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HomeMy WebLinkAboutProposed Resolution - 8/14/2025SALT LAKE CITY COMMUNITY REINVESTMENT AGENCY RESOLUTION NO. Disaster Relief Loan Program Policy RESOLUTION OF THE BOARD OF DIRECTORS OF THE SALT LAKE CITY COMMUNITY REINVESTMENT AGENCY ADOPTING THE DISASTER RELEIF LOAN PROGRAM POLICY WHEREAS, the Salt Lake City Community Reinvestment Agency (CRA) was created to transact the business and exercise the powers provided for in the Utah Community Reinvestment Agency Act, Utah Code Title 17C; and WHEREAS, the Utah Community Reinvestment Agency Act grants the CRA powers to use funds to provide for project area development within project area boundaries; and WHEREAS, the CRA Board now supports the goal of providing immediate financial assistance to targeted business and property owners within CRA project areas that have suffered significant damage or destruction due to fire, flooding, earthquakes or storms. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE SALT LAKE CITY COMMUNITY REINVESTMENT AGENCY, that Board hereby adopts the following policy for a Disaster Relief Loan Program: 1. PURPOSE & INTENT The Disaster Relief Loan Program (DRLP) provides immediate financial assistance to targeted business and property owners that have suffered significant damage or destruction due to fire, flooding, earthquakes, or storms (Qualifying Events). 2. PROGRAM ADMINISTRATION Administration of the DRLP shall be guided by this policy and corresponding administrative guidelines. Funding may be offered on an ongoing basis or periodically in response to specific disasters, subject to the availability of funds. 3. THRESHOLD REQUIREMENTS To be eligible for funding through the DRLP, projects must meet the following threshold requirements, in addition to further requirements that may be set forth in the DRLP administrative guidelines. a. Eligible Project Types Project must have sustained direct and verifiable damage or destruction within one (1) year from the Qualifying Event, as documented by official fire or police department reports, insurance claims, and/or on-site inspections by a licensed inspection agent. b. Eligible Costs Funds are intended to provide gap financing to help Owners with reconstruction expenses or hard costs for mitigation and/or repair of disaster-incurred damage including, but not limited to: • Demolition • Debris removal and site cleanup • Security measures for the damaged property during reconstruction • Architectural and engineering fees for reconstruction planning • Reconstruction of damaged buildings and other site improvements • Other qualified uses related to disaster recovery Funds may not be used for personal expenses, refinancing of existing debt, acquisition, or capital improvements not directly related to damage suffered. Project-related soft costs, or tenant-specific improvements will be considered on a case-by-case basis. c. Eligible Applicants Eligible Applicants must be the existing property owner or long-term lessee of the property, which may be an individual or an existing legally registered business that was in good standing with all local, state, and federal regulations prior to sustaining damage (collectively, Owners). Owners must provide sufficient evidence of their financial capabilities to successfully complete the project, and their credit history must demonstrate prompt payment of past obligations. Owners and affiliated entities must be in good standing on all existing contracts administered by the CRA, Salt Lake City Corporation, Salt Lake County, and the State of Utah. Owners must have an active and applicable insurance policy and be in the process of filing a claim for disaster-related damages. The CRA may require a copy of the insurance claim filing and contact information for the insurance adjuster. Evidence demonstrating compliance with any eligibility requirements may be requested by the CRA. d. Project Area Requirements The property must be located within an eligible CRA Project Area. e. Timeliness Time is of the essence in administration of the DRLP and use of funds. The intent of the DRLP is to provide funds to facilitate immediate reconstruction efforts and support projects with an expedited timeframe for completion. 4. LOAN AMOUNT, TERM, & INTEREST RATE a. Loan Amount The applicant must provide sufficient evidence that the amount of funds requested from the CRA is necessary for the project to succeed. i. Maximum Loan Amount All loans shall have a maximum loan amount of one million dollars ($1,000,000). ii. Gap Financing Loan maximums are limited to the demonstrated gap in available funds to cover anticipated project costs. The final loan amount will be determined based on the project need, available insurance coverage, scope of immediate expenses, and enhanced construction costs related to building code requirements, or preservation of building facades or structure. The CRA reserves the right to adjust the maximum amount based on the total number of applications and available program funding. b. Term & Amortization The loan term and amortization schedule shall be determined as follows: i. Term The loan term shall be up to three (3) years, commencing upon initial disbursement of funds. An option to extend the overall loan term to five (5) years may be available through a preauthorized extension that provides an interest rate of five percent (5%) beginning in year four (4). ii. Amortization The standard amortization period is up to ten (10) years