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HomeMy WebLinkAbout86-1210 Central Business District gb- ia �o 785 VOLUME LI RESOLUTION ADOPTING AN AMENDED CENTRAL BUSINESS DISTRICT ECONOMIC DEVELOPMENT LOAN PROGRAM WHEREAS, the City of Elgin has determined that it is appropriate to encourage the revitalization of the Central Business District; and WHEREAS, the City of Elgin has provided an allocation of Housing and Community Development Block Grant funds for Central Business District revitalization purposes; and WHEREAS, a Central Business District economic development program will further such revitalization; and WHEREAS, the City of Elgin is a home rule unit within the meaning of the Con- stitution of the State of Illinois and is authorized to exercise any power and perform any function relative to its government and affairs; and WHEREAS, it is within the government and affairs of the City of Elgin and in the interest of the public health, safety and welfare to promote the revitalization of the Elgin Business District. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN, ILLINOIS, that the City of Elgin hereby adopts an amended Central Business District Economic Development Loan Program, a copy of which is attached hereto as Exhibit A and incorporated herein by reference, which shall be effective upon passage of this resolution. s/ Richard L. Verbic Richard L. Verbic, Mayor Presented: December 10, 1986 Adopted: December 10 , 1986 Vote: Yeas 6 Nays 0 Recorded: Attest: si Marie Yearman Marie Yearman, City Clerk . f 1 CITP DELGIN CENTRAL BUSINESS DISTRICT ECONOMIC DEVELOPMENT LOAN PROGRAM TABLE OF CONTENTS I . General Introduction II . Building Rehabilitation, Expansion and Fixed Asset Loans Purpose Elgibility Loan Review Guidelines Program Operation Eligible Work Items III . Facade Improvement Loans Purpose Eligibility Loan Review Guidelines Eligible Work Items • IV. Steps To Obtain A Loan V . Loan Analysis Forms Exhibit A ELGIN CENTRAL BUSINESS DISTRICT LOAN PROGRAr, Introduction The Central Business District Loan Program has been established to assist in the retention and expansion of existing businesses and to encourage the location of new businesses in Elgin ' s Central Business District . The loan program is designed to work in conjunction with local lending institutions and is primarily directed toward the improvement of real property in the Central Business District . The existing loan pool has been created with funds received under the Housing and Community Development Block Grant Program administered by the U. S. Department of Housing and Urban Development . It must be understood that the loan program as outlined in the attached document will not meet all lending needs in the downtown area . Rather, the loan program should be viewed as one component of the downtown revitalization program. Examples of other components include the Enterprise Zone , the Elgin River Trail Tax Increment Financing District, the Elgin Residential Rehabilitation Rebate Program, the Elgin Civic Center Authority and planned public improvements and activities. Building Rehabilitation , Expansion, and Fixed Asset Loans Purpose The Central Business District loan program provides loans at an effectively reduced interest rate through the principal reduction technique . Loans are available for business start-up (fixed assets ) , building rehabilitation ( interior and exterior) and building additions . A basic aim of the loan program is to bridge the financial gap for downtown enterprises that require loans leveraged to a slightly higher degree than standard underwriting practice would allow. The Central Business District loan program is structured to preclude direct competition with private lenders and to provide an inducement for reinvestment in the downtown area . Eligibility Eligibility for participation in the loan program is based upon business location and an analysis of the loan request utilizing the established loan review guidelines . Locationally, the downtown blocks designated as Improvement Area I ( see attached map) constitute the focus of the loan program. Loan program assistance requires control of real property to be through a long term lease ( 5 years or more ) or ownership. Additionally, the applicant must be an owner-operator of a business or be an absentee owner who has entered into a lease agreement with a business operator . Generally, the loan program participation will be limited to the designated improvement areas. In no instance will loans be considered that are in conflict with a proposed or adopted redevelopment plan ( example - a tax increment financing district ) . Loan Review Guidelines In order to assure adequate public benefit and consistency with the adopted downtown plan a set of loan review guidelines has been established for use in considering a loan application. The following guidelines represent the major factors considered by the Loan Review Committee in assessing a loan proposal and formulating a recommendation to the Elgin City Council : 1 . The loan would result in the retention or expansion of an existing business or the addition of a new business ; 2. The number and types of jobs to be retained and/or created. For building additions the loan program will require , at a minimum, the creation of one full time job for each $5, 000 of public loan funds ; 3. The compatibility of the loan applicant 's business to existing businesses and the Central Business District Plan ; 4 . An assessment of risk , potential for success , and potential for loan repayment ; 5. Potential impact on the overall downtown economy; and, 6 . An assessment of the public to private dollar funding ratio. (Generally the maximum funding ratio is 1 : 1 with a minimum loan amount of $10, 000. ) Program Operation Once the prospective loan applicant has contacted a lender the financial institution functions in much its standard form. The servicing lender conducts a preliminary and, if warranted, a detailed credit analysis. Based upon the credit analysis and the loan package the lender and the loan applicant may decide to apply for a Central Business District Loan. The lender then submits the loan package and the completed Loan Review Analysis forms to the Loan Review Committee. The Loan Review Committee will review the information provided and schedule a meeting to discuss the proposed loan. The lender and the loan applicant may present the proposed loan to the Committee with an explanation of and a recommendation for an effective interest rate reduction. The Loan Review Committee will formulate a recommended loan amount , a recommended loan term, and a recommended effective interest rate based upon the loan review guidelines. (For further detail see the attached Steps to Obtain a Loan) . The effective reduction of the interest rate is accomplished through the principal reduction technique. This process provides a lump sum of public funds to reduce the cost of the overall amount of money required to an affordable level . The private portion of the loan is repaid at the market rate over the negotiated term. Following, or concurrent with, the repayment term of the market rate loan , the public loan amount is repaid to the city over a negotiated term at zero interest. The potential of a deferred payment term for the public loan provides for an additional subsidy while still allowing for the recapture of public funds. The public cost is reflected in the loss of alternative uses of the public funds and the loss of buying power due to inflation. Loss of public investment potential is not relevant since the federal funds used for the public loan cannot be directly invested. Indeed, a loan program can be viewed as an indirect investment of public funds for the benefit of the community . The servicing lender must accept total risk for the private loan and may accept or reject any application in accordance with usual underwriting standards . The servicing lender also accepts all responsibility for processing the public loan. Servicing lenders will also be responsible for providing and executing the appropriate loan security documents for the city on behalf of the client. Ultimately , the City of Elgin is responsible for the public loan, perfection of loan documents and collection of loan payments. Loan security documents can include but may not be limited to the following: first or second mortgages , liens on fixed assets , loan security agreements , and uniform commercial code statements. Additionally , the servicing lender shall promptly notify the City of Elgin of any arrearage of 30 days or more in loan payments . Eligible Costs Architectual and Engineering Services (includes plans and construction monitoring) Fixed Assets ( such as depreciable equipment ) Building Repair and Renovation Work : Ceilings : Repair and/or replace structurally deficient members and repair or replacement of finished ceilino. Chimneys and Flues: Repair and/or replace where necessary. Electrical : Installation of electrical service to upgrade system. Exit Doors : Installation, repair and replacement of exit doors and hardware . Extermination: Insects , rodents , vermin, and other pests in all interior and exterior areas . Floors : Repair and/or replacement of structurally deficient members and repair or replacement of sub-flooring . Foundations : Repair and reconstruction. Guards and Screens : Installation and repair of guards and screens to protect against rodents and insects . Handicap Accessibility : Improvements to a structure to accomodate improved accessibility. Heating and Air Conditioning Facilities : Installation or repair of heating and air conditioning mechanical systems . Insulation: Installation of insulation in attics and sidewalls . Loading Docks and Areas : Installation and repair where needed. Painting: Interior or exterior , contractual or materials. Plumbing: Installation and repair of plumbing. Roof and Drainage Pipes : Repair of structural defects and replacement of roof and drainage pipes . Shutters and Awnings : Repair, replacement , or addition of exterior shutters and awnings . Security Systems : Installation and repair. Signs : Removal or repair as required. Sprinkler Systems: Installation or repair of systems where necessary. Stairs , Porches , Railings , Exits : Repair and replacement or installation of stairs, porches , railings , and exit facilities . Walls : Repair, removal , and alteration as required. Building Additions : The loan program will participate in loans for additions to existing structures. The loan program will not participate in freestanding new construction. i 1 I _____ii ________/ _____ _I STREET -4 di---' KIMBALL 7:777:77:77:77:•:::::::::•:::.::•:•:•:•:::•: 4::.:.:.:.:.:.:.:.:.:.:.:.:**.*:.:.:.:.:.:.:.:.:%:'..:. . ----7 11 Alai" 1 II ull- zlij :::::: :::::::::'...4.::::•.::: 1 0 , 1 PuBLIC 1 zgh..................I, in : ::.:...:6.. .::: :...:.:•:.....:...V. :::: MI 1:11:1 s PARKING I I OLD -i t- •:•:•:•:•:•:•:•:::•::::::::::: w.:::::::::i:::::::::::. mr :::::: IIIII.r LOT I I FEE!MAIN 0 tit ?:;::::::::::::::::::::::::: t ,•.,..,• u 4 OA cu le La - :•:•:•%:•:•::::::::::::•::::: ::::::::::::::: 00- AI- R > :::•:•:•:•:•: PARK ,aiik- 0 ..•.......iv I in: LP NORTH SIRE 44, ••:•:•:•:•:•:•:•:•:•: f"'- ^^:^7:77:771 ........................-.-.% _s• ..:::::::::1;00, . ,Pt - •:•:•:•:•:•:•:•:•:•:•:•:•:•:•. •:•:•:•:•:•:•:•:•••••:•••%. .5`.- NQR T H .....1% .43'•. \\ \ ' -,,g,i •^' COURT 't .p • \,, i 1--7.;..', % ...-.................-...... 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EAST C HICAGO SIRE 141°4k \ ":4;:p• . 41 40 $0‘I 1 s , .....,.::::::::::,...x.:N ...,.:.:.•:.:..:•:.:.:.:.:.:.:.• 77777M7 4i.. . \ p.- :: • „:::::::::::::7::_::•::::::... 1 iii:i:E:E:E:i:iEiiii:E:i*:, i******K:i*:::::Ei IT, i:i:i:i:i::.::.:X:i::.* Pr:Ali 44 :;:•:::::•• tc..::::::.....f.::;.:::::::::::::::::::::::....".2.:::E.:;:1:::Eg:1:1:11:1:1:1:1 **A.'''.........". w/i giniiiii:::.:t. ifg7,0:4: U-174001L.7111.1, . .. . . . 1:13 • • • • •• •• I \ *. :: .pi: Po DU PAGE p_ c6,::.‘//1;e: S:‘ ig% \ .-f : ▪ :i• .:....• ::::i::i::Ei:::. ..::i:: :: ::i.:::::::::: * --1 • •.4\ 3t.". ,f i A.efell - • r Cr::I I.;::::.....:14:::::::::::::•."...".:.. .*•, °2:0 k\\:it.:::•:.'...:::.3.*::.:bo kr- .:*:::::::::.' ... '•:••••••••••• m ID 1.!&:%:..‹.., .::i:iiiii:i iii ..--... , Iiii x cr .t Lo‘o,s,c) .. •-iififfil:. . .15411f• • ••• :-,-1.'4:4. '1 • r \ 11, . lit" ..•• \.,. <*\ ..... S •:::11:.:14.,, - FULTON . '::::: • ,- '4. T \\ 4'. • ' 0 0 .:.:..:::::.4::..::::.4.:.:.:.:::..:..:.:• .':':..:::':..:::::: V -1 lr,..k \ 4.iifig:/... •:::•::•::•::•:::::::":•:.:::::::iiiiiiiii:ii::.::.iiiiii:iii:iiii:.°PA WEST IMPROVEMENT AREA I \% \ 41-9 al:::1: : 1::i::;:::::;;;;;;:::::::::;::i::r:.:...• ltil \ •::::::::°:::::::::•4. 4141 S1 :•:• .a .:. i /3 \ (N .. )‘' •41, soO'"I' .4 *•:•:•:•:-.-...- & ii,\\ \ e. •••:::::•'•" 'c• ir ( \.1-4.\•..\\) 6" v- \ NIt V _x• 4 11 --- 1- ‘,5-1 cer.\\ -'---. '\ ‘..0c- . 5 , pi ,,,...,, ,.. •I--)1, 4%,%•• \' Facade Improvement Loan Purpose The facade improvement loan differs from the preceding improvement loans in that a financing gap need not exist for public financial participation. The City recognizes that facade improvements have a public as well as private impact. Exterior improvements are highly visible and often result in positive benefits to adjacent properties. Because facade improvements affect the overall streetscape these type of improvements have often been leveraged with public funds . Eligibility Existing commercial structures located in the designated Central Business District are eligible for consideration for the facade improvement program. In no instance will a loan be made that would conflict with a pending or adopted redevelopment plan. Loan Review Guidelines In order to assure adequate public benefit and continuity of the downtown revitalization program the following guidelines will be used in assessing a loan request : 1 . The potential impact of the proposed facade improvement on the streetscape ; 2. The extent of the facade improvement to be undertaken ; 3. The compatibility of the proposed facade improvement to nearby structures ; 4. The impact of the facade improvement on eliminating city code violations and extending the life of the structure ; and, 5. An assessment of risk and potential for repayment . Program Operation : The facade improvement loans are provided through the same mechanism (principal reduction) and process as the standard Central Business District Loan Program. However, a facade improvement loan will be provided at a fixed rate of two to four points below the prevailing market rate for fixed rate improvement loans . Public funds will be loaned at zero interest in an amount that will effectively reduce the total interest rate • by two to four points . The amount of interest reduction will evaluated by the Loan Review Committee based upon the ng loan review guidelines . preceding The facade improvement loans will require the submission of plans and at least two cost estimates for the proposed work . Additionally , a city inspection of the building's exterior must be conducted. The city inspection ensures that the scope of work funded will alleviate any exterior code violations. will be reviewed by the City of Elgin prior to tal onato heeloana the Loan Review Committee. For the he lan pr to ogrm a facade is defined as any exterior building face visiblefrom aa public right-of-way or a pedestrian right-of-way. Compliance with relevant city codes will be manadatory for particpation in a facade improvement loan. STEPS TO OBTAIN A LOAN 1 . Contact the loan program coordinator, Patricia Andrews , for information on the loan program. Telephone number 695-6500. 2. If building rehabilitation is being considered a code compliance evaluation of the structure will be required. For a facade improvement loans an exterior code evaluation of the structure will be required. These will be provided by the City of Elgin through the loan program coordinator . 3. Contact a local lending institution. The lending institution will handle the loan application according to its standard operating procedure. - Provide the Loan Review Analysis Form to the loan program coordinator accompanied by at least two work cost estimates and financing information. For facade improvement loans provide a set of plans for the proposed improvement. - Within two weeks after receipt of a completed Loan Review Analysis Form and other documentation a Loan Review Committee meeting will be scheduled. Both the participating lender and the loan applicant will present the loan proposal to the Loan Review Committee . 4 . Caution: Do not begin work being considered for the downtown loan program prior to complete approval . Work initiated prior to loan approval by the City Council will not be eligible for the loan program. A letter advising the loan applicant of the Committee ' s recommendation will be mailed within seven days of the Loan Review Committee meeting. After City Council consideration and action a letter of loan approval or denial will sent to the loan applicant and lender by the loan program coordinator. 5. Each loan applicant will be required to abide by the federal regulations regarding the Community Development Block Grant Program. Generally, these regulations regard labor standards and wage rates. Contact the loan program coordinator for further information. 6. Loan payouts will be issued as a lump sum upon completion of the project or as partial payouts as paid receipts (and any required inspections) are received. Partial payouts will be issued in the name of the contractor and the loan applicant. All construction work must comply with local codes and ordinances . November 18, 1986 MEMORANDUM TO: Mayor and Members of the City Council FROM: City Manager SUBJECT: Revisions to the Central Business District Loan Program PURPOSE: To consider proposed revisions to the CBD Loan Program. BACKGROUND: During the City Council Committee of the Whole meeting on June 30, 1986 , a discussion was held regarding potential revisions to the CBD Loan Program. During the discussion, it was indicated that the following considerations • should be addressed : 1 . Retention of the confidentiality of the Loan Review Committee . 2 . Addition of the City Council representative to the Greater Downtown Elgin Commission to the membership of the Loan Review Committee. 3 . Addition of building additions to existing structures for CBD Loan Program eligibility. 4 . Addition of a reporting requirement for loans that may be in arrears . 5 . The addition of a facade improvement program to the CBD Loan Program. Attached for City Council review is a revised CBD Loan Program. The revised program incorporates the addition of new construction for building additions , reporting requirements and a proposed facade improvement program. The attached material has been reviewed by City staff, the Greater Downtown Elgin Commission and the Loan Review Committee. Suggestions from the various reviewing entities have been incorporated in the proposed revisions . FINANCIAL IMPACT: The addition of new construction and the creation of a facade improvement program could result in more loan requests. Currently,y, approximately $162 , 000 is available for loans . ;RC- Revisions to the Central Business District Loan Program November 19, 1986 Page 2 of 2 RECOMMENDATION: It is suggested that City Council members consider the proposed CBD Loan Program revisions and consider appointing the City Council GDEC representative as a member of the Loan Review Committee. If approved, staff will prepare the necessary documents for City Council action. es J. Co City Manager JJC :amp Attachments CITY OF ELGIN CENTRAL BUSINESS DISTRICT ECONOMIC DEVELOPMENT LOAN PROGRAM TABLE OF CONTENTS I . General Introduction II . Building Rehabilitation, Expansion and Fixed Asset Loans Purpose Elgibility Loan Review Guidelines Program Operation Eligible Work Items III . Facade Improvement Loans Purpose Eligibility Loan Review Guidelines Eligible Work Items IV. Steps To Obtain A Loan V . Loan Analysis Forms ELGIN CENTRAL BUSINESS DISTRICT LOAN PROGRAri Introduction The Central Business District Loan Program has been established to assist in the retention and expansion of existing businesses and to encourage the location of new businesses in Elgin ' s Central Business District . The loan program is designed to work in conjunction with local lending institutions and is primarily directed toward the improvement of real property in the Central Business District . The existing loan pool has been created with funds received under the Housing and Community Development Block Grant Program administered by the U. S. Department of Housing and Urban Development . It must be understood that the loan program as outlined in the attached document will not meet all lending needs in the downtown area . Rather, the loan program should be viewed as one component of the downtown revitalization program. Examples of other components include the Enterprise Zone , the Elgin River Trail Tax Increment Financing District, the Elgin Residential Rehabilitation Rebate Program, the Elgin Civic Center Authority and planned public improvements and activities. Building Rehabilitation, Expansion, and Fixed Asset Loans Purpose The Central Business District loan program provides loans at an effectively reduced interest rate through the principal reduction technique. Loans are available for business start-up ( fixed assets ) , building