HomeMy WebLinkAboutR-00-0867J-00-798
9/28/00
RESOLUTION NO. 867
A RESOLUTION OF THE MIAMI CITY COMMISSION,
WITH ATTACHMENTS, RESCINDING RESOLUTION
NOS. 98-580 AND \00-418 IN THEIR ENTIRETY,
THEREBY ABOLISHING THE HOUSING LOAN
COMMITTEE; FURTHER AUTHORIZING AND DIRECTING
THE CITY MANAGER TO ESTABLISH AN ELEVEN (11)
MEMBER HOUSING AND COMMERCIAL LOAN COMMITTEE
TO APPROVE/DISAPPROVE CERTAIN HOUSING AND
COMMERCIAL LOANS AND/OR GRANTS TO BE
PROVIDED BY THE CITY OF MIAMI THROUGH THE
COMMUNITY DEVELOPMENT BLOCK GRANT ("CDBG"),
HOME INVESTMENT PARTNERSHIP ("HOME") AND
STATE HOUSING INITIATIVES PARTNERSHIP
("SHIP") PROGRAMS; GRANTING AUTHORITY TO THE
HOUSING AND COMMERCIAL LOAN COMMITTEE TO
APPROVE/DISAPPROVE LOAN APPLICATIONS FOR
FUNDING OF AFFORDABLE HOUSING PROJECTS AND
COMMERCIAL (BUSINESS) PROJECTS AND RELATED
TRANSACTIONS, INCLUDING, BUT NOT LIMITED TO,
SUBORDINATION AGREEMENTS, LOAN RESTRUCTURING
PLANS AND/OR LOAN REPAYMENT PLANS FOR
AFFORDABLE HOUSING PROJECTS AND COMMERCIAL
LOANS IN THE CITY'S LOAN PORTFOLIO;
AUTHORIZING THE CITY MANAGER OR HIS DESIGNEE
TO APPROVE/DISAPPROVE SPECIFIC HOUSING LOANS
PROVIDED BY THE CITY THROUGH THE CITY'S CDBG
FUNDED SINGLE FAMILY REHABILITATION PROGRAM
4 AND SHIP FUNDED SINGLE FAMILY REHABILITATION
AND HOMEBUYERS FINANCING PROGRAM; DIRECTING
THE CITY MANAGER TO PRESENT EACH APPROVED
LOAN TO THE STATE OF FLORIDA FINANCIAL
EMERGENCY OVERSIGHT BOARD FOR REVIEW AND
FINAL APPROVAL; AND APPROVING THE CITY OF
MIAMI LENDING POLICY GUIDELINES, ATTACHED
HERETO AND MADE A PART HEREOF, TO IMPLEMENT
THE COMMERCIAL LOAN PROGRAM._
77Cn :�?bm 7 C'S,
CON TAS
Rescinded by 0-13030 1! ,
CITY COMUSSION
EETING OF
SEP 2, S2000
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WHEREAS, Resolution No. 98-580, adopted June 9, 1998,
authorized and directed the City Manager to appoint a seven
(7) member Housing Loan Committee for the purpose of
recommending approval/disapproval of loans and/or grants
provided by the City of Miami (the "City") through its
Community Development Block Grant ("CDBG") funded Single
Family and Multifamily Rehabilitation Programs, Home
Investment Partnership Program ("HOME"), and the State
Housing Initiatives Partnership Programs ("SHIP"), in
response to findings and concerns identified by the U.S.
