HomeMy WebLinkAboutResolutions - 2021.10.13 - 34913frOAKLANDF-
COU N T Y M IC H IGAN
BOARD OF COMMISSIONERS
October 13, 2021
MISCELLANEOUS RESOLUTION #21-389
Sponsored By: William Miller Ili
IN RE: Oakland County EDA CARES Act Recovery Assistance Revolving Loan Fund Plan
Chairperson and Members of the Board:
WHEREAS M.R. #20577, on November 19, 2020, approved the preliminary acceptance of award as Economic
Development was notified by the U.S. Economic Development Administration (U.S. EDA) that the application
was reviewed for merit and selected for consideration; and
WHEREAS M.R. #20577, dated November 19, 2020, authorized Oakland County to provide an
unencumbered, committed $1,000,000 match from assigned fund balance to awarded RLF capital, in addition to
$300,000 for oversight and administrative costs of CEED Lending; and
WHEREAS M.R. 421196, dated May 26, 2021, accepted the CARES Act Recovery Assistance Grant from the
U.S. EDA in the amount of $3,000,000 for the period of April 12, 2021, through April 12, 2024, and
WHEREAS M.R. 421196, dated May 26, 2021, established that the Board Chairperson is authorized to execute
the grant agreement and to approve grant changes and extensions which are consistent with the original
agreement; and
WHEREAS M.R. #21196, dated May 26, 2021, also established that the Board Chairperson is authorized to
execute the agreements with the Great Lakes Women's Business Council and its CEED Lending program and to
approve grant changes and extensions which are consistent with the original agreement; and
WHEREAS M.R. #21196, dated May 26, 2021, affirmed that a budget amendment is not required as M.R.
#20577 authorized the one-time funding of $1,300,000 to be appropriated from the General Fund Assigned
Fund Balance titled Investing in Oakland County's Economy (GL Account #383457) to Economic
Development's Administration Division (#1090101).
NOW THEREFORE BE IT RESOLVED Oakland County Board of Commissioners approves and adopts the
Oakland County EDA Cares Act Recovery Assistance Revolving Loan Fund Plan (see attachment A).
BE IT FURTHER RESOLVED that no additional budget amendment is required.
Chairperson, the following Commissioners are sponsoring the foregoing Resolution: William Miller III.
duDate: October 13, 2021
David Woodward, Commissioner
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Hilarie Chambers, Deputy County Executive II
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Date: October 15, 2021
Lisa Brown, County Clerk / Register of Deeds
COMMITTEE TRACKING
2021-10-06 Economic Development & Infrastructure - recommend to Board
2021-10-13 Full Board
VOTE TRACKING
Motioned by Commissioner Gary McGillivray seconded by Commissioner Christine Long to adopt the attached
Resolution: Oakland County EDA CARES Act Recovery Assistance Revolving Loan Fund Plan.
Yes: David Woodward, Michael Spisz, Karen Joliat, Kristen Nelson, Eileen Kowall, Christine Long, Philip
Weipert, Gwen Markham, Angela Powell, Thomas Kuhn, Charles Moss, Marcia Gershenson, Adam L.
Kochenderfer, Yolanda Smith Charles, Charles Cavell, Penny Luebs, Janet Jackson, Gary McGillivray,
Robert Hoffman (19)
No: None (0)
Abstain: None (0)
Absent: Commissioner Miller III, Commissioner Gingell (2)
The Motion Passed.
ATTACHMENTS
Oakland County EDA CARES Act Recovery Assistance Revolving Loan Fund Plan
STATE OF MICHIGAN)
COUNTY OF OAKLAND)
I, Lisa Brown, Clerk of the County of Oakland, do hereby certify that the foregoing resolution is a true and
accurate copy of a resolution adopted by the Oakland County Board of Commissioners on October 13, 2021,
with the original record thereof now remaining in my office.
In Testimony Whereof, I have hereunto set my hand and affixed the seat of the Circuit Court at Pontiac,
Michigan on Friday, October 13, 2021.
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Lisa Brown, Oakland County Clerk/Register of'Deeds
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Oakland County EDA CARES Act Recovery
Assistance Revolving Loan Fund Plan
Amended: January 4, 2021
Table of Contents
Introduction.....................................................................................................
PART I. Revolving Loan Fund Strategy............................................................
A. Summary of the Comprehensive Economic Development Strategy.
1. Economic Adjustment Problem ......................................................
2. Regional Comprehensive Economic Development Strategy..........
3. Area Resources...............................................................................
4. Organizational Structure and Program Administration .................
B. Business Development Objectives......................................................
1. Objectives.......................................................................................
2. Targeted Business Characteristics..................................................
3. Types of Assistance........................................................................
C. Financial Strategy, Policy and Portfolio Standards ............................
1. Financing Strategies and Policies ...................................................
2. Portfolio Standards and Targets .....................................................
3. Loan Selection Criteria...................................................................
PART H. REVOLVING LOAN FUND OPERATIONAL PROCEDURES ...................
A. Organizational Structure.. ............................ ......................................
1. Administration................................................................................
2. RLF Loan Advisory Committee.......................................................
3. Standard Loan Application Requirements .....................................
4. Credit Reports................................................................................
S. Appraisals.......................................................................................
6. Loan Write-ups...............................................................................
7. Procedures for Loan Decisions.......................................................
8. Loan Closing and Disbursement Procedures ..................................
9. Loan Servicing Procedures.............................................................
10. Loan Agreement Provisions...........................................................
11. Administrative Procedures.............................................................
B. Environmental Review Process..........................................................
C. Conflict of Interest..............................................................................
i
Introduction
Oakland County, Michigan and Great Lakes Womens' Business Council dba CEED Lending are
applying for a $3.0 million grant from the U.S. Department of Commerce's Economic
Development Administration (EDA) to establish a revolving loan program in Oakland County, MI.
The RLF will be used to provide gap financing to small businesses that cannot access funding from
conventional sources such as banks and credit unions as well as improve quality of life in
underserved markets by providing access to capital to minorities, women, and others who are
underserved in mainstream financing. The RLF can be used by small businesses as the primary
lender for their capital needs as well as for gap financing. The RLF will coordinate with small
business lenders who, without RLF funding support, would decline the loan request and establish
a reliable referral source for loan applicants. The RLF will issue loans primarily for equipment and
real estate purchases between $50,000 and $200,000. This allows the traditional lender to have
an improved loan to value and less exposure on a loan that they would historically decline.
Incorporated in 1820, Oakland County covers approximately 910 square miles in southeast
Michigan. With a population of 1,257,584 (2019 estimate) and the County seat in Pontiac,
Oakland County is home to a mix of urban and rural communities, encompassing 62 cities, villages
and townships, including thirty-two (32) downtown areas and many scenic natural settings,
providing a good quality of life for any lifestyle. Measuring per capita income, the County ranks
as the sixth (6th) wealthiest county in the nation among counties with populations between
900,000 and 1,600,000 as cited in an April 2019 report by University of Michigan economists.
Oakland County has enjoyed a world -class reputation due to its renowned business environment
and its many attributes that contribute to an excellent quality of life.