rehabilitation ( interior and exterior) and building additions . A basic aim of the loan program is to bridge the financial gap for downtown enterprises that require loans leveraged to a slightly higher degree than standard underwriting practice would allow. The Central Business District loan program is structured to preclude direct competition with private lenders and to provide an inducement for reinvestment in the downtown area . Eligibility Eligibility for participation in the loan program is based upon business location and an analysis of the loan request utilizing the established loan review guidelines. Locationally , the downtown blocks designated as Improvement Area I (see attached map) constitute the focus of the loan program. Loan program assistance requires control of real property to be through a long term lease ( 5 years or more) or ownership. Additionally, the applicant must be an owner-operator of a business or be an absentee owner who has entered into a lease agreement with a business operator. Generally, the loan program participation will be limited to the designated improvement areas . In no instance will loans be considered that are in conflict with a proposed or adopted redevelopment plan (example - a tax increment financing district ) . Loan Review Guidelines In order to assure adequate public benefit and consistency with the adopted downtown plan a set of loan review guidelines has been established for use in considering a loan application. The following guidelines represent the major factors considered by the Loan Review Committee in assessing a loan proposal and formulating a recommendation to the Elgin City Council : 1 . The loan would result in the retention or expansion of an existing business or the addition of a new business ; 2. The number and types of jobs to be retained and/or created. For building additions the loan program will require , at a minimum, the creation of one full time job for each $5, 000 of public loan funds ; 3. The compatibility of the loan applicant 's business to existing businesses and the Central Business District Plan ; 4 . An assessment of risk , potential for success , and potential for loan repayment ; S. Potential impact on the overall downtown economy ; and, 6 . An assessment of the public to private dollar funding ratio. ( Generally the maximum funding ratio is 1 : 1 with a minimum loan amount of $10, 000. ) Program Operation Once the prospective loan applicant has contacted a lender the financial institution functions in much its standard form. The servicing lender conducts a preliminary and, if warranted, a detailed credit analysis. Based upon the credit analysis and the loan package the lender and the loan applicant may decide to apply for a Central Business District Loan. The lender then submits the loan package and the completed Loan Review Analysis forms to the Loan Review Committee. The Loan Review Committee will review the information provided and schedule a meeting to discuss the proposed loan. The lender and the loan applicant may present the proposed loan to the Committee with an explanation of and a recommendation for an effective interest rate reduction. The Loan Review Committee will formulate a recommended loan amount , a recommended loan term, and a recommended effective interest rate based upon the loan review guidelines. (For further detail see the attached Steps to Obtain a Loan) . The effective reduction of the interest rate is accomplished through the principal reduction technique. This process provides a lump sum of public funds to reduce the cost of the overall amount of money required to an affordable level . The private portion of the loan is repaid at the market rate over the negotiated term. Following, or concurrent with, the repayment term of the market rate loan , the public loan amount is repaid to the city over a negotiated term at zero interest. The potential of a deferred payment term for the public loan provides for an additional subsidy while still allowing for the recapture of public funds. The public cost is reflected in the loss of alternative uses of the public funds and the loss of buying power due to inflation. Loss of public investment potential is not relevant since the federal funds used for the public loan cannot be directly invested. Indeed, a loan program can be viewed as an indirect investment of public funds for the benefit of the community . The servicing lender must accept total risk for the private loan and may accept or reject any application in accordance with usual underwriting standards . The servicing lender also accepts all responsibility for processing the public loan. Servicing lenders will also be responsible for providing and executing the appropriate loan security documents for the city on behalf of the client. Ultimately , the City of Elgin is responsible for the public loan, perfection of loan documents and collection of loan payments. Loan security documents can include but may not be limited to the following: first or second mortgages , liens on fixed assets, loan security agreements, and uniform commercial code statements. Additionally, the servicing lender shall promptly notify the City of Elgin of any arrearage of 30 days or more in loan payments . Eligible Costs Architectual and Engineering Services (includes plans and construction monitoring) Fixed Assets ( such as depreciable equipment ) Bui lding Repair and Renovation Work : Ceilings : Repair and/or replace structurally deficient members and repair or replacement of finished ceilino. Chimneys and Flues: Repair and/or replace where necessary . Electrical : Installation of electrical service to upgrade system. Exit Doors : Installation, repair and replacement of exit doors and hardware. Extermination: Insects , rodents , vermin, and other pests in all interior and exterior areas . Floors : Repair and/or replacement of structurally deficient members and repair or replacement of sub-flooring. Foundations : Repair and reconstruction. Guards and Screens : Installation and repair of guards and screens to protect against rodents and insects . Handicap Accessibility: Improvements to a structure to accomodate improved accessibility. Heat ing and Air Conditioning Facilities : Installation or repair of heatingand air r conditioning mechanical systems . Insulation: Installation of insulation in attics and sidewalls . Loading Docks and Areas : Installation and repair where needed. Painting: Interior or exterior , contractual or materials. Plumbing: Installation and repair of plumbing. Roof and Drainage Pipes: Repair of structural defects and replacement of roof and drainage pipes . Shutters and Awnings : Repair, replacement, or addition of exterior shutters and awnings . Security Systems : Installation and repair. Signs : Removal or repair as required. Sprinkler Systems : Installation or repair of systems where necessary . Stairs , Porches , Railings , Exits : Repair and replacement or installation of stairs, porches , railings , and exit facilities . Walls : Repair , removal , and alteration as required. Building Additions : The loan program will participate in loans for additions to existing structures. The loan program will not participate in freestanding new construction. '`� !, KIMBALL Iiiii 1 STREET { rrn >D `y i PARKING i i f H': 'A JE. �I , .; , LOT y Fy w: ,�� •_.. W P ZO fe ..: :. w W r ® ® OLO � � ,� A , \ �1^ W Y tal 2 OW[ :►� MAIN Q �� �'Q� �,'� 1 '\� cA1L WIDEN a PARK LIBRARTn �I m f�� :• S�. h NORTH __ 8TRE▪ . �W :'%:'•.