CCR2005165.
.
.
COMMON COUNCIL - CITY OF MUSKEGO
RESOLUTION #165-2005
APPROVAL OF AMENDMENT TO THE REVOLVING LOAN FUIND MANUAL
WHEREAS, The City approved a Revolving Loan Fund (RLF) Manual on May 14, 1991
in accordance with the Wisconsin Department of Development, as a participant in the
Wisconsin Development Fund (WDF) Loan Program; and
WHEREAS, The Manual was rewritten to conform with current Wisconsin Department of
Commerce requirements, and renamed "City of Muskego Revolving Loan Fund
Program - Policies and Procedures Manual" as approved by the Common Council on
June 24, 2003; and
WHEREAS, The Manual was amended to increase the marketability of the RLF Loans
and the amendments were approved by the Community Development Authority on April
13, 2005; and
WHEREAS, The amendments included reducin~~ loan origination fees, reducing loan
application fees, and reducing interest rates; and
WHEREAS, The amendments required approval of the WI Department of Commerce
and those approvals were received in August 2005; and
WHEREAS, The Committee of the Whole discussed the Revolving Loan Fund program
and recommended the Community Development Authority (CDA) administer the RLF
plan.
NOW, THEREFORE, BE IT RESOLVED, That the Common Council of the City of
Muskego, upon the recommendation of the Community Development Authority, does
hereby authorize the amendments to the Revolving Loan Fund (RLF) Manual in
accordance with the Policies and Procedures Manual amendments attached.
DATED THIS 23rd DAY OF AUQust ,2005.
SPONSORED BY:
Alderman Eric Schroeder
This is to certify that this is a true and accurate copy of Resolution #165-2005 which
was adopted by the Common Council of the City of Muskego.
8/2005jm
)
.
.
.
\Vi s) f
j
CITY OF MUSKEGO
REVOLVING LOAN FUND PROGFtAM
POLICIES AND PROCEDURES MAI~UAL
Adopted May 30, 2003
AMENDED August 23, 2005 by the Common Council as approved by
the Community Development Authority and the WI Dept. of Commerce
Prepared by the City of Muskego
Planning Department
P.O. Box 749
W182 S 8200 Racine Avenue
Muskego, Wisconsin 53150
.
.
.
FOREWORD
The Wisconsin Community Development Block Gr.ant (CDBG) Program, administered by the
Wisconsin Department of Commerce with funding provided by U.S. Department of Housing and
Urban Development, provides local units of government with monies to stimulate economic
development. CDBG funds are granted to local governments that, in turn, use the monies to
provide loans to new and expanding businesses. Businesses, in return for use~ of the public funds,
provide private investment towards the assisted activity and create job opportunities, principally for
the benefit of low- and moderate-income persons.
Repaid CDBG loans are used by the community to capitalize a local revolviing loan fund (RLF)
program. With the RLF, additional loans are made to businesses that are expanding or locating in
the community and willing to create jobs. When successfully administered, thE~ RLF can provide a
viable source of financing that fills the "gap" between the monies that are available through the
private sector and the amount needed to complete a project. In making a RLF loan to a business,
communities act like a "bank" and accept responsibilities comparable to a commercial lender.
This manual contains the RLF policies and procedures adopted by the City of Muskego Common
Council to govern the use of CDBG funds that have been received by the City.
For assistance and guidance in accessing these funds, please contact the Director of Planning at
(262) 679-4136.
11
.
TABLE OF CONTENTS
Section 1: GENERAL PROVISIONS
1.1 Purpose 1
1.2 Objectives 1
1.3 Amendments 1
Section 2: ADMINISTRATION
2.1 Loan Review 2
2.2 Meetings 2
2.3 Records 2
2.4 Loan Fees 3
Section 3: ELIGIBILITY CONSIDERATIONS
3.1 Eligible Area 4
3.2 Eligible Applicants 4
3.3 Ineligible Applicants 4
3.4 Eligible Activities 4
3.5 Ineligible Activities 5
. 3.6 Minimum Requirements 5
Section 4: TERMS AND CONDITIONS
4.1 Terms and Conditions 7
Section 5: APPLICATION PROCEDURES
5.1 Initial Contact 9
5.2 Timing 9
5.3 Priority 9
5.4 Loan Application 9
5.5 Review Process 10
Section 6: DISTRIBUTION OF FUNDS
6.1 Loan Procedures 12
Section 7: POST APPROVAL REQUIREMENTS
7.1 Obligation of Loan Recipient 14
Section 8: PERFORMANCE MONITORING
. 8.1 Private Leverage Commitments 16
8.2 Job Creation and Retention 16
8.3 Default 16
III
.
.
.
Section 9: USE OF LOAN REPAYMENTS AND REPORTING
9.1 RLF Program 18
Section 10: LOAN SERVICING
10.1 Monitoring
10.2 Record-keeping
19
19
Attachment A: Low- and Moderate-Income Limits
Attachment B: City of Muskego Revolving Loan Fund Application
Attachment C: Loan Servicing Templates
IV
.
