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HomeMy WebLinkAboutE1 Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Tracey Jette, Gallatin Dev. Corporation & Chris Kukulski, City Manager SUBJECT: Sub-recipient agreement for CDBG RLF MEETING DATE: May 22, 2006 BACKGROUND: In March 2006, Gallatin Development Corporation submitted a proposal to the Commission for the total management of the City’s Community Development Block Grant Revolving Loan Fund. During the March discussion, the Commission wanted to agreement to sunset at two years so that we would be forced to access the arrangement and we also wanted to improve the annual audit information that must be reported to the City’s finance department. Both items have been included in the agreement. Historically, GDC has partnered with the City to provide loan packaging services as well as management of the application process for the City’s CDBG RLF. In the current this arrangement the City’s legal department is responsible for much of the paper work. If approved, GDC would become responsible for the overall management (as outlined in the agreement) of the City’s RLF for a time period of two (2) years. The attached agreement defines the proposed relationship between GDC and the City. The agreement has been reviewed and approved by both the City’s attorney and GDC’s attorney. RECOMMENDATION: That the City Commission authorize the City Manager to sign the attached agreement between the City and GDC for management of the City’s CDBG RLF. FISCAL EFFECTS: GDC will be allowed to utilize $19,000 proceeds from the RLF to cover their for administration of the fund. The administrative fee cannot utilize any principal. ALTERNATIVES: As suggested by the City Commission. Respectfully submitted, _________________________________ ____________________________ Tracey Jette, Gallatin Development Corporation Chris A. Kukulski, City Manager Attachments: Sub-Recipient Agreement for CDBG Report compiled on May 17, 2006 1 SUB-RECIPIENT AGREEMENT FOR ”, and ALLATIN DEVELOPMENT CORPORATION, whose address is 222 East Main, Suite 102, Bozeman MT 59715, a nonprofit local development c ferred to as the “Sub-recipient.” approved by the Montana Department of Commerce DOC), for the receipt of grant funds under the Montana Community Development Block Grant er evelop the “CDBG Revolving Loan Fund” (RLF) which is designed to leverage private investment in aintain accountability, professional management and program performance, is deemed to be in the best interests of the City to enter into an Agreement with the Sub-recipient as HEREAS, the City desires to sub-grant the CDBG funds to the Sub-recipient and engage the Sub- nt understand that neither of them has in any way, expressly or plied, abrogated any of its individual powers, and further agree that this Agreement does not create REFORE, in consideration of the mutual covenants and conditions set out in this Agreement, e parties agree that the foregoing statements of fact are true and correct and further agree as COMMUNITY DEVELOPMENT BLOCK GRANT THIS AGREEMENT is entered into this day of ,2006, by the CITY OF BOZEMAN, MONTANA, whose address is PO Box 1230, Bozeman, MT 59771, herein referred to as the “City G orporation, herein re WITNESSETH THAT: WHEREAS, the City has applied to and has been (M Economic Development (CDBG) Program; and WHEREAS, the City wishes to use present and future CDBG grants and loan fund revenue to furth d new business for the purpose of generating new jobs within the corporate city limits of the City. WHEREAS, in order to m it hereinafter provided; W recipient to administer the RLF on the City’s behalf, and WHEREAS, the parties to this Agreeme im any new organization or legal entity. NOW THE th 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, consisting of those loans and loan records identifie in Exhibit “A” attached to and by this reference made a part of this Agreement, together with d its xisting RLF loan fund balance as of the date of execution of this Agreement in the amount of $ e . 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 2 ity for purposes of tax, retirement system, or social security (FICA) withholding. It is further tained, and will aintain at its expense for the duration of this Contract, coverage in a workers' compensation plan for C. C understood that pursuant to section 39-71-401, MCA, the Sub-recipient has ob m its principals and employees for the services to be performed hereunder. SCOPE OF SERVICES. The Sub-recipient will perform the following services: . The Sub-recipient will be responsible for all facets of the CDBG financing program as described in the o Sub-re r all asp ) Develop, apply and enforce written Policies and Procedures as they relate to the loan program under the local CDBG grant program, inc act upon loa (b) App a ication materials collateral o the RLF Loan