Section 498-18-3 - ECONOMIC DEVELOPMENTA. DEVELOPMENT FUNDThe Development Fund (DF) Program provides funding to local governments to assist businesses to create jobs for low and moderate income persons.
1. Threshold Criteria:(a)Eligible Applicants: All units of general local government in Maine, including plantations, are eligible to apply for and receive DF funds. County governments may apply on behalf of unorganized territories.(b) 51% of the jobs created or retained as a result of DF expenditures proposed by the applicant must be taken by persons of low and moderate income;(c) the cost per job created or retained with DF funds shall not exceed $35,000.(d) complete the required DF application materials.2. Special Program Requirements:(a)Necessary and Appropriate: A DF loan to a for-profit business must be for projects that are necessary and appropriate. The application must describe the need for DF assistance, reasonableness of the amount requested, the repayment plan, and assurance that the assistance provided is commensurate with the community benefits that will accrue from the project. Documentation must be provided that the project cannot proceed without DF participation.(b)Financing Plan: The DF application should present a financing plan for a project in which the DF loan comprises the lesser of $200,000 or 40% of total project cost. Project activities and use of funds to calculate the non-DF financing must represent a new investment or a new project. The financing necessary to support at least 60% of the total project cost must be from non-CDBG funds and must be documented by binding commitment letters submitted with the application..(c)Maximum Grant Award: $200,000(d)DF Loan: The DF is provided as a grant to a unit of local government. The local government must use designated grant monies as a loan to the business identified in the DF application. The loan must be provided under the terms stated in a DF Letter of Conditions and the contract between DECD and the local government.(e)Repayment Terms: Justification for the repayment terms relate to filling the financing gap, identifying the rate of return allowed through the repayment terms, or specifying the locational cost differentiations and the benefit derived from the assistance.3. Selection Process: The DF project will be evaluated as a viable business proposal. The following will be considered: (a)Strategy Priority: The Development Fund program will give priority to business activities that support the state's economic development strategy. The Development Fund will, whenever possible, be targeted towards economic sectors identified in the strategy.(b) Eligible activities include acquisition, relocation, demolition, clearance, construction, reconstruction, installation, and rehabilitation and working capital.(c)Chance of Success: The project demonstrates that a market exists for its product or service, the cost of the product or service is competitive in current market conditions, the cash flow projections are adequate to support operating expenses and indebtedness, and management has the capacity to carry out the business or development plan. The project must demonstrate that there are no unidentified costs necessary for implementation.(d)Financial Plan: The financing for the project is in place and legally binding commitments have been submitted; the proposal has an appropriate leverage ratio of private and public dollars and is structured to meet cash flow projections; and the project pro forma has been reviewed by an independent qualified financial professional. The financing plan must be complete in that there are no unidentified uses of funds necessary to complete the project.(e)Equity: The proposed loan recipient has made an equity commitment to the project, preferably through cash injection. Other substantial participation may substitute for a cash equity injection with appropriate explanation regarding equity participation.(f)DF Loan repayment: Loan repayment terms will allow a project to be implemented while providing the maximum and most expeditious return of CDBG DF monies.(g)Security: The proposed loan recipient presents collateral appropriate to secure the DF Loan and indicates willingness to execute security agreements.(h)Benefit: The DF proposal will be evaluated on the basis of the community and economic benefits that will result from the project.(i)Cost: The number of permanent jobs created or retained as per DF project dollars will be compared with current and past DF projects. The increase in local tax dollars resulting form the project will be evaluated. Overall project cost effectiveness also will be considered. (1)Low and Moderate Income Benefit: Benefit to LMI persons will be evaluated. The integration of job training programs, job advancement opportunities, education and training programs, and referral services from Joint Training Partnership Act and Job Service will also be reviewed.(2)Community and Economic Development: The primary and secondary impacts of the DF project on the community's current and future economic development will be evaluated.4. Approval Process(a)Application: Applications shall be submitted by the first Thursday of each month. DECD staff will review the applications to determine if the threshold criteria have been met. A credit analysis will be conducted by DECD or its designee for each proposal. And applications are reviewed by committee. The DF Committee will make recommendations to the Director of the Office of Business Development . The DF Committee is appointed by the Director and consists of a representative of local government, a certified public accountant, an attorney, a representative of private financing, a business person, and two at-large appointees.