.
.
SECTION 1: GENERAL PROVISIONS
1.1 PURPOSE
The policies and procedures that are contained within this manual present the criteria that
govern the economic development loans that are made through the City of Muskego
Revolving Loan Fund (RLF) program.
1.2 OBJECTIVES
Economic development loans made through the RLF program are intended to meet the
following objectives:
1.2.01 To encourage the creation and I"etention of permanent jobs that provide a
wage appropriate to the skills and experience of the local labor force. A
minimum of 51-percent (51 %) of the jobs created and/()r retained shall be
made available to low-income and moderate-income persons.
1.2.02 To encourage the leveraging of new private investment in the City in the form
of fixed asset and working capital investments.
1.2.03 To perpetuate a positive and proactive business climate that encourages the
retention and expansion of existing businesses and helps to attract desirable
new businesses.
1.2.04 To lend monies at interest rates and loan maturities that encourages business
development and facilitates reinvestment in the City, while providing for the re-
capitalization and growth of the RLF.
1.3 AMENDMENTS
The Community Development Authority of the City of Muskego (herein "CDA") may from
time to time amend the policies and procedures contained within this RLF manual and
such amendments are subject to prior written approval by the Wisconsin Department of
Commerce.
1
.
.
.
SECTION 2: ADMINISTRATION
2.1 LOAN REVIEW
2.1.01
2.1.02
2.1.03
2.1.04
2.1.05
2.1.06
2.1.07
The CDA will review all RL.F loan requests and forward funding
recommendations to the Common Council. Loan requests that receive CDA
approval shall be forwarded to the Common Council, which shall make all final
funding decisions relative to RLF loans.
The Common Council shall have the authority to make policy
recommendations to the CDA for the administration of the RLF program.
The Director of Planning, or designee, (hereinafter "City Staff") shall be
responsible for marketing the RLF program to local businesses, explaining the
RLF program, and providing written information to prospectiive applicants.
The City Treasurer shall be respclnsible for collecting monthly payments from
loan recipients.
The Southeastern Wisconsin Regional Planning Commission (hereinafter
"SEWRPC") staff shall be responsible for the day-to-day administration of the
RLF program, including assisting applicants in completing applications,
processing requests for financin!~, and, where necessary and appropriate,
counseling and guiding loan applicants to other technical and financial
resources when the loan applicant has needs that cannot be met through the
RLF program. SEWRPC staff shall periodically review financial statements
and loan amortization schedules for RLF loan recipients and review and
approve documentation of business expenditures financed with RLF proceeds.
The City Finance Department shall maintain RLF accounting records that are
segregated from other City accounts and report as requin:!d to the Wisconsin
Department of Commerce regarding the use of RLF funds. The City Finance
Director is responsible for the maintenance of all City financial records relating
to the RLF program.
The City Attorney, or designee, shall prepare all loan agreements, review all
promissory notes and mortgage or lien instruments, n:!cord RLF security
instruments, and counsel City and SEWRPC staff on default matters.
2.2 MEETINGS
The CDA shall meet as outlined in By-Laws ó::lnd Rules of Procedure to review completed
loan applications.
2.3 RECORDS
Written records shall be maintained in appropriate files located in a secure place with
limited access by authorized personnel. The City Attorney, or designeE:!, shall be consulted
2
.
.
.
with regard to compliance with State Open Records Laws and City Records Policies.
2.4 LOAN FEES
On an annual basis, up to fifteen-percent (15%) of the RLF program income will be made
available for personnel costs and other RL.F administrative expenses incurred in the
maintenance of the RLF program. In addition, the following fees shall be assessed to all
loan recipients:
2.4.01 Loan Application Fee: The City shall require a loan appllication fee of one-
percent f4%7 (0.5%) of the RLF loan amount, with a $50 minimum and an $800
$500 maximum. All loan application fees shall be identified as program income
and deposited in the RLF account prior to being used to finance administrative
costs associated with the program..
2.4.02 Loan Origination Fees: The City shall require a loan origination fee of $256
$150 or one-percent (1%) 0.5% of the RLF loan amount, whichever is greater.
In addition, the City shall require the applicant to pay aft 50 percent of the
legal fees and costs incurred by the City for the RLF loan closing. The fees
may be added to the principal amount of the loan and paid with RLF funds. All
loan origination fees, including attorney's fees, shall be identified as program
income and deposited in the RLF account. These funds will then be used to
pay for administrative costs associated with the RLF program.
3
.
.
.
SECTION 3: ELIGIBILITY CONSIDERATIONS
3.1 ELIGIBLE AREA
The area served by the RLF program shall be within the corporate limits of the City of
Muskego.
3.2 ELIGIBLE APPLICANTS
3.2.01
3.2.02
Applications may be submitted by the authorized representatives of any
business wishing to establish a new operation or expand an existing operation
in 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.
