ACTION REQUESTED:
Title
Communication from the City Manager with a Request for the Following:
A. APPROVE the New EDA CARES ACT REVOLVING LOAN FUND Plan; and
B. ADOPT an ORDINANCE Amending the CITY OF PEORIA 2020-2021 BIENNIAL BUDGET Relating to a New Revolving Loan Fund Program through a Grant from the Economic Development Administration (EDA) Cares Act Recovery Assistance, in the Amount of $1,419,000.00, and the Corresponding Expenditures of $1,290,000.00 to Establish the Loan Fund and $129,000.00 for Administrative Costs.
Body
BACKGROUND: The City is planning to establish a new Revolving Loan Fund (RLF) Program through a grant from the Economic Development Administration (EDA). The EDA will award $1.419 million of CARES Act Recovery Assistance grant to the City of Peoria to a) capitalize a $1.29 million loan fund and b) provide $129,000 to administer the program. EDA will fund the grant 100% and will not require local matching funds from the City.
In order to receive EDA funds, the City must approve a new RLF Plan (attached) separate from its existing RLF Plan. The RLF Plan serves as an operating manual and specifies the following:
* Purpose - To preserve and create jobs by making capital more accessible through "gap financing," in the form of debt, on projects determined to be financially viable.
* Strategy & Procedures - The parameters must be within the regulatory limits set by EDA and in accordance with "Prudent Lending Practices." Such practices include loan processing, documentation, approvals, servicing, legal compliance, and administrative procedures.
* Loan Parameters - This includes maximum and minimum loan size, loan dollars per job ratio, owner equity requirements, and other parameters.
* Capital Deployment - EDA's policy is for RLF operators to deploy capital similar to peer lenders, currently 62%. If the capital utilization is persistently low such funds may be subject to suspension or termination. If default rate exceeds 20%, ...
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