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HomeMy WebLinkAboutR-1997-150 Minority and Women Owned Business Loan FundRESOLUTION NO. R-97-150 A RESOLUTION authorizing and directing the City Manager and the City Clerk of the City of Yakima to execute an Agreement with the Washington State Department of Community Trade and Economic Development, for the purpose of the City of Yakima's participation in the Washington State Development Loan Fund for loans to certified Minority and Women -Owned Business Enterprises. WHEREAS, the Washington State Department of Community Trade and Economic Development ("CTED") has awarded $50,000 in Washington State Minority and Women - Owned Business Enterprises ("MWBE"); and WHEREAS, the purpose of the DLF Loan Program is to assist with the expansion and start-up of certified MWBES through low interest loans; and WHEREAS, the $50,000 award is conditioned upon the City executing the attached agreement with CTED regarding the use of these funds for loans to certified MWBEs; and WHEREAS, the City Council has allocated $50,000 of 1998 Community Development Block Grant Funds for economic development activities; and WHEREAS, the City Council deems it to be in the best interest of the City of Yakima to enter into the attached Agreement with CI'ED, now, therefore, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA: The City Manager and the City Clerk of the City of Yakima are hereby authorized and directed toexecute the attached and incorporated Agreement with the Washington State Department of CommunityTrade and Economic Development, for the purpose of the City of Yakima's participation in the Washington State Development Loan Fund for loans to certified Minority and Women -Owned Business Enterprises. ADOPTED BY THE CITY COUNCIL this 18thdaof November , 1997. 7 -tele John Puccinelli, Mayor Pro Tem A 1"1EST: Acting Sti City Clerk EcDevl/Micro-Loans/MWOBE Resolution Washington State Department of Community, Trade and Economic Development WASHINGTON STATE DEVELOPMENT LOAN FUND (DLF) Minority and Women -Owned Business Lending Initiative Entitlement Funding and Administrative Contract SECTION 1: PURPOSE OF THE CONTRACT This contract, made and entered into by and between the Washington State Department of Community, Trade and Economic Development (hereinafter referred to as "CTED"), on behalf of the Washington State Development Loan Fund, and the City of Yakima (hereinafter referred to as "Entitlement Community") witnesses that: WHEREAS, the Washington State Development Loan Fund (DL) is authorized under Chapter 43.168 RCW to provide capital to viable, but under -financed small businesses in order to increase and maintain jobs that are sustainable in the local economy, improve the local standard of living, assist in the employment of disadvantaged workers, and develop or expand business ownership by minorities and women; and WHEREAS, CTED is given responsibility under RCW 43.63.065A to administer state grants and programs assigned to the CTED by the Governor or the Washington State Legislature; and WHEREAS, Chapter 43.168.100 directs CTED to use funding available through DLF to address the financing needs of minority and women -owned businesses certified by the Washington State Office of Minority and Women Business Enterprises (OMWBE); and WHEREAS, most of the firms currently certified by OMWBE are located in large urban counties and metropolitan cities of the state; and WHEREAS, state funding appropriated to DLF may be used only to support constitutionally eligible capital projects and not to directly fund DLF loans to businesses or administrative expenses; and WHEREAS, state funding may be used to provide an incentive to urban counties and metropolitan cities, classified as entitlement communities by the federal Department of Housing and Urban Development (HUD) to provide entitlement Community Development Block Grant (CDBG) funding for this purpose,; and WHEREAS, CTED and the Entitlement Community desire to collaborate to increase access by qualified firms that are certified by OMWBE to business financing opportunities through DLF; and WHEREAS, CTED has earmarked DLF grant funding for the Entitlement Community for constitutionally eligible projects; and WHEREAS, the Entitlement Community has agreed to make an equal amount of CDBG funding available for DLF loans to certified businesses and to administer these loans in accordance with guidelines set forth by CTED; and WHEREAS, CTED and the Entitlement Community desire to give priority to using DLF loan repayments to make new loans to certified businesses under this initiative; and EcDevl/Micloans/DLF 11/13/97 CTED CONTRACT NO. WHEREAS, CTED will permit Entitlement Communities to use program income for reasonable administrative expenses incurred in the administration of the program; and NOW, THEREFORE, in consideration of covenants, conditions, performances, and promises hereinafter contained the parties hereto agree as detailed below. SECTION 2: TERMS AND DEFINITIONS A. Business Project is the business activity that is financed by the DLF Loan. B. CDBG is the Community Development Block Grant Program of the U.S. Department of Housing and Urban Development. C. Certified Business is a minority business enterprise or women's business enterprise, certified as such by the Washington State Office of Minority and Women's Business Enterprises. D. Closing is when a new loan is documented and funds are disbursed. F. CTE15 is the i V ashington State r'epurtle ent of community,/ Trade and F.cennrnic Develr,p'.�.ment anal its successors that have responsibility for providing staff to the DLF. F. DLF is the Washington State Development Loan Fund established under RCW 43.168 as it now exists or is hereinafter amended. G. DLF Committee is the Washington State Development Loan Fund Committee established by RCW 43.168. H. DLF Grant is a state -funded grant made by CTED to the Entitlement Community to fund a constitutionally eligible activity. I. DLF Loan is a federally -funded loan made by the City of Yakima Commercial Loan Committee to a certified Minority or Women -Owned Business, using its CDBG funds under DLF. J. DLF Minority and Women -Owned Business Lending Initiative is the component of the DLF Program which has been designed to implement HB 1493 in collaboration with Entitlement Communities. K. Director is the Director of the Washington State Department of Community, Trade and Economic Development or successor agency. L. Distressed Areas are counties and census tracts that show persistently high levels of unemployment or poverty as measured in accordance with RCW 43.168 020(4). M. Entitlement Community is a community that is a recipient of a U.S. Department of Housing and Urban Development entitlement grant under the CDBG Program. N. ESHB 1493 is Engrossed Substitute House Bill 1493 adopted in the 1993 Regular Session of the Washington State Legislature which relates to Minority and Women -Owned Businesses. O. HUD is the U.S. Department of Housing and Urban Development. P. Local Loan Committee is the City of Yakima Commercial Loan Committee that advises regarding loans made under this contract. Q. Minority and Women -Owned Business is a minority business enterprise or women's business enterprise, certified as such by the Washington State Office of Minority and Women's Business Enterprises. R. Program Income is described in CDBG regulations 24 CFR part 570, Section 500(a). For the purposes of this contract, Program Income is monies resulting from DLF Loans including, without limitation, principal; interest; loan fees; miscellaneous income; and proceeds of liquidation, foreclosure, or insurance claims. S. State -Eligible Project is an activity, which in the sole discretion of the Entitlement Community, satisfies the state constitutional requirements for use of DLF Grant funds. T. means the , a public corporation organized and existing pursuant to its charter, and the laws of the State of Washington, which entity will make DLF Loans in accordance with guidelines established by this agreement and by Attachments and by B and C of this agreement. EcDevl/Micloans/DLF Page 2 of 11 CTED CONTRACT NO. SECTION 3: STATE FUNDING COMMITMENT A. C 1ED has awarded $50,000 in state DLF grant funds to be used by the Entitlement Community for state -eligible projects. B. This amount will be reviewed six (6) months and twelve (12) months after the Entitlement Community has implemented its DLF Minority and Women -Owned Business Lending Initiative and adjusted to increase or decrease the earmark based on performance, available DLF grant funds, and available Entitlement Community CDBG funds. C. All DLF grant funding shall be committed and expended by the Entitlement Community no later than June 30, 1999. D. To drawdown DLF grant funding, the Entitlement Community must submit a Washington State invoice voucher which identifies the state -eligible project that will be assisted and the amount of funds requested. The voucher must include a statement which certifies disbursement by the Entitlement Community of a DLF loan, which is equal to the amount of the DLF grant drawdown request. E. C 1'ED shall issue a warrant in the amount of the request within 20 days of receipt of the request. F. The Entitlement Community shall use DLF grant funds solely for state -eligible projects identified in Attachment A. SECTION 4: LOCAL FUNDING COMMITMENT A. The Entitlement Community has agreed to use $50,000 in entitlement CDBG funding for use as DLF loans for certified businesses. B. The Entitlement Community will track and give priority to using program income to make new DLF loans to certified businesses. At a minimum, the Entitlement Community shall agree to commit the principal portion of DLF loan repayments to relending under this contract. These new DLF loans shall be made in accordance with this contract and applicable federal