The URL can be used to link to this page

Home My WebLink AboutRES 86-075 R E S O L U T I O N BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BEAUMONT: THAT the City hereby approves the guidelines for funding for the Downtown Revitalization Loan Fund, a copy of which is attached hereto as Exhibit "A" . PASSED BY THE CITY COUNCIL of the City of Beaumont this the 2St—k day of ��,e emu.. 1986. - Mayor - DOWNTOWN REVITALIZATION REVOLVING LOAN FUND (1/27/86) Revised: (2/14/86) SUMMARY: The Downtown Revitalization Revolving Loan Fund is a $450,000.00 pool jointly administered by BUILD, Inc. and six local financial institutions. Loans may be extended to eligible borrowers at rates approximately 50% below current market rates. Borrowers must meet normal underwriting criteria. Loans may be extended to eligible, fixed-improvement projects. GOALS: 1) To encourage physical improvements which combat deterioration, arrest blight and enhance the economic life of existing structures. 2) To promote visual improvements through the restoration and rehabilitation of exteriors. 3) To expand business and employment opportunities in existing, and deteriorated structures through interior code improvements, and redesigns. CAPITALIZATION: The City has committed $150,000.00 (from the Community Development Block Grant program) for the Downtown Revitalization Revolving Loan I Fund. This public commitment will form the revolving loan fund. Each of six participating financial institutions will extend matchino loans up to $ 50,000.00. i ELIGIBLE PROJECTS: 1) Existing commercial, residential, or mixed-use properties within the Downtown Revitalization Revolving Loan Fund target area (see attached map); 2) Exterior facade improvements, including removal of existing I facades, renovations, cleaning, repairs, windows and awnings. �� Page 1 of 9 Exhibit "A" C At least 15% of the total loan proceeds must be used for facade improvements. 3) Interior improvements including finish-out, rehabilitation and code related improvements. Up to 85% of the total loan proceeds may be used for interior improvements. EXTERIOR IMPROVEMENT GUIDELINES: 1) Every reasonable effort shall be made to provide a compatible use for a property which requires minimal alteration of the building, structure, or site and its environment, or to use a property for its originally intended purpose. 2) The distinguishing original qualities or character of a building, i structure, or site and its environment shall not be destroyed. The removal or alteration of any historic material or distinctive architectural features should be avoided when possible. 3) All buildings, structures, and sites shall be recognized as products of their own time. Alterations that have no historical basis and which seek to create an earlier appearance shall be discouraged. 4) Changes which may have taken place in the course of time are evidence of the history and development of a building, structure, or site and its environment. These changes may have acquired significance in their own right, and this significance shall be recognized and respected. 5) Distinctive stylistic features or examples of skilled craftsman- ship which characterize a building, structure, or site shall be treated with sensitivity. 6) Deteriorated architectural features shall be repaired rather than replaced, wherever possible. In the event replacement is necessary, the new material should match the material being replaced in composition, design, color, texture, and other visual qualities. Repair or replacement of missing architectural features should be based on accurate duplications of features, substantiated by Page 2 of 9 6) Historic, physical, or pictorial evidence rather than on conjectural designs or the availability of different architectural elements from other buildings or structures. 7) The surface cleaning of structures shall be undertaken with the gentlest means possible. Sandblasting and other cleaning methods that will damage the historic building materials shall not be undertaken. 8) Every reasonable effort shall be made to protect and preserve archeological resources affected by, or adjacent to any project. 9) Contemporary design for alterations and additions to existing properties shall not be discouraged when such alterations and additions do not destroy significant historical, architectural or cultural material, and such design is compatible with the size, scale, color, material, and character of the property, neighborhood or environment. 10) Wherever possible, new additions or alterations to structures shall be done in such a manner that if such additions or alterations were to be removed in the future, the essential form and integrity of the structure would be unimpaired. ELIGIBLE EXPENSES: The following may be included as eligible expenses in the interest-bearing portion of the loan: Title report and policy - Attorney certificates - Recording and other fees Appraisals Advertising and printing Surveys Architect and engineering (limit: not to exceed 10% of project costs) Page 3 of 9 • C INELIGIBLE EXPENSES: The following are ineligible expenses and may not be used from loan proceeds: - Incorporation and organizational expenses - Refinancing existing debt - Applicatiori"fees or cost of loan packaging - Non-fixes improvement except Mechanical & Electric with useful life greater than loan maturity - Speculative real estate investment - "Sweat" equity (applicant's) - Work started or completed prior to loan approval - Loan closing costs, other than attorney ELIGIBLE APPLICANTS: 1) The applicant must demonstrate adequate capacity to repay the loan based on past earnings, a satisfactory record Of fulfilled previous obligations, and future prospects. 