Department of Housing and Urban Development's District
Office of the Inspector General ("OIG") in its Audit Report
dated March 26, 1998, regarding the City's loan
underwriting procedures; and
Ar"qv I "%*- j
WHEREAS, the t composition of the Committee, approved
pursuant to Resolution No. 98-580, was comprised of a
Chairperson appointed by the Mayor, four (4) representatives
from the private sector with real estate lending and/or
affordable housing development experience and three (3)
representatives from the City Administration; and
WHEREAS, at its meeting of September 28, 1999, with the
adoption of Resolution No. 99-705, the City Commission approved
Page 2 of 8 1
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a modification to the City of Miami Local Housing Assistance
Plan for the SHIP Program, which resulted in the expansion of
the number of housing. assistance programs available to very low,
low and moderate income families residing in the City of Miami;
and
WHEREAS, since October 1999, with the establishment of the
Homebuyers Financing and Single Family Rehabilitation Programs,
which provide a maximum of up to $40,000 in financial assistance
to eligible households for the purchase of a home or the
rehabilitation of an existing home, respectively, the City has
experienced a substantial increase and demand from potential
homebuyers and current homeowners for financial assistance; and
WHEREAS, pursuant to Motion -99-976, adopted December 14,
1999, the City Commission authorized and directing the City
Manager and the City Attorney to proceed with the termination or
winding down of the agreement with Miami Capital Development,
Inc. and obtain the loan portfolio from said entity; and
WHEREAS, subsequently, Resolution No. 98-580 was amended by
the adoption of Resolution No. 00-418 on May 11, 2000, to change
the designation of individuals to be appointed as members of the
City Housing Loan Committee by (1) eliminating the appointment
Page 3 of 8 0 0 —
of an individual representing Miami Capital Development, Inc.,
(2) providing for the appointment of a third member with private
real estate lending experience, and (3) providing for the City
Manager's appointment of individuals from the Departments of
Planning and Zoning and Real Estate and Economic Development as
eligible members of said Committee; and
04'r
WHEREAS, pursuant to Resolution No. 00-413,' adopted May 11,
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2000, the City Commission designated the Little Haiti Credit
Union and Latin Chamber of Commerce (CAMACOL) as the
administrative entities to assist the City in its efforts to
reestablish a Commercial Loan Program that creates a
public/private partnership to stimulate business development and
growth in the City; and
WHEREAS, pursuant to Resolution No. 00-755, adopted
September 14, 2000, the .City Commission designated the Tacolcy
Economic Development Corporation, Inc. as an administrative
entity to assist the City in its efforts to reestablish a
Commercial Loan Program that creates a public/private
partnership to stimulate business development and growth in the
City; and
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WHEREAS, presently the Department of Community Development
is responsible for servicing the loan portfolio previously
originated and managed by Miami Capital Development, Inc.; and
WHEREAS, the City Commission directed the Administration to
develop guidelines for the Commercial Loan Program; and
WHEREAS, in an effort to be more responsive to the
residents of the City, it is recommended that the City
Commission grant authority to the City Manager or his designee
to approve/disapprove specific housing loans provided by the
City through the CDBG and SHIP funded Single Family
Rehabilitation and Homebuyers Financing Programs and to
establish a Housing and Commercial Loan Committee consisting of
eleven (11) members and further directed the Administration to
develop guidelines for the Commercial Loan Program; and
WHEREAS, to accomplish the foregoing, it is in order for
the City Commission to rescind Resolution Nos. 98-580 and
00-418, in their entirety, to abolish the existing Housing Loan
Committee, and replace same with a newly established Housing and
Commercial Loan Committee; and
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NOW, THEREFORE, BE IT RESOLVED BY THE COMMISSION OF THE
CITY OF MIAMI, FLORIDA:
Section 1. The recitals and findings contained in the
Preamble to this Resolution are hereby adopted by reference and
incorporated as if fully set forth in this Section.
Section 2. Resolution No. 98-580, adopted June 9, 1998,
and Resolution No. 00-418, adopted May 11, 2000, are hereby
rescinded in their entirety, thereby abolishing the Housing Loan
Committee created pursuant to said Resolutions.
Section 3. The City Manager is hereby authorized and
directed to establish an eleven (11) member Housing and
Commercial Loan Committee to approve/disapprove certain housing
and commercial loans and/or grants to be provided by the City
through the CDBG, HOME and SHIP Programs which shall be
comprised as follows:
(a) the Chairperson appointed by the Mayor;
(b) one (1) member who is an active affordable
housing provider;
(c) three (3) members with private real estate
lending experience;
(d) three (3) members with private commercial lending
experience; and
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(e) three (3) members appointed by the City Manager
from the City Administration.
Section 4. Except as provided in Section 5 herein, the
City of Miami Housing and Commercial Loan Committee is hereby
granted the authority to approve or disapprove all loan
applications for funding of affordable housing projects and
commercial (business) projects and related transactions
including, but not limited to, subordination agreements, loan
restructuring plans and/or loan repayment plans in the City's
loan portfolio.
Section 5. The City Manager or his designee is hereby
authorized to approve or disapprove specific housing loans
provided by the City through the City's CDBG funded Single
Family Rehabilitation Program (one to four units) in an amount
not to exceed $80,000 per transaction, and SHIP funded Single
Family Rehabilitation and Homebuyers Financing Programs in an
amount not to exceed $40,000 per transaction.
