15-1385 Approving a Microenterprise Revolving Loan Program Agreement Between the City and Fairwinds Credit UnionRESOLUTION NO. 15-1385
A RESOLUTION OF THE CITY OF LONGWOOD, FLORIDA,
ESTABLISHING A MICROENTERPRISE REVOLVING LOAN
FUND PROGRAM AND APPROVING A MICROENTERPRISE
REVOLVING LOAN PROGRAM AGREEMENT BETWEEN THE
CITY OF LONGWOOD AND FAIRWINDS CREDIT UNION;
PROVIDING FOR CONFLICTS, SEVERABILITY, AND AN
EFFECTIVE DATE.
WHEREAS, as provided in section 2(b), Article VIII of the Constitution of the State of
Florida and chapter 166, Florida Statutes, the City of Longwood (the "City") enjoys all
governmental, corporate, and proprietary powers necessary to conduct municipal government,
perform municipal functions, and render municipal services, and the City may exercise any
power for municipal purposes, except as expressly prohibited by law; and
WHEREAS, the City desires to create a Microenterprise Revolving Loan Fund Program
designed to assist the development and sustainability of micro -business by partnering with
organizations proving training and business development while being a source for funds for
businesses that may have a difficult time in obtaining conventional financing; and
WHEREAS, the City wishes to help stimulate economic growth within its boundaries by
encouraging the development of small, locally owned or operated businesses; and
WHEREAS, the City has found that the growth of many small businesses may be
stimulated by the availability of low interest micro -loan financing; and
WHEREAS, a significant portion of the City's industrial and commercial community is
considered micro -enterprise businesses; and
WHEREAS, the City has determined that small business growth within the City's
boundaries would be encouraged by lending institutions making low -interest, micro loans
available to both new and existing small businesses; and
WHEREAS, the Florida Legislature, through Section 166.021(8), Florida Statutes has
determined that the expenditure of public funds to attract and retain business enterprises and
undertake economic development activities constitutes a valid and therefore municipal purpose;
and
WHEREAS, the City Commission finds that adopting this Resolution, in part, is an
effort to promote economic development and the City exercises its Home Rule authority and its
authority under Chapter 163 and 166, Florida Statutes hereunder.
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NOW, THEREFORE, BE IT RESOLVED BY THE CITY COMNUSSION OF THE
CITY OF LONGWOOD, FLORIDA AS FOLLOWS:
Section 1. Intent. The above recitals are hereby adopted as the legislative purpose of this
Resolution and as the City Commission's legislative findings.
Section 2. Program Creation. The City hereby creates a Microenterprise Revolving Loan
Program (the "Program") in conjunction with Fairwinds Credit Union in accordance with the
terms of this Resolution, including the terms of the Microenterprise Revolving Loan Program
Agreement being approved under Section 3 of this Resolution. The Program is designed to assist
the development and sustainability of micro -business by partnering with organizations proving
training and business development while being a source for funds for businesses that may have a
difficult time in obtaining conventional financing. The Program will have the following structure
and requirements.
Program Structure:
1) An applicant desiring to seek a Program loan will submit an application and business plan
to the Economic Development Manager for review and recommendation. In making a
recommendation, the Economic Development Manager will seek informal input on the
application from the City Manager, Community Development Director, Financial
Services Director, and a member of the business loan department of Fairwinds Credit
Union.
2) If the loan applicant is accepted and recommended for approval by the Economic
Development Manager, the Economic Development Manager will submit a
recommendation for approval to Fairwinds Credit Union.
3) Applicants recommended for loan approval by the Economic Development Manager will
be given special consideration by Fairwinds Credit Union for a loan under the Program.
Applicants not recommended for approval by the Economic Development Manager will
not qualify for a Program loan.
4) Terms of the loans given by Fairwinds Credit Union shall be Prime + 1 % with a 60
month schedule for loans greater than $1,000.00. Any loans of less than $1,000.00 will
have a 12 month schedule.
5) Program loans range from $500.00 to $10,000.00.
6) The total of Program loans outstanding at any given time shall not exceed $30,000.00.
7) As the principal of any outstanding loans is paid down; those funds would become
available for new Program loans.
