails to meet the conditions of this 48 239 Page 4 of 7 Agreement or if an Event of Default occurs, after notice and opportunity to cure as provided in Section N below. E. CONFLICT OF INTEREST. The Sub-Recipient covenants that it presently has no interest and will not acquire any interest, direct or indirect, in the CDBG project that would conflict in any manner or degree with the performance of its services hereunder. The Sub-Recipient further covenants that, in performing this Agreement, it will employ no person who has any such interest. F. CIVIL RIGHTS ACT OF 1964. The Sub-Recipient will abide by the provisions of the Civil Rights Act of 1964, which states that under Title VI, no person may, on the grounds of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving federal financial assistance. G. SECTION 109 OF THE HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1974. The Sub-Recipient will comply with the following provision: No person in the United States may on the grounds of race, color, national origin, or sex be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity funded in whole or in part with the funds made available under this title. Any prohibition against discrimination on the basis of age under the Age Discrimination Act of 1975 or with respect to an otherwise qualified handicapped individual as provided in Section 504 of the Rehabilitation Act of 1973 will also apply to any such program or activity. H. NONDISCRIMINATION. In addition to the requirements of subseciton G, above, the Sub- Recipient will not discriminate against any employee or applicant for employment on the basis of race, color, religion, creed, political ideas, sex, age, marital status, or national origin, or because of actual or perceived gender sexual orientation or gender identity or disability., The Sub-Recipient agrees this provision will apply to the hiring and treatment of the Sub-Recipient’s employees and shall be included in all loan agreements with borrowers and apply to the use and expenditure of RLF funds. I. REPORTS AND INFORMATION. The Sub-Recipient will maintain accounts and records, including personnel, property and financial records, adequate to identify and account for all costs pertaining to this Agreement and such other records as may be deemed necessary by the City to assure proper accounting for all project funds. These records will be made available for audit purposes to the City or its authorized representative, and will be retained for three years after receipt of final payment for the services rendered under this Agreement unless permission to destroy them is granted by the City. J. ADMINISTRATION 1. For purposes of implementing this Agreement, the City will appoint a local government project representative that will work with the Sub-Recipient. The parties will meet as necessary to provide for the efficient and smooth implementation of this Agreement and the activities contained herein. 2. The parties agree the RLF Committee shall have final decision making authority regarding the loaning of RLF funds and shall follow guidelines set forth in Commission Resolution No. 3488 except that this Agreement supersedes the requirements of Commission Resolution 3488 only in so far as it relates to any provision in Resolution 3488 in conflict with this Agreement. 49 240 Page 5 of 7 3. To ensure the composition of the RLF Committee complies with applicable federal regulations, the Committee shall consist of seven members, two of which shall be appointed by the City Commission, with the remaining five to be appointed by the Sub-Recipient. 4. The Sub-Recipient will comply with the “Certifications for Application” signed by the City and submitted with the application for economic development assistance to the Montana Department of Commerce. 5. The Sub-Recipient shall ensure that all borrowers, to whom Sub-Recipient lends RLF funds after the effective date of this Agreement, comply with the State of Montana Department of Commerce’s Community Development Block Grant-Economic Development Program Application Guidelines pertaining to low and moderate income persons. 6. The Sub-Recipient will comply with Procurement Standards as outlined in Chapter 3 and Chapter 8 of the CDBG Administration Manual before entering into any agreements to remodel, to purchase equipment or material, or to retain the services of a consultant or Sub-Recipient. 7. The Sub-Recipient will contract with an independent accounting firm to conduct an annual audit sufficient to obtain an unqualified opinion of the RLF loan fund and program as conducted by Sub- Recipient under this Agreement. K. TERMINATION - DISPOSITION OF REAL PROPERTY OR EQUIPMENT ACQUIRED. Upon the expiration or termination of this Agreement, the Sub-Recipient will transfer to the City the then- existing RLF loan portfolio and all related loan records, together with the then-existing balance in the Sub- Recipient’s RLF loan fund, less any unpaid portion of Sub-Recipient’s compensation under this Agreement to the date of expiration or termination. L. INDEMNIFICATION. The parties agree to waive any and all claims and recourse against one another, including the right of contribution of loss or damage to person or property arising from, growing out of, or in any way connected with or incidental to the parties’ performance of this Agreement. Each party shall indemnify, defend and hold harmless the other party (including such other party’s affiliates, partners, officers, directors, employees, agents and representatives) against any claims and/or liabilities of any nature, including reasonable attorneys’ fees, arising out of the performance of this Agreement. The City specifically agrees that RLF loan decisions are the prerogative of the RLF Loan Committee, and that the Sub-Recipient has no liability of any kind for decisions and actions related thereto, including loan decisions that were made prior to this Agreement. M. TERMINATION OF AGREEMENT. If any of the following events occur, the City may, in its sole discretion, declare such event a default under this Agreement (“Event of Default”): 1. Any representation or warranty made by the Sub-Recipient in this Agreement, or in any request or certificate or other information furnished to the City under this Agreement, proves to have been incorrect in any material respect; or 2. The Sub-Recipient fails in any material respect to carry out its obligations under its proposal to the City for the assistance provided under this Agreement. If the Sub-Recipient fails to perform any of its duties under this Agreement or if any Event of Default occurs, the City may declare the Sub-Recipient to be in default and thereafter give the Sub-Recipient written notice setting forth the action or inaction that constitutes the default and giving the Sub-Recipient 45 days in 50 241 Page 6 of 7 which to correct the default. If the Sub-Recipient fails to correct the default within 45 days of receipt of such notice, the City may terminate this Agreement without further notice, subject to the terms of Section L above. The parties agree that this Agreement provides for reasonable and sufficient notice to be given to the Sub- Recipient in case of the Sub-recipient’s failure to comply with any of its covenants and that this notice is sufficient for the Sub-Recipient to rectify its actions or inactions of default. The waiver by the City of any default by the Sub-Recipient does not constitute a waiver of a continuing breach or a waiver of a subsequent breach. Any agreement contrary to this Agreement is not binding upon either party unless it is in writing and signed by both parties. N. CONSTRUCTION AND VENUE This Agreement will be construed under and governed by the laws of the State of Montana. The City and the Sub-Recipient agree that performance of this Agreement is in the County of Gallatin, State of Montana, and that in the event of litigation concerning it, venue is in the District Court of the Judicial District in and for the City of Bozeman, Montana. This Agreement has been approved by City Commission and by Sub-recipient’s Board of Directors, each of which has authorized the undersigned persons to execute this Agreement on its behalf. O. ATTORNEY’S FEES. In the event that either party incurs legal expenses, including the costs, expenses, salary and fees of the in-house counsel, to include City Attorney, to enforce the terms and conditions of this Agreement, the prevailing party is entitled to recover reasonable attorney's fees and other costs and expenses, whether the same are incurred with or without suit, including fees on appeal. P. PUBLIC MEETINGS AND ACCESS TO PUBLIC RECORDS. The Sub-Recipient’s RLF Loan Committee shall comply with the open meeting requirements of Montana law, including those set forth in Title 7, Chapter 1, Part 41, MCA and Title 2, Chapter 3, MCA. To help ensure compliance, the Sub- Recipient shall provide RLF Committee meeting agendas to the City Clerk’s office no later than 72 working hours prior to meeting for notice on the City’s official posting board and any other sites deemed reasonable by the Clerk’s office. In addition, meeting minutes will be kept by the Sub-Recipient and provided to the City Clerk’s office no later than 45 days after the meeting. These minutes shall be posted and made available to the public by the City Clerk’s office except for those minutes taken during a closed meeting in accordance with 7-1-4144, MCA. Minutes taken during a closed meeting shall also be provided to the City Clerk’s office but shall be handled in accordance with the City Clerk’s regular executive session protocol and kept private in a secured cabinet. In accordance with 7-1-4144, MCA and subject to any applicable legal obligation to protect and preserve individual confidential or private information, upon reasonable request and at reasonable times during normal business hours, Sub-Recipient shall make such RLF loan documents and records available for inspection and copying by members of the public. Sub-Recipient may charge for such copying in accordance with the policies of the city, which Sub-Recipient hereby adopts for such purposes. To determine whether a meeting or part of a meeting may be closed to the public and to determine whether information contained in RLF loan documents is protected by law from disclosure, the Sub-Recipient may consult with and seek the advice of the City Attorney at no cost to Sub-Recipient. The advice and consultation shall be on behalf of the RLF Committee and not Gallatin Development Corporation. 51 242 Page 7 of 7 Q. ELIGIBILITY. The Sub-Recipient certifies that the Sub-Recipient and the Sub-recipient's principals are not debarred, suspended, voluntarily excluded, or otherwise ineligible for participation in federally assisted contracts under Executive Order 12549, "Debarment and Suspension". (24 CFR 24.505) IN WITNESS WHEREOF, the parties hereto have executed this Sub-Recipient Agreement on the _______ day of June, 2017. SUB-RECIPIENT: CITY: Paul Reichert Date Date Dennis Taylor Executive Director Interim City Manager Gallatin Development Corporation, City of Bozeman DBA Prospera Business Network Attest: Attest: Date Date City Clerk Lilia Tyrrell, Board of Directors City of Bozeman Gallatin Development Corporation, DBA “Prospera Business Network Approved as to Form: _________________________________________ Greg Sullivan Date Bozeman City Attorney 52 243 1 Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Brit Fontenot, Director of Economic Development SUBJECT: Approval of the 2015 – 2017 Sub-Recipient Agreement for the City of Bozeman’ s Community Development Block Grant Revolving Loan Fund with the Gallatin Development Corporation, DBA the Prospera Business Network, and Authorize the City Manager to Sign the Agreement. MEETING DATE: June 1, 2015 AGENDA ITEM TYPE: Consent RECOMMENDATION: Approve the 2015 – 2017 Sub-Recipient Agreement for the City’s Community Development Block Grant Revolving Loan Fund with the Gallatin Development Corporation, DBA the Prospera Business Network, and Authorize the City Manager to Sign the Agreement. EXHIBITS 1 - 3) BACKGROUND: Loan payments from recipients of Economic Development Block Grants received from the City through the State of Montana Department of Commerce were placed into the City’s Community Development Block Grant Revolving Loan Fund as a continuing source of funds for furthering economic development. Prospera is uniquely suitable to administer the City’s Community Development Block Grant Revolving Loan Fund due to their long-standing community economic development relationship, extensive experience with the current borrowers, and ability to service the existing loan portfolio. In May, 2006, the City entered into a Sub-Recipient Agreement, placing overall management of the City’s revolving loan fund (“ the Fund”) with Prospera. The current two-year agreement expires on July 9, 2015. General Information about the Fund (As reported by Prospera as of April 30, 2015): Total loans disbursed: $ 2,847,288.55 Current balance of loans out: $582,289.20 216 53 244 2 Current loan loss reserve: $ 107,836.83 Current RLF account balance: $271,238.18 Number of loans in portfolio: 8 Scheduled total monthly repayment into Fund (principal + interest): $7,816.52 Actual total monthly repayment into Fund (principal + interest): $5,990.06 (discrepancy from scheduled amount is due to timing, with two clients April payments submitted at the end of March.) UNRESOLVED ISSUES: One loan is matured and Prospera is in the process of restructuring the loan with the loan recipient. FISCAL EFFECTS: None directly to the City. Prospera will continue to have custody of and administration of the Fund. $32,000 or 18% of interest and principal loan repayments (whichever is greater) will be retained by Prospera, in the form of a fee for services rendered. Exhibits: 1. 