[HISTORY: Adopted by the City Council of the City of Harrisburg by Ord. No. 11-1987; amended by Ord. No. 31-1991; 6-8-2010 by Ord. No. 5-2010. Other amendments noted where applicable.]
The Mayor's Office of Equal Economic Opportunity (MOEEO) is responsible for the development, administration and implementation of the Community Development Block Grant Revolving Loan Program (RLP). The RLP provides low-interest financing to firms in the City which will in turn strengthen existing jobs, create new employment opportunities, stabilize or increase the tax base, and increase private investment. Funding for the RLP can be appropriated only by the action of Council.
The Mayor's Office of Equal Economic Opportunity is responsible for the development, administration and implementation of the Special Projects Revolving Loan Program (SPRLP). The SPRLP provides low-interest financing for small business startup or expansion; small business contracting with Fortune 500 companies or governmental agencies; and fixed asset acquisition (construction).
Repayment of loans, both as principal and interest, and all application and processing fees shall be returned to a separate RLP or SPRLP account, as appropriate, for use in making additional loans so long as the program remains in effect.
As used in this chapter, certain terms are defined as follows; some terms may be found in the Glossary:
- COMMERCIAL ENTERPRISE
- Any business, other than an industrial or service enterprise, which by its nature or size has created, or offers reasonable likelihood of creating, substantial employment opportunities. The term may include wholesale, retail and other mercantile activities, office buildings (if not in violation of other prohibitions, i.e., no investor/developers), department stores (also if not otherwise in violation) and international, national and regional headquarters facilities.
- Includes the acquisition, erection, extension, renovation, enlargement, or substantial repair of structures utilized in, or related to, eligible business projects. The term does not include cost of demolition or removal of structures.
- ELIGIBLE BUSINESS
- Any commercial, industrial or service business locating or expanding in the City.
- ELIGIBLE PROJECT
- Activities undertaken by an eligible business and conducted pursuant to the definition of "use of funds," as well as expense related to inventory and working capital. The latter, however, are not considered as eligible use of funds. In the case of a mixed-use structure, the costs associated with renovation of the residential portion of the structure may be counted as eligible project costs, but RLP funds are limited to costs associated with the business portion of the project.
- FINANCIAL INSTITUTION
- Any bank, savings and loan or similar institution, one of whose primary business functions is the making of loans to business enterprises.
- INDUSTRIAL ENTERPRISE
- A business, other than a commercial or service enterprise, which by its nature or size requires substantial capital and which by its nature or size has created or offers a reasonable likelihood of creating substantial employment opportunities. The term may include manufacturing activities and research and development as well as warehouse facilities, distribution facilities, and international, national and regional headquarters facilities.
- Any person engaged in the development of a project to be occupied by a person or persons other than the loan recipient.
- LOAN REVIEW COMMITTEE or LRC
- The committee of five members appointed by the Mayor and confirmed by City Council, consisting of two representatives of the community and three representatives of the business community. The LRC will reflect the demographic makeup of the community at large. Term of office shall be three years. Terms of office shall be staggered.
- LOW- AND MODERATE-INCOME PERSON
- A person falling within the low- and moderate-income guidelines as defined by the United States Department of Housing and Urban Development.
- MANUFACTURING ACTIVITY
- The giving of new shapes, new qualities or new combination to matter by the application of skill and labor thereto through the use of equipment or otherwise.
- Any person who is:
- A. African American: All persons having origins in any of the black racial groups of Africa, the West Indies or the Caribbean Basin;
- B. Hispanic American: All persons of Mexican, Puerto Rican, Cuban, Central or South American, or other Spanish culture or origin, regardless of race;
- C. Asian American: All persons having origins in any of the original peoples of the Far East, Southeast Asia and the Indian Subcontinent;
- D. Native American: All persons having origins in any of the original peoples of North America and who maintain cultural identification through tribal affiliation or community recognition; or
- E. American Aleut: All persons having origins in any of the original peoples of the Pacific Islands.
