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HomeMy WebLinkAbout02-033~~~ ©~'S Up ~~•i~ `.`~~ ..r~rrrrurr~r~~} ~~.+ • ~~' rfiiJ+--~V''f ~i r:~ t '°` ~°~~` '~' BCJARD OF .vUPERVISORs ;?: ~* % ='~~'~ ~ *+" GOUNTY OF BUTTE, STATE OF CALIFORNIA `'~i • G~. ~i~'•~,.COUI:•*~s.•*~~ Iic~solufion No. oz -033 .... A RESOLUTION OF THE BUTTE COUNTY BOARD OF SUPERVISORS ADOPTING AN AMENDED REUSE PLAN GOVERNING PROGRAM INCOME FROM COMMUNITY DEVELOPMENT BLOCK GRANTS WHEREAS, the County of Butte receives program income from various State of California Community Development Block Grants: and WHEREAS, Community Development Block Grant regulations allow program income to be disbursed into revolving loan funds established to utilize program income; and WHERF,AS, the Board of Supervisors approved Resolution No. 99-47 on March 23, 1999, adopting a Reuse Plan Governing Program Income from Community Development Block Grants; and WHEREAS, the Board of Supervisors approved an amended Reuse Plan Governing Program Income from Community Development Block Grants through Resolution No. 01-086 on August 14, 2001; and WHEREAS, an amendment to the adopted Reuse Plan Governing Program Income from Community Development Block Grants is required in order to clarify that management of the housing program income resides in the Development Services Department and that the Department may choose to establish an advisory committee to assist in determining housing grants or loans. NOW, THEREFORE, BE IT RESOLVED that the Board of Supervisors of the County of Butte does hereby adopt the document entitled "Amended Reuse Plan Governing Program Income from Community Development Block Grant-Assisted Activities for the County of Butte" and attached hereto as Attachment A. PASSED AND ADOPTED by the Butte County Board of Supervisors on this 12th day of March 2002 by the following vote: AYES: `~iApF'--~ ~ Peeler. Doan, lioux, Yamaguchi and Glair Josh^_ssE>n NOF,S: Iron e ABSENT: None_ NOT VOTING: Nor: e. !. ,. -CURT JOSIASSEN. Chair ATTEST: LAWRENCE C. ODLE, Interim Chief Administrative Officer and Clerk of the Board of Supervisors >~ ~: ~ ,, ._ ,~~ Deputy, 1 Exhibit ~ emended Re-Use Plan Governing Program Income from Community Development Block Grant (CDBG)- Assisted Activities for the County of Butte Revised 3/12/02 Need for Plan Governing Re-Use of Program Income This Re-Use Plan is intended to satisfy the requirements specified in federal statute and regulation at Section 104 (j) of the Housing and Community Development Aet, referred to as "the Act," as amended in 1992 and 24 CFR 570.489 (c) (3}. These statutory and regulatory sections permit a trait of local government to retain program income for CDBG eligible activities. Under federal guidelines adopted by the State of California's CDBG program, local governments are permitted to retain program income as long as the local government has received advanced approval from the state of its local plan governing program income. This plan has been developed to meet these requirements. Any Re-Use Plan amendments and/or revisions will be reviewed and approved by the Re- Use Committee after consultation with State staff, and adopted by the Butte County Board of Supervisors. The County of Butte shall adapt the Re-Use plan, including amendments and significant modifications to the local Plan after the citizens have had an opportunity to comment on the Plan under the County sCDBG -required Citizen Participation Plan. II. Program Income Defined Program income is defined in federal regulations at 24 CFR 57©.489 (e), which specify that program income is the gross income received by the jurisdiction that has been directly generated from the use of CDBG funds. (For those program income-generating activities that are only partially funded with CDBG funds, such income is prorated to reflect the actual percentage of CDBG participation.) If the total amount of income generated from the use of CDBG funds (and retained by the County) during a single program year (July 1 -June 3l~) is less than $25,000, then these funds shall not be deemed to be program income and shall not be subject to these policies and procedures. Costs incurred that are incidental to the generation of Program Income may be deducted from the gross income to determine the Program Income amount. Examples of program income include: payments of principal and interest on housing rehabilitation or business loans made using CDBG funds; interest earned on program income pending its disposition, and interest earned on funds that have been placed in a revolving loan fund account; net proceeds