Section 6. The City Manager is hereby directed to present
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each approved loan transaction to the State of Florida Financial
Emergency Oversight Board for review and final approval.
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867
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Section 7. The City of Miami Lending Policy Guidelines,
attached hereto and made a part hereof, to implement the
Commercial Loan Program are hereby approved.
Section 8. This Resolution shall become effective
immediately upon its adoption and signature of the Mayor.'''/
PASSED AND ADOPTED this 28th day of September , 2000.
v
In accordance with Miami Code Sec. _,36, sinca 1
this legislation by signing it in the, designated
becomes effective with the elapse ct ten
regarding same, without the Ycr
ATTEST:
WALTER J. FFO�E�MAN , CITY CLERK I��
APPROVED/ASS �U FORM D CORRECTNESSt
LO
TTORNEY
682:DF:IT:BSS
JOE CAROLLO, MAYOR
I4t r did not indcate apPrcval eaf
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om the date t Cemmi
1� If the Mayor does not sign this Resolution, it shall become effective
at the end of ten 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 8 of 8 or
CITY OF MIAMI LENDING POLICY GUIDELINES
A City of Miami Commercial Loan can only be approved to assist
an identifiable small business concern (SBC) in accomplishing a
sound business purpose. Whether the SBC is a proprietorship,
partnership or corporation is not paramount to the eligibility
determination.
Eligible and Ineligible Small Business Concerns
For purposes of a Revolving Loan Fund (RLF) loan, a business may
qualify for consideration provided it meets the following
criteria:
1. Business is located or locating within the boundaries of
the City of Miami
2. Business and/or Principals do not demonstrate the financial
ability to obtain financing for the business with or
without the participation of Local, State or Federal
Government, through their direct or guaranteed loan
programs.
3. Business is an equal opportunity employer.
4. Business is not relocating jobs, except where the loan
applicant is forced to relocate due to circumstances beyond
their control (i.e. government intervention, building
demolition, etc.).
5. Project involves no negative environmental impacts.
6. Project impacts an adequate number of jobs (as defined by
24 CFR 209 (b)(1)(i)) to be created and/or retained.
7. Potential for jobs created are to be filled by City of
Miami residents wherever possible. A First Source Hiring
Agreement with the City of Miami will be required.
8. The business' ability to repay the loan.
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DtNIAL OF LOANS
Loans will generally be denied for the following reasons:
1
2
3.
M
5.
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7.
If the funds are otherwise available on reasonable terms:
(a) From the disposal at a fair price of assets not
required by the applicant in the conduct of its business
or not reasonably necessary to its potential growth,
(b) Through the use of personal credit and/or resources of
the owner, partners, management, or principal
stockholders of the applicant,
(c) From other Government agencies which provide credit
specifically for the applicants' type of business, or
(d) From other known sources of credit;
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For unsatisfactory credit history during the last twelve
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(12) months.
If a bankruptcy was discharged less than twelve (12) months
I
ago.
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If the loan would be for the purpose of:
(a) Paying off a creditor or creditors of the applicant
who are inadequately secured and are in a positions to
sustain a loss,
(b) Providing funds for distribution or payment to the
owner, partners, or shareholder of the applicant,
(c) Refunding a debt owed to a small business investment
company, or
(d) Replenishing working capital funds previously used for
such purposes;
(e) Paying of any tax lien or liability.
If the loan will provide for free funds for speculation in
any kind of property, real or personal, tangibles or
intangible;
If the applicant is a charitable institution or non-profit
enterprise, except for cooperatives which carry on a
business activity for the purpose of obtaining pecuniary
benefit for their members in the operations of their
otherwise eligible small business concern;
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If the applicant is a newspaper, book publishing company,
magazine, or similar enterprise;
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8. If any of the.gross income of the applicant, (or any of its
principal owners) is derived from gambling activities,
except for those small firms which obtain less than sone
third of their gross income from income or commission from
the sale of official state lottery tickets under a state
license; j
9. If the purpose of the loan is to provide funds to an
enterprise primarily engaged in the business of lending or
investments or to any otherwise eligible enterprise for the
purpose of financing investments not related or essential
to the enterprise.
10. If the purpose of the loan is to finance theacquisition,construction, improvement, or operation of real property..
11. If the effect of the granting of the financial assistance
will be to encourage monopoly or will be inconsistent with
the accepted standard of the American system of free
competitive enterprise.
12. If the Applicant and/or its principals are in a defc Lult
status with previous financial commitments to the City of
Miami or are indebted to the City of Miami.
