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Agenda

Agenda. Program Thresholds ED Application Grant Agreement and Closing Documents Grant Administration Monitoring and Closeout RLF Procedures Q&A. CDBG Economic Development. 2 types of projects Loans Low interest, fixed-asset financing to businesses Grants

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Agenda

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  1. Agenda • Program Thresholds • ED Application • Grant Agreement and Closing Documents • Grant Administration • Monitoring and Closeout • RLF Procedures • Q&A

  2. CDBG Economic Development • 2 types of projects • Loans • Low interest, fixed-asset financing to businesses • Grants • Grants to local units of government for public infrastructure improvements associated with for-profit business investment and job creation

  3. CDBG ED - Loans • Fixed-asset financing related to job creation • At least 5 jobs (no minimum for RLF) • Eligible Activities • Land/Building Acquisition • Machinery & Equipment • New Construction • Renovation/Leasehold Improvements • Site Preparation/On-site Infrastructure

  4. CDBG ED - Grants • Off-site, “publicly owned” infrastructure • At least 5 jobs (no minimum for RLF) • Eligible Activities • Electric • Gas • Rail • Sanitary Sewer • Street Improvements • Storm Sewer • Water

  5. Job Creation/Retention • CDBG regulations differ from other programs • Maintained = a job that will continue to exist even if the proposed project does not occur • Retained = Jobs will be lost without CDBG assistance • Created = New job as a result of CDBG-funded project

  6. Program Thresholds • Non-entitlement community • For-profit business • 51% LMI jobs • Gap financing • $25,000/job (loans); $9,999/job (grants) • $1:$1 leverage ratio • 5% cash equity • 15% private financing • Environmental Review

  7. Non-entitlement community • Non-entitlement counties and cities may apply • Counties apply for villages, townships • Counties may also apply for cities

  8. For-profit business • Common non-profits interested in program • Hospitals • Nursing homes • Non-profit business incubators

  9. 51% LMI Jobs • Who qualifies as LMI? • Household income for previous 12 months at or below 80% Median Income • How to determine if jobs available to LMI? • No special skills or experience beyond high school education required

  10. Gap financing • Maximize private funding sources first • CDBG should be last money in project budget • CDBG is commonly a subordinated lender behind banks, SBA

  11. Cost per job • Loans - $25,000 per job • Grants - $9,999 per job • Common mistake is to tell applicants a business “can ‘get’ $25,000 per job” • Many other competitive factors to be considered when determining potential for CDBG assistance!

  12. $1:$1 Leverage Ratio • CDBG can fund no more than half of the total project cost (not to exceed $500,000) • Again, funding thresholds are maximums. Funding not necessarily guaranteed at $1:$1 leverage ratio

  13. 5% Cash Equity • Borrower must commit cash equal to at least 5% of project’s total non-infrastructure fixed asset cost (i.e. private, on-site investment) • Borrowed cash does not meet this requirement

  14. 15% Private funds • 15% of the fixed asset cost must be privately financed • SBA Direct Loan – Public • SBA Loan Guaranty – Private

  15. Environmental Review • Project Aggregation (24 CFR 58.32) • “A responsible entity must group together and evaluate as a single project all individual activities which are related either on a geographical or functional basis, or are logical parts of a composite of contemplated actions.”

  16. Environmental Review (cont) • Common project aggregation red flags • Purchase of M&E without a building • Rehabilitation of a building only • Construction without acquisition

  17. Program Thresholds • Non-entitlement community • For-profit business • 51% LMI jobs • Gap financing • $25,000/job (loans); $9,999/job (grants) • $1:$1 leverage ratio • 5% cash equity • 15% private financing • Environmental Review

  18. Agenda • Program Thresholds • ED Application • Grant Agreement and Closing Documents • Grant Administration • Monitoring and Closeout • RLF Procedures • Q&A

  19. CDBG ED Application – The Process • Step 1: Discuss • Step 2: ER • Step 3: Submit Application • Step 4: Initial Review • REVISIONS • Step 5: Committee Review • REVISIONS • Step 6: Approval

  20. CDBG ED Application – The Process • Required Approvals • OCD ED Committee • OCD Management • ODSA Division Chief • ODSA Director

  21. CDBG ED Application • Section I: General Information • Contact information • Existing & projected employment • Description of project • Section II: Project Profile • Site/environmental information • Employment profile (job retention, relocation, and training) • Revolving Loan Fund coordination • Impact analysis

  22. CDBG ED Application • Section III: Administrative Profile • Section IV: Appropriate Determination • Availability vs. Affordability Gap • Public Benefit • Section V: Budget Table • Sources and Uses

  23. CDBG ED Application • Section VI: Tax Information, Financial Liability, & Certification • Company must sign Tax Information Disclosure Authorization, complete financial liability form, and sign Certification • Community must also sign Certification

  24. CDBG ED Application • Exhibit 1: Authorization resolution or ordinance to apply • Exhibit 2: Business/Developer Investment & Job Creation Commitment Letter • Exhibit 3: Table of Organization • Exhibit 4: Relocation Certifications • (A) Between Ohio communities • (B) Compliance with anti-pirating regulations