from the disposition by sale or long-term lease of real property purchased or improved with CDBG funds; income (net of costs that are incidental to the generation of the income) from the use or rental of real property that has been acquired, constructed or improved with CDBG funds that is owned (in whole or in part) by the participating jurisdiction or subrecipient. IIL CDBG Re-Use Committee Membership and Role A. The Committee will be made up of one (1) representative from the Department of Development Services. and one {I) from the Chief Administrative Office. This committee may identify ex-officio members for participation in review of specific projects, requests, and applications as would best serve the stated interest in the CDBG Re-Use Program and Housing and Community Development (HCD) regulations. Far the purposes of this plan, the Department of Development Services shall be the lead agency for all housing and general activities and the County Administrative Office shall be the lead agency for all economic development activities. The CDBG Re-Use Committee will review applications and documents submitted by the respective lead agencies in request of available funds from the miscellaneous revenue as defined by HCD and/or program income as defined in Section II of this plan. Loans made under Section V items A through F, and Section VI shall be exempt from review by the Re-Use Committee. The committee will ensure all funds are used to meet and further national objectives as outlined in Section I of this plan. This committee will make recommendations as to the amendment of an open CDBG grant(s) far the purpose of using program income from a revolving loan fund to fund a current activity or another CDBG eligible activity. The committee will develop guidelines, documents and utilize available expertise as needed to assure compliance with the County Re-Use Plan, government codes and HCD regulations. B. All Committee actions for projects equal to or greater than $~ 1,000 will be recommended for approval to the Board of Supervisors with projects less than $51,000 being approved by the Re-Use Committee. The Department of Development Services will execute all necessary documentation for approved housing or general projects and the County Administrative office will execute all necessary documentation for approved economic development-related projects. IV. Distribution of Reuse of Program Income The County's program income will be distributed as follows: two (2) revolving loan funds (RLF"s) are established to utilize program income. Program income will be allocated to each RLF as follows: A. All program income generated through housing grants funded from the General and Native American Allocations will be deposited into the housing Related RLF; B. All program income generated through grants funded from the Economic Development Allocation will be deposited into the Business Expansion and Retention RLF; and C. The County through the Re-Use Committee may reallocate up to $75,000 from either RLF in any given fiscal year. The Butte County Board of Supervisors may reallocate some or all of the contributions from one RLF to the other, identified in 2 this plan, which exceeds $7.000 in any given fiscal year subject to any limitations contained in these guidelines. For the purposes of this plan, unobliQated funds exceeding 2~% of the program capital far either RLF for 2 consecutive reporting quarters, as noted in the Program Income Sources and Uses report found in Exhibit A, may be subject to recapture and reuse by the Committee on a case-by-case basis. Unliquidated obligations shall be defined as orders, commitments, contracts, grants, subgrants, goods or services awarded or received that will require a payment during the current or future period by the applicable RLF. V. Housing Related RLF This fund will be used for the purpose of making loans to rehabilitate residential units occupied by households. which have an annual income, of 80 percent (80%), or less of the County's median income. At least 51 percent (51°l0) of the funds expended in a program year for activities funded under this RLF shall be used on revolving activities. No more than fifteen percent (15%) of the program income expended during the year shall be expended for housing rehabilitation grants. No more than sixteen percent (16%} of the funds expended from this RLF shall be used for activity delivery costs. No more than eighteen percent { 18%) of the amount expended annually may be used for general administrative costs related to this RLF activity. Total expended for non-revolving activities (grants, activity delivery costs, and general administration) shall not exceed forty-nine percent (-19%) of the total fiords expended during the program year (July I - June 30). The County reserves the right to adjust these limitations consistent with existing State policy or specific exemptions approved by the State, The review and funding of requests for CDBG loan or grant assistance under the RLF shall be conducted under the Housing Rehabilitation Program Guidelines that may be issued from time-to-time by the State. All assistance provided to activities under this RLF shall be made for activities that are located within the County's jurisdiction. Applicants will complete the CDBG Re-Use Housing Related loan application to apply for a CDBG loan or grant. The loan application will be submitted to the Development Services Department for review. lipan approval, the loan or grant will be awarded subject to the limitations found in Section III.B. Development Services may establish a committee or other reviewing body to assist in determining the appropriate course of action for any or all applications. For the purposes of this section, Development Services shall determine the appropriate use and level of support necessary to alleviate identified rehabilitation problems. The Butte County Housing Related RLF will finance the following types of activities and related costs or other means far the improvement of residential dwelling units occupied by the lower-income households, as defined by the current Grant Management Manual, Eligibility and Income Limits. A. Emergency home repair including but not limited to roofs, foundatians, and siding: B, Energy efficiency improvements in residential structures; G Residential handicapped access improvements; D. Payments to cover homeowner's hazard insurance premiums, encumbrances of existing liens, in conjunction with housing rehabilitation, or to secure the Count~~'s previous investment of rehabilitation services with CDBG funds. If such payments are made, the County or it's designee may, in it's sole discretion, add such payments to the principal amount that the OwnerBorrower is obligated to pay under the program; E. Costs related to the inspection, testing, and abatement of lead base paint and asbestos removal; and F. Provide down payment assistance for eligible target income renters to purchase their dwellings. Down payment assistance may be in the form of low interest loans for up to 10% of the purchase price of the home. Eligibility a~ Itilust be a first time home buyer with no home ownership in the last three years; b. Subject home or applicant must be in the unincorporated area of Butte County; c. Must be a Butte resident for the past two years; and Purchase must meet the most current CDBG income guidelines. IVlust have occupied the subject residence for a minimum of 6 months as a renter. Term a. IV~1ost loans shall be made based on the County's current rehabilitation loan standards; and h. Loans may be fully deferred in order to provide needed gap financing. If the activities funded under the RLF are for the same activities as those funded under an open State CDBG grant agreement, then the funds available in this RLF shall be expended prior to drawing down funds from the State CDBG program. VI. Business Expansion and Retention RLF This fund will be used to provide `'gap" financing for businesses that can document the need for CDBG assistance and that will create or retain qualifying permanent jobs that will be principally tilled by members of households which have an annual income that is eighty percent (80°ro) or less of the County's median household income, adjusted for size. At lease fifty-one (51%) of the funds expended in a program year for activities funded under this RLF shall be used on revolving activities (i.e., loans). No more that twenty percent (20%) of the program income funds received during the program year shall be 4 expended for grants for public infrastructure improvements that are needed to aceomtnodate a specific business expansion or retention projects. No more than 11% of the total fiords expended for business activities shall be used for activity delivery costs. Up to eighteen percent (18°/0) of the amount expended annually may be used for Qeneral administrative costs related to this RLF activity. Total expended for non-revolving activities (grants, activity delivery costs, and general administration) shall not exceed forty-nine percent (49%) of the total funds expended during the program year (July 1 - June 30). Any loan applications will be submitted to the Tri-County