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Home My Public Portal About1992-05-27 LOCAL DEVELOPMENT COMPANY AGENDA -i p ,' � • �13 � �5 RE I�IVED �''� CITY F LYNWOOU I ' �� CITY CIERKS OFFICE MAY 21 T99'L . AM PM � 7i8�9�l0illi12ili2i3 'si6 _ . �l ` G�i��f /� r //� / � � � � � l�C�l ��E%Gf,�Z� � 1 � LYNWOOD LOCAL DEVELOPMENT COMPANY . BOARD OF DIRECTORS Wednesday May 27, 1992 3:00 p.m. � City Council Chambers , Lynwood City Hall 11330 Bullis Road Lynwood, CA. 90262 . LEIGHTON HULL BERNARD LAKE PRESIDENT VICE PRESIDENT ERNEST TOPPS ALFREDDIE JOHNSON SECRETARY/TREASURER MEMBER . CELIA ARROYO ' MEMBER I. OPENING CEREMONIES: A. CALL TO ORDER � �� /J i , // 1. Flag Salute « -�" 2. Roll Call ``��'�-� ` � p - B. Certification of Agenda Posting �� 7 /� /�Z G�/` II. APPROVAL OF MINUTES - April 9, 1992 . :r�, � � IV. ITEMS FOR CONSIDERATION: A. BDAP GUIDELINES Staff has deternuned that the BDAP Loan Guidelines are vague in some aspects and need to be amended for clarity. The area insufficient that needs to be reconstructed is found in the Loan Section of Description of Assistance. The interest rate shown (3%) is not the extent of our interest rate range. A report has been prepared and a proposal of amendation to this section has been submitted for review and consideration. B. LLDC AFFILIATION WITH SECURITY PACIFIC NATIONAL BANK Confusion has led staff to believe that duties performed by Security Pacific National Bank are not necessary and/or are not being carried'out efTiciently. A staff report has been submitted for the purpose of analyzing the duties of Security Pacific National Bank and taking into consideration the necessity of services rendered by Security Pacific National Bank and staffs role in the loan prepazation. C. PARTICIPATION AGREEMENT ADDITION Pursuant to the well being of the, LLDC, staf£ has taken into consideration the following: Funds provided to applicants/loanees need be spent in a timely manner and in accordance with BDAP Guidelines. Though this is expected upon approval of a loan, staff feels that execution dates and expenditure checks should be handled differently and in a timely manner. Proof of intent to purchase (which was provided in the past) is not proof of payment. Time limitations should be acknowledged and proofs of purchases should be mandatory. This should be a part of their agreement with the LLDC. Prepared and submitted for your review and approval is an expenditure/execution clause to be considered for an addition to the Participation Agreement. D. WARRANT REGISTER Invoices from Security Pacific Bank for the payment of the annual fee for the administration of the LLDC loan for C. Smith ($60.40). E. LLDC BALANCE SHEET A Balance Sheet indicating the LLDC's financial position has been prepared and submitted herein. �M� ' � • , V. STAFF ORAI.S A. MOUTH OF THE SOUTH Upon discovery of the loan request by Mr. Gary Spears, an assessment of his application and forms was made to find they were still incomplete. A letter was sent to Mr. Spears hi-lighting the necessities that he's lacking in order to further his processing. B. AUDIT UPDATE At the last LLDC meeting, an audit was requested of the LLDC by staff. Staff respectfully request an update on the progress pursuant to an audit. C. LLDC GRANTS 2 LOANS Processed and approved, both Daniel Moon of Moon Trucking and Juanita Ramos of Lucky Muffler and Auto Repair are recipients of $20,000 loans. VI. BOAR,D ORALS VII. ADJOURNMENT With no additional matters for consideration, . adjournment to the next scheduled meeting. C:\W P51\FILES\LLDCOVER. WPF\SF . � ' � . .. LYNWOOD LOCAL DEVELOPMENT COMPANY MINUTES ' ' April 9, 1992 LLDC Board Members Present: Chairznan Leighton Hull Vice Chairman Bernard Lake Alfreddie Johnson , Ernest Topps Absent: Celia Arroyo City Staff Present: Bruno Naulls � Administrative Analyst III Kenrick R. Karefa-Johnson, Director Community Development Department Susan Fowler, Adzninistrative Aide OPENING. CEREMONIES: Chairman Hull opened the meeting at 3:06 p.m. Roll call was taken, with Celia Arroyo being absent. � Mr. Naulls stated the Agenda had been posted in accordance with the Brown Act. APPROVAL OF MINUTES: A motion was made by Mr. Lake to approve the reading of the minutes of February 26, 1992. Motion seconded by Mc Topps and ITEMS FOR CONSIDERATION: A. APPLICATION FOR BUSINESS DEVELOPMENT ASSISTANCE Mr. Karefa-Johnson presented a brief background of the application submitted by Ms. Ramos, stating that she has submitted an amended application and balance sheet. Ms. Ramos stated she has tried to obtain a commercial loan through her bank, but was turned down by the , bank. Mr. Naulls recommended a loan in the amount of $20,000.00 at 8.5% over a S year period. Mr. Karefa- Johnson stated that a loan starting at 5% interest ending at a matured 8.5°Io interest over a period of 5 years could be arranged. The Board discussed different � , percentages and periods by which to grant the loan to Ms. Ramos. Mr. Lake made a motion to grant a loan in the amount of $20,000 at 8.5% for 5 years. It was suggested by Chairman Huli to grant the loan with a 7 year/5 year call to lower the payments for the first 5 years. It was decided that Mr. Karefa-Johnson and Ms. Ramos would have a meeting for the purpose of Ms. Ramos to decide which type of repayment plan best suits her needs, with the options to be worked out by staff. Mr. Lake amended his motion, which was seconded and ' passed to grant the loan to Ms. Ramos, pending loan denial documentation from the bank. � � � �, B. REQUEST FOR FINANCIAL ASSISTANCE Mr. Moon was informed that his reasons for requesting a loan, operating capital, is not a . qualifying reason. The Bqard advised Mr. Moon that he must use to money to purchase equipment for his business. It was decided to have a further meeting with Mr. Moon on April 16, 1992, at 11:OQ a.m., and this item, the'refore, was tabled to the meeting of April 16. C. LLDC AUDIT � Mc Karefa-Johnson advised the Board of the need for an audit, stating that the LLDC has not been audited in the past six years. A motion was made to allow the LLDC to pay the cost of the audit. Motion �seconded and passed. D. LLDC's CURRENT BALANCE SHEET FOR REVIEW AND CONSIDERATION A motion was made, seconded and passed to accept the Balance Sheet as submitted. E. LLDC BYLAWS It was stated by Mr. Kazefa-Johrison that the Board needed to address the re-election scheduled to take place on the first Tuesday in May. After some discussion, Mr. Topps made a motion to table this item and to take up the matter on April 16, 1992, at the next Specia] Meeting with Moon Trucking. Mr. Topps amended his motion to extend the election date up to an additional 90 days for the purpose of reviewing and possibly revising the LLDC Bylaws. Motion seconded by Mc Lake and passed. STAFF ORALS: None BOARD ORALS: Mr. Johnson stated that he would like to formulate an Agency to procure more funds for the � LLDC. Mr. Lake stated that there is already such an Agency, Pacific Coast Regional Office, ' which is involved in this type of activities. After some discussion, Chairman Hull stated ihat he ' would like the LLDC to meet with Pacific Coast Regional Office, and to actually go there dudng ' the next regulariy scheduled LLDC meeting. . ADJOURNMENT Meeting adjourned at 5:00 p.m. ` , � c�.\wpUld�mnts�vf � � ' � I _ � � ,, bate: N1A'( 2.7, 1992- - To: HonorabTe Chairman and Members of the Board '° From:. Bruno Nau11s, Administrative Analyst III ` Subject: AMENDING BDAP GUIDELINES WITH EMPHASIS ON LOAN GUIDELINES: I.E., INTEREST RATES, AMORTI2ATION, AND ELIGIBLE EXPENDITURES ` _ PURPOSE fio make that loans provided at 38 with amortization periods for 7 years is not a fixed rate, but is the minimum percentage and the maximum amortization for loans by LLDC. BACKGROUND In the past up to now the LLDC's BDAP loan description of „ assi§tance read as thus: LOANS• _ The BDA Program provides three percent (38) loans with amortization � not to exceed seven (7) years. All loan requests must be submitted to the LLDC, which will then be ' submitted to an approved lender. 1. Maximum Loan Amount The maximum Ioan amount shall be limited to $20,000, including the amount necessary to cover the cost `. . of equipment, trade fixtures and . inventory or trade stock. � 2. Terms ` � � Amortization of the loan shall not .exceed seven (7) years. . 3. Loan Costs The bank may charge to the loan the cost of loan origination fees. , ANALYSIS _ Upon review of information previously stated, staff feels that (due to loans previously dispersed by LLDC) there is ' room far speculation by loanees if the section on loans ' is carefully read. it states loan to be provided at 38 interest. This statement alonq with the brief in which the statement was abstracted would compel the loanee and/or reader to believe this is a fixed rate. Since this is a falsehood, it would behoove staff and board members to agree upon amending the clause in question and make it self explanatory whereas there is no confusion. � � Paqe 2 CONCLUSION " Staff brings this to board members as a matter of importance and is therefore prepared to bring about the amending of .this clause in the BDAP description of ' assistance. RECOMMENDATION ." In light of information brought to board's attention, staff respectfully requests that the amended description of assistance (loan portion) read as thus: L AN The BDA Program provides loans with rates ranqing from a maximum eight point five . percent (8.5�) down fo a minimum three percent , (38) {rate based ' upon individual case/financial evaluation). Amortization not to exceed seven (7) years. All loan requests must be completed fully and submitted to the LLDC, which will then be submitted to an ',' approved lender. 