laws and regulations. In case of any conflict, federal laws and regulations shall prevail over this contract. C. The City of Yakima has also budgeted sufficient funds to support the administrative costs of operating this DLF Minority and Women -Owned Business Lending Initiative within its jurisdiction. D. The Entitlement Community may charge an application fee to prospective borrowers and may use borrower's interest payments and investment earnings on loan repayments for administration within the regulations and requirements of the CDBG Program. SECTION 5: SERVICE PROVISIONS A. The Entitlement Community shall make loans which conform to the "Loan Policies and Guidelines" for the DLF Minority and Women -Owned Business Lending Initiative set forth in Attachment B. B The Entitlement Community shall administer its program in accordance with a "Loan Management and Servicing Plan" which has been approved by CTED and set forth in Attachment C. C. The Entitlement Community shall document loans using legally binding contracts to protect the Entitlement Community's rights to repayments and proceeds of liquidation or foreclosure. EcDevl/Micloans/DLF Page 3 of 11 CTED CONTRACT NO. SECTION 6: CONTRACT PERIOD A. The effective date of this contract shall be the date the parties sign and complete execution of this contract. B. The termination date of this contract shall be upon satisfaction of Entitlement Community service provisions under Section 4, or termination pursuant to Section 19. SECTION 7: DLF/CTED OVERSIGHT AND MONITORING The DLF Committee and CTED will provide guidance as requested by the Entitlement Community on decision-making under the program. The DLF Committee and CTED will retain oversight responsibility for monitoring Entitlement community performance under this contract. SFCTT(IN R. T,(lAN TIFcTSTONS The Entitlement Community will utilize a Local Loan Committee to approve or deny DLF loans made from CDBG funds or program income and such loans will be made by and through . The Entitlement Community and its Local Loan Committee will have sole responsibility for loan making and for ensuring that DLF loans meet DLF Minority and Women -Owned Business Lending Initiative "Loan Policies and Guidelines" defined in Attachment B of this contract. SECTION 9: LOCAL LOAN COMMI t"I EE A. Members of the Local Loan Committee are not individually liable to the state, to DLF, or to any other person as a result of their activities as members, whether ministerial or discretionary, except for willful dishonesty or intentional violations of law. Notwithstanding this provisions, the Entitlement Community may purchase liability insurance for members and may indemnify these persons against the claims of others. B . If the Entitlement Community makes changes in the roster of the Local Loan Committee, new names and credentials shall be submitted to CTED for review and comment no later than 15 days after making the appointment. The Entitlement Community staff will transmit any comments received from C IED to the City of Yakima Mayor and City Council, who are authorized to make Local Loan Committee appointments, for their consideration. SECTION 10: RECORDKEEPING REQUIREMENTS A. Entitlement Community will keep records on each DLF loan. These records will include: (1) OMWBE certification number, (2) Business project purpose, location, and use of loan proceeds. (3) Sources and uses of funds statement. (4) Analysis of project viability and repayment capacity. (5) Credit report(s) on owner(s). (6) Copies of any written objections to the project received by the Local Loan Committee. (7) Copies of loan documentation. (8) Loan servicing/repayment transactions. (9) Statements to show compliance with applicable federal requirements. (10) Job creation/retention performance documentation, if appropriate. EcDevl/Micloans/DLF Page 4 of 11 CTED CONTRACT NO. B. In addition, the Entitlement Community will keep records on the state -eligible projects assisted with DLF grant funds, to include: (1) Description and location of project. (2) Total project cost. (3) State -funded portion. (4) Project implementation schedule. (5) Project expenditures (financial/accounting). SECTION 11. REPORTING REQUIREMENTS A. Intent The Entitlement Community is responsible for providing new DLF Loan reports within 20 days of closing a new Loan. A quarterly portfolio performance report, an annual job report, and a semi- annual State -Eligible Project report are also required. These reports will be submitted to C IED to meet legislatively mandated reporting requirements. The contents of each report is detailed in the following sections of the contract. B. New Loan Report (by DLF Loan) Within 20 days of the closing of a new DLF loan made from CDBG funds or program income, the Entitlement Community will provide CTED a brief description of the loan containing the following information: (1) Borrower name, address (including county), and telephone number. (2) Business project location (if different). (3) Business project sources and uses of funds. (4) Loan amounts used or to be used for fixed assets or working capital. (5) Type of business (corporation, partnership, sole proprietorship). (6) Size of business (small, medium, large) under definitions provided by CI'ED. (7) Whether the business project is a start-up, expansion, or retention. (8) Whether the business is located in a distressed area, a timber area, or whether it is owned by a resident of the Entitlement Community. (9) Nature of the business and whether it is manufacturing, service, retail, or other. (10) SIC number. (11) Amount of loan. (12) Date of loan closing. (13) Term and rate of the loan. (14) Statement of the public benefit to be realized by the loan. If jobs will be created or retained, a statement of the number of jobs projected during the two-year period following the loan. (15) Recruitment plan for jobs to be filled to ensure availability to low- and moderate - income persons, including the name of the Job Services Center or Private Industry Council providing recruitment assistance and job referrals, if any. (16) Information on how the business project will help diversity the local economy if it is expected to do so. (17) Specific mention if the loan assists the creation of an employee cooperative or assists in an employee buy-out to prevent the loss of existing employment. (18) OMWBE certification number, and minority designation of African American, Hispanic, Asian, Pacific Islander, etc., if provided voluntarily by the borrower. EcDevl/Micloans/DLF Page 5 of 11 CTED CONTRACT NO. C. naT n Cta±lug RnY nnrt (1-,y flT F T nanl At least quarterly until the loan is paid or otherwise disposed of, the Entitlement Community will provide CTED a report that contains the following information: (1) Name of borrower. (2) Original loan amount. (3) Outstanding principal. (4) Program income to date. (5) Loan status (current, delinquent/days or default). D. Tob Report (by DLF Loan) Each year, until the loan is closed out for purposes of the CDBG Program, the Entitlement Community will submit copies of reports that document the job creation and retention performance of any business project that was originally funded for the purposes of job creation or retention. At minimum, these documents will show, for each DLF loan, the total number of jobs created and retained; whether the jobs created or retained were part-time or full-time (based on hours per week); whether the jobs (on a per job basis were filled by a member of low- or moderate -income household; and the ethnicity, gender, veteran status, and disability status of new hires, to the this infoiulation is provided voluntarily by the new employee. E. Use of State Funds Report (by state -eligible project) (1) Name and location of project. (2) Total cost. (3) State -funded portion. (4) Status of project and expenditure of state funds. SECTION 12• PROGRAM MARKETING A. CTED will provide program marketing support to the Entitlement Community in the following ways, subject to staff and funds availability: (1) Support through the Community Development Finance Staff for networking, development of loan making and loan packaging expertise, and informing the public and businesses about the availability of funds; (2) Inclusion of the Entitlement Community program in state generated brochures and program descriptions; and v v v (3) Preparation of informational packages for Washington State Legislators, staff and the Governor's Office. B. The Entitlement Community will be responsible for: (1) Making information on how to apply for the program available and providing guidelines for eligible business projects, especially to firms which are currently certified by OMWBE. (2) Presentations at local public meetings and public hearings as may be required under CDBG regulations governing public participation. (3) Response to CTED requests for information on loans to be included in state -initiated marketing efforts. EcDevl/Micloans/DLF Page 6 of 11 CTED CONTRACT NO. SECTION 13: SUBCONTRACTING A. The Entitlement Community may enter into subcontracts for any of the state -eligible project work contemplated under this contract without obtaining prior written approval of CTED. B. The Entitlement Community may also enter into subcontracts for any activity described in the Loan Management and Servicing Plan (Attachment C). The Entitlement Community must not enter into any new subcontracting arrangements not identified in the Entitlement Community's approval Loan Management and Servicing Plan without prior approval of C TED. SECTION 14: CONTRACT MODIFICATIONS CTED and the Entitlement Community may request changes in services to be performed with the funds. any such changes that are mutually agreed upon by CTED and the Entitlement Community shall be incorporated herein by written amendment to this contract. It is mutually agreed and understood that no