7. Norwest Bank - Community Rehab Agreementt i
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Incorporated 1892
Planning, Economic &
Community Development Department
P.O. Box 1997
Kalispell, MT 59903-1997
TO: Bruce Williams, City Manager
FROM: Lawrence Gallagher, PECDD, Director .�
DATE: March 17, 1995
248 Third Avenue East
(406) 758-7740
(406) 758-7739 (office fax)
(406) 758-7758 (City Hall fa-0
SUBJECT: Renewal of Commercial Rehabilitation Loan Agreement - Norwest Bank -
increase from 8 % to 10 %
Attached, is a March 17, 1995, Memorandum from Ross Plambeck,
recommending that we enter into a new and revised agreement with Norwest Bank. This
agreement has been updated and renewed annually since the program started in 1980.
The interest rate has increased from last years Eight percent (8 %) to Ten percent
(10%), reflecting the rising cost of money related to the Federal Reserve's multiple increases
in the Fed Discount rate since our last agreement w/Norwest.
Steve Olson, President of Norwest Bank Kalispell, has furnished a KDR Rate
History showing what we have been paying annually since 1980.
I concur with Ross's recommendation. Please request City Council authorization
for you to execute the new agreement.
p2PCATU�11?Y
Planning, Economic &
Community Development Department
P.O. Box 1997
Kalispell, MT 59903-1997
Date:
To:
From:
Subject:
iheCitroiKallv I
Incorporated 1892
Memorandum
March 17, 1995
Larry Gallagher, PECD Director
Ross Plambeck, Redevelopment Manager `"�
Renew Agreement with Norwest Bank
248 Third Avenue East
(406) 758-7740
(406) 758-7739 (office fax)
(406) 758-7758 (City Hall fax)
The agreement for the Commercial Rehabilitation Loan Program with Norwest needs to be
updated. The current agreement has expired. The only change in the new agreement is the
loan rate. Last year it was at 8%, with the new rate set at 10% to reflect the rising cost of
money. The loans to the applicants are made at 3%, making the interest subsidy we pay to
the bank at 7%.
Attached are the proposed agreements to be signed by the City Manager and a history of the
loan rates for the program. Also attached is the current status report showing the
effectiveness of the program is leveraging private capital to make physical improvements to
downtown buildings. The current leverage ratio is an outstanding 1100%
The City Attorney has advised me the City Council will need to approve the City Manager's
signature on the agreements.
Recommendation: Please ask the City Manager to request City Council's
approval to sign the new agreement.
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OPPORTUNITY
ankaff
EMBER
BANKS
RNERN
RRIVER
KDR Rate History - 1/4/95
Norwest Bank Kalispell, N.A.
201 First Avenue East
Post Office Box 88
Kalispell, Montana 59903
4061756-4000
BUSINESS
DATE
RATE
PRESENT RATE
TOTAL RATE
SUBSIDY
7/25/80
3%
15%
14%
11 %
7/25/81
3%
20%
17%
14%
7/15/82
3%
20%
17%
14%
1/15/83
3%
(amended)
15%
12%
2/17/84
3%
15%
14%
11 %
8/24/84
3%
15%
12%
11 /1 /85
3%
15%
14%
11 %
4/1 /86
3%
14%
13%
10%
11/10/86
3%
(amended)
12%
9%
5/11 /87
3%
12%
9%
4/1 /88
3%
13%
12%
9%
4/1 /89
3%
15%
14%
11 %
1/25/90
3%
14%
13%
10%
2/1 /91
3%
13.5%
12.5%
9.5%
1 /1 /92
3%
11.5%
10.5%
7.5%
11 /1 /93
3%
9%
8%
5%
Status Report/Combined 2/17/95
STATUS REPORT:
COMMERCIAL REHABILTAION LOAN PROGRAM
KDRP 1, KDRP 2, & TIF
A Summary of the History of the Program since 1980
APPLICATIONS & APPROVALS
Number Submitted to Date:
Applications Withdrawn/Denied:
Number of Loans Closed Q Norwest:
New Businesses in the CBD:
FUNDING & LEVERAGE ANALYSIS
312
46
260
73
Total Loan Amount Leveraged: $4,115,244.20
Total Interest Subsidy Expended: $1,106,488.61
Total Private Capital Invested: $12,178,512.00
Percent of Private Investment Leveraged: 1101%
AGREEMENT
This agreement made this 1st day of November, 1994 by and between NORWEST BANK
KALISPELL, National Association - 201 First Avenue East - Kalispell, Montana 59901, herein
known as the "LENDER" and the City of Kalispell, a municipal corporation, herein known as the
"CITY".
The Parties 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:
The CITY SHALL:
Commit to the LENDER the sum of One Hundred Thousand Dollars ($100,000) to be used
as interest subsidy in order to stimulate the economy, encouraging job opportunities for the
low and moderate income persons in the Commercial and Central Business District in the
Kalispell Downtown Redevelopment Plan. The $100,000 commitment will be used for
interest subsidy.
A. Providing prepaid interest subsidy to the LENDER for approved loans, which subsidy
shall be paid to provide the LENDER a return of 10 percent upon such loans. (Appli-
cants loan rate is 3 percent; therefore, the interest subsidy is 7 percent.)
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 loans meeting the goals and guidelines of Kalispell's down-
town Redevelopment Plan (Ordinance No. 933).
C. The City of Kalispell 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 applicants
to the Architectural Review Committee with all documentations.
D. The City shall make final determination of the loan's eligibility (through Architectural
Review Committee) and notify the applicant of determination pursuant to Planning,
Economic and Community Development Department guidelines.
II. The LENDER SHALL:
Following the intent of the Community Reinvestment Act, the LENDER will make available
Four Hundred Thousand Dollars ($400,000) for improvement loans in the Kalispell Down-
town Redevelopment Plan commercial district to eligible applicants. When interest rates
change, leverage rates will be changed; therefore, the LENDER will make adjustments
relative to the funds provided for the Planning, Economic and Community Development
Program.
A. The maximum loan amount will be $40,000 for a five (5) year period. The present rate
of interest will be 11 percent. As our part in the betterment of the business community,
the LENDER will make the loans at a 10 percent rate.
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 insure all concerns 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 these type of loans and that it will greatly enhance the business community, particu-
larly in the aesthetic and safety areas. The LENDER can foresee that these monies
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 Norwest Bank Kalispell will service all loans to the final processing, etc. The use
of Tax Increment Funds will be to leverage these commercial loans.
F. The record file on these loans be open to inspection for municipal auditing purposes.
III. The CITY and the LENDER agree to the following:
A. That the use of the committed funds will be used to subsidies 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 CITY will process authorization for the specified
interest subsidy and forward it to the LENDER.
B. This Agreement shall remain in force for the period of the City's 1994-95 fiscal year.
C. At the termination of the period of this Agreement, all unobligated CITY funds that
have not been encumbered or disbursed shall be allocated as the CITY deems
appropriate in the budget process.
D. The City of Kalispell shall reserve the right to withdraw from the rehabilitation program
any unobligated amount.
Bruce Willia i Manager
City of pelt
Stephin P. Olson, President
Norwest Bank Kalispell, N.A.
ATTEST: