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CCR2009105COMMON COUNCIL – CITY OF MUSKEGO RESOLUTION #105-2009 RESOLUTION TO ADOPT THE JANESVILLE ROAD GRANT & LOAN PROGRAMS FOR THE CITY OF MUSKEGO, WISCONSIN WHEREAS, The Committee of The Whole earmarked $600,000 for the TIF residual fund to go towards new grant and loan programs in the City of Muskego on November 11, 2008; and WHEREAS, The Community Development Authority has recommended approval of the Janesville Road Grant & Loan Programs to help fostering the development and redevelopment of the properties affected by the upcoming Janesville Road reconstruction; and WHEREAS, Upon the recommendation of the Community Development Authority, it is proposed to adopt the programs as attached. NOW, THEREFORE, BE IT RESOLVED That the Common Council of the City of Muskego does hereby adopt the Janesville Road Grant & Loan Programs of Muskego, Wisconsin as attached. BE IT FURTHER RESOLVED That unsubstantial changes to the operations of the programs may be completed at the discretion of the Mayor. DATED THIS 14TH DAY OF JULY , 2009. SPONSORED BY: Mayor John R. Johnson This is to certify that this is a true and accurate copy of Resolution #105-2009 which was adopted by the Common Council of the City of Muskego. ____________________________ Clerk-Treasurer Janesville Road Commercial Building & Site Grant Program Introduction The Janesville Road Commercial Building & Site Grant Program has been established to stimulate commercial exterior building and site improvements within the context of the downtown as administered by the Community Development Authority (CDA). The Façade Grant Program is relatively the same as the Façade Loan Program but is focused towards smaller scaled projects (Ex. new signage, parking lot updates, general structure updates, landscaping, etc.). Businesses that meet the eligibility requirements outlined below can receive matching grants up to $3,000. Purpose The purpose of the Janesville Road Commercial Building & Site Grant Program is to provide matching grants to existing commercial buildings and sites for preservation and restoration. Further, the program is instituted to encourage urban design excellence, integrate urban design and preservation of Muskego’s heritage into the process of downtown redevelopment, and enhance the character of the downtown area. Grant resources should produce visible changes to commercial buildings and commercial sites. Since funding sources are limited, priority will be given to projects demonstrating the most substantial impact on building and neighborhood aesthetics. Target Area The Façade Grant Program is available to all Downtown Muskego businesses within Redevelopment District #2 (please refer to attached map). The Redevelopment District #2 area has been found and declared a blighted area and specific properties within the RD #2 Plan boundary are specifically discussed as such in the Plan. Eligibility A. Buildings & Sites Funds must be used for rehabilitation of existing commercial buildings or for site modernizing within the designated target area. All properties must be conforming uses or legal nonconforming uses under the City’s zoning ordinance. Properties will not be eligible if any special assessments, real estate taxes or personal property taxes are delinquent. Only one grant per property will be allowed each calendar year. Buildings with multiple tenants must be remodeled in a unified manner. B. Eligible Applicants Owners, tenants, or owner/tenant joint ventures may submit applications under this program. Tenants must submit written approval of the property owner, evidence of their leasehold interest and must comply with requirements and standards as deemed necessary by the CDA. Applicants shall not be disqualified based on age, race, religion, color, handicap, sex, physical condition, development disability as defined in s.51.01(5), sexual orientation, or national origin. C. Ineligible Applicants No member of the CDA, the Common Council, or any other official, employee, or agent of the City who exercises decision-making functions or responsibilities in connection with the implementation of the program is eligible for financial assistance under this program. In addition, no loans shall be made which are in conflict with Section 946.13 of the Wisconsin Statutes (Private Interest in Public Contract Prohibited). Loans shall not be available for the following businesses: 2 · Speculative investment companies; · Real estate investment companies; · Lending institutions; · Gambling operations; · Non-public recreation facilities; or · Businesses not serving the interests of the City. D. Eligible Activities Eligible activities shall include but are not limited to the following: Buildings A. Design improvements made to front, rear or side building elevations, (priority will be given to front facades) including the following: · Modernizing of overall building materials and structure · Addition of new building materials · Adaptation of new and innovative architectural elements to a structure · Re-Painting B. Design fees on completed projects. Sites A. New road signs (Must be “monument” signage only to