19- 498 C.M.R. ch. 37, § 3

Current through 2024-50, December 11, 2024

Section 498-37-3 - ECONOMIC DEVELOPMENT

A. ECONOMIC DEVELOPMENT PROGRAM

The Economic Development program (EDP) provides communities with gap funding to assist identified businesses in the creation/retention of jobs for low-and moderate-income persons.

1. Eligible EDP Activities and Maximum Grant and Loan Awards:

(a) Activity Breakdown: Applicants may apply in only one specific grant activity group. Applicants for Activity Group Numbers 2 and 3 below may also utilize the DF Loan Activity for the same project but are limited to a total of $400,000 in EDP assistance.

Activity Group Numbers	Maximum Award
1)Grants to Municipalities: for acquisition, relocation, demolition, clearance, construction, reconstruction, installation and rehabilitation associated with public infrastructure projects such as water and sewer facilities, flood and drainage improvements, publicly- owned commercial and industrial buildings, parking, streets, curbs, gutters, sidewalks, etc. All public infrastructure must be owned by the municipality or public or private utility and be in support of an identified business.	$300,000
2) Grants to Municipalities for Direct Business Support: for non-capital equipment, land and site improvements, rehabilitation or construction of commercial or industrial buildings.	$200,000
3) Grants to Municipalities for Direct Business Support: Working Capital and capital equipment.	$100,000
4) Development Fund Loan (DF): for acquisition of existing facilities, land and site improvements necessary for the construction of a new facility, rehabilitation or construction of commercial or industrial buildings, structures, non-capital equipment, capital equipment, working capital and real property improvements.	$300,000

Economic Development Program funds cannot be used to refinance existing debt.

2. Threshold Criteria:

(a) Project Benefit: All projects must document that at a minimum, 51% of all jobs created or retained as a result of the funded activity must be taken/held by persons of low and moderate income as defined by HUD. Jobs created/retained must be in the community applying for the EDP award, new jobs to that community and not associated with any other branches of the assisted business located in another community. Transfer positions cannot be counted toward the job creation/retention requirements. In the event that job creation requirements are not met, the applicant community will be responsible for immediate repayment to DECD of all CDBG funds expended on the project.

(b)Program Dollars Per Job: The maximum CDBG participation per job created or retained with EDP funds in a non Pine Tree Development Zone or not in an identified Empowerment Zone or HUB Zone is $20,000. The maximum CDBG participation per job created or retained with EDP funds for a certified Pine Tree Development Zone business and/or a business located in an Empowerment Zone or HUB Zone is $30,000. Pine Tree Development Zone certified means that the business has been certified as a Pine Tree Development business by the Department of Economic and Community Development at the time of application.

(c) Minimum EDP Application Amount: $50,000

(d) Maximum Project Size for Utilizing EDP Funds: $5,000,000 Phasing of projects to make the total cost appear to be below the maximum project size is expressly forbidden.

(e) Minimum Per Capita Income Requirement: All jobs created with EDP assistance must meet or exceed the Per Capita Income earnings established for the Maine county where the EDP project will take place.

(f) All EDP activities must be in support of an identified business; speculative activities are prohibited.

3. Program Requirements:

(a) EDP Letter of Intent Due Dates for Activity Group Numbers 1-3 ONLY: 4:00PM on January 9, 2009 and, depending on funding availability, April 3, 2009 and June 12, 2009.

(b) EDP Application Due Dates for Activity Group Numbers 1-3 ONLY: 4:00PM on March 6, 2009 and, depending on funding availability, June 5, 2009 and August 14, 2009.

(c) EDP Application Due Dates for Activity Group Number 4 ONLY: Due the first Friday of every month by 4:00 p.m. If that day is a recognized State Holiday the due date would then be the following Monday by 4:00 p.m.

(d) Necessary and Appropriate: EDP assistance to a business must be for projects that are necessary and appropriate. The application must describe the need for program assistance, reasonableness of the amount requested, the repayment plan (DF only), 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 program participation and that program funds provide gap financing.

(e) Compliance with Benefit Certification Requirements: The business and the applicant community, under the direction of the Program Manager assigned to the project, must comply with documentation requirements for jobs created/jobs retained on a project including but not limited to benefit surveys, income verification and periodic reporting that the Office of Community Development may require.

