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HomeMy WebLinkAboutExhibit 1CITY OF MIAMI Economic Development Loan Fund Program GUIDELINES, FORMS, SCOPE OF WORK, AND ATTACHMENTS City of MiQmi • Deportment of Comimunafy Development Last Revision: June 2009 Economic Development Loan Fund ("EDLF") Program Lending Policies and Guidelines The City of Miami has established an Economic Development Loan Fund ("EDLF") Program in accordance with the goals and objectives outlined herein. The EDLF Program; which will be administered by the City of Miami ("City') Deparmaent of Community Development ("CD"), will be capitalized using Community Development Block Grant ("CDBG") funds authorized under 24 CFR 570. Purpose The goal of the Economic Development Loan Fund'.Prop-i.:_is to provide businesses with financial assistance to support the retention and creation of jobs fatlow to moderate income City residents. The EDLF Program is designed. to fill the financing`ap between private debt financing and private equity. Funds are provided to create economic benefit through increased revenues and the creation and the retention of join in the City. Eligible Area The EDLF Program is available to businesses located or planning to locate within the boundaries .k, of the City. Priority will be given to'3usinesses the Neighborhood Development Zones as described in the 2009-2014City of Mian i nsolidated Plan andlor Special Target Areas. Loans are Evaluated Based on a Project' • • Poten • Vauagement quail • Cornittlnity economic • Capacity "tt everage • Potential to increase s • Ability to repay log • Readiness to proceed ITPact Y-* funzis::from other sources v=s: Esmond economic development 1 Eligible Use of Funds and Activities Loan funds can be used for: o Purchase and Installation of machinery, equipment, furniture, fixtures • Leasehold improvements or expansions • Technolorly infrastructure • Renovation, improvement and expar clan o Inventory Note: The use of funds for construction activities such as • renovation, improvement and expansion will trigger a requirement that prevailing wages be paidfor all labor (Davis Bacon Wage Rates). Ineligible Use of Funds Funds cannot be used for the purpose of:. • Paying off a creditoror creditors of the applicant who a:re:inadequately secured and are in a position to •-,•&-;.!_,. • Providing fLnds fbr distribution or payment to the owner, partners, or shareholder of the applicant. = -•. • Reftindinti a -debt -ow dtqamall business investment company. • Pangof any tax lien;r:or hab • Refinanceioans made byother lenders. • Projects which*re not:OOnSistent with the City's economic development prom -am. Eligibility Criteria A business may qualify for consideration provided it meets the following criteria: • Business is located or locating within the boundaries of the City of Miami. 2 • Business and/or Principals demonszate that financing is not otherwise available on terms or conditions that would permit completion and/or successful operation or accomplishment of the project activities to be financed. • Business is an equal opportunity employer. • 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.). • Project involves no negative environmental impacts • Project impacts an adequate number of jobs, as,=defined by 24 CFR 209 (b)(1)(i), to be created and/or retained for low to moderate income people.. • All applicants shall grant City of Miami residents hiring preference: over all applicants for any jobs created as a result of the loan. • The business ability to repay itielaan. • Applicant must be willing to coy relate to the program .:= Loan Criteria Job Creatix i nd. Reteiitidn •Moans will reche applicant to create`or retain one, full time, permanent job for every �2_, 00.00, or parts eereof, loaned. — `...SSµ • At le tfity one percen 51%) of..afl jobs created or retained must be made available to low and n oderate incomU-D e ersons as defined by Hunder Section 8. regulations, guidelines and policies as they Job Creation:, • Jobs must b =created within six (6) months of the loan closing if loan is not used for rehabilitation or leasehold improvements or the total project does not include rehabilitation or leasehold improvements. • Jobs must be created within eighteen (18) months of the loan closing if loan is used for rehabilitation or leasehold improvements or six (6) month after the completion of the rehabilitation/improvements, whichever is less. 3 Job Retention • The applicant must give details on why the borrowed funds are required to retain the jobs and demonstrate that without the assistance, the jobs would be lost. Loan Amount Minimum: $20.000.00 Maximum: $80.000.00 • A HUD environmental review must be conducted and completed prior to disbursing funds. Note: Higher loan amounts may