13. If the Applicant and/or its principals have been debarred
from doing business with federal, state, county or local
governments.
14. If the proceeds of- the loan will be used for moving an
eligible business when the move is solely for the purposes
of obtaining the benefits of borrowing from the RLF.
MINIMUM AND MAXIMUM AMOUNTS LOANED
1.
The
minimum amount loaned will be
$10,000.00 I
2.
The
maximum amount loaned for
working. capital will
be
$25,000.00
3. The maximum amount for the purchase of equipment will be
$35,000.00
4. The maximum combined loan amount shall not exceed
$35,0000.00. j
TERMS
Repayment term shall be as follows:
a) Working Capital - Up to five ( 5 ) years
b) Equipment - Up
involved, not to
IRS Instructions
(7) years.
INTEREST RATES
to the economic life of the assets
exceed the IRS depreciation limits (See
for Form 4562) and not longer than seven
The interest rates of the City"of Miami's RLF loans shall be 6 %
per annum.
EQUITY GOALS/REQUIREMENTS
All loans shall be matched with the applicant's monies or other
commercial loans participation. Matching participation
requirements will be:
a) Existing Businesses - These are businesses having operating
experience greater than 2 years. A minimum of 20 % of
capital matching is required.
b) Businesses Relocating into Economic Opportunity Zones -
Existing businesses (as defined above) relocating into Ione
of the Economic Opportunity Zones identified by the City of
Miami in its Five Year Consolidated Plan, will be required
to match at least 15 % of the capital requirement.
JOBS CREATION OR RETENTION:
All loans will require a job created or retained for eery
$35,000.00, or parts thereof, loaned. There shall be a minimum
requirement of one (1) low/moderately low-income job retained or
created for a loan of less than $35,000.00. In the case of job
retentions, the applicant must identify why the borrowed funds
are required to retain the job. All applicants will be required
to execute a First Source Hiring Agreement with the City of
Miami, stating that City of Miami residents will have a
preference over all applicants for any jobs created as a result
of the granting of the loan.
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OTHER CONSIDERATIONS:
1. Married applicants shall sign Unlimited Guarant
including their spouses, even if they are not part of
Company requesting the funds.
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the
Collateral assignment of Life Insurance policies will
requested from every applicant's principal(s). The
amount of the policy shall be at least equal to
original loaned amount. No exceptions of this rule
be allowed.
Commercial Insurance Policies naming the City of Miami
loss payee in an amount of 120% of the loan amount sr
be required _from every applicant, i.e. fire, loss
income, liability, etc. All policies shall provide
City with mandatory written notices in cases
cancellation or material change.
be
face
the
will
as
all
of
the
of
In the cases of cooperation agreements involving banks or
other institutions and the City of Miami, the City of
Miami will have an equal standing as the other financial
institutions as far as the collateral position of any and
all real property or equipment pledge as security for the
loan.
5. Loans for Equipment will require UCC filings. The City
of Miami must be in the first security position on these
assets.
6. Once the loan is closed, recipient may not pledge,
transfer, hypothecate, encumbrance or dispose of any
asset purchased in whole or in part with funds from the
City of Miami, without the written approval from the City
of Miami.
7. The City of Miami may impose late fees if the busii
does not pay on a timely manner.
IN-HOUSE LOAN UNDERWRITING
The Department of Community Development (DCD) will receive
underwrite all loan packages. The applicant shall submit
original and a copy of the entire loan package. All docume
submitted, as part of a loan application will become property
the City of Miami.
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The following process will be followed:
l.All packages will be date and time stamped when received.
2. The package will be reviewed for completeness against the
list of Documents and General Requirements shown on
Attachment I. If any package is found to be incomplete,
the agency that prepared the loan package will be sent a
letter via fax indicating the missing item(s). A copy of
the letter will be sent to the applicant.
The agency submitting the loan package will be given five
(5) working days to submit the missing item(s); if at the
end of this period, the agency has not submitted the
item(s), the entire package will be returned to the agency
indicating that the application is closed. A copy of the
letter returning the package will be sent to the applicant.
It will be the agency's responsibility to obtain the
missing items and to resubmit the package as a new
application.
3. The Agency preparing the loan application will obtain the
necessary credit reports and perform the underwriting tasks
within a period of 30 -days.
4. If DCD's underwriters agree with the loan request, DCD will
prepare its recommendations for submission for the next
feasible loan committee meeting. A copy of the
recommendations will be given to the agency that submitted
the loan package and to the applicant.
