A.
ECONOMIC
DEVELOPMENT PROGRAM
Funds for economic development activities are provided to
communities as gap
funding to assist businesses in the creation/retention of jobs for low-and
moderate-income persons. The Economic Development Program (EDP) offers the
following two categories:
1.
Business Assistance Grant Category (BA)
(a)
Activity Group
1 - Non-Municipal owned
(i) Grants for
gap financing to assist
an identified business to create or retain jobs for low and moderate-income
persons; or
(b)
Activity Group 2 - Municipal owned
(i) Grants to Maine communities for
gap financing to develop
or rehabilitate public infrastructure or facilities that is essential for the
location or expansion of identified business and industry.
(ii) Grants for
required local match to
conduct eligible economic development planning and technical assistance
activities.
(c)
Development Fund Loan Category (DF)
(i) Loans for
gap financing to assist
specified businesses to create or retain jobs for low and moderate-income
persons.
2.
Threshold Criteria:(a)
Project Benefit: Except for eligible economic development planning
activities, projects must document that at a minimum, 51% of all jobs created
or retained as a result of the project 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, 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.
(b)
Cost Per Job: The maximum
cost per job created or retained with EDP funds in a non Pine Tree Development
Zone is $20,000. The maximum cost per job created or retained with EDP funds
for eligible Pine Tree Development Zone applicants is $30,000.
(c)
Minimum EDP Application Amount:
$100,000.
(d)
Maximum
Project Size for Utilizing EDP Funds: $5,000,000
(e)
Eligible Activities: The
eligible activities for each program category are as follows:
Category 1 - Business Assistance
Grant (BA) | Maximum Award |
Activity Group 1 - Non-Municipal
Owned |
1) Rehabilitation of commercial or industrial
buildings, structures, capital equipment, and real property
improvements. | $400,000 |
2) Non-capital equipment and operating capital; or
technical assistance provided regionally to businesses facing
closure/bankruptcy needing advice to retain jobs and/or in need of advice to
expand operations for the purpose of new job creation. | $200,000 |
Activity Group 2 - Municipal
owned |
1) 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. which are necessary to create or retain jobs in the
non-retail private sector for low and moderate income
persons. | $400,000 |
2) Required local match necessary to secure new
funds to the State for eligible economic development planning
activities. | $ 50,000 |
Category 2 -
Development Fund Loan (DF) |
1) Acquisition of existing facilities or land and
site Improvements necessary for the construction of a new facility. DF
program funds cannot be used to refinance existing
debt. | $250,000 |
3.
Program Requirements:
(a)
EDP Application Due
Dates: 4:00PM on February 10, 2006, May 12, 2006 and August 11, 2006.
The May 12 and August 11 application deadlines are based upon availability of
funds.
(b)
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.
(c)
Agreement to Participate and Benefit Certification:
The business and the applicant community must submit signed documentation
agreeing to participate in the EDP program, to comply with all program
requirements and to complete the Job Creation/Retention Agreement.
(d)
Maximum % of EDP Assistance and
Matching Funds Requirements:(i) For
non-municipal owned BA and DF activities, the program application must present
a financing plan for a project in which the request comprises the lesser of the
maximum award amount or 50% of the total project cost.
Projects totaling over $5,000,000 are not eligible for EDP
assistance. Project activities and use of funds to
calculate the non-program financing must represent a new investment or a new
project. The financing necessary to support at least 50% of the
total project cost must be firm commitments from non-CDBG funds and must be
documented by binding commitment letters submitted with the
application. In addition, for municipal owned BA activities, the
community must provide a minimum cash match of 20 percent of the
total BA award. This match must be directly related to the BA
infrastructure portion of the project and is in addition to any investment made
by the assisted business.
(ii) For
BA eligible planning activities, the community must provide documentation that
the amount requested is the lesser of the maximum award amount or the actual
match required by the funding agency.
(e) Exclusions: Communities
receiving a BA or DF award may not receive any other EDP award for the same
project or business during the same program year.
(f)
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.
(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 119th 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.
(g)
DF
Program Specific Requirements:(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 DECD and the community.
(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 locational cost differentiations and the
benefit derived from the assistance. The normal interest rate will be 5%
however, a special interest rate of 2% will be available for projects located
in a downtown area as defined in PL 776 enacted by the
119th legislature.
4.
Selection Process: The
selection process will consist of two phases, an application phase and a
project development phase. EDP applications will be evaluated as a viable
business proposal or eligible planning/technical assistance activity. Each EDP
application will be rated in relation to all others. The total points from the
Problem, Solution, Citizen Participation, Commitment and Numerical Analysis
will be used to determine the score for each application. Applications will be
placed in rank order from highest to lowest.
Applications scoring more
than 70 points will be given first consideration from the top of the
list and continuing downward until the allocation for the EDP funding round is
exhausted. The following criteria will be considered during the application
phase:
(a) Problem (15 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.
(b) Solution (15
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.
(c)
Citizen/Business Participation (10 points) Describe
the involvement of the specific business and the general citizenry in this
application process.
(d)
Numerical Analysis (60 points) Based on an analysis
of the following factors:
(i) Strategy
Priority (5 points) Does the activity support the State's economic
development strategy.
(ii)
Natural Resource Based (10 points) Does the activity support a natural
resource based industry (5 pts). Does the activity provide value added products
derived from natural resource based industries (5 pts).