1. Maximum Loan Amount The maximum loaa amount shall be limited to . $20,000, including the amount necessary to � cover the cost of equipment, trade fixtures and inventory or trade stock. 2. Te s Amortization of the loan shall not exceed seven (7) years. 3. Loan Costs � The bank may charge to the loan the cost of loan origination fees. . • � BUSINE88 DEVSLOPMENT A88ISTANCB PROGRAM (BDA) GENERAL GIIIDELINEB The Business Development Assistance Program (BDA) is a financial assistance program administered by the Lynwood Local Development Company (LLDC). PROGRAlS BACRGROQND The Business Development Assistance Program has been adopted by the LLDC to provide technical and/or financial assistance to businesses wishing to expand in, or relocate to, the City of Lynwood. Primary funding for the BDA Program is from the City of Lynwood's Community Development Block Grant (CDBG) Program. Although the LLDC anticipates continuing support from CDBG funds, it shall seek to expand and diversify its financial resources. DESCRIPTION OF ASSISTANCE The BDA Program can make available, to qualified applicants, below-market interest loans and grants, and technical assistance as described below: LOANS• The BDA Program provides three percent (3�)"loans with amortization not to exceed seven (7) years. All loan requests must be submitted to the LLDC, which will then be submitted to an approved lender. . 1. Maximum Loan Amount The maximum loan amount shall be limited to $20,000, including the amount necessary to cover the cost of equipment, trade fixtures and inventory or trade stock. 2. Terms � Amortization of the loan shall not exceed • seven �(7) years. 3. Loan Costs , The bank may charge to the loan the cost of loan origination fees. � � � GRANTS• The grant component is designed to provide assistance to ^ local businesses to cover the cost of equipment, trade fixtures, and inventory or trade stock. These funds shall be used only in those cases where the loan proceeds are not sufficient to cover the cost of the request for - assistance. As such, the grant should be considered as "gap financing" only. T. Maximum Grant Amount The maximum grant amount per participant shall be . $2,500. . 2. Documentation • To qualify for this grant, a participant must provide appropriate documentation of planned expenditures (such as purchase orders or invoices), showing the use of funds, estimate of costs, and name and address of vendor or . supplier. ELZGIBILITY REOIIIREMENTS Program assistance will be provided to those businesses which.provide evidence of need. Preferential treatment will be given to businesses which will provide additional : jobs to the community. Applicants must have their business located in the City of Lynwood and must have been in business for at least one year prior to submitting their application to the LLDC. REQIIIRED DOCIIMENTATION In order to document needs, the following.must be submitted: - Financial statements for the business - Personal financial statements - Business and personal tax returns � � - Letter outlining request EMPLOYMENT DOC[JMENTATION A list of.current employee's names, position title, hourly wage and social security numbers and a list of new jobs to be created or returned must accompany the loan request. � � SLIGIBLS EBPEtIDITIIREB • All costs directly attributable to the costs of equipment, trade fixtures and inventory or trade stock are eligible, including loan origination fees and. any other costs associated with the preparation of loan documents. ; - PROCESSINCi OF REODESTS FOR ASSIBTANCE ° Step 1: Application Submittal Applicants must complete and submit a BDA ' Program application forsn, a business development p1an, a balance sheet, profit and loss statements for the preceding two years, and an itemized list of needed equipment; furniture, trade fixtures or trade stock to the LLDC with approximate costs. Step 2: Staff review and Determination of EliQibilitv After submittal of the application, staf£ will review the financial information to determine the applicant's level of need and the estimates for reasonableness of costs. Step 3: Securinq_,the Financinq . After the'application has been approved by staff, it will be submitted to the LLDC for " evaluation. The LLDC will approve or deny the loan or grant request based on its evaluation. The LLDC may also approve an amount which is less than the amount requested. Step 4: Obtainin� Bid and Vendor/Supplier Selection . Upon approval by the LLDC, staff will assist participants in obtaining at least three (3) - bids from vendors/suppliers. Staff will then ' review bids for costs and the participant will `- choose the lowest reasonable bid. . Step 5: Participation Agreement After the selection of a vendor/supplier, the ' participant will execute an agreement with the LLDC and the applicable loan documents. Step 6: Disbursement of Loan and(or Grant Proceeds Payments will be made directly to the selected • and approved vendor/supplier; not to the participant.