HomeMy WebLinkAbout972088.tiffRESOLUTION
RE: APPROVE WELD/LARIMER REVOLVING LOAN FUND CLOSEOUT LETTER AND
AUTHORIZE CHAIR TO SIGN
WHEREAS, the Board of County Commissioners of Weld County, Colorado, pursuant to
Colorado statute and the Weld County Home Rule Charter, is vested with the authority of
administering the affairs of Weld County, Colorado, and
WHEREAS, the Board has been presented with a Weld/Larimer Revolving Loan Fund
Closeout Letter from the County of Weld, State of Colorado, by and through the Board of
County Commissioners of Weld County, on behalf of the Greeley/Weld Economic Development
Action Partnership, Inc. (EDAP), to Jaime Gomez, Director of Finance and Job Training
Programs, Colorado Office of Business Development, with terms and conditions being as stated
in said letter, and
WHEREAS, after review, the Board deems it advisable to approve said letter, a copy of
which is attached hereto and incorporated herein by reference.
NOW, THEREFORE, BE IT RESOLVED by the Board of County Commissioners of
Weld County, Colorado, that the Weld/Larimer Revolving Loan Fund Closeout Letter from the
County of Weld, State of Colorado, by and through the Board of County Commissioners of
Weld County, on behalf of EDAP, to Jaime Gomez, Director of Finance and Job Training
Programs, Colorado Office of Business Development, be, and hereby is, approved.
BE IT FURTHER RESOLVED by the Board that the Chair be, and hereby is, authorized
to sign said letter.
The above and foregoing Resolution was, on motion duly made and seconded, adopted
by the following vote on the 24th day of September, A.D., 1997.
APPAS TO FORM:
et: a7
ianty Attorne
BOARD OF COUNTY COMMISSIONERS
WELD COUNTY, COLORADO
Georg E. Baxter, Chair
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o stance L. Harb rt, o-Tem
Dale K. //Hall
arbara J. Kirkmeyer
W. H. Webster
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COLORADO
September 23, 1997
Mr. Jaime Gomez, Director
Finance & Job Training Programs
Office of Business Development
1625 Broadway, Suite 1710
Denver, CO 80202
Dear Mr. Gomez:
OFFICE OF BOARD OF COMMISSIONERS
PHONE (970) 356-4000, EXT. 4200
FAX: (970) 352-0242
915 10TH STREET
P.O. BOX 758
GREELEY, COLORADO
As you are aware, Weld County is in the process of closing out its current open CDBG
Contract #C854963 which provided funds for the Weld/Larimer Revolving Loan Fund
(RLF). As part of this close out process, we hereby request that this contract be
amended to allow use of the revised program income/ "Miscellaneous Income"
definitions as allowed in your memorandum dated February 13, 1997. Further, we
request that the contract be amended to allow Weld County use of revised
administrative funding limitations.
Weld County and the Greeley/VVeld Economic Development Action Partnership, Inc.
(EDAP) d.b.a. Weld/Larimer Revolving Loan Fund hereby agree that all funds repaid
under this contract (as well as funds repaid under all previous CDBG contracts, which
to date amount to $1,166,998) are classified as "Miscellaneous Income" and shall be
retained as an asset of EDAP and shall be used for future business development and
expansion loans according to the established loan policies, a copy of which is attached
and made a part of this agreement.
Copies of EDAP's non-profit status, corporation documents, and RLF loan policies are
also enclosed to provide evidence that the RLF is a "nonprofit organization serving the
development needs of the community in non -entitlement areas."
Weld County hereby certifies that it will complete the required annual survey pertaining
to the RLF's historical and current performance as required with this conversion
process, and that all CDBG funds from prior and current CDBG contracts with the
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Jaime Gomez
Page 2 September 23, 1997
State for economic development revolving loan fund purposes will continue to be
utilized for business assistance under our local RLF policy guidelines (without
application of Federal requirements).
Sincerely,
George E. Baxter, Chairman (4/�d/A1)
Board of Commissioners
It
William J. M. on, Chairman
Board of Dire ors
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WELD/LARIMER REVOLVING LOAN FUND GUIDELINES
(For use with Revolved Funds from original CDBG funds)
Updated 7/19/96
The Weld/Larimer Revolving Loan Fund (RLF) is funded from State CDBG grant dollars. The intent of this
fund was to develop this loan pool over a period of years to provide gap financing assistance to new and
existing business expansions which resulted in job creation and improved economic conditions. Once those
funds were loaned and revolved back to the RLF through principal and interest payments, the revolved
funds were no longer encumbered by contractual obligations between Weld County and the State Office of
Business Development (OBD). These revolved funds may then be re -loaned to businesses under the loan
policies established by the RLF for these revolved funds.
The policies of this program are presented below. This set of policies is designed as a guide to the Loan
Committee in providing business assistance. We expect it to be changed often reflecting the creativity of
the Committee and the growth of the RLF fund.
