HomeMy WebLinkAbout961751.tiff RESOLUTION
RE: APPROVE REVOLVED FUNDS POLICY STATEMENT WITH WELD/LARIMER
REVOLVING LOAN FUND LOAN COMMITTEE AND GREELEY/WELD EDAP, INC.,
BOARD OF DIRECTORS 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 Revolved Funds Policy Statement
between the County of Weld, State of Colorado, by and through the Board of County
Commissioners of Weld County and members of the Weld/Larimer Revolving Loan Fund Loan
Committee and the Greeley/Weld Economic Development Action Partnership, Inc., Board of
Directors, with terms and conditions being as stated in said policy statement, and
WHEREAS, after review, the Board deems it advisable to approve said policy
statement, 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 Revolved Funds Policy Statement between the County of
Weld, State of Colorado, by and through the Board of County Commissioners of Weld County
and members of the Weld/Larimer Revolving Loan Fund Loan Committee and the
Greeley/Weld Economic Development Action Partnership, Inc., Board of Directors, be, and
hereby is, approved.
BE IT FURTHER RESOLVED by the Board that the Chair be, and hereby is, authorized
to sign said policy statement.
The above and foregoing Resolution was, on motion duly made and seconded, adopted
by the following vote on the 30th day of September, A.D., 1996.
BOARD OF COUNTY COMMISSIONERS
o WELD COUNTY,/COLCaRADO
ATTEST' G14 iI� /O/ "_ r, li 4lc \/ /% /7 :/�
�' Barbara J. Kirkmeyer, Chair
�ti
Nieloriela r the Board
�(. Ali' A-5-.4- 9-4-1,
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/
Cl he Board
J(7, Dale K. Hall
17
AP OV AS F RM: � evcXf
Constance L. Harbert
n Att me ILLZIt7711-1)
W. H. ebster
C c? : Gl SLAP 961751
FI0009
Weld/Larimer Revolving Loan Fund
REVOLVED FUNDS POLICY STATEMENT
The purpose of this statement is to document the discussion held on January
12, 1995, between members of the Weld/Larimer Revolving Loan Fund (RLF)
Loan Committee, the Greeley/Weld Economic Development Action Partnership,
Inc. (EDAP) Board of Directors, and Don Warden, Finance Director for Weld
County, representing the Weld County Commissioners. The meeting was held to
establish the boards' policy/philosophy for administration of program income
funds earned as a result of business assistance activities from the RLF's CDBG
loan program, hereafter referred to as "revolved funds." Complete details of the
meeting are set forth in the minutes of that meeting.
In total, $926,000.00 of CDBG funds have been loaned by the RLF to
businesses in Weld and Larimer Counties, which, once repaid, are no longer
subject to HUD guidelines and reporting requirements. HUD has not established
any requirements regarding use of these revolved funds, so it is up to the local
CDBG grant recipient to establish these guidelines.
The group's consensus regarding the policy for administering the revolved
funds was that these funds should be loaned using the same general criteria and
loan guidelines followed for the CDBG loan program (e.g. gap financing, rural
program, job creation/retention, etc.). The major difference in use of the
revolved funds is that federal guidelines and reporting requirements will not
apply. Complete Revolved Fund Loan Guidelines were developed prior to the
meeting by the RLF Loan Committee based on CDBG program guidelines and
are attached as Attachment A.
961751
RLF Revolved Funds
Policy Statement
Page 2
Further, it was resolved that the revolved funds are ultimately the sole
responsibility of Weld County since the county is the lead county for the CDBG
program and is the grant recipient (see Attachment B - Intergovernmental
Agreement between Weld and Larimer Counties). Weld County wishes to
continue its agreement with EDAP to administer the revolved funds in the same
manner that CDBG funds are administered, which is fully explained in the
Subgrantee Agreement between EDAP and Weld County (see Attachment C).
It was agreed that the RLF Loan Committee should approve projects giving
priority to projects benefiting the rural areas of Weld and Larimer Counties.
However, if a major job retention project arises in the entitlement areas of the
two counties: Greeley, Ft. Collins, or Loveland, use of revolved funds can be
considered, providing the project meets all other loan criteria. A "major" job
retention project was defined as a project involving retention of 50 or more
employees.
In addition to the lending philosophy discussed above, this policy statement
also covers the following agreement reached between EDAP and Weld County
regarding administrative reimbursement for loans made from revolved funds. At
a regular meeting of the EDAP Board of Directors, held on September 18, 1996,
it was agreed that EDAP shall be reimbursed for administrative costs resulting
from the making of and servicing of loans from revolved funds by payment of a
servicing fee based on a percentage of each loan made. In addition to this
servicing fee, a percentage of all program income earned from revolved funds
will be deposited in a separate reserve account to cover loan losses and collection
961751
RLF Revolved Funds
Policy Statement
Page 3
costs. The percentage rates for the servicing fee and reserve account shall be set
by the EDAP Board of Directors annually on of about January 15th using local
commercial lending rates as a guideline, with approval of the percentages made
by the Weld County Commissioners.
THE UNDERSIGNED DECLARE THAT THE ABOVE IS THE RECOGNIZED
POLICY STATEMENT REGARDING ADMINISTRATION OF THE WELD/
LARIMER REVOLVING LOAN FUND REVOLVED PROGRAM INCOME
FUNDS.
ELia
/ 1861 se A .
