Loft Development Loan Fund Urban Development Concepts, LLC (on behalf of NewTown Macon, Inc.) Overview Urban Development Concepts, LLC (UDC) functions as the lending and real estate subsidiary of NewTown Macon, Inc (NewTown). Founded in 1996, NewTown is a non-profit organization dedicated to implementing the community’s vision of a comprehensive, coordinated, and continuous plan for revitalizing downtown Macon, Georgia. We accomplish this mission by increasing residents, growing jobs and creating a sense of place. Part of our role in increasing residents is providing financing to private developers to fill the gap between what traditional lenders will loan on loft projects and the economic necessities of loft development. Launched in 2012, NewTown’s Loft Development Loan Fund consists of bond funds issued by the Development Authority of Bibb County and backed by the full faith and credit of the MaconBibb government. NewTown acts as manager of these funds, accepting and reviewing applications, performing underwriting, making and managing loans, and repaying the bonds to bond holders. The Loft Development Loan Fund exists to provide public benefit through converting vacant space to active loft use, increasing property tax revenue, creating construction jobs and improving aesthetics. Instructions 1. Review and sign this application form. 2. Attach a complete and comprehensive development pro forma, showing detailed construction and development expenses and a minimum five-year operating projection. 3. Attach drawings showing existing conditions and proposed construction plans. 4. Attach proof that you own the property (a deed or purchase contract). 5. Attach the application fee of $500, unless you have donated this amount or more to NewTown in the past 12 months. 6. Attach credit verification: a. If you are applying as an individual, attach a signed copy of a credit application (sample provided as Exhibit B). b. If you are applying as a corporation, you must attach your Articles of Incorporation AND current Corporate Bylaws AND three years of audited financial statements OR three years of tax returns. c. If you are applying as either type of entity below, you must attach individual credit applications for all members or partners, AND: 1. If you are applying as an LLC, attach the Articles of Incorporation and the Operating Agreement. 2. If you are applying as a General Partnership, or LLP attach the Partnership Agreement AND official filings of Partnership, if applicable. 3. If you are applying as a Limited Partnership or LLLP, attach the Limited Partnership agreement AND either three years audited financial statements or a credit application for the General Partner. 7. Turn in your application to NewTown: Physical Address: 479 Cherry St., Macon, GA 31201 M-F 9am-5pm Email: hal@newtownmacon.com 8. Loans are reviewed year-round by the Loan Committee. If approved by the committee, your loan can close and be disbursed at your convenience. The usual wait for underwriting and approval is one month, though that speed is not guaranteed. 479 Cherry St. ● Macon, GA 31201 ● Phone & fax: 478.722.9909 ● www.newtownmacon.com
1
I. Program Definition NewTown Macon’s Loft Development Loan Fund exists to provide “gap” financing for loft development projects in downtown Macon, Georgia. This program directly fulfills our mission of “implementing the community’s vision of a comprehensive, coordinated, and continuous plan for revitalizing downtown Macon, Georgia” by increasing the number of residents in downtown Macon and converting vacant upper floor space to active use for lofts. II. Loan Review Committee The Loan Review Committee will be appointed from time to time by the Chair of NewTown Macon. Appointments to the Loan Review Committee will be ratified by the Board of Directors, and The Loan Review Committee will review applications, and when appropriate recommend term sheets to the Board of Directors for ratification. The Loan Review Committee will have the ability and authority to construct and recommend term sheets that vary from these guidelines on a case-by-case basis. The Board of Directors will have final and binding authority in administering the Loft Development Loan Fund program and approving, denying and making loans. Each committee member will serve a term of one (1) year from the date of their appointment or until they retire or the Chair relieves them of duty. Unlimited consecutive terms are allowed. The President & CEO of NewTown shall be an ex officio member of the committee, except he or she will not be allowed a vote in any matters under consideration by the committee. NewTown staff will be responsible for providing technical assistance, receiving applications; conducting a staff review and presenting qualified applications to the Loan Review Committee. III. Property Eligibility To be eligible for a loan from this fund, a property must meet the following criteria: A. Be located within the Central Business District (CBD) in downtown Macon as defined by the map attached to these guidelines. B. Be owned in fee simple title or leased under a PILOT agreement by the applicant. Applications may also be considered if the applicant provides a valid sales contract to acquire the property. Evidence must be provided to verify the required ownership interest. D. Both new construction (in-fill) and historic rehabilitation projects are eligible for this program. Rehabilitation projects must be physically and financially