3.3 INELIGIBLE APPLICANTS
3.3.01
3.3.02
No member of the CDA, the Common Council, or any othE!r official, employee,
or agent of the City who exercises decision-making functions or responsibilities
in connection with the implementation of the RLF pro!~ram is eligible for
financial assistance under this program. In addition, no RLF loans shall be
made which are in conflict with Section 946.13 of the Wisconsin Statutes
(Private Interest in Public Contract Prohibited).
RLF loans shall not be available for the following businesses:
3.3.02.1 Speculative investment companies;
3.3.02.2 Real estate investment companies;
3.3.02.3 Lending institutions;
3.3.02.4 Gambling operations;
3.3.02.5 Non-public recreation facilities; or
3.3.02.6 Businesses not serving the interests of the City.
3.4 ELIGIBLE ACTIVITIES
RLF loans shall be provided to eligible applicants for the following activities:
3.4.01
3.4.02
The acquisition of land and buildings;
The acquisition of furniture, fixtures, and equipment;
4
.
3.4.03
3.4.04
3.4.05
3.4.06
Site preparation; the construction and reconstruction of buildings; the
rehabilitation of buildings, including leasehold improvements and façade
renovation for commercial and industrial buildings; and the! installation of fixed
equipment;
Clearance, demolition, and the removal of structures;
Working capital; and
Buyouts by purchase of assets or stock.
3.5 INELIGIBLE ACTIVITIES
RLF loans shall not be available for the following activities:
3.5.01
3.5.02
3.5.03
3.5.04
.
3.5.05
3.5.06
3.5.07
Refinancing or consolidating existing debt;
Reimbursement for expenditures prior to loan approval;
Specialized equipment that is not E~ssential to the business operation;
Residential building constructilon and reconstructi()n (unless such
reconstruction is intended to convElrt the building to a busim~ss use);
Routine maintenance;
Professional services such as feasibility and marketing studies, accounting,
management services, and other similar services; or
Other activities that the COA may identify as inappropriate for the RLF
program.
3.6 MINIMUM REQUIREMENTS
To be eligible for funding, a proposed project shall meet all of the following minimum
requirements:
3.6.01
3.6.02
3.6.03
..
3.6.04
Private Funds Leveraged. One dollar of private sector investment shall be
provided for each dollar of RLF investment. Private sector investment is
defined as financing from a private lending institution, public sector business
loan programs other than the CDBG program, or new equity that is injected
into the business as a part of the expansion project.
Cost Per Job. A minimum of one Full Time Equivalent (FTE) job shall be
created and/or retained for each $20,000 of RLF funds requested.
Financial Feasibility and Business Viability. The applicant shall demonstrate
that the proposed project is viable and that the business has the economic
ability to repay the funds.
Low- and Moderate-Income (LMI) Benefit. At least fifty-one percent (51 %) of
5
.
3.6.05
3.6.06
.
.
the FTE jobs that will be created and/or retained shall bel made available to
persons who reside in low- and moderate-income (LMI) households as defined
by the City with income limits provided by the U.S. Department of Housing and
Urban Development (see Attachment A).
Compliance with Applicable Laws. Applicants shall comply with all applicable
local, State, and Federal laws and codes.
Project Completion. All projects shall be completed, all funds expended, and
all jobs created and/or retained within 24 months from the elate of the RLF loan
approval. All jobs shall be maintained for a minimum of 12 months.
6
.
.'
.
SECTION 4: TERMS AND CONDITIONS
4.1 TERMS AND CONDITIONS
Loan terms and conditions shall be structured on the basis of need and ability to repay.
Minimum standards include the following:
4.1.01
4.1.02
4.1.03
4.1.04
4.1.05
4.1.06
LO;:in Amount. The amount of funds available for any single business
enterprise shall range from a minimum of $20,000 to a maximum of $100,000.
Requests for loan amounts less than $20,000 or in excess of $100,000 may
be negotiated on a case-by-case basis.
Interest Rate. The interest rate on each loan shall be determined on a case-
by-case basis by the CDA, subject to approval by the Common Council. Rate
shall range from 50% of the prime rate a minimum of 4 percent to a maximum
of the prime rate of interest plus 200 basis points as published in the Midwest
Edition of the Wall Street Journal c)r 4 percent, whichevel' is less (Note: The
range in interest rates is subje(:t to change and is reviewed annually by
the Muskego Community Development Authority). The interest rate shall
be fixed for the term of the RLF loan.
LO;:in Term. Standard terms for R:LF loans shall be as follows:
4.1.03.1 Machinery, equipment, and fixtures-2 to 1 0 YE~ars,
4.1.03.2 Buildings and land-S to 10 years, and
4.1.03.3 Working capital-1 to '7 years.
Amortization periods that exceed the loan term may be provided where
appropriate. The specific term and amortization period for an individual
borrower shall be based on the Llseful life of the asset, als well as the terms
offered by the private sector financial institution participating in the project.