  25. CDBG ED Application • Exhibit 5: Acquisition, Relocation, and Demolition Questionnaire • Website links for sample forms are provided • Exhibit 6: OHPO Coordination Letter • Exhibit 7: Environmental Certification • (A) ER Certification • (B) ER Certification for general administration, fair housing, and planning

  26. CDBG ED Application • Exhibit 8 – National Objective • Exhibit 8a: Job Creation Table • Exhibit 8b: Job Retention Table • Exhibit 8c: Job Benefit Verification Form • Exhibit 8d: Job Certification Summary • Exhibit 8e: Payroll Report • Exhibit 9 – Public Infrastructure Funding Justification • Exhibit 10 – Site Control

  27. CDBG ED Application • Exhibit 11: Tax Information & Financial Liability Exhibits • A: Three years historical financial statements • B: Interim financial statement • C: Three years projected financial statements • D: Personal financial statements (if applicable) • E: Resumes • F: Working capital line of credit

  28. CDBG ED Application • Exhibit 11: Tax Information & Financial Liability Exhibits (continued) • G: Real estate and/or used M&E appraisal • H: Site plan • I: Third-party cost estimates • Infrastructure & fixed asset costs • J: Estimated taxes • K: W-9

  29. Agenda • Program Thresholds • ED Application • Grant Agreement and Closing Documents • Grant Administration • Monitoring and Closeout • RLF Procedures • Q&A

  30. Grant Agreement & Closing Binder • The process: • Grant Agreement issued / ER Released • Community drafts Closing Binder (CB) • OCD Reviews and Approves CB to form • Community may draw funds

  31. Grant Agreement & Closing Binder • The process: • Grant Agreement issued / ER Released • Community drafts Closing Binder (CB) • OCD Reviews and Approves CB to form • Community may draw funds

  32. Grant Agreement & Closing Binder • Grant Agreement binds ODSA to Grantee • Closing Binder binds Grantee to business

  33. Closing Binder Contents • Both loans and grants require: • ROF • Evidence of Site Control • Evidence of Financing • Evidence of Equity • Compliance with Special Conditions (Section B15) • Legal Counsel approval

  34. Closing Binder Contents - Loans • Loan-specific documents • Loan Agreement • Security Agreement • Mortgage • Cognovit Promissory Note • Guaranty(s) • Intercreditors/Subordination Agreement

  35. Closing Binder Contents - Grants • Grant-specific documents • Guaranty of Completion

  36. Agenda • Program Thresholds • ED Application • Grant Agreement and Closing Documents • Grant Administration • Monitoring and Closeout • RLF Procedures • Q&A

  37. CDBG ED Grant Administration • 2 Key Responsibilities • Collect Invoices, Maintain evidence of expenditures • Periodically collect job documentation • Also… • Bid and manage construction project (grants only) • Manage Davis-Bacon Federal Prevailing Wage (when applicable)

  38. CDBG ED Grant Administration • Tracking expenditures • New Fiscal Spreadsheet template • Tracking jobs • New Job Certification Toolkit

  39. Agenda • Program Thresholds • ED Application • Grant Agreement and Closing Documents • Grant Administration • Monitoring and Closeout • RLF Procedures • Q&A

  40. Monitoring & Closeout • Keys to a successful monitoring • Clear documentation of expenses and payments • Loan payment history and status • Evidence of collateral filed

  41. Agenda • Program Thresholds • ED Application • Grant Agreement and Closing Documents • Grant Administration • Monitoring and Closeout • RLF Procedures • Q&A

  42. RLF Program Requirements • The RLF is program income received from ED loans and can be used for projects with the same national objective (LMI job creation) • RLF dollars must be retained by the community

  43. RLF Program Thresholds • Same thresholds apply to the RLF as the ED program, except: • Loans can be issued to non-profit entities • No minimum job creation requirement

  44. Typical Steps • Community receives application from a business for assistance • Community goes through its RLF Board to determine the viability of the project and financing details • RLF Board must include members representing LMI community, members with financing experience and members representing an active ED organization

  45. Typical Steps • Submit initial LRRF electronically to OCD • Receive feedback from OCD on initial review of the LRRF • Revise LRRF and submit any required documentation electronically to OCD • OCD reviews the LRRF and supporting documentation, then notifies community to submit signed LRRF via mail (if no other revisions are needed)

  46. Typical Steps • Community submits signed LRRF via mail to OCD • Community will receive a review letter from OCD indicating the project can move forward * Community must submit appropriate ER documentation and receive ER Release of Funds from OCD prior to moving forward with the project

  47. Agenda • Program Thresholds • ED Application • Grant Agreement and Closing Documents • Grant Administration • Monitoring and Closeout • RLF Procedures • Q&A

  48. Q&A • What recommendations do you have on keeping a Revolving Loan Fund active? How do you generate projects?

  49. Q&A • What are the some of the most common challenges you face when structuring a CDBG ED project and working through the application phase?

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