The Greeley/Weld Economic Development Action Partnership, Inc. (EDAP) has been designated to
administer these revolved funds on behalf of Weld and Larimer Counties.
I. ELIGIBILITY REQUIREMENTS
A. The Company
1. Private, for-profit businesses.
2. Expansions of existing businesses and new business start-ups will receive equal consideration.
3. Priority will be given to base industry projects: manufacturing, wholesale, distribution, etc.
4. The company must be adding/retaining jobs.
B. Company Location
1. Priority will be given to companies located in, or considering a location, in the non -entitlement
areas of Weld or Larimer Counties.
2. However, if a major job retention project arises in the entitlement areas which include Greeley,
Ft. Collins or Loveland, the project may be considered for revolved funds. Major job retention is
defined as retention of 50 or more employees. The project must also meet all other loan criteria.
II. FINANCIAL ASSISTANCE GUIDELINES
A. Loan Structure
Any variation from these guidelines will require a majority vote of the Loan Committee.
1. Minimum RLF loans will be $10,000.
2. Priority will be given to projects in which a minimum of one FTE job will be created/retained for
every $20,000 of RLF assistance.
3. RLF participation in a project is targeted to those companies who have exhausted all other
sources of "gap" financing. A typical loan package may be:
Owner Equity 10%
Other: Investors, Bank Financing 45%
Venture Capital, SBA, etc.
Revolving Loan Fund 45%
Loan structure will be determined on a project -by -project basis by a majority vote of the Loan
Committee.
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B. Fees. Term. Interest Rates. Collateral
1. The term of the loan will typically be no longer than 10 years unless necessary to leverage other
financing such as SBA funds.
Suggested loan terms: Working Capital & Inventory — 2 to 5 years
Fixtures & Equipment — 5 years
Other — Case by case basis
2. Interest rates
a. Interest rates will typically be at, and in some cases below, New York prime.
b. In addition, the interest rate or payback period may be accelerated if cashflows meet or
exceed projections.
3. Fees
a. Loan application fees shall be a minimum of $50 to cover all costs related to loan processing
expenses.
b. Closing fee will be 2% of the total RLF assistance.
4. Collateral
a. Effort will be made to collaterize all forms of assistance.
b. RLF forms of assistance may assume a second or third position.
C. Types of Business Assistance
1. Under many circumstances loans will be made to applicants with attractive flexible rates and
terms.
2. Partial loan guarantees may be made to leverage conventional funding sources.
3. Equity positions may be taken when deemed appropriate.
4. Partial loan purchases can be made to motivate the lending institution to make the remainder
of the loan.
5. Interest rate buy -downs can be made to motivate the lending institution to make the remainder
of the loan.
6. Other
D. Potential Uses of RLF Funds
1. Working Capital
a. Inventory
b. Salaries
2. Fixed Assets
a. Equipment
b. Purchase of existing buildings
c. Land (when part of a business project)
d. Renovation of interior and exterior of commercial building
e. New construction of facilities for operation
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E. Criteria to he Considered by Loan Committee in Decision Making Process
1. Wages of positions created are above minimum wage or equal to average community wage.
2. Full-time jobs are being created -not seasonal.
3. When two or more proposals compete for the same funds, the project which best fulfills the RLF
criteria will be given priority.
4. The project will help to diversify the local economy.
5. The project is environmentally sound.
III. CONDITIONS OF FINANCIAL ASSISTANCE APPROVAL
A. The Loan Committee may set performance conditions with any loan commitment. Examples follow:
1. Require certain management practices to ensure repayment of the financial business assistance.
2. Require that expert help be hired for the term of the business assistance.
B. In addition, the Weld/Larimer RLF will not provide financial assistance to any company when
financing is available from conventional sources at reasonable terms, rates, and conditions, unless it
is found to be necessary to further the economic development objectives of Weld/Larimer Counties.
C. A clause will be included in each loan agreement indicating that any condition or remedial
requirement imposed upon the business by the Loan Committee or Loan Administrator will in no way
discharge the borrower from any obligations under the loan agreement, and that neither the Loan
Committee nor the Loan Administrator shall incur any liability on account of conditions or require-
ments imposed.
IV. CONDUCTING RLF BUSINESS
A. Application Process
1. All borrowers who submit a completed application will be notified in writing that the Loan
Committee has:
a. Approved the loan, with conditions;
b. Disapproved the loan and why; or
c. No action was taken, and why.
Upon approval, a letter of commitment is sent to the company for acceptance. The letter of
commitment, if not accepted by the company, expires 30 days after the letter date.
2. Funds will not be allocated to counties, towns or other areas to achieve fair distribution in the
region. Rather, projects which best meet the policies and criteria of the Loan Committee
will receive priority. This policy is created for two reasons:
a. It is important to commit the funds as soon as possible to initiate the revolving of funds;
and
b. We do not want to penalize a firm that needs assistance because we have set an
arbitrary maximum to be loaned in a geographic area.
3. Evidence of leveraging of private and other public funds committed to projects will be
maintained to support documentation on leveraged funds.
