HomeMy WebLinkAboutResolution 3200 Revised CDBG loan development guidelines
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COMMISSION RESOLUTION NO. 3200
A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF BOZEMAN,
MONTANA, REVISING GUIDELINES FOR THE COMMUNITY DEVELOPMENT
BLOCK GRANT ECONOMIC DEVELOPMENT REVOLVING lOAN FUND, AND
SUPERSEDING COMMISSION RESOLUTION NO. 2852.
WHEREAS, the City of Bozeman has received four economic development grants,
totalling $725,000, from the Community Development Block Grant program administered
by the State of Montana Department of Commerce to fund specific loan requests; and
WHEREAS, the City of Bozeman is now beginning to receive payments on these
loans, with said payments going into the Community Development Block Grant Revolving
Loan Fund; and
WHEREAS, the City Commission did, on the 9th day of December 1991, establish
guidelines for the Community Development Block Grant Revolving Loan Fund, by adopting
Commission Resolution No. 2852; and
WHEREAS, the City Commission did, on the 27th day of May determine that
revisions of the guidelines for the Community Development Block Grant Revolving Loan Fund
are needed.
NOW, THEREFORE, BE IT RESOLVED by the City Commission of the City of
Bozeman, Montana that the revised guidelines for the Community Development Block Grant
Revolving Loan Fund, attached hereto as Exhibit "A", and by this reference made a part
hereof, are hereby adopted.
PASSED AND ADOPTED by the City Commission of the City of Bozeman, Montana,
at a regular session thereof held on the 15th day of September 1997.
( C)~ / /i~~
DON E. STUECK, Mayor
ATTEST:
(tJ:- ;/ ~
ROBIN L. SULLIVAN
Clerk of the Commission
APPROVED AS TO FORM:
l~A~
PAUL J. .....
City At mey
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CITY OF
BOZEMAN
ECONOMIC DEVELOPMENT REVOLVING LOAN FUND
GUIDELINES
L. INTRODUCTION
The City of Bozeman has received several grants from the Montana Community
Development Block GrantR99.j~!i~~M9~~y~!:!~:I~g~ Program. The first Grant reccivcd was a
$500,000 Multi Purpose Grant (for housing and public facilities), the proceeds of which are
plDecd in a Revolving Loan Fund and arc governed by City Commission Resolution ~Jo. 2823
which commits the program income to housing and neighborhood rovit::llization for tho
benefit of low and moderate income persons. These funds arc maintained completely
sep::lr::ltely, and ::Ire not included in the Economic Development Revolving LO::ln Fund.
:gj~'r~~~.:tQ~.::p~r!Q.g~~:~~r~'I,~,~~,~:~:~~~'1g~g.~: the City r~g~~i*~q has been successful in its
quost for four~~*~ Economic Development Grants, and with those funds awarded tfle
followi ng loa ns to ~:~:~.g~.~~---~~I~:::::::!!:!r~~:~:~::::::!:gl:j:::::B!9~~I~M~..tp8:~:~!r~~iBg~:~:::j:jg!~~iB~:::::::I~~~~i~:!~
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SCHNEE'S BOOT WORKS: July 1 a87
$150,000 to be repaid over a term of 20
years with interest Qt five percent, with principal and interest deferred through
December 31, 1989. P::Iyments on prinoip::ll bal::lnce of $500 per month beginning
January 1 aao for 12 months. The $144,000 principal balance shall begin accruing
interest on January 1, 1 a91 at the rote of 5 %, and payments of $950.34 will then
be amortized over a 20 yem period.
ILX LlGHT\NA'JE CORPORATION: August 1988
$300,000 to be repaid over ::I
term of 8 years, with principal and interest deferred through March 31, 1 aD 1 .
Commencing April 1, 1 aa1, the principal balQnee of $300,000 shall be amortized
over ::In 8 year period at the r::lte of 5%, payable in quarterl." installments of
$11,432.37, with the first payment becoming due on July 1, 1991.
LATTICE MATERIALS CORPORATION: March 1990
$180,000 to be repaid over
a term of 1 0 yems. Interest will be deferred until August
1, 1991. Quarterly
principal PQyments of $1,000 each shall be made commencing on September 1,
1990. Commencing August 1, 1991, the principal balance of
$176,000 shall be
amortized over a 9 year period of time at 6.25 peroent interest, with monthly
payments of $2, 134.84 to begin on September 1, 1091.
CVR OAK DESIGNS: March 1000
$95,000 to be repaid over a term of 10 years
at arK interest. Payments of interest shall be made on a monthly basis commencing
on July 1, 1000. Payments of principal ::md interest on the note will commence on
January 1, 1991. The interest rate shall be reduced 1/8% for each LMI job created,
with 16 jobs anticipQted, for an anticipated interest rate of 69{' at elose out of the
grant. Monthly payments of $1,048. 57 began on January 1, 1 a91 .
