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HomeMy WebLinkAboutReso 1990-087 - Agreement between the city of redding and the economic development corp for a revolving loan fund J • • RESOLUTION NO. 7j--57 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF REDDING APPROVING THE AGREEMENT BETWEEN THE CITY OF REDDING AND THE ECONOMIC DEVELOPMENT CORPORATION FOR A REVOLVING LOAN FUND, AND AUTHORIZING THE MAYOR TO SIGN SAME. BE IT RESOLVED by the City Council of the City of Redding as follows: 1. The City Council of the City of Redding hereby approves the Agreement between the City of Redding and the Economic Development Corporation providing for a Revolving Loan Fund. 2. The Mayor of the City of Redding is hereby authorized and directed to sign all necessary documents on behalf of the City of Redding and the City Clerk is hereby authorized and directed to attest the signature of the Mayor and to impress the official seal of the City of Redding on the aforesaid documents, when appropriate, upon receipt of documents fully executed by Economic Development Corporation. 3. A true copy of the Agreement referred to herein is attached hereto and made a part hereof. I HEREBY CERTIFY that the foregoing resolution was introduced and read at a regular meeting of the City Council of the City of Redding on the 20th day of February , 1990, and was duly adopted at said meeting by the following vote: AYES: COUNCIL MEMBERS: Buffum, Dahl , Fulton, Johannessen, & Carter NOES: COUNCIL MEMBERS: None ABSENT: COUNCIL MEMBERS: None ABSTAIN: COUNCIL MEMBERS: None SCOTT CARTER, Mayor City of Redding ATTEST: E ' EL A. NICHO S, City .y Connie Strohmayer, Assistant FORM APPROVED: /441e121:44e// :-.---- RANDALL A. HAYS, City ttorney N III ,1110 AGREEMENT BETWEEN CITY OF REDOING AND ECONOMIC DEVELOPMENT CORPORATION REVOLVING LOAN FUND PROGRAM THIS AGREEMENT, made and entered into this day of 19 , by and between the CITY OF REDDING, a municipal corporation, herein- after called "CITY" and the ECONOMIC DEVELOPMENT CORPORATION, a California non-profit corporation, hereinafter called "EDC. " WITNESSETH: WHEREAS, the CITY has entered into a grant agreement with the Department of Housing and Urban Development (HUD) to carry out the Community Development Block Grant (CDBG) program within CITY; and WHEREAS, the City Council has determined that it is in the best interest of CITY, to provide certain economic development services in connection therewith; and WHEREAS, the City Council has determined that the FDC is the appropriate provider of Revolving Loan Funds for the purpose of economic development by creating or retaining jobs for low-income residents of the City of Redding; WHEREAS, the Revolving Loan Fund has been established by CITY as an important part of its Economic Development effort by providing $98,000 in the Final Statement of Community Development Objectives for this purpose; WHEREAS, EDC has been designated by the State of California and the County of Shasta as a nonprofit Economic Development Corporation, and by the S. Small Business Administration to package SBA 503, 504, and 7A loans; WE REAS, EDC has been providing financial counseling services and loan packaging assistance in Shasta County since 19b4, and is capable of :ircVid na the hereinafter stated services as required for the implementation of the CITY' s Revolving Loan Fund through the utilization of Coununity De.-e_opment. Flock Grant (CDBG) funds. III • NOW, THEREFORE, in consideration of the recitals and the mutual obligations of the parties as herein expressed, the parties hereto agree as follows: 1. SCOPE OF SERVICES A. EDC shall provide services in the implementation of the CITY's Revolving Loan Fund for the primary benefit of low-income residents as requested by and under the supervision of the Housing Administrator or designee, and in compliance with the Economic Development Revolving Loan Fund Operating Procedures attached hereto as "Exhibit A." B. EDC agrees to promote and assist the growth and development of small business concerns in Redding under the CITY's Revolving Loan Fund Program. EDC shall provide financial analysis, loan packaging and related advisory services as a means of assisting the CITY' s Revolving Loan Fund. C. EDC shall work with clients to develop feasible financial loan packages. D. EDC shall provide financial analysis of loan applicants to determine the borrower' s eligibility for the loan and ability to repay the loan. E. EDC shall analyze the loan packages according to the Revolving Loan Fund Guidelines established by the CITY. F. EDC shall submit loan packages to the EDC Loan Committee with recommendations of loan approval and terms or disapproval, and to appropriate governmental agencies and/or private lending institutions for loan approval . :DC shall ensure that loan packages are complete and accurate prior to sub- mission co potential lenders. EDC shall continue working with clients and potential lenders until the loan is approved and disbursed or declined or withdrawn. Ill .s H. EDC