2015-2017 Sub-recipient agreement between the City of Bozeman and Prospera for administering the Community Development Block Grant Revolving Fund; 2. July 8, 2013 Memo and Sub-recipient agreement between the City of Bozeman and Prospera for administering the Community Development Block Grant Revolving Fund; and 3. 2013-2015 Sub-recipient agreement between the City of Bozeman and Prospera for administering the Community Development Block Grant Revolving Fund. Report compiled on: May 21, 2015 217 54 245 Page 1 of 7 SUB-RECIPIENT AGREEMENT FOR COMMUNITY DEVELOPMENT BLOCK GRANT REVOLVING LOAN FUND July 2015 – July 2017 THIS AGREEMENT is entered into this ___ day of June, 2015 by the CITY OF BOZEMAN, MONTANA, whose address is 121 N Rouse, Bozeman MT 59715, herein referred to as the “ City”, and the GALLATIN DEVELOPMENT CORPORATION, doing business as PROSPERA BUSINESS NETWORK, whose address is 2015 Charlotte Street, Suite 1, Bozeman MT 59718, a nonprofit economic development corporation, herein referred to as the “ Sub-Recipient.” WITNESSETH THAT: WHEREAS, the City has applied to and has been approved by the Montana Department of Commerce MTDOC) for the receipt of grant funds under the Montana Community Development Block Grant Economic Development (CDBG) Program; and WHEREAS, the City wishes to use present and future CDBG grants and loan fund revenue to further develop the “ CDBG Revolving Loan Fund” ( RLF) which is designed to leverage private investment in new business for the purpose of generating new jobs within the City of Bozeman; and WHEREAS, the City has previously entered into an Agreement with the Sub-Recipient to sub-grant the CDBG funds to the Sub-Recipient and engage the Sub-Recipient to administer the City of Bozeman (RLF) jointly on their behalf for a period of twenty four months; and WHEREAS, to maintain accountability, professional management and program performance, it is deemed to be in the best interests of the City to extend the Agreement with the Sub-Recipient for two additional years, as hereinafter provided; and WHEREAS, the City desires to continue to sub-grant the CDBG funds to the Sub-Recipient and engage the Sub-Recipient to administer the RLF on the City behalf; and WHEREAS, there exists City of Bozeman Economic Development Revolving Loan Fund Guidelines, established pursuant to Commission Resolution 3488 which are hereby included in this agreement; and WHEREAS, pursuant to Resolution 3488 there exists a City of Bozeman Revolving Loan Fund Committee the “ RLF Committee”); to evaluate the feasibility and investment potential of proposed economic development projects; and WHEREAS, the parties to this Agreement understand that neither of them has in any way, expressly or impliedly, abrogated any of its individual powers, and further agree that this Agreement does not create any new organization or legal entity. 218 55 246 Page 2 of 7 NOW, THEREFORE, in consideration of the mutual covenants and conditions set out in this Agreement, the parties agree that the foregoing statements of fact are true and correct and further agree as follows: A. SPECIAL PROVISIONS. The City agrees, under the terms and conditions of this Agreement, to sub- grant to the Sub-Recipient the CDBG loan funds as a grant for gap financing and technical assistance to eligible borrowers and does hereby transfer, assign and convey to Sub-Recipient all of the City’s interest in and to its existing RLF loan portfolio. B. INDEPENDENT CONTRACTOR. It is understood by the parties hereto that the Sub-Recipient is an independent contractor and that neither its principals nor its employees, if any, are employees of the City for purposes of tax, retirement system, or social security (FICA) withholding. It is further understood that pursuant to section 39-71-401, MCA, the Sub-Recipient has obtained, and will maintain at its expense for the duration of this Contract, coverage in a workers' compensation plan for its principals and employees for the services to be performed hereunder. C. SCOPE OF SERVICES. The Sub-Recipient will perform the following services: 1. The Sub-Recipient will be responsible for all facets of the CDBG financing program as described in the Management Plan for the CDBG project, a copy of which the City has delivered or will deliver to Sub- Recipient prior to execution of this Agreement. The Sub-Recipient will also be responsible for all aspects of the Revolving Loan Fund program, including the following: a) Develop, apply and enforce written Policies and Procedures as they relate to the City of Bozeman RLF program and/ or administering the RLF program under the local CDBG grant program, including the creation and operation of an RLF Loan Committee to review and act upon loan requests. b) Application process through approval: a. Assist prospective borrowers in completing loan application materials; b. Conduct UCC lien searches, if applicable and pertinent to the proposed loan collateral c. Provide a project analyses to the RLF Loan Committee; d. Coordinate monthly RLF Loan Committee meetings; and e. Present proposed projects to RLF Loan Committee for loan approval or denial. Decisions as to loan approval or denial are the sole responsibility of the RLF Loan Committee, and the City shall have no authority or ability to intervene in the loan approval or denial process. c) Loan Closing and Documentation: a. Completion of loan documentation using loan documentation software; b. Loan closing, to be conducted by a title company or by Sub-Recipient; c. Funds disbursement and payment processing, utilizing the GMS Loan Accounting software; and d. Collection and retention, for Sub-Recipient’s use, of loan fees and charges, as provided in Sub-Recipient’s Policies and Procedures. d) LoanServicingOversight: a. Gather and analyze monthly or quarterly financial reports from borrowers as required by the applicable loan agreement; 219 56 247 Page 3 of 7 b. Track and monitor status of borrower insurance policies; c. Track and monitor UCC financing statement filings and renewals; and d. Provide monthly loan updates to RLF Loan Committee. e) Process monthly loan payments a. Track, receive, process and account for all monthly loan payments b. Track late payments – mailing late notices and calling delinquent borrowers, as needed c. Work with delinquent borrowers to cure defaults and, where appropriate, develop a work-out plan, subject to approval of the RLF Loan Committee. f) Monitorandprocessall forfeitures of loan collateral and use commercially reasonable efforts to collect delinquent and defaulted loans, including the filing of creditor’s claims in bankruptcy, where applicable, subject to the approval of the RLF Loan Committee. 2. The Sub-Recipient shall maintain eligibility as a Community-Based Development Organization pursuant to Title 24, Part 504, CFR, and shall ensure all activities conducted pursuant to this Agreement comply with all federal and state regulations regarding community development block grants. 3. During the term of this Agreement, the Sub-Recipient will maintain reasonable records of its performance under this Agreement in a manner consistent with generally accepted accounting principles. The Sub-Recipient will provide the City (or its authorized representatives) access to these records at any time during normal business hours. Upon written request of the City, the Sub-Recipient will submit to the City, in the format prescribed by the City, semi-annual status reports on its performance under this Agreement. 4. Except as set forth in Section (4) below, the Sub-Recipient will retain, administer, manage, record, and account to the City for all RLF loan fund revenue received subsequent to the date of this Agreement, including principal and interest received from borrowers. Sub-Recipient will use such revenue to enhance the RLF program for the benefit of all eligible borrowers located within the City of Bozeman. 5. As payment for the services rendered by Sub-Recipient, the Sub-Recipient shall retain either $32,000.00 or eighteen percent (18%) of the total of payments on interest and principal from loan repayments and interest earned on the principal balance, whichever is greater. The Sub-Recipient may retain and pay such compensation to itself in installments, not more frequently than monthly. In no case, except for the Sub-Recipient’s expenses for attorney fees and attorney costs related to collection efforts as described in subsection 6 of this section, shall the payment for services to the Sub-Recipient result in a decrease in the base principal amount of the fund as determined on a yearly basis. 6. Sub-Recipient is entitled to use RLF funds for any costs incurred by Sub-Recipient in connection with the collection of delinquent or defaulted loans, including but not limited to any filing fees or legal fees and costs. It is specifically agreed and understood that any such use of RLF funds in this manner by the Sub-Recipient is separate and distinct from the payment Sub-Recipient will be receiving for its services; that is to say, costs and fees incurred in connection with the collection of delinquent or defaulted loans will be paid by RLF Funds and not by the Sub-Recipient. D. EFFECTIVE DATE AND TIME OF PERFORMANCE. This Agreement supersedes all previous agreements, whether written or oral, between the City and the Sub-Recipient dealing with the City of Bozeman RLF program. The term of this Agreement shall be twenty four (24) months, commencing on the date of execution by the parties. This Agreement will terminate upon expiration of its initial term, unless extended in writing by mutual agreement of the parties, or if either party fails to meet the conditions of this 220 57 248 Page 4 of 7 Agreement or if an Event of Default occurs, after notice and opportunity to cure as provided in Section N below. E. CONFLICT OF INTEREST. The Sub-Recipient covenants that it presently has no interest and will not acquire any interest, direct or indirect, in the CDBG project that would conflict in any manner or degree with the performance of its services hereunder. The Sub-Recipient further covenants that, in performing this Agreement, it will employ no person who has any such interest. F. CIVIL RIGHTS ACT OF 1964. The Sub-Recipient will abide by the provisions of the Civil Rights Act of 1964, which states that under Title VI, no person may, on the grounds of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving federal financial assistance. G. SECTION 109 OF THE HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1974. The Sub-Recipient will comply with the following provision: No person in the United States may on the grounds of race, color, national origin, or sex be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity funded in whole or in part with the funds made available under this title. Any prohibition against discrimination on the basis of age under the Age Discrimination Act of 1975 or with respect to an otherwise qualified handicapped individual as provided in Section 504 of the Rehabilitation Act of 1973 will also apply to any such program or activity. H. NONDISCRIMINATION. In addition to the requirements of subseciton G, above, the Sub- Recipient will not discriminate against any employee or applicant for employment on the basis of race, color, religion, creed, political ideas, sex, age, marital status, or national origin, or because of actual or perceived gender sexual orientation or gender identity or disability., The Sub-Recipient agrees this provision will apply to the hiring and treatment of the Sub-Recipient’s employees and shall be included in all loan agreements with borrowers and apply to the use and expenditure of RLF funds. I. REPORTS AND INFORMATION. The Sub-Recipient will maintain accounts and records, including personnel, property and financial records, adequate to identify and account for all costs pertaining to this Agreement and such other records as may be deemed necessary by the City to assure proper accounting for all project funds. These records will be made available for audit purposes to the City or its authorized representative, and will be retained for three years after receipt of final payment for the services rendered under this Agreement unless permission to destroy them is granted by the City. J. ADMINISTRATION 1. For purposes of implementing this Agreement, the City will appoint a local government project representative that will work with the Sub-Recipient. The parties will meet as necessary to provide for the efficient and smooth implementation of this Agreement and the activities contained herein. 