8) The City will guarantee the principal repayment of Program loans through a loan reserve
account. This reserve will be used to reimburse Fairwinds Credit Union for any loss of
principal incurred in loans made under the Program.
Eligibility Requirements.
Loan applicants must meet the following eligibility requirements:
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1) Retail, service or manufacturing businesses employing 1 to 5 full-time employees, (FTE),
including the owner and have been in operation less than 3 years may submit an
application for board review. Any business that has operated beyond 3 years and has
documented requirement of equal to or less than $10,000.00 for gap financing (was not
able to receive a conventional loan for the full need of the project) may also submit an
application.
2) Company must be located within the municipal boundary
3) Applicant must not be delinquent in any taxes
4) Applicant must obtain all applicable permits and licensing
5) Applicant must submit a business plan with the application
6) Start-up businesses must meet with the Florida Small Business Development Center for
certification of the business plan
7) Company must complete standard protocols as required by Fairwinds Credit Union,
including financial records
Eligible Fund Uses:
Eligible uses of loans funds are:
1) Working capital for merchandising and inventory
2) Interior or exterior property renovations
3) Supplies
4) Capital equipment and machinery
5) Store fixtures, furnishings and other equipment
6) Building or monument signage
Ineligible uses of loan funds include salaries and fringe benefits, advertising, utilities, taxes,
insurance costs and other similar operating expenses.
Section 3. Program Agreement Approval. The City Commission hereby approves and
authorizes the execution of a Microenterprise Revolving Loan Program Agreement between the
City of Longwood and Fairwinds Credit Union substantially in the form attached hereto and
incorporated herein (the "Agreement") subject, however, to revisions as contemplated herein.
The City Commission further authorizes the City Manager and City Attorney to negotiate and
make revisions to the Agreement prior to its execution in order to satisfy any comments and
concerns they may have and to address any comments and concerns of Fairwinds Credit Union.
Further, the City Commission specifically authorizes the Program loan reserve account and the
$30,000.00 for funding the same as required of the City by the Agreement.
Section 4. Conflicts. If any Resolutions or parts thereof are in conflict herewith, this Resolution
shall control to the extent of the conflict.
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Section 5. Severability. If any portion of this Resolution is determined to void, unconstitutional,
or invalid by a court of competent jurisdiction, the remainder of this Resolution shall remain in
full force and effect.
Section 6. Effective Date. This Resolution shall take effect upon adoption.
ADOPTED this 21 st day of September, 2015.
City Commission
City of Longwood, Florida
ATTES /
Michelle Log , ty'CTdICc
and legality for the use and reliance of the City of Longwood, Florida only.
Mf—u,rpfls R—Mng Loan Fund Program 09 142015.doc
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Fairwinds Credit Union/Longwood
Microenterprise Revolving Loan ProLyram Agreement
THIS MICROENTERPRISE REVOLVING LOAN PROGRAM AGREEMENT is
entered into this 040' day of Ak1/e 4,*(_ , 2015, by and between the City of Longwood, a
Florida municipal corporation, whose address is 175 West Warren Avenue, Longwood, Florida
32750 (hereinafter "City") and Fairwinds Credit Union, whose address is 135 W Central Blvd,
Orlando, Florida 32801 (hereinafter "Credit Union").
WHEREAS, the City desires to create a Microenterprise Revolving Loan Fund Program
(hereinafter "Program") which is designed to assist the development and sustainability of micro -
business by partnering with organizations providing training and business development while
being a source for funds for businesses that may have a difficult time in obtaining conventional
financing; and
WHEREAS, the City wishes to help stimulate economic growth within its boundaries by
encouraging the development of small, locally owned or operated businesses; and
WHEREAS, the City has found that the growth of many small businesses may be
stimulated by the availability of low interest micro -loan financing; and
WHEREAS, the Florida Legislature, through Section 166.021(8), Florida Statutes has
determined that the expenditure of public funds to attract and retain business enterprises and
undertake economic development activities constitutes a valid and therefore municipal purpose;
and
WHEREAS, a significant portion of the City's industrial and commercial community is
considered micro -enterprise businesses; and
WHEREAS, the City has deternned that small business growth within the City's
boundaries would be encouraged by lending institutions making low -interest, micro loans
available to both new and existing small businesses; and
WHEREAS, the City desires to enter into this Agreement with the Credit Union so that
the Credit Union can make and administer Program loans to benefit small businesses within the
City's boundaries in accordance with the loan criteria and terms set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and undertakings
herein, the receipt and sufficiency of which are hereby expressly acknowledged, it is agreed by
the parties as follows:
1. RECITALS. The above recitals are true and correct and are incorporated herein
as material provisions of this agreement.
