Agenda Program Thresholds ED Application Grant Agreement and Closing Documents Grant Administration Monitoring and Closeout RLF Procedures Q&A

Agenda• Program Thresholds• ED Application• Grant Agreement and Closing Documents• Grant Administration• Monitoring and Closeout• RLF Procedures• Q&A

CDBG Economic Development• 2 types of projects– Loans• Low interest, fixed-asset financing to businesses

– Grants• Grants to local units of government for public

infrastructure improvements associated with for-profit business investment and job creation

CDBG ED - Loans• Fixed-asset financing related to job creation• At least 5 jobs (no minimum for RLF)• Eligible Activities– Land/Building Acquisition– Machinery & Equipment– New Construction– Renovation/Leasehold Improvements– Site Preparation/On-site Infrastructure

CDBG ED - Grants• Off-site, “publicly owned” infrastructure• At least 5 jobs (no minimum for RLF)• Eligible Activities– Electric– Gas– Rail– Sanitary Sewer– Street Improvements– Storm Sewer– Water

Job Creation/Retention• CDBG regulations differ from other programs– Maintained = a job that will continue to exist even

if the proposed project does not occur– Retained = Jobs will be lost without CDBG

assistance– Created = New job as a result of CDBG-funded

project

Program Thresholds• Non-entitlement community• For-profit business• 51% LMI jobs• Gap financing• $25,000/job (loans); $9,999/job (grants)• $1:$1 leverage ratio• 5% cash equity• 15% private financing• Environmental Review

Non-entitlement community• Non-entitlement counties and cities may apply• Counties apply for villages, townships• Counties may also apply for cities

For-profit business• Common non-profits interested in program– Hospitals– Nursing homes– Non-profit business incubators

51% LMI Jobs• Who qualifies as LMI?– Household income for previous 12 months at or

below 80% Median Income

• How to determine if jobs available to LMI?– No special skills or experience beyond high school

education required

Gap financing• Maximize private funding sources first• CDBG should be last money in project budget• CDBG is commonly a subordinated lender

behind banks, SBA

Cost per job• Loans - $25,000 per job• Grants - $9,999 per job

• Common mistake is to tell applicants a business “can ‘get’ $25,000 per job”– Many other competitive factors to be considered

when determining potential for CDBG assistance!

$1:$1 Leverage Ratio• CDBG can fund no more than half of the total

project cost (not to exceed $500,000)

• Again, funding thresholds are maximums. Funding not necessarily guaranteed at $1:$1 leverage ratio

5% Cash Equity• Borrower must commit cash equal to at least

5% of project’s total non-infrastructure fixed asset cost (i.e. private, on-site investment)

• Borrowed cash does not meet this requirement

15% Private funds• 15% of the fixed asset cost must be privately

financed– SBA Direct Loan – Public– SBA Loan Guaranty – Private

Environmental Review• Project Aggregation (24 CFR 58.32)– “A responsible entity must group together and

evaluate as a single project all individual activities which are related either on a geographical or functional basis, or are logical parts of a composite of contemplated actions.”

Environmental Review (cont)• Common project aggregation red flags– Purchase of M&E without a building– Rehabilitation of a building only– Construction without acquisition

Program Thresholds• Non-entitlement community• For-profit business• 51% LMI jobs• Gap financing• $25,000/job (loans); $9,999/job (grants)• $1:$1 leverage ratio• 5% cash equity• 15% private financing• Environmental Review


CDBG ED Application – The Process• Step 1: Discuss• Step 2: ER• Step 3: Submit Application• Step 4: Initial Review– REVISIONS

• Step 5: Committee Review– REVISIONS

• Step 6: Approval

CDBG ED Application – The Process• Required Approvals– OCD ED Committee– OCD Management– ODSA Division Chief– ODSA Director

CDBG ED Application• Section I: General Information

– Contact information– Existing & projected employment – Description of project

• Section II: Project Profile– Site/environmental information– Employment profile (job retention, relocation, and training)– Revolving Loan Fund coordination– Impact analysis

CDBG ED Application• Section III: Administrative Profile

• Section IV: Appropriate Determination– Availability vs. Affordability Gap– Public Benefit

• Section V: Budget Table– Sources and Uses

CDBG ED Application• Section VI: Tax Information, Financial Liability, &

Certification• Company must sign Tax Information Disclosure

Authorization, complete financial liability form, and sign Certification

• Community must also sign Certification

CDBG ED Application• Exhibit 1: Authorization resolution or ordinance to apply• Exhibit 2: Business/Developer Investment & Job Creation

