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HomeMy WebLinkAboutOMNI-CRA-R-03-0052ITEM 11 69 RESOLUTION NO. SEOPW/CRA R- 0.3 .r OMNI/CRA R- 03 52 A JOINT RESOLUTION OF THE BOARDS OF DIRECTORS OF THE SOUTHEAST OVERTOWN/ PARK WEST. AND OMNI REDEVELOPMENT DISTRICT COMMUNITY REDEVELOPMENT AGENCIES (THE "CRAS") WITH ATTACHMENT(S), AUTHORIZING THE EXECUTIVE DIRECTOR TO EXECUTE AN AGREEMENT, IN SUBSTANTIALLY THE FORM DETAILED IN EXHIBIT "A", WITH THE NATIONAL DEVELOPMENT COUNCIL AND THE GROW AMERICA FUND, INC. FOR THE PURPOSE OF ESTABLISHING THE' CRA/GROW MIAMI FUND UTILIZING COMMUNITY DEVELOPMENT BLOCK GRANT FUNDS PREVIOUSLY ALLOCATED TO THE CRA/MICRO BUSINESS LOAN BUSINESS PROGRAM, IN THE AMOUNT OF $471,770.00; FURTHER ACKNOWLEDGING THAT, PURSUANT TO MIAMI CITY COMMISSION RESOLUTION NO. R-03-706, ANY CHANGES TO THE "CONTRACT CONDITIONS" DETAILED IN EXHIBIT "B" ARE SUBJECT TO APPROVAL BY THE CITY OF MIAMI'S DEPARTMENT OF COMMUNITY DEVELOPMENT AND SUBSTANTIAL CHANGES TO THE AGREEMENT MUST BE BROUGHT TO THE MIAMI CITY COMMISSION FOR APPROVAL. WHEREAS, the Southeast Overtown/Park West and Omni Redevelopment District Community Redevelopment Agencies (the "CRAS") are responsible for carrying out community redevelopment activities within redevelopment areas; and Page 1 of 4 their respective owa / CRA SEOPW/C;RA0 3 - 52 ij3- 69 • WHEREAS, the Miami City Commission by Resolution No. R-03-706, passed and adopted on June 24, 2003, authorized the transfer of Community Development Block Grant (CDBG) funds in the amount of $471,770.00 from the CRA/Micro Business Loan Business Program to the CRA%Grow Miami Fund to fund a self-sustaining community development bank for small business financing within the community redevelopment areas and set forth certain "contract conditions" for the use of the funds; and WHEREAS, the Grow America Fund, Inc. was created in 1992 by the National Development Council ("NDC"), a New York non-profit corporation; and WHEREAS, the Grow America Fund, Inc. is licensed by the U.S. Small Business Administration (SBA) as a "small business lending corporation" authorized to lend under SBA's 7(a) Loan Guarantee Program; and WHEREAS, the Grow America Fund, Inc. will underwrite and make loans to businesses referred by the CRAS and qualified under SBA credit guidelines so as to leverage the CRAS' investment; and WHEREAS, the CRAS desire to establish the CRA/Grow Miami Fund ("GMF"), a new CDBG eligible loan program that will be the local affiliate of the Grow America Fund, Inc. Page 2 of 4 SE®PW/CRA OMNI/CRA and will service the needs of businesses in the CRAS' redevelopment areas by providing access to affordable loans. NOW, THEREFORE, BE IT RESOLVED BY THE BOARDS OF DIRECTORS OF SOUTHEAST OVERTOWN/PARK WEST AND THE OMNI REDEVELOPMENT DISTRICT COMMUNITY REDEVELOPMENT AGENCIES OF THE CITY OF MIAMI, FLORIDA: Section 1. The recitals and findings contained in the Preamble to this Resolution are adopted by reference and incorporated herein as if fully set forth in this Section. Section 2. The Executive Director is authorized to execute an agreement, in substantially the attached form, with the -National Development Council (NDC) and the Grow America Fund, Inc. for the purpose of establishing the CRA/Grow Miami Fund utilizing CDBG funds previously allocated to the CRA/Micro Business Loan Business Program, in the total amount of $471,770.00. Section'3. the CRAS acknowledge that any changes to the "Contract Conditions" detailed in Exhibit "B" are subject to approval by the City of Miami's Department of Community Development and substantial changes to the Page 3 of 4 SEOPW/CRA OMMCRA 03- 69 03- 52 agreement must be brought to the Miami City Commission for approval. Section 4. This Resolution shall become effective immediately upon its adoption. PASSED AND ADOPTED this �/ O day of 2003. ART UR E. TEELE, JR.,"CHAIRMAN ATTEST: PRISCILLA A. THOMPSON CLERK OF THE BOARD APPROVED AS TOE ORM ANDO'CORRECTNESS: COUNSEL by Page 4 of 4 SEOPW/CRA '03- 69 O1�ou/CRA „j3- 52 0 0 ITEM 11 JUL 2 8 2003 SOUTHEAST OVERTOWN/PARK WEST • AND OMNI COMMUNITY REDEVELOPMENT AGENCIES . INTER -OFFICE MEMORANDUM To: Chairman Arthur E. Teele, Jr. and Date: JUL 28 2003 File: Members of the CRA Board Subject:Grow Miami Fund Proposal From: Fran K. Rollason Enclosures: Resolution, Support Executive Director Documentation RECOIL MENDATI ON : It is recommended that the CRA Board of Directors adopt the attached Joint Resolution authorizing the Executive Director to execute an agreement, in substantially the attached form _as detailed in Exhibit "A", with the National Development Council and Grow America Fund, Inc. (GAF) for the: purpose of establishing the Grow Miami Fund utilizing Community Development Block Grant ("CDBG") funds under the Grow Miami Fund Program, in the amount of $471,770.00. JUSTIFICATION: Pursuant to City of Miami Resolution R-03-706, Adopted on June 24, 2003, the City of Miami Commission approved the transfer of CDBG funds for the CRA/Micro Business Loan Program. The Grow Miami Fund (GMF) will be the 0i local affiliate office of the Grow America Fund, Inc. The Grow America Fund (GAF), created in 1992 by the National Development Council (NDC), operates as a community development bank in partnership with NDC relationship communities throughout the United States. GAF is a U.S. Small Business Administration (SBA) licensed lender as well as a U.,S. Treasury Department designated Community Development Financial Institution (CDFI) and Community Development Entity (CDE) under the Treasury Departments' New Market Tax Credit Program. GAF operates as a community development bank in partnership with NDC relationship communities throughout the United States. More than $50 million in GAF.funds loaned has financed projects with a total cost of nearly $80 million; loan amounts range from $16,000 to more than $1,350,000, with most in the range of $100,000 to $300,000. More than half of GAF borrowers are minority or women business owners. The Grow America Fund is a SBA 7 (a) Loan Guarantee Program. As such., the SBA guarantee will provide for a leverage capability of the CRA's investment 3-4 times, thus enabling the CRA to realize total lending capacity under the program in excess of $2,000,000 based on the initial $471,770 investment. Further, Grow Miami Fund would permit the CRA to service the growing business needs in the redevelopment areas by providing businesses access to affordable loans in the range of $25,000 to $1,300,000; CRA anticipates the average loan size will be in the range of $100,000 to $300,000. FUNDING SOURCE: CDBG Micro Loan project. ; 0 ACCOUNT CODE NO.: Pending Resolution Adoption FKR/CA/EM SEOPW/CRA OM�U/CRA ,J3_ 69 03- 52 JUL-10-2003 09:06 CITY CLERKS OFFICE 305 858 1610 P.02 J-03-538 0 06/23/03 - 4 RESOLUTION NO. 0 3- 706 A RESOLUTION OF THE MIAMI CITY COMMISSION, WITH ATTACHMENT(S), AUTHORIZING THE TRANSFER OF COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM FUNDS, IN THE AMOUNT OF $471,770, FROM THE COMMUNITY REDEVELOPMENT AGENCY/MICRO BUSINESS LOAN BUSINESS PROGRAM TO THE COMMUNITY REDEVELOPMENT AGENCY/GROW MIAMI FUND FOR A COMMERCIAL LOAN PROGRAM; REQUIRING THE AGREEMENT BETWEEN THE COMMUNITY REDEVELOPMENT AGENCY, THE NATIONAL DEVELOPMENT COUNCIL AND GROW AMERICA FUND, INC. TO ESTABLISH THE GROW MIAMI FUND AND REFLECT THE CONTRACT CONDITIONS, AS ATTACHED AND INCORPORATED; FURTHER PROVIDING THAT CHANGES TO SAID CONTRACT CONDITIONS BE SUBJECT TO APPROVAL BY THE CITY OF MIAMI DEPARTMENT OF COMMUNITY DEVELOPMENT AND FURTHER DIRECTING THAT SUBSTANTIAL CHANGES TO SAID CONTRACT CONDITIONS BE PRESENTED TO THE CITY COMMISSION FOR APPROVAL. WHEREAS, Resolution No. 98-465, adopted May 12, 1998, reallocated available Community Development Block Grant ("CDBG") funds, in the amount of $500,000, to Micro Susiness Loan Business Program (Micro Loan), to be operated by the Community Redevelopment Agency ("CRA"); and CITY coransswm NEETMG OF, J U N 2 4 2003 t,eeolution ND. SEOPW/CRA 03-- 69 OMM/ #J3. 52 C I Tl' CLERKS OFFICE 385 858 1610 P.83 WHEREAS, Resolution No. 00-535, adopted June 29, 2000, !' authorized the ,allocation of CDBG funds, in the amount of $28,230, from the Micro Business Loan program to Shakers Conch House, leaving a balance of $471,770 in the Micro Business Loan Program; and WHEREAS, GAF was created in 1992 by the National Development Council ("NDC") to operate as a Community development bank in partnership with. NDC relationship communities throughout the United States; and WHEREAS, GAF is a Small Business Administration ("SBA") 7(a) Loan Guarantee Program, an SBA licensed lender, a United States Treasury Department designated Community Development Financial Institution and a Community Development Entity under the United States Treasury Department's New Market Tax Credit Program; and WHEREAS, the CRA has requested the transfer of funds, in the amount of $471,770, to Grow Miami Fund, a new project fund that will be the local affiliate office of GAF; NOW, THEREFORE, BE IT RESOLVED BY THE COMMISSION OF THE CITY OF MIAMI, FLORIDA: Page 2 of 4 SEOPW/CRA 03-.. 