ALLEGHENY COUNTY ECONOMIC DEVELOPMENT FUND

ECONOMIC DEVELOPMENT FUND (EDF)BACKGROUND

Created in 1995 Key Financing Vehicle of the

Redevelopment Authority of Allegheny County

Using Proceeds from Issuance of $25 Million Special Tax Development Bonds Second $25 Million Bond deal in 1999

Used for Low Interest Loans

PURPOSE OF THE ECONOMIC DEVELOPMENT FUND (EDF)

Principal Objective Creation of a diverse economic & industrial

community Establishment of new industries &

expansion of existing business that will enhance the taxable base of properties in Allegheny County

Principal Focus Development of industry & encouragement

of high technology enterprises.

DEBT SERVICE PAYMENT Paid with Portion of Allegheny County’s

Regional Asset District (RAD) Tax Earmarked for Economic Development RAD Tax is a 1% additional sales tax imposed

by Allegheny County Pennsylvania Sales Tax – 6% Allegheny County Sales Tax – 7%

TYPES OF ELIGIBLE PROJECTS /ACTIVITIESReal Estate Development• Purchase of Land / Buildings• Site / Infrastructure Development• Construction and / or Rehab of Buildings

Machinery & Equipment• Includes new and used equipment, acquisition, delivery and

installation

Small Business Loans• Available for small start-up businesses & existing businesses

which require capital for expansion projects

Education & Training• Assist businesses with training of employees as a result of

the funded projects

EDF LOAN TERMS Must be less than or equal to the term of private lender,

but not to exceed 20 years Not to exceed:

24 months for new construction or rehabs 10 years or remaining depreciable life for used equipment

May be made in conjunction with an acceptable private lender

Requires 10% equity, total lending sources not to exceed 100% of costs

Must be secured with lien positions on the asset or other acceptable collateral

Interest rate generally 75% of then current published Wall Street Journal prime rate

EDF LOAN FEES Financing Application Fee

$750 Loan Origination Fee

1.0% to 2.0% of original principal Annual Administrative Fee

0.1% of original principal for life of loan

EDF LOAN APPLICATION PROCESS

Public Purpose EvaluationNumber Jobs Created /

Retained / Quality of Jobs / EDF Investment per Job

Ratio of EDF fund dollars to private investment

Overall Benefit to Community / Community Support

Business Evaluation

Business Plan Review Management Review Tenant Commitments

Financial Evaluation

Status of Business / Owners Cash Flow / Collateral / Security Analysis

EDF LOAN APPROVAL PROCESS

In-House• ACED Staff

reviews Loan Application

• Determines initial eligibility

Loan Committees

• Business or Real Estate Committees• Comprised of

representatives of from private & public sectors

• Expertise in credit analysis & economic Development

RAAC Board • At Board

Meeting• Approve EDF

Loan Funding• Upon Approval

Send to Allegheny County Executive for final approval

EDF IN-HOUSE LOAN SERVICING PROCESS

Performed by ACED Staff Project Management

Underwriter on Staff Review EDF Loan Applications Determine Eligibility Present Loan Application to Loan Committees & RAAC Board

of Directors Accounting Staff

Create Loan Amortization Schedule Track Monthly / Yearly Payments in QuickBooks Send out Monthly / Yearly Invoices Notify Key Personnel / Legal of any Defaults Prepare Monthly Reports

EDF IN-HOUSE LOAN SERVICING PROCESS

Monthly

•Principal / Interest Invoices•Based on Amortization Schedule•Lists Any Missing Yearly Loan Covenant requirements

•Internal Monthly Report is Issued to Key Personnel

Yearly•Yearly Loan Covenant Requirements•Financial Statements / Tax Returns•Annual Audits •Current Insurance

•Administrative Fee is required

Defaults

•Failure to make payments within 30 days•Failure to submit non-financial information as required by loan covenants•Internal process – Borrowers receive letters / Project Managers contact Borrower to rectify issues•Legal Involvement when Borrower is non-responsive or Borrower is in Financial trouble

Quarterly •Job / Employment Information required from Borrower

SUCCESSFUL LOANSDick’s Sporting Goods

$1,006,250 New Headquarters

Eat’ N Park $1,100,000

New Headquarters / Restaurant

Damascus Bishop a/k/a Marchigalia USA $1,010,000 Steel Manufacturing

Facility

TO DATE $86.5 MILLION OF LOANS ISSUED $5.1 MILLION IN DEFAULTS

APPROXIMATELY 6%

SUB-COMPONENT OF EDF LOAN PROGRAM TARGETING MWDBE CONTRACTORS

MWDBE CONTRACTOR WORKING CAPITAL LOAN FUND

MWDBE CONTRACTOR WORKING CAPITAL LOAN PROGRAM

Revolving Loan Fund of $500,000 Purpose

Fill the void for short term working capital needed by MWDBE businesses for contracts with a government entity or other contract funded with government dollars

Must be Certified as an MWDBE To Date

Over $2.1 Million in loan commitments have been issues

PROGRAM LIMITS Maximum Loan 80% of contract

amount of $100,000 whichever is higher

Interest Rate is Prime Rate Floating currently at 3.25%

Maximum 1 Year Loan Term or term of contract whichever is less

SUCCESSFUL LOANSCannon Systems, Inc. (MBE)

Painting Firm of 911th Air Wing

K. Bealer Consulting, LLC (WBE)

Engineering work for ALCOSAN

Wilcox A Design Solutions (WBE)

Construction management services for CONSOL Energy

Center

Jack Exler, Deputy DirectorAllegheny County Economic Development

jexler@alleghenycounty.us412-350-1036

QUESTIONS?