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HomeMy WebLinkAboutAGENDA REPORT 1999 1006 CC REG ITEM 10C1'I'EM CITY OF N10ORPARK, CALIFORNIA City Council 'Meeting of ACTION:��►''Vr'[� < GC BY. CITY OF MOORPARK CITY COUNCIL AGENDA REPORT TO: The Honorable City Council FROM: Graham Mitchell, Senior Management Analyst &k'V­- DATE: September 24, 1999 (CC Meeting of 10/6/99) SUBJECT: Consider Establishment of a Business Emergency Loan Program and Resolution No. 99- Appropriating $100,000 from the Los Angeles Area of Contribution for Businesses within the Gateway Plaza and Moorpark Plaza Shopping Centers. Background Since April 1998, Spring Road has been closed north of Peach Hill Road while the Spring Road Bridge is being reconstructed. Several businesses at the intersection of Spring Road and Los Angeles Avenue have indicated that the road closure has negatively impacted business sales. Because of a concern for the business community, the City Council at its September 15, 1999 meeting directed development of a loan program to assist businesses impacted by extensive public capital improvement projects. Discussion In order to improve community infrastructure, the City may periodically initiate capital improvement projects. Because of their large -scale nature and extended period of construction, some projects have the potential to adversely impact local businesses during the construction period. To assist businesses negatively impacted by an extensive capital improvement project, at its September 15th meeting the City Council referred the matter of establishing a business emergency loan program to the Council's 0003; Honorable City Council September 24, 1999 Page 2 Economic Development Committee. The Economic Development Committee met on September 21, 1999 to review a program specifically designed to provide short -term support through a low interest rate loan. The Business Emergency Loan Program addresses the needs of businesses impacted by an extensive capital improvement project. The Program allows eligible businesses to use loan proceeds for operational expenses. To expedite the loan process, approvals would be made by staff. If staff denies an application, it can be appealed for a hearing at the Economic Development Committee, which will make a recommendation for City Council action. The attached guidelines for the Business Emergency Loan Program outlines the Program's objectives and parameters. Some of the major criteria and terms of the Program identified in the guidelines include: • Applicant must be located at its existing site for at least 12 months prior to submitting an application. • The capital improvement project potentially impacting the applicant has a duration of at least 6 months. • Applicant must demonstrate a correlation between a loss of revenue and the capital improvement project and must be able to quantify that loss. • Applicant may use loan funds for operating costs and to pay off existing loans related to the impact of the project (loan funds cannot be used for personal or non - business related uses). • The interest rate will be a simple uncompounded rate of 5 percent per annum. • The term of the loan will be five years. • During the first year of loan issuance, only interest payments are due. • Loan will be secured by real property or a liquid asset. • Loan amount will equal the quantified monthly revenue loss as a result of the capital improvement project multiplied by the months of anticipated disruption; the loan is capped at $20,000. The guidelines also summarize the application procedure and include a loan application form. 000353 Honorable City Council September 24, 1999 Page 3 The Program guidelines require the City Council to activate the Program for a specific commercial area when deemed necessary as a result of a long -term construction project. The City Council will also determined the specific funding source for the activated Program at the same time. With Spring Road closed due to the construction of the Spring Road Bridge, the City Council has expressed a desire to assist the businesses in the Gateway Plaza and Moorpark Plaza shopping centers. If approved by the City Council, the Business Emergency Loan Program may be activated to assist the eligible businesses at those shopping centers. The loan proceeds will be made available from the Los Angeles Area of Contribution fund. The Program will remain active until the City Council approves the Notice of Completion of the Spring Road Bridge project. Recommendation That the City Council 1) Approve the creation of the Business Emergency Loan Program; 2) Activate the Business Emergency Loan Program for businesses in the Gateway Plaza and Moorpark Plaza shopping centers; and 3) (ROLL CALL VOTE REQUIRED) Adopt Resolution No. 99- amending the Fiscal Year 1999/2000 Operating Budget by appropriating $100,000 from the Los Angeles Area of Contribution for the Business Emergency Loan Program. Attachment: A) Business Emergency Application Form B) Resolution No. 99- Loan Program: Guidelines & 000394 CITY OF MOORPARK Business Emergency Loan Program Guidelines & Application Form 000,3) TABLE OF CONTENTS Section I Loan Program Objectives ........................... 1 Section II Loan Program Area . ............................... 1 Section III Loan Program Criteria .............................. 2 Section IV Uses of Loan Funds ............................... 2 Section V Terms of the Loan .. ............................... 3 Section VI Application Procedures ............................. 4 Section VII Loan Documents .. ............................... 