2. The parties agree the RLF Committee shall have final decision making authority regarding the loaning of RLF funds and shall follow guidelines set forth in Commission Resolution No. 3488 except that this Agreement supersedes the requirements of Commission Resolution 3488 only in so far as it relates to any provision in Resolution 3488 in conflict with this Agreement. 221 58 249 Page 5 of 7 3. To ensure the composition of the RLF Committee complies with applicable federal regulations, the Committee shall consist of seven members, two of which shall be appointed by the City Commission, with the remaining five to be appointed by the Sub-Recipient. 4. The Sub-Recipient will comply with the “ Certifications for Application” signed by the City and submitted with the application for economic development assistance to the Montana Department of Commerce. 5. The Sub-Recipient shall ensure that all borrowers, to whom Sub-Recipient lends RLF funds after the effective date of this Agreement, comply with the State of Montana Department of Commerce’s Community Development Block Grant-Economic Development Program Application Guidelines pertaining to low and moderate income persons. 6. The Sub-Recipient will comply with Procurement Standards as outlined in Chapter 3 and Chapter 8 of the CDBG Administration Manual before entering into any agreements to remodel, to purchase equipment or material, or to retain the services of a consultant or Sub-Recipient. 7. The Sub-Recipient will contract with an independent accounting firm to conduct an annual audit sufficient to obtain an unqualified opinion of the RLF loan fund and program as conducted by Sub- Recipient under this Agreement. K. TERMINATION - DISPOSITION OF REAL PROPERTY OR EQUIPMENT ACQUIRED. Upon the expiration or termination of this Agreement, the Sub-Recipient will transfer to the City the then- existing RLF loan portfolio and all related loan records, together with the then-existing balance in the Sub- Recipient’s RLF loan fund, less any unpaid portion of Sub-Recipient’s compensation under this Agreement to the date of expiration or termination. L. INDEMNIFICATION. The parties agree to waive any and all claims and recourse against one another, including the right of contribution of loss or damage to person or property arising from, growing out of, or in any way connected with or incidental to the parties’ performance of this Agreement. Each party shall indemnify, defend and hold harmless the other party ( including such other party’s affiliates, partners, officers, directors, employees, agents and representatives) against any claims and/ or liabilities of any nature, including reasonable attorneys’ fees, arising out of the performance of this Agreement. The City specifically agrees that RLF loan decisions are the prerogative of the RLF Loan Committee, and that the Sub-Recipient has no liability of any kind for decisions and actions related thereto, including loan decisions that were made prior to this Agreement. M. TERMINATION OF AGREEMENT. If any of the following events occur, the City may, in its sole discretion, declare such event a default under this Agreement (“ Event of Default”): 1. Any representation or warranty made by the Sub-Recipient in this Agreement, or in any request or certificate or other information furnished to the City under this Agreement, proves to have been incorrect in any material respect; or 2. The Sub-Recipient fails in any material respect to carry out its obligations under its proposal to the City for the assistance provided under this Agreement. If the Sub-Recipient fails to perform any of its duties under this Agreement or if any Event of Default occurs, the City may declare the Sub-Recipient to be in default and thereafter give the Sub-Recipient written notice setting forth the action or inaction that constitutes the default and giving the Sub-Recipient 45 days in 222 59 250 Page 6 of 7 which to correct the default. If the Sub-Recipient fails to correct the default within 45 days of receipt of such notice, the City may terminate this Agreement without further notice, subject to the terms of Section L above. The parties agree that this Agreement provides for reasonable and sufficient notice to be given to the Sub- Recipient in case of the Sub-recipient’s failure to comply with any of its covenants and that this notice is sufficient for the Sub-Recipient to rectify its actions or inactions of default. The waiver by the City of any default by the Sub-Recipient does not constitute a waiver of a continuing breach or a waiver of a subsequent breach. Any agreement contrary to this Agreement is not binding upon either party unless it is in writing and signed by both parties. N. CONSTRUCTION AND VENUE This Agreement will be construed under and governed by the laws of the State of Montana. The City and the Sub-Recipient agree that performance of this Agreement is in the County of Gallatin, State of Montana, and that in the event of litigation concerning it, venue is in the District Court of the Judicial District in and for the City of Bozeman, Montana. This Agreement has been approved by City Commission and by Sub-recipient’s Board of Directors, each of which has authorized the undersigned persons to execute this Agreement on its behalf. O. ATTORNEY’S FEES. In the event that either party incurs legal expenses, including the costs, expenses, salary and fees of the in-house counsel, to include City Attorney, to enforce the terms and conditions of this Agreement, the prevailing party is entitled to recover reasonable attorney's fees and other costs and expenses, whether the same are incurred with or without suit, including fees on appeal. P. PUBLIC MEETINGS AND ACCESS TO PUBLIC RECORDS. The Sub-Recipient’s RLF Loan Committee shall comply with the open meeting requirements of Montana law, including those set forth in Title 7, Chapter 1, Part 41, MCA and Title 2, Chapter 3, MCA. To help ensure compliance, the Sub- Recipient shall provide RLF Committee meeting agendas to the City Clerk’s office no later than 72 working hours prior to meeting for notice on the City’s official posting board and any other sites deemed reasonable by the Clerk’s office. In addition, meeting minutes will be kept by the Sub-Recipient and provided to the City Clerk’s office no later than 45 days after the meeting. These minutes shall be posted and made available to the public by the City Clerk’s office except for those minutes taken during a closed meeting in accordance with 7-1-4144, MCA. Minutes taken during a closed meeting shall also be provided to the City Clerk’s office but shall be handled in accordance with the City Clerk’s regular executive session protocol and kept private in a secured cabinet. In accordance with 7-1-4144, MCA and subject to any applicable legal obligation to protect and preserve individual confidential or private information, upon reasonable request and at reasonable times during normal business hours, Sub-Recipient shall make such RLF loan documents and records available for inspection and copying by members of the public. Sub-Recipient may charge for such copying in accordance with the policies of the city, which Sub-Recipient hereby adopts for such purposes. To determine whether a meeting or part of a meeting may be closed to the public and to determine whether information contained in RLF loan documents is protected by law from disclosure, the Sub-Recipient may consult with and seek the advice of the City Attorney at no cost to Sub-Recipient. The advice and consultation shall be on behalf of the RLF Committee and not Gallatin Development Corporation. 223 60 251 Page 7 of 7 Q. ELIGIBILITY. The Sub-Recipient certifies that the Sub-Recipient and the Sub-recipient's principals are not debarred, suspended, voluntarily excluded, or otherwise ineligible for participation in federally assisted contracts under Executive Order 12549, "Debarment and Suspension". ( 24 CFR 24.505) IN WITNESS WHEREOF, the parties hereto have executed this Sub-Recipient Agreement on the day of June, 2015. SUB-RECIPIENT: CITY: Nick Zelver Date Chris Kukulski Date President, Board of Directors City Manager Gallatin Development Corporation, City of Bozeman DBA “Prospera Business Network” Attest: Attest: Lilia Tyrell Date Stacy Ulmen, CMC Date Secretary, Board of Directors City Clerk Gallatin Development Corporation, City of Bozeman DBA “Prospera Business Network Approved as to Form: Greg Sullivan Date Bozeman City Attorney 224 61 252 SUB-RECIPIENTAGREEMENTFOR COMMUNITYDEVELOPMENTBLOCKGRANTREVOLV/NGLOANFUND July 2013-July 2015 THIS AGREEMENT is entered into this ~ day of July, 2013 by the CITY OF BOZEMAN, MONTANA, whose address is 121 N Rouse, Bozeman MT 59715, herein referred to as the "City", and the GALLATIN DEVELOPMENT CORPORATION , doing business as PROSPERA BUSINESS NETWORK, whose address is 222 East Main Street, Suite 102, Bozeman MT 59715, anonprofit economic development corporation, herein referred to as the "Sub-Recipient ." WITNESSETH THAT: WHEREAS, the City has applied to and has been approved by the Montana Department of Commerce MTDOC) for the receipt of grant funds under the Montana Community Development Block Grant Economic Development (CDBG) Program; and WHEREAS, the City wishes to use present and future CDBG grants and loan fund revenue to further develop the "CDBG Revolving Loan Fund" (RLF) which is designed to leverage private investment in new business for the purpose ofgeneratingnew jobs within the City ofBozeman; and WHEREAS, the City has previously entered into an Agreement with the Sub-Recipient to sub-grant the CDBG funds to the Sub-Recipient and engage the Sub-Recipient to administer the City of Bozeman (RLF) jointly on their behalf for a period oftwenty four months; and WHEREAS, to maintain accountability, professional management and program performance, it is deemed to be in the best interests of the City to extend the Agreement with the Sub-Recipient for two additional years, as hereinafter provided; and WHEREAS, the City desires to continue to sub-grant the CDBG funds to the Sub -Recipient and engage the Sub-Recipient to administer the RLF on the City's behalf; and WHEREAS, there exists City of Bozeman Economic Development Revolving Loan Fund Guidelines, established pursuant to Commission Resolution 3488 which are hereby included in this agreement; and WHEREAS, pursuant to Resolution 3488 there exists a City ofBozemanRevolvingLoanFundCommittee the " RLF Committee"); to evaluate the feasibility and investment potential of proposed economic development projects; and WHEREAS, the parties to this Agreement understand that neither of them has in any way, expressly or impliedly, abrogated any ofits individual powers, and further agree that this Agreement does not create any new organization or legal entity. Pagel of7 225 62 253 NOW, THEREFORE, in consideration of the mutual covenants and conditions set out in this Agreement, the parties agree that the foregoing statements of fact are true and correct and further agree as follows: A. SPECIAL PROVISIONS. The City agrees, under the terms and conditions ofthisAgreement, to sub- grant to the Sub-Recipient the CDBG loan funds as a grant for gap financing and technical assistance to elig1ble borrowers and does hereby transfer, assign and convey to Sub-Recipient all of the City's interest in and to its existing RLF loan portfolio. B. INDEPENDENT CONTRACTOR. It is understood by the parties hereto that the Sub-Recipient is an independent contractor and that neither its principals nor its employees, ifany, are employees of the City for purposes of tax, retirement system, or social security (FICA) withholding. It is further understood that pursuant to section 39-71-401, MCA, the Sub-Recipient has obtained, and will maintain at its expense for the duration of this Contract, coverage in a workers' compensation plan for its