5. If DOD's underwriters do not agree with the loan package as
presented, DCD . will prepare conclusions and / or
recommendations to the agency and the applicant for their
response. If the response from the applicant is not
received within five (5) working days, the application will
be closed.
APPROVAL PROCESS
The Loan Committee will review all applications for loans from
the RLF. The Loan Committee can recommend approval or deny any
loan application.
If the Loan Committee. denies a loan application, the applicant
and the agency that prepared the loan package will be advised in
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writing with an explanation as to why the loan was denied. This
will close the case file as far as the City of Miami is
concerned. If the agency and the applicant rework the loan and
wish to have it re -considered, it will be considered a new
application. The applicant will have to submit a new
application and package for the revised loan to be underwritten.
If the Loan Committee approves the loan application, the loan is
then forwarded to the State of Florida Financial Oversight Board
for its approval. If the Oversight Board approves the loan,
closing will take place within 10 workdays after the Oversight
Board approval.
APPLICATION FEE
There will be a non-refundable application fee of $75.00. This
Application Fee must accompany the loan package. The
Application Fee will be cashed when the package is accepted for
underwriting.
SERVICING
The City of Miami will service all loans made from the City's
RLF. The City reserves the right to sell the loan or transfer
the loan or the servicing of the loan at its discretion.
Appendix I - Documents and General Requirements
• Business Information
1. Business Loan Application.
2. Authorization for Services.
3. Business Financial Statements for the last two tax
years.
4. Tax Returns (Federal Income Tax, State Income Tax,
State Intangibles Tax, Property Tax) for the last two
tax years.
5. Current Financial Statement of Business with
supporting Bank Statements (not older than 90 days).
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6. Inventory of Fixtures and Equipment owned listing
description, serial number, year purchased, condition
and estimated current value.
7. History of Business including detailed Business Plan
with 3 -Year Projections. Agency assisting the
applicant with the loan package must review, modify
and indicate concurrence with the Business Plan
submitted by the Applicant.
8. Detailed Statement on use of Loan Proceeds.
9. Provide list of Fixtures and Equipment to be purchased
accompanied by three (3) detailed quotations for each
item listed.
10. Cash Flow Projections and impact on Financial
Statements reflecting infusion of loan proceeds.
Agency assisting the applicant with the loan package
must review, modify and indicate concurrence with the
Cash Flow Projections submitted by the Applicant.
11. Copies of Pending Contract or Sales Orders and pending
Purchase Orders.
12. Copy of Lease or Letter of Intent to Lease executed by
the landlord or legal representative.
13. Copies of Business Documents: Partnership Agreements,
Articles of Incorporations, current Certificate of
Good Standing, current Fictitious Names Registry, etc.
14. Copy of the Business' current Certificate of Use,
Occupational License (City and County), State License
(as appropriate).
15. Employment- Compliance Form for Job Creation /
Retention Goals.
16. First Hiring Source Agreement with the City of Miami.
17. Current (in forms specified by the City of Miami) and
Projected Employee Data.
00
18. Executed and undated IRS Forms 8821 - Tax .Information
Authorization and Form 4506 - Request for Transcript
or Copy of Tax Form
Personal Information
1. Completed Personal Financial Information Form (not older
than 90 days) .
2. Personal Income Tax Returns filed for the last two (2)
years including: W-2, Schedule C for sole proprietorship,
Form 1065 for partnerships and K -1s for S -corporation
stockholders.
3. Personal Resume of principals of applicant.
4. Executed and undated IRS Form 8821 - Tax Information
Authorization and Form 4506 - Request for Transcript or
Copy of Tax Form.
5. If any of the principals has experienced any credit
problems especially during the last twelve (12) months, a
satisfactory explanation of these problems must be provided
with the application.
Other
1. Copy of Warranty Deeds of all Real Estate owned by Business
and/or Guarantors and copy of closing statements evidencing
original purchase.
2. Evidence of Tax Assessment Values and any existing
appraisals not older than 6 months. The appraiser must be
State Certified and have at least two years of having been
licensed.
3. Evidence of existing mortgage balances and copy of
corresponding mortgage documents.
4. Written evidence of updated insurance coverage on property
owned.
Commercial Lending Program
Scope of Work for Participating Agencies
1. Prepare and Complete all sections of the "Technical
Assistance Intake Checklist" and the (Attachment I).
Original document is to be kept by Agency in the
Applicant's File.