Payments from these grants ~qip~, as well as any future economic development
grants from the Montana Community Development Bloek Grant Program, will be H~*~.::~g~m
deposited into an interest-bearing Economic Development Revolving Loan Fund, hereinafter
referred to as "Fund". Interest earnings and income generated from future th~$e investments
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will be ~b:i'M~...I;@:~ reinvested into the FundijJjd these funds will be ~:r~ loaned to local
businesses for the purpose of furthering economic development in the Bozeman jurisdictional
area.
Loons that assist for profit cntities must be dctcrmined
to be "nccessary and
oppropriatc" os defined in, and determined by following the procedures contained in the
current Montano CDBG Application Guidelines and current HUD policy. The City shall retain
records to document compliance with this requirement including the financial analysis
conducted to determine whether the financial assistanoe to the for profit business was
"necessary and appropriate".
By Resolution of the City Commission, an Economic Development
Loan Review
Committee, hereinafter referred to as "Committee". was formed to evaluate the feasibility
and investment potential of proposed economic development projects. Committee members
include:
A. Director
of Planning or designee;
B. Director
of Operations or designee;
C. A representative
of the Gallatin Development Corporation;
D. A representative
of a local commercial lender organization;
E. A representative
of H.R.D.C.;
F. A representative
of the Capital Opportunities Board of Directors; and
G. A principle
owner/partner of a business which has previously received an
economic
development loan from the City or County.
The members will be appointed by the City Commission and will serve two-year terms, with
the initial terms rotated to ensure on adequate carryover of members. Members may serve
more than one two-year term, if re-appointed by the City Commission. l:dY....grs~tHi?~j~
m
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The Committee will serve in an advisory role in recommending
attractive economic
development investment projects to the Bozeman City Commission. The City Attorney shall
serve as legal counsel to the Committee.
The City shall, at a minimum, maintain the following
records regarding the Fund:
-- sources
of program income, including interest earned;
-- a schedule
of anticipated program income receipts (e.g. a loan amortization
schedule
for each outstanding loan);
-- designated
person(s) or entity(ies) responsible for tracking loan payments
and servicing
the loan(s);
-- policies
and procedures for determining how the program income funds will
be expended
and for what activities;
-- names of
the person(s) or board(s) responsible for implementing the
program
inoome plan and
for ensuring compliance with applicable
requirements;
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-- dates and amounts of program income deposits and disbursements;
and
~~ the activities funded with program income,
lL. ADMINISTRATION
The Fund will be administered by the Bozeman City County Planning Officc !Q'I!y
1'~:~:~:I'~'t, or by a consultant or contractor working under the supervision of the City Count'(
Planning Office E~tY-I~Q~g~r, A maximum of seven ~~!~: percent of the fund balance may
be used for administrative costs, including, but not limited to:
A. Personal Services (salaries, benefits, etc.)
B. Offiee Costs (supplies, postage, telephone, printing)
C. Consulting
D. Legal assistance
E. Financial planning and loan packaging technical assistance
F. Travel and Training
G. Project Monitoring
All costs shall be itemized, including time, and only the documented costs will be
eligible as administrative costs,
All program income received by the City after close-out of a CDBG Economic
Development project is subject to the provisions of Title I (all CDBG requirements that
applied during the project) until all CDBG grants received by the City are closed out by the
Department of Commerce. Annual reports explaining the activities of the fund shall be made
to the Montana Department of Commerce, Business '~9IB~,m~9 Development Division.
IlL. ELIGIBLE ACTIVITIES
Priority will be given to projects 'v'Vhich will hove the greatest potential for crcating
or retaining long term employment opportunities with the City's jurisdictional orca for low
and moderate income persons. A minimum of 51 percent of the jobs to be directly created
or retained through the crootion of thc project must be held by or ......ill be filled with low and
moderate income persons, with low and moderate income levcls e3tablished os set forth in
the most current State CDBG guidelines. fflrigri~yi!!!I:!:!'!::!!!!!~~!~~9~M~rf"~g::~:~~Qi:!:Q:~~~i~::::~:~~~:~:~
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:~:~:!!!~~!:~:!::j:lliJm~y1~~~1Ptqyi~~:'~~~:g:iJi'!,,~y':J9~~8g9~li~y::,j:9~~~"~'r~~~~i'Q~,~",':~~~b9~~I:b:~:r~'~b~
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iij~~iIY!Qg,:,lq:r~:"i,i:R~:~~~:Q9:~~::~~U"~mp!9Y~~~8 The cost per job to be created or retained for low
and moderate income persons must not exceed $20,000 per job.