principals and employees for the services to be performed hereunder. C. SCOPEOFSERVICES. The Sub-Recipient will perform the following services: 1. The Sub-Recipient will be responsible for all facets of the CDBG financing program as described in the Management Plan for the CDBG project, a copy ofwhich the City has delivered or will deliver to Sub- Recipient prior to execution of this Agreement. The Sub-Recipient will also be responsible for all aspects oftheRevolvingLoan Fund program, including the following: a) Develop, apply and enforce written Policies and Procedures as they relate to the City of Bozeman RLF program and/ or administering the RLF program under the local CDBG grant program, including the creation and operation ofan RLF Loan Committee to review and act upon loan requests. b) Application process through approval: a. Assist prospective borrowers in completing loan application materials; b. Conduct UCC lien searches, ifapplicable and pertinent to the proposed loan collateral c. Provide a project analyses to the RLF Loan Committee; d. Coordinate monthly RLF Loan Committee meetings; and e. Present proposed projects to RLF Loan Committee for loan approval or denial. Decisions as to loan approval or denial are the sole responsibility oftheRLFLoan Committee, and the City shall have no authority or ability to intervene in the loan approval or denial process. c) Loan Closing and Documentation: a. Completion ofloan documentation using loan documentation software; b. Loan closing, to be conducted by a title company or by Sub-Recipient; c. Funds disbursement and payment processing, utilizing the GMS Loan Accounting software; and d. Collection and retention, for Sub-Recipient's use, ofJoan fees and charges, as provided in Sub-Recipient's Policies and Procedures. d) Loan Servicing Oversight: a. Gather and analyze monthly or quarterly financial reports from borrowers as required by the applicable loan agreement; Page 2 of7 226 63 254 b. Track and monitor status ofborrower insurance policies; c. Track and monitor UCC financing statement filings and renewals; and d . Provide monthly loan updates to RLF Loan Committee. e) Process monthly loan payments a. Track, receive, process and account for all monthly loan pay1nents b. Track late payments - mailing late notices and calling delinquent borrowers, as needed c. Work with delinquent borrowers to cure defaults and, where appropriate, develop a work -out plan, subject to approval ofthe RLF Loan Committee. f) Monitor and process all forfeitures ofloan collateral and use commercially reasonable efforts to collect delinquent and defaulted loans, including the filing ofcreditor'sclaimsin bankruptcy, where applicable, subject to the approval oftheRLFLoanCommittee. 2. The Sub-Recipient shall maintain eligibility as a Community-Based Development Organization pursuant to Title 24, Part 504, CFR, and shall ensure all activities conducted pursuant to this Agreement comply with all federal and state regulations regarding community development block grants. 3. During the term of this Agreement, the Sub-Recipient will maintain reasonable records of its performance under this Agreement in a manner consistent with generally accepted accounting principles. The Sub -Recipient will provide the City ( or its authorized representatives) access to these records at any time during normal business hours. Upon written request of the City, the Sub-Recipient will submit to the City, in the format prescribed by the City, semi-annual status reports on its performance under this Agreement. 4 . Except as set forth in Section (4) below, the Sub -Recipient will retain, administer, manage, record, and account to the City for all RLF Joan fund revenue received subsequent to the date of this Agreement, including principal and interest received from borrowers. Sub-Recipient will use such revenue to enhance the RLF program for the benefit ofall eligible borrowers located within the City ofBozeman. 5. As payment for the services rendered by Sub-Recipient, the Sub-Recipient shall retain either $32,000.00 or eighteen percent (18%) ofthe total of payments on interest and principal from loan repayments and interest earned on the principal balance, whichever is greater. The Sub-Recipient may retain and pay such compensation to itself in installments, not more frequently than monthly. In no case, except for the Sub-Recipient's expenses for attorney fees and attorney costs related to collection efforts as described in subsection 6 of this section, shall the payment for services to the Sub -Recipient result in a decrease in the base principal amount ofthe fund as determined on a yearly basis. 6. Sub-Recipient is entitled to use RLF funds for any costs incurred by Sub-Recipient in connection with the collection of delinquent or defaulted loans, including but not limjted to any filing fees or legal fees and costs. It is specifically agreed and understood that any such use ofRLF funds in this manner by the Sub-Recipient is separate and distinct from the payment Sub-Recipient will be receiving for its services; that is to say, costs and fees incurred in connection with the collection of delinquent or defaulted loans will be paid by RLF Funds and not by the Sub-Recipient. D. EFFECTIVE DATE AND TIME OF PERFORMANCE. This Agreement supersedes all previous agreements, whether written or oral, between the City and the Sub-Recipient dealing with the City of Bozeman RLF program. The term ofthisAgreement shall be twenty four (24) months, commencing on the date of execution by the parties. This Agreement will terminate upon expiration of its initial term, unless extended in writing by mutual agreement of the parties, orifeither party fails to meet the conditions of this Page 3 of7 227 64 255 Agreement or if an Event ofDefault occurs, after notice and opportunity to cure as provided in Section N below. E. CONFLICT OF INTEREST. The Sub-Recipient covenants that it presently has no interest and will not acquire any interest, direct or indirect, in the CDBG project that would conflict in any manner or degree with the performance of its services hereunder. The Sub-Recipient further covenants that, in performing this Agreement, itwill employnopersonwhohas any such interest. F. CIVIL RIGHTS ACT OF 1964. The Sub-Recipient will abide by the provisions of the CiYil Rights Act of 1964, which states that under Title Vl, no person may, on the grounds of race , color, or national origin, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving federal financial assistance. G. SECTION 109 OF THE HOUSINGANDCOMMUNITYDEVELOPMENT ACT OF 1974. The Sub-Recipient will comply with the following provision: No person in the United States may on the grounds of race, color, national origin, or sex be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity funded in whole or in part with the funds made available under this title. Any prohibition against discrimination on the basis of age under the Age Discrimination Act of 1975 or with respect to an otherwise qualified handicapped individual as provided in Section 504 of the Rehabilitation Act of 1973 will also apply to anysuch program or activity. H. NONDISCRIMINATION. In addition to the requirements of subseciton G, above, the Sub- Recipient will not discriminate against any employee or applicant for employment on the basis of race, color, religion, creed, political ideas, sex, age, marital status, or national origin, or because of actual or perceived gender sexual orientation or gender identity or disability., TheSub-Recipient agrees this provision will apply to the hiring and treatment of the Sub-Recipient's employees and shall be included in all loan agreements with borrowers and apply to the use and expenditure ofRLF funds. l. REPORTS AND INFORMATION. The Sub-Recipient will maintain accounts and records, including personnel, property and financial records, adequate to identify and account for all costs pertaining to this Agreement and such other records as may be deemed necessary by the City to assure proper accounting for all project funds. These records will be made available for audit purposes to the City or its authorized representative, and will be retained for three years after receipt of final payment for the services rendered under this Agreement unless permission to destroy them is granted by the City. J. ADMINISTRATION 1. For purposes of implementing this Agreement, the City will appoint a local government project representative that will work with the Sub-Recipient. The parties will meet as necessary to provide for the efficient and smooth implementation ofthisAgreementand the activities contained herein. 2. The parties agree the RLF Committee shall have final decision making authority regarding the loaning of RLF funds and shall follow guidelines set forth in Commission Resolution No. 3488 except that this Agreement supersedes the requirements ofCommission Resolution 3488 only in so far as it relates to any provision in Resolution 3488 in conflict with this Agreement. Page 4 of7 228 65 256 3. To ensure the composition of the RLF Committee complies with applicable federal regulations, the Committee shall consist of seven members, two of which shall be appointed by the City Commission, with the remaining five to be appointed by the Sub-Recipient. 4. The Sub-Recipient wm comply with the " Certifications for Application" signed by the City and submitted with the application for economic development assistance to the Montana Department of Commerce. 5. The Sub-Recipient shall ensure that all borrowers, to whom Sub-Recipient lends RLF funds after the effective date of this Agreement, comply with the State of Montana Department of Commerce's Community Development Block Grant-Economic De,relopment Program Application Guidelines pertaining to low and moderate income persons. 6. The Sub-Recipient will comply with Procurement Standards as outlined in Chapter 3 and Chapter 8 of the CDBG Administration Manual before entering into any agreements to remodel, to purchase equipment or material, or to retain the services ofaconsultantorSub-Recipient. 7. The Sub-Recipient will contract with an independent accounting firm to conduct an annual audit sufficient to obtain an unqualified opinion of the RLF loan fund and program as conducted by Sub- Recipient under this Agreement. K TERMINATION - DISPOSITION OF REAL PROPERTY OR EQUIPMENT ACQUIRED. Upon the expiration or termination of this Agreement, the Sub-Recipient will transfer to the City the then- existing RLF loan portfolio and all related loan records, together with the then-existing balance in the Sub- Recipient's RLF Joan fund, Jess any unpaid portion of Sub-Recipient's compensation under this Agreement to the date ofexpiration or termination. L. INDEMNIFICATION. The parties agree to waive any and all claims and recourse against one another, including the right of contribution of loss or damage to person or property arising from , growing out of, or in any way connected with or incidental to the parties' performance of this Agreement. Each party shall indemnify, defend and hold harmless the other party ( including such other party's affiliates, partners, officers, directors, employees, agents and representatives) against any claims and/ or liabilities of any nature, including reasonable attorneys' fees, arising out oftheperformanceofthisAgreement. The City specifically agrees that RLF loan decisions are the prerogative of the RLF Loan Committee, and that the Sub-Recipient has no liability of any kind for decisions and actions related thereto, including loan decisions that were made prior to this Agreement. M. TERMINATION OF AGREEMENT. If any of the following events occur, the City may, in its sole discretion, declare such event a default under this Agreement ("Event ofDefault"): 1. Any representation or warranty made by the Sub-Recipient in this Agreement, or in any request or certificate or other information furnished to the City under this Agreement, proves to have been incorrect in any material respect; or 2. The Sub-Recipient fails in any material respect to can)' out its obligations under its proposal to the City for the assistance provided under this Agreement. If the Sub-Recipient fails to perform any of its duties under this Agreement or if any Event of Default occurs, the City may declare the Sub-Recipient to be in default and thereafter give the Sub-Recipient written notice setting forth the action or inaction that constitutes the default and giving the Sub-Recipient 45 days in Page 5 of7 229 66 257 which to correct the default. lf the Sub-Recipient fails to correct the default within 45 days of receipt of such notice, the City may terminate this Agreement without further notice, subject to the terms ofSection L above. The parties agree that this Agreement provides for reasonable and sufficient notice to be given to the Sub- Recipient in case of the Sub-recipient's failure to comply with any of its covenants and that this notice is sufficient for the Sub-Recipient to rectify its actions or inactions ofdefault. The waiver by the City of any default by the Sub-Recipient does not constitute a waiver of a continuing breach or a waiver ofa subsequent breach. Any agreement contrary to this Agreement is not binding upon either party unless it is in writing and signed by both parties. N. CONSTRUCTION AND VENUE This Agreement will be construed under and governed by the laws oftheStateofMontana. The City and the Sub-Recipient agree that performance ofthisAgreementis in the County of Gallatin, State ofMontana, and that in the event oflitigation concerning it, venue is in the District Court of the Judicial District in and for the City ofBozeman, Montana. This Agreement has been approved by City Commission and by Sub -recipient's Board ofDirectors, each ofwhich has authorized the undersigned persons to execute this Agreement on its behalf. 