qualify) B. Updated and/or additional landscaping and lighting C. Screening devices for outdoor storage or refuse containers D. Parking Lot redesign or updates E. Ineligible Activities The following are not eligible for inclusion in this program: A. Roof repairs. B. Construction of new buildings. C. Structural additions to existing buildings. D. Purchase of property and/or buildings. E. Equipment. F. Interior fixtures & furnishings. G. Inventory or operating capital. Program Funding The program allows a matching grant. All grant funds are administered by the CDA and allocated by the Muskego Common Council. The grant runs on first come, first serve basis. Buildings/Sites shall be eligible for grant funding only once per calendar year. Façade Grant funds shall be allocated to specific projects based on the following formula: 50% matching grant up to $3,000 Funds are available up to the amount budgeted by the Common Council on a yearly basis and this program does not guarantee that monies will be in the program at all times. NOTE: While the grant amount stated above has a maximum of $3,000 allowed, actual amounts approved are subject to change by the approval of the CDA and Common Council on a case-by-case basis. Examples of allowing more than the stated maximum amount may include projects that demonstrate a benefit to the community and the surrounding area, projects that may set the tone for an area, projects that may be a catalyst for other redevelopments/developments in the area, and/or projects providing a considerable percentage match above the needed minimum of 50%. 3 Applicants seeking more than the maximum funding allowed must state in their applications which of the above criteria is fulfilled and their reasoning. Additional justification requesting funds surpassing the maximum may also be submitted. Providing justification does not guarantee approval. Design Standards All applicants shall utilize Muskego Downtown Design Guidelines, Muskego General Design Guidelines, and Redevelopment District #2 Plan concepts as a guide for designing improvements to buildings and sites. The documents can be found at the City of Muskego website or copies can be attained in the Muskego Community Development Department. Application Process A. Applicant obtains application and design standards from the Muskego Community Development Department to develop ideas for improvements. B. Applicant may meet with Community Development Department staff to go over improvement ideas. C. Based upon a concept, the applicant obtains preliminary cost estimates from a contractor selected by the applicant. D. Applicant completes an application, which includes design plans, cost estimates and construction schedules. The completed application is submitted to the Muskego Community Development Department for review and then forwarded to the CDA, at their next available meeting, for determination. The CDA meets on a monthly basis. E. If the application is recommended for approval by the CDA, the Common Council must then act upon the grant submittal. A resolution of the Common Council, outlining the commitments required by the applicant before issuance of any grants, must be approved at the next available Common Council meeting. If the application is not approved by the CDA, the board will explain the reasons for rejection, and what, if any, steps can be taken to gain approval. F. Applications, depending on the amount of changes made to an existing commercial buildings or sites, may need to be reviewed by other authorities before final approval including the Planning Commission. Substantial change determinations are solely made by the City’s Community Development Director. G. Projects that commence prior to approval by the CDA do so at their own risk but may be eligible for a grant if the proposal follows the Downtown Design Guidelines, General Design Guidelines, Redevelopment District #2 Plan concepts, and is for an eligible activity, as determined by the CDA. In such cases, the CDA will review the application at the next regular meeting following the filing of the application and make the necessary determinations. In no case shall a grant be approved for a project that was completed or started more than six months after the date of application submittal. Preference will be given to those grant proposals that haven’t commenced construction before grant approvals. Post Application Procedure The Common Council resolution will outline the responsibilities of the applicant, however, the basic procedures will apply: A. Projects must be completed within 12 months of Common Council approval or the grant shall become void. B. Changes in the approved work, that affect the monetary value of the grant issued, must be approved by the CDA and possibly other City boards (The City’s Planning Commission if change is deemed substantial to what was originally approved). C. Approved changes in work verifications will be attached to the original applications dated and signed by the City’s Community Development Department. D. The applicant and Community Development Department staff will review proof of payment and completed work before the grant payment will be made to