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I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br /> <br />Andy limiting factors <br />Real estate tax consequences for the City <br /> <br />Finally, ns t~ the proposal, a detailed source and use of funds is crucial. The proposal must <br />demonstrate ~'-oan repayment through the project's proforma. In reviewing the proforma, we need <br />to determine how realistic are the assumptions, and ff things should change as they always do, <br />how will thi~ affect the company's ability to repay thc loan from operating profits. Thc review of <br />past financial.~ statements, including the profit and loss statements for the past three (3) years, are <br />helpful in ga ~flging the soundness of the cash' flow projections in the proforma. <br />The objective is to finance only those projects which will provide benefits to the City <br />commensum~ with the risk and specifically to finance only those projects which will not go into <br />default or, if ~¢Y do, will be self-rescued by the nature and quality of thc deal. <br /> <br />Given this, the following nrc the F_IDA's general underwriting guidelines for financing a project. <br /> <br />1. The rpmject to be financed will typically be general purpose. General purpose buildings are <br /> those[that could easily be renovated to suit another use. If the project is not considered <br /> genefid purpose, then other considerations need to be taken into account to minimize the <br /> EDA'~ risk in financing the project. <br /> <br />o <br /> <br />If the project financing consists of all equipment or has a large equipment component, then <br />the ut iderwrifing will need to address issues of: term of loan will most likely be short given <br />the u eful life of the equipment, examination of the sales and revenues to be generated by <br />the e~iuipment and other considerations of equipment financing. <br /> <br />The Company shall provide financial statements for each of the three (3) years prior to the <br />loan. Having audited financial statements will provide a degree of comfort that a <br />disinterested outside party has reviewed the financial operations of the company. Personal <br />financial statements should also be provided to allow a trace of transactions between the <br />corpof~ afion and individual and allow a clearer view of the u'ue worth of the personal and <br />corporate entities. <br /> [ <br />The St profits of the company should be stable or improving in each of the last three (3) <br />years.!. Exceptions may be made for unusual circumstances. <br /> <br />The company shall provide at least one job for every 1,000 square feet.of building space <br />financed, unless waived by the EDA. <br /> <br />Minim~ um basic terms and conditions for any f'mancing through the EDA, unless modified <br />or cxetnpted following a discussion and agreement by the Loan Committee: <br /> <br />a) Hazardous materials indemnification agreement shall be provided; <br /> <br />b) <br /> <br />Financial statements and other reports arc to be provided to thc EDA and others at a <br />time of application; <br /> <br />c) <br /> <br />The financing will be personally guaranteed as full recourse debt, unless waived or <br />modified by the Loan Committee; <br /> <br />d) The Guaranty Agreement will include both corporate and individual guarantees; <br /> <br /> RLF <br />Page 4 of 7 <br /> <br /> <br />