0. ATTORNEY'S FEES. In the event that either party incurs legal expenses, including the costs, expenses, salary and fees of the in-house counsel, to include City Attorney, to enforce the terms and conditions ofthisAgreement, the prevailing party is entitled to recover reasonable attorney's fees and other costs and expenses, whether the same are incurred with orwithoutsuit, including fees on appeal. P. PUBLIC MEETINGS AND ACCESS TO PUBLIC RECORDS. The Sub-Recipient's RLF Loan Committee shall comply with the open meeting requirements of Montana law, including those set forth in Title 7, Chapter 1, Part 41, MCA and Title 2, Chapter 3, MCA. To help ensure compliance, the Sub- Recipient shall provide RLF Committee meeting agendas to the City Clerk's office no later than 72 working hours prior to meeting for notice on the City's official posting board and any other si tes deemed reasonable by the Clerk's office. In addition, meeting minutes will be kept by the Sub-Recipient and provided to the City Clerk's office no later than 45 days after the meeting. These minutes shall be posted and made available to the public by the City Clerk's office except for those minutes taken during a closed meeting in accordance with 7-1-4144, MCA. Minutes taken during a closed meeting shall also be provided to the City Clerk's office but shall be handled in accordance with the City Clerk's regular executive session protocol and kept private in a secured cabinet. In accordance with 7-1-4144, MCA and subject to any applicable legal obligation to protect and preserve individual confidential or private information, upon reasonable request and at reasonable times during normal business hours, Sub-Recipient shall make such RLF loan documents and records available for inspection and copying by members of the public. Sub-Recipient may charge for such copying in accordance with the policies ofthe city, whkl1 Sub-Recipient hereby adopts for such purposes. To determine whether a meeting or part ofameetingmay be closed to the public and to determine whether information contained in RLF loan documents is protected by law from disclosure, tl1e Sub-Recipient may consult with and seek the advice of the City Attorney at no cost to Sub-Recipient. The advice and consultation shall be on behalfoftheRLFCommitteeand not Gallatin Development C01poration. Q. ELIGIBILITY. The Sub-Recipient certifies that the Sub-Recipient and the Sub-recipient's Page 6 of7 230 67 258 principals are not debarred, suspended, Yolunrarily excluded, or othen\isc ineligible for participation in federally assisted contracts under Execuri,·e Order 125~9 . "Debarment and Suspension". ( 2~ CFR 2~. 505) lN \\' JTNESS \\.] lEREOF, the parties hereto ha,·e executed this Sub-Recipient . \greement on the I 7+. dayofJuly, 2013. Kathleen )obnso1 President, Board Gallatin De,·clopment Corporation , DB.\ "Prospera Business lctwork" nest: l om Kelly Secretary, Boar Directors Gallatjn DevelopmentCorporation, DB.r\ " Prospera Business Network CITY: c~A~'t Chris Kukulski City !\tanager City ofBozeman nest: J>~ gc 7 of7 7 -IJ Date p II 7-- 13 Date 231 68 259 1 Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Brit Fontenot, Director of Economic Development SUBJECT: Approval of the 2013 – 2015 Sub-Recipient Agreement for the City of Bozeman’ s Community Development Block Grant Revolving Loan Fund with the Gallatin Development Corporation, DBA the Prospera Business Network and Authorize the City Manager to Sign the Agreement. MEETING DATE: July 8, 2013 AGENDA ITEM TYPE: Consent RECOMMENDATION: Approve the 2013 – 2015 Sub-Recipient Agreement for the City’s Community Development Block Grant Revolving Loan Fund with the Gallatin Development Corporation, DBA the Prospera Business Network and Authorize the City Manager to Sign the Agreement. (ATTACHMENT 1) BACKGROUND: Loan payments from recipients of Economic Development Block Grants received from the City through the State of Montana Department of Commerce were placed into the City’s Community Development Block Grant Revolving Loan Fund as a continuing source of funds for further economic development grants. Prospera is uniquely suitable to administer the City’s Community Development Block Grant Revolving Loan Fund because of their long-standing community economic development relationship, extensive experience with the current borrowers, and ability to service the existing loan portfolio. In May of 2006, the first City entered into a Sub-Recipient Agreement, placing overall management of the City’s Revolving Loan Fund (“ the Fund”) with Prospera. The most recent agreement expired on June 20th, 2013. A letter temporarily extending the contract was executed on June 12, 2013 until the Commission was able to approve the renewal of the contract for a two year period. (ATTACHMENT 2) General Information about the Fund (As reported by Prospera on May 31, 2013): Total loans disbursed: $2,428,698.55 Current balance of loans out: $239,950.44 Current loan loss reserve: $93,336.15 Current RLF account balance: $638,868.04 Number of loans in portfolio: 3 Scheduled total monthly repayment into Fund (principal + interest): $4,579.98 27232 69 260 2 Actual total monthly repayment into Fund (principal + interest): $3,663.01 UNRESOLVED ISSUES: One loan is matured and Prospera is in the process of restructuring the loan with the loan recipient. FISCAL EFFECTS: None directly to the City. Prospera will continue to have custody of and administration of the Fund. $ 32,000 or 18% of interest and principal loan repayments whichever is greater) will be retained by Prospera, in the form of a fee for services rendered. Attachments: 1. Sub-recipient agreement between the City of Bozeman and Prospera for administering the Community Development Block Grant Revolving Fund; and 2. June 12, 2013 letter from the City of Bozeman to Prospera temporarily extending the sub- recipient contract until the Commission approves the renewal of the new contract. Report compiled on: June 26, 2013 28233 70 261 Page 1 of 7 SUB-RECIPIENT AGREEMENT FOR COMMUNITY DEVELOPMENT BLOCK GRANT REVOLVING LOAN FUND July 2013 – July 2015 THIS AGREEMENT is entered into this ___ day of July, 2013 by the CITY OF BOZEMAN, MONTANA, whose address is 121 N Rouse, Bozeman MT 59715, herein referred to as the “ City”, and the GALLATIN DEVELOPMENT CORPORATION, doing business as PROSPERA BUSINESS NETWORK, whose address is 222 East Main Street, Suite 102, Bozeman MT 59715, a nonprofit economic development corporation, herein referred to as the “ Sub-Recipient.” WITNESSETH THAT: WHEREAS, the City has applied to and has been approved by the Montana Department of Commerce MTDOC) for the receipt of grant funds under the Montana Community Development Block Grant Economic Development (CDBG) Program; and WHEREAS, the City wishes to use present and future CDBG grants and loan fund revenue to further develop the “ CDBG Revolving Loan Fund” ( RLF) which is designed to leverage private investment in new business for the purpose of generating new jobs within the City of Bozeman; and WHEREAS, the City has previously entered into an Agreement with the Sub-Recipient to sub-grant the CDBG funds to the Sub-Recipient and engage the Sub-Recipient to administer the City of Bozeman (RLF) jointly on their behalf for a period of twenty four months; and WHEREAS, to maintain accountability, professional management and program performance, it is deemed to be in the best interests of the City to extend the Agreement with the Sub-Recipient for two additional years, as hereinafter provided; and WHEREAS, the City desires to continue to sub-grant the CDBG funds to the Sub-Recipient and engage the Sub-Recipient to administer the RLF on the City’s behalf; and WHEREAS, there exists City of Bozeman Economic Development Revolving Loan Fund Guidelines, established pursuant to Commission Resolution 3488 which are hereby included in this agreement; and WHEREAS, pursuant to Resolution 3488 there exists a City of Bozeman Revolving Loan Fund Committee the “ RLF Committee”); to evaluate the feasibility and investment potential of proposed economic development projects; and WHEREAS, the parties to this Agreement understand that neither of them has in any way, expressly or impliedly, abrogated any of its individual powers, and further agree that this Agreement does not create any new organization or legal entity. 29234 71 262 Page 2 of 7 NOW, THEREFORE, in consideration of the mutual covenants and conditions set out in this Agreement, the parties agree that the foregoing statements of fact are true and correct and further agree as follows: A. SPECIAL PROVISIONS. The City agrees, under the terms and conditions of this Agreement, to sub- grant to the Sub-Recipient the CDBG loan funds as a grant for gap financing and technical assistance to eligible borrowers and does hereby transfer, assign and convey to Sub-Recipient all of the City’s interest in and to its existing RLF loan portfolio. B. INDEPENDENT CONTRACTOR. It is understood by the parties hereto that the Sub-Recipient is an independent contractor and that neither its principals nor its employees, if any, are employees of the City for purposes of tax, retirement system, or social security (FICA) withholding. It is further understood that pursuant to section 39-71-401, MCA, the Sub-Recipient has obtained, and will maintain at its expense for the duration of this Contract, coverage in a workers' compensation plan for its principals and employees for the services to be performed hereunder. C. SCOPE OF SERVICES. The Sub-Recipient will perform the following services: 1. The Sub-Recipient will be responsible for all facets of the CDBG financing program as described in the Management Plan for the CDBG project, a copy of which the City has delivered or will deliver to Sub- Recipient prior to execution of this Agreement. The Sub-Recipient will also be responsible for all aspects of the Revolving Loan Fund program, including the following: a) Develop, apply and enforce written Policies and Procedures as they relate to the City of Bozeman RLF program and/ or administering the RLF program under the local CDBG grant program, including the creation and operation of an RLF Loan Committee to review and act upon loan requests. b) Application process through approval: a. Assist prospective borrowers in completing loan application materials; b. Conduct UCC lien searches, if applicable and pertinent to the proposed loan collateral c. Provide a project analyses to the RLF Loan Committee; d. Coordinate monthly RLF Loan Committee meetings; and e. Present proposed projects to RLF Loan Committee for loan approval or denial. Decisions as to loan approval or denial are the sole responsibility of the RLF Loan Committee, and the City shall have no authority or ability to intervene in the loan approval or denial process. c) Loan Closing and Documentation: a. Completion of loan documentation using loan documentation software; b. Loan closing, to be conducted by a title company or by Sub-Recipient; c. Funds disbursement and payment processing, utilizing the GMS Loan Accounting software; and d. Collection and retention, for Sub-Recipient’s use, of loan fees and charges, as provided in Sub-Recipient’s Policies and Procedures. d) Loan Servicing Oversight: a. Gather and analyze monthly or quarterly financial reports from borrowers as required by the applicable loan agreement; 30235 72 263 Page 3 of 7 b. Track and monitor status of borrower insurance policies; c. Track and monitor UCC financing statement filings and renewals; and d. Provide monthly loan updates to RLF Loan Committee. e) Process monthly loan payments a. Track, receive, process and account for all monthly loan payments b. Track late payments – mailing late notices and calling delinquent borrowers, as needed c. Work with delinquent borrowers to cure defaults and, where appropriate, develop a work-out plan, subject to approval of the RLF Loan Committee. f) Monitorandprocessall forfeitures of loan collateral and use commercially reasonable efforts to collect delinquent and defaulted loans, including the filing of creditor’s claims in bankruptcy, where applicable, subject to the approval of the RLF Loan Committee. 