Oakland County is also Michigan's employment hub with nearly 745,000 workers and more than
39,000 businesses. The County is home to more than 1,000 foreign -owned firms from 39
countries with nearly $54 billion in goods exported from the area, ranking the Metro Detroit
region 4tt' nationally for total exports. In 2018, Oakland County accounted for 21.4% of the entire
state's GDP and has an increasingly diverse economy with the top three employment sectors
being Professional and Business Services (26%); Trade, Transportation, and Utilities (18%), and
Private Education and Health Services (16%). In 2019, the University of Michigan economists
expected Oakland County to see a 1.4 percent increase in job growth in each of the next three
years, 2019-2021, resulting in a total increase of 31,600 jobs. The economists also expected the
unemployment rate to drop to 2.6 percent by 2021 compared to 3.3 percent in 2018.
The emergence COVID-19 and resulting economic injury, however, have significantly altered the
economic outlook in this and other surrounding communities. Michigan has been hit hard and
consistently ranks among the states with the highest number of unemployed workers. As of April
2020, Oakland County's unemployment rate ballooned to 19.8% with approximately 113,351
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unemployed according to the Michigan Bureau of Labor Market Information and Strategic
Initiatives. This rate is up from a low of 3.4% in 2019. While the County has diversity in its business
sectors, 97% of the establishments have 100 employees or less. The small business community is
more vulnerable to economic swings than the larger private -sector employers.
PART I. Revolving Loan Fund Strategy
A. Summary of the Comprehensive Economic Development Strategy
1. Economic Adjustment Problem
Oakland County, Michigan has a long tradition of manufacturing, research &
development, and engineering -based companies because of the concentrated presence
of automotive manufacturers and their suppliers located in Southeast Michigan. Close
ties to the automotive industry cause Michigan to be one of the first states to encounter
downward economic pressure when the United States enters a recession and one of the
last to recover. Metropolitan Detroit's location quotient for Motor Vehicle
Manufacturing is 9.56 which represents 29,174 jobs and Motor Vehicle Parts
Manufacturing location quotient is 10.11 which represents 77,957 jobs.
Typically strong and prosperous during "normal" economic times, the automotive
industry is highly cyclical and downturns can cause wide economic swings in Oakland
County and the State of Michigan as a whole, leaving local interconnected economies
vulnerable. The emergence of the COVID-19 pandemic shuttered the automotive
industry and its expansive network of suppliers, rippling through the depths of the
community. Oakland County alone saw its unemployment rate increase from 3.4% in
2019 to 19.8% in April 2020.
The automotive industry's impact on the business community cannot be understated.
Southeast Michigan will struggle to regain the strength it had just months before the
pandemic. Access to a revolving loan fund will provide vital gap financing to businesses
whose access to funding has been compromised by deteriorated financial statements,
as many traditional lenders have tightened their lending requirements. The Oakland
County RLF will help the manufacturing, retail, and service companies survive the
financial crises caused by the COVID-19 pandemic.
2. Regional Comprehensive Economic Development Strategy
Oakland County's RFL plan will align with the Comprehensive Economic Development
Strategy (CEDS) for Southeast Michigan titled Partnering for Prosperity Economic
Development Strategy for Southeast Michigan. Created in 2016 by SEMCOG, the
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Southeast Michigan Council of Governments and Metropolitan Affairs Coalition (MAC),
Partnering for Prosperity encompasses the seven -county Southeast Michigan region,
which includes Livingston, Macomb, Monroe, Oakland, St. Clair, Washtenaw, and Wayne
Counties and includes 48% of the State's population. The economic development
strategy spans the region's community assets, business climate, and talent, and
innovation. It reflects Southeast Michigan's current and future needs and identifies
opportunities for building on its strengths and assets and addressing its challenges, to
grow investment, businesses, jobs, and create economic opportunity for residents.
The strategic plan outlines four business climate strategies related to creating an
environment that is conducive to business growth and job creation. Partnering for
Prosperity specifically concentrates on expanding trade and investment; supporting
business growth; increasing capital funding; and growing entrepreneurship. Capital
investment action steps include:
• Advancing initiatives that attract consistent funding sources and increase access to
capital across the continuum of business finance sources, including venture, angel,
and other investment capital to help start-up and growing businesses.
o Create funding collaboratives between business, government, foundations, and
others to creatively fund projects.
o Encourage quicker loan decisions by the banking industry.
o Increase the number of microloan programs and other seed capital sources to
address the need for funding by start-ups and existing small businesses, which
provide alternatives to conventional sources.
• Boosting follow-on funding for growing start-up companies expanding to the second
stage.
• Increasing the availability and ease of obtaining capital, particularly with gap
financing, especially for smaller projects.
• Cultivating non-traditional funding mechanisms to support entrepreneurial
endeavors.
o Support emerging financial instruments that provide small businesses with new
opportunities to raise capital by allowing private citizens to invest. (e.g.,
crowdfunding).
o Lower barriers to accessing financial capital by finding methods to reduce the
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risk for capital investors in small business start-ups.
• Demonstrate a product/service's market demand at the front end through
the enterprise's social capital (i.e., collective value of all social networks).
• Connect entrepreneurs and small businesses receiving funding with financial
counseling and other mentorship opportunities to help increase their prospects as
a going concern and continued growth as a second stage business.
• Advocate at federal and state levels for actions that address ongoing business
financing concerns.
These strategies are to be met, in part, by matching businesses with the appropriate
sources of financial capital needed to launch and operate their enterprise. This includes
connecting business owners with financing sources, including those located in
economically distressed and underserved communities.
3. Area Resources
Oakland County: Oakland County has over 1,200,000 residents and 39,250 businesses.
The Oakland County Economic Development and Community Affairs (EDCA) Division of
Oakland County operates the Oakland County One Stop Shop, a business center which
provides no -cost business counseling and services such as financial analysis, loan
package preparation, drivetime analysis, GIS mapping, access to the ESRI database of
consumer spending habits, and process mapping. EDCA also provides business
development services which include site searches, incentive coordination with state and
local governments, assistance with access to capital, workforce development assistance,
and a host of other services.
Southeast Michigan Council of Governments (SEMCOG): SEMCOG is a regional planning
partnership of governmental units serving 4.7 million people in the aforementioned
seven -county region of Southeast Michigan striving to enhance the region's quality of
life. SEMCOG supports local planningthrough its technical, data, and intergovernmental
resources. The work SEMCOG does improves the quality of the region's water, makes
the transportation system safer and more efficient, revitalizes communities, and spurs
economic development. According to the organization's website, its stated functions are
to:
• Promote informed decision -making by improving Southeast Michigan and its
local governments through insightful data analysis and direct assistance to
members;
• Promote the efficient use of tax dollars for infrastructure investment and
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governmental effectiveness;
• Develop regional solutions that go beyond the boundaries of individual local
governments; and
• Advocate on behalf of Southeast Michigan in Lansing and Washington.
Michigan Economic Development Corporation (MEDC): The Michigan Economic
Development Corporation, in collaboration with more than 100 economic development
partners, markets Michigan as the place to do business, assists businesses in their
growth strategies, and fosters the growth of vibrant communities across the state.
The mission of the MEDC is to achieve long-term economic prosperity for Michiganders
by investing in communities, enabling the growth of good jobs and promoting
Michigan's strong image worldwide. MEDC's strategic focus aims to position Michigan
at the leading edge of economic development in the nation.