�. .1• O4 % ` �� r.7� L TE PL. 2O -.__�:•'•' y.„ 9• O �lIAPPE COUNT} .... of •NORTH /,t. MME \J\ CIT " *•:•:•:•:•:•:•:•:•:•:•:•:•:. L:=I lo J G E u ti t 't, uM GC+ w DEXTER AVE. ;:{• v 't'• ':;:{:';:;' u HAL • r '...1 [..:::•:::::•:::::;:.*:.::::::::.1 ::ifiti::if:i:i:i:ii;* egfriiiiii:ili..•:. 10 . k:::i:::i.:::..f.:::::::1 ...........:::......::::::::::::::::: ........,......1..:::::::: . ::::::::::, 17.1 0 C, •\ \1r. u! O PA RK INS DIVISION .,6� \ ►DST � % LOT ;........... Il' E9 � STRE v) it ••':-:•:•:•:•:•:•:•....; OirICE . PK a;: :�, \\ HIGHLAND AVNUE \c"\\11 g"17 Di si'--J\ r---jig 111111 .€1' M c,,,,,0,0,, oi, . .;::i i la, A vN �ii1111, EAST ------' IP CHICAGO SIRE % % V. c, ... W Y U-N = 1 \‘ 7 H . :L. N 0o� zNIow GNL • ` W lCN DIlTR1v i A DM TATI r .•� • ` \ `�'� �s DU PAGE ` :. tn ,, \ **:•:!%.::74.:::::.: . :-.,,,g-4. .(lc`[ 41 WEST �� •� \` �\� •' �' :tip :. Q a IMPROVEMENT AREA I -, " St � PRAIRIE • .• )1. 10 yOJ \\,, 'Q \ CP </Z6,\:0. �/< 461)1 \t' t s `Q ti'c 71,1? Facade Improvement Loan Purpose The facade improvement loan differs from the preceding improvement loans in that a financing gap need not exist for public financial participation. The City recognizes that facade improvements have a public as well as private impact. Exterior improvements are highly visible and often result in positive benefits to adjacent properties. Because facade improvements affect the overall streetscape these type of improvements have often been leveraged with public funds . Eligibility Existing commercial structures located in the designated Central Business District are eligible for consideration for the facade improvement program. In no instance will a loan be made that would conflict with a pending or adopted redevelopment plan . Loan Review Guidelines In order to assure adequate public benefit and continuity of the downtown revitalization program the following guidelines will be used in assessing a loan request : 1 . The potential impact of the proposed facade improvement on the streetscape; 2. The extent of the facade improvement to be undertaken ; 3. The compatibility of the proposed facade improvement to nearby structures ; 4 . The impact of the facade improvement on eliminating city code violations and extending the life of the structure ; and, 5. An assessment of risk and potential for repayment . Program Operation : The facade improvement loans are provided through the same mechanism (principal reduction) and process as the standard Central Business District Loan Program. However, a facade improvement loan will be provided at a fixed rate of two to four points below the prevailing market rate for fixed rate improvement loans. Public funds will be loaned at zero interest in an amount that will effectively reduce the total interest rate by two to four points . The amount of interest reduction will evaluated by the Loan Review Committee based upon the ng precedin loan review guidelines . g The facade improvement loans will require the submission of plans and at least two cost estimates for the proposed work . Additionally, a city inspection of the building's exterior must be conducted. The city inspection ensures that the scope of work funded will alleviate any exterior code violations.will be reviewed by the City of Elgin prior to tal onato heeoa the Loan Review Committee. For the he lan prn to rm a facade is defined as any exterior building face visiblefromaa public right-of-way or a pedestrian right-of-way. Compliance with relevant city codes will be manadatory for particpation in a facade improvement loan. STEPS TO OBTAIN A LOAN 1 . Contact the loan program coordinator, Patricia Andrews, for information on the loan program. Telephone number 695-6500. 2. If building rehabilitation is being considered a code compliance evaluation of the structure will be required. For a facade improvement loans an exterior code evaluation of the structure will be required. These will be provided by the City of Elgin through the loan program coordinator. 3. Contact a local lending institution. The lending institution will handle the loan application according to its standard operating procedure. - Provide the Loan Review Analysis Form to the loan program coordinator accompanied by at least two work cost estimates and financing information. For facade improvement loans provide a set of plans for the proposed improvement. - Within two weeks after receipt of a completed Loan Review Analysis Form and other documentation a Loan Review Committee meeting will be scheduled. Both the participating lender and the loan applicant will present the loan proposal to the Loan Review Committee. 4 . Caution: Do not begin work being considered for the downtown loan program prior to complete approval . Work initiated prior to loan approval by the City Council will not be eligible for the loan program. A letter advising the loan applicant of the Committee ' s recommendation will be mailed within seven days of the Loan Review Committee meeting. After City Council consideration and action a letter of loan approval or denial will sent to the loan applicant and lender by the loan program coordinator . 5. Each loan applicant will be required to abide by the federal regulations regarding the Community Development Block Grant Program. Generally, these regulations regard labor standards and wage rates. Contact the loan program coordinator for further information. 6. Loan payouts will be issued as a lump sum upon completion of the project or as partial payouts as paid receipts (and any required inspections) are received. Partial payouts will be issued in the name of the contractor and the loan applicant. All construction work must comply with local codes and ordinances. �Xt ST' J 6/15/85 CITY OF ELGIN CENTRAL BUSINESS DISTRICT ECONOMIC DEVELOPMENT LOAN PROGRAM Introduction This document represents the basic framework for a City of Elgin Central Business District (CBD) economic development program funded through the use of Housing and Community Development Block Grant (HCD) funds. Program elements are structured to attract and/or retain desirable business concerns and to improve the physical condition of downtown buildings. It must be full understood that a program as outlined herein cannot and will not alleviate all existing difficulties in Elgin's central business district. Rather it must be viewed as a single component in an overall revitalization effort. Purpose The program provides loans at an effectively reduced interest rate through the principal reduction technique. Such loans are available for business start-up, expansion or building rehabilitation (interior and exterior). The basic aim of the program is to bridge the financial gap for downtown enterprises that require loans leveraged to a slightly higher degree than standard underwriting practice would allow. This approach