(f) EDP Matching Funds Requirements: Communities applying for Economic Development Program funds must certify that they will provide a 100% cash match of the total EDP award. Matching funds must be directly related to the activities undertaken with EDP funding.

(g) Exclusions: Communities receiving an EDP award may not receive any other EDP award for the same project or business during the same program year or for the same project or business from a prior program year that has not met final closeout status.

(h) EDP Projects in Support of Retail Businesses: OCD may accept an EDP application in support of a retail business activity only under the following limited conditions:

(i) The retail business represents the provisions of new products and services previously unavailable in the community or is a tourism-related business; and

(ii) The development or expansion of the retail business represents a net economic gain for the community and the region. Applications supporting a retail business or businesses are required to certify that the development represents a new overall gain for the region economy and not a shift from existing established businesses to a new or expanded one; and

(iii) The retail business is located in either a downtown district meeting the definition of PL 776 enacted by the 119^th legislature; or a designated local growth area contained in an adopted and consistent comprehensive plan; and

(iv) At least 50% of the jobs created by the retail business must be full time jobs.

4. Special Program Requirements for Grants to Municipalities then Loaned to an Identified Business (Activity Group 4 only):

(i) Loan: The DF program is a grant to the unit of general local government. The recipient must use the funds as a loan to the identified business. The loan must be provided under the terms stated in a DF Program Letter of Commitment and the contract between the DECD, the community and the business.

(ii) 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 cost differentiations and the benefit derived from the assistance and must be approved by the DECD. The interest rate for Development Fund loans is up to 5% for a term not to exceed 10 years. A special interest rate of 2% will be available for projects located in a downtown area as defined in PL 776 enacted by the 119^th legislature.

5. Selection Process: The selection process will consist of three phases, a letter of intent (does not apply to the Development Fund Loan activity), an application phase and a project development phase.

6. Review Process for Activity Groups 1, 2, and 3:

The following criteria will be considered during the application phase:

(i) Problem (30 points) Describe the problem facing the community/business as it relates to job creation/retention activities and document why the community/business is unable to finance the proposed project on its own, or with assistance from other sources.

(ii) Solution (30 points) Describe the activities that will be undertaken with EDP funds to resolve the stated problem/need; how the project will proceed to completion within 12 months from the date of a contract award with DECD; and the effect the project will have on the ability of the business to create/retain quality jobs for LMI persons.

(iii) Citizen Participation (15 points) Describe the involvement of the specific business and the general citizenry in this application process.

*How overall citizen participation process directly relates to identification of solution strategies and application development - 5 points

*Effective use of any media (newspapers, radio, TV, etc) to further public awareness and participation - 5 points

Describe the involvement in the citizen participation process by the business to be assisted with EDP funds - 5 points

(iv) Numerical Analysis (20 points) Based on the following factors determined by OCD:

(a) Strategy Priority (10 points) How the proposed EDP activity is aligned with the State's economic development strategy and supports at least one of the State's targeted technology sectors, specifically one of the following: Precision Manufacturing Technology, Biotechnology, Aquaculture and Marine Technology, Composite Materials Technology, Environmental Technology, Advanced Technologies for Forestry and Agriculture or Information Technology.

(b) Quality of Jobs (10 points) Quality of the jobs to be created/retained based on salary and fringe benefits.

(v)Priority Areas (5 points) Applications assisting a business located in an identified Empowerment Zone, HUB Zone or a labor market area with an unemployment rate exceeding the state average by at least 50% will receive 5 points.

(vi) Final Application Score Each application will receive a Final Application Score consisting of the average of the scores assigned by members of the OCD Review Team. Starting at the top of the scoring list, applicants will be invited to proceed to the Project Development Phase as funds allow. There is no minimum Final Application Score required for an application to be considered for funding.

7. Review Process for Activity Group 4 (DF Loan): Each application for DF assistance will be submitted through an OCD Development Fund Loan Application and must include all attachments required in the 2009 application directions.

Completed applications will be reviewed by the OCD Review Team who will make a recommendation to the Commissioner of Economic and Community Development. The following criteria will be considered during the application phase:

(i) Detailed description of project being financed.