Automation Alley: Automation Alley is the World Economic Forum's Advanced
Manufacturing Hub (AMHUB) for North America and a nonprofit Industry 4.0 knowledge
center with a global outlook and a regional focus. The organization facilitates public -
private partnerships by connecting industry, education and government to fuel
Michigan's economy and accelerate innovation. Its programs are designed to give
businesses a competitive advantage by helping them along every step of their digital
transformation journey.
Oakland University: Oakland University is recognized as a student -centered, doctoral
research institution with a global perspective. A public institution, OU engages nearly
20,000 graduate and undergraduate students in distinctive educational experiences that
connect to the unique and diverse opportunities within and beyond our region.
Oakland provides a distinct educational experience with flexible class schedules and
state-of-the-art facilities, student services, classroom technologies, research labs,
internships, and research opportunities with corporate partners. Oakland University
also operates two technology incubator facilities serving technology starts and small
businesses, one with a historical focus on environmental sciences and information
technology. Located in the heart of Oakland County, the university has forged hundreds
of partnerships with hospitals, Fortune 500 companies, cities, government agencies,
and educational institutions.
Lawrence Technological University: Lawrence Technological University (LTU) is a private
university in the City of Southfield, MI, 15 miles from Detroit. LTU offers more than 100
majors across four colleges with an emphasis on the STEAM fields (science, technology,
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engineering, arts, and mathematics). LTU also operates the recently dedicated
Centrepolis Accelerator, a high-tech prototyping and virtual reality equipment space to
help entrepreneurs, designers, and dreamers create the next generation of hardware.
The mission of Centrepolis is to accelerate the growth of small manufacturers and
hardware entrepreneurs.
Oakland Community College: Oakland Community College (OCC) is a five -campus
public community college in Oakland County. OCC is one of the largest community
colleges in Michigan and has the state's third -largest undergraduate enrollment of
almost 30,000 students. OCC's Department of Economic and Workforce Development
works with companies - big and small - to provide a full spectrum of state-of-the-art
training'courses and services and manages multiple state and federal grants.
4. Organizational Structure and Program Administration
The ability of enterprises to obtain funding through an Oakland County RLF would be a
vital piece of the overall strategy to promote economic recovery, business
development, and expansion in Oakland County during a period of economic hardship
caused by the COVID-19 pandemic.
Oakland County employs a unique "executive" form of government that ensures
accountability and efficiency in its services and encourages cooperation with its
communities to address issues of mutual concern. The County Executive has committed
$1.0 million in matching funds to supplement the RLF funds made available by the EDA.
Within the County, the Oakland County Economic Development and Community Affairs
(EDCA) department will provide administrative and programmatic oversight and
manage the required grant reports. County staff will assist with marketing, outreach to
the business community, and outreach to commercial lenders to generate leads.
Outreach to the business community will be accomplished through three of EDCA's
business -specific units; the One Stop Shop Business Center, Business Development, and
Business Finance Corporation. This network of business units will generate RLF leads as
they provide business counseling services, business visits, and review SBA 504 loan
applications.
Oakland County One -Stop Business Center provides business counseling,
business consultation, and workshops. The Business Center's nine staff members
provide process mapping, financial analysis, loan package development, engages
with commercial lenders to assist business gain access to capital, search engine
optimization, drivetime analysis, business performance assessments, ESRI
database analysis of retail customers, organize workshops and provide counseling
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to company leaders. As a result of the loan package development services, the
Business Center has developed relationships with virtually every commercial bank
with a facility in Oakland County. The Business Center's "Walk-in Thursdays'
enables individuals to talk to a business counselor without an appointment. There
were 277 unscheduled counseling sessions in 2018 and 2019. During that same
time, the Business Center met with 796 unique business owners in 2019.
Oakland County Business Development conducts traditional business retention
and attraction services. The Business Development staff of eight are engaged with
companies in start-up mode to Fortune 500 companies. Business Development
staff conducted 415 business retention visits and 35 international and domestic
attraction trips in 2019.
Oakland County Business Finance Corporation (BFC) is a Certified Development
Corporation which makes SBA 504 loans to business across Michigan. The BFC's
staff of five review loan applications, assemble loan packages and close loans on
behalf of the Small Business Administration. Since 1982, BFC has approved 553
loans, created 22,256 jobs, and invested over $620,000,000.
The Oakland County Economic Development Corporation (OCEDC) administers
loans for capital expenditures for qualified manufacturing businesses and non-
profit 501(c)(3) organizations through its Tax -Exempt Revenue Bond Program.
Since 1980, the OCEDC has funded 113 projects, created 14,945 jobs, and invested
$743,825,000.
In addition to financing expertise, Oakland County has received and administered many
federal grants. EDCA's Community & Home Improvement Division informs residents of
federal, state, and county housing and community development programs at work
throughout Oakland County. For more than 40 years, the division has promoted equal
opportunity and access to housing, community development, and public service
programming. As a HUD entitlement county, Oakland County receives funds on a
formula basis to meet the national objectives of four federal grants: the competitive
Comprehensive Housing Counseling Grant, Community Development Block Grant
(CDBG), HOME Investment Partnerships Program (HOME) and Emergency Solutions
Grant (ESG). These programs have invested over $336 million in Oakland County
communities since the program began more than 44 years ago.
The Great Lakes Women's Business Council (GLWBC), dba CEED Lending: GLWBC,
herein referred to as CEED Lending, will be the co -applicant for the EDA RLF grant. CEED
Lending is a Community Development Financial Institution (CDFI) and provides access
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to capital to underserved and distressed markets including women and men business
owners, and minority business owners.
CEED Lending currently manages Oakland County's Small Business Loan Program and
will be the RFL program administrator. For over 35 years, CEED Lending has made more
than $7 million in microloans which created more than 1,800 jobs. CEED has the capacity
and infrastructure to oversee the financial management of the program, develop and
maintain loan documents, and to organize and facilitate a Loan Advisory Committee
(LAC). The LAC will review loan applications and meet periodically to assess and amend,
as necessary, the goals and targets for the RLF program. LAC members will be appointed
by Oakland County and CEED Lending.
With support from Oakland County's Corporation Counsel, executive leadership, Board
of Commissioners, and partnership with the GLWBC, Oakland County and CEED Lending
are well situated to administer, implement, and maintain the Oakland County RLF.
B. Business Development Objectives
1. Objectives
The business development objectives for the Oakland County RLF are to:
• Assist businesses that have been negatively affected by the ongoing economic
impact of COVID-19;
• Strengthen local businesses as they bring back their staff due to COVID-19 Stay
Home/Stay Safe executive orders;
• Increase the economic viability of existing small business companies;
• Assist commercial business start-ups, expansion and preservation;
• Encourage the relocation of firms that add value to the local primary industries;
• Attract businesses that will provide additional capital and jobs to the area;
• Support economically distressed targeted areas;
• Improve the quality of life in underserved markets by providing access to capital
to minorities, women, and others who are underrepresented in mainstream
financing;
• Leverage additional resources and expertise to create greater economic stability;
• Target small businesses with growth potential and management insight but lack
sufficient collateral or owners' equity to qualify for mainstream financing;
• Encourage the development of higher -skill, higher -wage jobs; and
• Diversify the types of industries in Oakland County.