(b)DF Committee Recommendations: The DF Committee will review staff reports and make recommendations to the Director for awards. The Committee will recommend one of four options:(i) approval of requested amount and terms;(ii) approval of requested amount but under different terms;(iii) rejection with staff recommendation for resubmission; or,(c)Quarterly Allocation: The allocation will be limited to $300,000 per quarter, plus any unobligated portion of allocations of previous quarters. This limit can be waived by the Director of OBD. The Director also reserves the right to reject any or all applications in any quarter.B. REGIONAL ASSISTANCE FUNDThe Regional Assistance Fund (RAF) Program provides financial resources to local governments or regional organizations which can use the RAF assistance as leverage to obtain funds under the Economic Development Administration (EDA) Economic Adjustment Assistance Program (Title IX) and the EDA Public Works Program (Title I) or the Rural Development Agency (RDA), Rural Business Enterprise (RBE) Grant and the Intermediary Relending Program (IRP) and/or other Federal, State, and private programs. The purpose of the RAF is to bring additional money into the State and therefore RAF cannot be used as match with the State's CDBG program or conventional lending institutions.
1. Threshold Criteria:(a)Eligible Applicants: All units of general local government in Maine, including plantations and Counties, are eligible to apply for and receive a RAF grant. County governments may also apply on behalf of unorganized territories. Groups of local governments may apply for a multi-jurisdictional or joint RAF project. Multi-jurisdictional applications require designation of one local government as the lead applicant and consent for that designation by each participating local government.(b) be an eligible planning activity or a project with 51% of the jobs created or retained as a result of RAF expenditures proposed by the applicant are taken by persons of low and moderate income;(c) be designated by the appropriate organization providing matching funds eligible to receive funds; and(d) complete the required RAF application materials.2. Special Program Requirements:(a)RAF Funds: Provided an initial RAF application is successful, a grant contract will be executed between DECD and the local government to reserve RAF funds for the applicant, and a RAF Letter of Conditions will be included in the contract to describe the terms that will govern the release of funds from the reserve. The local government must use the designated RAF funds as a match to leverage additional funds.(b)Limit on Amount of RAF assistance: Generally, economic development district will be eligible for one RAF grant per year. Additional grants within districts will be made at the discretion of the Director of Office of Business Development (OBD). The RAF application must present a plan in which the RAF funding comprises the lesser of $200,000 or up to 100% of the matching funds required from the local government. The local government must also demonstrate that it is not possible to get funding from any other source for the portion of matching funds sought from the RAF.(c)Program Income Plan: Thresholds regarding interest rates or repayment terms for RAF assistance to revolving loan funds have not been established. Justification for the repayment terms relate to filling the financing gap, identifying the rate of return allowed through the repayment terms, or specifying the locational cost differentiations and the benefit derived from the assistance. To meet matching requirements, program income generated from RAF funds may be retained by the local grantee or by the local grantee's assignee with the approval of DECD.(d)Community Financial Commitment: Wherever appropriate the community must demonstrate a vested financial interest in the development project, ranging up to 33% of CDBG funds3. Selection Process: The RAF project will be evaluated as a viable CDBG proposal. The following considerations will be the focus of the Impact factor. (a)FinancialPlan: The financing need for the project will be based on an assessment of its financial resources. The proposal must have an appropriate leverage ratio of private and public dollars.(b)Benefit: The RAF proposal will be evaluated on the basis of the community and economic benefits that will result from the project.(c)Cost: The number of permanent jobs created or retained per RAF project dollars will be reviewed on a case by case basis. The increase in local tax dollars resulting from the project will be evaluated. Overall project cost effectiveness also will be considered.(d)Low and Moderate Income Benefit: Benefit to low and moderate income persons and families will be evaluated. The integration of job training programs, job advancement opportunities, education and training programs, and referral services from Job Training Partnership Act and Job Service will also be reviewed.(e)CommunityandEconomicDevelopment: The primary and secondary impacts of the RAF project on the community's current and future economic development will be evaluated.(f)Local Commitment: The commitment of local funds to the project. Additional weight will be given to applications showing a local commitment of funds.4.Approval Process:(a)Application: Once the applicant has submitted a pre-application to the appropriate agency and is working toward a full application, it may submit a RAF pre-application to DECD. DECD staff will review the RAF pre-applications on a first come basis to determine if the threshold criteria and special program requirements have been met. If and when the application process has been successfully completed, the applicant will be invited to continue to the project development phase. An analysis will be conducted by DECD or its designee for each proposal.(b)Staff Recommendations: Following the project development analysis, staff will make one of the following three recommendations to the Director of the OBD for awards: (i) approval of requested amount with requested or different terms(ii) approval of lesser amount with requested or different terms; or,C. MICRO-LOAN PROGRAM The Micro-Loan Program (ML) provides communities with funds to assist existing and new businesses to create and/or retain jobs for low and moderate income persons.