The Common Council, upon recommendation by the CDA., retains the right to
adjust individual loan terms in order to facilitate a successful RLF project.
Repayment. Deferral of principal payments may be provided for a maximum
period of one year from the date of the first disbursement of RLF funds.
Interest-only payments during this period shall be required.
Prepayment. There shall be no prepayment penalties.
Collateral. Collateral requirements shall be determined on an individual basis
by the Common Council and may include:
4.1.06.1 Mortgages on land and buildings;
4.1.06.2 Liens on equipment,
7
.
4.1.07
.
4.1.08
.
4.1.06.3 Accounts receivable, and inventory;
4.1.06.4 Guarantees from, or liens on the assets of, affiliated businesses;
assignments of leases and rents; and
4.1.06.5 Assignments of key-person life insurance naming the City as a
beneficiary.
This collateral may be subordinated to private sector financial institutions
participating in the RLF project, if required.
Unlimited personal guarantees from the principals of the business who have
twenty-percent (20%) ownership or more shall be required, except for publicly
held companies. Limited personal guarantees for the owners of the business
who have less than twenty-percent (20%) ownership may be required, where
appropriate. In addition, junior mortgages on personal residences may be
required on projects with limited co,lIateral.
Insurance Requirements. Businesses receiving loans for fixed assets shall be
required to obtain property-casualty insurance for the appraised value of the
property being financed, businesses receiving construction loans shall be
required to have builder's risk insurance for the amount of the debt financing
attendant to the project, and businesses purchasing rE~al estate shall be
required to have title insurance for the amount of RLF neal estate financing
attendant to the project. The City :shall be listed as an additional insured on all
property-casualty and builder's ris~~ insurance policies.
Equity Requirements. The RLF program may require an equity injection for
each RLF loan, when appropriate. Consideration will be !~iven 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 RLF project.
8
.
.
.
SECTION 5: APPLICATION PROCEDURES
5.1 INITIAL CONTACT
Prior to submitting an application, all RLF applicants must discuss the program with
SEWRPC staff, who will provide assistance, as is reasonably necessary, in completing an
RLF application. All financial information shall be kept in a secured place with limited
access by authorized personnel only, subject to the State and City Open Records Laws.
5.2 TIMING
5.3
5.4
Applications may be submitted at any time during the calendar year.
PRIORITY
Applications shall be reviewed in the order received and based 011 readiness for the
proposed project to proceed. In those instances where the number of requests for RLF
funds exceeds available funding, RLF applications shall be prioritized based upon the date
of receipt of all requested application materials, the number of jobs to be created and/or
retained, and the amount of private sector leverage that is included in the project. When
feasible, the amount of funds contributed to each project will be reduced in order to
facilitate as many loan requests as possible.
LOAN APPLICATION
Applicants shall submit an application using forms available from SEWRPC staff that
includes the following:
5.4.01 A completed RLF application (see Attachment B).
5.4.02 A written business plan that includes the following:
5.4.02.1 A brief history of the existing or proposed business, including when
it started or is to start, type of operation, legal structure,
management, markets, and products.
5.4.02.2 A marketing plan, including a list of key customers and clients.
5.4.02.3 A personal resume for each principal associated with the business,
including: number of years of experience in the business,
educational background, and role in the proposed or existing
business.
5.4.02.4 Financial statements for the past three years and a current interim
financial statement, including balance sheets and income
statements that are compiled by an independent accountant in
accordance with generally accepted accounting principles, including
all footnote disclosures.
9
.
.
.
5.4.02.5 Aging of accounts receivable and accounts payable corresponding
with latest available financial statements.
5.4.02.6 A description of how the business plans to use the requested funds.
5.4.02.7 Letters of commitment from all financial instituticms or other sources
of funds for the debt financing that are included in the project.
These commitments shall be obtained prior to, or concurrently with,
the approval of the RLF loan by the CDA.
5.4.02.8 Financial projections for the first three years of the project, including
balance sheets and income statements that are prepared by an
independent accountant in accordance with generally accepted
accounting principles and include a discussion of all significant
assumptions. In addition, start-up businesses shall provide quarterly
financial projections for the first two years of the project.
5.4.02.9 Personal financial statements for the principals ()f the business.
5.4.02.10 Cost estimates for equipment purchases, land and building
acquisition, and building construction and renovation.
5.4.02.11 A lease or pre-lease agreement for rental property or an offer to
purchase for real estatE~ that is included in the project.
5.4.02.12 Documentation that thel project is in compliance with local and State
building codes and zoning regulations and other applicable
ordinances.
5.4.02.13 Other documentation that may be required to support the RLF
projects.
5.5 REVIEW PROCESS
Specific steps in the review process include the following:
5.5.01
5.5.02
5.5.03
Project Application. SEWRPC staff shall review the application for
completeness and verify that the proposed project meets the minimum
requirements provided in Section 3.6. If the application is not complete,
SEWRPC staff will inform the applicant of the deficiencies.