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2. Targeted Business Characteristics
The entire Oakland County business community has experienced dramatic economic
hardship due to the COVID-19 pandemic. The Oakland County RLF will aim for small to
medium-sized businesses interested in locating or expanding across the County,
especially those in economically distressed areas. Special consideration will be given to
businesses that create and retain full-time, high -skill, high -wage jobs. Projects that
involve the redevelopment of unused or vacant buildings are especially attractive, as
well as projects that will assist in revitalizing downtown areas.
Oakland County is committed to supporting its 32 downtowns which were greatly
affected by COVID-19. Retail and restaurant businesses were required to close due to
the State of Michigan's Stay Home/Stay Safe executive orders. The executive orders
adversely affected smaller businesses, especially those with fewer than 5 employees,
which strongly contribute to the stabilization and growth of downtowns. The County
will continue to work with downtown organizations through its Main Street Oakland
County program which focuses resources on priority businesses and services
appropriate to maintaining and enhancing the downtown area.
3. Types of Assistance
Identifying the types of business assistance needed will be a coordinated effort by
Oakland County, CEED Lending, Oakland County's 62 municipalities, and other partners
including but not limited to Oakland University, Lawrence Technological University,
Oakland County Michigan Works, Automation Alley, and multiple Chambers of
Commerce. These partnerships are strongly established in Oakland County. Any new
needs will be addressed by the partners. The types of assistance provided through the
partnerships include but are not limited to:
• Business financial review and loan package assistance
• Business mentoring
• Business planning
• Workforce development
• Education and Training: Certification and continuing education
C. Financial Strategy, Policy and Portfolio Standards
1. Financing Strategies and Policies
a. Financing Needs
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RLF funds will provide an immediate, flexible, and accessible source of financing for
small businesses affected by COVID-19 that currently have few funding resources
available. Small businesses have fewer lending options as many were closed from
mid -March to early June due to the COVID-19 pandemic. Those that were able to
open often had to operate with new social distancing requirements for staff and
customers. These businesses have experienced dramatic declines in revenue
coupled with new expenses to keep staff and customers safe. These small
businesses are experiencing greater difficulty in securing loans from traditional
lenders. The RLF can help supplement traditional loans and borrower's equity.
Private equity can and should be included in the loan package.
Borrowers: RLF funds will be available primarily to private sector, for -profit,
businesses. Small and medium-sized businesses should be the primary recipients of
the funds.
b. Financing Niche
Financing will be provided for the purchase of assets such as machinery and
equipment, leasehold improvements, non-residential real estate, and working
capital. The RLF will close the lending gap for businesses affected by the COVID-19
pandemic.
c. Standard Lending Terms
i. Interest rates: Loans will be made to eligible borrowers at interest rates
determined to be most appropriate to achieve the goals of the RLF. Interest
rates should be designed to assist firms with special credit problems. Such
loans may involve greater risks and lower interest rates. These rates will be
determined by the RLF Loan Advisory Committee (LAC) based on EDA
guidelines. The minimum interest rate will be four percentage points below
the lesser of the current money center prime interest rate quoted in the Wall
Street Journal, or the maximum interest rate allowed under state law. In no
event shall the interest rate be less than the lower of four percent or 75
percent of the prime interest rate listed in the Wall Street Journal.
ii. Equity or cash injections required: The LAC can be flexible with project -specific
equity or cash infusions requirements. A minimum of 10% borrower equity
will usually be required in the form of cash, machinery and equipment,
inventory and receivables, real estate, or other assets. Some startups may
require higher than standard equity injections, which will be reviewed on a
case -by -case basis by the LAC. The standard guidelines, which are normal in
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most loans, are as follows:
• Fixed asset loans 10% new equity
• Real Estate 10% new equity
iii. Standard repayment terms: The term of the loans will not exceed the useful
life of the assets being financed. The ability of the borrower to repay will also
be of prime importance. If possible, short terms rather than longer terms will
be set in an effort to recycle funds faster and make more loans. Under certain
circumstances, the LAC may grant deferral of principal payments for up to one
year when necessary for the success of the project. Balloon payments may be
utilized in the RLF program. The following are normal loan terms, but could
have longer amortizations:
• Equipment: Up to 7 years
• Real Estate: Up to 10 years
• Working Capital: Up to 5 years
d. Collateral Policy
The RLF will secure each loan to the maximum extent possible in the judgment of the
LAC. Security interests will be taken on available assets, both business and personal.
These may include liens on fixed assets (land, real estate, machinery and equipment,
etc.), inventory, receivables, assignment of patents and licenses, and other available
assets of the borrower. Personal guarantees will also be required from principal
owners, as appropriate.
In general, the "abundance of caution" approach will be used regarding collateral.
Each loan will be secured to the greatest extent possible to obtain a secondary source
of repayment. The RLF will obtain not only a perfected interest in the borrower's
assets but also in available outside assets of related parties, personal guaranties, and
assignment of life insurance, as appropriate. Hazard and flood insurance, as
necessary, naming CEED Lending as loss payee, will be required to protect against
loss of collateral.
The amount and type of collateral will be negotiated with the borrower. The required
loan -to -value ratio will be determined on a case by case basis depending on the
strength of the financial position of the borrower and the strength of the project.
The financing that this program generally will be providing often requires the RLF to
lend more than the typical traditional lender on physical assets so the borrower has
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adequate cash holdings to meet working capital requirements. Because RLF loans
will most often be in a subordinate lien position, sufficient debt service coverage is
considered to be of greater importance than the loan -to -value ratio, and, depending
on circumstances, the LAC may allow an exception to this policy.
The RLF policy is that loans will normally have a minimum of one-to-one collateral
value coverage. This is a standard minimum, and in most cases, attempts will be
made to obtain higher coverage. The program will seek to obtain optimum coverage.
Discounted collateral coverage is as follows:
• Real Estate 90%
• Equipment, furniture, and fixtures 80%
• Leasehold improvements 60%
(term -limited to less than period of the lease)
Current assets such as accounts receivable are not usually considered the best
collateral for long-term debt. However, these assets may be used for collateral to
provide additional strength in the case of a loan with less than optimum coverage by
fixed assets.
Methods of valuation of assets used for collateral will be objective. Real estate will
be valued by an approved licensed appraiser, by staff valuation utilizing the most
current State Equalized Value, or some other method as approved by the LAC. If a
lead lender obtains an appraisal, generally (but at its option) the LAC will accept
valuation from such appraisal rather than requiring another (use of an appraisal is
subject to approval by the lender). Other asset types will be valued by methods that
will adequately show market value by use of objectively obtained market
comparisons, appraisals by qualified and approved persons, or by staff valuation. In
all cases, the valuation will need to show due diligence and objective evidence in
addition to values provided by the borrower. Documentation of collateral values will
be required in the loan file.
e. Loan Size
The target size of RLF loans is $100,000 and may range from $50,000 to $200,000.
Loans below the ranges will be evaluated on a case -by -case basis by the LAC.
f. Loan Fees and Other Charges
The following fees are typically used to cover the costs of RLF program
administration. They may also be invested in the RLF for re -lending. These packaging
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and servicing fees may be charged or waived as appropriate to meet the goals and
objectives of this RLF Plan.
i. A loan packaging fee of between 0% and 4% of the total amount of the RLF
loan may be charged.
ii. A loan servicing fee of no more than 1% per year on the declining principal
balance of the RLF loan may be charged to the borrower.
iii. An application fee of no more than $200.
iv. The amount of these fees may be included in the RLF loan.
