Moorhead, mn. Façade Loan Program

Transcription

1 Moorhead, mn Façade Loan Program

2 Table of Contents Purpose Eligibility Terms and Conditions Application Procedure Loan Approval Committee Roll Underwriting Guidelines Contact Information

3 Purpose Purpose: The City of Moorhead has created a Façade Loan Program to provide financial assistance to property and business owners to encourage the revitalization of older commercial properties in Moorhead. Eligibility Applicants: All businesses or tenants located within the Urban Progress Zone boundaries as adopted by City Council. Startup businesses are eligible but must provide an acceptable business plan and show sufficient management background and an equity position in the business. Applicants must demonstrate an ability to cash flow the projected debt service and to operate a business successfully. Property taxes on the property must be current. Preference will be given to projects improving buildings constructed before Projects located outside of the Urban Progress Zone will be considered on a case by case basis. Eligible Uses: Façade renovation, signs, exterior doors, windows, awnings, exterior graphics, exterior lighting, and other façade or landscape improvements. Building code violations such as roofing, structural repair and necessary mechanical system upgrades are eligible but only as part of an approved façade improvement. Façade funds can only be used for rehabilitation expenses incurred after the application is approved for funding. Applicants can also apply for other city or regional loan funds/grants for the same project but the Façade design must be approved first. Ineligible Uses: No refinancing, building purchases, inventory, furniture, equipment or working capital. Projects cannot be primarily residential in nature. Projects must have reasonable assurance of repayment. Design Requirements: Applicants must provide acceptable façade design plans that contribute to a cohesive and appealing look and feel of the area surrounding their business. All designs must meet local codes, laws, and standards. Terms and Conditions Loan Size: From $5,000 to $25,000. Loan Term: Loan amounts from $5,000-$10,000 up to 5 years. Loan amounts $10,000-$20,000 up to 10 years. Loan amount $20,000-$25,000 up to 15 years. Interest Rate: 0% interest Prepayment Penalty: None Deferral of Payment: Deferral of principal and interest payments may be allowed for extenuating circumstances. Collateral: All loans shall be secured by a mortgage on the property rehabilitated. Guarantees: Unlimited personal guarantees are required from any person with a 20% or greater ownership interest in the business. Corporate guarantees are required if applicable. Maintenance: All borrowers will be required to continue to maintain the properties in the condition and for a time as set forth in the loan documents but will normally not be less than the term of the financing. Application Procedure Application Process: Applications will be available through West Central Initiative, as loan administrators. Applicants must submit a completed application that will include copies of the design plans, sketches, and photographs, project cost estimates, a construction schedule, evidence that property taxes are current, and financial statements with the application. 3

4 Application Procedure (Continued) To Be Included: In addition to the income and property verification items required by West Central Initiative, the following items must be included as part of the application packet: Scale drawing of proposed façade changes Construction schedule, proposed materials list & color samples with cost estimates. Photos. Both recent and historical (if available). Proof of tax payment in the form of the most recent property tax bill. Loan Approval Process Review: Moorhead EDA staff will determine if the application is complete, that it meets all guidelines, and call a meeting of the Design Committee to review the façade improvement plans. Upon recommendation from the Design committee, the application and plans will be forwarded to West Central Initiative. WCI will review the items and a meeting with the Loan Committee will be scheduled. The loan committee will review the financial information and design proposal provided in the application and approve or decline funding the façade project. Loan Closing: If approved, West Central Initiative will schedule a loan closing and fund the loan. Committee Role Design Committee: The primary purpose of the design committee is to review the façade and building plans for compliance with applicable design guidelines. Most members of the committee should be comprised of design and building professionals. The Design Committee will be a five member panel with one representative from the Historical & Cultural Society of Clay County, the Art & Culture Commission, one architect, one real estate agent, and one EDA designee. Loan Committee: The loan committee shall review, select and approve loan applications based on the guidelines of the Façade Loan Program outlined in this manual. The loan committee will be responsible for the review and approval or denial of loan applications. Members will adhere to the requirements established by the program. A majority of the committee must approve any action. No loan shall be made without the approval of an authorized loan committee. The Loan Committee will be the same as the Moorhead Loan Fund Advisory board, with EDA representatives from Ward 1, Ward 2, Ward 3, Ward 4, and the Moorhead Business Association. Underwriting Guidelines Committee Consideration: The lender on the committee is responsible for assessing whether the cash flow of the business is sufficient to repay the proposed assistance. Most often the collateral will be insufficient to cover the outstanding debt in the case of liquidation. This should be of minimal consequence to the decision making process. 4

5 Contact information Moorhead Economic Development 500 Center Ave P.O. Box 779 Moorhead, MN (218) Cindy Graffeo Executive Director Moorhead Economic Development Authority Amy Thorpe Economic Development Program Administrator City of Moorhead 5