Development Corporation of Stamford, Inc.

P.O. Box 669 Stamford, Texas 79553 (325) 773-2495 - Office (325) 773-2145 Fax eddirector@stamfordtx.com

GUIDELINES FOR PUBLIC ASSISTANCE

General Overview The Texas Legislature passed the Development Corporation Act of 1979 (Texas Civil Statutes Article 5190.6) to allow municipalities to create nonprofit corporations (called development corporations) that promote the creation of new and expanded industry and manufacturing activity within the municipality and its vicinity. In 1989, the Texas Legislature amended the Development Corporation Act by adding Section 4A, which allowed the creation of a new type of development corporation. The legislation provided that a Section 4A development corporation could be funded by the imposition of a local sales and use tax dedicated to economic development. The City of Stamford adopted such a tax in 1991. The Section 4A tax was generally available to cities that were located within a county of under 500,000 and had room within the local sales tax cap to adopt an additional onehalf cent sales tax. Projects can be funded to primarily promote new and expanded industrial and manufacturing activities, which include:

Manufacturing & Industrial Facilities Research and Development Facilities Transportation Facilities (including but not limited to airports, ports, mass commuting facilities, and parking facilities) Sewage/Solid Waste Disposal and Recycling Facilities Air and Water Pollution Control Facilities Facilities for the Furnishing of Water to the General Public Distribution Centers Small Warehouse Facilities Primary Job Training Facilities for Use by Institutions of Higher Education Regional or National Corporate Headquarters Facilities

Projects may also include job training required or suitable for the promotion of development and expansion of business enterprises and other enterprises described by the Development Corporation Act. Projects may include expenditures founded by the Board of Directors of the DCOS to be required or suitable for infrastructure necessary to promote or develop new or expanded business enterprises limited to streets and roads,

rail spurs, water and electric utilities, gas utilities, drainage and related improvements, and telecommunications and Internet improvements. The Development Corporation of Stamford, Inc. (DCOS) is a non-profit public corporation governed by the Development Corporation Act of 1979 and organized exclusively for the purposes of benefiting and accomplishing public purposes of the City of Stamford by promoting, assisting, and enhancing economic development activities for the City under the State of Texas Guidelines for the 4A Sales Tax. The DCOS accomplishes these purposes by developing and maintaining a viable working relationship between the public and private sectors of Stamford, and furthering the development of commercial, industrial, and manufacturing enterprises to promote and encourage employment for the public welfare and benefit of the citizens of Stamford.

Mission Statement:
The mission of the Development Corporation of Stamford, Inc. is to use sales tax revenue to effectively stimulate Stamford's economic growth by assessing the community's economic development needs, developing a plan to meet those needs, coordinating community economic development efforts, and supporting targeted activities which enhance quality of life in the community and maximize the public's return on invested tax dollars.

Goals:
1. Make Stamford competitive in the attraction of business and industry in order to create new permanent jobs. 2. Create new jobs and retain existing jobs by providing assistance to existing emerging businesses. 3. Strengthen and expand the skills of Stamford labor force. 4. Strengthen and revitalize downtown Stamford. 5. Increase the number and size of minority and women owned businesses. 6. Effectively administer the half-cent sales tax revenue. Periodically, the DCOS receives requests for assistance from individuals or organizations for various projects. All requests for assistance will be received through the DCOSs Executive Directors Office, and must be in writing.

_____________________________________________________________________________________________ DCOS Guidelines and Policies 2

Infrastructure Improvements According to the Development Corporation Act of 1979, and amendments, infrastructure improvements may include only those required for the development and expansion of manufacturing, industrial, transportation, distribution and commercial purposes. Land Purchases, Leasehold Improvements and Construction The DCOS, through the Executive Director of the DCOS, will negotiate individually or approve any land purchases or construction costs required for the development or expansion of manufacturing, industrial, transportation, commercial, distribution, sewage or solid waste disposal, air or water pollution control facilities or facilities for the furnishing of water to the general public. The DCOS will conduct an analysis of land value and current construction costs to determine comparable value as a basis for assistance. Financing The DCOS administers a Development Finance Program which is designed to facilitate the development of new and existing businesses, diversity of the local economy. Funds are available through loan guarantees, bank participations and direct loans ensuring efficiency and flexibility while maximizing the resources of participating financial institutions. The DCOS's Development Finance Program governs the Board's participation in financing. Additional Conditions As a general rule, the DCOS will not provide funding support to any one (1) individual or organization which, when added to the financial assistance already being received from any other source associated with the City of Stamford, totals more than 50% of the total investment required for a project. Included in the total assistance package may be:

