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HomeMy WebLinkAbout2010-04-26 10-159 ORDERCOUNCIL ACTION Item No. I r Date: April 26, 2010 Item/Subject: ORDER, Authorizing a Community Development Business Development Loan to Webster Atlantic Corporation Responsible Department: Community & Economic Development Commentary: The City uses a portion of its annual federal Community Development Block Grant (CDBG) to provide funds for its Community Development Business Development Loan Program. The goals of the Program are to create and retrain jobs, principally for low- and moderate- income persons, leverage private investment, and alleviate physical and economic distress. Webster Atlantic Corporation, publishers of Bangor Metro and Maine Ahead magazines, is seeking financing for working capital to support its new publication, Maine Ahead magazine. The Eastern Maine Development Corporation has agreed to loan Webster Atlantic Corporation $35,000 in working capital if the City will loan a like amount through its CDBG Program. EMDC's proposal is for EMDC and the City each to finance a loan of $35,000 to Webster Atlantic, for a total of $70,000, for 24 months, at 8.5% interest, with the first payment due in three months, with EMDC and the City sharing a security collateral position behind Bangor Savings Bank on Mark Wellman's home and Webster Atlantic's business assets, and with a personal guarantee from Mark Wellman. The loan request is for working capital. The loan is eligible for Community Development funding because of the job creation and retention involved. The City's ability to make the loan with CDBG funds will be dependent on the applicant providing documentation that persons meeting the criteria of low- and moderate- income persons will be employed. Department Head Manager's Comments: l rC�i�h� Awi?<rl o) Aw/rnC f �A1flylr/�C /�%CC��� TiK �,an Q�i' jr JCilli%zhg ✓%/rI�./ Ci Manager IG -t 1� 't- rr terl-o �n/A t � �%�/ i�C City g Associated Information: Budget Approval: Legal Approval: Introduced for Passage First Reading Referral / &.x Fin a Director Page _ of _ ty Solicitor Assigned to Councilor— Gratwick CITY OF BANGOR IPC 1 ,,1 April 26, 2010 (TITLE.) ORDER, Authorizing a Community Development Business Development Loan to Webster Atlantic Corporation WHEREAS, the City allocates a portion of its annual federal Community Development Block Grant (CDBG) to provide funds for its Community Development Business Development Loan Program; and WHEREAS, the goals of the Program are to create and retain jobs, principally for low- and moderate- income persons, leverage private investment, and alleviate physical and economic distress; and WHEREAS, Webster Atlantic Corporation, publishers of Bangor Metro and Maine>Ahead magazines, is seeking $70,000 in financing to support its working capital needs to continue the growth of its newest publication, Maine>Ahead magazine; and WHEREAS, Eastern Maine Development Corporation (EMDC) has reviewed the loan application and has agreed to loan Webster Atlantic $35,000, half of the requested loan amount, provided the City also agrees to lend $35,000; and WHEREAS, the loan is eligible for Community Development funding because of the job creation and retention involved: BE IT ORDERED BY THE CITY COUNCIL OF THE CITY OF BANGOR THAT The application of Webster Atlantic Corporation for a Community Development Business Development Loan in the amount of $35,000 is hereby approved with the following conditions: Borrower: Webster Atlantic Corporation, One Cumberland Place, Bangor Loan Amount: $35,000 Security Collateral. Personal Guarantee of Mark T. Wellman, second security interest subordinate to Bangor Savings Bank shared with EMDC on all business assets, second mortgage on Mr. Wellman's home at 28 Squirrel Lane in Eddington, subordinate to a Bangor Savings Bank 1st mortgage, shared with EMDC. Purpose. To support working capital needs to continue the growth of Webster Atlantic Corporation's new publication, Maine>Ahead magazine. IN CITY COUNCIL April 26, 2010 Motion Made and Seconded for Passage Councilor Nealley had been determined to have a confilict of interest and left the room Motion Doubted Vote: 5-3 Councilors Vtoing Yes: Bronson, Hawes, Palmer, Stone & Wheeler Councilors Voting No: Blanchette, Gra ck Weston Pas d ITY CLERK (TITLE)) A";hnri zi ng a Community Deuelnnmpnt Rncinpss Development Loan to Assigned to Councilor. P L: 1 u v Location: One Cumberland Place, Bangor, Maine Employment: Webster Atlantic Corporation will not reduce current Bangor employment levels through transfers to other locations, and will employ a minimum of one person in Bangor that meets the US Department of Housing and Urban Development's published definition of low- or moderate- income persons. Other Funds: An Eastern Maine Development Corporation loan of $35,000 is made to Webster Atlantic, at 8.5% interest, with a two year amortization period, with the first payment due three months from loan closing, with EMDC and the City sharing security collateral Term of Loan: Amortized over 24 months. Interest Rate: 8.5% Payments: Monthly, starting 3 months from loan closing Payment Amount: $1,590.95 monthly, except for last payment adjustment.