alteration or variation of the terms of this contract shall be valid unless made in writing and signed by the parties hereto, and that any oral understanding or agreements not incorporated herein, unless made in writing and signed by the parties herein, shall not be binding. SECTION 15: RECAPTURE PROVISION In the event that the Entitlement Community fails to expend funds under this contract in accordance with state law and/or the provisions of this contract, CTED reserves the right to recapture DLF grant funds in an amount equivalent to the extent of noncompliance. Such right of recapture shall exist for a period not to exceed three years following termination of this contract. Repayment by the Entitlement Community of DLF grant funds under this recapture provision shall occur within thirty (30) days of demand. In the event that CTED is required to institute legal proceedings to enforce the recapture provision, CTED shall be entitled to its costs thereof, including reasonable attorney's fees. SECTION 16: NONDISCRIMINATION PROVISION A. Both parties agree that in fulfilling the terms and conditions of this contract that neither shall discriminate against Vietnam -era veterans, disabled veterans, or any person on the basis of race, creed, color, national origin, age, sex, marital status, or the presence of a physical, sensory or mental handicap in accordance with RCW 49.60. B. Furthermore, both parties agree to comply with the Americans with Disabilities Act of 1990, 42 U.S.C. 12101 et seq. (ADA), and its implementing regulations. The ADA provides comprehensive civil rights to individuals with disabilities in the areas of employment, public accommodation, state and local government services, and telecommunications. SECTION 17: OWNERSHIP OF PROJECT/CAPITAL FACILITIES CTED makes no claim to any real property improved of constructed with DLF grant funds under this contract, and by this contract, does not and will not require any ownership interest or title to such property of the Entitlement Community. This provision does not extend to claims that CTED may bring against the Entitlement Community in the event of recapture of funds expended in violation of this contract. EcDevl/Micloans/DLF Page 7 of 11 CTED CONTRACT NO. SECTION la ; AUDIT REQUIREMENTS A. The Entitlement Community is to procure audit services based on the following guidelines: (1) Entitlement Communities receiving less than $75,000 in state funds in a fiscal year, are exempt from compliance with the Single Audit Act or other audit requirements. However, records must be available for review by CTED. (2) Entitlement Communities receiving $75,000 or more in total state funds in a fiscal year may choose to have a financial audit as defined by Government Auditing Standards (The Revised Yellow Book), or single audit made in accordance with OMB Circular A-128 or A-133. B. As applicable, the Entitlement Community required to have an audit must ensure the audits are performed in accordance with Generally Accepted Accounting Principles; Government Auditing Standards (The Revised Yellow Book) developed by the Comptroller General, dated July 1988; the OMB Compliance Supplement for Single Audits of Educational Institutions and Local Governments, and the Compliance Supplement for Single Audits of Educational Institutions and Other Nonprofit Organizations; OMB Circular A-133 Audits of Institutions of Higher Education and Other Nonprofit Organizations; and all state and federal laws and regulations governing the program. C. The audit shall be conducted by the Office of the State Auditor. D. The Entitlement Community must prepare a Schedule of Financial Assistance for federal and state funds that includes: grantor name, program name, federal catalog (CFDA) number, grantor contract number, total award amount, beginning balance, current year revenues, current year expenditures, and ending balance. E. The Entitlement Community shall maintain its records and accounts in such a way as to facilitate CIED's audit requirements, and ensure that subcontractors also maintain records which are auditable. The Entitlement Community is responsible for any audit exceptions incurred by its own organization or that of its subcontractors. The CTED reserves the right to recover the Entitlement Community disallowed costs resulting from the final audit. F. The Entitlement Communities responsible for sending the audit report to C T ED's Internal Audit Manager as soon as it is available, but no later than thirteen months after the end of the Entitlement Community's fiscal year. Responses to previous management findings and disallowed or questioned costs shall be included with the audit report. The Entitlement Community will respond to CTED requests for information or corrective action concerning audit issues within 30 days of the date of request. G. The Entitlement Community shall include these requirements in any subcontracts. Non- governmental subcontractors are required to select a certified Public Accounting Firm to conduct the required audit. SECTION 19: SPECIAL PROVISION Either party's failure to insist upon the strict performance of any provision of this contract or to exercise any right based upon breach thereof or the acceptance of any performance during such breach, shall not constitute a waiver of any right under this contract. EcDevl/Micloans/DLF Page 8 of 11 CTED CONTRACT NO. SECTION 20: INDEMNIFICATION A. It is understood and agreed that this contract is solely for the benefit of the parties to the contract and gives no right to any other party. No joint venture or partnership is formed as a result of this contract. Each party hereto agrees to be responsible and assume liability for its own wrongful and/or negligent acts or omissions, or those of its officers, agents, or employees to the fullest extent required by law, and agrees to save, indemnify, defend and hold the other party harmless from any such liability. B. In the case or negligence of more than one party, any damages allowed shall be levied in proportion to the percentage of negligence attributable to each party; and each party shall have the right to seek contribution from the other party in proportion to the percentage of negligence attributable to the other party. C. This indemnification clause shall also apply to any and all clauses of action arising out of the construction, rehabilitation, reconstruction, upgrading, and/or preservation of the state -eligible project(s) and/or the business project. Each contract for construction, rehabilitation, reconstruction, upgrading, and/or preservation will include a provision that CTED and the state of Washington are not liable for damages or claims from damages arising from any subcontractor's performance of activities under the terms of the contracts. SECTION 21: GOVERNING LAW AND VENUE This contract shall be construed and enforced in accordance with, and the validity and performance hereof shall be governed by, the laws of the state of Washington. Venue of any suit between the parties arising out of this contract shall be the Superior Court of Thurston County, Washington. SECTION 22: SEVERABILITY In the event any term or condition of this contract or application thereof to any person or circumstances is held invalid, such invalidity shall not affect other terms, conditions, or applications of this contract which can be given effect without the invalid term, condition, or application. To this end, the terms and conditions of this contract are declared severable. SECTION 23: DEFAULTS AND TERMINATION OF THE AGREEMENT A. Entitlement Community Failure If an Entitlement Community fails to carry out the program consistent with this contract, CTED may decline to make new DLF grants to the Entitlement Community until the entitlement Community makes corrections acceptable to CTED and demonstrates future ability to implement the program as intended under this contract. In addition, CTED may pursue its right to recapture DLF grant funds as provided in Section 12 of this contract. B. Entitlement Community Petition for Termination If the amount of funds available to an Entitlement Community as program income on an annual basis becomes so insignificant so as to make the relending of these funds administratively impractical„ the Entitlement Community can petition CTED to allow reassignment of the remaining program income to another CDBG eligible activity, consistent with federal CDBG regulations, and for termination of this contract. CTED shall approve or deny the request within 45 days of such petition. EcDevl/Micloans/DLF Page 9 of 11 CTED CONTRACT NO. .C. Termination in the Event of DLF Program Sunset If the DLF Program is no longer operated by the state of Washington, this contract shall terminate, and any program income thereafter received by the Entitlement Community arising from DLF loan shall 1Ve dVdlldUle for -use by the Entitlement CVmmullly subject to apY1kaL1c federal r egulatUa V.' . D. Termination by Entitlement Community The Entitlement Community may terminate this agreement at any time by delivering written notice to C 1'hD of its intent to terminate the agreement. The termination will become effective 30 days after delivery of the notice. Any program income remaining in the DLF loan program will be used for purposes determined appropriate by the Entitlement Community. SECTION 24: CTED AND ENTITLEMENT COMMUNITY REPRESENTATIVES A. CTED's representative shall be: Business Loan Portfolio Manager Department of Community, Trade & Economic Development B. The Entitlement Cnmmlinit i s representative shall be: Director Department of Community & Economic Development SECTION 25: ENTIRE AGREEMENT This contract consisting of eleven (11) pages, contains all terms and conditions agreed to by the parties. The attachments to this contract are identified as follows: Attachment A: List of State -Eligible Projects Attachment B: DLF