- MINORITY BUSINESS ENTERPRISE
- A sole proprietorship, partnership, joint venture, corporation, or other entity run and controlled by minorities wherein:
- A. At least 51% of the enterprise is owned by minorities;
- B. Minority owners share in the risks and profits of the enterprise to the extent of their individual holdings;
- C. Control by the minority owners of the enterprise is active and not passive, and such control is not wholly dependent on the consent of majority group members who also have holdings in the enterprise; and
- D. The minority owners provide the primary input into the day-to-day operation of the business.
- Any person, partnership or corporation engaged in an industrial, commercial, service, or retail enterprise and determined by the LRC to be financially responsible to assume all obligations prescribed by the LRC (and this chapter) in the lease, sale and operation of an eligible project.
- PERMANENT JOB
- A position or positions providing not less than 25 hours of gainful employment per week for a period of at least three years.
- SERVICE ENTERPRISE
- Any enterprise, other than a commercial or industrial enterprise, that provides essential and necessary services to the business and residential community and which by its nature offers reasonable likelihood of creating substantial employment opportunities. The term includes, but is not limited to, legal counsel, engineering, architectural, investment, and counseling services.
- USE OF FUNDS
- Includes the expense of construction and of acquisition of all structures, land and other property rights and interests in land necessary to the project. The term does not include the expense of demolishing, removing or relocating any buildings or structures on land, machinery and equipment, financing charges, cost of engineering, financial and legal services, plans, specifications, studies, surveys necessary to determining the feasibility of a project, administrative expenses, reserves for interest and for extensions of payment thereof, enlargements, additions and improvements, and other such expenses that may be necessary to the project. Use by investor/developers is not permitted.
- WOMEN BUSINESS ENTERPRISE
- A sole proprietorship, partnership, joint venture, corporation, or other entity run and controlled by women wherein:
- A. At least 51% of the enterprise is owned by women;
- B. Women owners share in the risks and profits of the enterprise to the extent of their individual holdings;
- C. The control of the women owners in the enterprise is active and not passive, and such participation is not wholly dependent on the consent of men who also have holdings in the enterprise; and
- D. The women owners provide the primary input into the day-to-day operation of the business.
The RLP and SPRLP are available generally to a project which involves the investment of private capital in the fixed assets of a business venture within the City. They are intended to finance projects which would have a positive impact on the City by leveraging a significant amount of private investment and creating new employment opportunities for City residents or strengthening existing jobs. At least 51% of all jobs created or retained must be provided to low- and moderate-income persons who are residents of the City of Harrisburg. Loans are permitted for both job retention as well as job creation. For every three jobs retained, one new job must be created.
All development undertaken with proceeds of the RLP or SPRLP must conform to the requirements set forth in the Affirmative Action Cooperation Agreement as amended and readopted. (See Chapter 2-903.)
A minimum goal of 20% of the total dollar volume of RLP loans awarded in any calendar year shall go to qualified minority business enterprises. A minimum of 5% of the total dollar volume of RLP loans awarded in any calendar year shall go to qualified women-owned business enterprises.
The application process shall consist of the following steps:
Completion of an application and submission to MOEEO staff for review. An application fee of $50 must accompany an RLP application; the fee for an SPRLP application is $100. Loan applications will be evaluated by MOEEO staff prior to submission to the Loan Review Committee. Applications will be considered by the LRC at its regularly scheduled meeting.
Review and consideration of application by MOEEO and the LRC at a public meeting.
Issuance of a preliminary approval letter to the applicant following approval by the LRC.
Execution of a loan agreement with required evidentiary materials, following approval by the City Solicitor.
Receipt by MOEEO of loan funds approximately two weeks following approval of the Solicitor and receipt of approved expenditures.
The application fee is nonrefundable.