shall establish and maintain working relationships with lenders, both governmental and private, and with area accountants, brokers and realtors. In addition, EDC shall work closely with CITY staff in marketing and implementing CITY's Revolving Loan Fund. I. EDC shall maintain contact with businesses assisted under the CITY's Revolving Loan Fund for a period of 24 months after signing the loan, and report all such information regarding each business as required by CITY and HUD. After the 24-month period, EDC shall conduct a job audit to insure compliance with job creation/retention requirements. After the 24-month period, EDC shall submit quarterly reports on the status of the loan portfolio within ten working days of the end of each calendar year quarter for the life of the loan. J. EDC must certify for each loan application that assistance will be either: 1. Of primary benefit to low- and moderate-income persons, which for purposes of this Agreement means that at least 60% of the jobs affected ( i.e. , created or retained) meet the following requirements: a. Be made available to low/moderate income persons; or b. Be held by low/moderate income persons. (Low/moderate income persons are those whose total household income prior to being hired do not exceed 80% of the Median Area Income as annually established and updated by HUD and provided by the CITY to EDC; or 2. That the project is in a Redevelopment. Area and will aid in the prevention or elimination of slums and blight. h. EDC shall determine those participants who are eligible for services, the extent of such services and the amount, if any, of Revolving Loan Funds to be expended for such services. III • . L. EDC agrees that no less than ten new full-time permanent jobs shall be created or retained and filled by qualifying low- or moderate-income persons during the course of this Agreement. Part-time jobs shall be accepted on the condition that adequate assurances are provided to insure that these positions will become full-time within a 24-month period. Seasonal jobs shall not be acceptable. For the purposes of this Agreement, the term "full-time permanent job" shall mean a position that is expected to continue for two years or more and consist of a minimum of 35 work hours per week. M. EDC agrees to match $98,000 in CDBG funds with at least an equal amount of funds from other resources for this purpose within the City limits. N. EDC agrees to establish a goal to obtain private local loan commitments for the purpose of supporting the goals of the Revolving Loan Fund Program in the amount of $150,000 over the next two years and be able to show that they are actively pursuing that goal. 0. EDC agrees that if for any reason the funds covered under this Agreement are no longer used for the established purpose, that all payments from the CITY contribution to the revolving loan fund will be returned to the CITY`s Community Development Block Grant Program. P. The representative of CITY shall have the right to review and monitor services performed pursuant to this Agreement. CITY, the Department of Housing and Urban Development, the Comptroller General of the United States, or anv of their duly authorized representatives shall have the right to inspect and/or audit any boobs, documents, papers and records of EDC which are directly Pertinent to the services performed under this Agreement. 0Any services not listed herein but represented in the applica- tion dated February 3, 1988 are hereby incorporated by reference as if set forth in ful . • • 2. TERM/TERMINATION. The term of this Agreement shall be for the 12-month period beginning March 1, 1990 and ending February 28, 1991. In the event EDC violates the provisions of this Agreement for any reason other than the occurrence of circumstances over which it can exercise no effective control and such violation shall not be cured or remedied within thirty (30) days after notice thereof by CITY, in addition to any other remedies provided for herein, CITY shall have the right to terminate this Agreement by written notice duly serviced upon EDC. EDC may terminate Agreement at any time subject to EDC first complying with any and all of its provisions to that point and upon EDC serving thirty (30) days written notice to CITY of intent to terminate services. 