2. CRITERIA FOR BORROWERS. The City will, from time to time at its sole
discretion, by and through its Economic Development Manager (or other designee selected by
the City Manager) recommend to Credit Union pre -qualified, small business borrowers who
meet the following Program loan eligibility requirements:
a. Retail, service or manufacturing businesses employing 1 to 5 full-time employees,
(FTE), including the owner and have been in operation less than 3 years may
submit an application for board review. Any business that has operated beyond 3
years and has documented requirement of equal to or less than $10,000.00 for gap
financing (was not able to receive a conventional loan for the full need of the
project) may also submit an application;
b. Company must be located within the City's municipal boundary;
c. Applicant must not be delinquent in any taxes;
d. Applicant must obtain all applicable permits and licensing;
e. Applicant must submit a business plan with the application;
f. Start-up businesses must meet with the Florida Small Business Development
Center for certification of the business plan; and
g. Company must complete standard protocols as required by Fairwinds Credit
Union, including financial records.
Such loan eligibility requirements may be modified from time to time by the City Commission.
3. TERMS OF LOANS/CREDIT UNION RESPONSIBILITIES. The loans
made by the Credit Union under the Program shall be made exclusively to borrowers pre -
qualified as meeting the eligibility requirements of Section 2 of this Agreement and
recommended to the Credit Union by the City. The Credit Union shall give special consideration
to businesses that have been pre -qualified by the City under the Program when evaluating the
potential underwriting of a loan under Credit Union's loan guidelines and credit standards.
Eligible uses of Program loans funds are: (i) working capital for merchandising and inventory,
(ii) interior or exterior property renovations, (iii) supplies, (iv) capital equipment and machinery,
(v) store fixtures, furnishings and other equipment, and (vi) building or monument signage.
Loan funds shall not be used for salaries and fringe benefits, advertising, utilities, taxes,
insurance costs and other similar operating expenses. The loan purpose shall be expressly set
forth in every loan agreement between the Credit Union and borrower made under the Program.
Each and every Program loan will be a minimum of $500.00 and shall not exceed $10,000.00 to
any one borrower. The loan amounts will be paid out with a single disbursement. Subject to the
provisions herein, all Program loans shall be granted (or rejected) within the sole discretion of
Credit Union. Terms of the Program loans given by the Credit Union shall be given at an
interest rate per annum equal to the Wall Street Journal prime rate plus 1% with a 60 month
repayment schedule for loans greater than $1,000.00, and a repayment schedule of 12 months for
loans of $1,000.00 or less. No Credit Union origination or other fees will be charged to the
borrower. The total principal amount of Program loans at any one time shall not exceed
$30,000.00.
Upon request by the City, a copy of all loan agreements entered into under this Program
shall be provided by the Credit Union to the City subject to applicable borrowers executing and
delivering to the Credit Union an agreement and release acceptable to the Credit Union and the
City permitting the disclosure and sharing of such financial information and other information
relating to such borrowers' Program loans. The Credit Union shall provide periodic statements
to the City on the issuance and repayment status of Program loans. In implementing and
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administering the loans and duties hereunder, the Credit Union will operate under professional
standards of conduct and organizational effectiveness, consistent with the public interest and
mandates of the federal and state law and as is customary for similar financial institutions.
