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HomeMy Public PortalAbout07 Small Business Program TOWN OF TRUCKEE California RESOLUTION 2011 -07 A RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF TRUCKEE APPROVING A SMALL BUSINESS LOAN PROGRAM WHEREAS, the Town Council in 2009 adopted a Town of Truckee Economic Development Strategy in order to build on the goals, policies and actions adopted as part of the General Plan Economic Development Element; and WHEREAS, an important component of the Economic Development Strategy is for the Town to partner with other organizations and support local business owners to encourage the success of Truckee businesses in order to improve the local job market and to improve the overall economic environment in Truckee; and WHEREAS, Town staff has researched other existing small business loan programs that have proven to assist new and existing business owners with successful start-up and expansion efforts, resulting in the reduction of local commercial vacancy rates and the revitalization of RDA Project Areas; and WHEREAS, the Town Council, acting as the Redevelopment Agency Board, has amended the Fiscal Year 2010 -11 Redevelopment Agency budget and allocated $300,000 for Fiscal Year 2010 -11 for a Small Business Loan Program; and WHEREAS, the Town Council finds the action to approve the Small Business Loan Program to be exempt from further review under the California Environmental Quality Act pursuant to Section 15061(b)(3) of the CEQA Guidelines. NOW THEREFORE BE IT RESOLVED, the Town Council of the Town of Truckee hereby approves a Small Business Loan Program. Further, the Council directs the Town Manager to implement and conduct the program in accordance with the general parameters set forth in Exhibit A, attached hereto and incorporated herein. 1 Council Resolution No. 2011 -07 Page 2 1 The foregoing Resolution was introduced by Council Member Green, seconded by Council Member Wallace Dee at a Regular Meeting of the Truckee Town Council, held on the 17th day of March, 2011 and adopted by the following vote: AYES: Council Members: Green, Wallace Dee, Brown, and Mayor Anderson. NOES: None. ABSENT: Vice Mayor deRyk Jones. ViA, Ar ATTEST: Richard Anderson, Mayor ()I , Judy P ce, MMC Town Clerk 1 Exhibit A of Council Resolution 2011 -07 Program Summary - Town of Truckee Small Business Loan Program — Exhibit A of Town Council Resolution 2011 -07 Total Program Funding $300,000 Program Description A loan program funded by the Town of Truckee Redevelopment Agency (RDA) to provide below- market -rate loans of up to $50.000 to business owners of new or expanding businesses located within the RDA Project Area. Eligible Work Design, engineering, interior tenant improvements, and exterior facade improvements on the building frontage only (e.g. signage, lighting, siding material, paint). Interior tenant improvements including installation of fixtures, furnishings and equipment; construction or demolition of interior walls; replacement or repair of doors and windows; replacement or repair of furnaces, water heaters, plumbing or electrical systems; correction of non -ADA -code compliance; and installation of fire extinguisher sprinkler systems, smoke detectors or energy- saving devices. Any non - compliant conditions must be brought into compliance with funding from this loan program. Eligible Costs Design, engineering, permitting. materials and /or construction costs for eligible work. _ Property Eligibility Buildings physically located within the RDA Project Area (see map on Page 3 of this Exhibit). Applicant Eligibility Eligible loan program applicants include business owners who meet any one of the following criteria: • The business owner is establishing a new business with a physical presence within the.RDA Project Area. , • The business owner is relocating a business into the RDA Project Area and the business will be utilizing additional (existing) net physical space, relative to the space at its current location. • The business owner has an existing business located within the RDA Project Area and desires to expand the business into additional (existing) net physical space. • The business owner is relocating a business within or into the RDA Project Area as a direct result of RDA - related redevelopment activity. (Note: businesses relocating due to the last criteria may also be eligible for State - mandated relocation benefits.) Loan Amount 90% of total eligible costs, not to exceed $50,000 per applicant. _ Applicant Match At least 10% of total eligible costs. Work Bld Applicant must submit two bids for all construction work, Both bids must be approved by the RDA staff, and the applicant may choose from the two approved bids. Professional Service & All work must be completed and certified by professionals and contractors licensed by the State of California. Two bids are not required for Contractor Requirements professional services (e.g. designers. architects, engineers), but the submitted bid must be approved by RDA staff prior to payoff. Insurance Requirements Contractors and professionals must obtain insurance as required by the Town and the RDA. Prevailing Wage All construction work must comply with State labor standards and State prevailing wage requirements. Pre - Application Applicant must participate in a pre - application