with balloon payment due at loan maturity. c. Interest Rate The interest rate shall be determined as follows: i. Interest Rate The initial interest rate of zero percent (0%) will be applied for the first twenty-four (24) months of the loan term. After the initial 24-month period, an interest rate of two percent (2%) will be applied to the remaining balance. Any extension of the loan beyond the standard 3-year term shall carry a five percent (5%) interest rate. Interest shall begin to accrue following the initial 24-month period. In the event of a default, the interest rate will increase to fourteen percent (14%) on the unpaid sum. 5. COLLATERAL AND GUARANTEES Adequate security shall be required, generally in the form of a deed of trust, personal guarantees, UCC filings for business assets, vehicle titles, personal property and assets, and/or other acceptable forms of collateral as established by the DRLP administrative guidelines. 6. EVALUATION & APPROVAL PROCESS a. Application Process The process for distributing and collecting loan applications and supporting documentation shall be established by the DRLP administrative guidelines. b. Underwriting and review by CRA Staff CRA staff shall carry out an underwriting process according to the DRLP administrative guidelines and shall ensure the proposed loan is consistent with any applicable laws or regulations. Once the threshold requirements have been met, CRA staff will further review the application and supplemental materials to determine if the project shall be recommended for conditional loan approval. If either the applicant or proposed project fails to demonstrate the ability to meet underwriting requirements, or such loan conflicts with any laws or regulations, CRA staff shall reserve the right to deny the loan application. c. Conditional Approval Process All applications and requests for adjustments from the standard loan terms, except for those authorized modifications provided in Section 9 herein, shall be reviewed by the CRA Board for conditional loan approval. d. Loan Finalization Once an applicant receives conditional loan approval, CRA staff shall finalize the loan according to the DRLP administrative guidelines. e. Fees Applicable application and legal fees, as well as closing costs, as outlined in the DRLP administrative guidelines, shall be borne by the Borrower. 7. LOAN DISBURSEMENT & REPAYMENT a. Disbursement of Funds Funding shall be disbursed in the form of draws evidenced by supporting documentation of the related expenses and/or demonstration that the work has been completed. b. Repayment No payments will be due for the first twenty-four (24) months of the loan. Monthly payments will be due and payable within thirty (30) days of the Owner receiving its final insurance settlement proceeds related to the damage, the start of lease payments by a tenant, or issuance of a Certificate of Occupancy, whichever is soonest (Repayment Trigger). Evidence demonstrating compliance with the associated Repayment Trigger may be requested by the CRA. Loans may be prepaid in whole or in part at any time without penalty. 8. MONITORING & COMPLIANCE Reporting requirements, as determined by CRA staff, may be put in place to ensure that projects are in compliance with obligations associated with DRLP threshold requirements and loan terms, which will be memorialized in loan agreements, restrictive use agreements, or other form of agreement that is executed at closing. Obligations may extend beyond the approved loan term. 9. LOAN MODIFICATIONS In the event of extenuating circumstances or financial hardship of the Owner, the CRA may provide payment forbearance, payment deferment, an adjustment to terms, or loan forgiveness. Such adjustments shall be considered on a case-by-case basis and shall be subject to a thorough review of the project’s financial standing and other relevant information. The process for providing loan modifications shall be considered and authorized as follows: a. Forbearance/Deferment The Director of the CRA may elect to provide the Borrower with a temporary forbearance or deferment of payment for up to one (1) year. For periods of forbearance or deferment longer than one (1) year, the CRA Finance Committee shall provide a recommendation that is forwarded to the Board, who shall consider and act upon all such requests. b. Adjustment to Terms The Director of the CRA may elect to authorize an extension of the repayment term by an additional two (2) years (beyond the term that was initially approved), and/or re-amortization up to twenty (20) years. c. Loan Forgiveness The CRA Finance Committee shall provide a recommendation that is forwarded to the Board, who shall consider and act upon all such requests. 10. EXCEPTIONS The CRA Board of Directors, by a majority vote of those present, may waive or make exceptions to the foregoing requirements with a finding that the intent of the DRLP will be furthered by such waiver or exception. Passed by the Board of Directors of the Salt Lake City Community Reinvestment Agency, this _______ day of August 2025. ________________________________ Darin Mano, Chair Approved as to form: __/s/ Jennifer Huntsman____ Salt Lake City Attorney’s Office Jennifer Huntsman Date:____________________________ The Executive Director: ____ does not request reconsideration ____ requests reconsideration at the next regular Agency meeting. ________________________________ Erin Mendenhall, Executive Director Attest: ________________________ City Recorder