HomeMy WebLinkAbout2020-08-18; City Council; Resolution 2020-174EXHIBIT 1
RESOLUTION NO. 2020-174
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD,
CALIFORNIA, APPROVING FURTHER IMPLEMENTATION OF THE ECONOMIC
RECOVERY AND REVITALIZATION INITIATIVE AND MODIFICATIONS TO THE
COVID-19 SMALL BUSINESS LOAN PROGRAM
WHEREAS, on February 14, 2020 the San Diego County Health Officer declared a Local Health
Emergency as a result of the spread of COVID-19; and
WHEREAS, on March 4, 2020 Governor Newsom proclaimed a statewide state of emergency as
a result of the spread of COVID-19; and
WHEREAS, on March 16, 2020, the Director of Emergency Services proclaimed a local state of
emergency as a result of the COVID-19 pandemic, which the City Council subsequently ratified and
extended; and
WHEREAS, on March 19, 2020, Governor Newsom issued Executive Order N-33-20 directing
individuals living in California to comply with a State Public Health Officer order to stay at home except
as needed to facilitate authorized, necessary activities or to maintain the continuity of operations at
critical infrastructure sectors; and
WHEREAS, on May 4, 2020 Governor Newsom issued Executive Order N-60-20 allowing non-
essential businesses to reopen in four stages in compliance with criteria set by the State Public Health
Officer and based on certain public health criteria being met on a county-by-county basis; and
WHEREAS, on June 19, 2020, dine-in restaurants, alcohol-serving businesses offering dine-in
meals, personal care services businesses and other businesses in the County of San Diego were
permitted to reopen subject to compliance with state issued guidance; and
WHEREAS, on July 13, 2020 a statewide public health officer order was issued closing bars, pubs,
brewpubs, and closing indoor operations of dine-in restaurants, wineries, tasting rooms, family
entertainment centers, movie theaters, zoos, museums, and cardrooms; and
WHEREAS, the State of California has issued industry guidance for businesses that are allowed
to reopen that require modification to business operations which has a direct cost and may have an
impact on the space in which businesses may operate thus impacting revenue; and
WHEREAS, the impact of COVID-19 on businesses and the workforce is significant with the State
of California unemployment rate in June standing at 14.9 percent which is higher than the 12.3 percent
it was during the height of the Great Recession (March, October, and November 2010); and
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EXHIBIT 1
WHEREAS, the City of Carlsbad unemployment rate in June was 12.6 percent compared to the
2019 average of 2.9%; and
WHEREAS, the City of Carlsbad conducted a survey of businesses impacted by COVID-19 which
ended in July and found that seventy-two percent of companies indicated the need for further financial
assistance to maintain operations over the next six months; and
WHEREAS, seventy-eight percent of businesses surveyed indicated that they experienced a
revenue decrease of more than 25 percent due to COVID-19; and
WHEREAS, the City of Carlsbad approved a resolution creating an Ad Hoc City Council Economic
Revitalization Subcommittee on April 7, 2020; and
WHEREAS, the Ad Hoc City Council Economic Revitalization Subcommittee has met fifteen times
since it was created and provides input on the city's COVID-19 related economic relief efforts and
recommendations to the City Council; and
WHEREAS, it is in the public interest to take steps to ensure local businesses remain
economically viable during the COVID-19 pandemic state of emergency; and
WHEREAS, there is a public benefit to providing economic relief impacted by the COVID-19
health emergency, so they may continue providing jobs and tax revenue to the City of Carlsbad which
funds public services; and
WHEREAS, there is a public benefit to providing access to operating capital in the form of low-
cost or no-cost loans to allow businesses to fund the cost of payroll, utilities, rent, mortgage interest,
insurance, and business operation modification or adaptations necessary to comply with the public
health orders; and
WHEREAS, adopting this resolution is necessary and appropriate to mitigate the immediate
threats to the public health, safety, and welfare of residents and local businesses from the significant
economic impacts of the COVID-19 pandemic by providing economic relief and providing resources to
remain open in compliance with the public health orders.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as
follows:
1. That the above recitations are true and correct.
2. That conducting a small business loan program to mitigate the impacts of COVID-19
serves a public purpose and provides a public benefit.