V. Charges may be made for delinquent payments.
The RLF will have a solid but flexible payback policy. After an evaluation of specific
circumstances, the LAC may approve a temporary moratorium on the loan payment.
2. Portfolio Standards and Targets
a. Business Types
The RLF partners have a goal of achieving the following mix of businesses.
• New business 50%
b. Loan Purpose
• Existing business 50%
The anticipated percentage of investments by the purpose of the loan:
Y Fixed Assets 80%
c. Leveraging
• Working Capital 20%
Oakland County will leverage an additional investment of at least two (2) dollars for
every one (1) dollar of RLF loans. This leveraging requirement applies to the RLF
portfolio as a whole rather than to individual loans and is effective for the duration
of the RLF's operation. To be classified as leveraged, the additional investment must
be made within twelve months of approval of an RLF loan, as part of the same
business development project, and may include:
i. Capital invested by the borrower or others including crowdfunding and non-
federal grant dollars;
ii. Financing from financial institutions such as banks and credit unions;
iii. The non -guaranteed portions and ninety (90) percent of the guaranteed
portions of any Federal loan; or
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iv. Loans from other State and local lending programs.
d. CostperJob
The RLF will prioritize projects that emphasize higher -skilled, higher -wage jobs in
businesses and industries that have been negatively affected by COVID-19. Every
project shall contain a job component and the borrower must provide an estimated
number of jobs created/retained along with a justification for the estimate. Job
creation claims will be reviewed as part of the underwriting process by CEED
Lending. At the end of each year, loan recipients will be required to provide proof
that the stated targets for job creation/retention have been met. The RLF portfolio
will seek a cost per job ratio of one (1) job for every $40,000 loan. With a maximum
loan size of $200,000, the goal would be set at 5 jobs.
3. Loan Selection Criteria
a. Eligible Applicants
To be eligible, an applicant should meet some of these factors:
i. A private for -profit firm, preferably a small business (generally defined by the
Small Business Administration) and not dominant in its field.
ii. Demonstrate that the funds are not otherwise available or are not taking the
place of private financing.
iii. Show a reasonable assurance of repayment of loans. Among other things, this
will be judged by standards of character, capacity, collateral, conditions and
capital.
iv. The project should be consistent with the RLF plan.
V. The applicant should be able to capitalize and build upon local assets, assist in
advancing innovation, or increase productivity in economically distressed areas.
vi. Assist in building a regional cluster.
vii. Maximize private sector investment that would not otherwise come to
fruition without the RLF's investment.
viii. Support the creation or retention of high skill and high wage jobs.
b. Eligible Projects
Eligible projects may be for expansion, startup or retention of a business that will
meet the goals of the RLF program. Rules for each business stage loan will remain
consistent. Loans may be for fixed assets or working capital.
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i. Eligible fixed assets loans may include:
• Acquisition and improvements of real estate for non -speculative projects
• New construction or renovation of existing facilities
• Demolition and site preparation
• Facility modernization and expansion
• Acquisition of new or used machinery, equipment, and assets in accordance
with 13 CFR 307.17
ii. Eligible working capital loans may include:
• Inventory purchases
• Accounts receivable financing
• Operating expenses
• Other non -capitalized assets
c. Ineligible Loan Activities
Ineligible loan activities include the following and as outlined in 13 CFR 307.17:
• Loans outside the EDA-approved lending area of Oakland County, MI;
• Loans for the purpose of investing in accounts, publicly traded securities,
real estate or any other investment not related to job creation/retention;
• Speculative activities such as land banking and construction of speculative
buildings that do not have a specific job -creating tenant committed;
• Loans to businesses that engage in any activity that is illegal under federal,
state or local law;
• Loans that would create a conflict of interest as defined by the Standard
Terms and Conditions Part II Section C;
• Acquire an equity position in a private business;
• Subsidize interest payments on an existing RLF loan;
• Provide a loan to a borrower for the purpose of meeting the requirements
of equity contributions under another Federal Agency's loan programs;
• Enable borrowers to acquire an interest in a business either through the
purchase of stock or through the acquisition of assets, unless sufficient
justification is provided in the loan documentation. Sufficient justification
may include acquiring a business to save it from imminent closure or to
acquire a business to facilitate a significant expansion or increase in
investment with a significant increase in jobs. The potential economic
benefits must be clearly consistent with the strategic objectives of the RLF;
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• Provide RLF loans to a borrower for the purpose of investing in interest -
bearing accounts, certificates of deposit, or any investment unrelated to
the RLF;
• Refinance existing debt, unless:
a. Recipient sufficiently demonstrates in the loan documentation a "sound
economic justification" for the refinancing (e.g., the refinancing will
support additional capital investment intended to increase business
activities). For this purpose, reducing the risk of loss to an existing
lender(s) or lowering the cost of financing to a borrower shall not,
without other indicia, constitute a sound economic justification; or
b. RLF funds will finance the purchase of the rights of a prior lien holder
during a foreclosure action which is necessary to preclude a significant
loss on an RLF loan. RLF funds may be used for this purpose only if there
is a high probability of receiving compensation from the sale of assets
sufficient to cover an RLF's costs plus a reasonable portion of the
outstanding RLF loan within a reasonable time frame approved by EDA
following the date of refinancing.
• Serve as collateral to obtain credit or any other type of financing without
EDA's prior written approval;
• Support operations or administration of the RLF Recipient; or
• Undertake any activity that would violate the requirements found at part
13 CFR § 314.3 ("Authorized Use of Property") and § 314.4 ("Unauthorized
Use of Property").
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PART II. REVOLVING LOAN FUND OPERATIONAL PROCEDURES
The RLF will be operated using Prudent Lending Practices. The program will follow generally
accepted underwriting and lending practices for public loan programs, based on sound
judgment to protect Federal and lender interests. Prudent Lending Practices include loan
processing, documentation, loan approval, collections, servicing, administrative procedures,
collateral protection, and recovery actions. Prudent Lending Practices provide for
compliance with local laws and filing requirements to perfect and maintain a security
interest in RLF collateral.
A. Organizational Structure
1. Administration
Oakland County and CEED Lending will work together to manage the administrative
requirements of the RLF plan and EDA grant. The County will primarily provide oversight
and guidance while CEED Lending will manage the day-to-day program administration.
Both entities will use their network of resources for marketing and program outreach.
2. RLF Loan Advisory Committee
a. Authority
CEED Lending will be the administrator of the RLF program, under contract to
Oakland County, the program's co -grantee. CEED Lending leadership will appoint a
Loan Advisory Committee (LAC) consisting of not more than thirteen individuals.
The LAC makes loan policies and operating procedures, and all major loan decisions.
Changes and other delegations may be made as deemed necessary. The principal
activities of the Committee are as follows:
• Accepts grants to capitalize the RLF;
• Reviews, amends and submits an RLF Plan to Oakland County and Committee
for approval;
• Recommends to Oakland County and CEED Lending potential persons to fill
committee vacancies;
• Provides overall policy guidance to the program and staff;
• Makes decisions on final applications for loans;
• Decides whether to call delinquent loans; and
• Decides whether to liquidate loans.