meeting with RDA staff to review the scope of work and /or preliminary drawings for the proposed ' work, prior to completion of construction drawings and /or submittal of a loan application. Application Process Applicant (business owner) must submit a completed loan application package with the following documents included: • Lease agreement (only if the applicant is a tenant, and not the business and property owner). • Detailed description of proposed constructionlimprovements (e.g. copies of plans, specifications, construction drawings) that have been (or will be) submitted to the Building Divisibn. • Two construction cost estimates (bids) from licensed contractors, with State prevailing wage rates incorporated into labor costs. • Overall project cost estimate with selected contractor's bid, including all soft and hard project costs (e.g. design and engineering costs, Building Division (or other agency /district) fees and permits, construction costs). • Completion of Historic Design Review Process of exterior building modifications, if necessary for the project per Town policy. • Documentation that the applicant's business is a legal business entity. • Business Plan for all new businesses and those in business for less than three years. • A letter (template provided by RDA staff) signed by the property owner. stating that the property owner is aware the potential /current tenant is applying for _- the loan program, that the program requirements are acceptable to the property owner, and that the property owner intends to lease the property to the Exhibit A of Council Resolution 2011 -07 applicant (business owner) for a minimum of three years. (Note: this requirement only applies If the applicant (business owner) is a potenusfcunent tenant, and not the business and property owner). Sources and Uses Form. Financial projections- Business Income and Expense ((or a minimum of two years). Commitment of all sources of financing for the project (if other than RDA loan funds). Financial statements including Profit and Loss Statements for existing businesses for the past three years. Project cost estimates must include separate costs for eligible work if there is a component to the project That is not eligible. (Note: the applicants 10% cash match applies to the loan program funds, regardless of total project costs.) 11 the applicant (business owner) is also the property owner, then a Preliminary Title Report for the subject pored must also be submitted. Application Fee None. Application Approval Fir t -came, first -serve basis until program funding is exhausted. Program Deadlines Once the loan agreement is executed by the RDA, construction must be initiated within 120 days, and competed within 12 months to remain eligible for an approved loan. These timelines are specific to this program, regardless of extensions issued by other Town divisions. The applicant must request disbursement of the loan within 30 days of the completion of work. RDA staff may approve an extension to these deadlines on a case -by -case basis. The applicant is solely responsiblefor any agreement with hlsmer contractor. Loan Fund Payout Payout is made in two disbursements — the first disbursement is made within 30 days of submittal of invoices of up to 50% of the total loan amount Schedule and upon completion of a progress inspection by Town staff, and the second disbursement is made upon submittal of invoices for 100% of rpp oi ecl • completion costs and upon completion of a final inspection by Town staff. Loan Fund Requirements • Copies of all professional service agreements and construction contracts (with a prevailing wage agreement incorporated into all construction for Payment to Applicant contracts). • • The project has been issued building permits (or equivalent documents) from the Town. • A final building or engineering inspection (and a progress inspection for the 50% payment) has been conducted by Town staff. • All invoices to date from the licensed professionals and/or contractors have been submitted by the applicant to ROA staff. • Invoices submitted for professional work may be submitted for work that was performed for up to one year prior to submittal of a completed application. • Once a payment submittal from a• .licant is com.lete, the Town will disburse the re• uested disbursement within 30 da s. Loan Terms /Repayment • To qualify for the program, a business must be in contract with a minimum lease term of three years. of Loan • The first loan payment is deferred for 18 months. Once the payment deferral period is over, loan payments will be paid to the RDA monthly for a 10 -year period until the loan is paid in full. Loans may be paid off early, with no pre - payment penalty. • Loan interest is 1% annual simple interest during the 18 -month payment deferral period. and is then 1% compounded interest until the loan Is paid in full. • The loan balance, including principle and interest, must be paid at the time the business is sold or transferred. or at the end of the loan term, whichever occurs first. • The loan term begins and interest begins accruing once 100% of the loan Is disbursed to the applicant. Loan Agreement The applicant (and the property owner, if the applicant is a tenant) signs the loan agreement to complete the eligible work according to approved plans and /or permits, and