precludes direct competition with private lenders and provides an effective inducement for reinvestment in the downtown area. Eligibility Eligibility is determined on both functional tional and ra eo g g phic bases. Functionally, program participation is extended to new businesses and expanding, existing businesses meeting loan review criteria. Rehabilitation assistance requires control of the property through a long term lease (5 years or more) or ownership. Additionally, the applicant must be an owner-operator of a business or be an absentee owner presently entered into a lease agreement with a business enterprise meeting the program loan review criteria. Generally, program participation will be limited to a target area (a portion of the CBD designated as Improvement Area I). In no instances shall loans be made in conflict with a pending or effective redevelopment plan. Loan Review Criteria In order to assu re adequate public benefit and contin uity of the revitalization effort, downtown some criteria for business participation in the program are required. The following criteria are applied. a. Would the approval of the loan subsidy result in a new business locating in the downtown area or in the expansion or retention of an existing business? b. How many jobs would the loan proposed create or retain in the downtown area? c. Would the type of product or service to be offered complement existing products and services downtown and create additional foot traffic which would benefit other businesses? d. Is there a reasonable chance of success if the loan subsidy is approved? e. Would approval of a loan subsidy result in a healthier or more stable economy in the downtown area? f. Generally, the program will operate on a maximum public/private financing ratio of one (1 ) to one (1 ) and a minimum loan of 10,000 dollars. g. Is there a reasonable expectation that the loan subsidy will be repaid? Program Operation Once the prospective client contacts the service agent the financial institution functions in much its standard form. The servicing lender executes a preliminary and, if warranted, a detailed credit judgement. Based upon this credit judgement the lender may bring the loan package and the attached Loan Review Analysis before the Loan Review Committee (LRC) with an explanation of and a recommendation for an effective rate reduction. A list of Loan Review Committee members is attached. The LRC makes a determination based upon loan review criteria and establishes the effective interest rate (see attached Steps to Obtain a Loan). The effective reduction of the interest rate is accomplished through the principal reduction technique. This process provides a lump sum of public funds (HCD) to reduce the overall amount of money required to an affordable level. The remainder of the loan is repaid at market rates over a negotiated term. Following, or concurrent with, the initial repayment term the lump sum principal reduction amount is repaid to the city over a negotiated term at no interest. The potential of a deferred payment term provides for a further effective subsidy yet still allows the recapture of public funds. The public cost is reflected in the loss of alternative uses of the funds and the loss of buying power due to inflation. Loss of public investment potential is irrelevant since HCD funds cannot be drawn down and directly invested. Indeed, an economic development program can be viewed as an indirect investment of HCD funds for the benefit of the community. The servicing lender must accept total risk for the initial loan and may accept or reject any application in accordance with usual underwriting standards. It must also accept all responsibility for processing and servicing the loan. Servicing lenders will also be responsible for providing appropriate loan security instruments to the city on behalf of the client. These can include but may not be limited to the following: first or second mortgages, liens on fixed assets, loan security agreements and uniform commercial code - financing statements. Eligible Costs Fixed Assets Building Improvements (detail): Other than facade improvements most eligible rehabilitation items would be code compliance related as listed below: Architectural and Engineering Services Ceilings: Repair and/or replace structurally deficient members and repair or replacement of finished ceiling. Chimneys and Flues: Repair and/or replace where necessary. Electrical: Installation of electrical service to upgrade system. Exit Doors: Installation, repair and replacement of exit doors and hardware. Extermination: Insects, rodents, vermin, and other pests in all interior and exterior areas. Floors: Repair and/or replacement of structurally deficient members and repair or replacement of sub-flooring. Foundations: Repair and reconstruction. Guards and Screens: Installation and repair of guards and screens to protect against rodents and insects. Heating and Air Conditioning Facilities: Installation or repair of heating and air conditioning plants. Insulation: Installation of insulation in attics and sidewalls. Loading Docks and Areas: Installation and repair where needed. Painting: Interior or exterior, contractual or materials. Plumbing: Installation of plumbing to upgrade to code. Roof and Drainage Pipes: Repair of structural defects and replacement of roof and drainage pipes. Shutters and Awnings: Repair, replacement, or addition of exterior shutters and awnings. Security Systems: Installation and repair. Signs: Removal or repair as required. Sprinkler Systems: Installation or repair of systems where necessary. Stairs, Porches, Railings, Exits: Repair and replacement or installation of stairs, porches, railings, and exit facilities. STEPS TO OBTAIN A LOAN 1 . Contact any member of the Loan Review Committee regarding further information on program participation. 2. If building rehabilitation is to be a component of the loan package, a code compliance review of the structure is in order. Mr. Bob Richardson, Rehabilitation Specialist with the City of Elgin may be of assistance, (312) 695-6500, extension 235. 3. A brief explanation of the business concept and proposed financing should be formulated. 4. All cost estimates and financing information must be presented to a local financial institution for their review. At this time the applicant should advise the lender of his/her interest in the Central Business District Economic Development Loan Program. The lender will be of assistance in completing the Loan Review Analysis form. 5. The applicant and the prospective lender must present the loan package to the Loan Review Committee for their consideration. 6. Following Loan Review Approval (15-30 days) a letter confirming program participation and terms will be forwarded to the applicant and his/her lender. 