feasible for rehabilitation. E. The primary use for the proposed rehabilitation will be for residential lofts. F. Preference will be given to projects identified in NewTown Macon’s 2012 Strategic Plan. IV. Loan Requirements/ Conditions A. Fees: The applicant shall pay a non-refundable application fee of $500 to cover the cost of underwriting and application review (application fees will be waived for donors who have made a gift or pledge of $500 or more to NewTown Macon’s current capital campaign). C. Pro Forma: A complete pro forma detailing the scope of the proposed rehabilitation and projecting at least five years of operating costs and revenues must be approved by the loan committee. Financial projections must demonstrate a minimum 1.1 debt coverage ratio for this loan and conform to the most recent Zimmerman-Volk market study for downtown loft housing. D. Construction Drawings: The applicant must submit complete construction drawings, showing the existing conditions of the space and describing the proposed improvements in detail. E. Eligible Expenses: Proceeds from the loan may be used to pay for the following items i. Professional design services by licensed landscape designers and architects ii. Tax credit consulting and application fees for a substantial rehabilitation to a historic building 479 Cherry St. ● Macon, GA 31201 ● Phone & fax: 478.722.9909 ● www.newtownmacon.com
2
iii. Hard construction costs iv. Painting v. Permitting fees for a Certificate of Appropriateness and a building permit from local government F. Ineligible Expenses: Proceeds from the loan will not fund: i. The applicant’s own labor (sweat equity) ii. Developer’s fees iii. Working capital, debt service or debt service reserves iv. Market analysis or studies v. Furniture, fixtures and equipment v. Any work that is already underway, even qualifying expenses G. Permitting: All work for which a permit is required must be pursuant to a building permit issued by the Macon-Bibb government with the approval of Macon-Bibb Planning and Zoning through the issuance of a Certificate of Appropriateness. H. Inspection: The applicant will permit NewTown Macon and/or its employees, agents and representatives to inspect the property. I. Advertising: NewTown Macon reserves the right to place a 36”x24”’ sign in a storefront window or on the construction wall, for the duration of the construction period, and a permanent 18”x12” Powered by NewTown sign on the exterior of the building or on a storefront window at the conclusion of construction for the entire period of repayment. J. Records and Reporting: The borrower will maintain clear and accurate records and receipts to verify eligible expenses. K. Closing: Loans must be closed within thirty (30) days of approval by the loan committee. Loans that are not closed within thirty (30) days of approval may be resubmitted for consideration at the next loan committee meeting. V. Funding/ Loan Amounts A. Capitalization: Loft Development Loan Fund is capitalized at $5,000,000. No more than the fund's capitalization may be disbursed at any time. B. Loan Amounts: Loans will be made for no more than 40% of total projected development costs or projected value, whichever is less. Total project debt may not exceed 90% of total projected development costs or projected value, whichever is less. The applicant must invest at least 10% of his or her own equity. C. Interest Rate: Loans will carry an interest rate two points above the rate required to service the bond debt. The interest rate will be fixed at five and five one-hundredths percent (5.05%) until June 1, 2016. D. Credit: The applicant must demonstrate that he or she has a track record of repaying debt and obligations. These loan funds are backed by the Macon-Bibb taxpayers and held in trust for the benefit of the community. No loans will be made to applicants who do not have the ability to repay the loan and a history of good use of credit. You must demonstrate that you have a history of using credit responsibly. Applicants must submit documentation to verify credit history in one of the following manners: i. Individual applicants must fill out and sign a credit application (attached as Exhibit B). A credit report will be ordered from an independent credit rating agency. ii. Corporate applicants must provide organizing legal documents AND the most recent three years of audited financial statements OR the most recent three years tax returns. 479 Cherry St. ● Macon, GA 31201 ● Phone & fax: 478.722.9909 ● www.newtownmacon.com
3
iii. General Partnerships, LLPs or LLCs must provide all agreements and organizing legal documents AND copies of credit applications (Exhibit B) for all members or partners. iv. Limited Partnerships or LLPs must provide all agreements and official filings and either three (3) years audited financial statements or a credit application for the General Partner. VI. Application Process Applications are accepted year-round online at www.newtownmacon.com/loans. If you prefer, you may apply by completing, signing and submitting all pages in this document by mail to: Urban Development Concepts, LLC c/o NewTown Macon, Inc. 479 Cherry St. Macon, GA 31201 VII. Closing and Disbursement A. Loan recipient will render an origination fee of 1% of the total loan amount, due and payable at loan closing. B. Closing will be performed by Sell & Melton, LLP. Loan recipient will render a document preparation fee of $1,250, due and payable at