A nonrefundable processing fee of 1% of the total amount of City financing will be charged by MOEEO, plus the cost of filing fees with government offices, with a minimum RLP fee of $250 and a maximum of $1,500 and a minimum SPRLP fee of $1,000 to a maximum of $10,000. The processing fee is payable at the time of settlement. The borrower will also be responsible for all legal fees and expenses of legal counsel for the City incurred during the processing of the loan, as well as any other extraordinary expenses the City may incur which are directly related to the implementation of the loan. The LRC may waive the processing fee if, in its sole judgment, the circumstances warrant such action relative to the program objectives.
Applicants will be evaluated individually by the LRC to determine creditworthiness, project feasibility, the ratio of new, permanent jobs to be created per dollar borrowed, the number of City residents to be hired as a result of the project, the retention of jobs for low- or moderate-income individuals, the ability of the project to leverage private investment and tax revenues, and other benefits generated. All applications will be reviewed on a first-come-first-served basis. All official notifications, approvals, rejections, and other communications to the applicant will come from the LRC.
The amount of any RLP loan made for a project cannot exceed $10,000 per single permanent job created or retained in the City within three years of the date of the loan; within one year of the date of the loan, at least 50% of the permanent jobs to be created or retained must be in existence with the remainder to be in existence at the end of the three-year period. In no case will the RLP provide more than 40% of the financing for an eligible project.
A minimum of 5% of the project cost, in real assets (either cash or property), is required for all RLP loans. The investment itself, however, can be made in either program eligible expenditures or in working capital.
Firm commitments for participatory funding of the investment proposal, both debt and equity, other than the program loan funds requested, must be in place at the time a program loan application is submitted. All loan applications must include the participation of a conventional lender except where the applicant is able to:
Part of the application must include a statement demonstrating the need for assistance through the program.
The term of the loan for projects under this program is dependent upon the nature of the items financed:
Real estate (SPRLP only): 20 years.
The exact term, which may be less than the term applicable above, will be determined by the LRC based upon a case-by-case analysis of the proposed use of the program funds.
The applicant shall enter into a collateral security agreement with the City, which shall be the secured party therein, which agreement shall note the execution and delivery of a judgment note to the City evidencing the indebtedness of the applicant to the City. The agreement shall be in such form as approved by the City Solicitor and shall include but not be limited to:
A security interest in all inventory, equipment, fixtures, receivables, additions, improvements, and substitutions;
Provisions for the protection of collateral by prohibition of transfer or encumbrance without the written consent of the City and the maintenance of insurance coverage satisfactory to the City;
Indicia of default by the borrower; and
The rights and remedies of the City upon default by the applicant/borrower.
The applicant/borrower shall also execute and deliver to the City a suretyship guaranty agreement in such form as approved by the City Solicitor.
Security statements, liens, or other similar documents will be filed by the City to fully secure any and all loans.
RLP: for the first five years, 1/2 of the New York Prime Rate, with a four-percent minimum interest rate as of the date of approval by the LRC. Loans with terms in excess of five years shall be renegotiated at the end of the five-year period but shall not be less than 1/2 the New York Prime Rate or higher than the same.
SPRLP: 80% of the New York Prime Rate.
Subject to the RLP guidelines, the LRC has the power to:
Create the Committee bylaws and operations procedures;
Elect a Chairperson and other officers, if necessary;
Determine application periods;
Set loan review criteria;
Approve or reject loan applications;
Notify all applicants of the actions of the Committee; and
The decisions of the LRC are final. No appeal may be taken.
Only the LRC will announce program availability and program application deadlines, and applications for the program will only be accepted during such announced periods. Applications submitted in other than authorized periods will be returned to the applicant for resubmitting at the appropriate time.
The LRC will adopt guidelines for action in cases of noncompliance with these requirements by the borrower. In such cases, the interest rate on the loan awarded shall be recalculated at the New York Prime Rate from the date of the loan or from the date of discovery of the noncompliance, whichever is later. The guidelines adopted by the Loan Review Committee will further explain this program element.
The LRC will submit to City Council an annual report on program status. Such report shall include a review of loans made during the reporting period as well as payment progress on loans made in prior reporting periods.