the applicant. E. Deviations from an approved plan may disqualify the applicant from this program. Janesville Road Commercial Building & Site Loan Program Introduction In 2009, the City Of Muskego established the Janesville Road Commercial Building and Site Loan Program as administered by the Community Development Authority (CDA). These funds are intended to be used to improve properties and enhance the tax base within Redevelopment District (RD) No. 2. Businesses and property owners within the RD No. 2 are eligible for low-interest loans to finance business expansion or start-up projects. Loan funds that are repaid to the City will be used to assist other businesses within the RD No. 2. The purpose of this plan is to set forth the criteria for the financing that is available from the Program. The Façade Loan Program is relatively the same as the Façade Grant Program but is focused towards larger scaled projects. Purpose of the Economic Development Program The Program has been established to increase the tax base of RD No. 2 through the retention and expansion of existing, and the development of new, small businesses. Small- and medium-sized businesses often lack the necessary capital to develop or expand their operations, and, as such, this lack of capital has a significant impact on the local tax base. Further, the program is instituted to encourage urban design excellence, integrate urban design and preservation of Muskego’s heritage into the process of downtown redevelopment, and enhance the character of the downtown area. Loan resources should produce visible changes to commercial buildings and commercial sites. Since funding sources are limited, priority will be given to projects demonstrating the most substantial impact on building and neighborhood aesthetics. The Program includes funding mechanisms and interest rates that are designed to encourage business development, while providing for the recapitalization and growth of the Program. Target Area The loan program is available to all Downtown Muskego businesses within Redevelopment District #2 (please refer to attached map). The Redevelopment District #2 area has been found and declared a blighted area and specific properties within the RD #2 Plan boundary are specifically discussed as blighted properties per Common Council Resolution. Eligible Applicants A. Buildings & Sites Loans must be used for rehabilitation of existing commercial buildings or for site modernizing within the designated target area. All properties must be conforming uses or legal nonconforming uses under the City’s zoning ordinance. Properties will not be eligible if any special assessments, real estate taxes or personal property taxes are delinquent. Buildings with multiple tenants must be remodeled in a unified manner. B. Eligible Applicants Owners, tenants, or owner/tenant joint ventures may submit applications under this program. Tenants must submit written approval of the property owner, evidence of their leasehold interest and must comply with requirements and standards as deemed necessary by the City. Applicants shall not be disqualified based on age, race, religion, color, handicap, sex, physical condition, development disability as defined in s.51.01(5), sexual orientation, or national origin. C. Ineligible Applicants No member of the CDA, the Common Council, or any other official, employee, or agent of the City who exercises decision-making functions or responsibilities in connection with the implementation of the program is eligible for financial assistance under this program. In addition, no loans shall be made which are in conflict with Section 946.13 of the Wisconsin Statutes (Private Interest in Public Contract Prohibited). Loans shall not be available for the following businesses: · Speculative investment companies; · Real estate investment companies; · Lending institutions; · Gambling operations; · Non-public recreation facilities; or · Businesses not serving the interests of the City. Administration of the Program The monies in the Program shall be the property of the City of Muskego. Funding decisions, relative to Program applications, shall be made by the Common Council with recommendations from the CDA. The City Department of Community Development shall be responsible for day-to-day administration of the Program, with staff assistance provided by the Southeastern Wisconsin Regional Planning Commission (SEWRPC). Application Procedures Businesses that are interested in applying for Program financing should contact the Director of Community Development at W182 S8200 Racine Avenue, PO Box 749, Muskego, Wisconsin 53150-0749. A copy of the Program application and a list of the supporting documentation needed for each application are included as an attachment to this plan. Program Standards and Policies The following standards and policies will be utilized in the Program: 1. Funding Limits: The maximum amount of loans available for each applicant to the Program is $25,000. NOTE: While the loan amount stated above has a maximum of $25,000 allowed, actual amounts approved are subject to change by the approval of the CDA and Common Council on a case-by-case basis. Examples of allowing more than the stated maximum amount may include projects that demonstrate a benefit to the community and the surrounding area, those projects that are of a grander scale, projects that may set the tone for an area, projects that may be a catalyst for other redevelopments/developments in the area. 2. Private Sector Leverage Ratio: At least one dollar of private sector investment will be required for each dollar of City investment. Private sector investment is defined as financing from a private lending institution and/or cash equity that is contributed to the project by the applicant. 