Initial Review. The CDA shall meet to review an application within 45 days of
the receipt of a completed application, as documented in Section 5.4. A
recommendation for funding shall be forwarded to the Common Council for a
final funding determination.
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.
10
.
5.5.04
.
.
R~ection of Award. If the application is not approved, SEWRPC staff shall
notify the applicant in writing of the reasons for the rejectic'n and offer to meet
with the applicant to explore ways to strengthen the loan n:lquest or to identify
alternative funding sources.
11
.
.
.
SECTION 6: DISTRIBUTION OF FUNDS
6.1 LOAN PROCEDURES
The following documentation shall be in place prior to releasing funds, or provided at the
appropriate time during the term of the loan.
6.1.01
6.1.02
6.1.03
6.1.04
6.1.05
Loan Approval. Upon a receipt of a positive recommendation from the CDA,
the Common Council shall review and approve a complete application, as
documented in Section 5.4, for eaGh eligible applicant.
Loan Agreement. The City Attorney, or designee, shall prepare a loan
agreement that shall be executed by the Mayor and City Clerk, as well as the
authorized representatives of the business.
Promissory Note. A promissory note shall be prepared by the City Attorney, or
designee, and signed by the authorized representatives of the business at the
time of loan closing. The note shall be dated, reference the agreement
between the City and the business, and specify the amount and terms of the
loan funds to be delivered.
Security. All documents that are provided as security for RLF loans shall be
prepared by the City Attorney, or designee, and executed at the time of the
loan closing. The City Attorney, or designee, shall record all security
instruments, as needed, and place copies in the project file, as applicable, to
include:
6.1.04.1 Mortgages,
6.1.04.2 Security agreements,
6.1.04.3 UCC searches and filings,
6.1.04.4 Title insurance commitments and policies,
6.1.04.5 Assignments of life insurance,
6.1.04.6 Assignments of leases and rents,
6.1.04.7 Property-casualty insurance binders,
6.1.04.8 Corporate guarantees,
6.1.04.9 Personal guarantees, and
6.1.04.10 Other documentation as may be appropriate.
Amortization Schedule. An amortization schedule shall be prepared by
12
.
6.1.06
6.1.07
.
.
SEWRPC staff and forwarded to the loan recipient after all loan proceeds are
fully disbursed.
Evidence of Program Expenditures. Documentation shall be provided by the
applicant to evidence RLF program expenditures prior to the release of funds.
Documentation includes invoices or receipts for materials and supplies, final
bills of sale, letters from lenders, and canceled checks. All documentation shall
be reviewed and approved by SEWRPC staff. SEWRPC staff shall also verify
the installation of all fixed equipment.
Other Documentation. Documentation shall be provided by the applicant to
evidence that all required permllts, licenses, and registrations have been
obtained prior to the release of RtF funds. As appropriatl3 or necessary, the
borrower may also be asked to provide the following documentation:
6.1.07.1 A certificate of good standing from the Wisconsin Department of
Financial Institutions,
6.1.07.2 Articles of incorporation and by-laws,
6.1.07.3 A resolution or agreement to borrow funds,
6.1.07.4 Current financial statements,
6.1.07.5 Evidence of having secured other funds necessary for the project,
and
6.1.07.6 An environmental analysis for real estate loans, if justified.
13
.
.
.
SECTION 7: POST APPROVAL REQUIREMENTS
7.1 OBLIGATION OF LOAN RECIPIENT
In addition to the terms and conditions of the loan, all borrowers shall êlgree to comply with
the following:
7.1.01
7.1.02
7.1.03
7.1.04
7.1.05
7.1.06
7.1.07
The creation and/or retention of the agreed upon number of jobs within 24
months of the date of the execution of the loan agreement with the City. All
jobs created and/or retained shall be maintained for a minimum of 12 months.
Not to discriminate on the basis of age, race, religion, color, handicap, sex,
physical condition, development disability as defined in s.51.01 (5), sexual
orientation, or national origin in any employment or construction activity related
to the use of RLF monies.
To use RLF monies only to pay the cost of services and mélterials necessary to
complete the RLF project or activity.
To permit inspections by persons authorized by the City of all projects and
properties assisted with loan funds. Related project materials shall also be
open to inspections that include, but may not be limited to, contracts, materials,
equipment, payrolls, and conditions of employment. The borrower shall comply
with requests for inspection.
To maintain records on the project that are necessary for tlhe City to determine
if the performance of the business complies with the terms of the loan
agreement. Files shall be maintained as long as the loan is active or for at least
three years after completion of the work for which the loan has been obtained,
whichever is longer.
To submit the following documentation during the outstanding term of the RLF
loan:
7.1.06.1 Semi-annual financial statements verified by thl3 borrower within 45
days of the end of each calendar quarter,
7.1.06.2 Annual financial statements compiled by an independent
accountant in accordance with generally aGcepted accounting
principles within 120 days of the end of each fiscal year,
7.1.06.3 Signed copies of corporate federal income tax returns within 30
days following their due dates, and
7.1.06.4 Annual progress reports.
To maintain property-casualty insurance for the property financed with RLF
monies for the term of the RLF loan. The City shall be listed as an additional
14
.
