HomeMy WebLinkAboutSub-Recipient Agreement for the City Development Block Grant Loan Program with Prospera, Approval of_51
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
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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
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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.
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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;
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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 $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
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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.
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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
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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
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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
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