Commitment Letter• Exhibit 3: Table of Organization• Exhibit 4: Relocation Certifications– (A) Between Ohio communities– (B) Compliance with anti-pirating regulations

CDBG ED Application• Exhibit 5: Acquisition, Relocation, and Demolition

Questionnaire– Website links for sample forms are provided

• Exhibit 6: OHPO Coordination Letter

• Exhibit 7: Environmental Certification– (A) ER Certification – (B) ER Certification for general administration, fair housing, and planning

CDBG ED Application• Exhibit 8 – National Objective– Exhibit 8a: Job Creation Table– Exhibit 8b: Job Retention Table– Exhibit 8c: Job Benefit Verification Form– Exhibit 8d: Job Certification Summary– Exhibit 8e: Payroll Report

• Exhibit 9 – Public Infrastructure Funding Justification• Exhibit 10 – Site Control

CDBG ED Application• Exhibit 11: Tax Information & Financial Liability Exhibits– A: Three years historical financial statements– B: Interim financial statement– C: Three years projected financial statements– D: Personal financial statements (if applicable)– E: Resumes– F: Working capital line of credit

CDBG ED Application• Exhibit 11: Tax Information & Financial Liability Exhibits

(continued) – G: Real estate and/or used M&E appraisal– H: Site plan

– I: Third-party cost estimates• Infrastructure & fixed asset costs

– J: Estimated taxes– K: W-9


Grant Agreement & Closing Binder• The process:– Grant Agreement issued / ER Released– Community drafts Closing Binder (CB)– OCD Reviews and Approves CB to form– Community may draw funds

Grant Agreement & Closing Binder• The process:– Grant Agreement issued / ER Released– Community drafts Closing Binder (CB)– OCD Reviews and Approves CB to form– Community may draw funds

Grant Agreement & Closing Binder

• Grant Agreement binds ODSA to Grantee

• Closing Binder binds Grantee to business

Closing Binder Contents• Both loans and grants require:– ROF– Evidence of Site Control– Evidence of Financing– Evidence of Equity– Compliance with Special Conditions (Section B15)– Legal Counsel approval

Closing Binder Contents - Loans• Loan-specific documents– Loan Agreement– Security Agreement– Mortgage– Cognovit Promissory Note– Guaranty(s)– Intercreditors/Subordination Agreement

Closing Binder Contents - Grants• Grant-specific documents– Guaranty of Completion


CDBG ED Grant Administration• 2 Key Responsibilities– Collect Invoices, Maintain evidence of

expenditures– Periodically collect job documentation

• Also…– Bid and manage construction project (grants only)– Manage Davis-Bacon Federal Prevailing Wage

(when applicable)

CDBG ED Grant Administration• Tracking expenditures– New Fiscal Spreadsheet template

• Tracking jobs– New Job Certification Toolkit


Monitoring & Closeout• Keys to a successful monitoring– Clear documentation of expenses and payments– Loan payment history and status– Evidence of collateral filed


RLF Program Requirements• The RLF is program income received from ED

loans and can be used for projects with the same national objective (LMI job creation)

• RLF dollars must be retained by the community

RLF Program Thresholds• Same thresholds apply to the RLF as the ED

program, except:– Loans can be issued to non-profit entities– No minimum job creation requirement

Typical Steps1. Community receives application from a business

for assistance2. Community goes through its RLF Board to

determine the viability of the project and financing details– RLF Board must include members representing LMI

community, members with financing experience and members representing an active ED organization

Typical Steps3. Submit initial LRRF electronically to OCD4. Receive feedback from OCD on initial review of

the LRRF5. Revise LRRF and submit any required

documentation electronically to OCD6. OCD reviews the LRRF and supporting

documentation, then notifies community to submit signed LRRF via mail (if no other revisions are needed)

Typical Steps7. Community submits signed LRRF via mail to OCD8. Community will receive a review letter from OCD

indicating the project can move forward

* Community must submit appropriate ER documentation and receive ER Release of Funds from OCD prior to moving forward with the project


Q&A• What recommendations do you have on

keeping a Revolving Loan Fund active? How do you generate projects?

Q&A• What are the some of the most common

challenges you face when structuring a CDBG ED project and working through the application phase?

Q&A• What are some common challenges when

administering a CDBG ED project?