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b. Basic Procedures
The LAC members will elect a chair and vice -chair who will be responsible for
coordinating with CEED Lending staff to set the date, time, place, and agendas of
committee meetings. A quorum to conduct business is five (5) members, with a
simple majority of a quorum sufficient to make decisions. In the case of a tie vote,
CEED Lending will cast a vote to break the tie.
3. Standard Loan Application Requirements
All applicants for loans from the RLF shall be required to fill out a separate standard RLF
application form and supply the additional items as indicated in the application.
4. Credit Reports
Credit reports will be obtained on applicants or other evidence of creditworthiness
documented at the time of the application.
5. Appraisals
Appraisals will be required on real estate purchased using the RLF and when the
financing amount is greater than $150,000. If the financing is less than $150,000, a real
estate valuation may be substituted. In most cases, a copy of the appraisal or collateral
analysis done by a participating bank will be available. Generally, appraisals are valid for
one year unless the LAC decides otherwise.
6. Loan Write-ups
A loan request summary will be produced by CEED Lending staff for initial review and
discussion by the LAC. Following the initial discussion, any conflicts of interest shall be
disclosed and discussed by the LAC, as necessary. If appropriate, the party with a
perceived or real conflict will remove themselves from the discussion.
Final discussions regarding a loan request will be based on the full loan package. The
contents of the loan package will be shared with the LAC. The package will include
confidential and proprietary information as necessary to make the loan decision.
The loan package will include:
• Overview — The company's history, product(s), capacity and management; a
discussion and analysis demonstrating the need for RLF funds and how the RLF
is not replacing private lending sources; and job creation.
6 Include a bank denial letter and/or denial of credit supporting documents as
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available.
• Principals —Background and experience of owners.
• Market —A discussion of the business's market.
• Financing — Sources, amounts, and uses of project financing.
• Collateral and its assigned value.
• Credit Summary or Financial Analysis — An analysis of the business and personal
financial condition, credit reports, and repayment ability.
• Summary — Emphasizes the strengths and weaknesses of the proposed loan.
• Recommendation — CEED Lending staff recommendation to the LAC including
terms and conditions.
• Credit Reports for principles and guarantors.
• Summary of three-year financial history for existing firms (balance sheet and
income statement) if the applicant has been in business for three years or
greater.
7. Procedures for Loan Decisions
A quorum of the LAC (simple majority) will review the loan write-ups, discuss the
proposal, and vote on the application which must receive a majority vote of the quorum
to be approved. The minutes of the meeting must be taken and kept in a permanent file.
The decision of the LAC will be communicated to the applicant as soon as is practical via
commitment letter specifying the terms of the loan and time period of the commitment,
or a letter of declination.
If a loan application is declined, the applicant has thirty (30) calendar days to submit a
written appeal to the LAC, requesting the LAC to reconsider the application. The appeal
should include the rationale for the reconsideration to be reviewed by the LAC. The
committee will meet within 30 days of the receipt of the appeal, if possible. If not
possible, a reasonable explanation will be provided to the applicant. If the LAC, after the
meeting, declines the loan application, that decision is final. If necessary, the committee
may take a vote using an electronic means to facilitate a final review and decision
without discussion.
Staff will develop and present loan information forthe LAC review. The full LAC will make
the final loan decisions. The LAC will follow the procedures outlined in this plan when
evaluating applications and making final decisions. Minutes of all meetings will be kept
as part of the permanent record and shall document the vote taken to approve or deny
loan applications.
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8. Loan Closing and Disbursement Procedures
a. General Closing Requirements
The actual provisions for the RLF loan closing and servicing may vary from that
outlined here. Loan servicing from closing to loan repayment may be carried out by
CEED Lending or an organization designated by CEED Lending. The borrower will
provide to lending staff, on a quarterly basis, copies of current company and
personal financial statements, tax returns, bank statements, and any supplemental
information on financial condition and operation requested.
CEED Lending staff and legal representative will prepare closing documents and all
back-up materials of the RLF loan. Closing meetings will have all relevant parties
attending to close a deal.
b. Loan Closing Documents
Required on all loans will be the Loan and Security Agreement and Note. For loans
secured with real estate, a mortgage will be required. For loans using other
collateral, a UCC filing will be required along with lien searches both before and after
filing showing the CEED Lending as lien holder in the desired position approved by
the LAC.
For licensed vehicles, a title showing the CEED Lending as a lienholder will be
required.
c. Loan Disbursements
Prior to disbursement of RLF loan proceeds, the borrower must provide evidence
that the purpose for which the loan was made is what the proceeds are being used
for. In the case of the purchase of physical assets, invoices, orders, or delivery
documentation will be acceptable types of evidence. In loans for construction, the
loans are usually for permanent financing and a construction lender will provide
evidence that the project is complete. Title insurance is required showing that there
are no construction/mechanics liens on the property. The size of, and disbursement
schedule for, working capital loans will normally be determined by the LAC based on
schedules provided by the borrower prior to loan closing.
9. Loan Servicing Procedures
a. Loan Payment and Collection Procedure
For all approved loans, CEED Lending will require ACH transfers for all monthly
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payments. Borrowers will have loan payments automatically withdrawn via ACH on
the due date. All payments are posted to the borrower's Payment Record Ledger
showing the date and amount of the payment together with the breakdown of
principal and interest and the remaining balance. Payment records can be provided
to the borrower upon request.
b. Audits, Accounting
The Oakland County RLF is subject to an annual audit in accordance with 2 CFR Part
200, Subpart F and Compliance Supplement. Oakland County and CEED will ensure
that the Oakland County RLF appears on the Oakland County Schedule of
Expenditures of Federal Awards (SEFA) as part of the Oakland County, Michigan
Annual Audit. CEED Lending financial audits are conducted annually consistent with
EDA audit requirements of all program transactions and a written report shall be
provided to the Oakland County.. Oakland County and CEED Lending shall employ
recommended standard accounting procedures to record and report all financial
transactions.
c. Loan Monitoring Procedure
Specific language will be included in the RLF loan agreement requiring the
borrower to comply with the provisions of appropriate federal laws, regulations,
and executive orders regarding Civil Rights, Environmental Compliance, and Flood
Hazard Insurance. Specific language will ensure that the loan will be in default and
will be called if the business is moved outside of Oakland County. Applications may
be disapproved by the LAC if the proposed project adversely impacts, without
appropriate mitigation: floodplains, wetlands, significant historical or
archeological properties, drinking water resources, or non-renewable natural
resources. Lending staff shall do the following:
• Counsel with the borrower as appropriate to address any problems which
may be foreseen.
• Assess appropriate late charges for delinquency in the payment schedule.
• Recommend other management actions by the borrower to resolve potential
or actual problems.
• Carry out other appropriate actions, as needed, including a declaration of
default and recall of the RLF loan, to protect the interest of the RLF loan,
while still responding to the legitimate needs of the borrower.
The borrower will provide reports to the LAC as requested and per this schedule that
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will be presented to them at closing.
• A yearly Job Report
• An updated fiscal year-end federal business income tax returns within ninety
days of completion
• An updated fiscal year-end federal personal income tax returns within ninety
days of completion
• Annual personal financial statement
• Any additional financial information identified based on the conditions of
loan approval
d. Late Payment Follow-up Procedure
CEED Lending will monitor receipt of loan payments and confirm delinquency at 15
days. If the payment has not been received a note to the borrower will be sent
reminding them of the payment deadline and requesting a meeting if the borrower
is anticipating additional late payments. If the payment has not been received the
following schedule will be followed. Every effort will be made to work with the
borrower to resolve the delinquency. Modification of the terms of the loan will be
used only when it can be demonstrated that the modification will improve the ability
of the borrower to repay.