2. The Sub-Recipient shall maintain eligibility as a Community-Based Development Organization pursuant to Title 24, Part 504, CFR, and shall ensure all activities conducted pursuant to this Agreement comply with all federal and state regulations regarding community development block grants. 3. During the term of this Agreement, the Sub-Recipient will maintain reasonable records of its performance under this Agreement in a manner consistent with generally accepted accounting principles. The Sub-Recipient will provide the City (or its authorized representatives) access to these records at any time during normal business hours. Upon written request of the City, the Sub-Recipient will submit to the City, in the format prescribed by the City, semi-annual status reports on its performance under this Agreement. 4. Except as set forth in Section (4) below, the Sub-Recipient will retain, administer, manage, record, and account to the City for all RLF loan fund revenue received subsequent to the date of this Agreement, including principal and interest received from borrowers. Sub-Recipient will use such revenue to enhance the RLF program for the benefit of all eligible borrowers located within the City of Bozeman. 5. As payment for the services rendered by Sub-Recipient, the Sub-Recipient shall retain either $32,000.00 or eighteen percent (18%) of the total of payments on interest and principal from loan repayments and interest earned on the principal balance, whichever is greater. The Sub-Recipient may retain and pay such compensation to itself in installments, not more frequently than monthly. In no case, except for the Sub-Recipient’s expenses for attorney fees and attorney costs related to collection efforts as described in subsection 6 of this section, shall the payment for services to the Sub-Recipient result in a decrease in the base principal amount of the fund as determined on a yearly basis. 6. Sub-Recipient is entitled to use RLF funds for any costs incurred by Sub-Recipient in connection with the collection of delinquent or defaulted loans, including but not limited to any filing fees or legal fees and costs. It is specifically agreed and understood that any such use of RLF funds in this manner by the Sub-Recipient is separate and distinct from the payment Sub-Recipient will be receiving for its services; that is to say, costs and fees incurred in connection with the collection of delinquent or defaulted loans will be paid by RLF Funds and not by the Sub-Recipient. D. EFFECTIVE DATE AND TIME OF PERFORMANCE. This Agreement supersedes all previous agreements, whether written or oral, between the City and the Sub-Recipient dealing with the City of Bozeman RLF program. The term of this Agreement shall be twenty four (24) months, commencing on the date of execution by the parties. This Agreement will terminate upon expiration of its initial term, unless extended in writing by mutual agreement of the parties, or if either party fails to meet the conditions of this 31236 73 264 Page 4 of 7 Agreement or if an Event of Default occurs, after notice and opportunity to cure as provided in Section N below. E. CONFLICT OF INTEREST. The Sub-Recipient covenants that it presently has no interest and will not acquire any interest, direct or indirect, in the CDBG project that would conflict in any manner or degree with the performance of its services hereunder. The Sub-Recipient further covenants that, in performing this Agreement, it will employ no person who has any such interest. F. CIVIL RIGHTS ACT OF 1964. The Sub-Recipient will abide by the provisions of the Civil Rights Act of 1964, which states that under Title VI, no person may, on the grounds of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving federal financial assistance. G. SECTION 109 OF THE HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1974. The Sub-Recipient will comply with the following provision: No person in the United States may on the grounds of race, color, national origin, or sex be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity funded in whole or in part with the funds made available under this title. Any prohibition against discrimination on the basis of age under the Age Discrimination Act of 1975 or with respect to an otherwise qualified handicapped individual as provided in Section 504 of the Rehabilitation Act of 1973 will also apply to any such program or activity. H. NONDISCRIMINATION. In addition to the requirements of subseciton G, above, the Sub- Recipient will not discriminate against any employee or applicant for employment on the basis of race, color, religion, creed, political ideas, sex, age, marital status, or national origin, or because of actual or perceived gender sexual orientation or gender identity or disability., The Sub-Recipient agrees this provision will apply to the hiring and treatment of the Sub-Recipient’s employees and shall be included in all loan agreements with borrowers and apply to the use and expenditure of RLF funds. I. REPORTS AND INFORMATION. The Sub-Recipient will maintain accounts and records, including personnel, property and financial records, adequate to identify and account for all costs pertaining to this Agreement and such other records as may be deemed necessary by the City to assure proper accounting for all project funds. These records will be made available for audit purposes to the City or its authorized representative, and will be retained for three years after receipt of final payment for the services rendered under this Agreement unless permission to destroy them is granted by the City. J. ADMINISTRATION 1. For purposes of implementing this Agreement, the City will appoint a local government project representative that will work with the Sub-Recipient. The parties will meet as necessary to provide for the efficient and smooth implementation of this Agreement and the activities contained herein. 2. The parties agree the RLF Committee shall have final decision making authority regarding the loaning of RLF funds and shall follow guidelines set forth in Commission Resolution No. 3488 except that this Agreement supersedes the requirements of Commission Resolution 3488 only in so far as it relates to any provision in Resolution 3488 in conflict with this Agreement. 32237 74 265 Page 5 of 7 3. To ensure the composition of the RLF Committee complies with applicable federal regulations, the Committee shall consist of seven members, two of which shall be appointed by the City Commission, with the remaining five to be appointed by the Sub-Recipient. 4. The Sub-Recipient will comply with the “ Certifications for Application” signed by the City and submitted with the application for economic development assistance to the Montana Department of Commerce. 5. The Sub-Recipient shall ensure that all borrowers, to whom Sub-Recipient lends RLF funds after the effective date of this Agreement, comply with the State of Montana Department of Commerce’s Community Development Block Grant-Economic Development Program Application Guidelines pertaining to low and moderate income persons. 6. The Sub-Recipient will comply with Procurement Standards as outlined in Chapter 3 and Chapter 8 of the CDBG Administration Manual before entering into any agreements to remodel, to purchase equipment or material, or to retain the services of a consultant or Sub-Recipient. 7. The Sub-Recipient will contract with an independent accounting firm to conduct an annual audit sufficient to obtain an unqualified opinion of the RLF loan fund and program as conducted by Sub- Recipient under this Agreement. K. TERMINATION - DISPOSITION OF REAL PROPERTY OR EQUIPMENT ACQUIRED. Upon the expiration or termination of this Agreement, the Sub-Recipient will transfer to the City the then- existing RLF loan portfolio and all related loan records, together with the then-existing balance in the Sub- Recipient’s RLF loan fund, less any unpaid portion of Sub-Recipient’s compensation under this Agreement to the date of expiration or termination. L. INDEMNIFICATION. The parties agree to waive any and all claims and recourse against one another, including the right of contribution of loss or damage to person or property arising from, growing out of, or in any way connected with or incidental to the parties’ performance of this Agreement. Each party shall indemnify, defend and hold harmless the other party ( including such other party’s affiliates, partners, officers, directors, employees, agents and representatives) against any claims and/ or liabilities of any nature, including reasonable attorneys’ fees, arising out of the performance of this Agreement. The City specifically agrees that RLF loan decisions are the prerogative of the RLF Loan Committee, and that the Sub-Recipient has no liability of any kind for decisions and actions related thereto, including loan decisions that were made prior to this Agreement. M. TERMINATION OF AGREEMENT. If any of the following events occur, the City may, in its sole discretion, declare such event a default under this Agreement (“ Event of Default”): 1. Any representation or warranty made by the Sub-Recipient in this Agreement, or in any request or certificate or other information furnished to the City under this Agreement, proves to have been incorrect in any material respect; or 2. The Sub-Recipient fails in any material respect to carry out its obligations under its proposal to the City for the assistance provided under this Agreement. If the Sub-Recipient fails to perform any of its duties under this Agreement or if any Event of Default occurs, the City may declare the Sub-Recipient to be in default and thereafter give the Sub-Recipient written notice setting forth the action or inaction that constitutes the default and giving the Sub-Recipient 45 days in 33238 75 266 Page 6 of 7 which to correct the default. If the Sub-Recipient fails to correct the default within 45 days of receipt of such notice, the City may terminate this Agreement without further notice, subject to the terms of Section L above. The parties agree that this Agreement provides for reasonable and sufficient notice to be given to the Sub- Recipient in case of the Sub-recipient’s failure to comply with any of its covenants and that this notice is sufficient for the Sub-Recipient to rectify its actions or inactions of default. The waiver by the City of any default by the Sub-Recipient does not constitute a waiver of a continuing breach or a waiver of a subsequent breach. Any agreement contrary to this Agreement is not binding upon either party unless it is in writing and signed by both parties. N. CONSTRUCTION AND VENUE This Agreement will be construed under and governed by the laws of the State of Montana. The City and the Sub-Recipient agree that performance of this Agreement is in the County of Gallatin, State of Montana, and that in the event of litigation concerning it, venue is in the District Court of the Judicial District in and for the City of Bozeman, Montana. This Agreement has been approved by City Commission and by Sub-recipient’s Board of Directors, each of which has authorized the undersigned persons to execute this Agreement on its behalf. O. ATTORNEY’S FEES. In the event that either party incurs legal expenses, including the costs, expenses, salary and fees of the in-house counsel, to include City Attorney, to enforce the terms and conditions of this Agreement, the prevailing party is entitled to recover reasonable attorney's fees and other costs and expenses, whether the same are incurred with or without suit, including fees on appeal. P. PUBLIC MEETINGS AND ACCESS TO PUBLIC RECORDS. The Sub-Recipient’s RLF Loan Committee shall comply with the open meeting requirements of Montana law, including those set forth in Title 7, Chapter 1, Part 41, MCA and Title 2, Chapter 3, MCA. To help ensure compliance, the Sub- Recipient shall provide RLF Committee meeting agendas to the City Clerk’s office no later than 72 working hours prior to meeting for notice on the City’s official posting board and any other sites deemed reasonable by the Clerk’s office. In addition, meeting minutes will be kept by the Sub-Recipient and provided to the City Clerk’s office no later than 45 days after the meeting. These minutes shall be posted