1. Threshold Criteria and Certifications: Micro Loan Program funds will be distributed through an annual grant application selection process. (a)Eligible Activity: The establishment of a local commercial loan program for the purpose of assisting for-profit businesses(b)Project Benefit: As a result of Micro-Loan expenditures, 51% of the jobs created or retained by each business assisted must be taken by persons from households that qualify as low and moderate income (LMI).2. Special Program Requirements:(a) Past Performance: In order to be eligible to apply for the 1999 Micro-Loan program, communities that received CDBG grants in or prior to 1995 must have closed their grants prior to application date. Communities that received CDBG grants in 1996 must have conditionally closed their grants prior to application date. Communities that received CDBG grants in 1997 must have obligated 50% of their benefit activity funds prior to application date. Exceptions: Applicants may request a waiver of this requirement under the following circumstances: l) program delays have occurred beyond the control of the grantee due to unforeseen changes in availability of funds or acts of nature or 2) the recipient has received unanticipated program income and expenditure of grant funds has been delayed 3) the job creation goals of a previous grant have not been fulfilled.
(b) Maximum Micro-Loan Grant Amount: $100,000, part of which may be used to provide technical assistance to loan applicants. Funds not loaned out within 12 months of contract start date will be disencumbered.(c) Necessary and Appropriate: All loans made from the Micro-Loan Program to for-profit and non-profit businesses must be for projects that are necessary and appropriate as defined by HUD. Documentation must be provided that the project cannot proceed without Micro-Loan assistance.(d)Financing Plan: Micro-Loans are limited to a maximum of $25,000 per loan. Micro-Loans may provide 100% of the financing for loans up to $15,000. Micro-Loans exceeding $15,000 require a dollar-for-dollar match for the portion of the loan exceeding $15,000.3. Selection Process: The selection process will consist of two phases - an application phase (Phase I) and a project development phase (Phase II). Phase I Application: The maximum length of an application is six pages. The application deadline is March 12, 1999.
Each application will be rated in relation to all other Micro-loan applications. A minimum of 70 points from the Problem Statement, Proposed Solution and Citizen Participation sections will be required for an application to be considered for funding. A distress score will be added to this result.
(a)Problem Statement (35 points):Scope of Problem: (35 points) - Description of the economic base and business trend problems of the community and the impact on job opportunities. Description of the need for funds including data on area capital availability.