Committee e. to RLF Loan Committee for loan approval or denial (c) Loa a. cumentation using Banker’s Systems ARTA Loan b. y Sub-recipient c. Funds disbursement and payment processing, utilizing the GMS Loan e edures (d) Loa ts from borrowers as quired by the applicable loan agreement. f borrower insurance policies (e) Pro a. 1 Management Plan for the CDBG project, a copy of which the City has delivered or will deliver t cipient prior to execution of this Agreement. The Sub-recipient will also be responsible fo ects of the local RLF program, including the following: (a program and/or administering the RLF luding the creation and operation of an RLF Loan Committee to review and n requests. lic tion process through approval a. Assist prospective borrowers in completing loan appl b. Conduct UCC lien searches, if applicable and pertinent to the proposed loan c. Provide a project analyses t d. Coordinate monthly RLF Loan Committee meetings Present proposed projects n Closing and Documentation Completion of loan do Documentation software Loan closing, to be conducted by a title company or b Accounting softwar d. Collection and retention, for Sub-recipient’s use, of loan fees and charges, as provided in Sub-recipient’s Policies and Proc n Servicing Oversight a. Gather and analyze monthly or quarterly financial repor re b. Track and monitor status o c. Track and monitor UCC financing statement filings and renewals d. Provide monthly loan updates to RLF Loan Committee cess monthly loan payments Track, receive, process and account for all monthly loan payments 3 owers to cure defaults and, where appropriate, develop a work-out plan, subject to approval of Sub-recipient’s RLF Loan . During the term of this Agreement, the Sub-recipient will maintain reasonable records of its 3. . The Sub-recipient may retain and pay such compensation to itself in installments, not more frequently monthly, so long as the total of such installments . Sub-recipient is responsible for any costs incurred by Sub-recipient in connection with the col ut not limited to any filing fees or legal fees and costs. In addition to the compensation set forth in the immediately preceding paragraph, b. Track late payments – mailing late notices and calling delinquent borrowers, as needed c. Work with delinquent borr 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 2 performance under this Agreement in a manner consistent with generally accepted accounting principles. The Sub-recipient will allow the City or its authorized representative’s 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. 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 corporate city limits of the City. As payment for the services to be rendered by Sub-recipient under this Agreement, the City will initially pay the Sub-recipient the sum of $19,000 per year, payable by the Sub-recipient retaining and paying such compensation to itself from RLF revenue derived solely from interest paid by borrowers on loans granted under the RLF program does not exceed the total annual compensation to be paid to Sub-recipient under this Agreement. At no time will the RLF loan fund principal be used to pay Sub-recipient for the services to be performed under this Agreement, without the prior written consent of the City. The parties may adjust Sub-recipient’s compensation annually upon authorization by the City Commission and the Sub-recipient’s Board of Directors. 4 lection of delinquent or defaulted loans, including b Sub-recipient shall be entitled to use RLF revenue derived solely from interest paid by borrowers and from income earned on the RLF fund to reimburse itself for such costs incurred in the collection of delinquent or defaulted loans. 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 RLF program. The term of this Agreement shall be 24 months, commencing on the date of execution by the parties. This Agreement will terminat 4 e upon expiration f its initial term, unless extended in writing by mutual agreement of the parties, or if either party fails o to meet the conditions of this 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 ot acquire any interest, direct or indirect, in the CDBG project that would conflict in any manner or nts that, in s any such interest. n degree with the performance of its services hereunder. The Sub-recipient further covena performing this Agreement, it will employ no person who ha 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. jected to discrimination under any program r activity funded in whole or in part with the funds made available under this title. Any prohibition 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 sub o 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. 