Loan Policies and Guidelines Attachment C: Loan Management and Servicing Plan EcDevl/Micloans/DLF Page 10 of 11 CTED CONTRACT NO. IN WITNESS WHEREOF, the Department of Community, Trade and -Economic Development and the Entitlement Community have executed this contract as of the date and year last written below. DEPARTMENT OF COMMUNITY, TRADE AND ECONOMIC DEVELOPMENT Sandra L. Benbrook, Assistant Director Date Local Development Assistance CITY OF YAKIMA pt R.A. ais, /City Manager ; R ,Date '� a ". ,,Contract No. 97-112 JResolution No. R-97-150 ATTEST: APPROVED AS TO FORM Suzanne Shaw Date Assistant Attorney General EcDevl/Micloans/DLF Page 11 of 11 FROM ;ST OF WR DCTED LDA TO . SO9 S7S 6105 1997,11-13 ATTACHMENT B DLF LOAN POLICIES AND GUIDELINES PROGRAM GUIDELINES for the Washington State Development Loan Fund Minority and Women -Owned Business Lending Initiative 11;12RM #189 P.13/30 Introductip_n The goal of this initiative, incorporated as a component of the Development Loan Fund Program, is to support. thc expansion and start-up of minority and women -owned businesses that arc certified by the Washington State Office of Minority and Women's Business Enterpriscc (OMWBE). This initiative was authorized under state law in 1993 and amends sections of the law pertaining to the Washington State Development. I -oan Fund under RCW 43.168. A. AMOUNT OF FUNDS AVAILABLE The DLF Program has received funding authority of up to $2 million for the initiative B. APPLICATION GUIDELINES 1. implication Deadline Applications may be submitted any time during the program. The program funding ends 2. Application Requiremonta An application to the Development Loan Fund's Minority and Womcn-Owned Business Lending Initiative must be on behalf of a specific business project, An eligible jurisdiction may submit more than one application at anytime. Applicants requesting $5,000 to $50,000 must meet the requirements of the initiative. Applications for more than $50,000 also require participation by another lender. Applications of $J 00,000 to $750,000 must meet regular DLF review and underwriting requirements. An application will consist of: a. An application signed by the authorized chief administrative officer of the local jurisdiction; b. Documentation supporting the need for the assistance and job impact; c. Confirmation/documentation of authority of the business to enter into thc transaction; d. Evidence of adherence to the jurisdiction's adopted Citizen Participation Plan including at least. two well publicized public hearings, and c. Assurance that all CDBO Program requirements will be met. b:lsharoorlyakattti.doc 7/18/97 FROM t ST OF WR DCTED LDR TO SOS 675 5 L 5 C. ELIGIBILITY GUIDELINES 100r,''—1 ..a.w 1 a-" 1.2PM 1. Eligible Borrowers .. _ L, _ through �_ thi . lending initiative s targeted. businesses that are The financing assistance available through thin Icnding mitt, iv is ....gets to ..------- certified by the OMWBE. The certification process establishes that the firm is minority or woman - owned and controlled, All borrowers from non -entitlement areas of the state must be OMWI3F, certified prior to presentation of the loan to the DLF Committee. DI I leans to certified businesses are exempt from distressed area a`e.jeircments of the regular DLF Program. Firms may be organized as proprietorships, partnerships or corporations. To be eligible, the certified business must bo undertaking a conunercial venture (not governmental or nonprofit). 2, Eligible Activities; These loan fiends are not a substitute for private financing or financing that is available to the firm from other government -supported programs such as the Simall Business Administration or the Washington State Linked Deposit Program. The underlying policy is: these finds will fill credit gaps. The loans under this program will generally be under $50,000, with the emphasis on loans under $25,000. Loan funds can be requested for start-up costs, inventory, purchase of equipment, real estate (including remodeling and faoade improvements), working capital, assistance in securing contractor bonding, and technical assistance in such areas as marketing, accounting, management, and others. 3, Ineligible Activities Borrower needs that are unrelated to growth of the business (examples: refinancing equity, existing loans, or past due payables or funding past operating losses or taxes) are not eligible for loan funds, Loans which improve the position of the another creditor arc also generally not eligible. 1D. METIIOI) OF FUNDING DISTR113UTION Applications for DLF funds under the Minority and Women -Owned Business Lending initiative will be evaluated by staff who, in turn, will make recommendations to the DLP Committee for approval or denial based on the following guidelines: 1, Need for Assistance --the assistance requested is "appropriate" for the project. 2. Job Creation --permanent jobs created or retained as a result of the project will be made available to low- and moderate -income persons. 3. Ability to Repay the Loan --the borrower and the business plan must demonstrate the business venture is likely to be successful. To make this decision, the following factors will be considered: The borrower has direct, successful experience in the business, has developed business skills in at. least some of the areas important to its success (such as production, marketing, and fiscal management), and/or has developed skills important to this business venture through experience in a responsible management position of another firm. -- The borrower has prepared a well conceived, realistic plan for the business or its expansion that shows the availability of working capital to sustain and support its growth. a; utaottevakRttb.doe Pak; z of 4 FROM 3ST OF WR DCTED LDR TO 509 57S 5105 1997.11-13 11:13RM #189 P1S/30 The borrower has developed an on-going support program (such as management assistance, on- going counseling, or other) to shore up areas in which he or she tacks experience. This technical assistance is an eligible loan expense. The borrower bas a credit history that demonstrates the capacity to meet commitments. (Any delinquency or default in tllc payment of taxes or charging off of personal, undisputed debt will disqualify the applicant). The borrower is current, or is operating under a plan, in fulfilling all state and federal tax requirements. 4. Financial Risk --the: borrower must have a meaningful financial investment in the business. This can be in the form of cash, equipment needed by the business that bas been purchased by the borrower, real property needed by the business venture, or other investments material to the business. -- The amount of the borrower's investment will depend on the size of the venture, the need for working capital, and the financial circumstances of the borrower. -- If the borrower or business has liquid assets that arc otherwise not committed or needed for working capital, they must be contributed to the project. 5. Other Loans --if the project costs exceed $50,000, the borrower is responsible for seeking participation from other loan sources in the financing of the project. 6. Security and Collateral --a security interest in all reasonable personal and business collateral will be required. Examples of business collateral that will be considered to secure the loan include equipment, real estate, and inventory. All personal assets of owners with a 20 percent or greater interest in the business must also be made available to secure the loan, including homes. If all reasonable collateral available to the owner(s) and business have been pledged or offered as security for the loan, lack of collateral will not disqualify the borrower. -- Personal guarantees will be required for all persons or entities holding 20 percent or greater ownership interest in the business. E. LOAN TERMS The following loan terms apply to D1 ,F financing made availablt. to certified businesses: 1. Loans may range from $5,000 to $100,000 with emphasis on smaller transactions. 2. If the project cost is over $50,000, participation by other loan sources must be maximized. 3. Loan fees will include an application fee of $100. A loan fee of 1.5 percent of the loan amount is payable at closing, with credit given for the application fee. The loan fee can be financed as part. of the loan so long as other financial participation nxluirements of the borrower have been met. cleha ronrlyakattb.dou PiFc 3 of 4 FROM i S 1 OF UCH DOTED LJJH 1V C.'vMO 7ru C1 MCC 1 097 _ 1 1- 1 Z 1 1 = 1 'QOM ik 1 SSG 9 /76i 4, The interest rate is fixed at the rate determined by the loan committee, but i9ot less than 4% per annum, for direct loans. 5, Stepped payments and deferrals may be negotiated if just.i ed by the Particular circumstances of the loan. 6, Repayment terms will include: Loans for working capital may be repaid over a term dui) to 5 years. Loans for equipment may be repaid over a term of up to 10 years, Loans for real estate may be repaid over a term of up to 15 years, Loans with a repayment term of over 5 years may have a balloon clause that will allow for adjustment of the loan's interest rate_, and encourage refinancing in the commercial market if possible. USE OF DLF MINORITY AND WOMEN -OWNED BUSINESS LENDING INITIATIVE PROGRAM REVENUES Businesses receiving assistance through this DLF lending initiative are required to make principal and interest payments. Up to two percent of program income, including principal, interest, and investment earnings received by the find, may be used for DU' Program administration. The balance of program income will be made available for future loans through the DM' Program. 