Jump Start Incentive Program

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1 PENDLETON URBAN RENEWAL DISTRICT 500 SW DORION AVENUE PENDLETON, OREGON (541) Fax (541) TDD (541) Jump Start Incentive Program This document describes the process required for assisting new and expanding businesses and building owners with low-cost loans and other services to increase economic development in Pendleton s Urban Renewal District. Last revision: 1/11/18

2 A. Program Description 1. Project Purpose: To develop a financial incentive program and funding sources that can be used to Jump Start businesses that wish to locate or expand in the urban renewal district.. o An expanding existing business is one that meets at least one (1) of the criteria below: Is opening an additional location in the urban renewal district. Is increasing square footage used for business purpose in the urban renewal district and is creating at least one job or FTE over the 12-month period following expansion. o The Urban Renewal district is the area defined as the Urban Renewal District in the Pendleton Riverfront Urban Renewal Plan. o The Pendleton Riverfront Urban Renewal Plan is referred to in this document simply as The PLAN. o The Pendleton Development Commission is referred to in this document as the PDC. To develop an incentive program that encourages property owners to make improvements that update and enhance their ability to lease properties in the urban renewal district. To develop an incentive program to support business sustainability and retention. 2. Benefits: Stimulate Pendleton s urban renewal district economy. Fill vacant storefronts in the Urban Renewal District. Provide the City of Pendleton and property owners a recruiting tool. Increase tax increment financing. Strengthen existing business by encouraging growth and expansion. 3. Assumptions: Projects completed by property owners must increase the property value to positively impact the tax increment-financing requirement of The PLAN. Incentives will be given only to licensed businesses that meet the new or expansion requirements within the urban renewal district, each as defined in this plan. Criteria must be objective and easily verified by the Committee. Program will be in effect provided funds are available. Due diligence will be used in the loan review process to mitigate risk. Last revision 1/11/18 Page 2

3 Criteria: Program criteria are designed to: Encourage improvements that increase the life, value, and lease ability of property in the area defined in this plan as Pendleton s urban renewal district. Market Main Street as a priority focus. Solicit target business types as identified by the following studies: Pendleton Downtown Resource Team Report and Destination Development Report. This data was validated by an on-line survey of Pendleton citizens and business owners conducted by the Project Jump Start program development team. Promote job creation and retention. Consider and value business sustainability. Assure basic occupancy requirements such as ADA compliance, fire safety, building code specifications (applicant s property must satisfy such requirements or he/she must first use incentive funds to complete unmet occupancy requirements). Prioritize main floor improvements by excluding 2nd floor improvements and development from this program, unless the main floor business will involve the 2nd floor area for a public purpose. Prioritize commercial improvements by excluding residential improvements and development from this program. Establish maximum incentive caps to ensure maximization of funds. B. Property Owner Incentives 1. Funding Source: Urban Renewal Funds; Horizon Project, Inc.; GEODC or others. 2. Assumptions: Projects must have a reasonable probability to increase property values in order to positively impact the tax increment-financing requirement of Urban Renewal Plans. 3. Provision Support: Pendleton Downtown/Riverfront Urban Renewal Agency, Section IV Urban Renewal Projects, Section B Urban Renewal Projects, Sub-section 2, Assistance to Property Owners/Lessees for Rehabilitation, Redevelopment, or Development: Loans and/or grants for property rehabilitation and development, redevelopment and other improvements. Property to be improved may be residential or commercial. Loans may be at or below market rates, and assistance can include direct loans or guarantees of loans made by third parties. 4. Loan and Building Development Incentive Specifics: The Jump Start Committee will consider loan requests for property owners using PDC funding or refer a loan request to the Horizon Project, GEODC or other resources. Low interest loans will be considered for permanent improvements to property interior (i.e.: HVAC, ADA access, required fire and safety measures, or other interior improvements to enhance ability to lease), or the purchase of permanent fixed assets to support a secured tenant (i.e.: major equipment, business specific leasehold improvements such as built-in cabinets, bar, kitchen design, etc.). Last revision 1/11/18 Page 3

