5. Authorization to Sign Commercial Loan AgreementINTERO
DATE: October 14, 1998
TO: Glen Neier, Interim City Manager
ORANDUM
FROM: Susan Moyer, Community Development
SUBJECT: Commercial Loan Agreements With Participating Banks
Glen, October is the month the City needs to enter into new subsidy agreements with the
participating banks on the Commercial Loan Program. For the past two years, the prime rate
negotiated for the contracts was 9-1/2%; and this year the banks have agreed to participate at 9-
1 /4%.
If the council will give you permission at next Monday's session to sign the new contracts at the
9-1/4% rate, I will print out new contracts and bring them to you with the respective bank
signatures.
C:\myfiles\PECDD\Commercial loan contracts
Post Office Box 1997 • Kalispell, Montana 59903-1997
Telephone (406) 758-7700 • FAX (406) 758-7758
AGREEMENT
This Agreement is made this J �
g -� -day of �f_L k e r 1997, by and between
_,
BankWest, N.A., Kalispell, Montana, herein known as the "LENDER," and the City of
Kalispell, a municipal corporation, herein known as the "CITY."
The parties to this Agreement desire to achieve maximum benefit from the use of Tax
Increment Funds available to the CITY through leveraging of these funds with funds
made available by the LENDER.
Parties Agree:
I. The CITY SHALL:
Commit the sum of One Hundred Twenty Seven Thousand Dollars ($127,000) to
the total Commercial Rehabilitation Loan Program to be used as interest leveraging
to stimulate the economy and encourage job opportunities in the Commercial and
Central Business District in the Kalispell Downtown Redevelopment Plan.
A. Provide prepaid interest leveraging to the LENDER for approved loans, which
subsidy shall be paid to provide the LENDER a return of 9.5% upon such
loans. (Applicant's loan rate is 3%; therefore, the interest subsidy is 6.5%.)
B. The CITY, through an Architectural Review Committee appointed by the
Kalispell Development Corporation and approved by the Mayor and the City
Council, will review and approve all applications meeting the goals and:
guidelines of Kalispell's Downtown Redevelopment Plan (City of Kalispell
Ordinance No. 933).
C. The City of Kalispell's Planning, Economic, and Community Development
Department will be solely responsible for the preliminary applications for
commercial loans. The Planning, Economic, and Community Development
staff will present all loan applications to the Architectural Review Committee
with all documentation.
D. The City shall make final determination of the loan's eligibility (through the
Architectural Review Committee) and notify the applicant of determination
pursuant to Planning, Economic, and Community, Development Department
guidelines.
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11. The LENDER SHALL:
Following the intent of the Community Reinvestment Act, the LENDER will make
funds available for the principal for improvement loans in the Kalispell Downtown
Redevelopment Plan Commercial District to eligible applicants.
A. The maximum loan amount will be $40,000 for a five (5) year period. The
present rate of interest will be 9.5%.
B. The LENDER will handle all credit investigations in regard to these loans and
make all credit decisions as to credit worthiness.
C. The LENDER will ensure all concerned that there will be no losses incurred on
behalf of the City of Kalispell, Montana.
D. The LENDER in participating in this loan program agrees that there is a definite
market for this type of loan and that it will greatly enhance the business
community, particularly in the aesthetic and safety areas. The LENDER can
foresee that these moneys to various businesses will be merely a start, as
many of them will match or exceed the low interest loans with other loans to go
for expansion or remodeling. This in turn will create more jobs for the low and
moderate income person for a healthier business community.
E. The LENDER will service all loans to the final processing, notification, closing,
collection, and all other normal banking procedures.
F. The record file on these loans will be open to inspection for municipal auditing
purposes.
G. The LENDER will be entitled to collect those fees incidental and necessary to
process the loan including title insurance, appraisals, recording and
reconveyance fees, and loan closing fees. The loan closing fee shall not
exceed $75.00 per loan application. All fees and costs are the responsibility of
the loan applicant and are not an eligible item that can be included in the loan.
III. The CITY and the LENDER agree to the following:
A. That the use of the committed funds will be used to subsidize the interest rate
to the agreed upon rate. Upon loan closing by the LENDER, the LENDER will
notify the CITY of the interest subsidy. The LENDER will submit a statement
showing the loan amount amortized at both the 3% rate and the 9.5% rate to
determine the interest subsidy dollar amount for the difference of 6.5%. The
CITY will process a voucher for payment to the LENDER for the specified
interest subsidy and forward it to the LENDER.
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B. This Agreement shall remain in force for the period of the City's 1998 Fiscal
Year (July 1, 1997, to June 30, 1998), or until such time as the City Council
adopts the final budget for Fiscal Year 1999 and a new agreement is entered
into between the LENDER and the CITY.
C. Loans will be made on a first come, first served basis. Once the CITY has
expended the total interest subsidy amount contained in their fiscal year
budget, pending loans will have to remain pending until the CITY makes a
determination whether to provide additional funds for the interest subsidy.
City of Kalispell
By:
Clarence Krepps, Ci M ager
BankWest, N.A.
l
By: &m L Iii . 4,11� 4
Bank O er
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