3. Community Benefits: Applicants must demonstrate tax base enhancement to be eligible for funding. In particular, Program monies contributed to a project must not exceed 30 percent of the existing fair market value of the property as reported by the City Assessor or an appraiser acceptable to the City. Applicants for funding must also demonstrate that the project will meet a public purpose, such as providing jobs, enhancing the tax base, enhancing the community in some way, or increasing tourism and consumer utilization within RD No. 2. 4. Design Standards: All applicants shall utilize Muskego Downtown Design Guidelines, Muskego General Design Guidelines, and Redevelopment District #2 Plan concepts as a guide for designing improvements to buildings and sites. The documents can be found at the City of Muskego website or copies can be attained in the Muskego Department of Community Development. 5. Eligible Activities: Activities eligible for funding through the Program include: Buildings A. Design improvements made to front, rear or side building elevations, (priority will be given to front facades) including the following: · Modernizing of overall building materials and structure · Addition of new building materials · Adaptation of new and innovative architectural elements to a structure · Re-Painting B. Construction of new buildings. C. Structural additions to existing buildings. D. Building demolition in cooperation with a re-build E. Design fees on completed projects. Sites A. New road signs (Must be “monument” signage only to qualify) B. Updated and/or additional landscaping and lighting C. Screening devices for outdoor storage or refuse containers D. Parking Lot redesign or updates 6. Ineligible Activities: Activities not eligible for funding through the Program include: A. Roof repairs. B. Purchase of property and/or buildings. C. Equipment or Mechanical Systems. D. Interior fixtures & furnishings. E. Inventory or operating capital. 7. Standard Terms: Program loans will be provided with a maximum term of 10 years. The specific term for an individual borrower will be based on the useful life of the asset, as well as the terms offered by the private sector financial institution participating in the project. However, the City retains the right to adjust individual loan terms in order to facilitate a successful Program project. 8. Need Determination: Each applicant for Program monies must demonstrate that Program financing is necessary to make the project feasible. 9. Interest Rate: The interest rate on each loan shall be set at 50% of the prime rate as published in the Midwest Edition of the Wall Street Journal or 4 percent, whichever is less (Note: The range in interest rates is subject to change and is reviewed annually by the Muskego Community Development Authority). The interest rate shall be fixed for the term of the loan. 10. Deferral of Principal and Interest: The Program has the option of deferring principal and interest payments upon demonstration by the recipient business that a deferral is required to make the project feasible. The period of time for which a deferral can be provided will be negotiated with the City on a case-by-case basis. Interest will accrue during the deferral period or be cancelled at the discretion of the City. 11. Prepayment: There shall be no prepayment penalties. 12. Equity Requirements: The Program may require an equity injection for each loan, when appropriate. Consideration will be given for individuals that have made substantial equity commitments to the applicant business, as well as to individuals who do not have sufficient financial resources to contribute to the project. 13. Collateral Requirements: Each Program loan will include a financing agreement between the City and recipient business that details the terms and conditions of the Program financing, along with supporting collateral documents, if needed. In addition, the City may require performance bonding when deemed necessary to protect the City's interest in the project. Collateral requirements will be determined on an individual basis by the City and may include mortgages on land and buildings. This collateral may be subordinated to private sector financial institutions participating in the Program project, if required. Personal guarantees from the principals of the business will be required. In addition, junior liens on all business assets may be used where appropriate. Finally, loan recipients will be required to obtain property-casualty insurance for the appraised value of the property being financed, and have the City listed as an additional insured on the policy. 