Economic Development Corporation for approval subject to the general loan criteria found in Exhibit B. Anv funding application for non-revolving activities will be submitted to the County Administrative Office {CAO}. The CAO will review the application for eligibility and completeness with a recommendation for funding forwarded to the Re-Use Committee. The CAO may use the Tri-County EDC on a case-by-case basis to perform underwriting functions under applicable federal guidelines specified below. The County reserves the right to adjust these limitations consistent with existing State policy. The County reserves the right to contract out all or part of the Business Expansion and Retention RLF as needed necessary to ensure compliance and management of this RLF. If the activities funded under the RLF are for the same activities as those funded under an open State CDBG grant agreement, then the funds available in the RLF shall be expended prior to drawing down fiords from the State CDBG program. The review and funding of requests for CDBG loan or grant assistance under this RLF shall be conducted under the federal underwriting guidelines specified at 24 CFR 570.48? (e) which by adoption of this Re-Use Plan, are incorporated by reference to the RLF's project review procedures. Any activity requesting funding under this RLF shall be deemed to be eligible under Section 570.48? and Section 105 (a) of the Act and shall be determined to provide sufficient public benefits as specified under Section 570.482 (f). any CDBG assistance for infrastructure shall meet the requirements of Section 570.4$3 (b) (4) (F), which requires ongoing job tracking for all businesses that initially, benefit from an infrastructure project as well as any subsequent businesses benefiting from these improvements. All assistance provided to activities under this RLF shall be made for activities that are located within the County's jurisdiction unless otherwise approved by proper authority. A. General Program income received by the RLF's shall be substantially expended at the end of the Program Year, which is defined as July 1 to June 30. The County shall comply will all State CDBG reporting requirements, including submittal of an annual Grantee Performance Report and Environmental Review for each RLF and submittal of the required Annual Program Income Report. The County shall ensure that the use of program income under the Plan complies with all CDBG program requirements. The County shall utilize the latest available State CDBG program Grant Management Manual to ensure ongoing compliance with CDBG requirements. 6 EXHIBIT A PROGRAM INCOME SOURCES AND USES REPORT GRANT NUMBER REVOLVING LOAN FUND ACTIVITY REPORT GranCee Name Date of Report Report period: to (Quarterly! A Borrattt 0 6eE1APlij I,ow Reuivablt iblatce C Ptatrat Itcrote k;iaAiat kl~ace 0 Principal Rectited E Iattrtbt Rtceired oa 1oanb F Intettat RecciveJ of Pro6ttt ibcotc G Froarat Iacote Oi36atttebt t i. B Pro;ru incote Etd 1lal.ACe C+O+E~f-G=A i Eid:Ag ~O2A iieairable Hlttr. 7-0=1 SUHCON?RACTOR CERTIFICATION - FOR EDBG REVOLVING LOAN ACTIVITIES AND ACCURACY OF REPORT. If program income funds Activity, Subcontractor was made concerning the certification indicates is true in all respects for_ an appropriate EDBG have been expended for any Economic Development hereby certifies that an "appropriate" determination need far such expenditures of EDBG funds.. This that such a determination was made, that this zeport and that all program income expenditures were eligible activity. xl. LOAN DOCUMENTS REQUIRED. .~uthori2ed Signature Title Date Butte County Community Development Block Grant Program Business Expansion and Retention RLF Exhibit "B" (Rev. 3-5/08!01) Loan Amounts Minimum - $10,000 Maximum - $100,000 Loans may be made far under $10,000 if the borrower has been in business for at least 3 years, has been profitable for the previous 2 years, and has a superior credit record. Collateral requirements, for loans under $10,000 may be waived if these criteria are fulfilled. Repayment Terms Working Capital - up to ~ years Equipment - up to ] 0 years Other -term based on the useful life of the asset financed A maximum of six (6} months' interest only payments may be allowed to either improve repayment ability or initial multiple disbursements at project inception. Loans may be reamortized and differ from this section if it is in the best interest of the RLF to establish alternative repayment terms. Rates, Fees, and Charges Interest rate =prime +;~ ° maximum, with a minimum of ~%. Fees and charges = $150 application fee upon