* This payment will occur upon verification of expenses incurred, as evidenced by the participant's submission of purchase orders, invoices, etc. � . 'Amended�AUgust 27, 7986, to allow pre-approved loan prxeeds to go io an applicant es rei�ursement of a � � � pre-approved purchase. - . � . GENE� PARTICIPATZON RESPONSZBI�IEB � Al1 applicants who participate in the Business Development Assistance (BDA) Program must abide by all Program rules and regulations, which include those listed below: - Applicant(s) must keep all appointments. - Applicant(s) must allow at least three (3) vendors/suppliers to submit bids. - Applicant(s) must select the lowest reasonable bid. ' - Applicant(s) must sign a LLDC Participation Agreement prior to signing loan documents. - Applicant(s) must present vendor/supplier purchase orders, invoices, etc. ' MANAGEMENT ASSISTANCE/CONSIILTING PROGRAM Consulting services are provided to Lynwood Businesses � via the Los Angeles County Economic Development Corporation under contract to the LLDC. A firm who documents needs as outlined in the loan - program will generally qualify for free consulting services. However, if a firm does not meet the above-mentioned eligibility requirements, the firm may obtain these below market cost services on a fee reimbursement basis or deferred payment basis, upon execution of proper agreements between the firlu and the LLDC. I/AE TH$ IIND&RSIGNED� CSRTIFY THAT Z/WS HAVE READ AND IINDERSTAND THS I,BOV& GIIID8LIN88. Z/WE AGREB TO ABTDE BY ° TS$ REQIIIREMENTB ]12iD R$BPONSISILZTIEB OUTLINED IN THE GUIDELZNEB. I/AE AL80 CERTIFY THAT I/WS HAVS BEEN GIVEN A COPY OF THE . PROGRAIi GQIDSLINES. SIGNATURE OF APPLICANT DATE � . SIGNATURE OF APPLZCANT DATB � f:\redevelp\lldc\lldcbdaV10689\sf � � � � Date: NIAY 27 t992 To: Honorable Chairman and Members of the Board From: Bruno Naulls, Administrative Analyst III Subject: REVIEWING LOAN APPLICATION PROCESS AND FORMS FOR BUSINESS DEVELOPMENT ASSISTANCE PROGRAM PURPOSE • To determine whether services rendered by Security Pacific National Bank are further needed in processing BDAP Loans. BACKGROUND - On August 1, 1986, the LLDC and Security Pacific National Sank entered into an agreement of operation due to the LLDC's need for a servicing agent for the purpose of disbursiag and collecting loans. The agreement was bonded under conditions jointly - understood by both LLDC & Security Pacific National Bank. Conditions to this agreement are thus: ' 1. LLDC must establish bank account 2. Loan applications to Agency must be forwarded to bank in a package 3. 5 Days after bank receives applications bank will forward to Aqency all necessary loan documentation. ," 4. Bank will draw loan documentation using rate and , terms set by Agency including: a. Payment equal installment clause b. Stating first payment due (30) days after note date c. State Agency being obligeee on note 5. Bank will prepare note 6. Bank collects all monthly payments originated under this program and deposit them into a Demand Deposit Account � 7. Bank will advise LLDC of delinquency: more than 30 ,days due to nonpayment 8. Bank can and will charge a one time $125 loan origination fee ' 9. Annual service fee (1$ of original amount financed) � payable on anniversary of loan 10. Banks entitled to out-of-pocket expenses: , a. Title searches b. Lot book reports c. Recording fees 11. This agreement is ongoing . � � Page 2 12. Agreement may be amended (in writing agreed between Agency and Bank) 13. Termination of Agreement must be in writing and a notice period of 30 days must exist ANALYSIS The services rendered by Security Pacific are helpful in many ways. But they also seem to be costly and timely. In 3 separate incidents, loanees received loan monies at least two and a half (2 1/2) months after loan packages were sent to Security Pacific. Staff feels that pre-approved loans by LLDC should be handled expeditiously by bank. Staff feels that many of the services by bank can be executed elsewhere in a more speedy