3. USE OF FUNDS. Use of CITY's funds allocated hereunder to EDC shall be subject to the following terms and conditions: A. Any funds paid to EDC shall be used solely for the purposes set forth under Scope of Services. B. Funds paid hereunder shall be expended solely for the benefit of City of Redding businesses. All businesses assisted shall be located within the Redding City limits and priority on new jobs shall be given to City residents. C. EDC shall render services utilizing funds paid by the CITY hereunder only to recipients meeting appropriate eligibility criteria under the Revolving Loan Fund Guidelines as approved by the CITY. 4 . PAYMENT. A. Upon execution of this Agreement, payment will be disbursed to EDC upon receipt of invoices documenting reimbursable expenses. B. Unless otherwise approved, funds paid hereunder shall be deposited in a Redding bank with fiscal control as approved by City Finance Director. III ,111 5. PROGRAM INCOME. A. Funds provided under this Agreement shall be returned to the Revolving Loan Program Fund as they are repaid and recycled to other projects meeting the Loan Guidelines of the program. B. "Program Income" means amounts received by EDC generated from the use of funds under the terms of this Agreement. It includes, but is not limited to the following: I. Proceeds from the disposition by sale or long-term lease of real property purchased with CDBG funds; 2. Income from the temporary use, lease, or sale of properties acquired or developed with CDBG funds; 3. Payments of principal and interest on loans made using CDBG funds; 4. Interest earned on CDBG funds held in a revolving fund account; 5. Interest earned on program income pending disposition of such income; and 6. Fees charged to clients in conjunction with the provisions of services and/or financing assisted with CDBG funds. C. Program income may be retained by EDC and used for those activities as set out in the Scope of Services section of this Agreement. D. Program income earned shall be substantially disbursed to the approved activities prior to requesting disbursement of additional funds from CITY. EDC shall show all program income generated using CDBG funds as adjust- ments on their requests for funds submitted to CITY. E. In the event that EDC is unable to expend all program income in the current year, it will be considered as carryover funds available for III . • successive CDBG grant years. If the Agreement is terminated those funds shall revert to CITY. 6. RECORDS. A. EDC agrees to keep all necessary books and records including property, personnel and financial records in connection with the services performed under this Agreement in accordance with CITY Finance Director and in compliance with requirements of Office of Management and Budget Circular A-110 and A-122. B. EDC agrees to maintain and preserve such records during the period from the start of Agreement performance until three (3) years from the submission of the final report or until the CDBG audit hereinafter referred to is conducted and EDC receives CITY notification that said audit has been accepted by HUD, whichever is later. Provided, however, that records which are the subject of audit findings shall be retained over three (3) years after such findings have been resolved. C. The Secretary of HUD, the Comptroller General of the United States, CITY or any of their duly authorized representatives shall have access to and right to examine such records related to this Agreement during said period at any reasonable time during normal and usual business hours of EDC. However, recognizing that EDC may from time to time have records of recipients which are highly personal and confidential in nature, CITY, in its dealings with EDC will at all times maintain said confidentiality and will not require public record to be made or provided that will serve to violate the confiden- tiality requirements of EDC. D. Specifically, EDC shall maintain the following program informa- tion: 1. Evidence of marketing efforts (e.g. , brochures, meeting notices, etc. ) . - 7 - • . 2. Loan applications and disposition of application (e.g. , denied, withdrawn, approved). 3. A log of all activity on all loan packages, and advisory services, including work performed, hours, and persons working on project. 4. Client files of all businesses assisted. 5. Verification that the business could not obtain other financing, and that without Revolving Loan Fund assistance the project could not take place. 6. Statistical information on program beneficiaries as required by HUD and CITY. E. In addition, in order to meet HUD requirements for benefit to low/moderate income persons, EDC shall obtain and maintain the following for each loan package: 1. For businesses which will create new jobs: a. A copy of a written Agreement containing: (1) A commitment by the business that it will make at least 60% of the jobs available to low- and moderate-income persons and will provide training for any of those jobs requiring special skills or education; (2) A listing by lob title of the permanent jobs to be created indicating which jobs will be available to low- and moderate-income persons, which jobs ar,a part-time, and which jobs require special skills or education; and (3) A description of actions to be taken by the grantee and business to ensure that low- and moderate-income persons receive first consideration for those jobs; and b. A listing by job title of the permanent jobs filled, which jobs were available to low- and moderate-income persons, and a description of how first consideration was given to such persons for those jobs. 2. For businesses which will retain existing jobs: Evidence that in the absence of CDBG assistance jobs will be lost; and a . b. A listing by