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EXHIBIT 1
3. That the parameters for the small business loan program are as shown in Attachment
A.
4. That the city manager or designee is authorized to execute the contract with CDC
Small Business Finance to provide loan administration services as shown in Attachment
B.
5. That the deputy city manager, administrative services, is authorized to sign small
business loan agreements and other documents necessary to originate and service the
loans.
6. That $25,000 is allocated from the Economic Recovery and Revitalization Initiative
monies set aside for contingency or future City Council decisions to fund business
community outreach.
PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of
Carlsbad on the 18th day of August, 2020, by the following vote, to wit:
AYES: Hall, Blackburn, Bhat-Patel, Schumacher.
NAYS: None.
ABSENT: None.
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MATT HALL, Mayor
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BARBARA ENGLESON, City Clerk
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Aug. 18, 2020 Item #7 Page 9 of 21
ATTACHMENT A
CITY OF CARLSBAD
COVID-19 SMALL BUSINESS LOAN PROGRAM
A. LOAN PARAMETERS
The following are the parameters for all loans issued under the City of Carlsbad's COVID-19 small
business loan program. They are designed to ensure businesses that need resources during the
pandemic receive support. Based upon consultation with CDC Small Business Finance, a survey of
businesses, and specific information from business that have applied for loans, the following
program structure provides for significant participation and deployment of resources while
addressing the risk of significant defaults.
1. All applicants must have a valid City of Carlsbad business license or show proof that they have
applied for a business license or business license renewal before April 1, 2020.
2. All applicants must be in good standing with the city.
3. Nationally owned chain businesses or franchises are ineligible; however, chains or franchises
that are located in Carlsbad and have a business owner that lives within San Diego County are
eligible.
4. Loan funds may be used for operational expenses, such as rent, payroll, mortgage interest,
utilities, insurance, the cost of complying with public health orders, and the cost of activating
business operation areas.
5. The first loan repayment may be deferred up to 180 days from the date the loan is issued.
6. The city offers small business microloans of $5,000 to $10,000 for businesses with gross
receipts of $2,000,000 or less, or 15 employees or less, and terms of 0% interest if paid back
within six months, 1% if paid back within twelve months, and 2% if paid back within eighteen
months.
7. The city offers small business recovery loans of $10,000 to $25,000 for businesses with gross
receipts of $3,000,000 or less and fewer than 50 employees and terms of 2% interest if paid
pack within twelve months and 3% if paid back within thirty months.
B. LOAN APPLICATION EVALUATION AND DISPOSITION
CDC Small Business Finance (CDCSBF) will review loan applications based upon the goal of
deploying resources to businesses that are affected by COVID-19 while considering factors that
present a high risk of default. These factors include:
1. Minimum 640 FICO score but will engage with applicants that have a lower score to
understand mitigating factors that may be affect the risk of default
2. Bankruptcy must be at least three years old but will engage with applicants with more recent
bankruptcy to understand mitigating factors that may affect the risk of default
3. No open liens, judgments, or lawsuits that may present a high risk of default
4. Business owner will be required to sign a personal guarantee, or if there are multiple business
owners, the majority business owner will be required to sign the personal guarantee.
CDCSBF will provide a list of reviewed applications to the city for validation. Upon validation
CDCSBF, will generate the loan documents and route them for signature by the borrower and
deputy city manager, administrative services. CDCSBF will service the loan portfolio and will
provide monthly reports and invoices to the city for their services.
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AGREEMENT FOR SMALL BUSINESS LOAN SERVICES CDC SMALL BUSINESS FINANCE THIS AGREEMENT is made and entered into as of the 18th_ day of _____August__________, 2020 (“Effective Date”), by and between the CITY OF CARLSBAD, a municipal corporation ("City"), and CDC Small Business Finance, a non-profit, private organization ("Contractor"). RECITALS A. City requires the professional services of a non-profit contractor that is experienced in providing small business lending services.