4. LOAN LOSS RESERVE ACCOUNT. As an inducement to the Credit Union,
the City agrees to establish a dedicated loan loss reserve account under the following terms and
conditions:
a. The City will fund the Loss Loan Reserve account ("LLR account") by
depositing with its standard banking institution, Iberia Bank, the sum of
$30,000.00 in an interest -bearing, money market account. The account title will
be "City of Longwood Micro -Loan Program Loss Loan Reserve Account." The
$30,000.00 deposit shall be funded by a one-time, City Commission authorized
expenditure, and shall not constitute a pledge of the City's credit or ad valorem
taxing authority.
b. The LLR account, along with interest earned and any unallocated or
unused funds in the LLR account, shall be for the benefit of and run in favor of
the City.
C. Every loan made under the Program will be secured at one -hundred
percent (100%) of its principal value by the LLR account. The funds in the LLR
account will be used to reimburse the Credit Union for losses of principal that are
incurred in loans made under the Program by the Credit Union, and any
reimbursement to the Credit Union for losses of principal will be no more than
one -hundred percent (100%) of the principal amount of each individual defaulting
loan. After the repayment of a loan has been delinquent for a period of ninety
(90) days or longer and the Credit Union has made reasonable efforts to collect
such outstanding debt from the borrower, the Credit Union may request
reimbursement of its principal value loss from the defaulting loan from the LLR
account by giving the City written notice of such request. Thereafter, within ten
(10) days the Credit Union's request, the City shall transfer the applicable amount
from the LLR account to the Credit Union to pay such principal losses incurred by
the Credit Union. Under no circumstances shall funds from the LLR account be
debited or transferred to cover interest owed on loans; any expenditures incurred
as a result of collection efforts, including collection expenses, attorneys' fees and
court costs; any losses arising from loans issued outside the terms of the Program;
or any losses arising from loans issued pursuant to similar or like programs as
implemented by participating local governments other than the City. The risk of
interest losses incurred in connection with loans made pursuant to the Program
shall be the risk and sole responsibility of the Credit Union, and not the City.
Upon the depletion of the funds in the LLR account by the payment of principal
losses, all further losses sustained by Credit Union under the Program will be at
the risk of and the sole responsibility of Credit Union, and not the City. Further,
should the Credit Union be successful in recovering any amounts charged against
the LLR account, such amounts shall be transferred and credited back to the LLR
account by the Credit Union.
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d. The LLR account shall be maintained by the City until all loans made
pursuant to the terms and conditions of the Program are paid in full, or are
declared to be losses after the Credit Union exerted reasonable collection efforts
with respect to each loan pursuant to subsection 4(c) of this Agreement. When
the loan balance in the Program reaches zero (0) and there is an agreement
between the parties, no additional Program loans will be made and the City may
close the LLR account.
5. OTHER EXPENSES AND FUNDING. Except as expressly provided in and
subject to this Agreement, it is understood and expressly agreed by and between the parties to
this Agreement that the City is not responsible or obligated to provide any additional funding for
the Credit Union's responsibilities or to approve reductions in the scope of the promised Credit
Union's responsibilities. The Credit Union acknowledges and agrees that Credit Union shall
bear the sole responsibility and cost to perform the Credit Union's obligations and to provide any
additional funds necessary to perform and achieve the Credit Union's obligations, regardless of
the actual costs. Further, loans made pursuant to the Program as provided herein are secured
solely by the one-time legislative appropriation of funds by the City that secures the LLR
account as set forth in Section 4 of this Agreement.
6. TERM. This Agreement shall remain in full force and effect for five (5) years
from the date of execution; however, either the City or the Credit Union may cancel and
terminate this Agreement at any time by providing thirty (30) days' written notice to the other
party. Should this Agreement be terminated by either party, the LLR account shall remain open
and subject to the terms of this Agreement until all loans made under the Program prior to the
effective date of termination are paid off completely or declared losses after the Credit Union has
exerted reasonable collection efforts with respect to each loan claimed pursuant to Section 4(c)
of this Agreement. Provided, however, upon termination of this Agreement, the amount in the
LLR account may be reduced by the City to the then outstanding principal amounts of the
Program loans and said differential funds from the LLR account returned to the City promptly
upon termination. After any valid debits have been deducted from the LLR account pursuant to
this Agreement, the remaining balance in the LLR account shall be returned to the City. Upon
termination of this Agreement, the Credit Union shall provide a full accounting of the LLR
account funds it has received up to and including the date of termination and the status of all
outstanding Program loans, and continue to give the City quarterly reports on the same until the
LLR account reaches a zero (0) balance. The Credit Union's obligations set forth in this
Agreement to refund any monies from the LLR account to the City and to perform the post
termination obligations of this Section 6 shall survive termination of this Agreement.