0:\YI3i!]'aakva}f 3S11a).doc r i c,,, 4 of 4 FROM gST OF WR DCTED LDR City of Yakima 7Ilii/9l TO 509 S75 6106 ATTACHMENT C 1997x11-13 LOAN MA EMENT AN1) SERVICING Y1..A 11:13RM #189 P.17/30 UKAh 1 SOURCE OF FUNDS FOR MAILING LOANS The City of Yakima has reserved Community Development Block Grant (C013G) funds for business loans under the Washington State Department of Community, Trade and Economic Development's Development Loan Fund (DLF) Minority and Women Owned Business i.oan Program. II. I�tJNUING AND 1.311DGUT FOR ADMINISTRATION OF THE LOAN PROGRAM Tlic City intends to subcontract the to a third party in the future to administer the MWBE Loan Program. Staff support will then be provided through the City, This program will be another tool used by the staff to provide small business financing, Therefore, no separate budget allocation for administration of the MWBE Loan Program is being made. 11I. SYSTEM TO BE USED TQ TRACK LOAN REPAYMENTS AND POLICY REGARDING PROGRAM INCOME USE The City accountant will monitor all payments and report delinquencies. Loan principal payments will be accounted for and utilized in making additional loans under the MWI3L' Loan Program. If there are insufficient funds accounted for from principal repayments, additional funds needed may be requested from thc State at the discretion of the City. 1V. 1.0AN POLICIt$ AND TERMS AND MINIMUM UNDERWRITING CRITERIA The loan politics and terns and minimum underwriting criteria for the 1vIWBF Program arc outlined on attached Exhibit No. I. It is our general policy to review each loan application and make a determination, in conjunction with the participating bank, as to which program best fits the needs of the applicant, while maintaining the requirements of each loan program offered by the City. Therefore, some businesses ;nay receive better rates and/or terms in certain loan programs. The City will endeavor to place the applicant's financing package in the most appropriate program, V. LOAN APPLICATIONS AND PACKAGING The City's loan processing and administration in place outlining specific responsibilities and • Marketing • Counseling • Screening and packaging • Approval • Closing will be done by staff of thc Economic Development Department. A system is procedures. These are summarized as follows: • l,iles/Documentat.ion • Payment CollectioIi and Accounting • Compliance System • Loan Workouts • Other Page 1 of 14 City of Yakima November 13, 1997 An application package has been prepared for the applicants. These are included in the attachments hereto as Exhibit No. 2 VI. LOAN DECISIONS AND LOCAL LOAN COMMITTEE COMPOSITION The makeup of the Loral Loan Committee reflects a mix of expertise required to make informed decisions. The following individuals are the current members of the City of Yakima Commercial Loan Committee: * (name) (occupation) • (name) (occupation) * (name) (occupation) * (name) (occupation) * (name) (occupation) A loan committee roster prepared in matrix form demonstrates the qualifications, skills and characteristics of each member is included as Exhibit No. 3. EcDevli Micloansi DLF Page 2 of 14 FROM :ST OF WA DCTED LDP City of Yakima 7/18/97 TO g 509 575 6105 1997.11-13 11214RM #189 P.19/30 EXU 113I'I' No. 1 CITY OF YAKIMA MINORITY AND WOMEN BUSINESS LOAN PROGRAM PROGRAM POLICIES AND LOAN TERMS PROGRAM GOAL, The purpose antis loan program is to support the expansion and start-up of thc City of Yakima's minority- and women -owned businesses that are certified by the Washington State Olney of Minority and Women's Business Enterpriser: (OMWBE). ADMINISTRATION OF THE PROGRAM This loan program was authorized under state law in 1993 and amends sections of the law pertaining to the Washington State Development Loan Funds under RCW 43.168. The Washington State Department of Community, Trade and Economic Development has responsibility for overall administration of the program. Responsibility for project development, loan approval, and loan servicing will rest with the City of Yakima and its respective loan organization, GEOGRAPHICAL AREA SERVED The program will serve the City of Yakima. ELIGI BI ,1i BORROWERS The loan funds are for City of Yakima businesses that arc certified by the Washington State OMWBE, This certification process establishes that the firm is owned and controlled by one or inore minorities and/or women, Firms may be organized as proprietorships, partnerships or corporations. These loan funds are not a substitute for private financing or financing that is available to the firth from other government -supported programs such as the Small Business Administration or the Washington State Linked Deposit Programs. The underlying policy is that these funds address the lack of access to financing historically faced by minority- and worncn-owned businesses, To be eligible to apply, a business borrower must: • Demonstrate ability to repay the loan. • Show that the loan will result in the expansion of private business in the community, • Create or retain jobs for low- and moderate -income individuals. • undertake a commercial business venture. • Fac certified by State OMWBE. Loans will conform to all applicable requirements of thc Community Development Block Grant Program, including job creation or retention for low- and moderate -income persons, labor standards, environmental review and others, ELIGIBLE AND INELIGIBLE USES OF FUNDS The loans made under this program will generally be under $50,000, witil the emphasis on loans under $25,000. Loan funds can be requested for start-up costs, inventory, purchase of equipment, working capital, assistance in securing contractor bonding, and technical assistance in such areas as marketing, accounting, and management, Borrower needs that arc unrelated to growth of the business (examples; refinancing equity, existing loans or past -due payables or funding past operating losses or taxes) are not. eligible for loan funds, Loans which improve the position or another creditor arc also gcncrally llot eligible. Page 3 nt' 14 FROM 1ST OF WR DCTED LDR City of Yakima 7/18197 TO S0S 575 6108 1557,11-13 l l o 14RM #185 P.,20/30 APT ITV TO REPAY THE LOAN The borrower and the business plan must demonstrate the business venture is likely to be successful. To make this decision, the following factors will be considered, 1 . The borrower has direct, successful experience in the business; has developed business skills in at least some of the areas important to its success such as production, marketing and fiscal management; and/or has developed skills important to this business venture through cxperiencc in a responsible management position of another firm. 2. The borrower has prepared a well conceived, realistic plan for the business or its cxparsiojl that show the avail of working capital to sustain and support its growth, 3, The borrower has developed an ongoing support program (such as management assistance, ongoing counseling, or other) to shore up areas in which lie or she lacks experience. This technical assistance is an eligible loan expense. 4. The borrower has a credit history that demonstrates the capacity to meet commitments. (Any delinquency or default in the payment of taxes or charging off of personal, undisputed debt will disqualify an applicant,) 5, The borrower is current, oris operating under a plan, in fulfilling all state and federal tax requirements. FINANCIAL RISK The borrower mast have a meaningful financial investment in the business, This can bc in the form of cash, equipment needed by the business that has been purchased by the borrower, real property needed by the business venture, or other investments noolelial to the business. The amount of this investment will depend on the sic oldie venture, the need for working capital, and the financial circumstances of the borrower. lithe borrower or business bas liquid assets that arc otherwise not committed or needed for working capital, they must be contributed to the project CTIIER LOANS If the project costs exceed $50,000, the borrower is responsible for seeking participation from other loan sources in the financing of the project. 'i'ho City will assist in identifying potential sources. E(.111.ITY AND CQLLATI AL A security interest in all reasonable personal and business collateral will be required. Examples of business collateral that will be considered to Secure the loan include equipment, real estate and inventory. All personal assets of owners with a 20% or greater interest in the business must also be made available to secure the loan, including homes. If an reasonable collateral available to the owncr(s) and business have been pledged or offered as security for the loan, lack of collateral will not disqualify the applicant. Personal guarantees will be required for all persons or entities holding a 20% or greater ownership interest in the business. LOAN TERMS AND CONDITIONS 1 Loans from $5,000 to $50,000, with emphasis on transactions averaging $25,000, 2. If the project cost is over $50,000, participation by other loan sources must be maximiaed, 3. Loan fees will include an application fee of $100. A loan fee of 1.5% of the loan value is payable at closing, with credit given for the application foe. The loan fee can bc financed as part of the loan so long as other financial participation requirements of the borrower have been met, 1'ag6 4 of 14 FROM eST OF WA DCTED LDA City of Yakima 7118/97 TO a SOS 575 6105 1997,11-13 11115AM #199 P.21/Z0 4. Interest rate is fixed at the prevailing prime rate plus 3% for direct loans. If another lender is participating in the project, the loan rate will be at par with that lender's rate, 5. Stepped payments and deferrals may be negotiated if justified by the particular circumstances of the loan. 6. Working capital loans repayment terms may be up to 5 years. 7. loans for equipment inay be repaid up to a terns up to 10 years. 