69 OMNI/CRA 03- 52 W JUL-10-2003 09:06 CITY CLERKS OFFICE 305 858 1610 P.04 Section 1. The recitals and findings contained in the Preamble to this Resolution are adopted by reference and incorporated as if fully set forth in this Section, Section 2. The transfer of Community Development Block Grant Program funds, in the amount of $471,770, from the Community Redevelopment Agency/Micro Business Loan Business Program, to the Community Redevelopment Agency/Grow Miami Fund for a commercial loan program, is authorized. Section 3. It is required that the Agreement between the Community Redevelopment Agency, the National Development Council and Grow America Fund, Inc. to establish the Grow Miami Fund reflect Contract Conditions, as attached and incorporated.. Section 4. It is further required that changes to said Contract Conditions be subject to approval by the City of Miami Department of Community Development, and that any substantial changes to said Contract Conditions be presented to the City Commission for approval. Page 3 of 4 SEOPW / CRA omm / CRA - ")3- 69 03- 52 JUL-10-2003 09:06 CITY CLERKS OFFICE 305 858 1610 P.05 - Section 5. This Resolution shall become effective 0i immediately upon, its adoption and signature of'the.Mayoc.1/ PASSED AND ADOPTED this 24th. day of June , 2003. NUEL A. DIAZ, MA ATTEST: �Lt� ,ICI . C-�tir,c��C-.L' •'1, �1 PPI$CILLA A. THOMPSON i CITY CLERK G APPROVED AS TO FORM AND CORRECTNESS . EJANI3R0.11YILARELLO C tY,'ATTORNEY �7306;tr;AS:BSS li If the Mayor does not sign this Resolution, it shall become effective at the end of ten (10) calendar days from the date it was passed and adopted. If the Mayor vetoes this Resolution, it shall become effective immediately upon override of the veto by the City Commission. Page 4 of 4 SEOPW/CRA 01VM/CRA 0 3 - 69 03-- 52 JUL-10-2003 09:06 CITY CLERKS OFFICE ATTACHMENT ® CONTRACT CONDITIONS AGREEMENT BETWEEN: City of Miami Community Redevelopment Agency (CRA)' The National Development Council (NDC) The Grow America Fund, Inc. (GAF) • 305 858 1610 P.06 - FUNDING SOURCE: Community Development Block Grant (CDBG) Program FUNDED AMOUNT- $471,770 CDBG ELIGIBLE ACTIVITY: 24 CFR 570.203 (b) — National Activity: 24 CFR 570.208(d)(6) PURPOSE of AGREEMENT: To establish a community banking partnership known as the Grow Miami Fund (GMF) OBJECTIVE OF GROW MIAMI FUND: (1) to create an economic development finance bank which will leverage the CRA's limited investment capital and make loans to eligible small businesses which will create jobs and economic opportunity, stimulate investment or eliminate blight in the CRA area; and (2) to use the net revenues to promote additional investment into or to fund additional community economic development programs, in the CRA area and/or for the benefit of the CRA's low/moderate income target population, with prior approval by the City of Miami Department of Community Development. AGREEMENTS (1) GMF will be capitalized with equity provided by the CRA. These funds will be used solely for eligible SBA -guaranteed loans within the targeted neighborhoods identified by the CRA. (2) GAF will provide staff to operate GMF, provide periodic reporting to CRA and provide training and capacity building services for local GMF staff. (3) GAF will be responsible for all U.S, HUD reporting requirements, as well as all reporting required by the City of Miami. (4) Revenues generated by the financing activities of GMF: a. GMF will be paid a preferred return on its equity which is invested in small business loans. At this date, the preferred return is two percent (2%). b. GAF will be paid an Administration Fee for the operation of .GMF from the remaining balance of Revenues after the preferred return has been paid. The GAF annual Administration Fee budget must be pre -approved by the City of Miami Department of Community Development. Page 1 of 1 SEOPW/CRA OMM/CIt.A 03 ` 69 s)3 KQM � �' TOTAL P.06 • 0 ITEM 11 • • JUL 2 8 2003 EXHIBIT "A" sE®Pwsc®MIDI/CItA l� 0 3 — 52 03-- 69 AGREEMENYBY AND BETWEEN THE SOUTIEAST OVERTOWN/PARK WEST AND OMNI • REDEVELOPMENT DISTRICT COMMUNITY REDEVELOPMENT AGENCIES AND THE NATIONAL DEVELOPMENT COUNCIL AND THE GROW AMERICA FUND, INC. FOR THE ESTABLISHMENT OF THE "GROW MIAMI FUND" INTRODUCTION: RECITALS THIS AGREEMENT (hereinafter referred as the "Agreement") is entered into as of the _ day of 2003 by and between the Southeast Overtown/ Park West and Omni Redevelopment District Community Redevelopment Agencies (hereinafter referred to as the "CRASS") and the National Development Council, a corporation organized and existing under the laws of the State of New York and having its principal office at 51 East 42nd Street, New York, New York, 10017 (hereinafter referred to as "NDC") and the Grow America Fund, Inc., a corporation organized and existing under the laws of the State of Delaware and having its principal office at 51 East 42nd Street, New York, New York, 10017 (hereinafter referred to as "GAF"). WITNESSETH: WHEREAS, the CRAS desires to expand economic opportunity for residents of Miami, Florida so that these residents may become economically self-sufficient; and WHEREAS, the CRAS desires to encourage sustainable community development activities so that its various neighborhood(s) can revitalize themselves; and WHEREAS, the CRAS desires to establish a community banking partnership known as the Grow "Miami" Fund ("GMF") to achieve these goals; and WHEREAS, NDC and its affiliate, GAF, are desirous and are willing to assist the CRAS to achieve its goals to expand economic opportunity and revitalize its neighborhood(s); and WHEREAS, GAF, an Small Business Administration ("SBA") licensed and regulated Small Business Lending Company (SBLC) entitled to make SBA guaranteed loans to eligible small businesses, is the nation's only SBLC devoted solely to economic and community development financing; and WHEREAS, the GAF, a wholly owned subsidiary of the National Development Council a national 501 (c) (3) not -for -profit corporation engaged in economic and community development, intend to enter into a contract to create a self-sustaining • Page 1 of 10 SEOPW/CRA OMM/CRA On- 09 d33— 12 community development bank (hereinafter "Grow `Miami' Fund" or "GMT") for small 0 business financing in the CRAS; and WHEREAS, the purpose of GMT is twofold: to create an economic development finance bank which will leverage the CRAS's limited investment capital many times and make loans to eligible small businesses which create jobs and economic opportunity, stimulate investment, or eliminate blight in the target neighborhood(s); and, to use the net revenues to promote additional investment into or to fund additional community economic development programs in the target neighborhoods and/or for the benefit of the CRAS's low/moderate income target population; and WHEREAS, In addition to making loans to small businesses in -eligible redevelopment areas, the intent of this Agreement is to create a self-sustaining community development fund whose net returns revenues provide a long-term recurring income stream to the CRAS to fund additional community economic development activities as the CRAS elects. Unless stipulated as being otherwise by the CRAS, eligible GMF lending neighborhood(s) are identified in the attached Exhibit I. NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements herein contained, the parties hereto, intending to be legally bound, hereby agree as follows: A. GENERAL PROVISIONS AND RESPONSIBILITIES • 1. GMF will be capitalized with equity funds provided by the CRAS (as described in Section C below). These funds will be used solely for loans within the neighborhoods identified by the CRAS which are sponsored by the CRAS and which meet the purposes of job creation, increased investment, or the elimination of blight as determined by the CRAS or its designee. 2. GAF will use its SBLC license (as described in Section B below) to make SBA guaranteed loans sponsored by GMF, provide staff to operate GMF in conjunction with the local staff provided by the CRAS, and provide training and capacity building services to enhance the ability of local staff to operate the community development bank in a prudent and businesslike manner. Staff provided by GAF will perform the following services: • assist in marketing the GMF program • assist in originating and packaging loans • obtain GAF and SBA approvals (as described in Section B below) • close, service, and collect loans • perform annual reviews of each loan r• perform the fiduciary responsibilities of the corporation Page 2 of 10 SEOPW/CM OmNi/CI A 03- 69 03- 52 • • provide periodic reporting to the CRAS • provide training and capacity building services to the local staff as agreed with the CRAS. B. GAF AND SBA GUARANTEED LOANS 1. Under the SBLC license agreement, the SBA agrees to guarantee a portion (typically 75%-85%) of each loan made by GAF to eligible businesses for eligible business purposes. GAF will fund the SBA guaranteed portion of each loan with non-CRAS funds. Each loan must be approved by the SBA. Upon approval, the SBA issues a "Loan Authorization and Guaranty Agreement" which stipulates the terms and conditions of the loan. It is the right and responsibility of the GAF to close and service the loan in accordance with that Loan Authorization and Guaranty Agreement. 2. GAF may "sell" the guaranteed portion of the loans into the secondary market or fund the guaranteed portion of the loans with funds borrowed from "conventional" lenders. By selling the loans into the secondary market or funding the guaranteed portion through conventional sources, GAF may re -capitalize itself. The proceeds of the guaranteed loans which are "sold" or financed in the above manner will be used to make additional SBA guaranteed loans in the neighborhoods identified by the CRAS or to pay the expenses of managing and operating the SBLC and servicing the loan portfolio in accordance with this Agreement. 3. GAF earns revenue in four ways: First, it earns interest on the unguaranteed portion of the loans which are not sold into the secondary market (the retained portion); Second, it earns a servicing fee (or servicing "spread") on the [guaranteed] portion of the loans which are sold into the secondary market or on the [guaranteed] portion of the loans which are internally "match funded" with funds borrowed by GAF for the purpose of funding the guaranteed portion of the loans; Third, it may earn a one-time premium for selling a loan into the secondary market; and finally, it will earn interest on cash balances ("idle funds") which are not loaned out to businesses. 4. Under SBA regulations, GAF has a fiduciary responsibility to underwrite, approve, close, and service, and otherwise operate GAF in a prudent and businesslike fashion. In addition, the SBA requires all SBLCs to follow SBA regulations and to use SBA documents and procedures in making and servicing loans. These fiduciary responsibilities and SBA regulations cannot be delegated or waived and they are hereby incorporated by reference into this Agreement. Page 3 of 10 SEOPW/CRA OMNI/CRA 03- 69 03- 52 C. CAPITALIZING MIAMI'S "GROW MIAMI FUND" 1. The Parties agree that GMF will be capitalized with equity provided by the CRAS. These funds will be used solely for eligible SBA -guaranteed loans within the targeted neighborhoods identified by the CRAS. 2. The CRAS will invest $471,770 to capitalize the GMF program within sixty (60) days of the effective date of this Agreement. It is anticipated that the initial $ 471,770 investment will be provided by the CRAS, but the actual source and breakdown of the capitalization of the GMF is at the sole discretion of the CRAS. The CRAS may elect to invest additional equity from time to time, all of which will be governed by the terms and conditions of this Agreement unless otherwise agreed to in writing. Payments made under this section shall be made by check payable to "Grow America Fund" (CRAS of Miami, Florida). 