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~:~JI~I~ffll[[::II:~~j~i[~[j[j~~:~:;:;j~l:fu:ib9~@~.::@~~.!~~;fi~~[:[[:~~::jj~:~~::..~gttP.rg~!~:;j:~[~[~.i:ffl~.~~.:I~:~:!jj:~;j~;~t~.p,r!;~I[~:~
Typical eligible activities inelude: land acquisition;
public facilities and other
improvements, such as water and sewer lines, and access roads, specific to the project;
loans for acquisition, construction, rehabilitation, expansion, or installation of commercial and
industrial buildings, facilities, equipment, or working capital; and employee training.
The
funds also may be used as a match to other funding sources, as long as they are contingent
upon approval of the other funding source, i.c. Capitol Opportunitics Program.
IV. ELIGIBLE APPLICANTS
Eligible applicants are businesses located within the
Bozeman City-County Master
Plan Area. Applicants who do not meet eligibility criteria for the Fund will be referred
to
appropriate financing sources.
V. APPLICATION PROCEDURES
All applicants arc cncouraged to ~.~991~ discuss their
project with the Eoonomie
Development Loon Review Committcc ~~ij~'f prior to submittal of an application.
The
applicant shall provide all information as requested in the application form, which includes
a business plan,
financial information, hiring and training
information ~:lp.19Yr'l'l~ij~
~r~J.~s~!~~~, and the source, use, and terms of all funds.
VI. LOAN TERMS
The maximum loan amount granted to anyone project from
the City's Fund will be
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The Revolving Loan Fund amount must be
tfUU'''''' """" " t""""'l,uuuuuuuud $100 000 00
~L::$!U):iJJ~]}gr~;Y'i::ng::::::::!52!j1,~::':: ,.. matched on a 1: 1 basis from another source, i.e., private
funds, bank loan, SBA, other
grants, etc.
The term, interest rate, and repayment of the loan shall
be determined after review
of the application and shall be based on the project needs. In no case
will the minimum
allowable interest rate be less than 5 %. All loans must be secured with
~....,':P!r~gfu~:'
~:gij~~rn~~~:~ fixcd osscts, personal guarantccs, or~.qB any other reasonable source of available
collateral.
VII. APPLICATION REVIEW
These Funds will be open for application on a six month
schcdule 9!~99'P:~:':~:9qy~
gi~:r:~. Applications will be reviewed by the Economic Development Loan Review Committee
within 30 days of the receipt of a complete application (See Appendix). Within 15 days of
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completing its review of the application, the Committee will then provide a written report of
their recommendation for determining project eligibility to the Bozeman City Commission.
If the recommendation is supportive of a loan, the Committee will suggest the term and
interest rate of the loan. The report will be made at a regular meeting of the City
Commission, with a notice of the City's scheduled review of the application published in a
newspaper of general circulation in the Bozeman area not less than seven (7) days prior to
the regular meeting. However, confidential information such as financial data, will not
be
made available for public review.
In ordcr to insure 0 fair and competitivc system of rcviewing and reeommcnding
projccts, thc Committcc sholl dcvelop an application scoring system similar to that used by
the Montana Department of Commerce in their COBC application process. The process sholl
include a specified point system which awards applications points on the following review
criteria. Those applications .....hich exceed the criteria will be offered a higher number of
po i nts. m~~:::::::~~~lil:!yi",:::~~,:,::::1:~~:::::::::~:~:~:~:~:::~J:i:"::t9::::::,,~:,@,~:~:::::i:rJ:::::::'~m:~::":,:::pt~~I:~~q'm.9~,'::q~~HI,,,,:iip
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Applications will be reviewed on the following criteria:
-- The business' need forltu,nd assistance and the feasibility
of the
project,
as determined p~'Q)9:m:i~f:~~i~ by the Business Plan.
The demand
for the type of services/products offered
i~;;i__~~cnt
__fiEm ig_!li-~
-- The company's growth potential and resultant community
impact.
-- Q~9~r~~,~~I~Y~r~,9:~:,::'I't~q~m~:r:'::::!'9}i~~~I~m~'"1't:)9j4~!,
Q9:,';'~4~li9"iQ~
,p:r~~~'tS$9'-!rg~~:;
Commitment
to hiring, training, and retaining low and moderate
income
persons
~- Commitment to provide a combination of wages and
benefits to
low and
moderate income hires, that assures a standard of living
above poverty
level and access to health benefits 9Y~li~Y:,J~~~))
-- The cost per job created or retained~ for low and moderate
income
persons
-- ~@pri~:ii~}~~~~~$~~
The Bozeman City Commission will make the final determination on all applications.