Schedule
i 10 days late — Personal call to or communication with the borrower.
Y 20 days late — Send letter of delinquency.
• 30 days late — Notify guarantors and inform the LAC.
• 40 days late — Send a second letter of delinquency and notify guarantors.
CEED Lending staff will review security interest.
• 50 days late — Notify guarantors and inform the LAC, staff and CEED Lending
legal counsel will review security interest and prepare for action as needed.
• 60 days late — Initiate process outlined below in section e. Procedure for
Handling Loans Over 60 Days in Arrears.
Payments will be reported to the credit bureau when made, any late or defaulted
loans will be reported as such.
e. Procedure for Handling Loans Over 60 Days in Arrears
If a loan becomes 60 days delinquent, staff will make a recommendation to the LAC
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on actions to be taken such as repossession of collateral, foreclosure, etc. The LAC
will make the final decision on all such actions. CEED Lending and its attorney will
make sure all documentation is in order and file paperwork as determined by the
LAC. This includes confirming security interests are in place. Notification will be
sent to all guarantors indicating their liability. Borrower's senior lien holders will be
notified of default.
• 15 Days — call to principal
• 30 days — default letter issued with copies to any guarantors
• 90 days — Start procedures
f. Write-off Procedure
If a loan or portion of a loan remaining after the liquidation of collateral is
determined to be uncollectable, it will be written off. The direct write-off method of
accounting is used. However, collection efforts will continue until it is determined
by the LAC that such efforts are no longer cost-effective.
g. Priority of Payments on Defaulted Loans
When receiving proceeds on defaulted loans not subject to liquidation pursuant to
federal regulations, as amended, such proceeds shall be applied in the following
order of priority:
• Any costs of collection;
• Outstanding penalties and fees;
• Any accrued interest to the extent due and payable; and
Y Any outstanding principle balances.
h. Administrative Costs
Oakland County will fund the initial start-up administrative costs. Once the RLF can
support itself, administrative costs will be taken from RLF program income.
10. Loan Agreement Provisions
The loan agreement will specify the purpose of the loan. The Document will protect and
hold the Federal government harmless from and against all liabilities that the Federal
government incur as a result of providing an RLF Grant to assist directly or indirectly in
site preparation or construction, as well as the direct or indirect renovation or repair of
any facility or site. The LAC may require such paperwork of all borrowers, consultants
Page 24
or contractors to certify their understanding and compliance with all federal salutatory
and regulatory requirements for the loan funds.
11. Administrative Procedures
a. Procedure for Loan Files and Loan Closing Documentation
The loan file must contain all the documentation for that loan. Included in each file
are copies of the Loan and Security Agreement, Note, Trust Deeds, and collateral.
Originals of these documents will be stored in a fireproof vault at the headquarters
for CEED Lending. UCC filings and searches, the original loan application, business
plan and/or other documents submitted with the application, private lender
commitment, write-up, approval, insurance certificates, financial statements, job
reports, correspondence, servicing/site visit notes and any other documentation
regarding the loan will be kept in a fireproof filing cabinet at the offices of CEED
Lending.
b. Procedure for Complying with EDA Reporting Requirements
CEED Lending staff is responsible for preparing the required EDA semi-annual
reports. The staff accountant prepares the required financial reports to EDA as well
as ensuring that an independent audit is sent to EDA annually. CEED Lending will
also provide such audit to Oakland County. Each RLF fund is accounted for
separately. Income and expense line items are accounted for separately from
principal repayments and loans made.
c. Grantee Control Procedure for Ensuring Compliance with All Grant Requirements
and for Monitoring the RLF Portfolio
CEED Lending staff keeps a grantee file with copies of all required reports, audits
and EDA compliance manuals, guidelines, and Standard Terms and Conditions. The
forms used for documentation of RLF loans will be reviewed by CEED Lending
attorney.
d. Non -Discrimination
CEED Lending, Oakland County, and the partners will market the RLF program to all
eligible potential borrowers including targeting prospective minority and women
borrowers. The lending staff will make personal calls to current minority borrowers,
other minority entrepreneurs, bankers, and economic development organizations
for assistance in spreading the word about the program and for ideas for marketing
the RLF. Press releases and personal contacts will emphasize the opportunities that
Page 25
the RLF can bring to small businesses including those owned by women and
minorities.
RLF funds will be made available on a nondiscriminatory basis and no applicant will
be denied a loan on the basis of race, color, national origin, religion, age, handicap,
or sex. A provision is included in the RLF loan documents that prohibit borrowers
from discriminating against employees or applicants for employment or providers
of goods and services. CEED Lending will monitor borrower compliance with civil
rights laws periodically by reviewing the job reports that will be submitted to CEED
Lending for subsequent reporting to EDA.
e. Confidentiality
Confidentiality regarding financial information will be guarded at all times. No
Oakland County or CEED Lending staff or LAC member will use their official position
or office to obtain confidential information or in any other way obtain financial gain
for themselves other than salary and/or reimbursement of expenses, or for any
member of their household, or for any business with which they, or a member of
their household, is associated.
B. Environmental Review Process
The RLF will be operated to follow applicable environmental laws and other regulations,
including 13 CFR § 307.10 and parts 302 and 314 of the same chapter. Procedures to comply
and ensure that potential borrowers comply are included as part of this Plan. Prospective
borrowers, consultants, or contractors will be made aware of and are required to comply
with the Federal statutory and regulatory requirements that apply to activities carried out
with RLF loans. Loan documents and agreements will include applicable Federal
requirements to ensure compliance. The policies in this plan include the requirement for
annual compliance reporting by each borrower and corrective actions available to the LAC
in the case on non-compliance.
Prior to closing any RLF, the applicant shall provide evidence that environmental permits, if
any, have been issued. The closing documents will include certifications by the borrower to
comply with 13 CFR § 307, 13 CFR § 302, and 13 CFR § 314.
The LAC will monitor the loan recipients for environmental compliance through a self -
reporting program. CEED Lending shall ensure that prospective borrowers comply with all
applicable environmental regulations for the business and its activities. RLF loan agreement
papers shall include applicable federal requirements to ensure compliance. The recipients
will complete a yearly self -certification regarding their environmental compliance. The LAC
Page 26
will consider loan call stipulations as necessary if a recipient fails to meet the environmental
permit requirement or otherwise fail to comply with environmental standards.
The RLF Administrator with the assistance of appropriate staff, shall assess the significance
of all environmental impacts of activities to be financed in compliance with the National
Environmental Policy Act of 1969 and other Federal environmental mandates, as per the
Assurances (SF 424D as revised) executed with the Economic Development
Administration. No activity shall be financed which would result in a significant adverse
environmental impact unless the impact is to be mitigated to the point of
insignificance. When necessary to ensure compliance, any required mitigation shall be
made part of the loan conditions.
No project shall be approved which would result in the alteration of or have an adverse
impact on any wetland without prior consultation with the U.S. Department of the Interior,
Fish and Wildlife Service, and, if applicable, obtaining a section 404 permit from the Army
Corps of Engineers.