(b)Proposed Solution (35 points):(i)Scope of Solution: (17.5 points) - Description of how funds will be used to solve the identified problems.(ii)Capacity: (17.5 points) - Description of the capacity of the applicant to market and conduct a Micro-Loan Program. Identify accomplishments in administering loan programs or completing similar responsibilities.(c)Citizen Participation (20points):(i)Business Involvement: (10 points) - Description of how the business community participated in the development of the proposed program such as repayment policies, targeted sectors, etc.(ii)General Citizen Involvement: (10 points) - Description of how the need for, and priority of, a Micro-Loan program was defined by the general citizenry in the application process.(d)Distress(10 points): OCD will derive a community's distress score from the following two areas: (i)Unemployment: Rate (3.5 points) - The community's most recent annual unemployment rate will be divided by 10 and the result multiplied by 3.5. Communities with an unemployment rate greater than 10% will receive the total points allowed.(ii)Unemployment: Absolute Numbers (3.5 points) - Applicant communities will be listed from highest to lowest in terms of numbers of unemployed persons. The list will be divided into three equal segments and assigned points accordingly (high, 3.5; middle 2.0; and low 0.5). Unequal divisions will be rounded up.(iii)LMI: Percentage (1.5 points) - The community's most recent LMI percentage will be divided by 51 and the result multiplied by 1.5. Communities with an LMI population greater than 51% will receive the total points allowed.(iv)LMI: Absolute Numbers (1.5 points) - Applicant communities will be listed from highest to lowest in terms of numbers of LMI households. The list will be divided into three equal segments and assigned points accordingly (high, 1.5; middle 1.0; and low 0.5). Unequal divisions will be rounded up.D. ECONOMIC DEVELOPMENT INFRASTRUCTURE PROGRAMThe Economic Development Infrastructure (EDI) Program provides Maine communities with funds to develop or rehabilitate public infrastructure to support new and existing non-retail businesses that create or retain jobs for low and moderate income individuals.
1. Threshold Criteria and Certifications: Economic Development Infrastructure Program funds will be distributed 4 times annually.(a)Eligible Activities: Eligible activities include acquisition, relocation, demolition, clearance, construction, reconstruction, installation, and rehabilitation associated withpublic infrastructure projects such as water and sewer facilities, flood and drainage improvements, publicly-owned commercial/industrial buildings, parking, streets, curbs, gutters, sidewalks, etc. which are necessary to create or retain jobs in the non-retail private sector for low and moderate income persons.(b)Cost per Job: In no case will the cost per job created or retained with EDI funds exceed $35,000.(c)Project Benefit: At a minimum,51% of the jobs created or retained as a result of EDI expenditures must be taken by persons of low and moderate income.(d)Local Match: All communities applying for EDI funds must provide a local match equivalent to 20 percent of the total grant award.2. Special Program Requirements:(a) Past Performance: In order to be eligible to apply for the 1999 Economic Development Infrastructure program, communities that received CDBG grants in or prior to 1995 must have closed their grants prior to application. Communities that received CDBG grants in 1996 must have conditionally closed their grants prior to application. Communities that received CDBG grants in 1997 must have obligated 50% of their benefit activity funds prior to application. Exceptions: Applicants may request a waiver of this requirement under the following circumstances: l) program delays have occurred beyond the control of the grantee due to unforeseen changes in availability of funds or acts of nature or 2) the recipient has received unanticipated program income and expenditure of grant funds has been delayed 3) the job creation goals of a previous grant have not been fulfilled.
(b) Maximum Economic Development Infrastructure Grant Amount: $400,000.(c)EDI Projects in Support of Retail Businesses: OCD will accept EDI Program applications in support of retail businesses only under limited conditions; (i) The retail business represents the provision of new products and services previously unavailable in the community;(ii) The development or expansion of the retail business represents a net economic gain for the community and the region. EDI applications supporting a retail business or businesses are required to certify that the development represents a net overall gain for the regional economy and not a shift from existing established businesses to a new or expanded one; and(iii) At least 50% of the jobs created by the retail business must be full time jobs.(d)Agreement to Participate: The Agreement to Participate form must be submitted with application.(e)Statement of Job Retention: Acompleted Statement of Job Retention must accompany the Agreement to Participate where applicable.(f)Chance of Success: Each business will be evaluated for the following - job creation and retention, existing or new market potential, cash flow, indebtedness, and management capacity.(g)Financial Plan: Businesses must submit a financial plan for review by an independent qualified financial professional. All financial data will be kept confidential.(h)Repayment of Grant Funds: Recipients under this program must repay CDBG funds if job creation/retention goals are not met.3. Selection Process: The selection process will consist of two phases - an application phase (Phase I), and a project development phase (Phase II). Phase I Application: The maximum application length is 8 pages. The application deadlines are January 8, 1999, April 9, 1999, June 11, 1999 and September 10, 1999
Each application will be rated in relation to all others. The total points from the Problem Statement, Proposed Solution, Citizen Participation, Numerical Analysis and Commitment sections will be determined for each application. A distress score will be added to this result. A rank order will be established with the highest ranking application receiving first consideration and continuing until the allocation for each EDI funding round is exhausted.