2. If conclusion of Step 1 above is that applicant qualifies
.to receive assistance, applicant should complete the
"Technical Assistance Request for Assistance Form."
(Attachment II). Original document is to be kept by Agency
in the Applicant's File.
3. Compile all required documents to prepare and complete
the loan application. (Attachment III). Documents to be
included in Loan Package and Submitted to the City of Miami
for Loan Underwriting.
4. Prepare (or review, modify and endorse the applicant's)
Business Plan and projections of the impact of the loan
proceeds on business profitability. To be submitted to the
City of Miami for Loan Underwriting.
5. Assist the business with the preparation of the
"Employment Compliance Form for Job Creation / Retention
Goals" (Attachment IV). To be submitted to the City of
Miami for Loan Underwriting.
6. Prepare an Executive Summary of the Loan Application
explaining and justifying the approval of the loan. . To
be submitted to the City of Miami for Loan Underwriting.
7. Submit the Loan Package to the City of Miami for
Underwriting and Loan Approval.
8. Respond to the City Staff's request for missing documents
or additional information that will enhance the likeliness
of the loan being approved.
9. Participate in the presentation of the loan to the City's
Loan Committee.
10. Work with applicant in revising the loan application and
package if the City's Loan Committee issues a denial.
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11. Participate as advisor to applicant at the time the loan
closing occurs.
12. Provide monthly monitoring of applicant's operations
during the first (1st) year of the loan. Monitoring visits
are intended to review the borrower's utilization of the
loan proceeds and to determine if. the business plan's
objectives are being achieved. City of Miami staff may
participate in these monitoring meetings.
13. Prepare and submit a report by the 5th (fifth) calendar
day of the month following the visit communicating to the
City of Miami the results of the monthly monitoring (See
Attachment V) .
14. Provide quarterly monitoring of applicant's operations
during the second and subsequent years of the loan. City
of Miami staff may participate in these monitoring
meetings.
15. Prepare and submit a report by the 5th (fifth) calendar
day of the month following the quarterly visit
communicating to the City of Miami the results of the
quarterly monitoring (See Attachment V).
16. On the anniversary of the loan, the agency will obtain
copies of the business licenses, will keep these copies in
the project file and advise the City of Miami, as part of
its quarterly report that the business is operating with
active licenses. The agency will make these available to
City of Miami staff for review.
17. On an annual basis, the agency will solicit the Tax
Returns filed by the business (Federal Income Tax, State
Income Tax, State Intangibles Tax, Property Tax), will keep
these copies in the project file and advise the City of
Miami, as part of its quarterly report that the business
has filed all the pertinent tax returns. The agency will
make these available to City of Miami staff for review.
The agency should review these returns and compare them to
the information obtained during their quarterly monitoring
meetings.
18. In the event of a loan default, the agency originating the
loan must participate in the mitigation and/or recovery
efforts.
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TO
FROM
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CITY OF MIAMI, FLORIDA
INTER -OFFICE MEMORANDUM
The Honorable Mayor and Members of the
City Commission
RECOMMENDATION:
DATE:
SUBJECT:
REFERENCES
ENCLOSURES:
� 20B
SEP 9 2000 FILE :
Establishment of Housing and
Commercial Loan Committee and
Commercial Loan Program Guidelines
City Commission Agenda
September 28, 2000
It is respectfully recommended that the City Commission adopt the attached resolution rescinding
Resolution , Nos. 98-580 and 00-418, thereby abolishing the previously established Housing Loan
Committee; further authorizing and directing the City Manager to establish an eleven (11) member
Housing and Commercial Loan Committee for the purpose of approving and disapproving specific
housing and commercial loans and/or grants provided by the City through the Community
Development Block Grant (CDBG), Home Investment Partnership (HOME) and State Housing
Initiatives Partnership (SHIP) Programs.
The proposed resolution further empowers the Committee to approve and disapprove subordination
agreements, loan restructuring plans and loan repayment plans submitted by an applicant relative to the
City's existing housing or commercial loan portfolio and grants authority to the City Manager or his
designee to approve or disapprove specific housing loans provided by the City through the City's
CDBG and SHIP funded Single Family Rehabilitation and Homebuyers Financing Programs.
Finally, the proposed resolution provides guidelines to implement the Commercial Loan Program.