7. Contact Roger K. Dahlstrom, City of Elgin, (312) 695-6500, extension 235, to arrange for updated and additional bids for assisted portion of work to be performed. A reinspection of the property may be required at this time. Do not enter into any contractual obligations for purchase or construction until this step is completed. June 26 , 1986 MEMORANDUM TO: Mayor and Members of the City Council FROM: City Manager SUBJECT: Review of the Central Business District Economic Development Loan Program PURPOSE: The enclosed material has been provided to give the City Council an overview of the existing loan program and to raise issues which the City Council may wish to address in potential revisions to the existing program. BACKGROUND: Attached for City Council members are the current materials used for the Central Business District Economic Development Loan Program. The loan program was instituted on September 12 , 1983 and the Loan Review Committee was established by resolution on February 13 , 1984 . Since establishment of the loan program, the onlypro gram change p g an ge has been the deletion of the eligibility of operational and inventory costs for loan consideration. These two items were deleted based upon the high risk associated with lending for these items . Several issues need to be addressed in the review and potential revision of the attached material: 1 . The Loan Review Committee, as presently established, is not a City committee . As presently established, the Committee conducts meetings g in private. If the Committee becomes a City committee , the meetings would be open to the public . Since private finances are discussed, it may be desireable to maintain the confidentiality of the Loan Review Committee. Regardless , the Loan Committee membership needs to be defined and membership terms need to be established. 2 . Presently, the Loan Review Committee is composed of six members. The Committee recommends that one additional member be added. The Council may wish to consider appointing the Greater Downtown Elgin Commission City Council representative as a member of the Loan Review Committee. This would provide a direct link to the City Council, the GDEC and the Loan Review Committee . Review of the Central Business District Economic Development Loan Program June 26 , 1986 Page 2 of 3 3 . The loan program currently provides for loans for fixed assets ( such as equipment ) and building rehabilitation. New construction is not eligible under the current loan program. The consideration of new construction could be on a basis of: a) new construction as an addition to an existing business structure; and/or, b ) new construction as a free standing new building. The Loan Review Committee has recommended that new construction not be added to the loan program. If the eligibility of new construction is to be added to the program, guidelines need to be developed tying eligibility to job creation. (This is the basis of eligibility under the Community Development Block Grant Program. ) 4 . Currently, no financial reporting is required from the participating lender or from the loan recipient . The Loan Review Committee has recommended that during the first year of the loan that quarterly financial reports be provided, and that annual financial reports be provided after the first year until the City loan is repaid in full. 5 . Facade improvements to buildings have a public as well as private impact . Exterior improvements are highly visible and often result in improvements to adjacent structures ( spin-off effect ) . Because these types of improvements affect the streetscape , they have often been leveraged with public funds whether or not a financing gap exists. One of the means to encourage more facade improvements may be to provide loans at some reduced interest rate regardless of private financing ability. Provision of this type of loan should be accompanied by a mechanism to assure facade compatibility with the structure itself and the streetscape as an entity. A facade improvement program could also be used as an incentive to those individual businesses that have sufficient financing and are not eligible for the present loan program. Review of the Central Business District Economic Development Loan Program June 26 , 1986 Page 3 of 3 FINANCIAL IMPACT: Issues number 3 and 5 would enlarge the scope of the present loan program and probably will result in the processing of more loans . Presently, $162 , 838 in CDBG funds remains available for the loan program. In the first six months of this year, one loan was approved in the amount of $11 , 350 . Therefore, it would appear that sufficient funds are available to expand the scope of the downtown loan program. RECOMMENDATION: It is suggested that City Council members decide the status of the Loan Review Committee (either a City committee or continue as presently established) and consider the appointment of an additional member to the Committee. Additionally, if the City Council wishes to consider expanding the scope of the loan program, staff will develop the necessary criteria for review by the Loan Committee and City Council. Further, with concurrence from the City Council, staff will proceed to develop proposed membership terms and revise the loan program to include provisions for financial reports . J s J. Cook, • ty Manager JJC:amp Attachments 6/15/85 CITY OF ELGIN CENTRAL BUSINESS DISTRICT ECONOMIC DEVELOPMENT LOAN PROGRAM Introduction This document represents the basic framework for a City of Elgin Central Business District (CBD) economic development program funded through the use of Housing and Community Development Block Grant (HCD) funds. Program elements are structured to attract and/or retain desirable business concerns and to improve the physical condition of downtown buildings. It must be full understood that a program as outlined herein cannot and will not alleviate all existing difficulties in Elgin's central business district. Rather it must be viewed as a single component in an overall revitalization effort. Purpose The program provides loans at an effectively reduced interest rate through the principal reduction technique. Such loans are available for business start-up, expansion or building rehabilitation (interior and exterior). The basic aim of the program is to bridge the financial gap for downtown enterprises that require loans leveraged to a slightly higher degree than standard underwriting practice would allow. This approach precludes direct competition with private lenders and provides an effective inducement for reinvestment in the downtown area. Eligibility Eligibility is determined on both functional and geographic bases. Functionally, program participation is extended to new businesses and expanding, existing businesses meeting loan review criteria. Rehabilitation assistance requires control of the property through a long term lease (5 years or more) or ownership. Additionally, the applicant must be an owner-operator of a business or be an absentee owner presently entered into a lease agreement with a business enterprise meeting the program loan review criteria. Generally, program participation will be limited to a target area (a portion of the CBD designated as Improvement Area I). In no instances shall loans be made in conflict with a pending or effective redevelopment plan. Loan Review Criteria In order to assure adequate public benefit and continuity of the downtown revitalization effort, some criteria for business participation in the program are