B. Contractor has the necessary experience in providing professional services and advice related to small business lending. C. Selection of Contractor is expected to achieve the desired results and efficiencies
in an expedited fashion. D. Contractor has submitted a proposal to City and has affirmed its willingness and ability to perform such work.
NOW, THEREFORE, in consideration of these recitals and the mutual covenants contained herein, City and Contractor agree as follows:
1. SCOPE OF WORK City retains Contractor to perform, and Contractor agrees to render, those services (the "Services") that are defined in attached Exhibit "A," which is incorporated by this reference in accordance with this Agreement’s terms and conditions. 2. STANDARD OF PERFORMANCE While performing the Services, Contractor will exercise the reasonable professional care and skill customarily exercised by reputable members of Contractor's profession practicing in the Metropolitan Southern California Area, and will use reasonable diligence and best judgment while exercising its professional skill and expertise.
3. TERM The initial term of this Agreement will be for a period of three (3) years from the Effective Date.
The City Manager may extend the Agreement for up to an additional one (1) year period. 4. TIME IS OF THE ESSENCE
Time is of the essence for each and every provision of this Agreement. 5. COMPENSATION The total fee payable for the Services to be performed during the Agreement term shall not exceed Three Hundred and Fifty Thousand Dollars ($350,000). No other compensation for the Services will be allowed except for items covered by subsequent amendments to this Agreement. The City reserves the right to withhold a ten percent (10%) retention until City has accepted the work and/or Services specified in Exhibit "A." 6. STATUS OF CONTRACTOR Contractor will perform the Services in Contractor's own way as an independent contractor and in pursuit of Contractor's independent calling, and not as an employee of City. Contractor will be under control of City only as to the result to be accomplished, but will consult with City as
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necessary. The persons used by Contractor to provide services under this Agreement will not be
considered employees of City for any purposes. The payment made to Contractor pursuant to the Agreement will be the full and complete compensation to which Contractor is entitled. City will not make any federal or state tax withholdings on behalf of Contractor or its agents, employees or subcontractors. City will not be required to pay any workers' compensation insurance or unemployment contributions on behalf of Contractor or its employees or subcontractors. Contractor agrees to indemnify City within thirty (30) days for any tax, retirement contribution, social security, overtime payment, unemployment payment or workers' compensation payment which City may be required to make on behalf of Contractor or any agent, employee, or subcontractor of Contractor for work done under this Agreement. At the City’s election, City may deduct the indemnification amount from any balance
owing to Contractor. 7. SUBCONTRACTING
Contractor will not subcontract any portion of the Services without prior written approval of City, except as explicitly outlined in the Agreement. If Contractor subcontracts any of the Services, Contractor will be fully responsible to City for the acts and omissions of Contractor's subcontractor
and of the persons either directly or indirectly employed by the subcontractor, as Contractor is for the acts and omissions of persons directly employed by Contractor. Nothing contained in this Agreement will create any contractual relationship between any subcontractor of Contractor and
City. Contractor will be responsible for payment of subcontractors. Contractor will bind every subcontractor and every subcontractor of a subcontractor by the terms of this Agreement applicable to Contractor's work unless specifically noted to the contrary in the subcontract and approved in writing by City. 8. OTHER CONTRACTORS The City reserves the right to employ other Contractors in connection with the Services. 9. INDEMNIFICATION Each party shall indemnify, defend, protect, hold harmless, and release the other, its officers, agents, and employees, from and against any and all claims, loss, proceedings, damages, causes