job title of permanent jobs retained, indicating which of those jobs are part time and (where it is known) which are held by low- and moderate-income persons at the time the CDBG assistance is provided. c. Where applicable, identification of any of the retained jobs (other than those known to be held by low- and moderate-income persons) which are projected to become available to low- and moderate-income persons through job turnover within two years of the time CDBG assistance is provided. Information upon which the job turnover projections were based shall also be included in the records; and d. For each retained job claimed to be held by a low- and moderate-income person, information on the size and annual income of the person' s immediate family; and e. For jobs claimed to be available to low- and moderate-income persons based on job turnover, the information set forth above; and f. Where jobs were claimed to be available to low- and moderate-income persons through turnover, a listing of each job which has turned over to date, indicating which of those jobs were either taken by, or avail- able to low- and moderate-income persons. For jobs made available, a description of how first considera- tion was given to such persons for those jobs shall also be included in the record. 7 . FINANCIAL MANAGEMENT. EDC shall maintain a financial management system which provides for: a. Records that identify adequately the source and application of funds for Revolving Loan Fund activities. b. Effective control over and accountability for all funds and other assets. EDC shall adequately safeguard all such funds and assets and shall assure that they are used solely for authorized purposes under this Agreement. c. Comparison of actual outlays with s CDB Comparison �_y budgeted amounts ��ib,., funds. d. Accounting records that are supported by source documentation. 9 e. A systematic method to assure timely and appropriate resolution of audit findings and recommendations. 8. HOLD HARMLESS CLAUSE. In providing its services, EDC will act as an independent contractor and no officer or employee of EDC will be deemed a CITY officer or employee for any purpose. EDC shall hold the CITY, its officers, boards and commissions, and members thereof, its employees and agents harmless of and free from any and all liabilities which might arise out of or are related to the acts or omissions of the EDC in any way relating to the subject matter of this Agreement. CITY shall hold EDC, its officers, boards and commissions, and members thereof, its employees or agents, harmless of and free from any and all liabilities which arise out of or are related to the acts or omissions of the CITY in any way relating to the subject matter of this Agreement. EDC shall indemnify CITY, its officers, boards and commissions, and all members thereof, •its employees and agents, from any judgment rendered against them or any sums paid out in settlement, or otherwise, arising out of any act or omission of EDC in any way relating to the subject of this Agreement. CITi shall indemnify EDC, its officers, boards and commissions, and all members thereof, its employees and agents, from any judgment rendered against them or any sums paid out in settlement, or otherwise arising out of any act or omission of CITY in any way relating to the subject of this Agreement. q. INSURANCE PROVISIONS. EDC shall obtain comprehensive general liability in .trance naming the City, its officers, agents and employees as additional insureds in the amount of $500,000 combined single limits. A -- 10 - • policy of workers compensation insurance meeting California statutory require- ments shall be obtained. A certificate of insurance evidencing such compre- hensive general liability insurance and workers compensation insurance shall be furnished to the City guaranteeing City 10 days notice of cancellation or reduction in coverage in a form approved by the City Risk Manager. 10. LEGAL COMPLIANCES. EDC shall at all times during the term of this Agreement comply with all legal requirements, including any applicable Federal, State or City regulations, and shall secure at its full cost and expense any and all permits, applications or other requirements in connection therewith. 11. CONDITIONS OF AGREEMENT. . A. CITY shall retain ultimate control over matters involving the exercise of judgement and discretion in carrying out the intended program provided for by CDBG funds. B. EDC shall comply with the requirements of Title 24, Part 135, Employment Opportunities for Businesses and Lower-Income Persons in Connection with Assisted Project. C. EDC shall comply with the requirements and standards of OMB Circular No. A-122 and A-110. D. No member of or Delegate to the Congress of the United States, and no Resident Commissioner shall be admitted to any share or part of this Agreement or to any benefit to arise from the same. E. No member, officer or employee of the City of Redding, or its designees or agents, no members of the governing body of the City of Redding, and