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HomeMy WebLinkAboutRESOLUTION 1990-35Suggested by: City Council City of Kenai I~OLOTZON NO. 90-35 A RESOLUTION OF THE COUNCIL OF THE CITY OF KENAI, ALAS~AU~ORIZING SUBMISSION OF ANAPPLICATION TO THE STATE OF ALASKA FOR A COMMUNITY .DEVELOPMENT BLOCK GRANT (CDBG)_UNDER THE DCRA/RURAL DEVELOPMENT FUND PROGRAM. WHEREAS, CDBG funds are available to support economic development projects which are ready to implement and for which Jobs created or retained will be made available to lower income persons; and WHEREAS, the Peninsula Athletic Club II Rural Development Fund Project represents a commitment of private resources towards enhancing the vitality of the area and expanding the employment opportunities in the local area~ and ', WHEREAS, it is necessary that certain conditions be met as part of the application requirements~ and WHERFdtS, the City of Kenat will provide citizens with reasonable notice of, and an opportunity to comment on, any substantive change proposed from one elig/ble activity to another~ and WHEREAS, the City of Kenai shall agree to comply with all applicable federal and state regulations in the event that this application is selected for funding, including federal and state regulations in regard to the environmental impact of the proJect~ and WHEREAS, the City of Kenai will provide opportunities for citizen participation in accordance with the CDBG Citizen Participation Plan, and has-complied with all applicable public requirements; and WHEREAS, the City of Kenai Will conduct and adm/niSter its programs in conformance with Title VI and Title VIII of the Civil Rights Act of 1964, and affirmatively further fair housing; and WHEREAS, the City of Kenat Community Development Block Grant project will not result in the displacement of persons, or use of CDBG funds for public improvements. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, that the City Manager is authorized to submit an application to the Department of Community and Regional Affairs on behalf of the City of Kenai in the amount of $25,000 to assist with the Rural Development Fund Project of Peninsula Athletic Club II. 1 City of Kenai .Resolution No. 90-35 Page ~o BE IT PURTHERRESOLVED that the City Nanager is hereby authorized to provide such additional information as may be necessa to approval of. this grant application; and ry secure BE IT FURTHER RRSOLVED that the City of Kenai iS authorizsd t° .n~er into an agreement with the Department of Community and Re io Affairs for the funding and administra.~-- -, ~. .... g ~al -~- ~ ~ne aural Deve Fund project upon review and aDo-~..-~ -~ ~-- _ _ lopment City Administration. ~r---=, v~ ~ne qran= aocuments by the PASSED BY.T~E COUNCIL 0PT HE CITY OFK~NAI, ALASKA, this lit day of August, 1990. ATTEST: JOHN J. WILLIAMS, I~AYOR Carol L. Freas, City Clerk Approved by Finance:_ kl CITY OF KENAI, ALASKA Fln~noe Department . . . 210 Fldall]o'. Ken~. AK 99611 · (g07) 28:3 7538 CITIZEN PARTICIPATION The City of Kenat ts holding a public hearing on Resolution No. 90-35 at the.regular Council Meeting of August.!, 1990 in the City Hall Council Chambers. The purpose of the public hearing is to invite citizen coment on a proposal for the City to sponsor a Co~unity Development. Block Grant proposed to be received from the State of Alaska and loaned to PeninsulaAthletic Club II and its owner, Wayne Leitner. It is.expected that the grant/loan emount requested will be $25,000 and will be used for construction. ,D ITY OF KENAI ~10FIDAI.~O KENAI. ALASKA ~9ell TELEPHONE ~ - ~&18 FAX g07.28,~1014 NRNORANDUN TO: FROM: DATE: SUBJECT: CDBG - Peninsula Athletic Club II Kenai City Council Charles A. Brown, Finance Director July 20, 1990 I have reviewed material published by the Department of Community and RegionalAffairs relating to the Community Development Block Grant program (CDBG) under the Rural Economic Development Initiative (REDI). I have had conversation with Wayne Leitner, owner of Peninsula Athletic Club II, and with Judith Holden, Block Grant Administrator with the State of Alaska. It is my opinion that the Council should defeat the accompanying Resolution for the following reasons: There are two distinct programs within this CDBG program: (a) the _Entrepreneur Fund and (b) the Lender .participation Fund. Information p~°vided to ~he' City by 'Mr. Leitner demonstrates that'" he intends to apply under-the Entrepreneur Fund .... (I later .. confirmed this by telephone). ~.ltgiblltty requirements for this program (see page three, attached) include "He/She must reside in and have their principal place of business in a program eligible local government". Note that the location requirements for the Lender Participation Fund (see page six, attached) are not this strict. I discussed this with Judy Molden of C.