5 Exhibit A Loan Application ... ............................... A -1 0003OG City of Moorpark Business Emergency Loan Program SECTION I LOAN PROGRAM OBJECTIVES The City of Moorpark desires to assist local businesses and promote economic growth within the City. Periodically, to provide needed community infrastructure, the City may initiate capital improvement projects. Because some large scale capital improvement projects have a potential to adversely impact local businesses, the City has established the Business Emergency Loan Program. The objective of the program is to help mitigate the loss of revenues during the time a capital improvement projects is underway. The Business Emergency Loan Program makes available to local businesses low interest rate loans that may be used for operating capital. Businesses eligible to participate in the program must meet specific criteria defined in Section III. SECTION II LOAN PROGRAM AREAS The loan program is intended to assist certain businesses within commercial zoned areas. When there is a need to implement the Council will specifically identify which shopping areas are eligible 1 program. Businesses considered not eligible to participate in businesses classified as Educational, Financial, Insurance, Legal, Estate. Page 1 the City located in program, the City o participate in the the program are Medical, and Real 0O03J`t SECTION III LOAN PROGRAM CRITERIA A business must demonstrate that it meets the following criteria to participate in the program: 1. The applicant has owned and operated the business at its existing site for not less than 12 months from the time of application. 2. The capital improvement project impacting the business will or has caused disruption for a minimum of 6 months. 3. The business must demonstrate a direct correlation between its loss of revenues and the capital improvement project. 4. The loss attributable to the capital improvement project must be quantified. Applications may be received upon activation of the Program by the City Council. Applications must be received prior to the City Council's approval of the Notice of Completion for the capital improvement project. SECTION IV USES OF THE LOAN FUNDS The following are eligible uses for the loan funds: 1. Operating costs. 2. Mortgage and /or loan payments. 3. Credit card or personal unsecured loan payments for business expenses incurred as a result of the capital improvement project. 4. Inventory purchases and /or liquidation. Funds may not be used for: a. Payoff of other City or Redevelopment Agency loans. b. Personal use or for uses unrelated to the business. Page 2 000 =%3 SECTION V TERMS OF THE LOAN The following are the terms and conditions of the loan program: 1. The loan's interest rate will be a simple uncompounded rate of 5 percent per annum. 2. The term of the loan is for 5 years. 3. There is no penalty for early payoff. 4. The business may receive the entire loan amount in a single payment or may draw down loan funds when applicant demonstrates the need. 5. Loan payments will start 30 days from the execution of the issuance of the loan. 6. For the first year of the loan, an applicant may elect to make interest payments only. Beginning one year after the loan approval, both principal and interest will be due. 7. Monthly payments are due and are to be paid on the first day of each month. Any payment not received by the sixth day of the month shall be considered late. A daily administrative fee will be charged on all delinquent accounts from the first day of the month until payment is made. The administrative fee will be in the amount of 10 percent of the monthly loan payment due, compounded daily and based on a 365 day year. (The total amount due multiplied by 10 percent and divided by 365). If after 60 calendar days the default is not cured of all back payments owned, the City shall, at its discretion, begin foreclosure proceedings. 8. The loan shall be secured by a lien against real property, insurable personal property, or liquid assets such as stocks and bonds of equal value. A third position may be considered with a good credit rating and adequate loan to value ratio (at least a 1.5 to 1 loan ratio). 9. The loan will be in an amount equal to the quantified monthly revenue loss as a result of the capital improvement project multiplied by the months of anticipated negative impact. The amount of the loan will be capped at $20,000. 10. With the application, the business shall deposit a fee of $125.00 for staff processing time. 11. All escrow, title, and recording fees or other fees charged by escrow will be part of the loan or will be paid by the business at the time the application is approved by the City. The business shall make a deposit of $55.00 to the City to cover these costs. 000359 Page 3 If the loan does not close, any unexpended amount will be returned to the business. No interest shall be paid on this deposit. 12.The business shall prepay the City for any out -of- pocket costs for special studies or for consultants used in processing the application as determined by the City at its sole discretion. 13.The payment of processing costs is no guarantee of approval. The City may deny or approve the application at its sole discretion. SECTION VI APPLICATION PROCEDURES The following are the procedures that will be followed in approving a loan application: 1. Initial Meeting with Prospective Applicant - Upon contact by a prospective applicant, staff will review the program guidelines and application requirements. Staff will begin to assess the applicant's eligibility to participate in the program. 2. Application Submitted to City - At the time an application is submitted to the City, the applicant shall deposit a fee of $125.00. Staff will review the application documents for completeness. Additional information or documentation may be requested at that time. Staff will notify the City Council that the application has been submitted. 3. Credit Report - A credit report for the business and/or personal credit report of proprietor(s) will be obtained at applicant's cost or could be paid from the loan proceeds. 