4 Reimbursement for permit fees until the designated funding for the grant program is exhausted in any given grant cycle. Building owners submit their receipts for permits (electrical, plumbing, etc.) up to 60 days after they have opened a business or completed their expansion project and received clearance for occupancy. Reimbursement is provided up to 100% of the City s portion of the fee. (A 12% state of Oregon surcharge on permit fees is not reimbursable.) 5. Criteria: Maximum loan per project: $60,000 Square Footage of Occupied Space o Property Owner Incentive Loan: $10/square foot A property owner may borrow up to $60,000 at a rate of $10 per square foot of commercial space to be remodeled for a business occupant. Main Street as Priority Focus o A Property Owner whose commercial property is on Main Street may receive a loan of an additional $5 per square foot of occupied commercial space above the loan rate of $10 per square foot, subject to the maximum loan of $60,000. C. Business Owner Incentives 1. Funding Source: Urban Renewal Funds; Horizon Project, Inc.; GEODC or others. 2. Assumptions: Incentives and loan incentives will be given only to licensed businesses that meet the new or expansion requirements within the Pendleton urban renewal district, each as defined in this plan. 3. Provision Support: Jump Start Committee Urban renewal funding, Horizon Project, Inc., GEODC or other funding sources 4. Loan and Business Development Incentive Specifics: The Jump Start Committee will consider loan requests for business owners using PDC funding or refer a loan request to the Horizon Project, GEODC or other resources. These include low-interest loans to support the purchase of non-permanent, business-specific assets (i.e.: racks, shelves, cash register, printer, computer, etc.) or low-interest, working capital loans to pay for expenses during the start-up phase of a new business (i.e.: water, sewer, power, rent, etc.). Free Consultation with a Small Business Development Center (SBDC) Professional through Blue Mountain Community College. Reduced pricing and easy access to training and a mentor or business consultant (i.e.: Quick Books, Web Site Optimization, Customer Service, Maximizing Window Displays) through SBDC at Blue Mountain Community College. 75% reduction in business license fee. Business owner has the option of receiving this reduction off the prorated fee for the present year or the next full year s license fee. Last revision 1/11/18 Page 4

5 Expedited building permit process by The City of Pendleton. Free energy efficiency consultation by the Oregon Department of Energy. Reduced pricing for print and radio advertising during the start-up phase of a new business where available (to be negotiated with and funded by radio and newspaper companies). Three months free Internet service from Wtechlink if a business takes advantage of a reduced-cost membership for the first year in the Pendleton Chamber of Commerce. Free Mystery Shopper review of a new business by the Pendleton Downtown Association Reimbursement for permit fees. Businesses submit their receipts for permits (electrical, plumbing, etc.) up to 60 days after they have opened their business, completed their expansion project or received clearance for occupancy. Reimbursement is provided up to 100% of the City s portion of the fee. (A 12% state of Oregon surcharge on permit fees is not reimbursable.) For established Jump Start clients, a $1000 bonus grant per number of additional verifiable FTE (excluding the business owners) employed in Pendleton s urban renewal district at one year from the date the business opens or completes an expansion. Within 90 days of the first anniversary of the business opening or completing an expansion, the business owner must provide payroll records from their accountant or a notarized letter providing hourly data for all new full-time and part-time employees for a one-year period beginning with the first day of business opening or expanding. (These records must exclude all owners of the business.) The number of FTE will be calculated by dividing the total hours by The benefit is limited to a maximum of $5,000 and is payable to the business for sustainability purposes such as: debt repayment, rent, power bills, and maintenance projects. The jobs must have been created as a direct result of opening a new or expanding a business in Pendleton s urban renewal district. 5. Criteria: For loans with Urban Renewal Funds (PDC Loans) Maximum loan amount: $40,000 per project A business owner may borrow up to $40,000 at a rate of $5 per square foot of commercial space to be remodeled for the business occupant. Targeted Business Categories (As identified in the following studies: Pendleton Downtown Resource Team Report & Destination Development Report) o A new or expanding business that is in one of the categories listed below may receive a loan of an additional $2.50/square foot of occupied space above the loan rate of $5/square foot, subject to the maximum loan of $40,000. Art Gallery Bakery Boutiques Bowling Alley Brewery Children s Clothing Day Care Grocery Store Live Entertainment Men s Clothing Store Movie Theater Pharmacy Last revision 1/11/18 Page 5