& R. A., and she was unaware of this. difference. She said that if Hr. Lettner was applying under the. Entrepreneur Fund, the Borough would be the proper government for application. (She said she did not know why there is this difference between the two programs.) The pzoposedapplicationbl~ PentmaulaAthleticClub II does not meet basic eltgtbtlity~qulrame~ts because it 18 located outside the City limits. This is contrary to what has been represented to Council, but it is what the writtenmaterial says. Page Two Kenai City Council July 20, 1990 (2) The City of Kenai will be ensuring that Peninsula Athletic Club II confonms to environmental requirements (see page nine, attached). I doubt that we want to take this responsibi!~ty. (3) At the last Council meeting, I asked the State representative if the City would be responsible to monitor employment practices by the business to ensure that it conforms with the grant agreement. The response was essentially that we would not have to monitor the business, only to inform the State if some practice contrary to the agreement came to our attention. Material received from the State of Alaska (see page nine, attached) says "the local government is responsible for ensuring conformance by the business with recruitment and hiring procedures outlined in the agreement". Again, this is not what we have been told, but it is what the written material says. (4) The seventh "WHEREAS" of the resolution says that the City will "affimatively further fair housing". This language is in the sample resolution provided by the State. I note that, unlike other paragraphs in this resolution, this paragraph does not say it applies to this grant. Therefore, I assume the State intends for this to apply to all programs we administer. This could have unknown, but probably detrimental, effect on the congregate housingproJect. For.the above--ns, ! recc~ndthat the C~t~ not part~c~te ~n th~s pro~. ....... RURAL DEVELOPMENT FUND PROGRAM Program Purpose The Entrepreneur Fund is designed to help small, emer~tnf~ businesses is rural areas ~ow by providing loans for. operations and needed equipment and inventory. The,following objectives guide the pro,ram's loan decisions: - · To asSist small businesses which f'dl a local need in rural communities; · TO work exclusively with individuals who have already demonstrated they have the entrepreneurial and technical skills to survive and preferably who already own their small business; · To work with individuals who have a good reputation in the community; · To support ventures which will help to increase the range.of business services in rural Alaska and products produced in these re~ions of the state; · To fill in financing gaps not met by private lenders or other public loan proip'ams; and · To assist projects which have a likelihood of being successful so that funds revolve for use by other businesses and jobs are created in rural Alaska. Eligibility In order for an applicant to qualify for the Entrepreneur Fund, the following basic criteria must be m~t:· He/she must reside in and have their principal place of business in local:] a p. ro~ram eli~ble · The applicant must have been m business at least six (6) months or been performing the same type of work for at least one year. · Only for-profit busine%ses are eligible to apply. Maximum Loan The loan amount will be determined by the Loan Committee based on the needs of the project. The.maximum loan.approved under the Entrepreneur Fund will be $25,000. Loan Repayment-Terms The fund will require regUlar repayments over a reasonable length of time. Rapid repayment of working capital ftmds is encouraged. If the project requires a non-conVentional payment schedule this can be accommodated by the pro~ram~ but generally payments will 'monthly. .. Interest Rates The interest rate for the Entrepreneur Fund is set annually by the DCRA..This fixed interest.~rate'. Will remain the same for the duration of the life of the loan.