N.Y. Comp. Codes R. & Regs. tit. 21 § 4216.9

Current through Register Vol. 46, No. 50, December 11, 2024

Section 4216.9 - Commercial revitalization revolving loan trust fund-implementation, procedures and administration

(a) The corporation shall establish commercial district revolving loan trust fund accounts in such amounts as the corporation may determine.

(b) Administering corporations selected by the corporation in accordance with subdivision (d) of this section shall use funds deposited into a commercial district revolving loan trust fund account as set forth in subdivision (e) of this section. Such funds shall consist of:

(1) the program funds deposited by the corporation into the commercial district revolving loan trust fund account when the account is established pursuant to subdivision (a) of this section;

(2) repayments of the principal amount of trust fund loans; and

(3) interest earned by the corporation from the funds allocated to a particular commercial district revolving loan trust fund account beginning in the second year of an administering corporation's administration of same and thereafter.

(c) Administrative expense trust fund accounts.

(1) The corporation shall establish an administrative expense trust fund account in an amount equal to $25,000 for the benefit of each administering corporation. In addition to the foregoing amount, the corporation shall deposit into the administrative expense trust fund account interest earned by the corporation from the funds allocated to the corresponding commercial district revolving loan trust fund account during the first year of an administering corporation's administration of same. The corporation shall also either deposit or credit to such account repayments of interest accrued on trust fund loans.

(2) Semi-annually, the corporation shall disburse to the administering corporation, or otherwise permit the administering corporation to expend, funds on deposit in or credited to the administering corporation's administrative expense trust fund account. Such funds shall be used for the payment of net administrative costs projected pursuant to a semi-annual budget approved by the corporation as same may be updated from time to time with the approval of the corporation. In no event shall an administering corporation request or receive more than $25,000 from its administrative expense trust fund account during its first year of administering its commercial district revolving loan trust fund account.

(d) Selection of administering corporations.

(1) To be eligible for selection by the corporation to administer a commercial district revolving loan trust fund account, an administering corporation must:

(i) represent a service delivery region prospective trust fund loan applicants and borrowers whom the administering corporation's board of directors, staff and trust fund loan committee have personal knowledge of and experience with, and will have an ongoing relationship with following the providing of financial or technical assistance hereunder;

(ii) if it is a representative administering corporation, have strong written commitments from any organization represented on its board of directors to assist it in administering a commercial district revolving loan trust fund account, including the provision of business planning loan application preparation, loan application analysis, management, and other technical assistance as needed. A strong written commitment shall be evidenced by copies of contracts, memoranda of understanding, or other instruments delineating the responsibilities and obligations of the entities that will be assisting the administering corporation in administering the commercial district revolving loan trust fund account;

(iii) if it is a nonrepresentative administering corporation, have letters from other economic development and business development organizations promising assistance and cooperation in administering a commercial district revolving loan trust fund account, including the provision of business planning loan application preparation, loan application analysis, management, and other technical assistance as needed;

(iv) have staff, or have access to staff from organizations participating in the administration of a commercial district revolving loan trust fund account, with sufficient expertise to analyze loan applications, to regularly monitor trust fund loans, and to provide or make arrangements to provide management or technical assistance to its clients;

(v) have established a trust fund loan committee; and

(vi) have an effective plan to market its services and market programs provided by the corporation and the State Department of Economic Development.

(2) The corporation shall select administering corporations to administer a commercial district revolving loan trust fund accounts through a competitive process consisting of a request for proposals. At other times, at its discretion, the corporation may accept direct applications from prospective administering corporation and review and evaluate them on a case-by-case basis. Requests for proposals and applications shall require submission to the corporation of information necessary for the corporation to determine the eligibility of an administering corporation and the desirability of selecting a particular administering corporation to administer a commercial district revolving loan trust fund account.

(3) In determining whether to select a particular administering corporation meeting the criteria set forth in paragraph (1) of this subdivision to administer a commercial district revolving loan trust fund account, the corporation shall consider:

(i) the ability of the administering corporation to administer the Trust Fund Lending Program;

(ii) the degree of public and private support for the administering corporation;

(iii) the degree of economic distress in the service delivery region; and

(iv) whether all or part of the service delivery region is already being served by another organization administering a Trust Fund Lending Program or other decentralized lending program administered by the corporation.

(4) The corporation will enter into an agreement with each administering corporation selected hereunder to administer a commercial district revolving loan trust fund account, which agreement shall set forth the terms and conditions for administering the account.

(e) Use of funds. An administering corporation may use funds deposited into a commercial district revolving loan trust fund account to provide trust fund loans for eligible trust fund projects undertaken by commercial district business enterprises.

(f) Ineligible projects. Trust fund loans shall not be made available for the following projects:

(1) projects that would result in the relocation of any business operation from one municipality within the State to another, unless the municipality from which such business will be relocated is notified in writing by the corporation of the corporation's approval of such funding, and the chief executive officer of the municipality do not object in writing to same within 20 days of receipt of such notification. The chief executive officer of any municipality located within the City of New York shall be the borough president of said municipality;

(2) projects involving the refinancing of any existing loans or debts of an applicant, except for the purpose of transferring to the employees or to other local interests ownership of a company that would otherwise depart from or cease or substantially reduce operations in the State. For the purposes of this paragraph, a substantial reduction of operations in the State shall mean:

(i) the loss by a minority and/or women-owned business enterprise of 25 or more permanent jobs; or

(ii) the loss by a minority and/or women-owned business enterprise of fewer than 25 permanent jobs, if such a loss would have a major adverse impact on the community in which the business is located;

(3) projects that would provide funds, directly or indirectly, for payment, distribution, or loan to owners, partners or shareholders of a trust fund loan applicant, except as ordinary income for services rendered;

(4) to the extent permitted by law, projects involving the making of a trust fund loan to a full-time employee of the State or any agency, department, authority, public benefit corporation, or political subdivision thereof;

(5) projects involving the financing of acquisition or improvement of residential real property or the residential portion of mixed use properties; and

(6) projects in which the trust fund loan would constitute matching funds for the Commercial Revitalization Program.

