(A) Purposes.
(1) To provide a local source of revenue for economic development;
(2) To provide local funds to encourage and assist the location of new jobs, business, industry and retail establishments in the community; and
(3) To provide local funds to assist the expansion and preservation of existing jobs, business, industry and retail establishments.
(Prior Code, § 3.60.010)
(B) Composition of Revolving Loan Fund Board.
(1) The Revolving Loan Fund Board shall consist of seven members.
(2) The members and their terms shall be as follows:
(a) The Mayor of the city during his or her term of office;
(b) A member of the Common Council, to be appointed annually for a one-year term by the President of the Common Council;
(c) Two citizen members, to be appointed by the City Economic Development Commission for four-year staggered terms; one member shall be from the business community and one member shall be from the industrial community;
(d) Two members from local financial institutions, to be appointed by the City Economic Development Commission for four-year staggered terms, provided, however, that each member shall be from a different financial institution;
(e) A member of the City Economic Development Commission, appointed by the Commission annually for a one-year term; and
(f) Four-year staggered terms shall continue in the same progression for the purpose of future appointments and terms as if they had been appointed pursuant to the previous ordinance, which is Ord. 1099, passed 10-11-1985.
(Prior Code, § 3.60.030)
(C) Duties of Revolving Loan Fund Board.
(1) The Revolving Loan Fund Board is charged with sole responsibility for the expenditure of loan applications. The Board shall create a procedure for receiving and reviewing loan applications. The Board shall approve all documents to be used in connection with the loans, including, but not limited to, loan agreements, security agreements, promissory notes, financing statements, personal guarantees and any other documents. The Board shall be solely responsible for determining the amount of any loan, repayment terms, interest rates and security for the loans based upon the criteria set forth in division (D) below.
(2) The Board shall charge a one-time loan processing fee equal to 1% of any loan, to be paid by the borrower at closing. This fee may be added to the principal balance in extraordinary cases if the Board makes a determination that it is necessary and reasonable. The proceeds from these fees shall be used to offset administrative costs associated with the Revolving Loan Fund program. The Board may also charge each applicant for any recording fees, abstracting or title search fees, legal fees, closing costs and application fees incurred in connection with the loan. The Board shall make a written policy with respect to the charging of fees provided for in this division (C).
(Prior Code, § 3.60.040)
(D) Administration.
(1) The City Clerk-Treasurer shall be responsible for the financial management of the Revolving Loan Fund, including, but not limited to, the proper accounting of funds in the manner prescribed by the State Board of Accounts and Tax Commissioners and the investment of surplus funds. All surplus funds shall be invested in interest-bearing accounts until the time as the Revolving Loan Fund Board directs their expenditure. The Board may provide additional technical support to the Clerk- Treasurer.
(2) The Revolving Loan Fund Board may hire and pay consultants, including, but not limited to, attorneys, grants persons and certified public accountants.
(3) The Director of Redevelopment and Environmental Affairs shall act as Administrator of the Revolving Loan Fund.
(Prior Code, § 3.60.060)
(E) Funding and expenditures.
(1) (a) Funds for the Revolving Loan Fund shall be derived from the following sources:
1. Tax revenues as designated by the Common Council;
2. Loan repayments from outstanding loans;
3. Interest income from loans;
4. State and federal grants, provided, however, that the Revolving Loan Fund Board shall determine whether to accept these grants, taking into consideration the administrative requirements;
5. Income derived from money loaned which was borrowed from private financial
institutions;
6. Donations; and
7. Any other source of revenue appropriated by the Common Council.
(b) Payments in lieu of taxes made by borrowers outside the city limits, pursuant to division (F) below.
(c) No funds may be expended by the Board until lawfully appropriated by the Common Council of the city.
(2) Expenditures from the Revolving Loan Fund shall include the following:
(a) Low interest loans to industries, retail businesses and service businesses made in conjunction with loans made by private lenders or private equity;
(b) Historic preservation loans to industries, retail businesses and service businesses made in conjunction with loans made by private lenders or private equity;
(c) Housing rehabilitation loans;
(d) Eligible community, economic and rehabilitation and preservation activities, as defined pursuant to 24 C.F.R. §§ 570.201, 570.202 and 570.204;
(e) Local matching funds for obtaining state or federal grants for community and economic development;
(f) Administrative and professional costs associated with community and economic development activities;
(g) Loan guarantees of private funds, provided, however, that the Board shall establish a policy regarding the amount of the guarantees relative to available projected funds. In no event shall the loan guarantees be construed to grant the Revolving Loan Fund Board the authority, nor shall the Board attempt, in any way, to encumber unappropriated funds of the city; and
(h) The acquisition of land and construction of buildings for industrial or retail purposes.
(Prior Code, § 3.60.020)
(F) Loan criteria. Any loan applicant must be a business or industry located within the city limits of the city or the county. In the event the loan applicant is outside of the city limits of the city, but is located within the county, the following procedure must be used before making any loan.
(1) The City Economic Development Commission must make a finding that the applicant’s project is economically beneficial to the city before the Revolving Loan Fund Board approves the loan.
(2) The loan applicant must sign a written agreement providing for payment in lieu of taxes equal to the difference between the total tax rate of the city and the total tax rate of the City of Montpelier, depending upon the location of the project. The agreement shall remain in full force and effect during the term of the loan or until the time as the project is annexed into the city.
(3) The Board may establish target areas or target businesses or industries to receive priority of loan consideration.
(4) A residential property owner may be a loan applicant if funds for housing rehabilitation or historic preservation are available.
(5) Job creation requirements and other loan criteria will be established by the Revolving Loan Fund Board and will be based upon the following:
(a) The number of jobs created or retained, the types of jobs created and the ratio of loan fund dollars to jobs created;
(b) The ratio of loan fund dollars to private investment funds, including loans from the private sector and owner equity, the growth potential of the business, the generation of tax revenue and tax assessment base to further city long-term growth;
(c) The need of loan funds to make the project economically feasible;
(d) Each loan application shall be evaluated on its own merits without regard to other loans; and
(e) The maximum amount the Revolving Loan Fund may loan to any one business or industrial project 50% of the then-current balance of the Fund.
(6) Additional loan criteria shall be developed by the Revolving Loan Fund Board. The Council hereby adopts by reference the Revolving Loan Fund Plan, revised December 31, 1991, which is made a part herein as if set out in full.
(Prior Code, § 3.60.050)
(Ord. 1992-1341, passed 4-6-1992; Ord. 2000-1, passed 5-1-2000)