~..The fixed interest, r. ate fog,.';FY 89-90 is Eligible Projects This fund is designed for small developing and expanding rural businesses. The business can be in manufacturing, processing, service, retail, tourism or a cottage industry. 3 RURAL DEVELOPMENT FUND PROGRAM While the Entrepreneur Fund is for emerging businesses, the Lender Partid. pation Fund is reserved for Borrowers who demonstrate a need for greater amounts of cap~tal and can show that at least half of the needed funds are available from other sources. The following objectives guide the program's loan decisions: · To assist rural businesses to grow; · To work exclusively with individuals who have already demonstrated they have the entrepreneurial and technical skills to survive; . . _ :' · 'r,, ,~r,rk,with individuals who have a good reputation m the community;. · '~; s'~P°rt ventures which will. help to increase the range of business services in rural Alaska and products produced m th.ese regions of the state; . · To fill fin.anong gaps not m.e.t by .private lende.rs or other p.ublic loan progra.ms whale encouraging mammum participation of the private sector m rural Alaskan investment, s; and · To assist projects which have a likelihood of b, ein§ successful so that funds revolve for use by other businesses and jobs are created in rural Alaska. tigibility ualif for the Lender Participation Fund, the basic criteria of the Ap.plicant are.:. order to y q. ate of Alaska and the business must ~.. [" · 'The ~nncipal .owners must be residents of the st ..... .. /,,..10caf'ad 'in .'or near ...an~liRible local government.. . · ";the ~plicant mu'it demonstrate thai at leaSt half of the funds needed by the project are available from another source. · The Applicant must have at least 20% equity in the value of the project with a minimum 10% cash investment as a part of that equity. · The business must have a valid and current Alaska business license. Maximu.m Loan The maramum loan available to one borrower is $100,000 or one half of the project budget, whichever is less. The actual loan amount will be determined by the needs'of the project on a case-by-case basis. Loan Repa. yment. Terms The fund will require regular repayments over a reasonable length of time. Rapid repayment of workin ca ital funds is encouraged. If the project requires a non-conventional payme~tt g P ... schedule some flembihty can be accommodated by the program, but generally payments will, be made monthly; Inter. est Rates The interest rate for .the Lender Participation Fund is set annually. The annual fixed rate for FY has been set at 7%. 6 RURAL DEVELOPMENT FUN D PROGRAM ~CAL~GOVERNMENT PARTICI~ One objective of the CDBG-REDI RDF program is"t0'~nvolve local government in decisions and administration of the funds. Each project funded under., the Rural Development Fund.must be ... ~ endorsed.by resolution by a unit of local government~ The local government must meet certain public participation requirements before making a resolution to support a project. A sample form of resolution and guidance in meeting the public participation requirements are contained in the application materials. In addition, certain federal requirements, inclUding meeting environmental .standards~ .must. be met by fund borrowers. The. local l~ovemment ........ is the desiplnated a~ent for ensuring ....... that borro.wers~ "~ are aware of and conform to environmental, zoning and permitting requirements..I, Finally~ the local, government is a party.to an employment agreement. In...this ..agreement, the.~ h~rin roce e a eement. ~ The funds which are approved for lending to a Rural Development Fund borrower, either under the Entrepreneur Fund or the Lender Participation Fund, will be granted to the unit of local government for the sole purpose of making the approved loan to the business. The unit of local government will assign repayments back to the state-wide revolving loan fund. SINCE THE UNIT OF LOCAL GOVERNMENT HAS RECEIVED A GRANT FROM THE DEPARTMENT TO MAKE THE BUSINESS LOAN IT IS NOT RESPONSIBLE FOR REPAYMENT OF THE LOAN IN THE EVENT THE BUSINESS IS UNABLE TO MEET ITS REPAYMENT OBLIGATIONS. If the local government incurs costs in carrying out the administration of the grant, including an audit, these costs can be included in the grant and reimbursed. The maximum which .mayrbe.. reimbursed is five percent (5%) of the loan amount; local governments are encouraged to hold reimbursables to a minimum.