and made available to the public by the City Clerk’s office except for those minutes taken during a closed meeting in accordance with 7-1-4144, MCA. Minutes taken during a closed meeting shall also be provided to the City Clerk’s office but shall be handled in accordance with the City Clerk’s regular executive session protocol and kept private in a secured cabinet. In accordance with 7-1-4144, MCA and subject to any applicable legal obligation to protect and preserve individual confidential or private information, upon reasonable request and at reasonable times during normal business hours, Sub-Recipient shall make such RLF loan documents and records available for inspection and copying by members of the public. Sub-Recipient may charge for such copying in accordance with the policies of the city, which Sub-Recipient hereby adopts for such purposes. To determine whether a meeting or part of a meeting may be closed to the public and to determine whether information contained in RLF loan documents is protected by law from disclosure, the Sub-Recipient may consult with and seek the advice of the City Attorney at no cost to Sub-Recipient. The advice and consultation shall be on behalf of the RLF Committee and not Gallatin Development Corporation. Q. ELIGIBILITY. The Sub-Recipient certifies that the Sub-Recipient and the Sub-recipient's 34239 76 267 Page 7 of 7 principals are not debarred, suspended, voluntarily excluded, or otherwise ineligible for participation in federally assisted contracts under Executive Order 12549, "Debarment and Suspension". ( 24 CFR 24.505) IN WITNESS WHEREOF, the parties hereto have executed this Sub-Recipient Agreement on the day of July, 2013. SUB-RECIPIENT: CITY: Kathleen Johnson Date Chris Kukulski Date President, Board of Directors City Manager Gallatin Development Corporation, City of Bozeman DBA “Prospera Business Network” Attest: Attest: Tom Kelly Date Stacy Ulmen, CMC Date Secretary, Board of Directors City Clerk Gallatin Development Corporation, City of Bozeman DBA “Prospera Business Network Approved as to Form: Greg Sullivan Date Bozeman City Attorney 35240 77 268 36241 78 269 SUB -RECIPIENT AGREEMENT FOR COMMUNITY DEVELOPMENT BLOCK GRANT REVOLVING LOAN FUND July 2015 —July 2017 THIS AGREEMENT is entered into this day of June, 2015 by the CITY OF BOZEMAN, MONTANA, whose address is 121 N Rouse, Bozeman MT 59715, herein referred to as the " City", and the GALLATIN DEVELOPMENT CORPORATION, doing business as PROSPERA BUSINESS NETWORK, whose address is 2015 Charlotte Street, Suite 1, Bozeman MT 59718, a nonprofit economic development corporation, herein referred to as the " Sub -Recipient." WITNESSETH THAT: WHEREAS, the City has applied to and has been approved by the Montana Department of Commerce MTDOC) for the receipt of grant funds under the Montana Community Development Block Giant Economic Development (CDBG) Program; and WHEREAS, the City wishes to use present and future CDBG giants and loan fund revenue to further develop the " CDBG Revolving Loan Fund" ( RLF) which is designed to leverage private investment in new business for the purpose of generating new jobs within the City of Bozeman; and WHEREAS, the City has previously entered into an Agreement with the Sub -Recipient to sub -grant the CDBG funds to the Sub -Recipient and engage the Sub -Recipient to administer the City of Bozeman (RLF) jointly on their behalf for a period of twenty four months; and WHEREAS, to maintain accountability, professional management and program performance, it is deemed to be in the best interests of the City to extend the Agreement with the Sub -Recipient for two additional years, as hereinafter provided; and WHEREAS, the City desires to continue to sub -grant the CDBG funds to the Sub -Recipient and engage the Sub -Recipient to administer the RLF on the City behalf; and WHEREAS, there exists City of Bozeman Economic Development Revolving Loan Fund Guidelines, established pursuant to Commission Resolution 3488 which are hereby included in this agreement; and WHEREAS, pursuant to Resolution 3488 there exists a City of Bozeman Revolving Loan Fund Committee the " RLF Committee"); to evaluate the feasibility and investment potential of proposed economic development projects; and WHEREAS, the parties to this Agreement understand that neither of them has in any way, expressly or impliedly, abrogated any of its individual powers, and further agree that this Agreement does not create any new organization or legal entity. Page 1 of 7 79 270 NOW, THEREFORE, in consideration of the mutual covenants and conditions set out in this Agreement, the parties agree that the foregoing statements of fact are true and correct and further agree as follows: A. SPECIAL PROVISIONS. The City agrees, under the terms and conditions of this Agreement, to sub - giant to the Sub -Recipient the CDBG loan funds as a grant for gap financing and technical assistance to eligible borrowers and does hereby transfer, assign and convey to Sub -Recipient all of the City' s interest in and to its existing RLF loan portfolio. B. INDEPENDENT CONTRACTOR. It is understood by the parties hereto that the Sub -Recipient is an independent contractor and that neither its principals nor its employees, if any, are employees of the City for purposes of tax, retirement system, or social security ( FICA) withholding. It is further understood that pursuant to section 39- 71- 401, MCA, the Sub -Recipient has obtained, and will maintain at its expense for the duration of this Contract, coverage in a workers' compensation plan for its principals and employees for the services to be performed hereunder. C. SCOPE OF SERVICES. The Sub -Recipient will perform the following services: 1. The Sub -Recipient will be responsible for all facets of the CDBG financing program as described in the Management Plan for the CDBG project, a; copy of which the City has delivered or will deliver to Sub - Recipient prior to execution of this Agreement. The Sub -Recipient will also be responsible for all aspects of the Revolving Loan Fund program, including the following: a) Develop, apply and enforce written Policies and Procedures as they relate to the City of Bozeman RLF program and/ or administering the RLF program under the local CDBG grant program, including the creation and operation of an RLF Loan Committee to review and act upon loan requests. b) Application process through approval: a. Assist prospective borrowers in completing loan application materials; b. Conduct UCC lien searches, ifapplicable and pertinent to the proposed loan collateral c. Provide a project analyses to the RLF Loan Committee; d. Coordinate monthly RLF Loan Committee meetings; and e. Present proposed projects to RLF Loan Committee for loan approval or denial. Decisions as to loan approval or denial are the sole responsibility of the RLF Loan Committee, and the City shall have no authority or ability to intervene in the loan approval or denial process. c) Loan Closing and Documentation: a. Completion of loan documentation using loan documentation software; b. Loan closing, to be conducted by a title company or by Sub -Recipient; c. Funds disbursement and payment processing, utilizing the GMS Loan Accounting software; and d. Collection and retention, for Sub -Recipient's use, ofloan fees and charges, as provided in Sub -Recipient' s Policies and Procedures. d) Loan Servicing Oversight: a. Gather and analyze monthly or quarterly financial reports from borrowers as required by the applicable loan agreement; Page 2 of 7 80 271 b. Track and monitor status of borrower insurance policies; c. Track and monitor UCC financing statement filings and renewals; and d. Provide monthly loan updates to RLF Loan Committee. e) Process monthly loan payments a. Track, receive, process and account for all monthly loan payments b. Track late payments — mailing late notices and calling delinquent borrowers, as needed c. Work with delinquent borrowers to cure defaults and, where appropriate, develop a work-out plan, subject to approval of the RLF Loan Committee. f) Monitor and process all forfeitures of loan collateral and use commercially reasonable efforts to collect delinquent and defaulted loans, including the filing of creditor' s claims in bankruptcy, where applicable, subject to the approval of the RLF Loan Committee. 2. The Sub -Recipient shall maintain eligibility as a Community -Based Development Organization pursuant to Title 24, Part 504, CFR, and shall ensure all activities conducted pursuant to this Agreement comply with all federal and state regulations regarding community development block giants. 3. During the term of this Agreement, the Sub -Recipient will maintain reasonable records of its performance under this Agreement in a manner consistent with generally accepted accounting principles. The Sub -Recipient will provide the City ( or its authorized representatives) access to these records at any time during normal business hours. Upon written request of the City, the Sub -Recipient will submit to the City, in the format prescribed by the City, semi-annual status reports on its performance under this Agreement. 4. Except as set forth in Section (4) below, the Sub -Recipient will retain, administer, manage, record, and account to the City for all RLF loan fund revenue received subsequent to the date of this Agreement, including principal and interest received from borrowers. Sub -Recipient will use such revenue to enhance the RLF program for the benefit of all eligible borrowers located within the City of Bozeman. 5. As payment for the services rendered by Sub -Recipient, the Sub -Recipient shall retain either $32,000. 00 or eighteen percent ( 18%) of the total of payments on interest and principal from loan repayments and interest earned on the principal balance, whichever is greater. The Sub -Recipient may retain and pay such compensation to itself in installments, not more frequently than monthly. In no case, except for the Sub -Recipient' s expenses for attorney fees and attorney costs related to collection efforts as described in subsection 6 of this section, shall the payment for services to the Sub -Recipient result in a decrease in the base principal amount of the fund as determined on a yearly basis. Sub -Recipient is entitled to use RLF funds for any costs incurred by Sub -Recipient in connection with the collection of delinquent or defaulted loans, including but not limited to any filing fees or legal fees and costs. It is specifically agreed and understood that any such use of RLF funds in this manner by the Sub -Recipient is separate and distinct from the payment Sub -Recipient will be receiving for its services; that is to say, costs and fees incurred in connection with the collection of delinquent or defaulted loans will be paid by RLF Funds and not by the Sub -Recipient. D. EFFECTIVE DATE AND TIME OF PERFORMANCE. This Agreement supersedes all previous agreements, whether written or oral, between the City and the Sub -Recipient dealing with the City of Bozeman RLF program. The term of this Agreement shall be twenty four (24) months, commencing on the date of execution by the parties. This Agreement will terminate upon expiration of its initial term, unless extended in writing by mutual agreement of the parties, or if either party fails to meet the conditions of this Page 3 of 7 81 272 Agreement or if an Event of Default occurs, after notice and opportunity to cure as provided in Section N below. E. CONFLICT OF INTEREST. The Sub -Recipient covenants that it presently has no interest and will not acquire any interest, direct or indirect, in the CDBG project that would conflict in any manner or degree with the performance of its services hereunder. The Sub -Recipient further covenants that, in performing this Agreement, it will employ no person who has any such interest. F. CIVIL RIGHTS ACT OF 1964. The Sub -Recipient will abide by the provisions of the Civil Rights Act of 1964, which states that under Title VI, no person may, on the grounds of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving federal financial assistance. G. SECTION 109 OF THE HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1974. The Sub -Recipient will comply with the following provision: No person in the United States may on the grounds of race, color, national origin, or sex be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity funded in whole or in part with the funds made available under this title. Any prohibition against discrimination on the basis of age under the Age Discrimination Act of 1975 or with respect to an otherwise qualified handicapped individual as provided in Section 504 of the Rehabilitation Act of 1973 will also apply to any such program or activity. H. NONDISCRIMINATION. In addition to the requirements of subseciton G, above, the Sub - Recipient will not discriminate against any employee or applicant for employment on the basis of race, color, religion, creed, political ideas, sex, age, marital status, or national origin, or because of actual or perceived gender sexual orientation or gender identity or disability., The Sub -Recipient agrees this provision will apply to the hiring and treatment of the Sub -Recipient' s employees and shall be included in all loan agreements with borrowers and apply to the use and expenditure of RLF funds. I. REPORTS AND INFORMATION. The Sub -Recipient will maintain accounts and records, including personnel, property and financial records, adequate to identify and account for all costs pertaining to this Agreement and such other records as may be deemed necessary by the City to assure proper accounting for all project funds. These records will be made available for audit purposes to the City or its authorized representative, and will be retained for three years after receipt of final payment for the services rendered under this Agreement unless permission to destroy them is granted by the City. J. ADMINISTRATION 1. For purposes of implementing this Agreement, the City will appoint a local government project representative that will work with the Sub -Recipient. The parties will meet as necessary to provide for the efficient and smooth implementation of this Agreement and the activities contained herein. 