_ ��' '� a9/ 0/9(
Barbara J. Kirkm-yer, C . ' 1C' p � Date
Weld County Commissioners '(l N$ i
yce Clark, Chairman Dj/
Greeley/Weld Economic Development
Action Partnership, Inc.
961751
ATTACH MT A
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.
1
961751
ATTACHMENT A cont 'd
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
2
ATTACHMENT A - cont 'd
E. Criteria to be Considered by Loan Committee in Derision 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.
3
961751
ATTACHMENT A - cont'd
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 foredosure
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.
4
961,71
ATTACI-11117TI A - cont 'd
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. MARICETING
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. MI 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.
5
961.751
AlIACITIENT A - cont 'd
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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961731
ATTACHMENT 13
INTERGOVERNMENTAL AGREEMENT FOR
COMMUNITY DEVELOPMENT BLOCK GRANT PROJECT
THIS AGREEMENT, made this 274/1 day of , 1994, by and between the County
of Weld and County of Larimer:
WHEREAS, the parties to this Agreement have the authority pursuant to Article XIV, Section 18
of the Colorado constitution and Section 29-1-201, et. seq., Colorado Revised Statutes, to enter into
intergovernmental agreements for the purpose of providing any service or performing any
function which they can perform individually.
WHEREAS, the parties to this Agreement desire to cooperate in developing and carrying out a
Community Development Block Grant (CDBG) project, the purpose of which is to support the
Weld/Larimer Revolving Loan Fund, a small business revolving loan fund program.
NOW THEREFORE, the parties hereby mutually agree as follows:
1. Designation of Lead Party. Weld County shall act as the lead party in
developing and carrying out said proposed CDBG project.
2. Responsibilities of Lead Party. In its capacity of lead party, Weld County shall
be the lead jurisdiction in making application to the Office of Business
Development for CDBG funds, and shall be the grantee of the State for such
funds, if awarded. As the grantee of the State, it shall be fully and solely
responsible to the other parties to this Agreement for compliance with all
financial management, environmental review, labor standards, civil rights,
recordkeeping, reporting and other requirements of the CDBG program
contained in the Applicant Statement of Assurances and Certifications, and
in the grant contract with the state, except those specified in Paragraph 3 here-
inafter.
3. Responsibilities of Each Party. Each party to this Agreement shall be individually
responsible for compliance with the following requirements of the CDBG program:
a) adopting a required Citizen Participation Plan, and providing to
its citizens information and opportunities to comment as required
by the State in developing an application and substantially changing
project activities;
b) identifying its community development and housing needs, including
the needs of low and moderate income persons, and the activities to be
undertaken to meet such needs; and
c) adopting a required Antidisplacement and Relocation Assistance Plan
which calls for replacement of demolished or converted low/moderate
income housing units and provision of necessary relocation assistance;
and,
d) t4king actions to affirmatively further fair housing.
Furthermore, each party shall provide documentation to Weld County demonstrating
its compliance with the requirements specified in Paragraph 3, and Weld County
shall retain such documentation and other required records and documents for the
period of time specified by the State.
96.1x:1
ATTACHMENT B - cont 'd
4. Contracting. Weld County shall contract with the Greeley/Weld Economic
Development Action Partnership (EDAP) or with other eligible individuals or
entities to carry out all or any portion of the responsibilities assumed by Weld
County under this Agreement and its grant contract with the State.
5. Terms of Agreement. This Agreement shall remain in full force and effect
for so long as the parties to this Agreement are pursuing CDBG funding for
said proposed project or, if awarded, carrying out such project activities. Any
party to this Agreement may, however, terminate its participation in this
Agreement six months after providing written notice of such termination to
the other parties of this Agreement. This Agreement may be terminated at
any time by agreement of all parties to this Agreement unless a grant contract
is in effect with the State. In this case, the State mus approve such termination
and arrangements for completing the project.
6. Modification and Changes, The terms of this Agreement may be modified at
any time by Agreement of all parties to this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day first
above written.
Weld County Lorimer County
(Lead Party) (Party)
By: �,2JrrJf�1 / •
William H. Webster V Jan t 'avail
Chairman
Weld County Commissioners ' "•.er County Commissioners
961751
Minutes of Meeting
EDAP Board of Directors
September 18, 1996
Bank One Board Room
At a regular meeting of the EDAP Board of Directors, the following motion was
made:
John Dent made a motion and Mike Geile seconded, to approve a 1% servicing
fee to EDAP for administration on loans made from the revolved funds loan
program, and a 3% of program income reserve for loan losses and collection
expenses for loans made from revolved funds. These percentages are subject
to county approval and are in effect until the annual review in January, 1997.
Motion passed unanimously.
Respectfully submitted,
Jodi Hartmann, Secretary
961751
Cal9
7::
o / ir/rnOrREVOLVING LOAN FUND
AJimdaJminisieredby the Greeley/1Ve@1Et-anoint(Development:action Partner,hip,Inc.('EDAP)
822 7th Street,Suite 550 • Greeley, Colorado 80631 • (970)356-4565 • FAX (970)352-2436
MEMO
TO: Don Warden
FROM: Jodi Hartmann
DATE: 9/23/96
RE: Revolved Loan Funds Policy
As per the discussion at our last EDAP Board meeting, I have made the
changes to the Revolved Loan Funds Policy as recommended by the board.
I am enclosing two original copies for Barbara's signature. I will return a copy
to you after I get Royce's signature.
I realize the Commissioners are in the middle of budget hearings and that it
may take a while to get this on their agenda. No big hurry(we've waited this
long!).
961751
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