7. INDEMNIFICATION. The Credit Union agrees to indemnify and hold the City
and its elected and appointed officials, officers, employees, attorneys and agents harmless from
and against any and all liability, claims, demands, damages, expenses, fees, fines, penalties, suits,
proceedings, actions and cost of actions, including attorneys' fees for trial and on appeal, of any
kind and nature arising or in any way connected with the Credit Union's actions and duties as
they pertain to loaning funds and ongoing administration of the loan underwriting, granting,
repayment and collection processes and compliance with all applicable laws and regulations.
8. CONFIDENTIALITY. The City recognizes and agrees that pursuant to this
Agreement it may receive directly from the Credit Union non-public, personal information
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regarding members, borrowers and customers of the Credit Union (all of such information being
herein called the "Confidential Information"). Due to the nature of the Program, the Credit
Union acknowledges and agrees that the City may obtain personal information directly from
potential borrowers and borrowers, and that the City has the right to have such potential
borrowers and borrowers execute a written consent to allow the City the right to receive and
access personal information of such persons and entities participating in the Program, including
without limitation current balance, payoff information and delinquent status of Program loans.
The term "Confidential Information" as used herein shall not include personal information that
the City has obtained: (a) directly from potential borrowers, borrowers, customers of the Credit
Union or from any other third party source, or (b) after written consent from the person or
entity's whose personal information is at issue. The Credit Union acknowledges and agrees that
the City is subject to the Florida Public Records Act (Chapter 119, Florida Statutes), and that
there are limitations on the City's ability to keep records considered "public records" as defined
by Chapter 119, Florida Statutes, confidential, and that this paragraph is not intended to require
or compel the City to violate Chapter 119, Florida Statutes. The City hereby agrees that neither
it nor any of its employees or agents shall disclose any of the Confidential Information to any
third party, and that it and such employees and agents shall maintain the confidentiality of and
shall not use such Confidential Information, and shall, without limitation, comply with the
provisions of the Gramm -Leach -Bliley Act, 15 USC 6801 et seq., and regulations promulgated
thereunder. The City will use commercially reasonable means to implement appropriate
administrative, technical and physical safeguards to (a) ensure the confidentiality of the above -
described information, (b) protect against threats or hazards to the security or integrity of the
above -described information, (c) protect against unauthorized access to or use of the above -
described information that could result in substantial harm or inconvenience to the Credit
Union's members, borrowers and customers, (d) notify the Credit Union regarding any breach in
security resulting in an unauthorized intrusion into or access to the above -described information
or information systems as soon as is reasonably possible after the breach is discovered, (e)
require third parties from whom the City procures services in connection with this Agreement to
have a formal information security policy that addresses the issues described in (a) through (d)
above, and (f) within thirty (30) days after termination of this Agreement for any reason, return
the above -described information to the Credit Union or certify to the Credit Union in writing that
the City has destroyed the above -described information in a commercially reasonable manner.
Notwithstanding any herein to the contrary, the City shall not be in violation or default of this
provision if disclosure of any information claimed to be "Confidential Information" occurs: (y)
due to the requirements of law, including without limitation, requirements of the Florida Public
Record Act (Chapter 119, Florida Statutes) as determined by the City Clerk and/or City Attorney
and compliance with orders of a court, subpoenas, discovery requests in litigation or other legal
obligations; or (z) after the City obtained written consent from the entity or individual whose
personal information is at issue. There are no third party beneficiaries intended by this paragraph.
All warranties and agreements set forth in this Section 8 shall survive termination of this
Agreement for any reason.
9. REMEDIES. The City's maximum liability under this Agreement shall be
limited to the $30,000.00 deposited in the LLR account and the Credit Union waives all other
rights and remedies against the City concerning any defaults or breaches under this Agreement.