The Office of Community Development reserves the right to fund only those applications deemed to be in the best interests of the State of Maine and the Community Development Block Grant Program. Applications will not be funded out of rank order except in instances where a preceding application is deemed ineligible.
(a)Problem Statement (20 points):(i)Scope of Problem: (10 points) Problems facing a specific business(es) in relation to job creation or retention activities and overall financial outlook.(ii)Impact on Community and Region: (5 points) Explain how these problems negatively impact local and regional employment and overall economic conditions.(iii)Need for Funds: (5 points) Reasons why the community is unable to finance the proposed project on its own, or with assistance from other sources, including the affected business.(b)Proposed Solution(20 points):(i)Project Description: (10 points) Construction activities that the applicant will undertake using EDI funds to resolve the problem presented in the Problem Statement.(ii)Effect on Assisted Business: (5 points) Effect EDI assistance and completion of the project as a whole will have on the ability of the business(es) to remain competitive, and create/retain quality jobs for low-to-moderate income persons.(iii)Project Timeline and Feasibility: (5 points) Identification of tasks, timetables and responsible parties to implement the project.(c)Numerical Analysis of Significance of Project to Community and Region (20 points): Numerical tables to demonstrate the significance of the proposed project as it relates to job creation/retention and the effect on the labor market area and local economy. Point values will be determined by comparing the information presented in the application for each below with set scoring criteria established by the OCD. (i) Number of jobs created/retained: (5 points)(ii) Percentage of full time jobs: (5 points)(iii)EDI dollars per job created: (5 points)(iv)Quality of LMI jobs created: (5 points)(d)Citizen Participation (10points):(i)Public Hearing Process : (5 points) Documentation of the public hearing held in the applicant's municipality specific to this EDI application.(ii)Business/Local Involvement: (5 points) Description of the involvement that the general citizenry, municipal leaders and businesses have had in increasing citizen awareness and developing the EDI application.(e)Commitment (25 points):(i)Confirmation of LMI Jobs to be Created/Retained: (10 points) Firm documentation as to the number and type of jobs to be created or retained as a result of EDI financing.(ii)Project Funds Table and Source Documentation: (10 points) A listing of all private and public funds firmly committed to this EDI project and binding documentation that these funds are secured.(iii)Environmental and Permitting: (5 points) Accomplished and future actions necessary for successful EDI project implementation.(f)Unemployment Factor (3 points): OCD will derive a community's unemployment factor score from the following areas:(i)Unemployment Rate: (2 points) A score determined by taking the community's most recent annual unemployment rate, dividing it by 10%, and multiplying the result by 2. Communities with a most recent annual unemployment rate greater than 10% will receive the total points allowed.(ii)Unemployment Numbers: (1 point) Applicants will be ranked from highest to lowest by number of unemployed persons. The rank order will be divided into three segments and assigned points (high 1; middle 0.5; and low 0.25). Unequal divisions will be rounded up.(g)Priority Points (2 points): EDI projects in support of natural resource based industries and value added products derived from natural resource based industries will receive two additional points.E. BUSINESS ASSISTANCE PROGRAMThe Business Assistance (BA) program provides funds to assist businesses to create or retain jobs for low and moderate income persons. The Business Assistance program will provide either loans, grants or a combination of each to meet the infrastructure, capital equipment and real property needs of businesses. The program will assist those economic initiatives and development opportunities that are of sufficient magnitude to have a significant impact on a local or regional economy.