no other public official of tine City of Redding who exercises any func- tions or rest>_ns bilities with respect to the program during his tenure or for one year thereafter shall have any interest, direct or indirect, in any Ill I contract or subcontract, or the proceeds thereof, for work to be performed in connection with the program assisted under this Agreement. F. The assistance provided under this Agreement shall not be used in the payment of any bonus or commission for the purpose of obtaining HUD approval of the application for such assistance, or HUD approval of applica- tions for additional assistance, or any other approval or concurrence of HUD required under this Agreement, Title I of the Housing and Community Develop- ment Act of 1974 or HUD regulations with respect thereto; provided, however, that reasonable fees or bona fide technical, consultant, managerial or other such services other than actual solicitation, are not hereby prohibited if otherwise eligible as program costs. G. EDC shall comply with the prevailing wage provisions of the Davis - Bacon Act on any project costing in excess of $2,000.00 when 25 percent or more of the costs of such project are paid with Community Develop- ment Block Grant funds. H. EDC shall pay individuals employed in jobs financed in whole or in part with CDBG funds not less than the prevailing rates of pay for such jobs. This provision does not apply to an employee or employees in any program category who are being paid in whole, or in part with CDBG funds unless 25 percent or more of the total wages paid to all employees in that category are paid from CDBG funds. I . EDC shall not discriminate against any person on the grounds of race, color, national origin, age, sex or religion, or against an otherwise qualified handicapped individual. J . EDC shall comply with the National Environmental. Policy Act of - l -- • K. It is the responsibility of EDC to comply with all requirements outlined in this Agreement. Should a default occur, no additional funds will be allocated to the Revolving Loan Fund until such time as all obligations outlined in this Agreement are satisfied. CITY OF REDDING ATTEST: By ETHEL A. NICHOLS, City Clerk SCOTT CARTER, Mayor FORM APPROVED: ECONOMIC DEVELOPMENT CORPORATION By RANDALL A. HAYS, City Attorney Chairman of the Board 111 • EXHIBIT "A" ECONOMIC DEVELOPMENT REVOLVING LOAN FUND OPERATING PROCEDURES TABLE OF CONTENTS I. INTRODUCTION II. ELIGIBLE APPLICANTS III. ELIGIBLE ACTIVITIES LV. INELIGIBLE LOAN ACTIVITIES V. TARGET AREAS VI . TYPES OF FINANCIAL ASSISTANCE A. Jobs Generated/Retained B. Maximum Loan Amount C. Private Financial Commitments D. Loan Terms E. Interest Rate F. Security G. Timely Completion H. Recapture of Funds I. Compliance with City and Federal Conditions/Regulations J. Interest Supplements and Loan Guarantees VII. LOAN APPLICATION AND APPROVAL PROCESS VIII . SET,FCTION PROCESS AND CRITERIA IX. ADMINISTRATION/LOAN APPROVAL X. DELINQUENT LOAN/LOAN DEFAULT PROCEDURES XI . SALE OR TRANSFER OF BUSINESS; ASSUMPTION OF RLF LOANS III • I. INTRODUCTION The City of Redding has established an Economic Development Revolving' Loan Fund (RLF) as part of its Community Development Block Grant (CDBG) Program to expand economic opportunities benefitting principally persons of low- and moderate-income in accordance with regulations in Title I of the Housing and Community Development Act of 1974, as amended (24 CFR, Part 570) . Loan funds are available for various economic development activities undertaken by private businesses which create or retain jobs accessible to low- and moderate-income people, expand the City's tax base and leverage public and private investments. The RLF shall be administered by the Economic Development Corporation (EDC) . The RLF will provide public loans in conjunction with private investments for the development and expansion of businesses. The program is intended to provide assistance to projects whose needs are not currently being met by existing federal and other programs. II. ELIGIBT,F APPLICANTS Funds will be made available on a competitive basis to assist new and existing manufacturing or assembling businesses located in the City of Redding and as a sole proprietorship, partnership or for-profit corporation with a proposed project in the City of Redding. III. ELIGIBLE ACTIVITIES Eligible activities for funding under the RLF Program include all normal project development costs, including but not limited to: - Land and building acquisition; - Off-site improvements; - Building construction/renovation/expansion; - . Capital equipment; - Interim financing; - Clearance, demolition and site preparation; - Parking facilities; - Relocation; - Project "soft costs" ( i.e. , reasonable engineering and architectural costs) ; - Working capital (In tandem with a bank loan - no singular working capital loans, and working capital loans will generally be limited to 30 percent of the total Loan Fund portfolio) ; - Venture capital; • -410 . - SBA 504 Program Companion Loan (Provides long term, fixed rate financing for land and building acquisition, construction and equipment, and requires a minimum 50% private loan and 10% equity. ) The RLF may be used to provide up to 5% of the required equity. IV. INELIGIBLE LOAN ACTIVITIES The following activities/borrowers will not be eligible for an RLF loan: - Non-profit organizations; - Speculative building and renovation; - Land banking; - Loans for the sole purpose of investing in high interest accounts or other investments not related to direct job creation/retention. V. TARGET AREA The RLF may be used throughout the City of Redding providing that it is demonstrated that the funded activities principally benefit low- and moderate-income persons and/or aid in the elimination of slums and blighted areas. VI. TYPES OF FINANCIAL ASSISTANCE All RLF projects must comply with the following financing standards and policies; A. Jobs Generated/Retained A major goal of this program is to create new jobs and to retain existing jobs. It is expected that one new job will be created or one existing job retained for every $10,000 in RLF funding provided. These jobs should principally benefit low and moderate-income people. B. Maximum Loan Amount Except under special circumstances determined by the Economic Development Corporation Loan Committee (EDCLC) , an RLF loan or other financing will not exceed 25% of the entire project cost. C. Private Financia] Commitments ("But For" Condition) Firm private financial commitments must be submitted to the EDCLC before preliminary approval and legally binding commitments must be secured prior to any final RLF loan approval . Applicants must provide, at a minimum, 10 percent cash or equity injection for the project, except in the case of SBA 504 Program Companion Loans. Other private financial conu!d tments may be in the form of loans from financial institutions, the SBA, investors or other sources. RLF participation can he subordinated. • • Private lender commitments may be qualified only on the condition of EDCLC approval of funds and/or the award of other funds to be linked to the RLF loan. Any RLF loan made prior to full commitment of private funds will be subject to that commitment. Applicants must demonstrate that an RLF loan would provide "gap" or "last resort" financing. A project will not be awarded RLF funding unless the primary lender can affirm that "but for the RLF loan, the project would not be implemented as defined." There are several typical kinds of "but for" statements and situations which apply to projects. 1. Projects whose risk would and can prevent the full participation and/or investment by the private sector. 2. New business - these projects would involve entrepreneurs engaged in new businesses, but because of a lack of a "track record" would prohibit private sector financing without public leveraging. 3. Other situations in which the primary lender can affirm that "but for" public leveraging of the financial package, the project would not be feasible. D. Loan Terms 1. Loans for building construction/renovation/expansion/ demolition, improvements and land and building acquisition may have terms of up to seven (7) years. The actual term is negotiable; the deal must justify the maximum term. 2. Loans for capital equipment may have terms of up to seven (7) years. The actual term is negotiable; the deal must justify the maximum term. 3. Loans for interim financing, project "soft costs" may have terms of up to seven (7) years. The actual term is negotiable; the deal must justify the maximum term. 4. The term for working capital loans shall not exceed five (5) years. 5. In no case will the loan term exceed the economic life of the asset to be financed or the term of the lease. Interest Rate The RLF is intended to be a flexible financing tool. The interest rate will be set at the time the loan is made and will generally ranee near the current money center commercial bank prime rate as reported in the Western edition of the "Wall Street Journal . Interest rates shall reflect the amounts of risk and pledged security as determined and evaluated by the EDCLC. Under the appropriate circumstances, loans may be made which permit "interest only" payments for a short period of time at the front end of a loan period. F. Security The EDCLC shall obtain sufficient and adequate collateral to secure all RLF loans. It will usually be in the form of liens on the assets financed, including fixed assets such as machinery and real estate, accounts receivable, inventory and lease agreements. Liens upon other non-project assets of the borrower may also be used to secure the loan. It will also be the general policy of the EDCLC to require personal guarantees by the principal borrowers as deemed appropriate in the circumstances. Personal guarantees will normally be required of all persons/entities holding a 20% or more interest in the borrower. Collateral taken should be of such nature that it is readily marketable, not single purpose. If existing (not being purchased) , an