3. Revenues generated by the financing activities of GMF will be used for program purposes as described in Section D and E below. D. RETURN TO INVESTOR I. The GMF will be paid a preferred return on its equity, which is invested in small business loans. As of the date of this Agreement, the preferred return is two (2%) percent. That return may be changed from time to time at the sole discretion • of GAF, but will at all times be the same rate of preferred return as paid to other comparable investors in GAF. E. DISTRIBUTION OF REVENUES Revenues (as defined in Section B above) generated by GMF activities will be distributed in the following order: First, at the written election of CRAS, to pay the "Return to Investor" outlined in Section D. Such return may be remitted quarterly to the CRAS, or reinvested into the GNU account, at the discretion of the CRAS; 2. Second, the balance will be paid to GAF for the operation of GMF as a GAF Administrative Fee. F. DURATION OF AGREEMENT AND DISTRIBUTION OF ASSETS 1. GENERAL TERM. This Agreement will become effective upon its execution by the CRAS, NDC and GAF, and shall continue in effect for a period of not less than the date of GAF's receipt of the final loan repayment of the last outstanding loan made in the CRAS. GAF will continue to make loans in the CRAS as long as the Agreement is in full force and effect. Page 4 of 10 SEOPW/CRA O /CRA 03- 69 93- 52 2. AGREEMENT TERM NATION a. This Agreement cannot be cancelled by either parry for 2 years from the date of its execution. b. After two years, GAF or the CRAS may cancel this Agreement with or without cause by giving ninety (90) .days prior written notice to the other party of their election to terminate this Agreement. Without limiting such right to terminate, it is the present intent -of the parties not to terminate this Agreement if the administrative costs of the GMF program are being paid from revenues generated by the program. 3. DISTRIBUTION ASSETS a. Should termination occur, GMF program assets (the CRAS's original investment plus any reinvested earnings less any loan losses or reserves for losses) will be distributed and the Agreement will be closed out as provided under this section. The "Close -Out Period" is defined as the period beginning at the date of termination and ending on the date of the last payment of principal and interest by the borrowers. b. Upon the termination of this Agreement, GAF will determine the assets • eligible for distribution (hereinafter "Distribution Assets") which will be defined as: ■ the total equity original investment from the CRAS ■ plus any reinvested earnings ■ less any loan losses incurred and reserves for losses ■ less any unpaid annual Close -Out Portfolio Management Fee ■ less any Performance Compensation earned as outlined below. c. After termination of this Agreement, GAF will receive an annual Close- _ Out Portfolio Management Fee (CPMF) equal to 4.0% of the loan portfolio outstanding for the previous twelve months plus reasonable out of pocket costs incurred in servicing and collecting the outstanding loans, but in no event will this fee be less than $5,000 per annum unless otherwise mutually agreed by the CRAS and GAF. The CPMF will be paid in monthly installments equal to 1/12 of the total annual CPMF. This fee shall be paid first from the interest and servicing fee revenue generated by . GAF from the GMF portfolio. If the revenues generated are not sufficient to pay the annual CPMF, the unpaid balance will be deducted from the Distribution Assets. Based on performance thresholds, GAF shall Page 5 of 10 SEOPW/CRA OM I/CRA ")3- 69 03- 52 L_J receive Performance Compensation under one of the methods described below. This allows GAF to partially underwrite its continuing presence and operation in the CRAS for the duration of the loan terms to which it commits. (i) If GAF terminates the Agreement, or if the CRAS terminates the Agreement and total GMF loans are less than 100% of the equity invested, GAF will not receive any performance compensation. The distribution assets will be returned to the CRAS as principal and net interest are paid by the borrowers, net of any losses and reserves for losses and net of the CPMF described . above. (ii) If the CRAS terminates this Agreement and total GMF loans exceed the amount of the equity invested, then GAF will receive performance compensation in accordance with the following formula: • If the loans under GMF are less than 200% of the equity invested, GAF's performance compensation will equal 10% of the equity invested and be paid from servicing fees and debt service payments made by borrowers. • If the loans under GW equal or exceed 200% of the equity invested, GAF's performance compensation will be 25% of the equity invested and be paid from servicing fees and debt service payments made by borrowers. d. The formula for calculating the Performance Compensation will be the percentage, in accordance with 3(d)(i) or 3(d)(ii) above, times the amount of GN9 net loan repayments received each quarter. "Net loan repayments" is equal to the principal repayment received less the principal due to any secondary market holder(s) or lenders which funded the "guaranteed" portion of the loans made. In the event that the CRAS's percentage of net loan repayments received is less than the amount - calculated in accordance with this paragraph, then GAF will have no further obligation to repay the CRAS. e. The CRAS shall not be obligated to make payments to GAF beyond the equity invested into GMF. Page 6 of 10 SE®PW/CRA ®mm/CRA 03- 69 03- 52 4. AMOUNT OF DISTRIBUTION ASSETS a. The CRAS will be entitled to all program assets (the CRAS's original investment plus any reinvested earnings less any loan losses or reserves) except as described in Section 3 above. b. The pay -out of the Distribution Assets will be made to the CRAS on a quarterly schedule which is tied to the repayment schedule of the loans outstanding in the GMF portfolio G. OTHER TERMS AND CONDITIONS 1. COMPLIANCE WITH LAW GAF agrees to comply with all applicable federal, state and local laws in the conduct of the work hereunder. GAF accepts full responsibility for payments of all unemployment compensation, insurance premiums, workers compensation premiums, all income tax deductions, social security deductions, and any and all other taxes or payroll deductions required for all employees engaged by GAF on the performance of the work authorized by this Agreement. 2. MODIFICATIONS The parties shall have the right to waive or amend any of the terms and conditions of this Agreement, provided that all waivers and amendments shall be in writing and shall be signed by or on behalf of all parties. 3. RIGHT OF AUDIT The CRAS shall have the right, during GAF's normal business hours for the duration of this Agreement and for a period of three.(3) years after final payment or termination of this Agreement, whichever is later, to conduct the following audits at the GAF office: (a) Audits of GAF's performance of services under this Agreement. (b) Audits of books and accounts maintained under this Agreement. Such audits shall be performed either by CRAS personnel or by an independent third party that the CRAS may employ for the purpose of making such audits. The CRAS and GAF shall establish procedures for performing such audits and shall preserve the confidential and proprietary status of audited documents and information. GAF will not be required to relocate records from their normal location. GAF will provide copies of GMF records to the GMF local office upon request. SEOPW/CRA 03 - 69 OmwCRA Page 7 of 10 93- 52 0 E • • 4. ASSIGNMENTS Neither this Agreement nor any rights, duties or obligations described herein shall be assigned by either party hereby without the prior expressed written consent of the other parry. 5. COMPLETE AGREEMENT This Agreement incorporates all understandings of the parties. 6. SEVERABILITY AND WAIVER If any provision of this Agreement is held invalid, the balance of the provisions of this Agreement shall not be affected thereby if the balance of the provisions of this Agreement would then continue to conform to the requirements of the applicable Agreement. Any waiver of the terms and conditions of this Agreement by either of the parties hereto shall not be construed to be a waiver of any other terms or condition of this Agreement. 7. CONSTRUCTION This Agreement shall be construed, interpreted, and the rights of the parties determined, in accordance with the laws of the State of Florida. 8. CHOICE OF VENUE Any dispute, action, proceeding or claim arising from this Agreement shall be filed in the state courts of the City of Miami, Florida or if such dispute, action, proceeding or claim arises under the U.S. Constitution, federal laws or treaties or under diversity jurisdiction between or among the parties thereto so that it can be brought in the United States District Court. SEOPW / CRA ®NiNI /CR�4 Page 8 of 10 a�r 69 0 3— 52 i 0 • IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first written above. Attest: Attest: Attest: By: ACKNOWLEDGEMENT OF THE TERMS BY: CITY OF NIIAMI CONEMIUNITY REDEVELOPMENT AGENCY, Name: Frank K. Rollason Title: Executive Director GROW AMERICA FUND, INC. By: Name: Robert W. Davenport Title: Chairman NATIONAL DEVELOPMENT COUNCIL By: Approved as to Form and Correctness: Name: Alejandro Vilarello, Esq. Title: CRAS General Counsel Name: Robert W. Davenport Title: President Page 9 of 10 SEOPW/CRA 03- 69 OmNI/CRA 03- 52 • 0 • • Eligible GMF Lending Neighborhoods: Page 10 of 10 SEOPW / CRA oivNi/CRA o)3— 52 0 • • Eligible GMF Lending Neighborhoods: Page 10 of 10 SE®PW/CRA ®MM/CPA` ")3- 69 �j 3 - 52 W w 0 • EXHIBIT "B" • • SE®PW / CRA OW U/CRA 03- 69 03- 52 • ATTACHMENT CONTRACT CONDITIONS • AGREEMENT BETWEEN: City of Miami Community Redevelopment Agency (CRA) The National Development Council (NDC) The Grow America Fund, Inc. (GAF) FUNDING SOURCE: Community Development Block Grant (CDBG) Program FUNDED AMOUNT: $471,770 CDBG ELIGIBLE ACTIVITY: 24 CFR 570.203 (b) — National Activity. 