(ii) Detail of the sources and uses (include itemized description of work and costs) of all financing.

(iii) Business' Federal tax return for the previous three years and/or complete accountant prepared financial statements (income statement and balance sheet and notes).

(iv) Interim financial statements (if the most recent financial information is older than 90 days).

(v) Personal Financial Statement and Federal Income Tax Returns of all owners and guarantors with 20% or more ownership.

(vi) One-year pro forma balance sheet, income statement and monthly cash flow statement with supporting assumptions.

(vii) Copies of signed commitment letter from other financing sources as applicable.

(viii) Completed Employment Plan.

(ix) Supplemental information such as collateral appraisals, marketing plans, resumes, site assessments, and aging of accounts receivable/payable may be requested by OCD. If these materials are readily available they should be included with the application package.

(x) Priority AreasDFApplications assisting a business located in an identified Empowerment Zone, HUB Zone or a labor market area with an unemployment rate exceeding the state average by at least 50% will receive priority for funding.

8. Project Development Phase: The project development phase must be completed within 3 months from the date of award. The goal of this phase is a grant contract for CDBG funds. During this phase an OCD Development Program Manager will be assigned to work with the community to finalize their project. OCD reserves the right to rescind the CDBG program award of the community is not under contract within this time. The Director of the Office of Community Development may grant waivers for just cause.

B. COMMUNITY ENTERPRISE GRANT PROGRAM

The Community Enterprise Grant (CE) Program provides grant funds to assist in innovative solutions to problems faced by micro-businesses, promote business façade programs and make streetscape improvements in downtown and village areas. Assistance to businesses may be in the form of grants or loans at the discretion of the community.

1. Threshold Criteria and Program Requirements: CE Program funds will be distributed through an annual grant application selection process.

(a) Eligible Activities:

(i) Eligible activities under the Micro-Enterprise Grant/Loan category are grants or loans to for-profit businesses, façade grants to for-profit or non-profit businesses for exterior improvements, including signage, painting, siding, awnings, lighting, display windows and other approved exterior improvements (interior improvements are not allowed) and streetscapes including pocket parks, benches, street lighting, tree plantings, signage, traffic calming improvements, sidewalks and other approved improvements; eligible planning activities necessary to complete the Project Development Phase. Sewer, water, storm drainage, parking, roads or streets and other infrastructure improvements and buildings solely for residential use are not eligible. All streetscape improvements must take place on publicly owned property.

(b) Downtown Revitalization Program Prohibition - Communities applying for a CE grant may not apply for, receive, or benefit from a Downtown Revitalization Program (DR) grant in the same program year.

(c) Maximum CE Grant Amount: $150,000 - Applicants may apply to address one or any combination of eligible activities listed in Section H (1) (a) above but are limited to a total of $150,000 in CE funds.

(d) Maximum Amount of Community Enterprise Grant/Loan Assistance to Businesses: $25,000

(e) Project Benefit:

(i)Micro-Enterprise Grant/Loan: Existing or developing businesses that have, or will have five or fewer employees, one of

whom owns the enterprise, and whose family income is LMI will meet the project benefit. Employees are not considered in meeting project benefit.

(ii)Business Facade Grants: Projectbenefit will be metwhen exterior improvements and signage on an existing business take place in a designated slum/blight area, or documentation exists that a business qualifies under a spot blight basis.

(iii)Streetscapes: Projectbenefit will be metwhen streetscapes take place in a designated slum/blight area or the applicant community where the project will take place is 51% or greater LMI as determined by HUD and the U.S. Census.

2. Special Program Requirements

(a) Demonstration of National Objective: Applicants must demonstrate that the project meets the National Objective of 1) benefiting 51% or greater low/moderate income persons, 2) preventing or eliminating slum or blighting conditions, or 3) existing or developing businesses that have, or will have five or fewer employees, one of whom owns the enterprise, and whose family income is LMI. Census information, a certified target area survey, an officially adopted declaration of slum/blight conditions conforming to the requirements of MRSA Title 30-A, Chapter 205, 5202 and HUD, or assurances of spot blight designation or micro-enterprise eligibility must be submitted to OCD. These demonstrations must be made as part of the Letter of Intent and Verification of CDBG National Objective submitted to OCD on or before 4:00pm on Friday January 9, 2009.