Tax Abatement (using net present value of the abatement) Financing (using amount DCOS guarantees, participates or lends directly) Infrastructure Improvements Land Purchases, leasehold improvements and construction (using amount provided by DCOS) Training expense reimbursement Relocation expense reimbursement for equipment and/or personnel

At least one permanent job must be created for each $3,500 of total public assistance provided. To determine an applicant's financial viability, each applicant must submit the following information:
_____________________________________________________________________________________________ DCOS Guidelines and Policies 3

Financial information for the previous 3 years A business plan from the Small Business Development Center (Abilene, Texas) Any additional information requested by the DCOS. Any guarantors must also submit the same information.

The Executive Director for the DCOS, working within the guidelines established herein, shall have the authority, upon the advice of the President of the DCOS (or the Vice President if the President is not available), to approve land purchases or construction costs up to $5,000. For each request, the DCOS will make an assessment of public benefit and return, amount of assistance requested compared to total project cost, and the applicant's financial viability. The DCOS may request the assistance of various local businesspersons when making the appropriate assessment. Based upon a recommendation from the Executive Director and the DCOS Board will decide whether or not to grant assistance. GENERAL POLICY STATEMENTS 1. All loans will be funded out of the DCOS's unobligated fund balance and all principal repayments, interest and late charge income shall be returned to the DCOS's unobligated fund balance. Loans will be made on an accrual basis. Payments will be applied first toward the interest due and the remaining, if any will be applied to principal. Request for loan restructuring may be approved by Staff with the support of the Board. The Board will be given two business days to respond to a written proposal from the staff to restructure an existing loan. Should any Board member object to the terms of the proposed restructure, no action will be taken and the item will be placed on the next agenda. The DCOS is an equal opportunity lender and does not discriminate with regards to race, color, religion, national origin, sex, marital status, age or disability (provided that the applicant has the capacity to enter into a binding contract). In the event of any conflict between this policy and any applicable federal, state or local statute, the statute shall prevail. This policy may be reviewed annually by the DCOS. ADDITIONAL POLICY STATEMENTS

2. 3.

5.

6.

6.

_____________________________________________________________________________________________ DCOS Guidelines and Policies 4

1.

An Agreement for Financial Assistance will be signed by every borrower. The Agreement for Financial Assistance will govern approved assistance for training, relocation of personnel and/or machinery and equipment, and leasehold improvements to DCOS owned property. The amount of assistance available is based on the number of full time equivalent, permanent employment positions created or retained, the skill level and salary range for each employment position, and the length of time the company commits to staying in Stamford. The business must be located in Stamford or in the extraterritorial jurisdiction (ETJ) of Stamford. The business may not move outside of the Stamford ETJ without prior written consent of the DCOS. At minimum, 51% of the jobs must be available to Stamford residents. Jobs will be considered available to Stamford residents if the opening is advertised in the local daily newspaper or the local office of the Texas Workforce Commission and the WCTCOG Job Training Partnership Act office, and a proportionate number of Stamford residents are interviewed for the position. New jobs created or existing jobs retained which are held by owners of 25% or more of the company will not qualify for Development Financing Program dollars for training. Full time equivalent, permanent jobs are defined as that number of jobs which together equate to 40 hours per week including allowance for vacation and sick leave during a 12-month period. Salary or wages must be equal to or greater than the federal minimum wage. The average hourly wage rate may impact the amount of assistance the DCOS will provide. Job retention is defined as a continued job which would have been eliminated without financial assistance. Documentation of potential job elimination shall be required. Loans from relatives, owners or other individuals shall be subordinated to the DCOS's loan. All credit and collateral documents required by prudent lending practices must be included in the loan package at closing. A required document may not be waived except with the full knowledge and approval of the Board. The business may not be sold without prior written consent of the DCOS. The business will notify the DCOS in writing of substantial changes in management.

2. 3. 4.

5.

6.

7.

8. 9.

10.