2) The applicant must not be delinquent in payment of debt secured by a lien on the property by more than sixty (60) days. 3) The applicant's project must be eligible. 4) The applicant, as owner, must hold a general warranty deed with or without a deed of trust to the property. 5) The applicant, as tenant, must have a leasehold and must meet certain terms and condition as determined by the private lender. The owner of the leased structure must agree to the right of the tenant to remain on the premises and owner must have a primary lease term or option to renew the lease for the period of the loan to enable orderly retirement of debt. COLLATERAL REQUIREMENTS: Collateral requirements will be determined by each participating lender. Minimum collateral requirements may include: - Interest in land, buildings, machinery and/or equipment; L - Assignment of contracts and contract proceeds; - Assignment of current receivables; - Personal and/or corporate guarantees. Page 4 of 9 • ' C The City will assume a subordinated position to the participating lender. Tenant collateral on leasehold improvements may include personal assets, with the exception of the homestead. Other acceptable tenant collateral may include: - Other real estate; - Surrender value of life insurance policies; - Assignable contracts; - Negotiable instruments; - Machinery, equipment, furniture and fixtures; - Accounts and notes receivable TERMS: The loan period will be determined by the private lender. -Terms may range from one (1) year to ten (10) years. Shorter terms are preferred. MATCHING: BUILD loan commitments must be matched by a participating lender at 1:1 up to a maximum total loan of $ 50,000.00. LOAN SIZE: 1) Minimum matched loan size: $10,000.00 = BUILD commitment at least $5,000.00; Private loan at least$5,000.00 2) Maximum matched loan size: $50,000.00 BUILD commitment up to $25,000.00; Private loan may exceed $25,000.00, as requested by the applicant and determined by �°--- the private lender INTEREST RATES: ( Interest rates on loans up to $50,000.00 will be approximately one-half the current market rate. Adjustable rates may be V Page 5 of g • C negotiated with the private lender. The borrower may negotiate rates on loans from the private lender in excess of $50,000.00. ADMINISTRATION & LOAN SERVICE BUILD will screen loan applicants and refer acceptable loans to participating private lenders. BUILD will approve commitment of matching funds. Applicants may select one of the participating lenders with whom the applicant has an established relationship, otherwise applicants will be referred to participating lenders on a rotating basis. Loans will be serviced by each originating lender. The lender will remit the revolving loan portion of each loan to BUILD. Loan repayments will be placed in a separate program account PARTICIPATING LENDERS: 1) Beaumont Bank 2) First City Bank 3) First Federal Savings & Loan 4) Interfirst Bank - Beaumont 5) M Bank - Beaumont 6) Texas Commerce Bank �� Page 6 of 9 APPLICATION PROCESS PRELIMINARY REVIEW i BUILD staff (B) Client prepares and (C) Package and commitment provides client w submits application, sent to selected lender with application personal financials, for preliminary q uali- �� and summary of plans and cost esti- fication. RLF criteria mates 1 r plication and pre- Preliminar Package accepted and minary package is Y letter of commitment reened and verified review by lender and. disclosures made BUILD by lender Screening by BUILD to de- -YES Preliminary de- Letter of termine client's termination made b commitment from eligibility BUILD staff or De- BUILD velopment Finance Committee c a m °n NO Rejected Rejecte(: Reconinend re- NO NO Recommend re- structuring and/or Denial letter structuring and/or Client referred renackaging sent repackaging. to alternative funding source YES YES 4 t Client returns to (B) Client makes chanties n and returns to 1r) r11 FINAL COST PREPARATION LOAN REVIEW Client assembles bid (E) (F Final application F Lender conducts standard package, advertises, and package submitted loan review and bids received to BUILD Final review by Development Fi- Loan Lender's decision 'Loan City Housing staff nance Committee approved made approved reviews for federal compliance D co 0 M `O Loan Loan denied denied Bids awarded. Client includes final costs in package Recommend restructuring NO Denial letter NO Recommend sent restructuring YES YES Client returns to (B) or (C) Client retu171 P 1 �1 LOAN CLOSING LOAN SERVICING (G) (H Client notified of pre- Lender services loan; closing and closing re- lender makes pay-backs quirements to BUILD's RLF account Title work and final appraisals ordered ' 0 u , ] D fi Legal documents ordered; loan documents prepared Loan proceeds are dis- Initial RLF draws' bursed made after each phase of work is certified by City Housing staff n