7.1.08
.
.
insured on the policy. In addition, key-person life insurancl3 coverage naming
the City as a beneficiary, with a declining balance equal to tlhe outstanding loan
balance may be used where appropriate.
To abide by all Federal laws, when applicable. These include, but may not be
limited to: the Civil Rights Act of 1 !364, the Age Discrimination Act of 1975, the
Davis-Bacon Act (as amended), the Contract Work Hours and Safety
Standards Act, the Copeland "Anti-Kickback" Act, and all flegulations pursuant
to these Acts.
15
.
.
.
SECTION 8: PERFORMANCE MONITORING
8.1 PRIVATE LEVERAGE COMMITMENTS
SEWRPC staff shall monitor the use of the funds and expenditure of private leverage
commitments. Documentation shall include invoices or receipts for materials and supplies,
letters from lenders, final bills of sale, and canceled checks.
8.2 JOB CREATION AND RETENTION
SEWRPC staff shall monitor the borrower's progress in meeting agreed upon job creation
and/or retention goals. Job creation shall bl~ documented using prH-project and post-
project payroll records.
8.2.01 For each FTE job that is not created and/or retained and for each Low-
Moderate Income (LMI) job that is not created and/or retained during the
required time period, the following penalties shall apply:
8.2.01.1 If the Department, in its reasonable discretion, determines that the
Borrower has failed to comply with its obligations under Section 7,
then for each Full-Time Position that the Borrower fails to keep,
create and fill, or maintain, whichever the Gase may be, the
Borrower shall pay the Municipality upon demand a penalty of
One Thousand Dollars (USD$1,OOO.00) for each Full-Time
Position.
8.2.01.2 If the Department, in its reasonable discretion, determines that the
Borrower has failed to comply with its obligations under Section 7,
then for each FTE job that the Borrower has not Made Available
to LMI Persons, the Borrower shall pay the Municipality a penalty
of One Thousand Dollars (USD$1 ,000.00).
8.2.02 In no event shall the loan recipient be assessed a penalty under both
8.2.02.1 and 8.2.02.2 above for the same job which it has failed to create
and/or retain. Job penalties may be paid in one lump sum or added to the
principal of the RLF loan and amortized over the loan term.
8.3 DEFAULT
In the event the business is in default on any of the terms and conditions of the loan
agreement, the promissory note, or any other loan document, other than the failure to
make a payment of principal or interest when due or to create and/or retain the agreed
upon number of jobs, all sums due and owing to the City, including the full unpaid principal
balance and all unpaid accrued interest, shall, at the option of the City, become
immediately due and payable. To exercise this option, the City Attorney shall provide a
written notice to the business that specifies the following:
16
.
8.3.01 The default;
8.3.02 The action required to cure the default; and
8.3.03 A date, not less than 60 days from the date of the notice, by which the default
shall be cured to avoid foreclosure or other collective action.
If the borrower fails to make any payment of principal or interest when due under the
promissory note, and the default continues for 30 days, all sums due and owing to the
City, including the full unpaid principal balanCE! and all unpaid accrued interest shall, at the
option of the City, become immediately due and payable, without notice or demand. The
failure to create or retain the agreed upon number of jobs is not a default, but is subject to
the provisions of Section 8.2 hereof.
In the event of the occurrence of a default, other than a default under Section 8.2 hereof,
and the City exercises its option to accelerate the promissory note, then interest after the
date of default shall be computed at a market rate to be established at the time the loan
agreement is executed.
.
.
17
.
.
.
SECTION 9: USE OF LOAN REPAYMENTS AND RIEPORTING
9.1 RLF PROGRAM
Repaid RLF monies shall be deposited in the RLF account and used in a manner
consistent with the RLF manual. A separate record for each loan shall be kept to account
for all funds loaned. The RLF account shall be audited on an annual basis and City and
SEWRPC staff shall provide progress reports as required to the Wisconsin Department of
Commerce regarding the use of RLF program income. Reports shall be submitted on
forms prescribed by the Department.
18
.
.
.
SECTION 10: LOAN SERVICING
10.1 MONITORING
10.2
SEWRPC staff shall monitor each loan to ensure compliance with the loan terms and
conditions and to monitor the financial health of the business to ensure continued
repayment of the loan. The monitoring shall also ensure that all record-keeping
requirements are met particularly with regard to job creation and the expenditure of
matching funds.
A loan servicing file shall be established and maintained for each loan recipient that
includes all written correspondence; a record of important telephone conversations; a list
of applicable loan covenants; certificates of insurance for builder's risk, property-casualty,
and life insurance, as applicable; and documentation for job creation and retention
including low- and moderate-income benefit.