8. Loans with a repayment term over 5 years may have a balloon clause that will allow for the adjustment of' the loan's interest rate and encourage refinancing in the commercial market, if possible. Page 5 of 14 FROM :ST OF WR DOTED LDR City of Yakima 7118/97 TO SOS S (5 6105 APri ICAT1ON PROCESS 1597,11-13 110 1SRM 4 ISS P.22/30 PRE -APPLICATION ASSESSMENT (CITY) Applicant makes an appointment to meet with the City o 1al3.., 'Business Loan Specialist Prior to submitting an application, and a qualification assessment is made based on the following: • The business concept, • Probable use of funds, • Preliminary review of most recent financial report, • Possible collateral. • The program fit (with specific eligibility requirement and HUD requirements), a IIow to structure the proposal, If the pre -application assessment results arc positive, the applicant and the Business Loan Specialist will begin to prepare a loan application. There is no commitment. at this time to fund a loan, A. record of this and future meetings will be kept. LOAN APPLICAT1ONICITY) A, The loan application will include a minimum of the following; proprietorships/Partilers] aic)s 1. A signed and date application which authorized the City of Yakima to obtain the applicant credit report 2. A personal financial statement, 3. Past three years' personal tax returns, including all schedules. 4. Copy of partnership agreements, if applicable. Corporations 1. A signed and dated application by the guarantor (the major stockholder(s) of the corporation) which authori;".es the contractor to obtain the guarantor's credit report. 2, The last three years' profit and loss statements with balance sheets and the most recent quarterly statement, if applicable. 3, The last three years' lax returns, including all schedules (business and personal). B. lJpon satisfactory review of the credit report and the basic financial information submitted, the applicant will provide and, if necessary, receive assistance from the Business Loan Specialist to complete the following: 1. 24 -month cash flow projections. 2. Market and financial assumptions, with sources noted, for cash flow projections in narrative form. 3. Statement of management abilities and experience. 4, A statement explaining current business management practices of the applicant. Page 6 of 14 FROM sST OF WA DCTED LDA City of Yakima 7/18/97 TO SOS 575 6105 1997,11-13 11.15AM #189 P.23/30 C, in addition the following information may be required: I. A lead bank "Letter of Intent" for loans over $50,000, 2. Franchiser disclosure form and sample franchise agreement for a franchise project. 3. A performance bond and an "assignment of proceeds and contract" for construction projects. 4. A copy of the contract and an "assignment of proceeds and contract's for contract financing (factor financing), 5. A letter of intent t0 lease. Note: Other items may be requested at the discretion of the Business Loan Specialist and receipt may be a condition of approval or closing. LOAN UNDLIZWRITINO (CIT'Y) Once the application is complete, the Business Loan Specialist will prepare a loan Illemorandum, The analysis in the loan memorandum will be based upon the following: A. Analysis of the five Cs of credit. 1. Character - analyze how credit has been handled in the past Inquire us to any criminal record, Any felony conviction related to financial matters may disqualify an applicant. 2, Capacity - determine that the projections are reasonable and attainable, thus giving the ability to repay, 3, Capital - analyze the equity invested, 4. Collateral - evaluate the collateral offered, 5, Conditions - analyze overall x ononuc climate as it relates to interest rates and inflation and market for the product or service. 13, Fvalnate for HUD eligibility requirements (necessary and appropriate and attainment of a NUD national objective). C, Evaluate the lien search and the preliminary title. LOAN APPROVAL (CITY) The City of Yakinla's Loan Review Committee will moct Monthly, or more frequently when required, and consists of five members. The purpose of these meetings is to review loan applications and to approve or deny loans. Members of the Committee will possess experience in small business lending and be reflective of the community as stipulated in the state administrative agreement A. A loan package is prepared by the Business Loan Specialist and is provided to City in advance of the meeting. The package is then presented to City for approval, decline, or bold for more information. B. Within a week of loan approval, a letter is prepared by the Business Loan Specialist outlining key loan terms, Within 30 days, a commitment letter is prepared for review and sigllsatuIe by the City and is issued to the borrower fisting all the conditions that must be met prior to closing and disbursement, C. Minutes of all Loan Review Committee meetings will be kept. D. Any commitment tnadc initiates the establishment of the loan file record. The initial information recorded will include the amount of funds committed and the source of commitment. rxgc 7 of 14 FROM aST OF WR DOTED UDR TO o 509 S75 5105 City of Yakima 7/18/97 1997,i1-13 11 .L HM #1SS P.24/30 CI ()dol" (('TTV1 When the loan commitment letter is i;otintcrsigned by the borrower and the City has certifaul all the loan conditions arc mci, the City Attorney will prepare the closing documents. The closing checklist is as follows: A. Legal Documents. 1. Promissory Note. 2. Security Agreement. 3. Personal Guaranty(s) (if applicable). 4. Assignment of Leases and Rents (if applicable). 5. Subordination Agreement(s) (if applicable). Perfection of Collateral 1, UCC e 1. 2. Deed of Trust (if applicable). 3. Title Policy (if applicable). 4, Vehicle Title and Regiciration (if applicable). S. Collateral Insurance. 6. Appraisal (if applicable). C. Support Documents 1. No Adverse Changes (current financial statement), 2. Borrowing Resolutions. 3, Opinion c)1 counsel, 4, Proof of Taxes Maid and Licenses Current, 1). Compliance Forms 1. lobs Contract (if applicable). 2. Environincntal Review (if applicable), When dosing is complete, the City will: A. Take receipt of the loan fcc and any reimbursement of closing costs and deposit, into the City account. 13. Pile all collateral perfection with the appropriate authorities. Forward the Transmittal Morin to City Clerk's office together with the originals of all documents for safekeeping. 13. NA,r$or14 FROM IST OF WA DCTED LDA TO 509 575 5105 City of Yakima 7/18/97 1997,11-13 11315AM #159 P.25/30 1. Disburse funds. a) If multiple disbursements arc part of the agreennient, then follow the terms of the Commitment Lotter. 2. Checks will be drawn on the Minority/Women Business loan Portfolio account and whenever possible joint payee cheeks will be issued. SERVICING (CITY) Mier all loans arc closed and disbursed, the City will: A, Maintain a loan filing system, using standard department format. 1. Applications. 2, Closing Documents. 3 Approval and Analysis, 4, Servicing. 5, Collateral and Perfection, 6, IIUD-related Items. B. Maintain a payment collection system, 1, 13ill on the first of the month (quarter, annual, other) for payment on the tenth attic month. 2, Record and determine application of payments. 3. Maintain payment histories. 4. Courtesy calls on the tenth day after payment due to remind of late penalty. 5. Late penalty applied if more than 15 days laic. 6. If one payment late, phone and/or site contact to be made. 7. If two payments late, appropriate action will be taken to determine a plan to bring the loan current. 8. if three payments laic, the City will authorize the Business Loan Specialist to prepare a letter of transmittal to the City attorney outlining the situation, steps taken to collect thus far, and stating the amount outstanding. 9, Propose to the Economic Development Manager all loan modification terns. 10. Maintain record of all borrower contacts. C. •Maintain tickler files for date -sensitive compliance itcmR, 1 . UCC - 1. 2. Insurance, 3. Jobs Report. Page 9o1'14 rr(L rI b1 LJT WH iJL ICL 6_LH City of Yakima iilol9i TO amu= X75 ®4eJ0 4. Annual Financial Statements, 5, Annual Silo MOS: Cromuapjrh�aa,= nce+e.•D- •r,p•a-o�r••s� A..n_-[.t_ Actions. v. UD Close-out Form ) a) Jobs Report - Quarterly report form (mailed two weeks after the end of the quarter, duc back within another two weeks) demonstrating completion of progress toward completion of the Jobs Contract. t o !IUD ('ln n_niif Fra aii b) Upon completion of the Jobs Contract, Planning and Development staff completes the Caos. or• . c) Request for semiannual, in-house financial statements mailed two weeks after the end of tl1C half year dnc hack within another two weeks. Requests for annual financial statement mailed 1 due back by May 1. d) Requests c5ela�Saiae financial ysuay.==,.__, mailed on March - -- - c) Annual site visits are performed tiller receipt of annual financial statement. Site visit report fled by the City within two weeks of visit, The City, if needed, can substitute al their discretion other visits to the site for this purpose,. UCCs, if needed, arc to be renewed before the date of expiration, ADMINISTRATIVE? PROCEDURES A. The llusincss Loan Specialist will write a monthly report to the Economic Development Manager suiiiiiiali!-'tng the: 1, Monthly collections. 2, Problem collections, 3, Loan Activity, 13, Cash Management Practices, 1. Establish and maintain a checking account at a local bank. The account shall have two signatories required for checks. 2. Deposit daily, or no later than the day Ater receipt, all loan payments, loan fees, and reimbursements of closing costs in this account, 3. Disburse from this account all loan proceeds. Page 10 of 14 FROM =ST OF WR DCTED LDR TO 509 575 5105 C:ity of Yakima 7/18/97 EXHIBIT NO. 2 1997,11-13 11e15RM #189 P.27/30 Washington State Development Loan Fund and City or Yakima - EconomIC Development LOAN APPLICATION MOWN- AND WOMEN -OWNED BUSINESS LOAN PROGRAM PLEASE COMPLETE EACH BLANK,; IF NOT APPLICABLE TO YOUR BUSINESS, WRITE WJR' Borrower Name Please be the business' exact name es It appears In legal documents. Business Address I Project Address (if different) Business Phone # Business FAX # Business Tax ID # 91. Legal Organization (Check One) LiCorporatIon ❑ Partnership 0 Solo Proprietorship # of Employees at Time of Application # of Employees If Application Is Approved Date of Incorporation Date Business was formed • Owners(s) Name 'title Soclai Security # % of Business Owned Owner 1 tome Address Home Phone # Attach additional sheets If necessary - - %% % v 1206) (206) (206) Is the Business or any of Its owners Involved in any pending lawsuits? 