of action, liability, costs, or expense (including attorneys’ fees and witness costs) arising from or in connection with, or caused by any act, omission, or negligence of such indemnifying party or its agents, employees, contractors, subcontractors, or invitees. This indemnification obligation
shall not be limited in any way by any limitation on the amount or type of damages or compensation payable to or for the indemnifying party under workers’ compensation acts, disability benefit acts, or other employee benefit acts. This indemnity provision survives the
Agreement. Contractor agrees to indemnify and hold harmless the City and its officers, officials, employees and volunteers from and against all claims, damages, losses and expenses including attorneys fees arising out of the performance of the work described herein caused by any negligence, recklessness, or willful misconduct of the Contractor, any subcontractor, anyone directly or indirectly employed by any of them or anyone for whose acts any of them may be liable. 10. INSURANCE Contractor will obtain and maintain for the duration of the Agreement and any and all amendments, insurance against claims for injuries to persons or damage to property which may arise out of or in connection with performance of the services by Contractor or Contractor’s agents, representatives, employees or subcontractors. The insurance will be obtained from an insurance carrier admitted and authorized to do business in the State of California. The insurance
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carrier is required to have a current Best's Key Rating of not less than "A-:VII"; OR with a surplus
line insurer on the State of California’s List of Approved Surplus Line Insurers (LASLI) with a rating in the latest Best’s Key Rating Guide of at least “A:X”; OR an alien non-admitted insurer listed by the National Association of Insurance Commissioners (NAIC) latest quarterly listings report. 10.1 Coverage and Limits. Contractor will maintain the types of coverage and minimum limits indicated below, unless the Risk Manager or City Manager approves a lower amount. These minimum amounts of coverage will not constitute any limitations or cap on Contractor's indemnification obligations under this Agreement. City, its officers, agents and employees make no representation that the limits of the insurance specified to be carried by Contractor pursuant to this Agreement are adequate to protect Contractor. If Contractor believes that any required insurance coverage is inadequate,
Contractor will obtain such additional insurance coverage, as Contractor deems adequate, at Contractor's sole expense. The full limits available to the named insured shall also be available and applicable to the City as an additional insured.
10.1.1 Commercial General Liability (CGL) Insurance. Insurance written on an “occurrence” basis, including personal & advertising injury, with limits no less than $2,000,000 per
occurrence. If a general aggregate limit applies, either the general aggregate limit shall apply separately to this project/location or the general aggregate limit shall be twice the required occurrence limit.
10.1.2 Automobile Liability. (if the use of an automobile is involved for Contractor's work for City). $2,000,000 combined single-limit per accident for bodily injury and property damage. 10.1.3 Workers' Compensation and Employer's Liability. Workers' Compensation limits as required by the California Labor Code. Workers' Compensation will not be required if Contractor has no employees and provides, to City's satisfaction, a declaration stating this. 10.1.4 Professional Liability. Errors and omissions liability appropriate to Contractor’s profession with limits of not less than $2,000,000 per claim. Coverage must be maintained for a period of five years following the date of completion of the work.
10.2 Additional Provisions. Contractor will ensure that the policies of insurance required under this Agreement contain, or are endorsed to contain, the following provisions:
10.2.1 The City will be named as an additional insured on Commercial General Liability which shall provide primary coverage to the City.
