5. Resolution 5618 - Revolving Loan AgreementCity of Kalispell
Post Office Box 1997 -.Kalispell, Montana 59903
Telephone: (406) 758-7701 Fax: (406) 758-7758
5,1
MEMORANDUM
To: Doug Russell, City Manager
Cc: Tom Jentz, Planning Director
From: Katharine Thompson, Community Development Manager
Re: USDA Rural Development Intermediary Relending Program Grant
Application
Meeting Date: May 6, 2013
BACKGROUND: The City of Kalispell, Community and Economic Development
Department has been operating two United States Department of Agriculture Rural Development
(USDA RD) Intermediary Relending Program grants which originated in 1992 and 2006. These
funds are repaid to the USDA with a I % interest over a thirty year period. The intent of the
program is to provide funds that may be re -lent at low interest rates to eligible businesses for
expansion and job creation in Kalispell. As borrowers repay their loans to the City, the funds go
toward repayment of the original USDA RD loan with remaining funds from interest being
available for re -lending to other businesses.
As a review, loan applications are available on the City website or at the Community and
Economic Development Department office. Staff works with an applicant to gather all
supporting documentation and complete loan applications are provided to the Revolving Loan
Fund (RLF) Committee for consideration. The RLF Committee is comprised of five local
volunteers, most recently three bankers and two accountants.
Interest in the loan program is influenced by the prevailing economic conditions. Thus,
Kalispell's Revolving Loan Fund program has experienced a significant increase in applications
as the local economy improves and has made six (6) loans in the past fourteen months totaling
more than $296,000. These funds leveraged $479,500 in participating bank financing and
$57,000 of owner equity in the projects. The City's current outstanding principal (loaned funds)
from the two existing USDA RD IRP programs is $629,689. Current funds available to loan
from these two programs is $91,394.
At this time, the Revolving Loan Fund program has two applications in process and has been
contacted by two more parties who are interested in the loan program. It is anticipated that the
City would have no funds available for relending in the event that even two of these applications
were approved.
The USDA RD Intermediary Relending Program application is due June 2013 and if awarded,
funds would be available September 2013.
FISCAL IMPACT: Depending on the approved borrower interest rate, the City of Kalispell
receives between 2% and 5% revenue on loaned funds.
RECOMMENDATION: It is recommended that Council move to adopt the resolution
authorizing the City Manager to make application for $750,000 in USDA RD Intermediary
Relending Program funds.
Respectfully submitted,
Katharine Thompson
Community Development Manager
Community & Economic Development
RESOLUTION NO.5618
A RESOLUTION AUTHORIZING THE CITY MANAGER TO MAKE APPLICATION FOR
ADDITIONAL LOAN FUNDS FROM THE USDA RURAL DEVELOPMENT AGENCY
INTERMEDIARY RELENDING PROGRAM IN ORDER TO FUND ADDITIONAL
PROJECTS THROUGH THE CITY OF KALISPELL ECONOMIC DEVELOPMENT
REVOLVING LOAN FUND FOR SMALL BUSINESS RETENTION AND EXPANSION.
WHEREAS, the City Council passed Resolution 4780 on May 5, 2003, which established an
Economic Development Revolving Loan Fund for small business retention and
expansion in the City of Kalispell and created an Economic Development Loan
Review Committee; and
WHEREAS, Rural Development and CDBG Economic Development Block Grant sources make
loan funds available for the creation of local government revolving loan programs for
small business retention and expansion which may stimulate economic development
activity by assisting the private sector where a funding gap exists and alternative
sources of public and private financing are not adequate; and
WHEREAS, most of the funds that have been made available up to this date to the City of
Kalispell by Rural Development and CDBG Economic Development Block Grant
sources have been placed and are active loans assisting the private sector within the
City of Kalispell business region; and
WHEREAS, the City continues to receive applications from the private sector for loan funding for
viable business development seeking to locate or expand within the City of Kalispell
business region; and
WHEREAS, the City of Kalispell is otherwise eligible to apply to the USDA Rural Development
Agency's Intermediary Relending Program for an additional $750,000 to fund its
revolving loan program for small business retention and expansion.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
KALISPELL AS FOLLOWS:
SECTION 1. That the City Manager is hereby authorized and directed to apply for funds
from the United States Department of Agriculture, Rural Development office
in the amount of $750,000 in order to fund additional projects for the
Revolving Loan Fund.
PASSED AND APPROVED BY THE CITY COUNCIL AND SIGNED BY THE MAYOR OF THE
CITY OF KALISPELL, THIS 6TH DAY OF MAY, 2013.
ATTEST:
Theresa White
City Clerk
Tammi Fisher
Mayor