RECORD-KEEPING
A loan servicing file shall be established and maintained for each loan recipient that
includes the following:
10.2.01 Loan Application File. The loan application file shall include! a copy of the RLF
application, business financial statements, personal financial statements,
business plan documents, and other supporting loan information submitted to
the City, including all applicable correspondence. In addition, the file shall
contain a copy of the loan application summary with recommended actions
regarding the application, and a copy of the minutes for the public meetings
held to take action on the loan request.
10.2.02 Loan Closing File. The loan closing file shall includE~ all loan closing
documents, including the note and other security instruments; closing
statement; title insurance commitment and policy, if applicable; certificates of
insurance for builder's risk, property-casualty, and life insurance, as applicable;
and documentation for job creation and retention including documentation that
jobs were made available to LMI persons. This file shall be placed in a locked,
fireproof vault. SEWRPC staff shall be involved in helping create and complete
this file to ensure complete loan documentation. Copies of the loan closing
documents and an amortization schedule shall be provided to the loan
recipient.
10.2.03 Financial Management File. RLF financial management records shall be
maintained that include the following registers:
10.2.03.1 RI F Register: A record of all deposits and disbursements to and
from the RLF, including funds used for RLF administration.
10.2.03.2 CDBG Loan Repayment Register: A record of all repayments made
19
.
by each business that has received a loan from the CDBG program,
as well as the balance of repayments from all CDBG loans.
10.2.03.3 RLF Loan Repayment Register: A record of all repayments made
by each business that has received a loan from the RLF, as well as
the balance of repayments from all RLF loans.
10.2.03.4 Collection Register: A register for each loan that contains the
business name, loan date, loan amount, terms, and date repayment
begins.
10.2.03.5 "Tickler File" System. A tickler file system shall be established and
maintained to ensure that loan repayments, financial information,
the loan agreement, UCC updates, and other documentation
requirements are tracked and obtained as required. The system will
include the following monthly-coded index files:
10.2.03.5.1 Expiration dates for property-.casualty and life
insurance policies,
10.2.03.5.2 Due dates for all financial statemEmts,
. 10.2.03.5.3 Expiration dates for UCC Financing Statements, the
remindel" to update being at least 45 days prior to
the expiration of the UCC filing on hand,
10.2.03.5.4 Schedulied dates of annual loan performance and
covenant reviews,
10.2.03.5.5 Dates for site visits,
10.2.03.5.6 Due dates for property tax payments and dates by
which the community expects to hear from the
borrower regarding confirmation of payment of
taxes,
10.2.03.5.7 Review dates for job monitoring, and
10.2.03.5.8 Dates on which loan recipients will be notified of
scheduled changes in the loan amortization
scheduled per loan agreements.
10.2.03.6 Financial Statement Fila. The financial statememt file shall include
the business' periodic financial statements as nequired by the loan
covenants with a statement indicating that SEWRPC staff reviewed
the data.
. 10.2.04 Progress Report File. During thEl outstanding term of the RLF loan, loan
recipients shall be required to submit semi-annual progress reports with
financial statements that will be stored in this file (see Attachment C).
20
.
10.2.05
10.2.06
10.2.07
.
.
Field Visit File. SEWRPC staff shall make periodic field visits to verify
information in the progress report and financial statements. A summary of each
site visit will be placed in the permanent file, including any information that can
assist in assessing the overall condition and risk of the loan (see Attachment
C).
Repayment-Monitoring File. The repayment-monitoring file shall include the
loan amortization schedule and status of payments on the RLF loan.
Observations regarding concerns or problems shall be reported to the City and
notations placed in the tickler filE~ to remind SEWRPC staff of the need to
provide continued monitoring.
Loan Review File. All loans shall be reviewed on an annual basis, and at such
other times as may be deemed necessary by the City. ThEl review shall follow
receipt of the fiscal year-end financial statements, the year-end progress
reports, and site visits. A report on the loan review will be placed in the file and
address the following: timeliness of monthly payments, condition of collateral
securing the loan and status of security documents, overaU financial condition
of the business, the presence of material liens or lawsuits, and violations of
loan covenants and suggested corrective actions (see Attachment C).
If the business is experiencing problems, City and SEWRPC staff shall work
with the loan recipient to identify actions that are needed to correct the
identified deficiencies, including possible restructuring of the loan to improve
cash flow within the business. Restructuring can include deferring principal and
interest payments, adjusting the rate of interest, and providing additional
working capital. If appropriate, City and SEWRPC staff shall arrange for
business assistance, including sl3rvices available through the University of
Wisconsin-Extension, Small Business Development Center, the Service Corp
of Retired Executives, and other entities having an interest in serving the needs
of businesses.
21
.
.
.
ATTACHMENT A
City of Muskego Revolving Loan Fund
2004 Low- and Moderate- Income Limits
Household Size Household Income
1 Person $ 37,650
2 Persons $ 43,000
3 Persons $ 48,400
4 Persons $ 53,750
5 Persons $ 58,050
6 Persons $ 62,350
7 Persons $ 66,650
8 Persons or More $ 70,950
Note: This schedule is updated annually. Effective date: January 28, 2004.