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4. Revolved principal payments will continue to be used in the business assistance program,
except when administrative cash flow shortages require use of principal to cover program
expenses. In this case, every attempt will be made to re -pay the principal fund when cash
flow allows.
5. Loans will be due and payable upon sale of tangible or intangible assets or transfer of the
business. No assignment will be made unless prior written approval has been given by the
State of Colorado and the Weld/Larimer RLFC.
B. Default Process
1. In the event of default:
a. Due diligence will be exercised to collect loan payments or attached collateral.
b. A 5% late fee for every 10 days payment is late may be charged to cover the cost of staff
time spent in collections.
c. Loan agreements will contain the phrase in the promissory note: cost of collections " with
or without suit," meaning that all cost of collections, with or without formal foreclosure
shall be borne by the loan client.
2. Staff responsibilities:
a. Send a late notice letter 10 days after which payments are due. If payments are not
received within 20 days or some other acceptable alternative has not been made, then:
b. Staff shall send a letter informing the borrower of the need to cure the default or
a foreclosure or enforcement of the loan security may be undertaken. In this letter, the
borrower shall be given ten additional days to make payment before foreclosure steps are
undertaken. Copies of this "Right to Cure Letter" shall be sent to members of the Loan
Committee.
c. At the end of the 30 day default period, staff and RLF attorney shall consult with the
Loan Committee regarding a potential modification agreement or foreclosure process.
The Loan Committee shall then direct staff to the appropriate action.
d. Possible modification agreements include:
1) Interest only payments for a pre -determined length of time; after receiving a written
request from borrower.
2) Any other modifications of the terms of the loan agreement shall be approved by a
majority of the Loan Committee.
C. Reserve Funds
1. Contingency Fund for Cash Flow and Collections.
As loans are repaid, 3% of each payment will be set aside as a reserve account for cash flow
shortages and for the purpose of keeping funds on hand for loan collection/recovery expenses.
Fund need not exceed $15,000.
V. PUBLIC RECORD/CONFIDENTIALITY
A. Copies of all public records associated with the RLF will be available to the general public upon
request as required by Weld County's public records statutes.
B. Confidential records include the following:
1. Commercial and private financial information on loan applicant.
2. Review of the funding request by the Loan Committee and staff.
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VII. ENVIRONMENTAL CONCERNS
A. Business projects involving construction will be required to provide at minimum, Phase I
environmental clearance before final RLF approval will be made. The RLF reserves the right to
require further environmental clearance if reasonable cause is shown.
B. Written documentation about the environmental review will be maintained on each project.
VIII. CIVIL RIGHTS
A. No person or group will be denied project benefits of employment, training, business contracting,
or housing opportunities on the basis of race, national origin, religion, color, sex, age or handicap.
B. No actions will be taken to negatively affect fair housing by the Weld/Larimer RLF, and the
Residential Antidisplacement and Relocation plans for Weld and Larimer Counties will be
followed.
C. Information will be maintained on the ethnicity, handicap status, income level, female head
of household status, and sex of all persons newly hired and retained by assisted businesses.
XI. MARKETING
A. A multiple vendor list will be maintained for referring businesses to consultants (i.e., writing a
business plan, marketing plan, etc.).
B. The availability of assistance and application procedures will be publicized to ensure the program
is open to any interested, qualified business.
XII. CONFLICT OF INTEREST
A. RLF Loan Committee members, RLF staff and families shall not receive RLF business assistance
because they are considered to be in a position to participate in a decision making process or gain
inside information from the activity. This policy applies to any employee, agent, consultant,
officer, elected official or appointed official of the contractor on any designated public agencies or
subcontractors receiving CDBG funds.
XIII. WELD/LARIMER RLF FISCAL/PERSONNEL POLICIES
A. The Weld/Larimer RLF shall be guided by the fiscal policy outlined in the State and Weld County
Contract and Subcontract Agreement. The RLF Personnel policies shall be guided by policies of
EDAP, who is administering these funds.
B. The RLF staff and Loan Committee will follow the "Financial Management Requirements" as set
forth in the CDBG Grantee Handbook.
C. EDAP will provide for an audit of the RLF Program as part of its annual audit report, and will
provide copies to Weld County.
D. All administrative and reporting requirements of the RLF, as required by the State RLF contract,
will be followed.
E. All appropriate RLF documentation will be presented to the County for review.
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F. The Weld/Larimer RLF will keep separate financial records in accordance with generally accepted
bookkeeping procedures.
XIV. WELD/LARIMER LOAN COMMITTEE
A. The Weld/Larimer RLFC shall consist of three representatives who are residents of Larimer
County appointed by the Larimer County Commissioners, and likewise for Weld County.
B. Each group of Commissioners shall initially appoint one person to a one (1) year term, one person
to a two (2) year term, and one person to a three (3) year term. All initial terms shall commence in
1990. All terms thereafter shall be for three (3) years.
C. The EDAP Director shall serve as the ex -officio chairman of the Loan Committee and Loan
Administrator.
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