24 CFR 570.208(d)(6) PURPOSE of AGREEMENT: To establish a community banking partnership known as the Grow Miami Fund (GMF) OBJECTIVE OF GROW MIAMI FUND: (1) to create an economic development finance bank which will leverage the CRA's limited investment capital and make loans to eligible small businesses which will create jobs and economic opportunity, stimulate investment or eliminate blight in the CRA area; and w - (2) to use the net revenues to promote additional investment into or to fund additional community economic development programs, in the CRA area and/or for the benefit of the CRA's low/moderate income target population, with prior approval by the City of Miami Department of Community Development. AGREEMENTS: (1) GMF will be capitalized with equity provided by the CRA. These funds will be used solely for eligible SBA -guaranteed loans within the targeted neighborhoods identified by the CRA. (2) GAF will provide staff to operate GMF, provide periodic reporting to CRA and provide training and capacity building services for local GMF staff. (3) GAF will be responsible for 01 U.S. HUD reporting requirements, as well as all reporting required by the City of Miami. (4) Revenues generated by the financing activities of GMF: a. GMF will be paid a preferred return on its equity which is invested in small business loans. At this date, the preferred return is two percent (2%). b. GAF will be paid an Administration Fee for the operation of GMF from the remaining balance of Revenues after the preferred return has been paid. The GAF Annual Administration Fee budget must be pre -approved by the City of Miami Department of Community Development. Page 1 of 1 SEOPW / CRA 03e 69 Owa/CRA 03- 52 Other Success Stories Insert picture of GMF borrower Insert picture of GMF borrower GROW A JERIC:A FUND I The Grow Miami Fund A Small Business Loan Fund Grow Miami Fund The Grow Miami Fund is a unique economic development partnership between the City of Miami's Community Redevelopment Agency (CRA) and the Grow America Fund, Inc. (GAF). GAF is a wholly -owned affiliate of the National Development Council (NDC), a CDFI (Community Development Financial Institution) and a CDE (Community Development Entity) under the US Department of Treasury Community Arthur E. Teele, Jr., Development Financial Chairman of the CRA. Institutions and New Markets Tax Credits programs. NDC is a non-profit organization engaged in activities that result in the creation of jobs and economic opportunities, as well as affordable housing and other public projects in more than 120 communities throughout the US. How the Fund Operates The City of Miami has capitalized the Grow Miami Fund with an investment into GAF that is targeted to assist eligible small businesses within the boundaries of the CRA. In order to qualify for these loans, the businesses must also be engaged in a legitimate for - profit business activity and have the ability to create permanent jobs in the community. The Fund will look to finance healthy, successful, small businesses that need expansion capital to reach their full growth potential. Loans made under this program will be guaranteed by the SBA under GAF's Small Business Lending Company (SBLC) designation. As such, each loan must comply with SBA guidelines and procedures. GAF and CRA staff are well equipped to make the application process simple and seamless. Once a request for financing is approved, GAF will also close, disburse and service each loan. Specifics... Loan Amount, Rate and Term The Grow Miami Fund can make loans ranging from $25,000 to $1 million, at or below market rates, for terms up to 25 years depending on proposed use of funds. Use of Proceeds Loan proceeds may be used for any legitimate business purpose, including working capital, machinery and equipment, acquisition of land and building, construc- tion, renovations and tenant improvements. The Fund, however, does not provide venture capital and cannot provide funds for research and develop- ment or to satisfy equity or near -equity needs. Collateral All loans must be adequately collateralized. Personal guarantees of the owners are required. More on Terms The typical structure. Working Capital : up to 10 years Machinery & Equipment: 5-10 years or life of the asset Tenant Improvements: term of the lease Acquisition of Real Estate: Up to 25 Years Construction/Renovations: Up to 25 years What does the Fund Offer a Borrower? The Fund offers affordable growth capital on advanta- geous terms to borrowers who create jobs and invest- ment in our community. Does the Fund Compete with Local Banks and Other Lenders? No. The Fund is meant to complement not replace, existing sources of financing. Therefore, GAF encour- ages the borrower's bank or other lenders to partici- pate in providing a portion of the total financing. The Fund always works with existing lenders to struc- ture the best financing available for the borrower. Finally, as any other lender, the Grow Miami Fund will operate according to prudent lending practices. Application Process Information Required ❑ A brief description of the project, including proposed sources and uses of funds ❑ Corporate Financial Statement or Tax Returns for previous 3 years ❑ Current Financial Statement (may be an in-house statement) ❑ A Personal Financial Statement of all principals who own more than 20% of company stock ❑ A Credit Release, authorizing GAF and the Grow Auburn Fund to obtain personal and corporate credit reports We have made the application process simple and straight forward. Our staff is readily available to assist you through the application process. If you feel your small business is the type of dynamic and growing business we have been empowered to help succeed, please contact Chelsa Arscott-Douglas, Policy & Programs Development Administrator at either (305) 579-3324 or via e-mail at carscott@ci.miami.fl.us for an application package. City of Miami Community Redevelopment Agency 300 Biscayne Blvd. Way, Suite 430 Miami, FL 33131 Phone (305) 579-3324; Fax (305) 372-4646 Grow Miami Fund NDC * Works with CRA on it's economic development projects * Manages GAF for CRA Affiliate Corporation `,© Grow America Fund Underwrites * Approves * Closes * Services Loans Works with CRA on Economic Development Transfers Project Loan Funds (i.e.: $100,000 loan = $25,000 from CRA) Repayments to CRA GMF Account $$ UNGUARANTEED (15-25%) = $15,000 (CRA) Repays Loans .....................GUARANTEED 75-85% ( ) _ $75,000 (GAF) SEOPW/OMNI CRA *Appoints committee to sponsor local projects *Coordinates NDC activities with local programs and activities Commits ICapitalization Grow Miami Fund Staff: * Markets Program * Originates Loans * Packages Loans * Helps Close and Service Loans Small Businesses Leverage: guaranteed portion will be sold on the secondary market to recapitalize the program. Anticipated leverage: 4:1, i.e.: $500,000 investment = $2.0 million in loans to eligible businesses i E The National Development Council AMNI/CRC 03- 52 SP �gEOPW/CR�I Seattle, WA PICTURES ON FRONT COVER: Top row, left to right: Peekskill, NY, Yonkers, NY; Hato Rey, PR; Chicago, IL Bottom row, left to right: Seattle, WA; Vega Baja, PR; Denver, CO; Pueblo, CO; Seattle, WA 46 e• Milwaukee, Wf II of us at NDC are truly pleased to present this report to the people and organizations who are our public: the cities, counties, states and communities that we serve; the companies and institutions that invest in our projects and support our work; the entrepreneurs and the workers in the businesses we finance; the families and individuals who live in the housing we develop and finance; and our colleagues in community development. When we set out to compile this report, we began with the usual recitation of numbers and projects, leavened with the usual illustrations of our year's work. As our data came together, we saw a picture emerging which suggested that the time had come to tell our story a little differently. The numbers and the lists depicted an NDC that had come very far and changed significantly from the NDC of three decades ago. But none of our regular reporting has taken account of this trajectory of change. So while the numbers are impressive, and tell a great story (you'll find them aplenty in the report) we thought that this would be a perfect time and a perfect opportunity to step back and take a longer, deeper look, to take stock, as it were, of where we've been, how we grew and what we have become - with a little glimpse of where we are going. No longer an annual report, what to call it? The most accurate title would be "NDC —The State of the Organization". But since that phrase doesn't exactly come tripping off the tongue, you won't find it on the cover. Nevertheless, awkward as the name may be, it does describe what you will be reading in the following pages. The NDC of this report is not the result of a�rand Masi Plan created when we began in 1969. We have evolved gradually to meet the changing needs of our client communities and the ongoing shifts in national and loci policy, and in the economic environment, But through it all, there was one thing that did not change. That constant is the mission upon which NDC was founded: to strengthen the economy of rural and urban distressed and minority communities by increasing their access to capital for investment and job creation. Of course, this is serious work. Jobs and investment and good housing can mean life or death to a community. But we confess: we have lots of fun while we're at it. How could we not? The communities, organizations and people that we work with are committed, energetic and extremely talented and, honestly, we get more from them than they do from us. They are the source of all the progress that has been made in their communities and it is our privilege (and, again, fun) to be a part of their efforts. It's a standing joke around NDC that it is far easier to do our work than to explain it. In the following pages, we try to do just that, presenting by description and example - vividly, we hope - all the diverse services, programs and products that have come to comprise that work. Since 1969, we have followed our mission where it has led us and we have ended up an organization that could not have been imagined those decades ago. We are holding steady and looking forward to the challenges of our next three decades. President he National Development Council (NDC) is one of the oldest national non-profit community and economic development organizations in the U.S. It was founded by Samuel S. Beard in 1969, with " one simple but powerful purpose: increasing the flow of capital for investment, jobs and community development to underserved urban and rural areas across the United States. offOur earliest programs focused on getting more private -sector capital into minority -owned banks and insurance companies. Since that time our work has taken many forms. New programs and services have been added and old ones changed. NDC has grown in size, scope and capabilities. Our core service remains Technical Assistance (p.2), which we have provided to thousands of communities, in every one of the 50 states. ' Everything else that NDC does grew from Technical Assistance and the w needs of our TA clients: professional training (p.5); direct development 1 ' ' services (p.7); equity for affordable housing (p.10) and small business o i lending (p.13). i� At the national level, NDC has worked with successive Presidents and with Congress to design new community development tools, or to refine old ones, which are still in use today, providing capital for business expansions and jobs, housing and community development. NDC brings together a staff of former bankers, developers, entrepreneurs, community and economic development officials and government agency lenders. We understand the needs and concerns of both the private and public sectors, and can help our client communities bridge the differences. • Like private sector investment bankers, we match financing needs with the best sources of capital, but we bring those skills to Main Street, not Wall Street - the Main Streets of thousands of distressed communities throughout the country. • Like private developers, we organize all the elements needed to build high quality projects, efficiently and at the lowest possible cost, and then we build them. But the projects are driven by community, not private, needs. • Like private lenders, we extend credit that meets SBA standards. But we lend for community development purposes, and to create the greatest opportunity for our borrowers to survive and prosper. By the last years of the twentieth century, NDC had become something far different from the small organization that set out in 1969 to bring capital to low-income communities. Technical Assistance and training remained the heart of our service, but in pursuit of that mission we had become a full -service financial institution for community and economic development. In 1996, we were officially designated a "Community Development Financial Institution" by the U.S. Department of the Treasury. The evolution is continuing. We have been selected by New York State to be a lender in their World Trade Center Business Recovery Loan Program, using funds appropriated by Congress. NDC has been designated a "Community Development Entity" by the U.S. Treasury Department and we are preparing to participate in what promises to be a powerful new program for community development - New Markets Tax Credits, created by Congress in 2000. The story we tell in these pages is of an organization shaped by the needs of the people and communities we serve and anchored by our roots in our founding principles. The National Development Council is proud of this story, but we have our eyes firmly fixed on the future, continuing to help communities throughout the United States solve their most pressing development challenges. nil THE NATIONAL DILOPMENT I TECHNICAL ASSISTANCE Sandra Joice Director 51 E. 42nd St., Suite 300 TEL (212) 682-1106 New York, NY 10017 FAX (212) 573-6118 WEB nde-online.org EMAIL ndemiami@aol.com echnical Assistance is NDC's core service. It's more t an consu tmg, we don Udo s u� dies a-ir Tw -aon't vrnm reports. We work with our clients, becoming part of their operating force - to act, to build and to conduct the business they need to get done to reach their development goals. We review and update existing programs or design and organize new ones, and we get projects financed and built. Whether the goal is job creation, community investment, affordable housing, small business development, or commercial revitalization, every NDC client expects and gets expert guidance in development and finance from our professional staff, located in our 20 regional offices throughout the country. NDC staff come from careers in both the public sector and private sector. They understand the needs and concerns of both. It is this understanding which sets NDC apart, enabling us to build bridges between the finance community, the city, and the neighborhoods and to bring together public sector resources with financing from banks or other private investors. NDC's Technical Assistance for development projects includes: • Evaluation of sponsor/developer capacity �a „,�� • Financial review and structuring �a • Review of appraisals, cost assumptions, capital budgets, j operating statements, marketing data and funding commitments • Advising on equity sources, requirements and structuring • Identifying and securing other funding sources as needed • Assisting with development issues during predevelopment and development phases • Negotiating with investors, lenders and developers • Structuring loan documents and development agreements • Advising on regulatory and administrative issues �1 l NDC's Technical Assistance for economic development I J or business finance programs covers: * Program goals s cot,g Beach, CA • Eligibility criteria t • Underwriting guidelines i - • Program documents • Intake, application and approval processes • Internal administration SEQP fC T E ONIN X" L A S S I S T 433 .V. E 03- 42 J The immediate and-rimary goal of NDC's technical assistance is tc get the project done. But in the process local staff works side -by -side with NDC professionals, developing new skills and capabilities. TA AROUND THE COUNTRY: NDC's services helped the City of Seattle redevelop its retail core and keep Nordstrom's flagship and world headquarters downtown. Our TA is helping Jackson Hole, Wyoming find ways to alleviate a desperate shortage of affordable housing for working families, and in Greensboro, North Carolina it is helping to restore an African -American retail center. In Kingston, New York, NDC helped the City create and establish an economic development program when IBM closed its 8000-job facility in that Hudson River community. The resulting revolving loan funds, new Alton, IL .k x waterfront and downtown redevelopment and a business park for new industrial growth are important building blocks in Kingston's recovery. The City of Bridgeport, Connecticut used NDC's technical assistance to create and capitalize its $7,000,000 Grow Bridgeport Fund, a partnership of the City and the finance community, that provides alternative financing for small businesses, from startups to mature growing companies. And in San Bernardino County, El Monte, Los Angeles County, Oakland, Long Beach and Carson, California NDC works on unique and innovative financing — from federal grants to local sales tax revenue financing, and from local banks to capital markets — to improve neighborhoods, create more jobs and build better housing. echnical Assistance began in 1977. The new Carter Administration asked NDC to help implement its community development policies and improve the effectiveness of three Federal agencies that support economic development: HUD, SBA, and EDA. NDC crafted an Interagency Agreement under which those agencies coordinated their resources at the local level to stimulate commercial and industrial revitalization in high unemployment cities. The administration then asked NDC to bring the newly coordinated programs - Neighborhood Business Revitalization (NBR) - to demonstration cities (135 in all) "to create local, self-sustaining economic development delivery systems". With this initiative, Technical Assistance was born. The results after four years were $5 billion invested in more than 3,000 businesses, creating and sustaining more than 250,000 jobs. Following NBR, President Reagan asked NDC to assist 25 states throughout the country in implementing statewide small business financing and job creation systems. The results for this initiative were $1.5 billion assembled for businesses. Many of those cities and states are still numbered among NDC's clients. We have now provided TA in rural and urban areas in every one of the 50 states, to more than 350 clients - cities, counties, and states - and thousands of their communities. We have helped them in designing and creating effective economic development programs, and in securing and structuring more than $31 billion in public and private financing for thousands of business expansions, as well as hundreds of housing and public facility development projects. During these years, several agencies of the Federal government called on us periodically to craft, refine or improve key community development or economic development tools: HUD 108; the Community Development Block Grant Float; SBA 502, 503 and 504 programs. These resources are still in widespread use throughout the country and are major instruments for billions of dollars of successful community development. 3 P"} T E C H I C A L A S S I l S -, T A" Ik�,,s iC E TECHNICAL ASSISTANCE AT WORK ' - - 0 opulation, as well ip, were strengths. To those resources, added both its technical know-how financing muscle, putting together a local team that understood both "thy ih challenges and opportunities of development. The results: over $20 million invested in seven VY developments with more than 260 units of quality, affordable housing throughout the County - some developed by NDC and some developed by others using NDC's technical assistance or NDC Corporate Equity Fund financing. The benefits go to the people who will live in the new housing, to the local organizations which developed new capabilities and to the communities they serve. But perhaps the biggest benefit is the county's renewed belief in itself. Although NDC was the catalyst, it was the vision and determination of the local residents, government, bankers, and development teams that brought, this progress to the County. NDC had been providing technical assistance in for a number of years. Over those years, we have helped the City to shape general policy that affects economic development, to obtain public funding for major projects, and to assess and reorganize economic development financing programs. But perhaps the project that has played the greatest role in realizing the City's economic vision is the development of a new home for the City of Yonkers Central Public Library and Board of Education headquarters. While the downtown redevelopment effort had begun, it was still lacking in critical mass. And for more than 20 years, and headquarters for its Board The City's leadership saw two converge into one: renovate a owntown buildingand make i� d the Board of Education is would finally give the City eded, in a location that would m , --catalyst for realizing the City's vision. NDC's ability to act as the developer on'beha o - Yonkers, and under its leadership, made this project' possible. Our non-profit development arm, NDC Housing and Economic . Development Corporation, financed the 193,000 square foot conversion and renovation with $53 million in 501(c)(3) bonds issued through the Yonkers Industrial Development Agency. Following the announcement of the Library/Board of Education building, these new downtown waterfront developments were initiated: four commercial office buildings;' two inter -modal parking garages; a new minor-league baseball stadium and retail center; Hudson River ferry service to Manhattan; a waterfront esplanade; a mixed use market -rate residential and commercial project; two live/work loft projects; a new state -of -,"'a the -art commercial bakery; a waterfront park; restoration the commuter rail station; a new "vertical campus" for an are` college. Some of these are public projects, some private a some public -private partnerships. NDC has provided technic' assistance on almost all of them" NDC is of course proud of the outcome of this work: But t success of these projects, in Yonkers as in Madison Coun rested upon the leaders and citizens who had th.. determination to confront great challenges, the vision to be creative, and the will to accomplish great things. 