Consistent with E.O. 11988, no project shall be approved which would result in new above
ground development in a 100-year flood plain. This determination will be made by
reviewing the proposed development against FEMA Flood Insurance Rate Maps.
The State Historic Preservation Officer, (SHPO) shall be notified of each loan proposal that
involves significant new construction or expansion and asked to submit comments on the
effect of the proposed activity on historic and archaeological resources. The RLF
Administrator shall work with the SHPO and EDA in cases where the SHPO has
recommended actions or has been determined an adverse impact.
All loan applicants shall be requested to provide information indicating whether or not
there was hazardous materials such as EPA listed (see 40 CFR 300), hazard substances,
leaking underground storage tanks, asbestos, polychlorinated biphenyls (PCB), or other
hazardous materials on site that have been improperly handled and have the potential of
endangering public health. If deemed necessary, loan applicants may be required to
perform or provide evidence of a Phase I site assessment to identify possible sources of
contamination, a Phase II site assessment to test soil and/or groundwater samples, and a
Phase III site remediation involving mitigation of applicable contaminants. In cases where
there are unresolved site contamination issues, the RLF Administrator shall work with the
loan applicant and the appropriate state environmental agency office to resolve these
outstanding issues
C. Conflict of Interest
The LAC will work to comply with 13 CFR 302.17 regarding conflict of interest in operating a
Page 27
revolving loan fund. The policy for such is included below.
1. No officer, employee, or member of Oakland County (as RLF grant recipient), CEED
Lending, LAC, or other board (hereinafter referred to as "other board") that advises,
approves, recommends or otherwise participates in decisions concerning loans or the
use of RLF grant funds, or person related to the officer, another employee, or any
member of the Oakland County, CEED Lending or LAC by immediate family, law, or
business arrangement, may receive any benefits resulting from the use of the RLF loan
or grant funds.
2. An RLF applicant may not work to influence the support of officers, employees, LAC
members, or others involving in the decision -making process outside of a regular
advertised meeting of the LAC.
3. Immediate family is defined as parents, grandparents, siblings, children and
grandchildren, but does not include more distant relatives, including cousins, unless
they live in the same household. Exception: A benefit or loan may be conferred if the
officer, employee, or LAC member affected first discloses to the RLF Recipient and the
LAC on the public record the proposed or potential benefit and receives the RLF
Recipient's and/or LAC's written determination that the benefit involved is not so
substantial as to reflect adversely upon or affect the integrity of the RLF Recipient's
and/or LAC's decision process or the services of the officer, employee or LAC member.
4. An officer, employee or LAC member of the RLF Recipient or the LAC must not solicit
or accept, directly or indirectly, any gift, gratuity, favor, entertainment or any other
thing of monetary value, for himself or for another person, from any person or
organization seeking to obtain a loan or any portion of the grant funds.
S. An officer, employee or LAC member involved in the decisions of the LAC may not
influence the vote of the LAC if they have a perceived or actual conflict of interest
relating to the applicant. Any perceived or actual interest in the applicant, a
competitor to the applicant, a supplier to the applicant will be disclosed to the LAC.
The party should recuse themselves from the discussion and decline to review any
proprietary information from the applicant.
6. Former LAC members and/or officers are ineligible to apply for or receive an RLF loan
for a period of two years from the date of termination of his/her services. Exception:
A benefit or loan may be conferred if the officer, or LAC member affected first
discloses to the RLF Recipient and/or LAC on the public record the proposed or
potential benefit and receives the RLF Recipient's and/or LAC's written determination
that the benefit involved is not so substantial as to reflect adversely upon the integrity
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of the RLF Recipient's and/or LAC's decision process.
D. Conflicts of Interest (EDA)
In order to eliminate any real or perceived conflict of interest, any transaction involving an
employee, officer or board member of Recipient will require that the employee, officer or
board member remove him or herself from any position of influence or authority as it
pertains to the transaction. This includes abstaining from voting on loan approval and re-
assignment of duties (such as Loan Summary preparation and Loan Monitoring) as they
pertain to the transaction. In no case shall Recipient's relationship with an employee,
officer or director provide a basis for deviating from the credit standards or repayment
expectations identified in this policy. In addition, EDA requires inclusion of the following:
1. Definitions.
a. An "Interested Party" is any officer, employee or member of the board of
directors or other governing board of Recipient, including any other parties that
advise, approve, recommend or otherwise participate in the business decisions of
Recipient, such as agents, advisors, consultants, attorneys, accountants or
shareholders. An Interested Party also includes the Interested Party's "Immediate
Family" (defined as a person's spouse or partner in a domestic relationship, parents,
grandparents, siblings, children and grandchildren, but not distant relatives, such as
cousins, unless the distant relative lives in the same household as the person) and
other persons directly connected to the Interested Party by law or through a
business arrangement.
b. A conflict of interest generally exists when an Interested Party participates in a
matter that has a direct and predictable effected on the Interested Party's personal
or financial interests or there is an appearance that an Interested Party's objectivity
in performing his or her responsibilities under the Project is impaired.
C. An appearance of impairment of objectivity could result from an organizational
conflict where, because of other activities or relationships with other persons or
entities, a person is unable or potentially unable to render impartial assistance,
services, or advice. It also could result from non -financial gain to the individual, such
as benefit to reputation or prestige in a professional field.
2. Conflicts of Interest Rules.
Recipient must adhere to EDA conflicts of interest rules set forth at 13 CFR § 302.17,
including the following rules specific to RLFs:
a. An Interested Party of Recipient shall not receive, directly or indirectly, any
personal or financial benefit resulting from the disbursement of RLF loans. A
financial interest or benefit may include employment, stock ownership, a creditor or
debtor relationship, or prospective employment with the organization selected or to
Page 29
be selected for a subaward.
b. Recipient shall not lend RLF funds to an Interested Party.
C. Former board members of Recipient and members of their Immediate Family
shall not receive a loan from the RLF for a period of two years from the date that the
board member last served on the board of directors.
3. Duty to Disclose.
Recipient must, in a timely fashion, disclose to EDA in writing any actual or
potential conflict of interest.
4. Written Standard of Conduct.
a. Recipient must maintain written standards of conduct to establish safeguardsto
prohibit employees from using their positions for a purpose that constitutes or
presents the appearance of a personal or organizational conflict of interest
orpersonal gain in the administration of this RLF Award.
b. Recipient must maintain written standards of conduct covering conflicts of
interest and governing the performance of its employees engaged in the selection,
award and administration of contracts. See Section K, Other EDA Requirements,
Subsection 4., Codes of Conduct and Sub -Award, Contract and Subcontract Provisions,
Subsection b), Competition and Codes of Conduct
E. Allowable Cash Percentage
Effective Jan. 2, 2018, EDA replaced the Capital Utilization Rate of 2S percent with
region -specific Allowable Cash Percentage (ACP) that is updated annually. The ACP is
the average cash available for RLFs in the Chicago EDA region and is used for risk
rating RLFs according to the Risk Analysis System.
Lending activity will be managed so that the cash available for lending is less than
the current ACP in effect for the Chicago Region. However, if the Cash Available for
Lending is greater than 50% of the RLF Capital Base for 24 consecutive months, EDA
may take action to disallow the persistent excess cash.
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