(g) Providing assistance. An administering corporation shall not approve a trust fund loan unless:

(1) the administering corporation has determined that the trust fund loan applicant is a commercial district business enterprise;

(2) the trust fund loan applicant has a minimum equity interest of at least 10 percent in the proposed project or business;

(3) there is a reasonable likelihood of repayment of the trust fund loan based upon the staff of the administering corporation having:

(i) reviewed a business plan or other written justification of the eligible trust fund project cost compared with the anticipated benefits the trust fund loan applicant will realize from the project, including, without limitation, increased sales or productivity;

(ii) reviewed written price quotes, contracts, or other documentation for the goods, services or property which the trust fund loan applicant proposes to purchase with trust fund loan financing; and

(iii) obtained a personal guaranty of the trust fund loan from the owner(s) of the trust fund loan applicant, and, if appropriate, has made it a condition to the closing of the trust fund loan that the administering corporation receive a security interest in real or personal property to collateralize the trust fund loan;

(4) the project will comply with any applicable environmental rules or regulations;

(5) the trust fund loan applicant has certified that it will not discriminate against any employee or any applicant for employment because of race, religion, color, national origin, sex, or age;

(6) a staff member or a representative of the administering corporation, acting in an official capacity, has personally visited the project site or the trust fund loan applicant's place of business;

(7) the project is located in the service delivery region served by the administering corporation;

(8) the trust fund loan applicant, or the principal owner thereof, has appeared personally before the trust fund loan committee to discuss the proposed project; and

(9) the project proposed by the trust fund loan applicant is an eligible trust fund project.

(h) Approval of eligible trust fund projects.

(1) Each application for a trust fund loan shall be reviewed by the trust fund loan committee. The trust fund loan committee shall determine the feasibility of the project proposed in the application and the likelihood of repayment of the trust fund loan requested and shall recommend to the board of directors or other governing body of the administering corporation such action as the committee deems appropriate.

(2) The decision to approve or reject an application for a trust fund loan shall be made by a majority of the directors or other governing body of the administering corporation and such decision shall be final.

(i) No member of the board or other governing body of an administering corporation shall participate in a decision on a project application when such member is a party to or has a financial interest in such project. Any member who cannot participate in a decision on a project application for such reason shall not be counted as a member of the board or other governing body for purposes of determining the number of members required for a majority vote on such application.

(ii) No employee or officer of any administering corporation shall be a party to or have any financial interest in any project that receives a trust fund loan.

(3) Upon approval of a trust fund loan and the satisfaction by the trust fund loan applicant of the conditions precedent to the closing of the trust fund loan, the administering corporation shall provide the corporation with:

(i) a certification that the trust fund loan complies with the provisions of this section; and

(ii) a report which provides:

(a) the amount, term and annual interest rate of the trust fund loan, the collateral, if any, therefor, and the date anticipated for the closing of the trust fund loan;

(b) the name of the trust fund loan applicant;

(c) a description of the project to be funded;

(d) the total eligible trust fund project cost. If the total eligible trust fund project cost exceeds the trust fund loan, the administering corporation shall identify all other sources of financing for the project, and the amount of financing to be provided by each, and shall verify that written commitments for such assistance have been obtained from each such source; and

(e) such other information as the corporation may require.

(4) Upon acceptance by the corporation of the administering corporation's certification, the administering corporation may draw down proceeds from its commercial district revolving loan trust fund account in the amount of any trust fund loan so accepted.

(i) Recordkeeping, auditing, and reporting.

(1) Each administering corporation shall maintain adequate books and records of its activities hereunder and shall submit annual reports to the corporation describing the financial assistance provided pursuant to this section, including:

(i) the number of projects assisted;

(ii) the amount and type of each trust fund loan approved or advanced;

(iii) a description of each project assisted by each trust fund loan;

(iv) the number of jobs created or retained by each project;

(v) the amount of principal and interest of each trust fund loan paid and outstanding;

(vi) the minutes of meetings of the board of directors or other governing body of the administering corporation of the corporation during which action regarding trust fund loans was taken; and

(vii) such other information as the corporation may require.

(2) The corporation shall periodically and annually audit each administering corporation to ensure conformity to all aspects of trust fund loan transactions with the substantive and procedural provisions of this section.

(j) Fees and out-of-pocket expenses. An administering corporation may charge reasonable trust fund loan application and trust fund loan commitment fees pursuant to a schedule of fees adopted by the administering corporation and approved by the corporation, and may collect such out-of-pocket expenses as it may reasonably incur in connection with the processing of any trust fund loan application and the closing of any trust fund loan.

N.Y. Comp. Codes R. & Regs. Tit. 21 § 4216.9