0- TRAINING AND PROFESSIONAL CERTIFICATION ore than a quarter century ago, the National Development Council created the first training program designed solely for economic and housing development practitioners. In 1977 NDC spread out to deliver to 135 demonstration cities President Carter's Neighborhood Business Revitalization Program. In every instance, we found committed and capable city staff, profes- sionals in urban planning or public administration or even public finance. But we found little or no understanding of economic development financing or small business finance, which was becoming an increasingly important dimension of local economic development. There was no economic development professional or economic development practice as they exist today. But NDC was small and lean. We could not continue to provide the direct operating assistance we were providing as the number of participating communities grew from the original 33 to 135. We needed to find a way to leverage our own staff resources. Our solution: build local self-sustaining capacity in community and economic development finance. NDC's training program was born, and with it, the economic development professional. NDC leads the nation in the quality and scope of training in economic and housing development finance, and in 5. T R A I. N 1 N G the number of practitioners trained each year. Since the inception of our training program, we have trained more than 50,000 professionals in the art and science of economic and housing development finance. NDC's state-of-the-art professional certification programs have earned the endorsement of the International Economic Development Council (formerly the National Council for Urban Economic Development) as the accepted credentials for economic development finance professionals. And today, many employers base promotions and hiring decisions on the successful completion of NDC training. A number of our courses, for both development professionals and entrepreneurs, are now given in Spanish. (See Sidebar for course listings.) Our constituents - local and state development agencies +l and neighborhood nonprofit development organizations - tell us they consider our training to be the "gold standard" for development finance professionals. And they demonstrate this year after year by enrolling their staff members in NDC training - on average, 100 courses per year, for a total of 3,000 to 5,000 annually. Some participants attend w 1" open -enrollment courses held in major cities around the country, while others attend courses brought to their communities by local agencies, development organizations or financial institutions. A? W D P R AQ¢ F E S S 1 0 N A L C E R T I F I C A T 1 0 N WHAT'S MAKES NDC'S TRAINING SO SUCCESSFUL? • All instructors are NDC staff members - professionals who do economic development and housing deals or design development finance programs with our client communities. • Classroom content combines the teaching of general principles and techniques with their application in actual case studies. • Training participants work through real cases, analyzing and structuring them to reach real solutions. Because the cases are based on actual development projects, plenty of real -world problems and obstacles arise and must be resolved. • The courses are intense and rigorous, with as many classroom hours as an average college course, plus homework and a final exam. • Courses are constantly updated to reflect the changing environment of public sector economic and housing development with material that reflects the latest legislation and regulations; fresh cases, using new financing techniques or resources; more advanced courses to create more advanced skill levels; new formats to reach more communities. C S C 1 L EDFP Certification Program Professional Development Courses i lily! 1160 .., . �. .. a ... ,,.... .., F O 20 oPw O �V-aQ7� T R A I N I N G A N D P R 0 F E S S 1 0 63 J_ C 5%T I F 13 6 NDC HOUSING AND ECONOMIC DEVELOPMENT CORPORATION DC Housing and Economic Development Corporation (HEDC) was created as NDC's development arm in 1988 in response to nearly a decade of severe cutbacks in federal housing and community development programs. Working with NDC clients — local or state governments or not -for -profit organizations — HEDC finances and develops affordable housing and other community development or economic development projects that private, for -profit developers cannot, or will not, take on. Seattle, WA a W_ Beaumont, TX Since its inception NDC HEDC has sponsored, financed, developed, or assisted its clients in projects totaling nearly 750,000,000 dollars: affordable housing, both rental and home -ownership projects; public office buildings; education, research and library buildings; recreation, transportation and parking facilities; student housing and more. Acting as sponsor or owner/developer, NDC HEDC is responsible for: • Design and costing • Negotiation of all contracts • Creation of the development budget and proforma • Obtaining legal opinions financial information • Closing the deal • Review of project feasibility • Identifying and securing private sector financing • Oversight and management of project implementation and construction • Finding and securing public sector financing as needed to fill gaps • Evaluating and selecting competent property • Finding and securing equity management • Development of an RFP or RFQ for all contractors • Operating the facility after completion '7 Y N D-C }h 0 USING A N E C 0,-,N 0 M I C D E V E L O P M E N T C 0 R P 0 R A T 1 0 N ,m ' Pttle, WA HEDC AT WORK which has won high praise from many quarters. 8 that praise is for more than the building's urban` aesthetic, its beautiful public art or even its highl'' functional aces. sp rtr; ' This 327,0000 square 1ool"5'tructcre,'vi+liiCft ois° King County's Department of Natural Resources a ,u Parks and its Department of Transportation, is on of the nation's first "green buildings", erected usi p construction practices and materials selected f ' their environmental benefits for "sustainabih (A few green elements: 80% of the excavate materials were reused in the new constructio' conventional buildings use almost none.Rainwater ushing toilets, saving 1.4 million year, Sensor controlled lighting''. sage 28.4% under allowab� But it took more than enlightened public official dedicated environmentalists and cutting -edge architects to accomplish this truly trail -blazing fea' These state-of-the-art environmental buildin' ractices required equally innovative financing nancing that would be even more favorable than pnventional public financing. This was the role for NDC. Like Wall Stree investment bankers, NDC matches econom` development financing needs with the best source of capital. In this case, the NDC Housing an conomic Development Corporation (HEDC) became the developer and found the right financing vehicle in "63-20 bonds, a method that permits tax- exempt financing by non-profit corporations. Ps the private, not -for -profit developer, HEDC used esign build approach, simplified the publ" enrocurement process and realized addition L savings through other construction and financi ' E; efficiencies. King County estimates it saved 20°/a i osts over the conventional public development a nancing approach, and the building is setting ne andards for public facilities. It has won praise n my in its forward -looking hometown of Seattle" but from environmentalists and public officials,,.,,, now a reality for many low income or first-time home buyers in Seattle, Cincinnati, St. Petersburg, Tampa, Boise, East Orange (NJ), Vancouver (WA), Portland (OR) and localities throughout North Carolina. And in Peekskill (NY) affordable new loft -style co-ops are now studios and homes to artists in NDC HEDC's Art Lofts. Other types of HEDC-built facilities are providing basic public services in our client communities. Two examples: Seattle, Washington was faced with the loss of major businesses because the City's dense downtown did not have adequate parking. HEDC assisted by financing and developing a 1200-car parking garage. After six months of operation, the garage was sold to the City, which now operates it for the benefit of all who work and use Seattle's vibrant downtown. In Camden, New Jersey, one of the most economically distressed cities in the country, businesses and property owners in one part of the city were unable to obtain fire Abilene, TX and casualty insurance because local fire -fighting service was below insurance industry standards. No insurance meant no investment and onerous financial risk to local businesses. NDC HEDC provided development and financing resources to build a firehouse that met those industry standards. Credit and investment capital once more became accessible. Historic preservation, too, is a key aspect of community development in many older downtowns and neighborhoods. HEDC's award winning preservation work includes restoration of unique historic buildings in Beaumont and Abilene, Texas and in Fort Collins, Colorado. Downtown or neighborhood, urban or rural, HEDC's projects are now spread across the map of the U.S. NDC's clients everywhere have found that HEDC is a powerful vehicle that can help them reach goals they could not reach by any other means. 