independent appraisal shall be obtained. G. Timely Completion All projects must be completed in a timely fashion, two years or less, with the total resources (both public and private) which are committed. RLF funds are a one-time only funding source. Additional RLF funds will be not awarded over the amount originally approved. H. Recapture of Funds RLF projects are to provide for the recapture of RLF loans. Loan contracts are to include provisions for the repayment of principal and interest and/or provide for an equity participation on behalf of the EDCLC. Recaptured RLF funds will be returned to the RLF for future loan awards. I. Compliance with City, State and Federal Conditions Each applicant must demonstrate an acceptance of and willingness to follow all applicable City, State and Federal regulations, including but not limited to: - Competitive bid procedures; - Davis/Bacon prevailing wage requirements; - Relocation regulations; r_ - Affirmative Action; -- National Environmental Protection Act (NEPA) ; - Provisions of benefits to low- and moderate-income persons; - Historical preservation requirements. • J. Interest Supplements and Loan Guarantee Interest supplements and loan guarantees will be handled by the EDCLC on a case-by-case basis, generally in accordance with the above Financial Standards and Policies. VII. LOAN APPLICATION AND APPROVAL PROCESS All applications for RLF will be made through the Economic Development Corporation. This office will provide application forms, screen applicants, will analyze the applications using RLF standards and will present all loans to the EDCLC for approval or rejection. The following are the general processing steps: A. Initial Applicant Contact. 1 . Applicant makes inquiry; 2. Staff discusses RLF purpose, procedures, and requirements with applicant; 3. Staff may also refer applicants to other sources of public and private capital and, if necessary, direct a client to small business assistance programs. B. EDC provides/send out application form and operating procedures to applicant. C. Applicant returns completed application form, including proof of private financing commitments and application fee. D. EDC staff will review the application to insure that it is complete and to deteiiuine initial eligibility, will check credit and other references, undertake credit analysis, rate the applications and prepare a loan report (staff recommendations) . EDC staff will submit request to City for an environmenta'. determination. Environmental clearance must be obtained before loan approval. The staff report is then presented to the EDCLC. E. The EDCLC considers the application and votes to award or deny the loan application, and any imposed conditions. Applicant will be notified by the EDC. F. EDCLC reco?uuends approval, the EDC prepares the loan documents and requests funds from the City. G. EDC disperses funds and deposits loan payments. H. The EDC monitors the loan the the business activity of the borrower, including number of jobs created and who is filling them, and other required data, and provides loan servicing and counseling. III .• • After EDCLC approval, the business recommended for funding will be notified and may be required to negotiate provisions, terms and conditions for the loans. A funding recommendation may be withdrawn if a reasonable and appropriate contract cannot be negotiated within a period of two months. Finalized copies of the contract will be processed by EDC and properly signed and duly authorized as a loan agreement between the business and the EDC. VIII. SELECTION PROCESS AND CRITERIA To insure the selection of the best possible applications and the maximum utilization of available funds, the EDC shall advertise the program for thirty days by a display ad and notices to client groups. For the first sixty days EDC will accept applications on a competitive basis. Loans which are awarded may include special conditions. Project implementation will only proceed after the EDC has signed and executed agreements with the selected applicants. At the end of the first sixty days, applications will be accepted and considered based on money available, applicant performance, etc. Initial Eligibility Determination In order to receive further consideration, each applicant will first be reviewed by the EDC staff to determine if they meet the following minimum project criteria described in the Financial Standards and Policies section of these procedures: 1. Project location within City of Redding; 2. Eligible applicants and activities; 3. Private or other financial equity commitments as determined by EDCLC; 4. Applicant's cash or equity injection ( 10 percent - except for SBA 504 Program Companion Loans) ; 5. Primary benefit to low- and moderate-income people or aid in prevention or elimination of slums or blight; 6. Jobs generated/retained per public (RLF) loan dollars (one loan = $10,000 approximately) ; 7. Maximum Loan Amount generally $50,000 as a companion loan, and $25,000 as a single stand-alone loan; 8. Type of financial assistance requested; 9. Compliance with Federal and City requlations, requirements and conditions. • .