fashion. The LLDC, in making loans is not borrowing money from the bank. Staff feels that a joint decision between LLDC and staff on loan terms and rates is sufficient. Since applicants come to LLDC due to rejection from commercial banks, it makes poor sense to send the applications back to the people who rejected them initially. Staff is fully capable of servicing loans for the Agency. All processing, analyzations, and conclusions made by staff on loan applications will ultimately be viewed and judged by members of the board upon staff's recommendation. In the event that services are discontinued by Security Pacific, staff will prepare loan packages based upon bank's original format. CONCLUSION Staff acknowledges the LLDC's need for loan servicing. Service which is efficient and done in a timely manner. Currently LLDC's loans are serviced by Security Pacific and though they are efficient, they are not timely. Staff realizes this and offers our services, keeping in mind that Security Pacific has (though slow at times) been an asset to the LLDC by carrying the load of those loans, keeping track of payments, and LLDC's balance in the bank. RECOMMENDATION Staff respectfully requests that honorable members of the board consider the following: A. Continuing to use Security Pacific Bank but request that (5) day loan overview by bank is enforced to ensure approved applicants receive loans in a timely manner; or B. Turn loan origination and processing over to staff to ensure a speedy process and approval. � � � l �� . • � Account established hereunder shall be governed by all applicable , banking laws, customs, and clearing house regulations and this Agreement. 2. LOAN APPLICATION PACKAGE Agency shall refer all persons desiring credit under this Agreement to the Bank by forwarding to the Bank a Loan Application Package consisting of at least the following documents and materials: (a) Letter of introduction from Agency; (b) Loan application; application supplement and the State of California fair lending notice; (c) Description of items to be purchased, with cost estimate; (d) Applicant authorization of confidential disclosure. 3. LOAN DOCUMENTATION Within five (5) days of receipt of the loan appiication package, Bank shall prepare and forward to Agency all necessary loan documentation. Bank shall draw the loan documentation using the interest rates and terms designated by Agency in its letter of introduction in addition to the following: (a) Payments on. loan shall be in equal monthly installments. i i � I �w+. ..a. . .. . . . , � • (b) First payment on loan shall be due thirty (30) days from Note date. . (c) Agency shall be designated as obligee on Note. Agency shall obtain obligor's signature on loan documentation, including Note, prepared by the Bank and arrange for notarial acknowledgements and return all documents to Bank. Bank shall arrange for recording of Deed of Trust, where �- applicable. 4'. DISBURSEMENTS ,� Upon receipt of executed loan documentation, Bank shall forward to Agency the loan proceeds in the form of one or more cashier's checks payable to the obligor and parties designated, or deposit the loan proceeds into an Escrow Account designated by the Agency. If more than one check is necessary, Agency will inform the Bank of the number of checks to be issued. Bank is authorized and instructed to charge Account for the amount of these cashier's checks. 5." COLLECTION OF FUNDS Bank shall hold all loan documentation and shall collect all monthly payments made on account of loans originated under this loan program. There shall be no additional charge to the obligor or AgEncy for servicing of loans excepC charges to obligor resulting from late payments, defaults, and/or foreclosures. A11 proceeds collected hereunder shall be deposited by Bank to a , Demand Deposit Account established for that purpose. ' � � 6.' DEFAULT Bank shall advise Agency of any loan made hereunder which shall be in default more than thirty (30) days because of ' nonpayment of any sum of money due puasuant to the terms of the � loan. Notwithstanding default, Bank shall perform its customary collection procedures with respect to each loan until such loan shall be ninety (90) days in default at which time Bank shall ` return all loan documentafion to Agency. Bank may accept , deTinquent payments, partial payments of amounts due and payments , by check, draft or other similar instrument and may forward such , instrument for collection in the same manner and subject to the _ same rights and liabilities as are attached to checks deposited with Bank. 7: HOLD HARMLESS AGREII�NT � Agency hereby agrees to hold Bank harmless from any acts of Agency's employees in the course of the loan process that may be in violation of state and/or federal credit granting statutes and regulations. Bank shall not be liable to Agency or any other � person in any manner related to a loan made hereunder. 