then the Redevelopment Agency executes the loan agreement. Loan Security • If a tenant (rather than the property owner) is applying for the loan program, the loan must be secured by the business owner through one or more assets per criteria outlined in the loan program guidelines, and a letter (template provided by RDA staff) signed by the property owner, • stating that the property owner is aware the tenant is applying for the loan program, that the program requirements are acceptable to the properly owner, and that the property owner intends to lease the property to the tenant for a minimum of 3 years. • • An improvement-to -value ratio of 3 -10 -1 is required to secure a loan. • If a business owner applying for the loan program is also the property owner, the loan must be secured by a deed of trust on the properly; Property Maintenance Maintenance on equipment obtained and any building improvements made with loan funds covenant until the end of the loan term. Permit Requirements Any required permits must be issued prior to the commencement of the work approved by the Town, or any other governmental agency affected by the work. �� Exhibit A of Council Resolution 2011 -07 Program Summary - Town of Truckee Small Business Loan Program — Exhibit A of Town Council Resolution 2011 -07 Total Program Fun din $300,000 Program Description A loan program funded by the Town of Truckee Redevelopment Agency (RDA) to provide below- market -rate loans of up to $50,000 to business owners of new or expanding businesses located within the RDA Project Area. Eligible Work Design, engineering, interior tenant improvements, and exterior facade improvements on the building frontage only (e.g. signage, lighting, siding material, paint). Interior tenant improvements including installation of fixtures, furnishings and equipment; construction or demolition of interior walls; replacement or repair of doors and windows; replacement or repair of furnaces, water heaters, plumbing or electrical systems; correction of non -ADA -code compliance; and installation of fire extinguisher sprinkler systems, smoke detectors or energy- saving devices. Any non - compliant conditions must be brought into compliance with funding from this loan program. Eligible Costs Design, engineering, ermittin , materials and /or construction costs for eligible work. Property Eligibility Buildings physically located within the RDA Project Area see map on Page 3 of this Exhibit). Applicant Eligibility Eligible loan program applicants include business owners who meet any one of the following criteria: • The business owner is establishing a new business with a physical presence within the. RDA Project Area. • The business owner is relocating a business into the RDA Project Area and the business will be utilizing additional (existing) net physical space, relative to the space at its current location. • The business owner has an existing business located within the RDA Project Area and desires to expand the business into'additional (existing) net physical space. • The business owner is relocating a business within or into the RDA Project Area as a direct result of RDA - related redevelopment activity. Note: businesses relocating due to the last criteria may also be eli ible f State - mandated relocation be nefits. 90% of total eligible costs, not to exceed $50,000 per applicant. Loan Amount Applicant Match At least 10% of total eligible costs. Work Bid Applicant must submit two bids for all construction work. Both bids must be approved by the RDA staff, and the applicant may choose from the two approved bids. Professional Service & All work must be completed and certified by professionals and contractors licensed by the State of California. Two bids are not required for Contractor Requirements professional services (e.g. designers, architects, engineers), but the submitted bid must be approved by RDA staff prior to payoff. Insurance Requirements Contractors and professionals must obtain insurance as required by the Town and the RDA. Prevailin Wa ge All construction work must comply with State labor standards and State prevailing wage requirements. Pre - Application Applicant must participate in a pre - application meeting with RDA staff to review the scope of work and /or preliminary drawings for the proposed work, prior to completion of construction drawings and /or submittal of a loan application. Application Process Applicant (business owner) must submit a completed loan application package with the following documents included: • Lease agreement (only if the applicant is a tenant, and not the business and property owner). • Detailed description of proposed construction /improvements (e.g. copies of plans, specifications, construction drawings) that have been (or will be) submitted to the Building Division. • Two construction cost estimates (bids) from licensed contractors, with State prevailing wage rates incorporated into labor costs. • Overall project cost estimate with selected contractor's bid, including all soft and hard project costs (e.g. design and engineering costs, Building Division (or other agency /district) fees and permits, construction costs). • Completion of Historic Design Review Process of exterior building modifications, if necessary for the project per Town policy. • Documentation that the applicant's business