HomeMy WebLinkAbout06/01/2010 10 CDBG Economic Development Grant Agreement with the National Development Council •
0 BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No.: /0
For Meeting of: June 1, 2010
ITEM TITLE: Consideration of a Resolution authorizing the City Manager to execute a CDBG .
Economic Development Grant Agreement with the National Development Council
SUBMITTED BY: Michael A. Morales, Director CED
CONTACT PERSON /TELEPHONE: Michael Morales, 575 -3533
SUMMARY EXPLANATION:
The Department of Community & Economic Development and the National Development Council
propose to establish a community investment fund for small business financing known as the
Grow America Fund - Yakima (Grow Yakima Fund). The project would be funded by a $200,000
Community Development Block Grant, which is available within the 2010 budget.
The Grow America Fund is recognized and certified by the U.S. Treasury Department as a
40 Community Development Financial Institution (CDFI) and Community Development Entity
(CDE). The GAF is also a U.S. Small Business Administration ( "SBA ") licensed and regulated
Small Business Lending Company ( "SBLC ") entitled to make SBA guaranteed loans to eligible
small businesses. The GAF, is the nation's only SBLC devoted solely to economic and
community development financing.
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Resolution X Ordinance Contract X Other Specify
Funding Source: CDBG Economic Development Funds.
APPROVAL FOR SUBMITTAL: —� �`- r
City Manager
STAFF RECOMMENDATION: Approve the contract by adopting the resolution.
BOARD /COMMISSION RECOMMENDATION: Neighborhood Development Committee and
Economic Development Committee recommend approval.
COUNCIL ACTION:
411
As described in the contract, the project would operate as follows:
1. Grow Yakima will be capitalized with $200,000 of CDBG funds provided by the
City. These funds will be used solely for loans within the federal Renewal
Community. This investment will leverage SBA guarantee funds at a minimum
ratio of 4:1.
2. GAF and the City will jointly create an Economic Development Financing system
that recognizes the purpose of bringing the Grow Yakima Fund to the community
is to provide sound financing to healthy, growing small businesses, which is
critical to the creation of permanent jobs. As such, the CED staff will continue to
work with the program to provide the following:
a) Participate in developing a marketing program and establishing periodic
goals;
b) Assist in establishing a database of potential referral sources for the Grow
Yakima program;
c) Assist in preparation of marketing materials;
d) Disseminate the application package provided by GAF to potential borrowers;
e) Gather the application information and perform a review for package
completeness and preliminary qualification of potential borrowers;
f) Assist GAF loan officer in scheduling meetings and site visits with potential
borrowers' places of business; 0
g) Provide support to the GAF closing and servicing teams when needed and
requested.
3. GAF will use its SBLC license to make SBA guaranteed loans sponsored by the
City. Staff provided by GAF will perform the following services:
a) Assist in marketing the Grow Yakima program;
b) Assist in originating and packaging loans;
c) Underwrite all loans;
d) Obtain GAF and SBA approvals;
e) Close, service, and collect loans;
f) Perform appropriate periodic reviews of each loan;
g) Provide reporting as required by the Client in a form acceptable to Client. (The
parties agree that acceptable form and format for this documentation is the
complete GAF quarterly portfolio status report to the Client and the loan report
for each Grow Yakima borrower including all relevant information as provided
by the borrower).
4. GAF has a fiduciary responsibility to underwrite, approve, close, service all
program loans, and otherwise operate Grow Yakima Fund in a prudent and
businesslike fashion. In addition, the SBA requires all SBLC's to follow SBA
regulations and to use SBA documents and procedures in making and servicing
loans. These fiduciary responsibilities and SBA regulations cannot be delegated
or waived and they are hereby incorporated by reference into this Agreement.
•
411
410 RESOLUTION NO. R -2010-
A RESOLUTION authorizing the City Manager to execute an Economic Development Grant
Agreement with the National Development Council (NDC) in the amount of
Two- Hundred Thousand Dollars ($200,000) for the purpose of establishing
the Grow America - Yakima Fund.
WHEREAS, the City has received and is responsible for the administration of annual
Entitlement Grants of Community Development Block Grant ( "CDBG ") funds made available
through the United States Department of Housing and Urban Development (HUD) and
authorized by Title I of the Housing and Community Development Act of 1974, as amended; and
WHEREAS, federal regulations governing the use of CDBG funds for special economic
development projects allow the City to use such funds as an economic incentive to provide
loans to assist private, for - profit businesses with projects that provide an appropriate level of
public benefit; and
WHEREAS, the City has determined that the CDBG assistance described below is
• necessary and appropriate to ensure that the National Development Council (NDC) continues
its economic development activities in the City of Yakima's Renewal Community Area; and
WHEREAS, the City has determined that provision of CDBG assistance would provide
substantial appropriate public benefits to the City and the Renewal Community, particularly by .
retaining jobs and supporting economic recovery; and
WHEREAS, the City of Yakima has worked closely with NDC in efforts to improve
economic development in the City of Yakima, including Section 108 loans, Economic
Development Initiative Grant; New Markets Tax Credits and other state and federal initiatives;
and
WHEREAS, the City desires to expand economic opportunity for residents of Yakima so
that these residents may become economically self- sufficient; and
WHEREAS, the City desires to encourage sustainable community and economic
development activities so that various neighborhoods in its geography may revitalize
themselves; and
III
WHEREAS, accordingly, the City wants to encourage NDC to continue such operations
in the City of Yakima's Renewal Community Area as a special economic development project
and is willing to use CDBG funds to assist NDC through a grant of not more than $200,000 to
establish the Grow America - Yakima (GAF) loan fund; and
WHEREAS, GAF is recognized and certified by the U.S. Treasury Department as a
Community Development Financial Institution (CDFI) and Community Development Entity
(CDE) as a domestic corporation having a primary mission of serving or providing investment
capital for low income communities or low income persons; and
WHEREAS, GAF, a U.S. Small Business Administration (SBA) licensed and regulated
Small Business Lending Company (SBLC) entitled to make SBA guaranteed loans to eligible
small businesses, is the nation's only SBLC devoted solely to economic and community
development financing; and
WHEREAS, NDC, a national 501(c)(3) not - for - profit corporation engaged in economic
and community development, GAF its wholly owned subsidiary, and the City, intend to enter into
an Agreement to create a self- sustaining community development investment fund for small
business financing in Yakima.
WHEREAS, the City Council deems it to be in the best interest of the City of Yakima to
enter into the attached Grow America Fund Yakima Agreement, with NDC, now, therefore,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA:
The City Manager is authorized to execute the attached and incorporated "Grow
America - Yakima Fund Agreement" with the National Development Council for the purpose of
providing financing to qualified economic development projects in the City of Yakima Renewal
Community. The final form of the Agreement shall be approved by the City Attorney or his
designee.
ADOPTED BY THE CITY COUNCIL this 1st day of June, 2010.
ATTEST: Micah Cawley, Mayor
City Clerk
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