14. Application Fee: The City shall require a loan application fee of one-half percent (0.5%) of the loan amount, with a $50 minimum and a $200 maximum. All loan application fees shall be identified as program income and deposited in the loan account prior to being used to finance administrative costs associated with the program. These costs include, but are not limited to: application packaging, appraisals, environmental studies, soil borings, and other consultant studies deemed necessary by the City to provide approval for the requested funding. These costs are the responsibility of the applicant, and, if the requested financing is approved, the costs may be financed with proceeds from the Program. The City reserves the right to waive or reduce this application fee. 15. Financing Origination Fees: The City shall require a loan origination fee of $50 or 0.5% of the loan amount, whichever is greater. In addition, the City shall require the applicant to pay 30 percent of the legal fees and costs incurred by the City for the loan closing. The fees may be added to the principal amount of the loan and paid with Program funds. 16. Availability of Funds: Available funding for the Program will be established by the City on an annual basis. In those instances where the number of requests for Program monies exceeds available funding, Program applications will be prioritized based upon the date of receipt of all requested application materials, the community benefit, and the amount of private sector leverage that is included in the project. When feasible, the amount of Program monies contributed to each project will be reduced in order to facilitate as many Program requests as possible. 17. Project Completion Date: All Program projects must be initiated within 12 months following approval of the financing application and completed within two years following approval of the financing application. The City may provide extensions beyond the time limit, if warranted, upon the request of the applicant. 18. Additional Requirements: All Program financed activities must: a) Conform with the RD No. 2 Project Plan, the City Of Muskego Comprehensive Plan, and all supporting policy documents; b) Have the applicant retain ownership for sufficient time to complete the project, stabilize its occupancy, and establish project management; c) Comply with all applicable policies, rules, codes, regulations, and statutes of the City and State. 19. Review Process: Specific steps in the review process include the following: A. Project Application. SEWRPC staff shall review the application for completeness and verify that the proposed project meets the minimum requirements provided herein. If the application is not complete, SEWRPC staff will inform the applicant of the deficiencies. A complete application, as determined by SEWRPC staff, must be received no less than 20 days prior to a scheduled Community Development Authority meeting in order to be available for discussion for that CDA meeting. B. Initial Review. The CDA shall meet to review an application within 45 days of the receipt of a completed application. A recommendation for funding shall be forwarded to the Common Council for a final funding determination. C. Notice of Award. Upon acceptance by the Common Council, SEWRPC staff shall contact the business to review and explain the loan terms and to schedule a closing to execute the necessary loan documents. D. Rejection of Award. If the application is not approved, SEWRPC staff shall notify the applicant in writing of the reasons for the rejection and offer to meet with the applicant to explore ways to strengthen the loan request or to identify alternative funding sources. Note: Applications, depending on the amount of changes made to an existing commercial buildings or sites, may need to be reviewed by other authorities before final approval including the Planning Commission. Substantial change determinations are solely made by the City’s Community Development Director. 20. City Considerations: Below is a list of some of the criteria the CDA and Common Council may consider in the review of a loan at a public meeting in open or closed session. Further eligibility requirements are found elsewhere in this manual. No one particular item will unduly advance or disqualify your application. The City looks at the full picture when choosing its recipients. A. Amount of the loan request. B. Eligibility of activities the loan is requested for. C. Personal financial information (Note: Submission of personal financial information may require the City go into closed session to keep this information private and available only to the City and SEWRPC. When reviewing any loan application, the potential for going into closed session will be noted on that evening's agenda so as not to postpone your application process. Providing for the possibility of a closed session on the agenda does not guarantee a closed session will be necessary.). D. Application completeness. E. If sufficient time was allowed for the Authority or Council to review the application. F. Necessity of requested loan.