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Home My WebLink About1987-02-02-R RESOLUTION NO. '6 A RESOLUTION APPROVING AN AMENDMENT TO THE RE-USE PLAN FOR ARKANSAS COMMUNITY AND ECONOMIC DEVELOPMENT PROGRAM SET-ASIDE GRANT. WHEREAS, a grant application submitted by the City of Batesville was approved by the Arkansas Industrial Development Commission for the purpose of making a loan to Omega Containers Batesville, Inc. , and, WHEREAS, the funding agency (AIDC) requires that the loan repayments must be held in a separate account, and a Re-Use Plan must be developed and approved by AIDC, and WHEREAS, Omega Containers, Batesville, Inc. , has defaulted on the loan and the balance in the revolving loan is $ 31,311.63 plus accrued interest and it now becomes necessary to modify the terms and conditions for Re-Use of the funds. NOW, THEREFORE BE IT RESOLVED that the Batesville City Council hereby amends the Re-Use Plan which establishes the requirements for utilization of the recaptured Omega Container Batesville, Inc. , loan payments. ENTERED this O rte- day of i, 1987. ayor SEAL Clerk IV. Certification The City of Batesville shall abide by the regulations set (W forth by the Arkansas Industrial Development Commission in the administration of this Re-Use Plan. The amended plan herein presented is approved and becomes effective this j()4E day of , 1987, by authority of the attached Resolution. Date Mayor �j City Clerk -7- CITY OF BATESVILLE RE-USE PLAN FOR AIDC GRANT NUMBER 790-00552 AUGUST 1985 AMENDED FEBRUARY, 1987 (W PURPOSE OF AMENDMENT The City of Batesville Re-Use Plan for AIDC Grant Number 790-00552 requires an amendment for the following reason: A loan of $225,000 was made to Omega Containers Batesville, Inc. to be repaid over ten years at 6%. After two payments, the company ceased operation and defaulted on the loan. The Re-Use Plan no longer presents a useable plan for the use of the repayments. This amendment provides the mechanism to utilize the reduced amount of funds that are available. I. Goals and Objectives of Re-Use Plan The objective of the Re-Use Plan is to stimulate industrial rw development with job creation for low/moderate income persons as the ultimate goal. The recaptured funds will be distributed to private enterprise through a revolving loan fund. The recaptured funds shall be held in an interest bearing account separate from other city funds. The funds shall be available as loans to approved private industry and businesses for start-up, expansion or relocation within a one mile extension of the city. A low interest rate will be the primary incentive for participation. Not less than 51% of jobs created must be reserved for low/moderate income persons. (Low/moderate income persons are those persons having incomes within the Section 8 income limits established by the Department of Housing and Urban Development. Such limits are calculated on a county level and change periodically. The income limits can be obtained (W from the Department of Housing and Urban Development or the Arkansas Industrial Development Commission (AIDC) in Little Rock. ) II. Structure of the Revolving Loan Fund The recaptured grant funds shall be reserved to capitalize a revolving loan fund. A. Any private enterprise may submit an application for a revolving loan. B. Specific requirements of the revolving loan program are: I. The potential business must relocate within a one-mile extension of the city limits. L -2- 2. The loan amount will be determined on a case by case basis at a term and conditions to be set by �r the city council at the time the loan is made, subject to the following limitations: a) The minimum interest rate shall be negotiated with a spread of two to six points below the prime interest rate at the local bank. The lower interest rates will be considered for a high job creation ratio and/or short-term first mortgage loan. b) The term of the loan shall not exceed five (5) years. 3. The loan may not exceed 25% of the project cost. 4. Loans will require a ratio of one job created for each $10,000 loaned. Borrower must document efforts to hire all employees from Independence or adjoining counties, and at least 51% of new hires shall be low/moderate income persons. 5. Acceptable collateral will be determined on a case by case basis. 6. Repayment of all or part of the loan may be waived if an excess of jobs are created. This determination shall be made by-the Council . 7. The borrower will not assign, sublet, mortgage, or otherwise convey in any shape, form, substance or manner any interest in the contract to any other person(s), firm(s), or corporation(s) without the written consent of the City of Batesville being first obtained.- In the event that consent is -3- granted, and unless expressly waived in writing, such consent shall not relieve borrower of its (W obligations herein, and consent to one such transfer shall not be deemed consent to any subsequent transfer or transfers. 8. The construction contractor with whom the borrower shall contract shall provide 100% performance and payment bonds approved by the lender. 9. Failure on the part of the borrower to comply with any or all of these requirements will be considered grounds to terminate the contract and principal and interest earned to date shall become due and payable. III. Administration A. The mayor's office will be responsible for the administration of the Re-use Plan, and the city clerk will be utilized to manage the revolving loan funds 1. The administrative duties will consist of: re-payment monitoring, setting up accounting, supervising the'bank account, disseminating information pertaining to the loan fund, advertising, and accepting applications, assuring - loan conditions are met, preparing budgets and submitting required reports to AIDC. 2. loan Packages will be available at the city hall and their availability will be advertised through the Chamber of Commerce, -local radio stations and the local newspaper. AFN 3. Bank interest earned on recaptured funds may be reserved for administration of the grant. No part (W of the recaptured principal or repayment interest may be utilized for administration but must be reserved to capitalize the revolving loan fund. B. The mayor shall appoint a review committee comprised of a Certified Public Accountant, legal and other financial related person(s) to review loan applications that are submitted to the city. The committee shall make recommendations to the city council and a council resolution shall be required as final approval of loan applications. C. An interest bearing checking account will be established at a local bank. Ninety day Certificates of Deposit shall be purchased and amounts less than $500 (or checking account minimum) shall remain in the checking account. The (W funds shall be managed to the city's best interest. That is, if it is apparent a loan application is likely to receive final approval within a short period of time and CD's are ready for renewal , the proposed loan amount shall be transferred to the checking account to avoid loss of interest by prematurely cashing CD's. D. Applications for loans will be accepted at any time there are adequate funds available in the revolving loan account to meet the loan request. E. Within thirty days after the revolving loan account has been opened and on an annual basis thereafter, the administrative entity shall prepare an annual L operating budget proposal to be approved by resolution of the city council . If, during the year, major budget revisions become necessary, the council must approve such revisions by resolution. The operating budget should reflect those anticipated actual costs for loan account management and accounting procedures (including budget preparation and AIDC reporting). The projected audit costs would be reflected in the budget. F. An annual audit shall be performed beginning one year after establishment of the revolving loan fund account. The city will select a private auditor in accordance with Attachment 0 of OMB Circular A-102. A reasonable contract shall be negotiated with the auditor on an annual basis. The city may choose to have the audit performed in conjunction with the annual city audit. G. The administrative entity shall submit to the city council an annual loan activity report which includes a status of projects and how funds were used for the interval that the annual audit is submitted. Council minutes shall reflect acceptance (or requested correction) of such reports, and after council approval , the reports and audit shall be submitted to AIDC. H. Any changes or amendments to this plan will require a minimum of one advertised public meeting, a resolution adopted by the city council , and written approval from AIDC. -6-