1. Threshold Criteria: The state will distribute Business Assistance Program funds through an annual grant application selection process.(a)Eligible Applicants: All units of general local government in Maine, including plantations, are eligible to apply for and receive BA funds. County governments may only apply on behalf of unorganized territories;(b) At a minimum, 51% of the jobs created or retained as a result of BA expenditures must be taken by persons of low and moderate income;(c) The targeted cost per job created or retained with BA funds is $10,000.2. Special Program Requirements:(a)Necessary and Appropriate: A BA loan or grant to a business must be for projects that are necessary and appropriate. The application must describe the need for assistance, reasonableness of the amount requested, the repayment plan, and assurance that the assistance provided is commensurate with the community benefits that will accrue from the project. Documentation must be provided that the project cannot proceed without BA assistance.(b)Financing Plan: The application should present a complete financing plan for a project. The financing necessary to support the total project cost must be documented by binding commitment letters submitted with the application. Project activities or uses of funds used to calculate any non-CDBG financing must represent new investment.(c)Funds: The Business Assistance funds are provided as a grant to a unit of local government. The local government will loan or grant to the business identified in the BA application. The loan or grant must be provided under the terms stated in a Business Assistance Letter of Conditions and the contract between DECD and the local government.(d)Repayment Terms: Terms must be based on the business' maximum capacity for principle and interest payments as documented in their pro formas and reviewed by DECD or its designee as appropriate to remain profitable.(e)Maximum Business Assistance Grant Amount: $400,000(f)Exclusions: Communities will be eligible to receive either Economic Development Infrastructure (EDI) or Business Assistance funds, but not both for the same project.3. Eligible Activities: Eligible activities to be carried out with BA funds include acquisition, reconstruction, rehabilitation or installation of commercial or industrial buildings, structures, fixtures, capital equipment and real property improvements.4. Selection Process: The BA Project will be evaluated as a viable business proposal. The following will be considered:(a)Strategy Priority: The Business Assistance program will give priority to business activities that support the state's economic development strategy. The Business Assistance Program, whenever possible, will be targeted towards economic sectors identified in the strategy.(b)Chance of Success: The project demonstrates that a market exists for its product or service, the cost of the product or service is competitive in current market conditions, the cash flow projections are adequate to support operating expenses and indebtedness, and management has the capacity to carry out the business or development plan. The project must demonstrate that there are no unidentified costs necessary implementation.(c)Financial Plan: The financing for the project is in place and legally binding commitments have been submitted; the proposal has an appropriate leverage ratio of private and public dollars and is structured to meet cash flow projections; and the project pro forma has been reviewed by an independent qualified financial professional. The financing plan must be complete.(d)Equity: The proposed loan/grant recipient has made an equity commitment to the project, preferably through a cash injection. Other substantial participation may substitute for a cash equity as determined by the Director.(e)BA Loan repayment: Loan repayment terms will allow a project to be implemented while providing the maximum and most expeditious return of CDBG BA monies.(f)Security: The proposed loan recipient presents collateral appropriate to secure the BA loan and indicates willingness to enter into security agreements.(g)Public Benefit: The BA proposal will be evaluated on the basis of the community and economic benefits resulting from the project.(h)Cost: The number of permanent jobs created or retained per BA project dollars and the increase in local tax dollars resulting from the project will be evaluated. Overall project cost effectiveness also will be considered.(i)Low and Moderate Income Benefit: Benefit to LMI persons will be evaluated. The integration of job training programs, job advancement opportunities, education and training programs, and referral services from Joint Training Partnership Act and Job Service will also be reviewed.(j)Community and Economic Development: The primary and secondary impacts of the project on the community's current and future economic development will be evaluated.(k)Community Financial Commitment: The community must demonstrate a vested financial interest in the development project. The program's goal is to obtain community participation ranging up to 33% of CDBG funds.5. Approval Process:(a)Application: Applications may be submitted at any time. DECD staff will review the applications to determine if the threshold criteria have been met. A credit analysis will be conducted by DECD or its designee for each proposal. Following staff analysis, applications will be evaluated by a review committee appointed by the Director of the Office of Business Development.(b)Review Committee Recommendations: The review committee will evaluate staff reports and make recommendations to the Director of OBD for awards.F. Regional Super Park Program NotificationIn 1998, the Office of Community Development awarded a grant to one Super Park Project. A similar program was included in the proposed 1999 Program Statement but was removed based on considerable public comment. OCD anticipates including a Regional Super Park competition in its 2000 Program Statement.
19- 498 C.M.R. ch. 18, § 3