8. FEE For its services provided hereunder, Bank shall be entitled to a one-time $125 loan origination fee and an annual servicing � o 't 1 '�� . fee ra�fi one percent (1�) of the original amount financed payable at inception and on the anniversary date of the loan. Bank shall be further entitled to its out-of-pocket expenses arising, for . ; . � � example, from title searches, lot book reports or recording fees. 9. NOTICES Any notice required or permitted under this Aqreement, shall be in writinq and may be personally,served or sent by certified U.S. Mail to the parties at the addresses indicated below: Lynwood Local Development Company ' 11330 Bullis Road Lynwood, CA 90262 � Attn: Ida Ruiz, Economic Development Specialist Security Pacific National Bank - P.O. Box 4430 Downey, CA 90241 - Attn: Phil Long, Vice President 10. PROVISIONS This Agreement shall be governed by the laws of the State of California. • 11. TERMINATION The term of this Agreement shall be ongoing from the date of � execution by the Agency and Bank. This Agreement may be amended . so long as amendment is in writinq and agreed upon by both � ' Agency and Bank. Termination of this Aqreement may be made by ' either Agency or Bank so long as written notice of intent to � � ,�.....,., ,, � . .:�:;, � , terminate is given by the other party at least thirty (30) days prior to the termination date. Upon termination, any documentation in the possession of the Bank shall be returned to Agency. _ LYNWOOD LOC DEVELOPM / COMP // // i / Date: L' /(/ � �� B i'�.e%uC� ,� lL Ti le : - " , l.C'i�'/I1�f� ��- Date : (/ T'tle: ✓ SECURI�CIFIC NATIONAL BANK r Date • AUG - 1 1986 gy: �_ (� ' , PH1L LONG Title: VICE PRFC�g� ' spfacon � � DATE: May 27, 1992 TO: HONORABLE CHAIRMAN AND MEMBERS OF THE BOARD , FROM: ,� Bruno Naulls, Administrative Analyst III SU&7ECT: Participation Agreement Addition: An Expenditure/Execution Clause PURPOSE To have in writing specific boundaries in which loanees would have to disperse funds loaned to by the LLDC, and to ensure that all funds provided are spent in a timely manner and within the ' guidelines of the BDA proqram. ° BACKGROUND In previous years loanee was obligated to provide only the purchaSe order receipts (receipts pending but not paid in full). Proof of purchase was through monitoring the use of equipment , (which was supposedly purchasedj over a period of time. . ANALYSIS The purchase order receipt does not satisfy staff as to whether or not items were actually purchased. That does not assure the LLDC that funds have been expended properly. Moreover, though in the past, recipient of loan tend to expend funds in a timely manner, there's no documentation setting expenditure periods to regulate any unnecessary extended periods of time if the funds are not expended promptly. • CONCLUSION Staff feels that within the Participation Aqreement, there should be a clause that requires receipts of purchases (paid in full), and limitations to the amount of time loanee has to expend funds • provided by the LLDC. In addition, a monetary penalty for not � using funds provided as prescribed and/or in a timely manner. RECOMMENDATION , Staff respectfully request that Board Members review clause submittal for your approval and consider the adoption of this addition to the Participation Agreement of the LLDC. �, �f:camdev:Agenda.LDC � � � ' � � LYNWOOD LOCAL DEVELOPMENT COMPANY � Business Development Assistance Proqram PARTICIPATION AGREEMENT This Aqreement is made and entered into this day of ' , 19 , by and between (hereinafter ��Participant��) and the. Lynwood Local Development Company (hereinafter ��company��). The Participant is located at (Street Address) Lynwood, Los Angeles county. The leqal description of the property is as follows: � The following definitions shall apply herein: 1. "Business Plan" shall refer to that portion of the loan application providing information about Participant's operation. 2. "Grant" shall refer to funding provided by the Company to supplement the loan; this grant is not repaid by the Participant. 3. "Loan" or ��Loan Proceeds" shall refer to funding provided by the Company through its Business Development ; Assistance Program; this loan is to be repaid by the Participant. 4. "Provider" shall refer to any person or entity providing services or materials pursuant to the Agreement. 