• Once it has been determined that the application meets the eligibility requirements, the application will then be evaluated based on administrative criteria to be established. IX. ADMINISTRATIVE APPROVAL The EDC shall administer the RLF Program for the City of Redding. Loan applications will be reviewed and recommended for funding by the EDCLC. A. Loan Review Committee The EDCLC will be composed of members who are knowledgeable in areas of commercial and industrial real estate development, commercial mortgage lending, public development, financing small business development and the needs of the low- and moderate-income persons in the City of Redding. The EDCLC and the chairperson shall be appointed by the EDC. The EDCLC will review the loan applications and staff reports to determine eligibility, evaluate the economic feasibility, assess credit risks, and approve or disapprove all loan amounts and interest rates. This determination will be based on the economic and financial feasibility of the borrower and the loan package, and the achievement of the public policy goals established for this program. B. Loan Approval Authority The EDCLC shall have the final approval power for all loans. C. Loan Servicing and Disbursements Following loan approval, all loan proceeds will be processed through the EDC office. The City Finance Department will arrange disbursement when all environmental and other clearances are received and all contracts are signed and executed, and certified for compliance by the City of Redding Department of Planning and Community Development. Upon receipt of funds from the City, the EDC will issue payment warrants and establish the borrower's payment schedule. Loan servicing and counseling will be conducted by EDC. X. DELINQUENT LOAN/LOAN DEFAULT PROCEDURES A. Delinquent Loans in the event loan payments are more than 15 days late, a loan shall be declared delinquent. Actions to be taken are: 1 . The EDC shall_ contact the borrower to determine the cause of the loan delinquency. 2. The EDC shall assist the borrower with technical and management assistance, and shall refer the borrower to other appropriate sources of technical and management assistance. • .• 3. EDC shall collect a late charge on any payment that is not paid within 10 days of the date that it is due. Such unpaid installment shall bear interest from the date of its maturity until paid at the rate established for other EDC loan programs. B. Loans in Default In the event payments are more than 60 days delinquent and the borrower is not cooperating with the EDC to correct th delinquency, the loan shall be declared to be in default. The case shall be referred to the EDCLC for review and to recommend appropriate action. Actions to be taken are: 1 . The loan may be referred to a collection agency. 2. The EDC may take legal action against the borrower to enforce guarantees and security. XI. SALE OR TRANSFER OF BUSINESS; ASSUMPTION OF RLF LOANS If all or any part of said business or an interest therein is sold or transferred by Borrower without EDC' s prior written consent, EDC may, at EDC's option, declare the Loan and all indebtedness of Borrower to EDC immediately due and payable regardless of any provision or term to the contrary contained in any promissory note securing same. EDC shall have waived such option if, prior to the sale or transfer, EDC and the person(s) to whom the business is to be sold or transferred reach agreement in writing. If EDC has waived the option and if the Borrower' s successor in interest has executed a written assumption agreement, with terms, provisions, and conditions accepted in writing by EDC, EDC shall release Borrower from all obligations under this Term Loan Agreement and the promissory note. The loan note and agreement shall include a provision that EDC shall have a right to declare a balance of the loan and any other indebtedness of borrower immediately due and payable in the event of any sale or transfer without EDC's consent. A. Procedure for RLF Loan Assumptions are: 2 . Written request to sell or transfer business submitted to EDC by Borrower. Such request shall include the name/address of Borrower' s successor in interest and all terms, provisions, and conditions pertinent to sale or transfer of said business. Such a request shall also include an agreement by the borrower and its proposed successor to provide to EDC such financial inforhation concerning the proposed successor as shall be requested by EDC. 2 . EDC shall appro e or deny Borrower' s request to sell or transfer said business in writing within 30 days of receipt of written request. Borrower's successor in interest shall execute a written assumption agreement and submit same to EDC. • 4. EDC shall accept in writing the Borrower's successor in interest assumption agreement. 5. EDC shall release Borrower from all obligations of the term loan agreement and the promissory note.