BACKGROUND:
The Department of Community Development has prepared legislation to accomplish the following
objectives:
• Rescinds previously approved legislation that established the Housing Loan Committee;
• Establishes an eleven (11) member Housing and Commercial Loan Committee to consider
housing and/or commercial loans and/or grants provided by the City through its CDBG, HOME
and SHIP Programs;
• Empowers the Housing and Commercial Loan Committee to approve and disapprove
subordination agreements, loan restructuring plans and loan repayment plans submitted by an
applicant relative to the City's existing housing or commercial loan portfolio and grants
authority to the City Manager or his designee to approve or disapprove
O- 867
• .•
• specific housing loans provided by the City through the City's CDBG and SHIP funded Single
Family Rehabilitation and Homebuyers Financing Programs;
• Provides guidelines to implement the Commercial Loan Program.
Housing and Commercial Loan Committee
In June 1998, the City Commission adopted Resolution No. 98-580 that authorized and directed the
City Manager to appoint a seven (7) member Housing Loan Committee for the purpose of approving
and disapproving loans and/or grants which are provided by the City of Miami through the City's
Single Family and Multifamily Rehabilitation Programs, HOME and SHIP Programs. The creation of
the Housing Loan Committee was initiated in response to findings and concerns identified in the City's
loan underwriting procedures in the audit report issued by the Office of the Inspector General on.the
City's grants from the U.S. Department of Housing and Urban Development (HUD).
The existing Housing Loan Committee includes a chairperson appointed by the Mayor, one (1)
member who is an active affordable housing provider, three (3) members with private real estate
lending experience and three (3) members appointed by the City Manager from the following
Departments:
• Community Development
• Finance
• Real Estate and Economic Development
• Planning and Zoning
• Public Works.
At its meetings of November 30 and December 14, 1999, the City Commission did not approve the,
continuation of the City's contract with Miami Capital Development, Inc. to administer a commercial
loan program. As a result, the City, acting through the Department of Community Development, has
assumed the responsibility of servicing the loan portfolio previously serviced by Miami Capital
Development, Inc.
Subsequently, the City Commission designated the Little Haiti Credit Union, Latin Chamber of
Commerce (CAMACOL) and Tacolcy Economic Development Corporation to serve as the
administrative entities to reestablish a Commercial Loan Program that fosters a public/private
partnership to stimulate business development and growth in the City. To move forward with the
reestablishment of a Commercial Loan Program, it is also'necessary that the City put in place a loan
committee charged with the responsibility. of approving/disapproving new loan applications for
housing and commercial projects and also proposals submitted for loan restructuring and repayment
plans, and subordination of mortgage agreements pertaining to the City's existing loan portfolio.
To accomplish this objective, the Administration recommends that the existing Housing Loan
Committee be abolished and replaced by a joint Housing and Commercial Loan Committee. It is
further recommended that the newly established joint loan committee be comprised of eleven (11)
members and said membership will be as follows: —
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• A Chairperson appointed by the Mayor
• One (1) member who is an active affordable housing provider
• Three (3) members from the private sector with experience in real estate lending
• Three (3) members from the private sector with experience in commercial lending
• Three (3) City representatives appointed by the City Manager.
Under the revised guidelines, the City Manager has to flexibility to appoint City representatives at the
Manager's discretion and is not restricted by the specific department heads identified in the legislation
being'rescinded.
The City Commission also approved Resolution No. 99-705 in September 1999 that modified the
City's Local Housing Assistance Plan for implementation of its SHIP Program, which resulted in the
expansion of the number of housing assistance programs available to very low, low and moderate
income families residing in the City. Since the establishment of the SHIP funded Single Family
Rehabilitation and Homebuyers Financing Programs in October 1999, which provide a maximum of up
to $40,000 in financial assistance to eligible households for the rehabilitation of an existing home or
purchase of a home in the City, the City has experienced a substantial increase and demand from both
current homeowners and prospective homebuyers for financial assistance. The attached report
highlights the number of cases that have been completed and cases pending.
Since the inception of the City's Single Family Rehabilitation Program, applications submitted for
home improvement or home purchase assistance have been historically approved by the Director of the
Department of Community Development. With the creation of the Housing Loan Committee, the
processing of applications has been hampered considerably due to problems inherent in the scheduling
of meetings to insure a quorum of the members. Moreover, Resolution No. 98-580 requires that all
applicants seeking financial assistance through the City's CDBG and SHIP funded Single Family
Rehabilitation and Homebuyers Financing Programs also secure approval from the Housing Loan
Committee, City Commission and State Financial Emergency Oversight Board.
