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MADELIA REVOLVING LOAN FOR ECONOMIC DEVELOPMENT 1. PURPOSE It is the purpose of this document to establish a local revolving loan fund for economic development for the City of Madelia. 2. POLICY STATEMENT
The City of Madelia recognizes the need to stimulate private sector investment into manufacturing facilities and equipment in order to create new jobs and retain existing jobs for local residents and boost productivity; to provide affordable loans for expansion and/or rehabilitation of commercial viability of Madelia's central business district. 3. PROJECT ELIGIBILITY Economic development revolving loans can be used for land acquisition, building construction, machinery, equipment and fixtures, inventory, renovation and modernization of buildings, exterior renovation of retail, commercial, and industrial buildings, or public infrastructure needed for economic development expansions. INELIGIBLE FUND USES ARE: A. Expenditures for the construction and/or renovation of residential units. B. Working capital, or the refinancing of existing debt. 4. LOAN AMOUNT Minimum loan amount will be $2,000.00 and the maximum amount will be $10,000.00 If the total project cost is over $50,000.00, the loan amount can be 20% of the total project cost up to a maximum of $15,000.00. A loan cannot exceed 90% of the estimated market value of the property upon completion of the project, less the outstanding balance of any prior mortgages. **** Ratio of private funds to Madelia Economic Development Revolving Loan Funds (minimum threshold: $2 private funds for $1 Madelia Economic Development Revolving Loan Funds). **** Sufficient cash flow to cover proposed debt service as demonstrated by financial statements and projections. **** Businesses to be assisted must show a positive net worth. **** Letter of commitment from applicant pledging to complete the project during proposed project duration, if the loan application is approved. **** Sufficient collateral. C. All other information as required in the application and/or additional information as may be requested by the Star City Finance Committee or the Madelia City Council. D. Project compliance with all city codes and policies. E. Program objectives - The Applicant must meet all revolving loan fund criteria and demonstrate how the proposed activities will meet at least one of the following objectives. 1. Job creation and/or retention. 2. Meet any city approved economic or redevelopment plans. 3. Prevention or elimination of slums and blights. 4. Increasing local tax base. 5. Required compliance with an existing building code violation. The interest rate for any loans will be negotiated. Financing terms will not exceed ten (10) years for land and buildings and seven (7) years for machinery, equipment and fixtures. 5. REGULATIONS FOR IMPROVEMENTS All building construction or renovation is to be brought into conformance with city codes and policies. Repairs may include the following systems and portions of real property. A. Mechanical, heating, plumbing and electrical. B. Structural-Including the facade of the structure and energy related improvements. 6. LOAN SECURITY AND GUARANTEES Applicant must be able to secure the loan with at least a junior mortgage upon the building and/or assets involved or other approved collateral. Applicant must demonstrate the financial means to repay the loans as determined by the Star City Finance Committee. The applicant must demonstrate that the assets involved are insured for an amount not less than total outstanding loans. 7. TIMING OF PROJECT EXPENSES No project may commence until the City of Madelia approves. No building construction may commence until the required city permits are secured. The applicant will be responsible for all legal, recording and other fees required for perfecting a security interest in a loan. 8. PROCEDURAL GUIDELINES FOR APPLICATION AND APPROVAL A. Application and review 1. An interested loan applicant will meet with the Madelia city staff to obtain information about the Madelia Economic Development revolving loan fund, discuss the proposed project and obtain application forms. 2. A completed application form (a form of which is attached hereto), together with a processing fee equal to 1% of the amount requested, must be submitted to the City of Madelia prior to review and consideration. the fee is used to cover city expenses for processing said application and will be refunded upon approval of the loan. If the loan is not approved, fee is not refunded. 3. The application is reviewed by the city staff to determine that it conforms to all city policies and ordinances and to consider the following: a. The availability and applicability of other governmental grants and/or loan programs. b. Whether the proposed project will result in conformance with the building and zoning codes. B. Project Review 1. The Madelia Star City Finance committee will review each application in terms of its consistency with the goals of the Madelia Economic Development Plan and in and in relation to the project's impact on the Madelia economic community. 2. The Madelia Star City Finance Committee will also evaluate the project application in terms of the following: a. Project Design-Evaluation of project design will include review of the proposed activities, time lines, and capacity to implement. b. Financial Feasibility- availability of funds, private involvement, financial packaging and cost effectiveness. 9. Special Loan Program – Storefront Renovation A. A unique opportunity exists for commercial property owners who wish to restore to original architecture that follows a common design or period theme; removal of “outdated” material(s); on the fronts of buildings only (side of building may be included if it lies on a corner); awnings; fascia; trim; windows and moldings; doors; painting/staining; masonry work – bricks and tuck pointing; business signs; exterior lighting fixtures. B. The interest rate for any loan will be 1%. C. Financing terms will not exceed seven years. D. All of the other terms and conditions in the Madelia Revolving Loan for Economic Development will apply to this special loan program. 10. The Star City Finance Committee will send its recommendation to the Madelia City Council for final review and approval. 11. The above criteria will be reviewed on an annual basis. This revolving loan fund criteria was adopted this 27th day of April 1987 and amended on the 11th day of February 1991. The Special Loan Program – Storefront Renovation was adopted this 14th day of January 2002
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