closing. C. Disbursement will be made in one of the following manners: i. Acquisition- Loan funds may be used by NewTown’s Transitional Properties Fund to acquire endangered or strategic projects. The purchase price or a portion of the purchase price may be disbursed to a buyer or developer at title transfer as long as all other guidelines and requirements are met. ii. Construction- Loan funds will be disbursed for work in place as verified by a qualified professional construction inspector. Construction inspector and order of funds disbursed will be negotiated among all lenders for the project. You will be responsible for the cost of construction inspection.The general contractor on the project will issue an unconditional waiver of lien for all work in place, materialmen and subcontractors prior to each and every disbursement. NewTown may require a construction holdback of up to 10% on payments for work in place. VIII. Terms of Repayment A. Loan term will be calculated from the date of closing until April 1, 2030. B. Interest will compound monthly from the date the funds are released by NewTown to the applicant. C. If any default is made in the payment of principal and/or interest as stipulated above and such default is not cured within thirty (30) days thereafter, then Holder may, at Holder’s option, declare the unpaid principal balance of the loan, immediately due, payable and collectible. The failure of Holder to exercise this option shall not constitute a waiver of the right to exercise the same in the event of any subsequent default. NewTown will also have such other rights and remedies as may be available according to the laws of the State of Georgia, including the right to foreclose on the property. D. Payments of principal and/or interest may be deferred until a certificate of occupancy is issued for the project, but no later than twelve months after the date of the loan. E. Note will be in default if construction is not complete within twelve (12) months from the date of the loan closing. IX. Security and Security Position A. The loan will be evidenced by a Promissory Note and will be secured by a Security Deed on 479 Cherry St. ● Macon, GA 31201 ● Phone & fax: 478.722.9909 ● www.newtownmacon.com
4
the subject property and any other security instruments or other documents and/or agreements deemed necessary by NewTown. B. The loan may be subordinated to any third party lender, provided that the primary loan must remain current and in good standing. Applicant must provide copies of all loan documents from any and all other lenders prior to closing. NewTown will consider subordination agreements on a case-by-case basis based on a review of the traditional loan, provided that NewTown’s loan can be adequately secured despite subordination. C. The partners, owners, members or principal developers may be required to sign a personal guarantee for the loan. D. The Promissory Note is not assumable, assignable or transferable by the Borrower. If the Borrower sells, refinances or otherwise disposes of title to the subject property, the full amount of the unpaid balance shall be due and payable upon the closing of the sale. Lender may transfer and assign the debt, note and security deed. E. If any disagreement should exist between this application and the loan documents, the loan documents will be controlling. F. Every downtown development project is unique. At its sole discretion, NewTown may require additional items or information based on the specific risks, challenges or structure of individual projects, including, but not limited to, detailed design drawings to scale and/or notated elevations showing all proposed exterior alterations.
I agree to all the guidelines and meet all the requirements for this loan (sign below): _______________________________/____________ Applicant Signature Date _______________________________/____________ Company Title
479 Cherry St. ● Macon, GA 31201 ● Phone & fax: 478.722.9909 ● www.newtownmacon.com
5
Exhibit A: The Central Business District (CBD)
479 Cherry St. ● Macon, GA 31201 ● Phone & fax: 478.722.9909 ● www.newtownmacon.com
6
Exhibit B: Credit Application
Credit Application APPLICANT INFORMATION
Name: Date of birth: Current address: City: Own Rent (Please circle) Previous address: City: Owned Rented (Please circle)
SSN:
Phone:
State: Monthly payment or rent:
ZIP Code: How long?
State: Monthly payment or rent:
ZIP Code: How long?
EMPLOYMENT INFORMATION
Current employer: Employer address: Phone: E-mail: City: State: Position: Hourly Salary (Please circle) Previous employer: Address: Phone: E-mail: City: State: Position: Hourly Salary (Please circle) Name of a relative not residing with you: Address: City: State: Relationship:
How long? Fax: ZIP Code: Annual income: How long? Fax: ZIP Code: Annual income: Phone: ZIP Code:
CREDIT CARDS
Name
Current balance
Monthly payment
PROPERTY MORTGAGE (SUBJECT PROPERTY)
Account no.:
Address: Balance
Monthly payment
AUTO LOANS
479 Cherry St. ● Macon, GA 31201 ● Phone & fax: 478.722.9909 ● www.newtownmacon.com
7
Credit Application Auto loans
Account no.
Balance
Monthly payment
OTHER LOANS, DEBTS, OR OBLIGATIONS
Description
Account no.
Amount
OTHER ASSETS OR SOURCES OF INCOME
Description
Amount per month or value
I authorize NewTown Macon to verify the information provided on this form as to my credit and employment history. Signature of applicant
Date
479 Cherry St. ● Macon, GA 31201 ● Phone & fax: 478.722.9909 ● www.newtownmacon.com
8