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Page 1 of 5 Ogden City Council Meeting: August 8, 2017 BANK LINE OF CREDIT ($1,400,000) Action: Adopt or Not Adopt Resolution Executive Summary The Board will consider a Resolution authorizing the Agency to renew a $1.4 M Line of Credit with Bank. The funds will be used to facilitate development in the Asset Control Area and Infill Housing Construction programs. Background August 17, 2004 The Ogden City Council adopted Resolution 2004-19 approving and authorizing the implementation of the East Central Revitalization Strategic Plan for Fiscal Year 2004-2005. The objectives of the Plan were as follows: 1. Restore the real estate market values so people can invest confidently. 2. Improve the visual appearance of properties for maximum market impact. 3. Provide flexible incentives for residents to achieve the desired market diversity. 4. Create expectations of quality of design and improved property maintenance. 5. Engage the residents in “ownership” of neighborhood improvement issues and solutions. To accomplishing this objectives, the Community and Economic Development Department used the following programs and strategies: 1. Homesteads/Infill Housing Construction 2. Homeownership Incentives (Own-in Ogden) 3. Homeowner Rehabilitation Incentives (HOME Loans) 4. Rental Rehabilitation (Unit Reduction) 5. Neighborhood Matching Grants 6. Historic District Designation (Tax Credits) 7. Public Improvements ---PAGE BREAK--- Page 2 of 5 Ogden City Council Meeting: August 8, 2017 These programs and strategies were funded with a combination of CDBG Funds, EDA grant funds, revolving loan funds, and various other non- profit and private funds. These programs are ongoing and continue to be utilized by the City. March 22, 2011 The Council approved Resolution 2011-7 authorizing a $1 M revolving Line of Credit with GE Money Bank (now Bank). This Line of Credit replaced a Fannie Mae loan which had been in place since 2004. November 24, 2015 The Redevelopment Agency Board passed Resolution 2015-21 adopting the Quality Neighborhood Initiative (Initiative). The goal of the Initiative was to accelerate the revitalization of East Central neighborhoods and build on previously established goals and vision for the community: 1. Improving business and economic development opportunities. 2. Improving the quality of life and community in general by creating a place where people want to live. 3. Emphasizing the City’s outdoor recreation opportunities. 4. Developing a functional transit system. 5. Improving educational opportunities for residents. 6. Building on Ogden’s rich history, architecture and heritage. To reach this vision, the Initiative establishes a multi-faceted approach to tackling the issues, focusing on efforts that will 1) reduce the concentration of low-income/sub-standard housing in the area, 2) increase the standards of care for residential units, 3) increase owner- occupancy rates, and 4) increase property values. To accomplish these goals three intervention methods will be utilized: 1. Targeting: a. Restructuring RDA areas. b. Declaring intent to use authorized municipal authority. c. Building on the bright spots (corridors and feeders). d. Reducing impediments to investment. 2. Resource Development ---PAGE BREAK--- Page 3 of 5 Ogden City Council Meeting: August 8, 2017 a. Revising and aligning City Ordinances. b. Accessing existing and developing new funding sources. 3. Marketing and Delivery a. Training and educating code enforcement b. Marketing to attract new buyers and convert renters to buyers. c. Expanding parameters to allow quicker property acquisition. d. Developing appropriate incentive programs for development, renovations, etc. In addition to these efforts, the City and the Redevelopment Agency continue efforts to influence regional growth management policies, state tax policies, and assist the school district in improving student performance by providing safer, more stable housing environments. August 16, 2016 The RDA Board approved Resolution 2016-15 authorizing the $5 M line of credit with Bank. June 27, 2017 The Council Office received an Administration Transmittal requesting authorization to renew the City’s $1.4 M Bank Line of Credit. July 11, 2017 The Council held a work session to review and discuss the proposed renewal of the City’s $1.4 M Bank Line of Credit. Bank (Formerly GE Money Bank) In 2005, Ogden City entered into a line of credit (LOC) agreement with Federal National Mortgage Association (Fannie Mae) to assist with costs associated with HUD’s Asset Control Area program. In 2011 the City switched to a LOC agreement with GE Money Bank. The City’s original LOC with GE was for $1 M. This was later increased to $1.4 M. As of June 30, 2015, the balance on the LOC was $1,057,152. The LOC matured on June 2, 2016 and has since been renewed. ---PAGE BREAK--- Page 4 of 5 Ogden City Council Meeting: August 8, 2017 In June of 2014, GE Capital changed its name to Bank. Bank has an office in Draper, Utah, however, all of the lending decisions are made at corporate headquarters in Connecticut. Additional information about can be found here. Proposal The Administration proposes that the City renew its line of credit with Bank to cover the costs of land acquisition and demolition for projects associated with the Asset Control Area and Infill Housing Construction programs. Terms of the proposed line of credit are as follows: Loan Type: Line of Credit Amount $1,400,000 Term: Withdrawals up to two years from closing date Interest Rate: Variable, 90-day LIBOR plus 1.75% (as of 7/5/17 LIBOR was paid quarterly and on sale of home Security: $350,000 to be held in deposit, secured by Account Control Agreement. Eligible Projects: Housing Projects as defined by the Community Reinvestment Act (CRA), 12 CRA § 345 (Purchase/rehab/resale and infill housing construction projects) Disbursements/ Repayments: Disbursed project by project; repaid upon sale to home buyer To date, the City has completed eighty-five (85) housing projects. More than $7 M in funds have rotated through the program. The CED staff have managed Ogden City’s line of credit and associated programs since 2005. ---PAGE BREAK--- Page 5 of 5 Ogden City Council Meeting: August 8, 2017 Questions 1. Please review the proposal for the $1.4 M Line of Credit with Bank. 2. Please explain how the funds will be used. Council Staff Contact: Janene Eller-Smith, (801)629-8165 ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- 2017-15 ---PAGE BREAK---