6 Shoe Store Specialty Candy Store Unique Retail Main Street as Priority Focus o A new or expanding business that occupies property on Main Street may receive a loan of an additional $2.50/square foot of occupied space above the loan rate of $5/square foot and subject to the maximum loan of $40,000. D. Program Administration 1. Criteria: Loans from the PDC up to and including $20,000 can be reviewed and approved by the Jump Start Committee. Urban Renewal Loans above that amount are reviewed by the Jump Start Committee and then approved by the PDC, based on the recommendation of the Jump Start Committee. Urban Renewal Loans will be based on credit-worthiness and ability to collateralize the loan. The maximum loan from the PDC is $60,000 for property owners and $40,000 for a new/expanding business owner. Loans from Horizon, GEODC or other sources are subject to terms of those organizations. Any property owner or business owner who receives a loan from this program is eligible to apply for additional funds at the end of year two, provided that payments have been made as agreed. E. Assignment & Delegation of Duties: 1. Jump Start Committee Chairman s Role: Represent & lead the Committee, work collaboratively with PDC, Horizon Project, Inc., GEODC or other funding sources, the PDC Executive and Associate Director and the City of Pendleton. Duties: Assign committee members to work with the applicant to maximize the benefits of the program beyond the loan application process. Provide support to facilitate the application process. Present a completed application to the Committee. Present a completed application to the PDC as applicable. Serve as a liaison between the applicant and the PDC as applicable. Partner with the PDC or banks through the loan review process. Report to the PDC monthly. Manage the marketing strategy to ensure a results-oriented outcome. Last revision 1/11/18 Page 6

7 2. Jump Start Committee: Will be composed of four to eight (4-8) persons who will be selected based upon an application and interview by the Committee Chair and final approval by the Pendleton Development Commission. The Committee will include at least one commercial banker, a former/current business or property owner, a representative of the Pendleton Downtown Association and at-large community representation. Role: Review applications for both property owner and business owner loans. Approve loans up to $20,000. Make recommendations and forward loan applications above $20,000 to the PDC. When appropriate, refer applications for loans to other funding sources. Committee MUST have at least one (1) Commercial Banker serve at ALL times. Duties: Meet monthly or as needed as determined by Chair. Review and prioritize applications as needed (Commercial Lender serving on this committee MUST review each and every PDC loan application to ensure fair lending practices and to help mitigate risk. ABSOLUTELY NO loan decision will be made or recommended by the Committee without the review of the Commercial Banker). o Review loan applications from both property owners and business owners. o Pre-qualify applicant by credit score and other due diligence measures standard in the credit industry. o Negotiate loan structure with the applicant, if approved. Actively promote the program. Set goals to ensure results. Approve loans up to and including $20,000 after the loan review process has been completed per established guidelines written in this plan. Serve in a fiduciary role for applicants. Recommend or approve loans as noted in (Role) noted above. Adhere to the Public Meeting Laws. Respect the definition of quorum. 3. Pendleton Development Commission: Role: Work in collaboration with the Jump Start Committee Chair on loan requests. Approve PDC loans in the amount greater than $20,000, up to the project maximum. All loan applications MUST be first reviewed by the Committee and presented to the PDC by the Committee Chair or his/her designate. Duties: The Executive Director or his/her designee will serve as the primary contact for all new applicants and serve in a fiduciary role for the loans on behalf of the PDC. Meet monthly with the Committee Chair or designate. Last revision 1/11/18 Page 7

8 Review loan recommendations for all loan requests greater than $20,000 to be funded by the PDC. To positively impact tax increment financing, prioritize projects that will increase property value. Provide necessary support and empower Committee Chair to carry out assigned duties. Work collaboratively with the Committee. 4. City of Pendleton: Role: Assist the PDC and Committee on loan closing and security filings for PDC loans. Duties: Support Committee s due diligence efforts by assisting with: o Credit Reports o Other support, as needed Coordinate loan closing to include promissory note, security filings, etc. on all loans made to Property Owners using Urban Renewal Funds. Work closely with Committee Chair or his/her designate. Make money available to applicant upon loan closing. Billing for loans. Collections for loans. Last revision 1/11/18 Page 8