10.2.2 Contractor will obtain occurrence coverage, excluding Professional Liability, which will be written as claims-made coverage. 10.2.3 This insurance will be in force during the life of the Agreement and any extensions of it and will not be canceled without thirty (30) days prior written notice to City sent by certified mail pursuant to the Notice provisions of this Agreement. 10.3 Providing Certificates of Insurance and Endorsements. Prior to City's execution of this Agreement, Contractor will furnish certificates of insurance and endorsements to City. 10.4 Failure to Maintain Coverage. If Contractor fails to maintain any of these insurance coverages, then City will have the option to declare Contractor in breach or may purchase
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replacement insurance or pay the premiums that are due on existing policies in order to maintain
the required coverages. Contractor is responsible for any payments made by City to obtain or maintain insurance and City may collect these payments from Contractor or deduct the amount paid from any sums due Contractor under this Agreement. 10.5 Submission of Insurance Policies. City reserves the right to require, at any time, complete and certified copies of any or all required insurance policies and endorsements. 11. BUSINESS LICENSE Contractor will obtain and maintain a City of Carlsbad Business License for the term of the Agreement, as may be amended from time-to-time. 12. ACCOUNTING RECORDS Contractor will maintain complete and accurate records with respect to costs incurred under this Agreement. All records will be clearly identifiable. Contractor will allow a representative of City
during normal business hours to examine, audit, and make transcripts or copies of records and any other documents created pursuant to this Agreement. Contractor will allow inspection of all work, data, documents, proceedings, and activities related to the Agreement for a period of three
(3) years from the date of final payment under this Agreement. 13. OWNERSHIP OF DOCUMENTS
All work product produced by Contractor or its agents, employees, and subcontractors pursuant to this Agreement is the property of City. In the event this Agreement is terminated, all work product produced by Contractor or its agents, employees and subcontractors pursuant to this Agreement will be delivered at once to City. Contractor will have the right to make one (1) copy of the work product for Contractor’s records. 14. COPYRIGHTS Contractor agrees that all copyrights that arise from the services will be vested in City and Contractor relinquishes all claims to the copyrights in favor of City. 15. NOTICES
The name of the persons who are authorized to give written notice or to receive written notice on behalf of City and on behalf of Contractor under this Agreement.
For City For Contractor
Name David Graham Name Robert Villarreal
Title Chief Innovation Officer Title Executive Vice President
Department Office of Innovation and Economic Development Address CDC Small Business Finance
2448 Historic Decatur Rd #200 San Diego, CA 92106
Address 1200 Carlsbad Village Drive Phone No. 619-234-8652
Carlsbad, CA 92008 Email rvillarreal@cdcloans.com
Phone No. 760-434-5992 Each party will notify the other immediately of any changes of address that would require any
notice or delivery to be directed to another address.
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16. CONFLICT OF INTEREST Contractor shall file a Conflict of Interest Statement with the City Clerk in accordance with the requirements of the City of Carlsbad Conflict of Interest Code. The Contractor shall report investments or interests in all categories. Yes No 17. GENERAL COMPLIANCE WITH LAWS Contractor will keep fully informed of federal, state and local laws and ordinances and regulations which in any manner affect those employed by Contractor, or in any way affect the performance of the Services by Contractor. Contractor will at all times observe and comply with these laws,
ordinances, and regulations and will be responsible for the compliance of Contractor's services with all applicable laws, ordinances and regulations.
Contractor will be aware of the requirements of the Immigration Reform and Control Act of 1986 and will comply with those requirements, including, but not limited to, verifying the eligibility for employment of all agents, employees, subcontractors and consultants whose services are
required by this Agreement. 18. DISCRIMINATION AND HARASSMENT PROHIBITED
Contractor will comply with all applicable local, state and federal laws and regulations prohibiting discrimination and harassment. 19. DISPUTE RESOLUTION If a dispute should arise regarding the performance of the Services the following procedure will be used to resolve any questions of fact or interpretation not otherwise settled by agreement between the parties. Representatives of Contractor or City will reduce such questions, and their respective views, to writing. A copy of such documented dispute will be forwarded to both parties involved along with recommended methods of resolution, which would be of benefit to both parties. The representative receiving the letter will reply to the letter along with a recommended method of resolution within ten (10) business days. If the resolution thus obtained is unsatisfactory
