HomeMy WebLinkAboutR-2004-040 Economic Development Loan Fund / Section 108 Fund Increase (Economic Development Initiative; EDLF; EDI)1
RESOLUTION NO. R-2004- 40
A RESOLUTION 1) To amend the Economic Development Loan Fund to increase the
amount of available Section 108 loan funding by $2,945,000; and
2) Authorizing the City Manager to submit a request for funding from the
Section 108 Loan Guarantee Program of the United States Department of
Housing and Urban Development (HUD) to increase the EDLF.
WHEREAS, the City of Yakima has been awarded a $1 million Economic Development
Initiative (EDI) grant from the U.S. Department of Housing and Urban Development (HUD);
and
WHEREAS, the grant award from HUD was conditioned upon submittal of a $4 million
application to the HUD Section 108 loan guarantee program; and
WHEREAS, HUD has approved the conversion of EDI and 108 funds to capitalize the
Yakima Economic Development Loan Fund;
WHEREAS, the City has worked with the National Development Council in developing
the guidelines for the program that provides more flexibility and opportunity for development;
and
WHEREAS, the modified project, the EDLF, has met the eligibility requirements of the
Section 108 loan guarantee program; and
WHEREAS, the City has provided $3,310,000 in EDLF financing to three projects over
the past year; and
WHEREAS, economic development is a priority for the City of Yakima, and the City
intends to approach economic development on an inclusive, comprehensive basis which involves
public, private and community-based efforts to achieve new investment and redevelopment in
the City; and
WHEREAS, portions of the City of Yakima have been designated a federal Renewal
Community by HUD, providing numerous federal tax incentives and priority for federal funding;
and
WHEREAS, under Section 108 of the Housing and Community Development Act of
1974, federal loans are available for the purposed of funding property rehabilitation for economic
development activities that will create new and stable jobs for low and moderate -income
residents; and
WHEREAS, the Yakima Commercial Development Loan Fund will leverage over $3
million in private investment and create 145 new full time equivalent jobs, at least 51 percent of
which shall either be filled or made available to low and moderate income persons as defined in
the Community Development Block Grant regulations; now therefore
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA:
1) The Economic Development Loan Fund is amended to increase the
amount of available funding by up to $2,945,000; and 2) the City
Manager is hereby authorized to execute and submit a request to amend
agreements with the U.S. Department of Housing and Urban Development
for Section 108 Loan Guarantee and Economic Development Initiative
Grant assistance for the EDLF. The City Manager is hereby designated as
the official representative of the City to act in connection with that funding
application and is authorized to take such additional actions as may be
necessary and prudent to complete the application process.
ADOPTED BY THE CITY COUNCIL this 2nd day of March, 2004.
ATTEST: ' aul George, Mayor
City Clerk
BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No. 7 t
For Meeting Of: March 2, 2004
I LM TITLE: Consideration of a resolution to: 1) Amend the Economic Development
Loan Fund (EDLF) to increase, by $2,945,000, the amount of Section 108
loan funds in the EDLF; and 2) authorize the City Manager to execute and
submit a request to amend an agreement between the City and the U.S.
Department of Housing and Urban Development for Section 108 loan and
Economic Development Initiative grant funds to capitalize the increase to
Killiam
theEDLF.
SUBMITTED BY: Cook, Director, Community & Economic Development
CONTACT: Michael Morales, Economic & Community Affairs Specialist, 575-3533
SUMMARY EXPLANATION:
The City of Yakima was awarded a $1 million Economic Development Initiative grant and $4
million Section 108 loan in November 1998. The City's initial EDI/108 project, conversion of
the Great Western Building into a hotel, did not materialize and the City requested an
amendment to establish the EDLF following a model adopted by Portland and Seattle to amend
their EDI/108 awards. Under the EDLF, EDI funds are used to provide a loan loss reserve and
subsidize a floating interest rate over the long term of each Section 108 loan. HUD approved the
City's request in October 2002
Over the past year, the City has closed on three loans totaling $3,310,000, leaving approximately
$690,000 available in the EDLF. In anticipation of more lending activity in 2004, the City has
the authority to access up to $2,945,000 in additional Section 108 loan funds.
CONTINUED ON FOLLOWING PAGE
Resolution X Ordinance _ Contract _Other: Amendment of grant and loan agreement.
Funding Source: U.S. Department of Housing and Urban Development
Approval for Submittal:
City Manager
STAFF RECOMMENDATION: Staff recommends approval of the resolution.
BOARD RECOMMENDATION: Council Economic Development Committee recommends
approval.
Resolution adopted. RESOLUTION NO. R-2004-40
COUNCIL ACTION:
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On January 20, 2004, the City Council issued a 30 -day public comment period for the proposed
EDLF amendment, and a public hearing was held on February 3, 2004. It was noted at the end
of the public hearing that the amendment request would be brought before the Council for the
March 2, 2004 meeting.
Upon approval of these amendments by the Yakima City Council, a formal request will be
submitted to both the Seattle office and the Washington, D.C. headquarters of the US
Department of Housing and Urban Development (HUD) for their review and approval.
The City Council will be asked to provide final approval of the documents at the time of any loan
closing with HUD. The final documents will contain language pertaining to the actual project
number assigned by HUD, the interest rate (3 month LIBOR, plus 20 basis points), repayment
terms and fees associated with the City's loan. The Council will also have final approval of the
notes issued to the ultimate borrowers of Section 108 loan funds at or near the time of closing for
the City's loan from HUD.
Upon approval of the amendment request, HUD will provide the following documents that must
be executed prior to the issuance of any loan from the EDLF:
1. Amended Agreement for Economic Development Initiative grant assistance;
2. Amended Contract for Section 108 Loan Guarantee Assistance from HUD;
3. A note for the Section 108 loan;
4. Amended Custodial Agreement for the funds; and
5. Amended Master Trust Agreement.
Please note: Approval of these amendments does not commit the City of Yakima to funding any
loan application currently pending or in the future. Approval of these amendments does,
however, increase the City's loan pool of Section 108 economic development funds by
$2,945,000 and reduce the review and approval time should Council be inclined to make one or
more economic development loans in the future.
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