In the event the Credit Union breaches any of the terms or conditions of this Agreement, the City
reserves the right to seek equitable relief and/or all other remedies as available to it under
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applicable law, including, but not limited to, repayment of the LLR Account, or any portion
thereof.
10. NO WAIVER. Continued performance by either party hereto, pursuant to the
terms of this Agreement, after a default of any of the terms, covenants or conditions herein shall
not be deemed a waiver of any right to terminate this Agreement for any subsequent default, and
no waiver of such default shall be construed or act as a waiver of any subsequent default.
11. CONSTRUCTION; SEVERABILITY. This Agreement shall be construed in
accordance with the laws of the State of Florida. It is agreed by and between the parties that if
any covenant, condition or provision contained in this Agreement is held to be invalid by any
court of competent jurisdiction, such invalidity shall not affect the validity of any other
covenants, conditions or provisions herein contained.
12. NON -ASSIGNABILITY; NON -EXCLUSIVITY. The Credit Union may not
assign its rights and obligations hereunder without the prior written consent of the City. Failure
to comply with this section may result in immediate termination of this Agreement. Nothing
herein shall operate or be construed to operate as a prohibition against the City's participation
with other entities, including financial institutions, from similar micro -loan programs or other
socially responsible Credit Union programs.
13. EXPENSES. Except as otherwise expressly provided in this Agreement, each
party to this Agreement will bear the party's own expenses in connection with the preparation,
execution, and performance of this Agreement and the transactions contemplated by this
Agreement. In the event of any default on the part of any party to this Agreement and the
necessity to initiate court action for the enforcement of any right herein, then in such event, the
parties in such action shall be responsible for their own respective costs and expenses of such
action, including attorney's fees.
14. NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement, express or
implied, is intended to or will be construed to confer upon any person, other than the parties to
this Agreement, any right, remedy or claim under or with respect to this Agreement.
15. VENUE. Any litigation occurring as a result of this Agreement shall be held
exclusively in a court of competent jurisdiction in and for Seminole County, Florida, and shall be
governed by the laws of the State of Florida.
16. LAWS. Nothing contained in this Agreement shall be considered or deemed a
waiver of the City's home rule authority, budgetary authority, police power, sovereign immunity
protections or of any other authority, power, immunity, defense or privilege afforded to the City
or its officials, officers, employees and agents under law. The parties agree that this Agreement
does not constitute a general indebtedness of the City within the meaning of any constitutional,
statutory, or charter provision of limitation and it is expressly agreed by the parties that the
Credit Union shall not have the right to require or compel the exercise of ad valorem taxing
power of City, or taxation of any real or personal property therein for payment of any monetary
obligations due under the terms of this Agreement. It is further agreed that this Agreement and
any funds called for to be expended hereunder shall not constitute a lien upon any real or
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personal property of City, any part thereof, and that the obligation called for hereunder shall be
subject to the legislative budgetary discretion of the City.
17. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof; any representations or
statement heretofore made with respect to such subject matter, whether verbal or written, are
merged herein. No other agreement, whether verbal or written, with regard to the subject matter
hereof shall be deemed to exist.
18. NOTICE. Any notices to be delivered hereunder shall be in writing and be
deemed to be delivered when (i) hand delivered to the person hereinafter designated, or (ii)
deposited in the United States Mail, addressed to a party at the addresses set forth opposite the,
parry's name below, or at such other address as the applicable party shall have specified, from=
time to time, by written notice to the other party delivered in accordance herewith:
Notice to the City of Longwood shall be to:
City of Longwood
Attn: City Manager
175 West Warren Avenue
Longwood, Florida 32750
and notice to Fairwinds Credit Union shall be to:
Fairwinds Credit Union
Attn: Business Services
135 W Central Blvd
Suite 120
Orlando, FL 32801
19. HEADINGS. The headings preceding the text of the sections and subsections of
this Agreement are used solely for convenience of reference and shall not affect the meaning,
construction or effect of this Agreement.
20. AMENDMENT. This Agreement may only be amended in writing by the parties
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hereto and constitute the entire agreement.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals on the
date written above.
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Date Approved by City Commission:
2015
City of Longwood, a Florida municipal
corporation
Fairwinds Credit Union
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