2. The parties agree the RLF Committee shall have final decision making authority regarding the loaning of RLF funds and shall follow guidelines set forth in Commission Resolution No. 3488 except that this Agreement supersedes the requirements of Commission Resolution 3488 only in so far as it relates to any provision in Resolution 3488 in conflict with this Agreement. Page 4 of 7 82 273 3. To ensure the composition of the RLF Committee complies with applicable federal regulations, the Committee shall consist of seven members, two of which shall be appointed by the City Commission, with the remaining five to be appointed by the Sub -Recipient. 4. The Sub -Recipient will comply with the " Certifications for Application" signed by the City and submitted with the application for economic development assistance to the Montana Department of Commerce. 5. The Sub -Recipient shall ensure that all borrowers, to whom Sub -Recipient lends RLF funds after the effective date of this Agreement, comply with the State of Montana Department of Commerce' s Community Development Block Grant -Economic Development Program Application Guidelines pertaining to low and moderate income persons. 6. The Sub -Recipient will comply with Procurement Standards as outlined in Chapter 3 and Chapter 8 of the CDBG Administration Manual before entering into any agreements to remodel, to purchase equipment or material, or to retain the services of.a consultant or Sub -Recipient. 7. The Sub -Recipient will contract with an independent accounting firm to conduct an annual audit sufficient to obtain an unqualified opinion of the RLF loan fund and program as conducted by Sub - Recipient under this Agreement. K. TERMINATION - DISPOSITION OF REAL PROPERTY OR EQUIPMENT ACQUIRED. Upon the expiration or termination of this Agreement, the Sub -Recipient will transfer to the City the then - existing RLF loan portfolio and all related loan records, together with the then -existing balance in the Sub - Recipient' s RLF loan fund, less any unpaid portion of Sub -Recipient' s compensation under this Agreement to the date of expiration or termination. L. INDEMNIFICATION. The parties agree to waive any and all claims and recourse against one another, including the right of contribution of loss or damage to person or property arising from, growing out of, or in any way connected with or incidental to the parties' performance of this Agreement. Each party shall indemnify, defend and hold harmless the other party ( including such other party' s affiliates, partners, officers, directors, employees, agents and representatives) against any claims and/ or liabilities of any nature, including reasonable attorneys' fees, arising out of the performance of this Agreement. The City specifically agrees that RLF loan decisions are the prerogative of the RLF Loan Committee, and that the Sub -Recipient has no liability of any kind for decisions and actions related thereto, including loan decisions that were made prior to this Agreement. M. TERMINATION OF AGREEMENT. If any of the following events occur, the City may, in its sole discretion, declare such event a default under this Agreement (" Event of Default"): 1. Any representation or warranty made by the Sub -Recipient in this Agreement, or in any request or certificate or other information furnished to the City under this Agreement, proves to have been incorrect in any material respect; or 2. The Sub -Recipient fails in any material respect to carry out its obligations under its proposal to the City for the assistance provided under this Agreement. If the Sub -Recipient fails to perform any of its duties under this Agreement or if any Event of Default occurs, the City may declare the Sub -Recipient to be in default and thereafter give the Sub -Recipient written notice setting forth the action or inaction that constitutes the default and giving the Sub -Recipient 45 days in Page 5 of 7 83 274 which to correct the default. If the Sub -Recipient fails to correct the default within 45 days of receipt of such notice, the City may terminate this Agreement without further notice, subject to the terms of Section L above. The parties agree that this Agreement provides for reasonable and sufficient notice to be given to the Sub - Recipient in case of the Sub -recipient's failure to comply with any of its covenants and that this notice is sufficient for the Sub -Recipient to rectify its actions or inactions of default. The waiver by the City of any default by the Sub -Recipient does not constitute a waiver of a continuing breach or a waiver of a subsequent breach. Any agreement contrary to this Agreement is not binding upon either party unless it is in writing and signed by both parties. N. CONSTRUCTION AND VENUE This Agreement will be construed under and governed by the laws of the State of Montana. The City and the Sub -Recipient agree that performance of this Agreement is in the County of Gallatin, State of Montana, and that in the event of litigation concerning it, venue is in the District Court of the Judicial District in and for the City of Bozeman, Montana. This Agreement has been approved by City Commission and by Sub -recipient's Board of Directors, each of which has authorized the undersigned persons to execute this Agreement on its behalf. O. ATTORNEY'S FEES. In the event that -either party incurs legal expenses, including the costs, expenses, salary and fees of the in-house counsel, to include City Attorney, to enforce the terms and conditions of this Agreement, the prevailing party is entitled to recover reasonable attorney' s fees and other costs and expenses, whether the same are incurred with or without suit, including fees on appeal. P. PUBLIC MEETINGS AND ACCESS TO PUBLIC RECORDS. The Sub -Recipient' s RLF Loan Committee shall comply with the open meeting requirements of Montana law, including those set forth in Title 7, Chapter 1, Part 41, MCA and Title 2, Chapter 3, MCA. To help ensure compliance, the Sub - Recipient shall pro dde RLF Committee meeting agendas to the City Clerk' s office no later than 72 working hours prior to meeting for notice on the City' s official posting board and any other sites deemed reasonable by the Clerk' s office. In addition, meeting minutes will be kept by the Sub -Recipient and provided to the City Clerk' s office no later than 45 days after the meeting. These minutes shall be posted and made available to the public by the City Clerk's office except for those minutes taken during a closed meeting in accordance with 7- 1- 4144, MCA. Minutes taken during a closed meeting shall also be provided to the City Clerk' s office but shall be handled in accordance with the City Clerk' s regular executive session protocol and kept private in a secured cabinet. In accordance with 7- 1- 4144, MCA and subject to any applicable legal obligation to protect and preserve individual confidential or private information, upon reasonable request and at reasonable times during normal business hours, Sub -Recipient shall make such RLF loan documents and records available for inspection and copying by members of the public.'Sub-Recipient may charge for such copying in accordance with the policies of the city, which Sub -Recipient hereby adopts for such purposes. To determine whether a meeting or part of a meeting may be closed to the public and to determine whether information contained in RLF loan documents is protected by law from disclosure, the Sub -Recipient may consult with and seek the advice of the City Attorney at no cost to Sub -Recipient. The advice and consultation shall be on behalf of the RLF Committee and not Gallatin Development Corporation. Page 6 of 7 84 275 Q. ELIGIBILITY. The Sub -Recipient certifies that the Sub -Recipient and the Sub -recipient's principals are not debarred, suspended, voluntarily excluded, or otherwise ineligible for participation in federally assisted contracts under Executive Order 12549, " Debarment and Suspension". ( 24 CFR 24.505) IN WITNESS WHEREOF, the parties hereto have executed this Sub -Recipient Agreement on the day ofJune, 2015. SUB -RECIPIENT: k) , L CS- cs Nick Zelver Date President, Board of Directors Gallatin Development Corporation, DBA "Prospera Business Network" Attest: Lilia Tyrell Date Secretary, Board of Directors Gallatin Development Corporation, DBA "Prospera Business Network CITY: v Chris Kukulski Date City Manager City of Bozeman Attest: 0 3' r Sta _y ' fin, CMC e _ '- t- :; _I_late - <' , City Clerk` City of Bozeman qTI co Approved as to Form: L& L/ 7 Greg van Date Bozeman City Attorney Page 7 of 7 85 276 277 278 279 280 281 282 283 284 From: Paul Reichert To: Brit Fontenot Cc: Carolyn Murray; Alex Evans Subject: RLF extension Date: Wednesday, January 8, 2020 11:53:49 AM Attachments: Extension to Sub-Recipient Agreement 2019.pdf Hi Brit, I am requesting an additional 6 month extension to our RLF sub-recipient agreement that ends this month. This extension will ensure consistent service for our existing loan clients, and it will give you adequate time to process a RFP for a future agreement. I have attached our current extension document for convenience. Thanks Brit Paul Reichert, Executive Director Prospera Business Network 2501 Charlotte St. #1 Bozeman MT 59718 406.587.3113 Find us at prosperamt.org 285 Second Amendment to Sub-Recipient Agreement for Community Development Block Grant Revolving Loan Fund FY 2019-2020 Page 1 of 2 SECOND AMENDMENT TO SUB-RECIPIENT AGREEMENT THIS SECOND AMENDMENT TO THE SUB-RECIPIENT AGREEMENT FOR COMMUNITY DEVELOPMENT BLOCK GRANT REVOLVING LOAN FUND made effective on the date last executed on July 24, 2017 (the “Agreement”) is made and entered effective the _________________ (”Effective Date”), by and between the CITY OF BOZEMAN, MONTANA, a self-governing municipal corporation organized and existing under its Charter and the laws of the State of Montana, 121 North Rouse Street, Bozeman, Montana, with a mailing address of PO Box 1230, Bozeman, MT 59771, hereinafter referred to as “City,” and PROSPERA BUSINESS NETWORK, whose address is 2015 Charlotte Street, Suite 1, Bozeman MT 59718, a nonprofit economic development corporation, hereinafter referred to as “Sub-Recipient.” In consideration of the mutual covenants and agreements herein contained, the receipt and sufficiency whereof being hereby acknowledged, the parties hereto agree to amend the Agreement as follows: 1. Extension of Term. Section D of the Agreement is amended to extend the term of the Agreement from the Effective Date until JULY 31, 2020. The Agreement shall terminate on July 31, 2020 unless earlier terminated as provided in the Agreement. 2. Agreement still valid. All remaining terms and provisions of the Agreement remain valid. **** END OF AGREEMENT EXCEPT FOR SIGNATURES **** 286 Second Amendment to Sub-Recipient Agreement for Community Development Block Grant Revolving Loan Fund FY 2019-2020 Page 2 of 2 IN WITNESS WHEREOF, the parties hereto have executed this instrument the day and year first above written. CITY OF BOZEMAN, MONTANA PROSPERA BUSINESS NETWORK By________________________________ By_____________________________ Dennis Taylor, Interim City Manager Paul Reichert, Executive Director APPROVED AS TO FORM By_______________________________ Greg Sullivan, Bozeman City Attorney 287