1•: Yes Do any owners or offioers have controlling Interests of any other business? ❑ Yes ■ No ■ No If yea, provide details on n3YBrSe. If yes, provide details on roverse. Have any of the owners ever filed personal or business bankruptcy, or havo any owners ever been In receivership? ■ Yes 0 No !f yes, provide details on reverse. 1 certify that the above Information is correct. Title of Signer •\vale.%110 AM` Signature of Owner Page 11of14 FRnt :4T nF bio nCTEn i n❑ Tn 509 S7S 5105 City of Yakima 7/18/97 APPLICANT; CONTACT PERSON: 1997.11-13 111 1SRMi #189 P.28/30 Phone#: n_aN APPLICATION CHECKLIST MINORITY- AND WOMEN -OWNED BUSINESS LOAN PROGRAM NOTE; items marked with an a are not required for startup businesses. 1. If Included or provide expianatiotl oil reverse Loan Application Form (attached) 11 Business Plan $100 Application Deposit Year end financial statements for the last 3 nears (CPA Review Quality, Year w,.... financial �..,._... _.-__ or also provide tax returns for the last 3 years) Interim Financial Statement (A Balance Sheet and Income Statement dated within 60 days of this application) 7 Cash Flow Projection (Assistance on completing this fora, is available at no charge to you; please refer to list of names provided). Accounts Receivable and Payable Aging (form provided) Personal Financial Statement for all Business Owners Lower-Ineoma Jobs Agreement with attached JobS List Certification for Contracts, Grants, Loans and Cooperative Agreements (form attached). I'a}c 12 of 34 11:16AM #189 P.29/30 1997,11-13 509 575 6105 0 1 - FROM :ST OF WA DCTED LDA AGING OF APIAR AND TAXES PAYABLE Please provide an aging of payaoles anc receivables in the space be,ow_ _Explain any acoownts over SO days on an attached sheet of paper. The date of the acing must coincide with The date of your current financial statement. Account Title ACCOUNTS PAYABLE TAXES PAYABLE ACCRUED PAYROLL ACCOUNTS RECEIVABLE 0-30 days 30-63 days 60-90 Cayes 90+ SCHEDULE OF OWNERS' COMPENSATION Include schedule of all officers'lowners' compensation, including salaries, fees, dividends, and withdrawals for the past three years and current year to date. YEAR TO DATE $ LAST YEAR: $ YEAR: $ YEAR: $ Business Name: Signed: Date: Name and Title Paae 13 of 94 11216RM #189 P.30/30 1997,11-13 509 575 6105 FROM gST OF WA DOTED LAR DETAILS OF EXISTV NG F.XED OBLIGATIONS (include all Leases) ) The Business does not have any fixed obiigations To Whom Payable Amount Orginal Date Maturity Balance Pre.aent Payment Monthly Portion Current Portion Long -Term Race Interest Security TOTAL PRESENT BALANCE $ musz equal amount shown on current balarme sheet Business Name: Signed: Dane: Narne and T Pagel4o1-14 STATE OF WASHINGTON RECEIVED SEP 221997 kcivvSay CITY OF YAKIMA GOMMUNI a Y DEVELOPMENT DEPARTMENT OF COMMUNITY, TRADE AND ECONOMIC DEVELOPMENT 906 Columbia St. SW • PO Box 48300 • Olympia, Washington 98504-8300 • (360) 753-2200 September 17, 1997 Mr. Glenn J. Valenzuela, Director Department of Community and Economic Development City of Yakima 129 North Second Street Yakima, Washington 98901 Dear Mr. Valenzuela: SUBJECT: The Minority and Women -Owned Business Lending Initiative. Listed below are answers to your specific questions about the City of Yakima' s participation in the Minority and Women -owned Business Lending Initiative, contained in your August 15, 1997 letter. Question 1: Sec. 4(C) - Local Funding Commitment - Question 2: Question 3: There is no specific dollar amount of local funding the City of Yakima must commit to. The City must commit to funding administrative costs from its own resources. The City must also commit a portion of their Community Development Block Grant in at least an amount equal to the state's DLF grant. For Yakima, this would be $50,000. As loan repayments are received from borrowers, the City may use a portion of the repayments (Program Income) to pay for reasonable administrative expenses, consistent with the federal CDBG regulations. The City must also identify the specific local project(s), which is eligible for state funding that the DLF grant will support. Section 5(b) - As stated in the C 11D contract and CDBG Regulations, the City is required to keep records even if the City uses a subcontractor. CTED will only monitor the City's records. HUD will monitor for CDBG requirements and may include the City and its Contractor. Section 12: yes - City may even contract out these duties entirely to the Contractor (as did Seattle, King County, and Spokane County). However ultimate responsibility for the program remains in the City. 0 T4r. Glenn J. Valentur-la Parra 2 September 17, 1997 Question 4: Minor changes would not be a problem, as long as the program stays intact. (It may be difficult to change the agreement without being restricted by federal CDBG regulations. The City's responsibilities come mainly from CDBG rules for entitlement communities ) CDBG funds, Question 5: Since the actual funds going to loan recipients are Yakima n s, program income is defined in federal CDBG regulations for Entitlement Communities, as follows: Gross income received by the recipient or subrecipient directly generated from the use of CDBG funds, principal and interest from loans, any bank interest, or loan fees paid on the repayment account. CTED's interpretation of program income is the same as HUD's interpretation. Attached for your reference ford background information on the MWOB Lending Initiative. 1 look for :.yard to our meetingFriday, September 26, 1997, at 9:30 AM in Yakima. Sincerely, Sandra L. Benbrook Assistant Director Local Development Assistance Attachment BACKGROUND The Minority and Women -Owned Business Lending Initiative for entitlement jurisdictions is a part of the statewide Development Loan Fund (DLF). The initiative seeks to enlist metropolitan cities and counties as the state's partners in delivering financing assistance to businesses certified with the Washington State Office of Minority and Women's Business Enterprises. A. Funding Community, Trade and Economic Development (CTED) has provided $1,909,596 from its 1993-95 and 1995-97 Biennium appropriations from the state capital facilities budget to implement this program in entitlement jurisdictions. Since the state constitution prohibits lending the state's credit to businesses, participating jurisdictions will receive state funding to support constitutionally -eligible (typically public works or housing) projects in amounts commensurate with loans made to qualifying businesses from other federal funding sources, such as CDBG. The Funding Distribution Plan is based on a formula, which takes the following factors into account: • the amount and percentage of each entitlement area's 1994 CDBG allocation compared to the total entitlement CDBG allocation for the state; • the number and percentage of OMWBE certified films in each entitlement jurisdiction compared to the total for all entitlement jurisdictions; • the number and percentage of minorities residing within each entitlement jurisdiction compared to the total for all entitlement jurisdictions; • the assumption that $50,000 is the minimum allocation needed to operate the program locally; and • to compensate for the minimum allocation, $450,000 would be the maximum allocation possible given the total amount of funding available. This funding distribution plan allowed for two adjustments: 1) when letters of intent were received, and 2) at the sixth -month implementation point for local programs. This funding could not be used for administration of the loan program. B. Participation Requirements To participate in the program, each entitlement jurisdiction had to demonstrate capacity to administer the program, individually or through a joint venture agreement with another participating jurisdiction (or jurisdictions), in accordance with all applicable state and federal requirements. Each entitlement jurisdiction committed to funding administrative costs from its own resources and submitted records and reports to CTED on program performance and outcomes. DEPARTMENT OF COMMUNITY AND ECONOMIC DEVELOPMENT 129 North Second Street Yakima, Washington 98901 (509) 575-6113 • Fax 575-6105 Glenn J. Valenzuela, Director August 15, 1991 Ms. Sandra L. Benbrook Assistant Director Local Development Assistance Community Trade & Economic Development 906 Columbia Street, SW P. O. Box 48300 Olympia, WA 98504-8300 Dear Ms. Benbrook: Thank you for agreeing to meet with the City of Yakima in reference to our participation in the Washington State Development Loan Fund. We anticipate the meeting will take at least two hours and will involve City Manager Zais, Finance Director Hanson, Attorney McMurray and Ms Luz Gutierrez. In order that we may use our time effectively, I have prepared a number of questions to begin our discussion. (1) Section 4(c) Local Funding Commitment. Are we looking for a specific dollar amount? (2) Section 5(b). If the City contracts out the loan servicing aspect, is it the City's record keeping as to contract compliance that is reviewed or the sub- contractor? (3) Section 12. The City work assist of sub -contractor in this area. It may involve printing, joint presentations, and public hearings. Is this acceptable to CT'hD? (4) There are a number of areas in the agreement where the City wishes to make changes. I anticipate that this