_____________________________________________________________________________________________ DCOS Guidelines and Policies 5

APPLICATION FOR FINANCIAL ASSISTANCE Applicants, whether through a financial institution or direct, requesting loan assistance must present the following documents to the DCOS: 1. A business plan detailing the project. The plan must be completed through the assistance of the following organization: Small Business Development Center 500 Chestnut, Suite 601 Abilene, Texas 79602 325-670-0300 (Phone) 325-670-0311 (Fax) 2. 3. 4. 5. 6. 7. 8. 9. 10. The last 3 fiscal year end financial statements or tax returns on the business (if applicable). The most current interim financial statement of the business. A current financial statement on all owners of more than 20% of the business. A current financial statement on all guarantors. The loan officer's analysis and recommendation of the applicant for loan assistance. The financial institution's credit history on the borrower and credit reports on cosigners and guarantors. The financial institution's description of the loan's terms and conditions. A list of collateral offered with an estimate of its current market value. A list of the jobs to be created/retained by the business during the agreed upon time frame.

If applicant is a start up business the following items will be required at minimum: 1. A detailed business plan including resumes of owners and managers. This plan must be completed with the assistance of the Small Business Development Center located in Abilene, Texas. Please refer to the above information regarding the SBDC. A projected balance sheet and income statement, Year 1.

2.

_____________________________________________________________________________________________ DCOS Guidelines and Policies 6

3. 4. 5.

A monthly cash flow analysis for Year 1. A list of collateral to be offered as security for the loan, indicating the present market value of each item. Additional information as required by the DCOS on a case-by case basis. ELIGIBILITY OF APPLICANTS

1.

No member of the Stamford City Council, or person related to a council member within the second degree by consanguinity or affinity, shall be eligible to apply for a loan under the Development Finance Program during his/her tenure or for six months thereafter. No member of the Development Corporation of Stamford, Inc. Board of Directors, or person related to a board member within the second degree by consanguinity or affinity, shall be eligible to apply for a loan under the Development Finance Program during his/her tenure or for six months thereafter. No director or employee of the DCOS or person related to a director, employee of the DCOS within the second degree by consanguinity or affinity, shall be eligible to apply for a loan under the Development Finance Program during his/her tenure or for six months thereafter. All other City of Stamford employees and elected or appointed officers not specifically addressed above shall be eligible to apply for a loan under the Development Finance Program; however, no special consideration shall be granted to such an applicant. CHARGED-OFF LOANS

2.

3.

4.

When repayment of a loan is recognized by the DCOS as being substantially doubtful, a resolution for charging off the balance of the loan will be drafted by the staff of the DCOS and presented to the DCOS Board for approval. This resolution will describe the reasons for viewing the repayment of the loan as doubtful, and the amount to be charged off. No specific course of action will be addressed within the resolution, but the following procedures will generally be followed:
1.

Charging Off The Loan: A copy of the executed resolution will be distributed to the DCOS and the loan will be charged off.

_____________________________________________________________________________________________ DCOS Guidelines and Policies 7

2.

Financial Responsibility: All interested parties will continue to be pursued financially. Charge-off of the loan balance will not release a debtor, cosigner or guarantor from their legal liability to repay the loan. Legal Action: When appropriate and economically feasible, legal action to collect a charged-off loan will be taken. Where applicable, all interested parties will be pursued individually including each borrower, cosigner, and guarantor. Only in cases in which the cost of legal action is greater than the amount to be recovered, will legal action be foregone. The status of any legal proceeding will be reported to the DCOS. Restructuring the Loan: After a loan is charged off, the collection and restructure of the loan will be the responsibility of staff. The account balances will be maintained by Staff in a separate ledger. After being posted to the charge-off ledger, all payments will be deposited into the DCOS's unobligated fund balance. Placement With An Outside Collection Agency: In many cases, a debtor during financially distressed periods is difficult to locate. If necessary, Staff will consign the account to an outside agency. The fee for this type of service is usually a percentage of the amount collected by the agency, and no fee is paid if no money is collected. The decision to place an account with an outside collection agency will be made by the Board upon the recommendation of Staff. Contact With The Participating Bank: Contact will be maintained through periodic verification of the account status with the account officer. This information is subject to the Texas Banking Code and cannot be discussed in an open meeting. Collection Efforts: All collection efforts will be detailed in the credit file in chronological order. C C C

3.

4.

5.

6.

7.

For additional information contact: Development Corporation of Stamford, Inc. P.O. Box 669 Stamford, Texas 79553 Voice: (325) 773-2495 Fax: (325) 773-2145 E-Mail: eddirector@stamfordtx.com Website: www.stamfordtx.com Note: Proprietary information will be kept confidential to the fullest extent allowed by law.
_____________________________________________________________________________________________ DCOS Guidelines and Policies 8