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Item 1.H.
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| City Council Regular | |
| Date: | 04/11/2022 |
| Title: | Second/Final Reading Ordinance Amending the Revolving Loan Program |
| Presented by: | Andy Zoeller, Finance Director |
| Department: | Finance |
| Presentation: | No |
| Legal Review | Not Applicable |
RECOMMENDATION
Staff recommends City Council approve this ordinance on second reading, amending the revolving loan program.
BACKGROUND (Consistency with Adopted Plans and Policies, if applicable)
The Billings Montana City Code Article 13-1100 established a revolving loan program for the City of Billings. In 1983, the City implemented a tax increment revolving loan program with increment from the Downtown Redevelopment District. At that time the City used approximately $600,000 of tax increment moneys to make loans for eligible projects under the program. Principal of and interest received on the program loans were deposited in to the revolving loan fund as received.
In 1999, the ordinance was adopted, establishing the program in the Billings Montana City Code. In an effort to bolster the funds available for revolving loans, a consortium of local banks entered into an agreement with the city, whereby the banks made available to the city an additional $1,600,000 for the program. The city was able to access the bank funds if there were no available moneys in the revolving fund from which to make a loan.
On October 2nd, 2000, the City and the bank pool entered into an inter-creditor agreement with a 5-year term. The original agreement was extended for an additional 5 year term on August 5, 2005, and again on September 14, 2010. Over this time the revolving loan program grew to an amount that no longer required the additional bank pool funds. The agreement expired on October 2, 2015 due to lack of need. The City made a final payment to the bank pool on February 21, 2012.
Since 1988, no additional tax increment money has been deposited in the fund and the city does not plan to or anticipate appropriating any additional revenues to the fund. As of June 30, 2021, there was approximately $918,000 of cash in the fund available for loans. The fund had approximately $1,804,748 in principal amount of loans outstanding. The total assets of the program were approximately $2,719,814 on June 30, 2021.
After the expiration of the bank pool agreement, the downtown revolving loan committee continued with its original members and operating in the same manner that was established with the original ordinance. In 2021, the committee chair announced his planned retirement from banking and informed the committee that he would be stepping down. This change prompted a review of the current ordinance.
City Council held a first reading of the ordinance amendments on March 28, 2022.
At the first reading the City Council approved the ordinance changes with the following modifications:
Amendment 1: Council requested that the boundaries of the eligible projects be approved by City Council. Section 13-1103 has been modified to include the boundary map as part of the ordinance.
Amendment 2: Council increased the committee to 5 members, and added an additional commercial lender to the committee. Section 13-1105(b) has been modified to reflect this change.
Amendment 3: Council and staff desired clarifying language about the committee applications that would be received by the mayor. Section 13-1105(c) has been modified to reflect this language change.
In 1999, the ordinance was adopted, establishing the program in the Billings Montana City Code. In an effort to bolster the funds available for revolving loans, a consortium of local banks entered into an agreement with the city, whereby the banks made available to the city an additional $1,600,000 for the program. The city was able to access the bank funds if there were no available moneys in the revolving fund from which to make a loan.
On October 2nd, 2000, the City and the bank pool entered into an inter-creditor agreement with a 5-year term. The original agreement was extended for an additional 5 year term on August 5, 2005, and again on September 14, 2010. Over this time the revolving loan program grew to an amount that no longer required the additional bank pool funds. The agreement expired on October 2, 2015 due to lack of need. The City made a final payment to the bank pool on February 21, 2012.
Since 1988, no additional tax increment money has been deposited in the fund and the city does not plan to or anticipate appropriating any additional revenues to the fund. As of June 30, 2021, there was approximately $918,000 of cash in the fund available for loans. The fund had approximately $1,804,748 in principal amount of loans outstanding. The total assets of the program were approximately $2,719,814 on June 30, 2021.
After the expiration of the bank pool agreement, the downtown revolving loan committee continued with its original members and operating in the same manner that was established with the original ordinance. In 2021, the committee chair announced his planned retirement from banking and informed the committee that he would be stepping down. This change prompted a review of the current ordinance.
City Council held a first reading of the ordinance amendments on March 28, 2022.
At the first reading the City Council approved the ordinance changes with the following modifications:
Amendment 1: Council requested that the boundaries of the eligible projects be approved by City Council. Section 13-1103 has been modified to include the boundary map as part of the ordinance.
Amendment 2: Council increased the committee to 5 members, and added an additional commercial lender to the committee. Section 13-1105(b) has been modified to reflect this change.
Amendment 3: Council and staff desired clarifying language about the committee applications that would be received by the mayor. Section 13-1105(c) has been modified to reflect this language change.
ALTERNATIVES
City Council may:
- Approve the amendments to BMCC 13-1100 as recommended by staff; or,
- Modify the proposed amendments; or,
- Not approve the recommended amendments to BMCC 13-1100.
FISCAL EFFECTS
There is no fiscal impact to adopting the recommended amendments to BMCC 13-1100.
As of June 30, 2021, the revolving loan fund has approximately $918,000 of cash available for loans. The fund had approximately $1,804,748 in principal amount of loans outstanding. The total assets of the program were approximately $2,719,814.
As of June 30, 2021, the revolving loan fund has approximately $918,000 of cash available for loans. The fund had approximately $1,804,748 in principal amount of loans outstanding. The total assets of the program were approximately $2,719,814.