would be available at least ten days prior to a meeting. Is that acceptable? (Please note: the Council date to consider this item has been moved to September 16, 1997) (5) There is a need to explain program income to staff as you interpret the CDBG regulations to allow us to be on the same page. Thank you again, and I look forward to meeting your staff. lenn J. Vale ► ' era Director cc: Dic ais, City Manager Ms. Kathy Chance DEPARTMENT OF COMMUNITY AND ECONOMIC DEVELOPMENT 129 North Second Street • Yakima, Washington 98901 (509) 575-6113 • Fax 575-6105 Glenn J. Valenzuela, Director August 15, 1997 Mr. Doug Hunter Housing Assistance Community Trade and Economic Development 906 Columbia Street, SW Olympia, WA 98504-8300 Dear Mr. Hunter: The City of Yakima is considering an application from the Washington Association of Minority Entrepreneurs (WAME) to be certified as a Community Housing Development Association (CHDO). The City's administrative policy now requires all applicants to obtain certification from the state prior to consideration by the City Council. This coordinated approach allows organizations to fully analyze their capacity to take on regional housing programs to serve our community. The City understands that WAME submitted a formal application to the state on July 2, 1997. Your review pointed out the need for additional information which was provided to your office on July 30, 1997. It is our understanding in conversations with Ms. Gutierrez that all material required has been complied with. Our staff has been working with Ms. Gutierrez providing technical assistance for her CHDO application and Senior Mercado/Housing Project. This project is very exciting for the City as it brings together the private sector, public agencies and non -profits to provide much needed services to our growing elderly population. The City staff has scheduled consideration of the WAME request for the Council's regularly scheduled meeting on September 2, 1997. I realize, in discussions with Ms. Gutierrez, that your staffs vacation times have created a backlog in your office. However, I am requesting that you consider expediting WAME's completed application prior to August 29, 1997, in order that we may proceed. This request is made due to time constraints and the tremendous amount of momentum surrounding this project. Your assistance in helping this organizations dream become a reality is much appreciated. Si Glenn J. Directo enzuela cc: Sandra Benbrook, CTED Dick Zais, City Manager Yakima kraal Lynn Buchanan, Mayor Al-AmaricaCtlY 1994 stir' 45,5,00, 0 August 13, 1997 Glenn Valenzuela Director Community & Economic Development 129 N. 2nd St. Yakima, Wa. 98902 Dear Glenn: We have been diligently working with your department on the following issues and we need to know the status ASAP. 1. Mercado & Senior Housing Project: We submitted the CHDO application to CTED since June, 1997. Doug Hunter is the CTED contact and he has been on vacation for 4 weeks; however, we have been in contact with his office and we have complied with all their recommendations to meet criteria. On Tuesday, August 12, Doug Hunter left me a message on our voice mail stating that (1) they are backlogged with many requests, and (2) that the City of Yakima should proceed with the city certification process as well. 1 shared this with Bill Cook yesterday, and he said he would discuss with you. We have also submitted a workplan on how we expect to expend the monies. The workplan has been reviewed by both you and Bill Cooke. We have complied with all CTED and your office requests. When will both issues above CHDO designation and the HOMF money allocation be put before the 'pity Council? YYe had August 19 as the protected date. SYY1111 1t be oil the agenda next week? 2. Development Loan Fund (DLF) Minority and Women -Owned Business Lending Initiative Program Thank you for the update Monday on the DLF RLF monies. In reviewing the draft of CTED and City of Yakima contract, I list the following items that need clarification: 1. Program income can be used for administrative expenses. (p3/30 faxed copies) Question: Does that mean we can use both principal and interest or just interest? 2. Up to 2 % of program income, including principal and interest...may be used for DLF program administration. (Attachment B, Loan Policies, Page 4) Question: Here again is a question of what the 2% means? 3. Amount of money can be adjusted to increase or decrease based on performance. Sec 3.B (p4/30) Ch tip, " :: n thi.- rrienn if nil v_rinev x�en. in _re- rnn h. • ' mt e 'Ube _tt.de available? Washington Association ofMinority Entrepraierm 24 & 3rd Avenue RO ,Box 9492 Yakima, WA 98969-0492 (509) 453-5133 Fox: (509) 453-5165 4. All DLF grant funding.. shall be committed and expended no later than ? . Sec. 3.C(p4/30) Question: Do we need a time line? Based on the demand it will be expended quickly. 5. The city intends to subcontract to a third party " in the future"... (Attachment C, II) Question: In the future? WAME has been requesting the City of Yakima to tap these resources since 1995 so that we could be able to access capital for small businesses in the City limits. Will it be put out as an RFP or can we be a sole source contract? 6. The City of Yakima has also budgeted sufficient funds to support the administrative costs of operating the DLF...within its jurisdiction. (Sec 4.C) (p4/30) Question: What money has been budgeted for administration ? Is this a possible allowable cost for the $100,000 allocated for economic development under the CDBG Consolidated plan? If so, can be amended to include these costs? 7. On 4 different parts of the documents a "City of Yakima Loan Specialist" is mentioned. Question: Are you creating a new position for management of $50,000 loan portfolio? This notation should be deleted from all documents. Lastly, we have provided all documention as requested by the City attorney for a possible contract. as Please call me if you need additional information at 453-5133. Thank you working with us on these very important projects that will benefit all the community. Sincerely,; uz :. . ' utie Execu v: Directr cc: Dick Zais, City Manager Mayor Buchanan BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. For Meeting Of: November 18, 1997 ITEM TITLE: Authorize the City Manager to approve an Agreement between CTED and City of Yakima to commit $50,000 of 1998 CDBG funds for participation in the Minority and Women Owned Business Loan Fund Initiative SUBMITTED BY: Glenn J. Valenzuela, Director of Community & Economic Dev. CONTACTPERSON / TELEPHONE: William Cook, Neighborhood Development Services Manager, 575-6101 SUMMARY EXPLANATION: Background: the Minority and Women -Owned Business Lending Initiative for entitlement jurisdictions s a part of the statewide Development Loan fund (DLF). The initiative seeks to enlist metropolitan cities and counties as the state's partners in delivering financing assistance to businesses certified wit the Washington state Office of Minority and Women's Business Enterprise. Funding: Community, Trade and Economic Development (MED) has provided $1,909,596 from its 1993-95 and 1995-97 Biennium appropriations from the state capital facilities budget to implement this program in entitlement jurisdictions. since the state constitution prohibits lending the state's credit to businesses, participating jurisdictions will receive state funding to support constitutionally -eligible (typically public works or housing) projects in amounts commensurate with loans made to qualifying businesses from other federal funding sources, such as CDBG. Participation Requirements: To participate in the program, each entitlement jurisdiction has to demonstrate capacity to administer the program individually or through a joint venture agreement with another participating jurisdiction (or jurisdictions), in accordance with all applicable state and federal requirements. Continued on next page Resolution X Ordinance_ Contract _ Other (Specify) Funding Source APPROVAL FOR SUBMITTAL: City Manager STAFF RECOMMENDATION: Authorize the City Manager to execute, on behalf of the City of Yakima an Agreement with the Washington State Department of community Trade and Economic Development to facilitate the City's participation in the Washington State Development Loan Fund for loans to certified Minority and Women -Owned Business Enterprises. BOARD RECOMMENDATION: COUNCIL ACTION: Resolution adopted. RESOLUTION NO. R-97-150 Page 2 William Cook Agreement w/CTED for Dev Loan Fund for WMBE businesses Each entitlement jurisdiction committed to funding administrative costs from its own resources and submitted records and reports to CTED on program performance and outcomes. Local Funding Commitment: With approval of this contract with the Washington Department of Community, Trade and Economic Development, the City of Yakima will commit to funding administrative cost from its own resources. The City will also commit $50,000 of 1998 Community Development Block Grant for participation in the Minority and Women Owned Business Loan Fund initiative. As loan repayment are received from borrowers, the City may use a portion of the repayments (Program Income) to pay for reasonable administrative expenses, consistent with federal CDBG regulations. The city must also identify the specific local projects eligible for state funding that the DLF grant will support. The City is required to keep records even if the city uses a subcontractor. C1'LD will only monitor the City's records. HUD will monitor for CDBG requirements and may include the City and its contractor. Although the city may contract out these duties entirely to a contractor (as did Seattle, King County, and Spokane County), the City is ultimately responsible for the program. The City has initiated an RFP process to select a private firm to manage this loan program for the City.