3. Selection Process: The selection process will consist of three phases; a letter of intent, an application phase and a project development phase.

(a) Letter of Intent and Verification of CDBG National Objective: All communities wishing to submit a CE application must submit a Letter of Intent and Verification of CDBG National Objective to OCD on or before 4:00PM on Friday January 9, 2009 according to the requirements set forth in the 2009 DR application package.

(b)Application: The maximum length of an application is four pages, not counting required attachments. The application deadline for the CE Program is 4:00PM on February 20, 2009. Each application will be rated in relation to all others in a two-stage process.

Stage 1: Review Team Analysis- Members of the four-person OCD Review Team will assign a Review Point Total for each application reviewed. Review Point Totals will consist of the sum of the three scoring areas below and be determined by the total of each sub-scoring area. A maximum of 100 points is obtainable.

(i)Impact (40 points):

*State the problems then present the scope and magnitude of the identified problems. - 6 points

*Explain how the problems negatively impact the local economy and the viability of existing downtown or village area. - 8 points

*Clearly define how the problems negatively affect LMI persons and/or contribute to slum/blight conditions. - 10 points

*Describe the obstacles to overcoming the identified problems. - 6 points

*Explain why CE funds are necessary for the project; describe efforts to secure other grant or loan funds, and tell why they are not are available locally to assist businesses or local government with their development and site improvement needs. - 10 points

(ii)Development Strategy (40 points):

*List the specific activities to be undertaken in the project. For streetscapes include location, size and design features. - 5 points

*Identify the specific use of CE funds and the specific tasks or activities to be funded with each other source of funds. - 5 points

*Provide Identification and description of potential business grant/loan applicants and their needs; or provide details of how areas in need of streetscape improvements were identified and prioritized. - 5 points

*Explain how the CE project will stimulate business in the downtown or village area and assist in improving the area's long-term viability. - 6 points

*Describe how the CE funded activities will have a positive impact on LMI persons and/or on alleviation of the slum/blight conditions. - 6 points

*Provide a project timeline; list activities or actions completed to date. - 4 points

*Describe the capacity and experience of the administrator to market and conduct a grant/loan program or streetscape improvement effort; and describe how CE funds will be expended in a timely manner. - 5 points

*Budget Summary Review - 4 points

(iii)Citizen Participation (20 points):

*Effective use of any media (newspapers, radio, TV, etc) to further public awareness and participation. - 4 points

*Relevance of listed meeting/hearing activities/comments (not counting required public hearing) and the overall citizen participation process in application and project development. - 4 points

*Involvement of downtown and local businesses, Chambers of Commerce, development groups or other business related organizations in identification of problems and development of the application and project. - 4 points

*Involvement of potential LMI project beneficiaries in development of the application and project and how the required public hearing relates to the application development and citizen participation process. - 4 points

*How other local resources (cash and in-kind) are directly related to the project and the establishment of a cash value equivalent for all in-kind commitments. - 4 points

Stage 2: Final Application Score- Each application will receive a Final Application Score consisting of the average of the scores assigned by members of the 4-person OCD Review Team. Starting at the top of the scoring list, applicants will be invited to proceed to the Project Development Phase as funds allow. There is no minimum Final Application Score required for an application to be considered for funding.

C. SMALL BUSINESS DEVELOPMENT CENTER TECHNICAL ASSISTANCE (Limited to the County of Aroostook)

The Small Business Development Center Technical Assistance (SBDCTA) provides funding to provide technical assistance to Maine micro-enterprise businesses through a partnership with Maine's Small Business Development Centers.

1. Special Threshold Criteria and Certifications: SBDCTA will be distributed through a set aside of CDBG funds provided to the County of Aroostook as the lead community. The lead community will establish a legally binding contract with the SBDC as approved by OCD.

(a) Eligible Activities:

(i) Eligible activities under the SBDCTA are technical assistance to verified Maine micro-enterprise businesses and potential start up companies which can be reasonably expected to become a micro-enterprise business.