4 N D C H ,0 U S I N G A�N ,`l E G„ (1# 0,0 M I C D E V E L O P M E N T C 0 R P 0 R A T 1 0 N r. NDC CORPORATE EQUITY FUND he NDC Corporate Equity Fund (CEF) was established in 1995 to provide equity for low-income housing using Federal Low Income Housing Tax Credits (LIHTC). The Fund was a natural outgrowth of NDC's technical assistance in housing and economic development finance. In the early 1990's, through our work in all parts of the U.S., we found that many urban and rural areas were not yet being reached by the LIHTC program. Because it had become the primary financial vehicle for affordable housing, these localities were falling behind in meeting their housing needs. CEF was created to fill this gap. CEF has raised nearly $200,000,000 in equity for 95 projects in 18 states and the Commonwealth of Puerto Rico, with a total of 3500 units. Our projects are diverse in geography, in size, in sponsorship, and in constituencies. They provide housing for low-income families and low-income elderly; for developmentally or physically disabled individuals and families; for homeless men, women and families; and for senior citizens in need of assisted -living facilities. WHAT MAKES CEF STAND OUT? There are many LIHTC funds that invest in good, affordable housing but they are solely investors. NDC CEF has something more to bring to a project. Because NDC's core service is technical assistance in housing and economic development finance, we can work with local housing sponsors very early in a project, providing expertise to guide the financial structuring and securing additional public and private sector funds. This leaves the community stronger in two ways: it gets the housing and it gets newly -skilled local housing organizations. This was the result in Pueblo, Colorado, where we worked with the non-profit Colorado Bluesky Enterprises. Once exclusively a social service agency, Colorado Bluesky was meeting increasing difficulty in finding appropriate Pueblo, CO N D C C 0 1- 3Q_R A -5P) E Q U I T Y�'i3 jL N D s 3b NDC CEF IN THE COr8""L�.�'� Affordable quality housing is CEPs primary goal and primary benefit. But much Of OUr work has an impact that goes well beyond hnusing, as it did in the Hudson Rive, city of Newburgh, New York, where CEF provided equity for the rehabilitation of ll historically and one of the Good and affordable housing was invery short supply, and project was conceived to address that shortage. utthe project sponsors and the City nfNewburgh also understood that it could be an important first stop in improving the street, and the immediately surrounding neighborhood. And it was. The success of the project is Wen as much in the changing street environmen aointhe quality and stability ufthe large -family housing that these 0ui o now provide. P|�ming is now underway for o tecondphase ofhousing investment nnthat same street. across the country from Newburgh, the State of innesota faced a very different community development oblem. The Minnesota Department of Trade and :onomic Development had found that, istacte to economic development in t, gift ral areas was a shortage of labor,'41 NDC has 20 field offices i,. it differ.-. t a lack of affordable housing jor cause of that da\housi/gcow|dbefou )-staodardmnbUwhomes shortage.. g10family homes. with the State, CEFhaa provided e equity for housing developments in umhis '(pop. 1256), Staples (pop.2z54), )nton (pop. 553), Long Prairie (pop. ' 786), Little Falls (pop. 7232). and Mora ' op. 2805). The result is not just guod, fordable huuohmQ. The result is also ` i important foundation an which d`oo* can build their nationwide. Its familiarity with local conditions, resources and rules gives it the ability 10move much more quickly than unoutside investor. Newburgh, NY WHAT ELSE IS SPECIAL ABOUT NDC CEF? No project too big or too small. The Fund's largest investment committed to date is for a project with 180 units, the smallest for one with 8 units. Equity investments range from $252,000 to more than $8 million. No specific project type or sponsor requirements. NDC CEF provides equity for both new construction and rehabilitation, and can invest in for -profit and not -for -profit projects. Rural, urban, and in-between. The Fund invests in small rural communities, large urban areas, and mid -sized cities. Communities with projects overlooked by larger investment funds get the financing they need to provide housing for their low income residents and to preserve historic buildings. From New York City (pop. 8,000,000) to Mancos, Colorado (pop. 800); from coast to coast; from the Canadian border to the Gulf of Mexico and Puerto Rico and territories in-between, CEF investments are making it possible for communities to meet their housing needs. No hassle Fund. NDC CEF is a small, results -oriented organization without layers of processors, underwriters, committees, and lawyers to slow a project down and second guess the developer. All the work is done by NDC professionals who process, approve, and close the projects with the help of the Fund's own legal counsel. NDC makes the decisions, so approvals are quick, deal terms are straightforward and flexible, and closings are timely. Project goals are achieved quickly. NDC has 20 field offices and has worked in thousands of communities nationwide. Our knowledge of local conditions, resources and rules gives us the ability to move more quickly than an outside investor and we are able to close quickly. N D C C O R 01"lAk;V4 E Q U I T Y0 {V -er N D 6 92 033- 52 L GROW AMERICA FUND East and West Cafe in Tacoma, Washington, is rapidly becoming a culinary legend, where diners wait in long lines for Vietnamese cuisine lovingly cooked by proprietor Vien Floyd. Floyd emigrated from her native Vietnam and later opened this restaurant because, as she told us, she loves to make people happy with good food. Hernandez Grocery in New York is a small grocery and sandwich shop serving the diverse neighborhood of Washington Heights in Manhattan. It has become a community fixture since Rosendo Hernandez, a Dominican immigrant, opened it in 1988 and it has prospered as the neighborhood has become a thriving, family -friendly New York City community. Red Barn Pet Products, Inc., in the West End of Long Beach, California, produces premium pet food that is sold in chain and independent outlets throughout the U.S. and Canada. Under the dynamic management of its owner, Maria Deschamps Bloxam, Red Barn grew in less than five years to be named by Inc. Magazine as one of the top 100 manufacturing businesses in the country. The Meineke Discount Muffler Shop on Lamar Avenue in Memphis, Tennessee is part of the nationwide chain of automotive service franchises. It is now owned by Derrick Whitt, who worked for the shop for nine years and managed it for six before purchasing it from its absentee owner. Under new ownership, the business has been consistently profitable and the number of employees has doubled, strengthening both the enterprise and the neighborhood. hat do these far-flung enterprises have VVin common? Each is the fulfillment of an entrepreneur's dream, each is contributing to its neighborhood and local economy and each is providing a livelihood for its owners, employees and their families. But there is one more thing that they share: each was financed, at a critical point in its development, with a loan from NDC's Grow America Fund (GAF). And they have this in common with scores of other enterprises every year. The Grow America Fund is NDC's small business lending arm. GAF operates as a community development bank, in partnership with client communities throughout the United States. As a local lending tool within those participating communities, GAF provides SBA - guaranteed credit for the creation or expansion of eligible small businesses in underserved urban or rural areas, and to minority and women business owners. Because NDC's mission is to create economic opportunity and jobs for low and moderate income people, and to stimulate investment in target areas, GAF's lending differs from conventional lending practices in several key ways, providing: 13 G R 0 W A M E R I C A F U N D GAF - THE BACK STORY Credit for small business has been an essential tool in economic develo from the very start of the community development movement in the late 1 Since NDC's beginning at the same time, development of busines in distressed communities has been central to our work. We understc the importance of small business to a community's economic life. We a recognized that no business can reach its fullest potential without capital - the right type, in the right amounts and on thetermsthat will allow it to prosp But in low-income communities and communities of color, lack of access to t capital, in the form of appropriately structured credit, restricts the econor potential and harms the overall welfare of the community. to help address this problem, NDC worked closely throughout the 1980's wit variety of federal agencies to structure and design their development financ l 3g, arcs so they could better meet the national goals that Congn �ablis� ed for them, including small business lending. At the same time N was also engaged in urban and rural communities around the country, thr ` our Technical Assistance and Training programs, to help them crea operate their own small business loan programs using those federal resourrr #n rrhnnvn drmmn't;n'nnv ,n th. 1oarl'c r0+h °+t, fundamental restructuring of the nations banking system throughout the decade, and parallel drastic reductions in federal funding for economic development financing. In that emerging environment, underserved communities saw their access to credit further reduced. NDC decided that its role neededto change too. We continued to work with client communities, identifying and working 1 alternative resources to fill the void left by shrinking federal programs. Bu small business lending by banks continued to plummet in the early 1990's, decided to add small business lending to our services. The Grow America (GAF) was born. Created in 1992 to be an ecort e,w community development financial institution for NDC's participating communities across the country. As a "Small Business Lending Corporh GAF rakes loans that are guaranteed under the Small Business Administratio'. 