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______________________________________________________________________________ <br />City of Arden Hills <br />Economic Development Authority Meeting April 28, 2014 <br /> <br />Page 3 of 4 <br />- Repair or replacement of windows, doors, cornices, masonry, awnings, and <br />decorative details <br />- Sign removal, repair, or replacement <br /> <br /> Fixed asset equipment <br />- Production equipment <br /> <br /> <br />Financial Criteria <br />Revolving fund loans should act as gap financing for loans being made by a private lender. For <br />each bank participating in the program, a Lender Agreement would be signed with the City. This <br />agreement would outline the general requirements of the RLF program and what the expectations <br />are of the bank in partnering with the City. A Participation Agreement would also be created for <br />individual loans, providing specific details and responsibilities for each deal. The lender would <br />prepare the note and collateral documents and the City would issue a check from the RLF to <br />purchase a participation in the note. The lender would be responsible for disbursing the loan <br />funds and collecting payments for both the City and private portions of the loan. Monthly <br />payments would then be submitted to the City. <br /> <br />The bank would also be responsible for doing the necessary underwriting for the entire loan <br />package. Since banks are risk-averse, if an applicant meets a bank’s underwriting requirements <br />the City can be confident about the risk level associated with the loan. The City should primarily <br />rely on the financial criteria used by the participating bank to screen loan applications. <br />Additional recommendations included: <br /> <br /> Require that a minimum of 50 percent of the project be privately financed. <br /> Many projects would likely not receive a high score using the City’s Grading and Report <br />Card for public financing proposals, as this tool is largely focused on redevelopment <br />projects. Consider exempting projects receiving financing through the RLF from being <br />reviewed using this evaluation tool. <br /> The job creation requirements in the existing RLF Guidelines should be revised <br />considering that certain projects such as façade improvements and equipment acquisition <br />may not meet this required criteria. <br /> Be willing to take on some risk recognizing that the City will likely see a direct benefit <br />from a completed project regardless of whether the loan is repaid in full (for example, <br />improvements to landscaping or public frontage façades). <br /> <br /> <br />Guidelines and Approval Process <br />The application process for obtaining revolving loan funds should be streamlined and <br />transparent. The City should set a goal of completing the necessary evaluation and deciding on a <br />loan request within 30 to 45 days of receiving a completed application. A long approval process <br />will make the program less attractive to businesses interested in participating. While the City <br />should request financial records from the applicant, if possible these documents should not be <br />included in the public records for meetings.