(b) Communities ineligible for SBDCTA Assistance:

(i) Micro-enterprise businesses and potential start up companies located in the communities of Auburn, Bangor, Biddeford, Lewiston, Portland and all of Cumberland County with the exception of Baldwin, Brunswick, Casco, Frye Island and Westbrook are not eligible for financial assistance under the SBDCTA.

6. Special Program Requirements:

(a) Maximum SBDCTAGrant Amount: $250,000.

D. NON-PROFIT DEVELOPMENT GRANT PROGRAM

The Non-Profit Development Grant Program (NPDG) provides funding for communities forming partnerships with local non-profit development organizations to carry out activities in blighted areas located in designated downtown areas which will foster community economic development initiatives leading to the elimination of slum and blight and increased job opportunities for LMI persons.

1. Special Threshold Criteria and Requirements: NPDG Program funds will be distributed through an annual grant submission and review process

(a) Eligible Activities: Eligible activities in the NPDG Program are: demolition, site clearance, structural stabilization, removal of environmental contaminants, installation of security devices, including sprinkler systems and smoke detectors, energy conservation measures, including replacement of heating and cooling equipment, removal of architectural barriers, and replacement of landscape materials, sidewalks and driveways where it is incidental to rehabilitation of the property; and eligible planning activities necessary to complete the Project Development Phase.

(b) Match: All communities applying for NPDG funds must certify that a cash match of at least 20 percent of the total grant award will be injected into the project activities. This match may consist of all non-CDBG loans, grants, endowments, etc contributed to the project.

(c) Maximum NPDG Grant Amount: $250,000

(d) Project Implementation: Implementation of all project activities must be carried out by a non-profit development organization that has established a contractual relationship with the applicant community.

(e) Bona-fide Non-Profit Development Organization: NPDG activities may only be carried out by bona-fide non-profit development organizations that meet the Internal Revenue Service definition as a non-profit, and are organized under state or local law to carry out community and economic development needs of the applicant community. Examples of bona-fide non-profit development organizations include but are not limited to: Neighborhood-Based Non-Profit Organizations, Local Development Corporations, SBA Section 504 C ertified Development Companies, Small Business Investment Companies organized under 15 USC Section 681 and Community Action Agencies.

(f) Ownership of Project Site: The non-profit development organization must own the site on which all NPDG activities will take place.

(g) Demonstration of National Objective: Applicants must demonstrate at the time of application that the project meets the National Objective of preventing, or eliminating slum or blighting conditions. An officially adopted declaration of slum/blight conforming to the requirements of MRSA Title 30-A, Chapter 205, 5202 and HUD must be submitted with the application. For spot blight activities documentation must be submitted substantiating the condition of the structure as "blighted."

2. Selection Process: The selection process will consist of two phases an application phase and a project development phase.

(a) Application: The application deadline for the NPDG Program is 4:00PM EST on February 20, 2009. The OCD review team will rate each application in relation to all others.

(b) Rating Criteria: The following rating criteria will apply to all NPDG applications:

(i) Documentation of bona-fide status for Non-Profit Development Organization carrying out NPDG activities: 10 points

(ii) Verification of property ownership of project site by Non-Profit Development Organization: 10 points

(iii) Documentation that project site is in a designated downtown area as defined in an adopted and consistent comprehensive and/or an approved downtown revitalization plan; and that proper slum/blight designation exists for the site: 15 points

(iv) Project Summary - A maximum 2-page summary of all project activities funded with NPDG and matching funds: 15 points

(v) Budget Summary & Matching Funds Review - a review of the Budget Summary Page, Matching Funds Table and required documentation and how they assure the project is fully funded and ready to proceed: 15 points

(vi) Summary of potential jobs, which may be created for LMI persons as a result of the NPDG project: 10 points

(vii) Assurances that NPDG activities will be completed within 12 months of CDBG contract award; including a summary of any financial, permitting, political, environmental or contracting concerns which could delay project: 15 points

(viii) Pine Tree Zone Bonus: NPDG applications supporting project activities taking place in a designated Pine Tree Zone shall receive a bonus of 10 points.

(c) Application Approval: The OCD Review Team will forward their recommendations for funding to the Director, Office of Community Development. A minimum Final Rating of 75 points will be required for an application to be considered for funding. Starting at the top of the scoring list, applicants will be invited to proceed to the Project Development Phase as funds allow.