1 ' � � I. PIIRPOSE � The purpose of this Agreement is to improve the economic viability of the Participant by providing working capital for the purchase of eguipment, trade fixtures, stock and/or inventory, etc. directly related to the Participant's operation from a below market interest rate loan and, if applicable, a supplemental grant from the Company. The use of any fixed equipment (e.g., office furniture, cash register, etc.) is restricted to the Participant's location within the City limits. II. CONDITSONS ' In consideration of the assistance provided by the Company, ' Participant agrees to the following conditions: A. Participant agrees to provide training and employment to not less than two low-income Lynwood residents by ' - , 19 After training has , been completed, Participant agrees to hire these individuals at wages and fringe benefits comparable to wages and fringe benefits paid for similar work done in the industry. B. Participant agrees that approved funds will be expended pursuant to this Agreement solely for the purposes, , activities and amounts set forth in detail and approved by the Participant and the Company as required by the Business Development Assistance Program General Guidelines, attached hereto and made a part of this ` • � Agreement. C. Participant must be in operation at the time of . application (as evidenced by a current Lynwood Business License); be a profit-making concern which generates active rather than investment income (as evidenced by ,. financial statements); and maintain a location within the City of Lynwood (if Participant moves outside of the City, the loan may be recalled, subject to a review by the Company). , D. Participant must demonstrate a reasonable financial ability to repay the loan and must have experience in , operating the business for which it requires financing (as evidenced by the Business Plan). Z � � - E. Participant agrees to pay any origination fee associated with securing the loan up front or as part of the loan amoant. F. Participant shall cooperate with the Company, providers : and others who have an official capacity in the Business Development Ass,istance Program which is the' subject of this Agreement and shall sign necessary documents to permit the provision of assistance, including but not limited to, release of funds to the , provider when items have been received to the satisfaction of the Participant. G. In the performance of this Agreement, participant agrees not to discriminate against any provider, or potential provider, because of race, color, religion, ancestry, sex, age, national origin, physical handicap or on any other arbitrary basis. H. Participant ensures that all of its employees and applicants for employment are treated without regard to their race, color, religion, ancestry, sex, age, national origin or physical handicap. Such action ' shall include, but not be limited to the following:• employment, upgrading, demotion or transfer; ' recruitment or recruitment advertising; layoff or � termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship. I. Participant shall permit access to records, bids, application forms and other pertinent data and records by an appropriate of the Federal Government or Company for the purposes of ascertaining compliance , with this section. Participant further agrees to , retain copies of all records related to use of funds � pursuant to this Agreement for a period of seven (7) years from the effective date of this Agreement and to i forward copies or originals, as requested, to the I Company when required or requested. � J. Participant agrees to indemnify, defend and hold 1 � harmless the Company, its officers, agents and I employees from any and all claims and losses accruing ` or resulting to Participant by any and all persons, � firm or corporation furnishing or supplying services or , `, supplies in connection with the performance of this � Agreement and from any and all claims and losses i accruing or resulting to any person, firm or + corporation who may be injured or damaged by + Participant in the performance of this Agreement. � I ' I 3 ' � � � � � . I � ! � i i , � t 1 i i I i � I � � K. Participant, and any agents and employees of . Participant in the performance of this Agreement, shall act in an independent capacity and not as officers, employees or agents of the Company. ZII. TERMS A. Loan proceeds will be withheld until Participant submits verifiable evidence of contracts for work to be performed. Loan proceeds will be disbursed to vendors selected by Participant in amounts necessary to procure supplies and materials to complete said work. B. The effective date of this Agreement is the date on which it is approved by the Company and shall remain in effect so long as the loan is outstanding. . C. Without the written consent of the Company, this • Agreement is not assignable or transferable by' ' Participant either in whole or in part. ' D.