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 tatus, physical or mental handicap, or national origin. s 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 s authorized representative, and will be retained for three years after receipt of final payment for the it services rendered under this Agreement unless permission to destroy them is granted by the City. J. PUBLIC MEETINGS AND PUBLIC ACCESS TO RECORDS. Subject to those meetings or portions of those meetings at which an individual’s right to privacy outweighs the public’s right to know as determined by the chairperson of such meeting, the Sub-recipient’s RLF Loan Committee will comply with the “open meeting” requirements of Montana law, including those set forth in MCA Title 7, apter 1, Part 41, and Title 2, Chapter 3. accordance with MCA Section 7-1-4144 and subject to any applicable legal obligation to protect and preserve individual confidential or private information, upon reasonable request and at Ch In 5 reason and records available for inspection and copying by members of the public. Sub-recipient may charge r such copying in accordance with the policies of the City, which Sub-recipient hereby adopts for K. able times during normal business hours, Sub-recipient will make such RLF loan documents fo such purposes. 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. 3. 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- greement. A copy of the audit report will be delivered to the City project representative no later than 30 days after completion of the audit 2. 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. The Sub-recipient will comply with Procurement Standards as outlined in Chapter 3 and Chapter recipient. 4. The Sub-recipient will contract with an independent accounting firm to conduct an annual audit of the RLF loan fund and program as conducted by Sub-recipient under this Agreement. The scope of the audit must be sufficient to issue an unqualified audit opinion each year, including the audit for the first year of this a report. L. 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. M. INDEMNIFICATION The b-recipient waives any and all Su claims and recourse against the City, including the right of ontribution of loss or damage to person or property arising from, growing out of, or in any way ce of the City or its officers, agents or employees. The ub-recipient will indemnify, hold harmless, and defend the City against any and all claims, demands, damages, costs, expenses, or liability arising out of the Sub-recipient’s performance of this Agreement c connected with or incidental to the Sub-recipient’s performance of this Agreement, except claims arising from the concurrent or sole negligen S 6 except for liability arising out of the concurrent or sole negligence of the City or its officers, agents, or mployees. N. e 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 the Sub-recipient fails to perform any of its duties under this Agreement or if any Event of Default fails to correct the default within 5 days of receipt of such notice, the City may terminate this Agreement without further notice, jec ve. he waiver by the City of any default by the Sub-recipient does not constitute a waiver of a continuing D VENUE 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 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 which to correct the default. If the Sub-recipient 4 sub t to the terms of Section L abo 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. T 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. O. CONSTRUCTION AN ate of e his Agreement has been approved by City Commission and by Sub-recipient’s Board of Directors, 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, St Montana, and that in the event of litigation concerning it, venue is in the District Court of th Judicial District in and for the City of Bozeman, Montana. T each of which has authorized the undersigned persons to execute this Agreement on its behalf. P. ATTORNEY’S FEES 7 he costs, expenses, salary and fees f the in-house counsel, to include City Attorney, to enforce the terms and conditions of this greement, the prevailing party is entitled to recover reasonable attorney's fees and other costs In the event that either party incurs legal expenses, including t o A and expenses, whether the same are incurred with or without suit, including fees on appeal. Q. ELIGIBILITY. nt's principals are not debarred, uspended, voluntarily excluded, or otherwise ineligible for participation in federally assisted contracts nder Executive Order 12549, "Debarment and Suspension". (24 CFR 24.505) b-recipient Agreement on the The Sub-recipient certifies that the Sub-recipient and the Sub-recipie s u IN WITNESS WHEREOF, the parties hereto have executed this Su day of , 2006. SUB-RECIPIENT: CITY: Scott Levandowski Date Chris Kukulski Date President Manager Gallatin Development Corporation City of Bozeman Attest: Attest: Rod Ridenour Date Brit T. Fontenot Date Secretary City Clerk Gallatin Development Corporation City of Bozeman