E. INTERIM FINANCE PROGRAM

The Interim Finance Program (IFP) utilizes funds not disbursed in the State's Letter of Credit for grants to communities to assist businesses or developers in creating housing and job opportunities for low and moderate-income people through short-term loans. The duration of loans will be dependant on availability of CDBG funds.

1. Threshold Criteria:

(a) The proposed activities must meet the low and moderate-income objective as described below:

(i) At a minimum, 51% of the jobs created or retained as a result of the IFP project must be taken by persons of low and moderate income. Jobs created/retained must be in the community applying for the IFP, be new jobs to that community, and not be associated with any other branches of the assisted business located in another community. Transfer positions cannot be counted toward the job creation/retention requirements. In the event that job creation requirements are not met, the applicant community will be responsible for immediate repayment of all CDBG funds to the State.

(ii) The maximum cost per job created or retained with IFP funds is $20,000. The maximum cost per job created or retained with IFP funds for eligible Pine Tree Development Zone, Empowerment Zone or HUB Zone applicants is $30,000.

(iii) At least 51% of the housing units created by the IFP project must be occupied by low and moderate-income households, or

(iv) The IFP expenditures reduce the development costs for new multi-family, non-elderly housing construction where not less than 20% of the units will be occupied by low and moderate-income households at affordable rents and the proportion of the total cost of developing the project to be borne by the IFP funds is no greater than the proportion of units in the project that will be occupied by low and moderate-income households.

(b) Complete the required IFP application materials.

(c) The application amount must be between $500,000 and $5,000,000. The Commissioner of DECD may waive the $500,000 minimum requirement if OCD determines it is in the best interest of the State and if OCD incurs no additional administrative costs as a result of the smaller award. Eligible planning activities necessary to complete the Project Development Phase are also an allowable expense.

2. Special Program Requirements: IFP applicants must also comply with the following:

(a) Need for Financing: There must be a demonstrated need for an IFP loan in order for the project to be funded. The need may be based upon either a gap in available funding for the project or on a determination that the costs of financing so adversely affect the project's rate of return that the project would not be undertaken without additional assistance. IFP grantees must demonstrate the proposed rate and term have been set to ensure that assistance provided is the minimum needed and the proposed assistance is necessary and appropriate to carry out the economic development project.

(b) Commitment of Non-CDBG Funds: The business being assisted must demonstrate that all non-CDBG financing, both permanent and interim, necessary for the project's completion has been secured.

(c) Community Benefit: The project must result in substantial benefit to the community: job creation/retention, tax revenue increases, new housing opportunities, or public facility improvements relative to the public dollar investment.

(d) Surety: The business being assisted by the IFP grantee must secure an unconditional, irrevocable letter of credit for the full amount of the Interim Financing Loan (principal plus any accrued interest to term) from a lending institution acceptable to DECD which will be assigned to the State. The State may accept a FAME guarantee in lieu of an irrevocable letter of credit, or other surety instrument deemed acceptable by DECD.

3. Selection Process: Applications may be submitted on an open basis. IFP grants will be made on a first come, first served basis. Projects that meet requirements may be awarded IFP grants until the amount of funds available in the State's letter of credit has been committed. Following full commitment of the IFP, the State will maintain a waiting list of eligible projects to be funded. If projected funds will not be available for a minimum of six months, the State reserves the right not to accept any additional applications.

4. Approval Process: Through its Technical Assistance Providers, direct mailings, and other marketing methods, the State will advertise the availability of funds within the IFP. Communities interested in applying will: notify the State of their intent to apply, identify the proposed loan recipient and provide an application describing the project. Following the acceptance of a complete application by the State, the DECD or its designee will conduct a financial analysis of the project, DECD will determine if the IFP loan is needed, if all non-CDBG permanent and interim funds are committed, and if an irrevocable letter of credit is in place. The DECD staff will recommend the loan terms and interest rates to the Director, Office of Community Development. The State will review all other program requirements. If these requirements are met, the Commissioner of the DECD will make a grant award based on the project meeting all program requirements.

19- 498 C.M.R. ch. 37, § 3