required. The following criteria are applied. a. Would the approval of the loan subsidy result in a new business locating in the downtown area or in the expansion or retention of an existing business? b. How many jobs would the proposed loan create or retain in the downtown area? c. Would the type of product or service to be offered complement existing products and services downtown and create additional foot traffic which would benefit other businesses? d. Is there a reasonable chance of success if the loan subsidy is approved? e. Would approval of a loan subsidy result in a healthier or more stable economy in the downtown area? f. Generally, the program will operate on a maximum public/private financing ratio of one (1) to one (1) and a minimum loan of 10,000 dollars. g. Is there a reasonable expectation that the loan subsidy will be repaid? Program Operation Once the prospective client contacts the service agent the financial institution functions in much its standard form. The servicing lender executes a preliminary and, if warranted, a detailed credit judgement. Based upon this credit judgement the lender may bring the loan package and the attached Loan Review Analysis before the Loan Review Committee (LRC) with an explanation of and a recommendation for an effective rate reduction. A list of Loan Review Committee members is attached. The LRC makes a determination based upon loan review criteria and establishes the effective interest rate (see attached Steps to Obtain a Loan). The effective reduction of the interest rate is accomplished through the principal reduction technique. Thisprocess u P P q provides a lump sum of public funds (HCD) to reduce the overall amount of money required to an affordable level. The remainder of the loan is repaid at market rates over a negotiated term. Following, or concurrent with, the initial repayment term the lumpprincipal sum p incipal reduction amount is repaid to the city over a negotiated term at no interest. The potential of a deferred payment term provides for a further effective subsidy yet still allows the recapture of public funds. The public cost is reflected in the loss of alternative uses of the funds and the loss of buying power due to inflation. Loss of public investment potential is irrelevant since HCD funds cannot be drawn down and directly invested. Indeed, an economic development program can be viewed as an indirect investment of HCD funds for the benefit of the community. The servicing lender must accept total risk for the initial loan and may accept or reject any application in accordance with usual underwriting standards. It must also accept all responsibility for processing and servicing the loan. Servicing lenders will also be responsible for providing appropriate loan security instruments to the city on behalf of the client. These can include but may not be limited to the following: first or second mortgages, liens on fixed assets, loan security agreements and uniform commercial code - financing statements. Eligible Costs Fixed Assets Building Improvements Building Improvements (detail): Other than facade improvements most eligible rehabilitation items would be code compliance related as listed below: Architectural and Engineering Services Ceilings: Repair and/or replace structurally deficient members and repair or replacement of finished ceiling. Chimneys and Flues: Repair and/or replace where necessary. Electrical: Installation of electrical service to upgrade system. Exit Doors: Installation, repair and replacement of exit doors and hardware. Extermination: Insects, rodents, vermin, and other pests in all interior and exterior areas. Floors: Repair and/or replacement of structurally deficient members and repair or replacement of sub-flooring. Foundations: Repair and reconstruction. Guards and Screens: Installation and repair of guards and screens to protect against rodents and insects. Heating and Air Conditioning Facilities: Installation or repair of heating and air conditioning plants. Insulation: Installation of insulation in attics and sidewalls. Loading Docks and Areas: Installation and repair where needed. Painting: Interior or exterior, contractual or materials. Plumbing: Installation of plumbing to upgrade to code. Roof and Drainage Pipes: Repair of structural defects and replacement of roof and drainage pipes. Shutters and Awnings: Repair, replacement, or addition of exterior shutters and awnings. Security Systems: Installation and repair. Signs: Removal or repair as required. Sprinkler Systems: Installation or re pair airof y p systems where necessary. Stairs, Porches, Railings, Exits: Repair and replacement or installation of stairs, porches, railings, and exit facilities. STEPS TO OBTAIN A LOAN 1. Contact any member of the Loan Review Committee regarding further information on program participation. 2. If building rehabilitation is to be a component of the loan package, a code compliance review of the structure is in order. Mr. Bob Richardson, Rehabilitation Specialist with the City of Elgin may be of assistance, (312) 695-6500, extension 235. 3. A brief explanation of the business concept and proposed financing should be formulated. 4. All cost estimates and financing information must be presented to a local financial institution for their review. At this time the applicant should advise the lender of his/her interest in the Central Business District Economic Development Loan Program. The lender will be of assistance in completing the Loan Review Analysis form. 5. The applicant and the prospective lender must present the loan package to the Loan Review Committee for their consideration. 6. Following Loan Review Approval (15-30 days) a letter confirming program participation and terms will be forwarded to the applicant and his/her lender. 7. Contact Roger K. Dahlstrom, City of Elgin, (312) 695-6500, extension 235, to arrange for updated and additional bids for assisted portion of work to be performed. A reinspection of the property may be required at this time. Do not enter into any contractual obligations for purchase or construction until this step is completed. DOWNTOWN ECONOMIC 0 IC DEVELOPMENT LOAN REVIEW COMMITTEE Walter W. Cordin, President M. Edward Kelly, Executive Director First Federal of Elgin Elgin Area Chamber of Commerce 28 North Grove Avenue 28 North Grove Avenue Elgin, Illinois 60120 Elgin, Illinois 60120 742-7560 741-5660 Roger K. Dahlstrom, Director Richard C. McConnell Planning Department 1701 Kimberly Avenue City of Elgin Elgin, Illinois 60120 150 Dexter Court 888-6908 Elgin, Illinois 60120 695-6500 x 235 Renard I. Jackson, Chairman Leonard A. Rempert, Vice President Elgin Planning and Land Use Commission Commercial Loan Office 1845 Joseph Court First National Bank Elgin, Illinois 60120 6 Fountain Square Plaza Elgin, Illinois 60120 584-0506 x 280 697-1100 LOAN REVIEW ANALYSIS ECONOMIC DEVELOPMENT PROJECT COMMUNITY DEVELOPMENT BLOCK GRANT Date: Bank Officer: Borrower: Background: Loan Request: Rate: Purpose: Collateral : Bank Loan Policy: -. "Loan Proposal : , Analysis: Advantages: Disadvantages: Guarantees: Other Considerations: A) Jobs - B) Downtown - C) Facade Compatibility -