(iii)
Project Significance (45
points) Each application will be evaluated in relation to all others.
Scores will be based on a maximum of 5 points in each of the nine following
areas:
- # of jobs to be created/retained
- # of jobs created/retained as % of municipal
unemployment
- # of jobs created/retained as % of LMA unemployment
- % community unemployment above state average
- % of LMA unemployment above state average
- $'s per job created/retained
- % average hourly salary of jobs created/retained exceeds
per
capita income by Maine County
- Quality of jobs created/retained based on wage and
fringe
- % non EDP $'s in project
5.
Review Process:
(a)
Application: Applications
must be submitted on the appropriate dates. BA planning activity applications
must not be submitted until an application has been accepted by the appropriate
agency (such as EDA) and is working toward a full application. Once submitted,
the EDP Application Review Team will evaluate applications using the criteria
outlined in the Program Statement and the individual application package.
Successful applicants will be invited to proceed into the project development
phase. DECD or its designee may conduct a project development, financial and
credit analysis for each proposal.
(b)
EDP Review Team
Recommendations: Following the EDP Review Team evaluation, one of the
following recommendations will be made to the Director, Office of Community
Development and the DECD Commissioner:
(i)
approval of award under recommended amount and/or terms;
(ii) rejection with staff recommendations for
resubmission or to provide additional information; or
(iii) rejection.
6.
Project Development
Phase: The project development phase will include the following
additional information along with required state and federal requirements
necessary for final approval.
(a)
Financial/Management Plan: The application must include a
business/management/financial plan as outlined in the application package.
Submission will be rated on completeness and soundness of
information.
(b)
Equity: The proposed program recipient has made an equity commitment to
the project, preferably through cash injection. Other substantial participation
may substitute for cash equity as determined by the DECD.
(c) Repayment - DF Loan: Loan
repayment terms will allow a project to be implemented while providing the
maximum and most expeditious return of CDBG DF monies.
(d)
Chance of Success: does the
proposal demonstrate the following:
- a market/need exists for the product, service or planning
activity;
- the cost of the product, service or planning activity is
competitive in current market conditions;
- the cash flow projections are adequate to support operating
expenses and indebtedness for the business activities;
- management has the capacity to carry out the business or
development plan; and
- no unidentified costs are necessary for
implementation.
(e)
Security DF ONLY: The proposed loan recipient must present collateral
appropriate to secure the DF Loan and indicate a willingness to execute
security agreements. The discount collateral coverage ratio is 1:1. In projects
involving subsidiary corporations a corporate guaranty must be obtained from
the parent corporation. Personal guaranty and/or principal life insurance
assignment may be required on a case-by-case basis.
(f)
Public Benefit: The
proposal will be evaluated on the basis of the community and economic benefits
resulting from the project including the increase in local tax revenue
resulting from the project will be evaluated.
(g)
Community and Economic
Development: The primary and secondary impacts of the project on the
community's current and future economic development will be
evaluated.
B.
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.
(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)
Bone-fide Non-Profit Development
Organization: NPDG activities may only be carried out by bone-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 bone-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 on February 10, 2006. 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 bone-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: 20 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: 20
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.
C.
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
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.
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.
D.
PINE TREE DEVELOPMENT ZONES SET
ASIDE
The Pine Tree Development Zones Set Aside (PTDZ) provides
$2,000,000 in CDBG funding targeted for business growth in areas within Pine
Tree Zones designated by DECD under 30-A MRSA C. 206, Sub-c.3. The Pine Tree
Zones are established to foster development and create employment opportunities
for low/moderate income persons in specific areas within regions of economic
need in Maine, which will be governed through cooperative agreements adopted by
all participating communities.
1.
Threshold Criteria:
(a) The
proposed PTDZ activities must meet the low and moderate-income objective as
described below:
(i) At a minimum, 51% of the
jobs created as a result of the PTDZ project must be taken by persons of low
and moderate income. Jobs created must be in the designated Pine Tree
Development Zone to be assisted with the PTDZ application, be new jobs to that
Zone, and not be associated with any other branches of the assisted business
located elsewhere. Job retention is not an allowable program
benefit activity. 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 with
Economic Development Program funds for PTDZ activities is $30,000.
(b) All applications for funding
under the PTDZ must be in support of a Certified Pine Tree Zone
Business.
2.
Special Program Requirements:(a)
Eligible Applicants: Eligible applicants are limited to units of
general local government participating in a Pine Tree Development Zone as
designated by DECD. The entitlement communities of Auburn, Bangor, Biddeford,
Lewiston, Portland and South Portland are not eligible to receive PTDZ funds.
In addition, project activities may not take place in the entitlement
communities listed above. Eligible applicants as defined above may apply
for PTDZ assistance on behalf of the five Maine
Indian Tribes.
Maine Indian Tribes are not themselves
eligible applicants.
(b)
Eligible CDBG Programs and Activities: Eligible CDBG programs
under the PTDZ Set Aside are the Economic Development Program and Interim
Financing Program. PTDZ projects must comply with all rules and regulations set
forth in each of the CDBG programs listed in this section including, but not
limited to, eligible activities, application procedures and deadlines, maximum
dollar awards, national objectives, Project Development Phase and special
program requirements, as necessary.