Ordinance No. 5,867910523-4
ORDINANCE
NO. 5867
AN ORDINANCE APPROVING AND ADOPTING AMENDED GUIDELINES
AND CRITERIA FOR COMMUNITY DEVELOPMENT SMALL BUSINESS
REVOLVING LOAN PROGRAM; AND PROVIDING FOR THE EFFECTIVE
DATE HEREOF.
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF BAYTOWN,
TEXAS:
Section 1: That the City Council of the City of Baytown,
Texas, hereby approves the amended guidelines and criteria for
the administration of a Small Business Revolving Loan Program. A
copy of said guidelines is attached hereto, marked Exhibit "A",
and made a part hereof for all intents and purposes.
Section 2: This ordinance shall take effect immediately
from and after its passage by the City Council of the City of
Baytown.
INTRODUCED, READ and PASSED by the affirmative vote of the
City Council of the City of Baytown, this the 23rd day of May,
1991.
ATTEST:
EILEEN P. HALL, City Clerk
4wa,";)
ACIO RAMIRM,)SR., Assistant City Attorney
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CITY OF BAYTOWN
COMMUNITY DEVELOPMENT BLOCK GRANT
. SMALL BUSINESS REVOLVING LOAN PROGRAM
I. Goals and Objectives:
A) To create employment opportunities for law and
moderate income persons.
B) To create growth and expansion within the City of
Baytown.
I I . Loan Terms
A) The City shall lean up to $50,000 but not greater
than 25% of the total cost of the project. The
remainder of the project cost must be comprised of
conventional leans and owners equity, such equity to
be not less than 10% of the total cost of the project.
H) The term of the loan may not exceed the term of the
conventional loan.
C) The City lean shall be made at a rate of interest
of 4% per annum.
III. Loan Conditions
A) If total loan funds are used solely for acquisition
or construction of fixed assests with a depreciable
life of no less than ten ( 10) years the City may take a
"subordinate lien position" to the conventional
lenders. If total loan funds are used to purchase
assests with a depreciable life of no less than four
(4) years the City must have a "first lien position" or
a "shared first lien" with the conventional lender.
B) The borrower agrees to create or preserve a minimum
of three (3) jobs regardless of the amount of the loan
and also agrees that no less than fifty -one percent
(51 %) of new .jobs created as a result of the Small
Business Revolving Lean Program shall be filled by low
and moderate income residents of the City of Baytown.
Documentation that every effort was made to hire
law /moderate income citizens will be required.
C) The borrowers shall not engage in any
discriminatory practic=es based upon an individual's
race, color, creed, sex, national origin, or
handicapped status.
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IV. Administrative Procedures:
A) The Community Development staff shall formulate an
application and review process that ensures program
funds will be utilized in conformance with HUD
requirements.
B) The Baytown /West Chambers County Economic
Development Foundation shall originate all
applications. An application submitted to the City
staff for review shall include the following:
1) Project narrative detailing the company
history and type of product or service, number of
new jobs, and proposed uses of funds.
2) Project budget which includes line item budget
identifying proposed sourc=es of funds.
3) Identification of HUD requirements which are
being fulfilled.
C) Functions to be performed by the Foundation staff
are:
1) Review proposals for compatibility with
prc-gram guidelines.
2) Assist with preparation of loan applications.
3) Transmit applications to the Community
Development staff for review and approval.
4) Serve as liaison between applicants and
lenders.
D) Upon favorable review of a proposed project, the
borrowers shall receive a "Letter of Qualification"
from the Community Development staff, listing the
conditions and amount of the lean.
E) The "Letter of Qualification" will be used in
acquiring a conventional loan. The conventional lender
will be responsible for determining credit worthiness
of a project. Upon approval of the total loan package,
the Community Development staff will issue a check
payable to the conventional lender and the borrower.
The conventional lender will disburse both their funds
and the City funds at the time of loan closing. The
• borrower shall bear the cost of preparing any and all
legal documents necessary to effectuate both leans.
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F) The conventional lender shall be responsible for
collecting both the conventional and City share of
funds. Semi - annually, the conventional lender will
remit to the City its share of the collections to
include principle and interest, less any pre - arranged
service fee.
G) Throughout the life of the city loan, the City
maintains the right for any of its representatives or
the representative of the department of Housing and
Urban Development to inspect the borrower's premises,
interview its workers or take any other actions
necessary to insure that goals, objectives and
requirements of the program are being met.
V. Eligibility Criteria:
A) The borrower warrants that the loan funds are
essential for the preservation or creation of .jobs
through a duly licensed business enterprise located
within the corporate limits of the City of Baytown.
B) There shall be no minimum time period for having
been in business. However, the borrower must be able
to meet surety and collateral requirements of
conventional lending institutions. Additionally, the
borrower must provide evidence that sufficient cash
flow exists to meet operating capital and debt service
requirements.
VI. Enforcement
Should the borrower fail to meet any of the federal
requirements after the initiation of the loan, the City
may institute appropriate actions to ensure that these
requirements are met.
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