7(a) Loan Guarantee Program. Since that time, GAF has grown to serve more than 40 communities across the nation and in Puerto Rico. Our participating communities are large and small, urban and rural, GAF borrowers include businesses in almost every econom' sector: manufacturing, retail, service, distribution, finance, and transportatio" Ne ar�y S50,000,000 in GAF funds loaned has financed projects with'a total coy of almost $80,000,000 and our loan amounts range from $16,000 to more th $1,350,000, with most in the range from'$100,000 to $300,000. More th half of our borrowers are minority or women business owners. We are now poised to take on a new and critical role as a lender under New York States World Trade Center Business Recovery Loan Program. The State has allocated $3,545,000 for GAF, part of the funds appropriated by Congress to aid the City in the aftermath of September 11. If a loan is the right course, we work to structure it so it will maximize the likelihood of success for the business, including of course their ability to meet all of their financial obligations. Once a loan is made, we stay in touch and strive to maintain a productive relationship with our borrowers. We visit every borrower at least once a year, often on a weekly basis with a new borrower. We stay in touch in other ways, and work to identify business problems early so they can be resolved before becoming insurmountable. And when there is a problem, our first goal is to help that business persevere. We see possibilities where others may not, and we go more than "the extra mile" to help ensure the survival and success of a GAF borrower. Our loan portfolio management has resulted in an exceptionally high success rate in loan repayment but equally important is the ability of our borrowers to maintain and expand businesses. (The success of this approach has been recognized by the SBA, which found in a recent assessment that GAF "continues to effectively manage its high -risk loan portfolio and fulfill its SBA lending mandate to provide capital access to small businesses that are unable to obtain credit elsewhere." SBA also noted that our portfolio management has "the added benefit of helping less financially able businesses succeed.") The Grow America Fund has been capitalized with equity from NDC, and from our state, county and city partner communities, with additional support from financial institutions, faith -based institutions and foundations. All contributed capital is earmarked for lending within specific areas determined by the contributing partner. GAF dollars flowing into a community also leverage other dollars. Nearly 60% of GAF transactions have companion financing from banks or other lenders. In these transactions, it is often the GAF loan that makes the conventional loan possible, providing a new opportunity to a local lending institution and bringing private capital into the community. In addition, through the use of the SBA loan guarantee and our secondary market program, we bring the muscle of private capital markets to community -focused small business lending - a resource not otherwise available to our target communities and businesses. Through our work with other lenders and this secondary market program GAF can achieve a leverage of more than 6 to 1 of capital invested by a participating community. The United States Department of the Treasury has designated GAF as a Community Development Financial Institution (CDFI), formally recognizing that our primary purpose is and must remain community development lending in targeted areas, benefiting populations with incomes at or below 80 percent of the area's median income. GAF's loans achieve this purpose through job creation or provision of goods and services for such target populations in our community partners' most distressed neighborhoods. The Small Business Administration has further recognized GAF's excellence by designating the program a "Preferred Lender". According to the SBA, its Preferred Lenders are "chosen from among the SBA's best lenders and enjoy full delegation of lending authority. (It is) given only to our most active and expert lenders". Long Beach, CA 15 G" =R- 0 W; A M E R 1 C A F P! i -is •� REAL ESTATE RECYCLING AND REUSE FormerAlbank Building, now the Carpeles Manuscript Museum, Newburgh, NY acant buildings are often seen as signs of economic distress in a community. To NDC more often they can represent opportunities: obsolete or surplus buildings can be recycled, restoring jobs and economic activity to what might otherwise be a wasting or neglected resource. Many communities have this kind of property — frequently the result of corporate downsizing or moves to other locations. NDC has a long history of helping communities recycle such vacant or partially occupied real estate. Using tax benefits provided by the Internal Revenue Code, NDC has acquired under-utilized properties from corporate (and individual) owners and reconveyed or redeveloped them so that they are once again productive elements in the local economy. NDC is known in the private sector for its expertise in these transactions — in understanding both the needs and concerns of the communities in which the property is located and the needs and concerns of the private sector owners in what is a highly specialized real estate transaction. As real estate developers, we also bring an understanding of the complicated processes involved in redeveloping older sites, including those with significant environmental impairment. It is this expertise which has brought dozens of major corporate properties to us from owners such as Chrysler, Colgate Palmolive, York International, Akzo Nobel, General Motors, Berkshire Hathaway and many others. The real estate involved in these transactions has ranged in value from $250,000 to $20,000,000. Here is a sampling of some NDC recycling projects since we began this program more than two decades ago: An Eastman Kodak facility in Rensselaer, New York had employed more than 1000 people before it was closed. NDC acquired the entire complex of manufacturing, research, office and distribution buildings and worked with new owners, who renovated them for re -use, returning jobs and economic viability to the site. • A neglected landmark movie theater in the City of Easton, Pennsylvania became a vibrant performing arts center when NDC acquired it from United Artists and worked with a community arts group to restore it to an important place in Easton's downtown. • A 452-acre site in Lexington, Kentucky, mostly farmland with some small manufacturing and storage buildings, was donated to NDC by R.J.Reynolds. After a comprehensive planning process, NDC implemented a development program that blended commercial, residential and institutional uses with recreational and green space for the public. The land is now on the city's tax rolls, with uses that generate both jobs and increased revenue for the region. • A former Levi Strauss clothing factory in Roswell, New Mexico was acquired by NDC. A local company then converted it for use as a candy factory, making sweets that are sold throughout the U.S. and abroad. • A shuttered distribution warehouse of the Pillowtex Corporation near Cincinnati, Ohio was conveyed to NDC. It has now been redeveloped by a local developer, housing several manufacturing companies with a total employment level higher than it was in its previous use. • An obsolete building in Longview, Texas, once a Kroger Supermarket, was acquired by NDC for redevelopment. It was converted by a local developer into a multi -tenant manufacturing and distribution center. • A manufacturing facility in Berkeley, California, vacated by Colgate-Palmolive, was acquired by NDC from Colgate. Working with a local developer, we recycled the facility, restoring employment and maintaining the tax base at the site. These transactions have been repeated in many other places around the country and have included the recycling of a broad range of property types in addition to the ones cited above: unimproved land, breweries, factories, shipyards, department stores, banks, office buildings, warehouses, shopping centers and textile mills. R E A L E S T A T E R E J%'Vq/ .fir, G 0 V2 A N D Q B0Y Yr / L.PM16 ��O Port Angeles + Seattle Tacoma Olympia King County n Pierce County Issaquah Yakima Vancouver Poorrtllaand Ft Benton Sacramento O Napa O San Francisco Oakland Richmond O San Jose *Jackson Hole Salt Lake City O Las Vegas Santa Barbara County El Monte Irwindale Carson Los Angeles County OPasadena Los An eles0 San Bernardino County Long Beach O -�,Air San Bernardino City San Diego O AColton QTempe ALASKA Anchorage Tucson A Cheyenne *0 Fort Collins AO-,'V Denver + Goodland Colorado Springs Manhattan C) *_ '�Ar Pueblo A Cortez Canon City Prowers Hayes Mancos County O Wichita H Farmington +San Juan Pueblo Gallup Las Vegas Alamagordo ++Texico Clovis Oklahoma C I A-,.,Ac Wichita Falls *0-,')r Abilene Irving A+ Austin O San Antonio 17v! N D`f k.1 N T H E U Yt :uo I' r. NEW YOF, TATE Monroe County Syracuse Niagara Falls .N'f .,� Rochester Auburn Buffalo Cortland Ithaca Warren County Utica -r )Gloversville Mechanicville Nassau Ulster County ,f Hudson .,� Kingston Newburgh Port Jervis Tuxedo q� Binghamton L - Peekskill Rockland County ?xx� Yonkers 7SA1)White Plains New York City Long Prairie rainerd+ +Ironton 44M +Little Falls Staple +Mora g City, OSt. Paul OWisconsin Dells ® St. Cloud Osakis +Rochester OMadison Lansing County Milwaukee O Cleveland O O (-)A Chica o Detroit Toledo Augusta Lewistown/ South Portland Auburn ® Portsmouth Nashua++Pelham Gardner + Worcester Hartford Providence Towanda O Bridgeport Scranton A`, + Newark SEEINSERT FOR PROJECTS IN NY STATE Rockford O East Chicago ZI Warren Lancaster Cook County —�A Gary Pittsburgh Columbus St. Claire County Indianapolis O-'�r Trenton Quincy f O Cincinnati Springfield Charleston Topeka AltonA+ O O Kansas City �f*OGranite City `� Madison County Pikeville Jefferson City 0+/ Madison Science Hill /)Washington Park East St. Louis Knoxville Gast nia O�Charlotte O Houston 0 Beaumont LJ PUERTO RICO Vega Baja + Hato Rey O 12han Juan O Caguas O Baltimore0 Washington O Richmond ,,'IfO Camden Wilmington Prince Georges County Greensboro O`er `�, Durham O Raleigh Columbia O Atlanta Augusta O Jacksonville O Tallahassee O A() Daytona Beach `A Orlando Clearwater Palm Beach County O Miami 0 HEDC Projects CEF Projects O Training Relationships and Sites Grow America Fund Communities Technical Assistance Communities 43 C I N SEOPW / T H If) 3 —$ A jot Syracuse, NV nncHA0 THE NDC BOARD Samuel S. Beard Chairman Wilmington, Delaware Robert W. Davenport President New York, New York David 0. Boone Westlake, Ohio Natalia Delgado Chicago, Illinois Barry J. Lang Los Angeles, California William W. Lawrence Montclair, New Jersey Burton S. Tauber New York, New York O`LV� i/Cif +�/ a — �i 2 BACK COVER: Tap row, left to right: Seattle, WA; Worcester, MA; Daytona Beach, FL; Beaumont, TX �+nn�A�� Bottom row, left to right PW 1, u+Qsl[yc,�A: Marcos, CO; NDC tram' sgioll Madison, IL,� i A THE NATIONAL DEVELOPMENT COUNCIL' 51 East 42nd Street Suite 300 New York, NY 10017 Tel (212) 682-1106 Fax (212) 573-6118 www.ndc-online.org