° No alteration or variation of the terms of this Agreement shall be valid unless made in writing and signed by the paities hereto; and no oral understanding or agreement not incorporated in writing herein, shall ' be binding on any of the parties hereto. E. Participant agrees to complete performance of all obligations under this Agreement in a timely manner. IV. TERMZNATZON - A. Participant covenants that all material facts and � statements provided by Participant in conjunction with this Agreement are true and complete to the best of the Participant's knowledge, and any misrepresentation I shall be just cause for the Company to declare this ; Agreement to be terminated. I B. In the event Participant, for any reason is unable or � otherwise does not proceed with the approved use of � funds, the Company may declare this Agreement to have � been terminated and shall be released from any further � performance hereunder. � I ! 4 i � , i i I � 1 � I I � I I i i _ � . � � � � PARTICZPANT HA8 READ THS FOREGOING AND IINDERSTANDS AND A(iREEB TO. EACH AND SVERY PROVISION. PARTICIPANT IINDERSTANDS THAT ITS PRESENT AND FOTIIRE LSGAL RIGHTS AND LIABILITIES ARE AFF&CTED BY , THIS AGREEMENT� AND THAT PARTICIPANT IS FREE TO CONBIILT AN - ATTORNEY OF ITS CHOICE AT ZT8 OWN E%PENSE REGARDING ANY MATTERS OF CONCERN. . PARTICIPANT BY• . SIGNATURE AND TITLE _ BY: SIGNATURE AND TITLE LYNWOOD LOCAL DEVEIAPMENT COMPANY . BY• . CHAIRMAN BY• • SECRETARY-TREASURER � - lra\bdap�partagmt\170889\sf . , . 5 :. � � , Pi'opo.�e� �Jr✓ol �b �R.Ie�' EXPENDITURE/EXECUTION CLAUSE E%PBNDITURE MONITORING You the loanee, in consideration of the amount of funds provided (�2 O�oo O•o D) for the growth and/or prosperity of your business • concern, will provide us (LLDC and staff) with the following: 1. Copies of all receipts (itemized) in which loan monies were dispersed (up to $20,000.00) This is to be done to ensure that the funds provided are being used in accordance with the LLDC loan guidelines and regulations. Any deviation from stated expenditure rules (funds to cover cost of equipment, trade fixtures, and inventory or trade stock) shall be � considered unlawful andJor criminal. At that time appropriate � legal action will be taken. , LIMITSD EXF'sCUTION_-TIMS In order to ensure that funds allocated are being expended as perceived by our company, a duration period up to, but no more than Z months will be enforced to expend all funds received by loanee, ,vqras Nan S Funds ' not expended amounting to �i,00O.00 can 'and will be retrieved on the basis that funds ' were not used properly in time provided. This would not be considered a subtraction from total loan, but a penalty payment for - misnsing funds to the extent that the funds (unused portion) were not used at all. Only under special circumstances (determined by Board and staff) will loanee be able to extend �execution time , provided once loanee make his/her plea, and upon vote and majority acceptance by Board Members. All provisions stated herein are to be considered lawful and beneficial. Beneficiai to loanee in ways that ensure progress and growth of business concern is both apparent and timely. Bene`icial to LLDC in wavs that: 1. Fund usage is trackable; and . 2. Used for purchasing items within guidelines; and 3. Expended in timely'manner ,l � � . � � 3: 4 ' DATE: May 19, 1992 ' TO: HONORABLE CHAIRMAN AND LLDC BOARD MEMBERS BY : Bruno Naulls, Administrative Analyst III � Community Developemnt Department LYNWOOD LOCAL DEVELOPMENT COMPANY (LLDC) BALANCE SHEET " • May 19, 1992 Assets Cash � Saving...........$40,829.54 Saving............17,247.09 ' Checking........... 970.34 ' Total Cash Balances $59,036.97 , Outstanding Loan Balances Smith ..............$1,310.42 Lan 11,479.30 g ............... Shook ..............18,450.06 Johnson............14,357.50 Austed .............15,355.11 Total Outstanding Loan , Balances $61,052.39 Total Cash and Loan Balance $120,089.36 Accounts Receivabla , (MOnthly Debt Payments) , Smith ...............$110.78 Lang .................264.26 Shook ................266.83 Johnson..........'....265.94 Austed ...............496.19 � � Total Monthly , Payments Receivables 1,404.00 1,404.00 Total Capital Assets..........:.$121,093.36 Liabilities " Accounts Payable .. ..................$350.00 (Service fee to Security Pacific Bank) Tax Payable .......................... 15-0.00 Total Liabilities ...............:...........$500.00 LLDC's Eeuity LLDC, Capital Equity ........................... $120,593.36 - , wp4\ldrbincAOS?09[�sf