Current through Register Vol. 46, No. 12, March 20, 2024
(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.