is a legal business entity. • Business Plan for all new businesses and those in business for less than three years. • A letter (template provided by RDA staff) signed by the property owner, stating that the property owner is aware the potential /current tenant is applying for the loan program, that the program requirements are acceptable to the property owner, and that the property owner intends to lease the property to the Exhibit A of Council Resolution 2011 -07 applicant (business owner) for a minimum of three years. (Note: this requirement only applies iF the applicant (business owner) is a potential /current tenant, and not the business and property owner). • Sources and Uses Form. . Financial projections- Business Income and Expense (for a minimum of two years). • Commitment of all sources of financing for the project (if other than RDA loan funds). . Financial statements including Profit and Loss Statements for existing businesses for the past three years. • Project cost estimates must include separate costs for eligible work if there is a component to the project that is not eligible. (Note: the applicant's 10% cash match applies to the loan program funds, regardless of total project costs.) • If the applicant business owner is also the property owner, then a Preliminar Title Re ort for the sub'ect ro ert must also be submitted. Application Fee None. Application Approval First -come, first -serve basis until program funding is exhausted. Program Deadlines Once the loan agreement is executed by the RDA, construction must be initiated within 120 days, and competed within 12 months to remain eligible for an approved loan. These timelines are specific to this program, regardless of extensions issued by other Town divisions. The applicant must request disbursement of the loan within 30 days of the completion of work. RDA staff may approve an extension to these deadlines on a ca - by -case basis. The applicant is solely responsible for any agreement with his /her contractor. Loan Fund Payout Payout is made in two disbursements — the first disbursement is made within 30 days of submittal of invoices of up to 50% of the total loan amount Schedule and upon completion of a progress inspection by Town staff, and the second disbursement is made upon submittal of invoices for 100% of rp olect completion costs and upon completion of a final inspection by Town staff. Loan Fund Requirements • Copies of all professional service agreements and construction contracts (with a prevailing wage agreement incorporated into all construction for Payment to Applicant contracts). • The project has been issued building permits (or equivalent documents) from the Town. • A final building or engineering inspection (and a progress inspection for the 50% payment) has been conducted by Town staff. • All invoices to date from the licensed professionals and /or contractors have been submitted by the applicant to RDA staff. • Invoices submitted for professional work may be submitted for work that was performed for up to one year prior to submittal of a completed application. • Once a payment submittal from a licant is complete, the Town will disburse the requested disbursement within 30 days. Loan Terms /Repayment • To qualify for the program, a business must be in contract with a minimum lease term of three years. of Loan • The first loan payment is deferred for 18 months. Once the payment deferral period is over, loan payments will be paid to the RDA monthly for a 10 -year period until the loan is paid in full. Loans may be paid off early, with no pre - payment penalty. • Loan interest is 1 % annual simple interest during the 18 -month payment deferral period, and is then I % compounded interest until the loan Is paid in full. • The loan balance, including principle and interest, must be paid at the time the business is sold or transferred, or at the end of the loan term, whichever occurs first. • The loan term begins and interest begins accruing once 100% of the loan is disbursed to the applicant. Loan Agreement The applicant (and the property owner, if the applicant is a tenant) signs the loan agreement to complete the eligible work according to approved and /or permits, and then the Redevelopment Agency executes the lo agreement. Loan Security _p If a tenant (rather than the property owner) is applying for the loan program, the loan must be secured by the business owner through one or more assets per criteria outlined in the loan program guidelines, and a letter (template provided by RDA staff) signed by the property owner, stating that the property owner is aware the tenant is applying for the loan program, that the program requirements are acceptable to the property owner, and that the property owner intends to lease the property to the tenant for a minimum of 3 years. • An improvement -to -value ratio of 3 -to -1 is required to secure a loan. • If a business owner applying for the loan program is also the property owner, the loan must be secured by a deed of trust on the property; Property Maintenance Maintenance onequipment obtained and any building improvements made with loan funds covenant until the end of the loan term. Permit Requirements Any required permits must be issued prior to the commencement of the work approved by the Town, or any other governmental agency affected by the work.