to the aggrieved party, a letter outlining the disputes will be forwarded to the City Manager. The City Manager will consider the facts and solutions recommended by each party and may then opt to direct a solution to the problem. In such cases, the action of the City Manager will be binding
upon the parties involved, although nothing in this procedure will prohibit the parties from seeking remedies available to them at law. 20. TERMINATION In the event of the Contractor's failure to prosecute, deliver, or perform the Services, City may terminate this Agreement for nonperformance by notifying Contractor by certified mail of the termination. If City decides to abandon or indefinitely postpone the work or services contemplated by this Agreement, City may terminate this Agreement upon written notice to Contractor. Upon notification of termination, Contractor has five (5) business days to deliver any documents owned by City and all work in progress to City address contained in this Agreement. City will make a determination of fact based upon the work product delivered to City and of the percentage of work that Contractor has performed which is usable and of worth to City in having the Agreement completed. Based upon that finding City will determine the final payment of the Agreement. Either party upon tendering thirty (30) days written notice to the other party may terminate this Agreement. In this event and upon request of City, Contractor will assemble the work product and
X
XX
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put it in order for proper filing and closing and deliver it to City. Contractor will be paid for work
performed to the termination date; however, the total will not exceed the lump sum fee payable under this Agreement. City will make the final determination as to the portions of tasks completed and the compensation to be made. 21. COVENANTS AGAINST CONTINGENT FEES Contractor warrants that Contractor has not employed or retained any company or person, other than a bona fide employee working for Contractor, to solicit or secure this Agreement, and that Contractor has not paid or agreed to pay any company or person, other than a bona fide employee, any fee, commission, percentage, brokerage fee, gift, or any other consideration contingent upon, or resulting from, the award or making of this Agreement. For breach or violation of this warranty, City will have the right to annul this Agreement without liability, or, in its discretion,
to deduct from the Agreement price or consideration, or otherwise recover, the full amount of the fee, commission, percentage, brokerage fees, gift, or contingent fee. 22. CLAIMS AND LAWSUITS By signing this Agreement, Contractor agrees that any Agreement claim submitted to City must be asserted as part of the Agreement process as set forth in this Agreement and not in anticipation
of litigation or in conjunction with litigation. Contractor acknowledges that if a false claim is submitted to City, it may be considered fraud and Contractor may be subject to criminal prosecution. Contractor acknowledges that California Government Code sections 12650 et seq.,
the False Claims Act applies to this Agreement and, provides for civil penalties where a person knowingly submits a false claim to a public entity. These provisions include false claims made with deliberate ignorance of the false information or in reckless disregard of the truth or falsity of information. If City seeks to recover penalties pursuant to the False Claims Act, it is entitled to recover its litigation costs, including attorney's fees. Contractor acknowledges that the filing of a false claim may subject Contractor to an administrative debarment proceeding as the result of which Contractor may be prevented to act as a Contractor on any public work or improvement for a period of up to five (5) years. Contractor acknowledges debarment by another jurisdiction is grounds for City to terminate this Agreement. 23. JURISDICTION AND VENUE
Any action at law or in equity brought by either of the parties for the purpose of enforcing a right or rights provided for by this Agreement will be tried in a court of competent jurisdiction in the County of San Diego, State of California, and the parties waive all provisions of law providing for
a change of venue in these proceedings to any other county. 24. SUCCESSORS AND ASSIGNS
It is mutually understood and agreed that this Agreement will be binding upon City and Contractor and their respective successors. Neither this Agreement nor any part of it nor any monies due or to become due under it may be assigned by Contractor without the prior consent of City, which shall not be unreasonably withheld. 25. ENTIRE AGREEMENT This Agreement, together with any other written document referred to or contemplated by it, along with the purchase order for this Agreement and its provisions, embody the entire Agreement and understanding between the parties relating to the subject matter of it. In case of conflict, the terms of the Agreement supersede the purchase order. Neither this Agreement nor any of its provisions may be amended, modified, waived or discharged except in a writing signed by both parties.