be approved in a case by case;basis by the City of Miami Commission. Loan Terms Repayment term shall be as follows: a) Equipment: IRS depreciation limits (7) years. b) Others: c) Special Circumstances Interest Rates The interest rates f the City: o cash flo f e 54smdss. Match Auirements All loans must e matched b' be: Capital: Equity: Up tofthe;nomic life of the assets involved, not to exceed. the (See IRS;.Inst actions for Form 4562) and not longer than seven Fully amortized bet\%91, Longer repayaents' ay ee (3)-to seven (7) years e,J<Bonsidered on a case by case basis iami's EDLF loans shall be 0% - 3% per annum, based on the applicant's funds. Matching participation requirements will ApplimustX gatch a minimum of 20% of capital needed for project. Applicant isati,Stlave at least 20% equity in business. Special Target Areas Special Target Areas as defined in the City of Miami Consolidated Plan or approved by the City of Miami Commission for this loan program may have different from thee ones detailed above. 4 Application Fee There will be a non-refundable application fee of SI00.00. This application fee must accompany the loan application package. The application fee will be cashed when the package is accepted for underwriting. Program Requirements: • Applicants and their spouses shall sign Unlimited Guaranties, even if the spouse is not part of the Company requesting. the funds. • Commercial Insurance Policies naming the City of Miami as loss payee in an amount acceptable to the City of Miami Risk Department. All policies shall provide the City with mandatory 30 days written notices in cases of cancellation or material change. • Unless otherwise approved by the I©nsing and Loan Committee andlor the City of Miami Commission, all loans will requi ee ._collateral position of any and all real property or equipment pledge as security for the • Loans for equipment will require t CC-1 filings. • Once the loan is closed, recipient way not pledge, trans r hypothecate, encumbrance or of any;�tu-ph dispose P_a�s�ased, in Whole or � piart, with'fitds from the City of Miami, without thew ti approval from the pity of Mtamr • The City of Miarar nay imp se late fees`iflhe business does not pay on a timely manner • if a_bi siiiess'does no -n eet its minimum employment requirements, then the City shall ca'the loan payable witli0 days Non -recommended Loans _. _Loans will generallyiuot be recommended for approval for the following reasons: • If the requested are:otherwise available on reasonable terms: a) From the"gosal 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 andlor 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; • For unsatisfactory credit history during the last twelve (12) months. 5 • If a bankruptcy was discharged during the last twenty four (24) months. • If the loan will provide funds for speculation in any kind of property, real or personal, tangible or intangible; • If the applicant is a charitable incaution 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; • If the applicant is a newspaper, book publishing.: company; magazine; or similar enterprise; • If any of the gross income of the applicant, (orany ofits principal owners) is derived from gambling activities, except for those small firms whichbtain less than one third of their gross income from income or commission from the sale: :.,of official state lottery tickets under a state license; • If the purpose of the loan isto 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 invesLuents not reiaedar:`essential to the enterprise. • If the purpose of the loan is to finance the acqusition of real property or land. • If the Applicant and/or its fiincipals are &bted to the -City of Miami. • If the .Applicant and/or its principals have, been debarred from doing business with fedez , #a 'county or local governments. • rtre _ e proceeds of't oan will',.be used for moving an eligible business when the move is sol'or the purposesf obtarng the benefits of borrowing from the EDLF. 147 Appeal Process Applicants will have 10 business days from the receipt of the letter not recommending the loan to appeal the decision. The applicant can provide additional documents at that time for consideration of the underwriting committee. If the loan is not recommended a second time, there will be no further appeal entertained from the applicant. 6 Loan Approval All loans made strictly under the policies of the EDLF pro -ram will be recommended for approval by the Housing and Commercial Loan Cornminee. If the Housing and Loan Committee denies a loan application, the applicant will be advised in writing with an explanation as to why the loan was denied. All loans not meeting the EDLF program guidelines will require an additional approval by the City Comriission. 7