acceptance 2% loan processing fee Actual closing casts $6.00 monthly service fee added to loan payment 2% loan modification fee for any changes after loan closing Equity Requirements ZO% of project costs may be borrower cash. Equity for working capital loans may be satisfied by an appropriate amount of net working capital based on a current borrower financial statement. Equiry requirements will be based on the portfolio as a whole, allowing for flexibility on aproject-by-project basis. Exhibit "B" Page Two Butte County Program Income Reuse Plan (Rev.3-5108/O1) Matching Requirement For every one dollar ($1 } of RLF financing, there shall be one dollar ($1 } of private capital. Private capital is either: { 1) Owner cash; (2) Bank financing (3) Private, third party lending or investment; or, (4) Existing net working capital invested in the business. This matching requirement will be based on the portfolio as a whole, allowing for flexibility on aproject-by-project basis. Debt to iYet Worth Ratio This ratio should not exceed 4:1 unless underwriting provides adequate justification or additional security is provided. Debt is defined as the total liabilities of the business. Security/Collateral Security may be required as a secondary sowce of repayment. The extent that collateral is required will vary from loan to loan depending on risk. The Loan Administration Board will determine appropriate levels of collateral. Public Benefit Loans provided by the RLF shall meet one of the National Objectives as stated in 24 CFR, Part 570.208, and meet the evaluation guidelines in 24 CFR 570.209. Loan Aaaroval Board Loan in excess of $25,000 submitted for consideration will be approved by the existing Tri-County Economic Development Corporation Loan Administration Board (LAB), as specified in Section VII of this Reuse Plan. Loans at or below $25,000 will be approved by the Tri-County EDC staff. Loans under $25,000 shall be submitted to the County on the form attached as Exhibit "C". Recognizing that the Tri-County EDC may from, time to time, render services to borrowers which are highly personal and confidential in natwe, County, in its dealings with the Tri-County EDC, will at all times maintain confidentiality and will not require a public record to be made or violate the confidentiality requirements of the Tri-County EDC as allowed by law. Exhibit "B" Page 3 Butte County Program Income Reuse Plan (Rev. 3-5/08101) Eligible Projects and Activities (1) acquisition ofowner-occupied land and facilities; (2) acquisition of machinery, equipment, furniture, and fixtures; (.i) working capital; (4) lines of credit; (5) loan guarantees; and, (6} loan participations. Eligible Project Costs Eligible costs include the following: (1) cost of purchasing land and buildings; (2) machinery and equipment costs including delivery, installation, engineering, architectural, legal, insurance and related costs associated with the acquisition and installation of machinery and equipment; (3) other costs such as sales and use tax, loan fees, and interest on interim construction financing; (~3) refinancing existing debt when it can be demonstrated that the refinancing will improve repayment capacity, expand job creation or retention, ar improve the sustainability of the borrower. Refinancing may not be used for the sale purpose of reducing the risk of other lenders or investors; and, (5) working capital. County of Butte Community Development Block Grant Loan Review/Authorization to Disburse Funds Client: Date of Application: Approval: Credit Memo Attached: Yes No If no, explain: Loan request amount: $ CDBG RLF balance: $ Remaining balance: $ Tri-County Economic Development Corporation Certification The analysis supporting this request has been conducted by the Tri-County Economic Development Corporation which serves as staff to the Loan Advisory Board. The Loan Advisory Board or staff has analyzed this information and other business credit information and is recommending approval of this loan. t hereby certify the above information to be correct to the best of my knowledge ititarc Nemanic, Executive Director, Tri-County EDC. Based on the above described information, this small business loan is an eligible activity under the County's Business Expansion and Retention Revolving Loan Fund. The amount of CDBG funds to be loaned to the borrower, at the proposed terms, has been determined to be appropriate to achieve the project's expected public benefit. Reviewed bv: Starlyn Brown, Deputy, Assistant Chief Administrative Officer, Butte County RLF #/Type: Loan Date: Business Type: Rev. 2-2/10194