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26. AUTHORITY
The individuals executing this Agreement and the instruments referenced in it on behalf of Contractor each represent and warrant that they have the legal power, right and actual authority to bind Contractor to the terms and conditions of this Agreement. CONTRACTOR CITY OF CARLSBAD, a municipal corporation of the State of California
By: By:
(sign here) Scott Chadwick, City Manager
Kurt Chilcott, CEO/President
(print name/title)
ATTEST:
By:
(sign here) BARBARA ENGLESON
Catherine Riddle, Chief Financial Officer City Clerk
(print name/title)
If required by City, proper notarial acknowledgment of execution by contractor must be attached. If a
corporation, Agreement must be signed by one corporate officer from each of the following two groups. Group A Group B Chairman, Secretary,
President, or Assistant Secretary, Vice-President CFO or Assistant Treasurer
Otherwise, the corporation must attach a resolution certified by the secretary or assistant secretary under corporate seal empowering the officer(s) signing to bind the corporation. APPROVED AS TO FORM: CELIA A. BREWER, City Attorney
BY: _____________________________ Assistant City Attorney
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EXHIBIT “A” SCOPE OF SERVICES
COVID-19 Small Business Loan Program Administration
CDC Small Business Finance
As a leader in the community and economic development field, CDC Small
Business Finance (CDC) provides access to transformative products, services,
and advocacy to ensure all small businesses have the opportunity to succeed
and grow.
We offer a variety of low-interest financing that fit the needs of small businesses
no matter where they are in the growth cycle. Start-ups to seasoned companies
and every small business in between can benefit from our financing
programs. Over four decades, CDC and its affiliate companies have provided
more than $18 billion in funding to over 11,000 small business owners.
Overview:
The City of Carlsbad is seeking an administrator for its COVID-19 business loan
program. CDC has a strong history of providing low-interest financing and
business support for small businesses.
During the pandemic the CDC has been a leading non-profit lender of the
Paycheck Protection Program (PPP), a source of low-interest financing, and an
informational resource for small businesses.
CDC also has active loans with Carlsbad businesses and is an experienced lender
to north county companies. Carlsbad has a diverse economy and given our
experience in lending to businesses of all kinds, we have the knowledge and
people to make this program a success.
One advantage of partnering with CDC is that we can offer more financial
products and resources to aid in the long-term resilience of Carlsbad businesses,
via CDC and its affiliate companies. We believe that small businesses are the
backbone of the economy and by connecting them with advice, access to capital,
and resources we help businesses thrive. Right now, we are all focused on
supporting the economy during the pandemic. But, we see our involvement as
growing our existing support for Carlsbad businesses into a more expansive and
long-term relationship of supporting your economy.
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Business Loan Program Administration:
CDC proposes the following for administering the program:
• Dedicated small business advisor included
• Dedicated online application portal included
• Initial setup of Laser Pro $500
• Application review and denial per application fee $250
• Application review and disposition per application fee $1000
o Credit score check
o Collection of documents from borrower
o Analysis of documents from borrower
o Approval
• File management included in application review and disposition fee
• Preparing closing documents included in review and disposition fee
• Annual loan servicing of a portfolio exceeding $2,000,000 .25%
o Payment collection
o Portfolio management
o Accounting
• Monthly reporting to the City of Carlsbad is included
• (Optional) Liquidation services $75 per hour
We believe in supporting small business and our cities. The cost associated with
administering this program reflect the heart of the way our non-profit does
business. With these reduced administrative fees more funding can go to the
businesses that need it most.
Loan Servicing
CDCSBF will provide Loan Servicing as part of the Agreement. Loan servicing
consists of managing the loan file after loan closing.
CDCSBF will provide the following:
i. Upon notification of loan funding by CITY OF CARLSBAD, CDCSBF will
prepare and send a package of loan document records and payment plan
information to the CITY OF CARLSBAD, enroll the loan in CDCSBF payment processing system and update CDCSBF’s loan management system (Ventures+) with relevant funding data and loan monitoring requirements. ii. Loan payments for the CITY OF CARLSBAD loan, collected via ACH, will be
collected and managed by CDCSBF. All payments will be deposited to a segregated
account managed by CDCSBF Accounting Department. On a monthly basis, CDCSBF will wire the balance of loan payments received by CDCSBF and invoice the city for any fees due to CDCSBF.