9 F. Loan application process for loans granted by the PDC: 1. Loan Structure: The same pricing and amortization will be used for both property owner and business owner loans. The Jump Start client must choose the term and corresponding interest rate when the loan is originated. Once chosen, that is their rate for the full term of the loan, even if paid early. 2. Associated Costs: Amortization Interest Rate 7 Years 7% 6 Years 6% 5 Years 5% 4 Years 4% 3 Years 3% 2 Years 2% 1 Year 1% $250 application fee, which will be refunded if loan application is denied. No penalty for early pay-off 3. Loan Features: No interest will accumulate or payments be required for the first 90 days of the loan. If the loan is signed on a date other than the first of the month, 90 days will be counted from the first day of the month following the closing date of the loan. Principal and interest will be due and payable on a monthly basis after this initial period by the first day of the month. The cost of Urban Renewal Funds used to fund property owner loans will be covered over time by the assumed appreciated tax assessment value of urban renewal district properties. 4. Loan Quality Control: Credit Score is vital regardless of collateral or security position. Loans will be approved only if the credit score of guarantors is greater than or equal to 685. Pre-qualification will be done by credit check and applicant will be promptly notified. Assigned Committee members will work with an applicant to find ways to make the loan bankable. Business Plan is required to accompany all loan applications. Last revision 1/11/18 Page 9

10 Applicant will be referred to the Small Business Development Center at Blue Mountain Community College for assistance. The Committee Chair, in collaboration with the commercial banker serving on the committee, will determine how extensive the Business Plan needs to be (committee to approve suggested collaboration with banker). Ex: A business plan for an established business choosing to expand is different than that of a start-up business. Collateralization is a non-negotiable requirement of both property and business owner loans. Loans to Property Owners will be secured by 2nd or 3rd position on the commercial property. Personal guarantees may also be required depending on credit score and equity position. Loan collateral will include without limitation a first lien purchase money interest in all assets purchased with loan funds. Such collateral is to be listed in writing and provided to the PDC by the borrower at the time the loan is disbursed. Loan Application (See Appendix) The same application will be used for both property owner and business owner loan requests. Fair Credit Reporting Act must be prominently displayed on all applications and credit related materials. Last revision 1/11/18 Page 10

11 Loan Application Checklist (See Appendix) For both Property Owners and Business Owners the following items are required, in addition to a completed loan application. Not all of these items are required for a preliminary loan application review. (For more details see the separate loan application.) o Signed & Dated Personal Financial Statement o Last 3 years personal & business tax returns o Business Plan o Feasibility Study, if appropriate o Financial projections for at least the first 2 years of operation o Resume on all key participants o Copy of buy/sell agreements, if any o Completed credit application from bank, if involved o Copy of Articles of Incorporation, Operating Agreement, LLC, etc. o Statement regarding pending lawsuits or judgements and/or previous bankruptcy o $250 loan application fee In addition to the above requirements, the following are also required for Business Owner loan requests: o Summary of previous experience in the field o Detailed business plan outlining the vision, plans, cash flow, and financial projections o If Angel Investor Capital is involved, a statement of what return on investment is expected ### Last revision 1/11/18 Page 11

12 PENDLETON URBAN RENEWAL DISTRICT Jump Start Referral Form 500 SW DORION AVENUE PENDLETON, OREGON (541) Fax (541) TDD (541) Business Name: Date: Applicant Type: (Check one) Building owner Business owner Address: Contact Person: Telephone(s): Fax: Address: Referred By: Services Desired: (Check all that apply) Small Business Development Center Consultation Business License Reduced Rate Building Permit Process Assistance Mystery Shopper review for new business Chamber Membership at reduced cost Advertising Discount Free Energy Review (Energy Trust of Oregon) Free Wtechlink Internet for three months Loan ($250 fee reimbursed if loan is denied) Permit Fee Reimbursement Qualifications met: (Check yes or no) Yes No Geographic Boundaries New Business Expansion Business Criteria Loan Fee Submitted Applicant Signature: Date: For PDC Use Only Referral Form Complete: PDC Executive Director Jump Start Committee Member Assigned: Date: Date: Last revision 1/11/18 Page 12

LOAN REGISTRATION Type In Form Note: Partial Packages Will NOT Be Reviewed!

LOAN REGISTRATION Type In Form Note: Partial Packages Will NOT Be Reviewed! (Check One) Borrower Broker/Banker Contact Name Date Company Phone Cell Address Fax City, State, Zip: E-Mail Borrower Information