If there is not an adequate balance in the fund to finance an application, the
Commission may conditionally commit the available funds to a project, as well as enough
future funds to adequately support the project.
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VIII. ADOPTION/AMENDMENT OF THESE GUIDELINES
These Guidelines have been reviewed at a public meeting of the Bozeman City
Commission and have been adopted by Commission Resolution No.3200 dated September 15,
1997 The Guidelines may be amended after review at a regular meeting by a
majority vote of the Bozeman City Commission, a notice of which shall be published in a
newspaper of general circulation in the Bozeman area, not less than seven days prior to the
meeting.
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APPENDIX
"A"
CITY OF
BOZEMAN
ECONOMIC DEVELOPMENT REVOLVING LOAN FUND
APPLlCA
TION FORM
NAME OF APPLICANT:
NAME OF BUSINESS:
ADDRESS:
CONTACT PERSON:
TELEPHONE NO:
A. GENERAL BUSINESS INFORMATION
1. Type of business/business description:
2. Number of years in business:
3. Form of Business Organization: Sole Proprietorship
Partnership Corporation
Other
Names of Proprietor/Partners/Officers:
5. Number of current employees:
Full Time
Employees
Part Time
Employees
.e... EXPLANA TION OF NEED FOR LOAN
1. Provide a complete Business Plan, which includes business description and products/
services offered; discussion of present or proposed market, including future projections, with
explanation of how the information was developed (market surveys, etc). Document all
identified potential markets with contracts, letters, etc.
2. Provide a complete budget of project, including the source, use, terms and payback
of all funds for the entire project;
3. Provide the following Financial Exhibits for the last three years:
- Balance Sheet
- Profit and Loss Statement
- Cash Flow Statement
- Reconciliation of Net Worth
- Aging of Accounts Receivable and Payable
The above documents must be compiled or reviewed by an independent CPA, with full
disclosure notes. All financial information must be signed by a responsible officer of the
business.
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4. Provide the following earnings projections for 3 years:
- Balance Sheet
- Profit and Loss Statement
- Cash Flow Statement
There must be no time period gaps between the historical statements and the projected
statements. The financial statements must not be dated more than 90 days prior to the date
of application. Earnings projections must include a projected monthly cash flow analysis for
at least one year and until the break even point is projected to be reached. A businesses
that experiences regular or occasional cyclical variations in cash flow, must provide a
narrative explanation of the reason(s) for the occurrence of the cycles and the effects, if any,
on the business' ability to meet its debt obligations.
5. Provide descriptions of all existing and projected debts and lenders, annual debt
service amount, and any related loan requirements.
6. Provide information on working capital needs and verify through cash flow
projections, explaining changes in inventory and receivables.
7. Provide current personal balance sheets for each individual with 10% or more
ownership in the project, as well as a release from principal owners of the business allowing
a personal credit history check by the City as part of the application review.
b. HIRING AND TRAINING PLAN/INFORMATION
The City of Bozeman, Human Resource Development Council, and the Bozeman Branch of
the Montana Job Service will coordinate the development and implementation of Hiring and
Training Plans for businesses seeking
Economic Development Revolving Loan Fund
assistance from the City of Bozeman. It is required that businesses agree to comply with
and follow their final Hiring and Training Plan.
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NOTICE OF INTENTION TO ADOPT
REVISED GUIDELINES FOR THE COMMUNITY DEVELOPMENT
BLOCK GRANT (CDBG) ECONOMIC DEVELOPMENT REVOLVING LOAN
FUND
NOTICE IS HEREBY GIVEN that the City Commission of the
City of Bozeman intends
to consider adoption of Commission Resolution No, 3200, revising guidelines for the
Community Development Block Grant (CDBG) Economic Development Revolving Loan Fund,
superseding Commission Resolution No. 3852, at its regular meeting to be held at 3:00 p.m.
on Monday, September 15, 1997. Copies of the revised guidelines are on file with the Clerk
of the Commission of the City of Bozeman for inspection by the public.
Any and all interested persons are invited to attend
and to state their support of or
opposition to the adoption of the revised guidelines for the Community Development Block
Grant Economic Development Revolving Loan Fund.
For additional information, please contact Robin Sullivan,
Clerk of the Commission,
at 411 East Main Street, Bozeman, Montana, or telephone 582-2320 (TOO 582-2301)
during regular business hours.
DATED this 3rd day of September 1997.
ROBIN
L. SULLIVAN
Clerk
of the Commission
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Publish: Friday, September 5, 1997