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iii. Monthly reports including a Non-Current Report with Portfolio Risk Rate and Trial Balance Report will be provided by CDCSBF to CITY OF CARLSBAD. iv. CDCSBF will request annual business financial statements of borrowers, annual personal financial statements of each guarantor and any other reasonable requested document or report related to a specific credit risk identified by CITY OF
CARLSBAD for a borrower and, when secured will review and risk rate each loan. In the event a borrower does not respond to repeated requests for updated financial information, CDCSBF shall establish each loan risk rating based upon repayment history, seasoning, industry standards and other factors as applicable to loan borrowers.
v. Loans that become delinquent will be serviced by CDCSBF which may include repeated telephone, email and/or written demands of payment and fees due beginning within 5 (five) business days of the payment default. Repeated or ongoing delinquencies will result in a downgrade of the loan risk rating. vi. CITY OF CARLSBAD loans that become 61 days delinquent will be transferred to
a CDCSBF Liquidation Analyst for Intensive Servicing and moved to Liquidation Status. A summary report of the loan, cause for delinquency and recommended course of action will be provided by CDCSBF to CITY OF CARLSBAD. Any actions that may result in loan repayment deferment, loan modification or loan charge off will only be executed by CDCSBF after receipt of written approval by a
CITY OF CARLSBAD representative. vii. General servicing actions, including but not limited to file at closing and extend UCC filings for each loan as required by state law, collateral release, loan subordination, ownership changes, address changes, etc. will be completed on behalf of CITY OF CARLSBAD by CDCSBF. All such actions that would impact
the collateral position or loan guarantee for CITY OF CARLSBAD will be approved by CITY OF CARLSBAD in advance of taking any such action. viii. CDCSBF will monitor all CITY OF CARLSBAD loans for compliance on loan conditions and covenants through the term of this Agreement or the loan term, whichever is shorter.
Conclusion
Carlsbad is a vibrant place with a diverse economy. Our proposal reflects our
desire to build upon the support we are already providing to Carlsbad
companies and deliver top-notch service to companies that are struggling
during the pandemic.
Whether it is support directly from the city or finding financing solutions
through other public and private programs, our goal will be to invest in the long-
term viability of Carlsbad, its companies, and economy.
DocuSign Envelope ID: 8850FE7D-C6E6-48E4-932A-3B11B10A01C4
Aug. 18, 2020 Item #7 Page 20 of 21
City Attorney Approved Version 6/12/18 11
CITY OF CARLSBAD COVID-19 BUSINESS LOAN PROGRAM
$5,000- $25,000
Term Sheet
Use of Proceeds • Working Capital – Payroll, Rent, Utilities, Mortgage Interest,
Insurance, COVID-19 Compliance and Adaptation
Min/Max Loan Amount
• $5,000 – $10,000
• Gross revenues cannot
exceed $2MM and 15 or
fewer employees
• $10,000 – $25,000
• Gross revenues cannot exceed
$3MM and 50 or fewer
employees
Credit Score
• Minimum 640 FICO
• Bankruptcy at least 3 years old
• No open liens, judgements, suits
Required Documents • Application
• Bank Statement from 12/31/19 to current
Interest Rate & Term
• Deferment of first payment for 180 days
• 0% first 6 months
• 1% months 7-12
• 2% months 13-18
• Term 18 Months
• 2% first 12 months
• 3% months 13-30
• Term 30 Months
• ACH Required for monthly payments
Borrower Fees
• Doc-U-Sign - $XXX
• Out of pocket - $35-50 (Credit reports, Lexis Nexis, Sec of
State)
Prepayment Fee • No Prepayment Penalty
Collateral • None - unsecured
• Personal Guarantee – Majority Owner(s)
Program Eligibility
• Valid business license or proof of business license renewal
prior to April 1, 2020
• Located and licensed to operate in the City of Carlsbad,
California
Other Criteria
• One Loan per Eligible Business
• Borrower Required to Sign Agreement attesting that Loan
Proceeds will be used only for Purposes of Maintaining or
restarting Business
DocuSign Envelope ID: 8850FE7D-C6E6-48E4-932A-3B11B10A01C4
Aug. 18, 2020 Item #7 Page 21 of 21