As you are aware, the Department of Community Development has undergone a significant
reorganization in response to the HUD audit. As a part of the reorganization, a housing loan
underwriting unit was created to improve the City's overall loan underwriting procedures. In an effort
to streamline the process, be more responsive to the residents of the City and address the increasing
number of applicants seeking financial assistance through the City's housing programs, the
Administration recommends the City Manager or his designee be authorized to approve or disapprove
housing loans provided through the City's SHIP funded Single Family Rehabilitation and Homebuyers
Financing Program in an amount not to exceed $40,000 per transaction, and the CDBG funded Single
Family Rehabilitation Program (1-4 units) in an amount not to exceed $80,000 per transaction.
All transactions involving both housing and commercial loans other related loan transactions must be
reviewed and approved by the State Financial Emergency Oversight Board.
Commercial Loan Program Guidelines
As previously stated, Miami Capital Development, Inc. (MCDI) has_ historically operated a
Commercial Loan Program to assist local businesses and stimulate economic revitalization in the City
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of Miami. However, as a result of an intense monitoring review of the Agency. -in December 1999, the
City severed its contractual relationship with.MCDI. .
During City Commission deliberations relating to MCDI issues, it was agreedthat an effective
commercial loan program would be essential to serve as a catalyst to stimulate business growth and
development to revitalize the City of Miami and create jobs for its citizens. It was further agreed that it
would be critical that the standards of the lending institution reflect sound business. standards and the
City Commission designated the Little Haiti .Credit Union, Latin Chamber of Commerce (CAMACOL)
and Tacolcy Economic Development Corporation to serve as the administrative entities to reestablish
the. Commercial Loan Program
The proposed resolution includes the guidelines (attachment to the resolution) to .implement the
Commercial Loan Program. Under these guidelines, the (3) entities will be responsible for:
• " Processing loan applications,
• Determining eligibility
• Development of Business Plans
• Provision.of Technical Assistance
• Preparation of Loan Packages
The following criteria are included in the restructured Commercial Loan Program:
• Business must be located within the boundaries of the City of Miami
• Business and/or Principals do not demonstrate the financial ability to obtain financing
for the business with or without the participation of Local, State or Federal
Government, through their direct or guaranteed loan programs.
• Must be an existing Business that has greater than 2 years of operating experience.
v Project impacts an adequate number of jobs (as defined by 24 CFR 209 (b)(1)(i)) to be
created and/or retained.
• Potential for jobs created are to be filled by City of Miami residents wherever possible.
A First Source Hiring Agreement with the City of Miami will be required.
• The�business' ability to repay the loan.
• The minimum amount loaned will be $10,000'
• The maximum amount loaned for working capital will be $25,000.
• The maximum amount for the purchase of equipment will be $35,000. .
• The maximum combined loan amount shall not. exceed $35,0000.
• The interest rates of the City. of Miami's RLF loans shall be 6 °Io per annum.
As previously directed by the City Commission, the restructured Commercial Loan Program is not
intended to assist new businesses. Start-up businesses may apply for assistance from Working Capital
of Florida, an organization that currently receives CDBG support from the City of Miami to provide
technical assistance and related services for new business start-ups.
The Department of Community Development will be responsible for the full servicing of approved
loans and all loan packages will be reviewed and approved by the Housing and Commercial Loan
Committee and must be approved by the Financial Oversight Board.
In addition, all loan recipients must meet the national objectives of the CDBG Program and the Scope
of Services for each loan package must specifically quantify the number of jobs to be created or
retained as a result of the loan assistance provided by the City of Miami. Failure to satisfactorily
address this criterion will result in immediate disapproval of the loan application.
It is recommended that the City Commission approve the attached Resolution that:
• Rescinds Resolution Nos. 98-580 and 00-481, thereby abolishing the previously established
Housing Loan Committee
• Authorizes and directs the City Manager to establish an eleven (11) member Housing and
Commercial Loan Committee to approve and disapprove housing and commercial loans and/or
grants provided by the City through the Community Development Block Grant (CDBG), Home
Investment Partnership (HOME) and State Housing Initiatives Partnership (SHIP) Programs.
• Empowers the Committee to approve and disapprove subordination agreements, loan
restructuring plans and loan repayment plans submitted by an applicant relative to the City's
existing housing or commercial loan portfolio and grants authority to the City Manager or his
designee to approve or disapprove specific housing loans provided by the City through the
City's CDBG and SHIP funded Single Family Rehabilitation and Homebuyers Financing
Programs.
• Provides guidelines to implement the Commercial Loan Program.
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