085-2 Wyo. Code R. § 2-9

Current through April 27, 2019

Section 2-9 - Float and Section 108 Loan Guarantees

(a) The Wyoming Business Council will accept economic development loan applications from qualified applicants under the CDBG float activity and the HUD administered section 108 loan guarantee program. A business must apply through an incorporated local government for assistance under the float program and the section 108 program.

(b) Float loans involve the use of CDBG funds for an economic development loan that will generate program income in time to carry out other activities listed in these rules. Use of this procedure is based on the premise that the later activities do not require funds immediately and that the recipient's (state) letter of credit will therefore contain a balance (the "float") that can be used on a temporary basis. Float loans shall be due on demand.

(c) The Section 108 Loan Guarantee program represents an activity where the Wyoming Business Council will accept applications directly from incorporated local governments on behalf of an eligible project. If approved, the Wyoming Business Council will then pledge future CDBG allocations as a guarantee to the loan, and submit the application to HUD for approval. As repayment is made by the borrower to HUD, the Wyoming Business Council's pledge amount will be decreased accordingly. The Wyoming Business Council may pledge up to an amount not to exceed five times the amount of the most recent CDBG grant received by the Wyoming Business Council. If a borrower defaults on a loan, the Wyoming Business Council will forfeit a portion of its future CDBG allocations. The term of a section 108 loan guarantee shall not exceed twenty (20) years.

(d) The minimum amount to be requested for a float or section 108 loan guarantees will be $350,000 and the maximum will be $1,500,000. These limits can be modified only in writing by the Chief Executive of the Wyoming Business Council. Interest rates for both will be based on the amount the company is able to pay and the public benefit to be derived.

(e) Applicants for float loans must be able to secure an unconditional and irrevocable letter of credit, drawn against a sound and acceptable financial institution payable to the Wyoming Business Council before CDBG funds will be disbursed. The purpose of the letter of credit is for the Wyoming Business Council to draw against in the event paybacks are delayed or the borrower has defaulted.

(f) Activities that are eligible for payment from either program are:

(i) Acquisition of real property;

(ii) Building construction;

(iii) Site improvements;

(iv) Acquisition or rehabilitation of machinery and equipment necessary for the operation of the project;

(v) Acquisition, rehabilitation and leasehold improvements of an existing facility;

(vi) Payment of professional fees -- surveying, appraising, engineering, architectural, legal, accounting and closing costs. All fees must be determined to be legal and reasonable;

(vii) Working capital needs of the project.

(g) Minimum threshold requirements for applications requesting either a float loan or a section 108 loan guarantee are:

(i) At least 51 percent of the jobs created or retained must be available to low and moderate income persons. Applicants should propose methods to ensure preferential recruitment, hiring and training of Wyoming workers, particularly those of low and moderate income (see Attachment A). Applicants must take into consideration equal opportunity and non-discrimination laws to ensure that women and minorities are not excluded from participation, denied the benefit of or subjected to discrimination under any program or activity funded in whole or in part with CDBG funds. Successful applicants will be required to comply with equal opportunity and non-discrimination laws and regulations; Or,

(ii) The elimination of slum and blight conditions is specified in Title I of the Housing and Community Development Act of 1974, as amended through 1992;

(iii) The use of CDBG funds for economic development loans must be determined to be appropriate to the project. Applicants must clearly demonstrate the need for the CDBG assistance by documenting that a financial gap exists in funding the proposed project. It could also be considered appropriate to invest CDBG funds into a project that can obtain total private sector funding, but the returns to the for-profit are inadequate to motivate an "economic person" to proceed with the project. In either case, it is incumbent upon the applicant to indicate that the project cannot be developed in the absence of federal loan funds;

(iv) Business plan. Applicants must submit a business plan along with their standard application form. The business plan must reflect;
- (A) A description of the business,
- (B) Qualifications of management,
- (C) A market investigation; and other documentation of financial feasibility as appropriate,
- (D) Three-year financial statements including balance sheets, income statements,
- (E) Cash flow projections for at least three years,
- (F) Cost quotes for all project costs.

(v) A list of each job classification/position that will be created by the project that includes;
- (A) A brief job description,
- (B) Educational/job experience requirements,
- (C) Salary range,
- (D) Hours worked per week/months worked per year.

(vi) Evidence that the SHPO was contacted and consulted and a brief narrative of the results of the consultation (See Chapter 1, Section 13 ).

(h) Potential applicants are requested to contact this office previous to application submission for additional information requirements.

(i) An administrative fee not greater than one percent (1%) of the loan principal may be charged each successful applicant to assist in defraying the local government's expenses of analyzing the loan applications.

085-2 Wyo. Code R. § 2-9