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Richard Turner Department of Commerce & Economic Opportunity 2013 CDAP Grant Administration Workshop CDAP Revolving Fund 1.

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Presentation on theme: "Richard Turner Department of Commerce & Economic Opportunity 2013 CDAP Grant Administration Workshop CDAP Revolving Fund 1."— Presentation transcript:

1 Richard Turner Department of Commerce & Economic Opportunity 2013 CDAP Grant Administration Workshop CDAP Revolving Fund 1

2 Sequence of Topics National Goals and Objectives Purpose Federal Regulations/Title I Recapture Strategy/Assurances RF Policy Guidelines Use of Funds Security 2

3 National Goals / Objectives Assist in building the financial and operational capacity of communities to carry out local economic development –Expand Economic Opportunity –51% LMI Benefit 3

4 Low and Moderate-Income Persons 47 Ill. Adm. Code "Low and Moderate-Income Persons" shall mean those individuals in a family whose income is less than 80% of the median income of the area (for non-metropolitan areas the non-metropolitan median income or county income shall apply, whichever is higher). 4

5 CDAP RFs 174 CDAP RFs Statewide $59.8 million – Dec. 31,

6 REVOLVING FUND FEDERAL CDBG HUD $$s STATE (DCEO) CDBG $$s ECONOMIC DEVELOPMENT GRANT CDBG $$s to Unit of Local Government (ULG) CDBG LOAN TO BUSINESS CDBG LOAN REPAYMENTS (PROGRAM INCOME) TO ULG REVOLVING FUND LOANS MADE FROM PROGRAM INCOME BY ULG REVOLVING FUND CDBG-Community Development Block Grant HUD-US Dept. of Housing & Urban Development DCEO-Dept. of Commerce & Economic Opportunity 6

7 Purpose Economic Development Financial projects –Job creation with 51% LMI –Job retention with 51% LMI Public Infrastructure in Support of Business –Participation Agreement –Job creation with 51% LMI –Job retention with 51% LMI 7

8 Purpose 47 Ill. Adm. Code The primary objective of CDAP-funded revolving funds (RF) is to enable grantees to carry out local economic development activities in a way that will expand economic opportunity, principally for low and moderate-income persons. Each RF project shall result in private sector job creation or retention. At least 51% of such jobs shall be filled or retained by persons of low and moderate-income. 8

9 Eligible Borrowers 47 Ill. Adm. Code Private for-profit Not-for-profit entities Borrowers must directly create or retain jobs; indirect jobs (employed by other than the borrower) are not sufficient to meet program guidelines. 9

10 Ineligible Borrowers 47 Ill. Adm. Code RF Community Units of Local Government Public School Districts Developers and business incubators (generally will not create/retain sufficient direct jobs) private for-profit or not-for-profit entities. 10

11 Federal Regulations/Title 1 Job Creation/Retention with 51% LMI Benefit Environmental Review – Required prior to loan closing Davis-Bacon –Required for construction work using RF funds Uniform Act –Required when real property is acquired or persons displaced 11

12 Recapture Strategy 47 Ill. Adm. Code Goals & Objectives of the RF Strategy for achieving goals Management Plan Assurances Must be approved by DCEO 12

13 Assurances Administrative Costs –No more than 10% annual program income –Expenses documented receipts, bills, invoices, etc. 51% LMI benefit Report to DCEO semi-annually Any changes to Recapture Strategy must be approved by DCEO 13

14 Assurances, cont. Pursue all legal remedies to recover delinquent financial assistance project funds One FTE job created or retained for every $15,000 of financial assistance provided. Minimum leverage- $1 non-CDAP to every $1 CDAP RF Comply with environmental reviews and prevailing wages 14

15 RF Policy Guidelines 47 Ill. Adm. Code et al. Finance no more than 50% of project Not to exceed $15,000 for every FTE created/retained No speculative financing 51% LMI benefit Economic Development grant request may be reduced by balance of RF 15

16 Eligible Use of Funds 47 Ill. Adm. Code Site development/infrastructure extension Construct new facility/addition Renovation of existing facility Leasehold improvements Purchase of machinery or equipment Working Capital 16

17 Ineligible Use of Funds 47 Ill. Adm. Code Projects of speculative nature Forgivable financial assistance projects Refinancing existing private debt –Restructuring RF loans is eligible –Refinancing RF loans (with additional funds) is NOT! 17

18 Ineligible Use of Funds 47 Ill. Adm. Code Relocation of business from one area of the state to another (generally no, requires DCEO written approval) General marketing activities Preparing CDAP application 18

19 Security 47 Ill. Adm. Code COLLATERAL 19

20 Security 47 Ill. Adm. Code All RF financial assistance projects to businesses shall be secured –Financial assistance agreement, mortgage, security agreement, promissory note, UCC, financing statement or other assignment of rights of the assets of assisted firms. Dont expect the bank to protect your RF 20

21 Security, Cont. 47 Ill. Adm. Code Necessary actions to protect interests of the RF –Timely action to sell, collect, liquidate, or otherwise recover financial assistance funds or guarantees 21

22 Employee Income Certification Forms Use current Section 8 HUD income guidelines Jobs created by 24 th month Completion required only until goal is achieved 22

23 Other Uses of RF Funds 47 Ill. Adm. Code CDBG eligible activity with prior DCEO approval –51% LMI benefit –Leverage $1 : $1 –Environmental Clearance –Davis-Bacon 23

24 Other Uses of RF Funds 47 Ill. Adm. Code You must use the entire fund balance and closeout the local RF when doing a CDBG eligible activity 24

25 -WARNING- 47 Ill. Adm. Code Failure to comply with State or Federal Regulations could result in: –Pending, future grant requests will not be considered; –Payment requests for active grants suspended; –RF recovery procedures by DCEO. 25

26 Revolving Fund Program DCEO Website _Development/Community+Programs/RF.htm 26

27 Program Documents RLF Handbook RF Report Forms –Excel Semiannual RF Report Form –Instructions for Completing Excel Semiannual Revolving Fund Reports –Employee Income Certification –HUD Income Limit Retrieval –Sample RF Recapture Strategy –Uniform Act – Voluntary Sale Form 27

28 Conclusions RF Program is a valuable local economic development tool Minimum leverage funds must be included in all projects 51% LMI benefit must be met 1 FTE job created/retained for every $15,000 28

29 Contact Information Richard Turner, RF Manager Department of Commerce & Economic Opportunity 500 E. Monroe St, R-2 Springfield, IL (217) (217) 4107 FAX 29

30 Questions??? Comments!!! Concerns~~~ Thank you and good luck! 30


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