4. Application Review - Upon the submittal of a complete application package, staff will review the application. Staff shall either approve or deny the application based on the information received and the intent of this Program. If the application is denied, the applicant may appeal the denial to the Economic Development Committee. The Economic Development Committee will make a recommendation for the City Council's consideration. 5. Loan Documents - If the application is approved, loan documents will be prepared. The applicant will be responsible for advanced payment of all document preparation costs and City out -of- pocket expenses. These costs may be included in the loan amount. 6. Ongoing Monitoring - An escrow company or the City will service the loan and provide monthly activity reports of loan payments. 0(U0'�:� Page 4 SECTION VII LOAN DOCUMENTS The following documents shall be submitted to the City for review: 1. Completed application (Exhibit A) and Applicant Information Sheet (Exhibit B). 2. Ownership documents of the business (Deed of Trust, signed Rental Agreement or Purchase Document). 3. Financial History (most current three month's bank statements, business or personal tax returns for the past three years, and current Profit and Loss Statement prepared and certified by an accountant). 4. Copies of the prior 6 monthly State Board of Equalization sales reports, if applicable. 5. Evidence of insurance including fire, earthquake, and personal liability. Applicant is responsible to ensure that the City is notified of changes by the insurance provider 30 days prior to any change. 6. Copies of other loans that may be outstanding. 7. If proposing to pay off credit cards, appropriate documentation showing the business related expenses must be submitted. The City may request additional information if necessary to evaluate the application. Page 5 0004G:i EXHIBIT A LOAN APPLICATION 0004::: CITY OF MOORPARK Business Emergency Loan Program LOAN APPLICATION Name of Business: Business Address: Phone Number: Fax Number: Previous Business Address: (if at current location for less than 2 years) Federal ID Number: Number of Years In Business: At Current Location: Organizational Structure of Business (check one): Corporation' Sole Proprietorship Partnership2 Sub (S) Corporation Describe the products sold, services provided, etc. by your business: 'On a separate sheet, provide names, addresses, home phone numbers and social security numbers of the corporation's officers. 2 O a separate sheet, provide names, addresses, home phone numbers and social security numbers of general partners. 3 O a separate sheet, provide name, addresses, home phone number and social security numbers of sole proprietor and spouse. 4 O a separate sheet, provide names, addresses, home phone numbers and social security numbers of corporate participants. Page A -1 000403 Identify the Capital Improvement Project impacting your business: Can you demonstrate the direct correlation between loss of revenue and the Capital Improvement Project? YES* NO *If YES, on a separate sheet provide documentation to support the correlation. Average monthly loss of revenue due to Capital Improvement Project: $ (On a separate sheet provide documentation to quantify the amount identified.) Loan Amount Requested: Purpose of Loan (specify how the loan proceeds will be used): Business References (3): Name Address Phone Number 1) 2) 3) Identify personal or real property that will be used as collateral for this loans: I certify that the information presented as part of this application for a Business Emergency Loan from the City of Moorpark is accurate to the best of my knowledge, under penalty of perjury. I further attest that I am the duly authorized representative of this business. I grant permission to obtain a credit report on myself, if applicable, for the purpose of evaluating this application for loan and to obtain a credit report on this business for the same purpose. Name Title Date 51f the personal or real property is owned or co -owned by someone other than the applicant or has interest in the property, on a separate sheet identify the individual, his/her address, and percentage of ownership of the property. Page A -2 00 0 4 G a RESOLUTION NO. 99- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MOORPARK, CALIFORNIA, AMENDING THE FY 1999/00 BUDGET BY APPROPRIATING $100,000 FROM THE LOS ANGELES AVENUE AREA OF CONTRIBUTION FUND FOR THE BUSINESS EMERGENCY LOAN PROGRAM. WHEREAS, the City Council desires to appropriate funds from the Los Angeles Avenue Area of Contribution (LAAOC) Fund to establish a business emergency loan program; and WHEREAS, Exhibit "A" hereof describes said budget amendment and its resultant impact to the budget line item. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF MOORPARK DOES RESOLVE AS FOLLOWS: SECTION 1. A budget amendment to from the LAAOC Fund, and appropriate Administrative Services Department for the business emergency loan program, as described in Exhibit "A" attached approved. allocate $100,000 the same to the administration of more particularly hereto is hereby SECTION 2. The City Clerk shall certify to the adoption of the resolutions and shall cause a certified resolution to be filed in the book of original resolutions. PASSED AND ADOPTED this 6th day of October 1999. Patrick Hunter, Mayor ATTEST: Deborah S. Traffenstedt, City Clerk Attachment: Exhibit A B0004Gr i Resolution No. 99- EXHIBIT A Budget Revision A. Fund Allocation Fund No. IFund Name jAmount 2501 jLos Angeles Avenue A.O.C. 1$100,000 B. Budget Appropriation: Budget Number Budgeted Revision New Budget 2501- 1313 - 0000 -0000 $0 $100,000 $100,000 C. Fund balance should be restricted to the extent of outstanding loans. Reviewed r 0004G-,;