Source: U.S. Department of Housing and Urban Development,
Wisconsin Department of Administration, and SEWRPC.
This Attachment is included for reference, and is subject to change upon the availability of
updated information from the US Department of Housing and Urban Development.
22
.
.
.
co
I- Z
w
:E
J:
() <(
I- ~
z
o
l- e)
:::::i
a..
a.. ~
o
Z
:J
u..
z
ð
.....I
c..9
Z
~
o
>
W
0:::
o
c..9
w
~
CJ)
:J
:2:
u.. o
~
o
Qj
E
co
Z
en
en
Q)
"~
en
:l CO
en
en
Q)
....
"'0
"'0 ~
T"""
ë
o
~
Q)
a..
..... () CO
..... C
o
o
c
o
:;:; ....J ~
o
I-
ï::
() en
Q)
o
..... ()
Q)
o
....
a..
en
-....
Q) :t::
C :l 6 w
.... Q)
ï::
(II
....
Q)
Q)
CJ)
.....
c
..c ë3
Q) C
o co
C
ü:
M
N
C
u.. "(3
.....I C
0::: co
C
ü:
o
Z
Q)
C
o
..c
c.
Q)
Q)
I-
N
co CJ)
Q) .....
en "ı en I- .....
co co en CJ)
..c 0 0 0
() 0
.... c:
0
:l C c:
a.. ~ "~ I-
..... .... en
0
Q) 0 0
W
en S
en
0 -:l
~ - -
0
- ..c ()
0:::
co
a..
.....I ~
0
I-
ev)
.
.
.
"Ö
(])
+-' en
(])
:J
0-
(])
e:::
(])
() c
co
+-' en
ëi)
en
<(
U. ......J
e:::
..t
+-' C
:J o
E
<(
c
CO
o
....J
-
CO
-
+-' C
~
.....
(])
.3
(])
+-' CO
e:::
êñco- ..... .....
en
CO .......c
(]) (]).....
>"-
c
_ (]) 0
E
0 É
..... co
(]) a
I- ,- ()
c c
co ï:::
o 0..
......J
_
Û "0
+-' en
(])
.....
(])
..... c
-
.0
0: C
'ı
c
co
c
ü:
+-' .0
(])
o
2
co
>
'C
0..
"- o
(])
() .....
:J o
(f)
l.(')
(])
E
co
z
in
en
(])
.....
"0 ~
7
N
c
o
en
.....
(])
0..
t5
co
+-' C
o
Ü
o
z
(]) c
o
..c a
(])
(])
I-
"
.
~
c
CI3
0::
~
a..
'- (l)
.0 E
:J
Z
J
(JJ
.0 o
...,
-c
(l)
c
CI3
-
(l)
0:::
'+- 0
-
(JJ
(l)
.c
(l)
.c -
0
-
,~
C
0
'';::::;
CI3
-
C
(l) E
:J U
0
-c
c: c
t
0
c.
C.
:J
(JJ
-c
(l)
.c u
CI3
:t::
CI3
(l)
.c -
c
-C C
CI3
(l) >
0
.0 CI3
1:5
-C
(l) (l)
'- -C '- 's; 0
0 U
'- -C C C. C c: C CI3
(l) 0
(l) lD :;::; :J CI3
'- -
E - ~
'- (l) 0 c: t5 '+- -c c
(l) (l) 'ı (l) 3:
'- .c 0 0.. -
c - ~ (l) CI3
- .c > CI3
- E 0 >
'+- t
(l) u
>
.0
(l)
'- (l)
.c
~
:J -
CI3
C
Ol Cñ
(l) -
CI3
o
.
~
C
CI3
0:::
~
a..
'- (l)
.0 E
:J
Z
I
(JJ
.0 o
...,
3:
(l)
z
c
0
(JJ (f) :;::; (JJ C .0 .0 CO
(l) 0 0 0 -
..., ..., (l)
(l) ..., 0::: (l)
....J
-c E E ~ c i= i= CI3
..!. I 0 t c :J CI3 I- 0 u. a.. :;::;
CI3
(l)
'- ()
.0 0
...,
.
(0 I'-
c
ëñ
c
o
u
(JJ
~
(l)
.c -
E
o
'- '+-
C
o
:;::; CI3
E
'- o
'+- c
-c
(l) -
CI3
-C
c..
:J
'+- o
>. ~
:ı
CI3
'æ
>
CI3
(l)
.c -
c
o
c..
:J
(l)
Ol C
CI3
.c u
o
-
-
U
(l) E
:J
(JJ
,~
-c c
CI3
(l) ,
U () c a.. ~ 0:::
~S ~ UJ
'- (f) o '- '+- 0
-C
(l) (l) -C U
~ ID
g E
';;; E
,- 0
ë ()
(l) '+-
E ~
.c c
U (l) 19 E
-
t:: <( CI3
(JJ c.. ,- (l) ~O
If) N