Low Interest Revolving Loan Fund

(Please pick up loan application at WCDC office.)

LOAN POLICY

Program Objective

The Warsaw Community Development Corporation Low Interest Revolving Loan Fund was established in 1985 to promote the physical and economic revitalization of downtown Warsaw. The availability of funds at a low interest rate has a proven record of encouraging reinvestment in existing properties located within the C-4 District*. Property owners who elect to implement specific renovation and restoration projects within the C-4 District may be eligible for a WCDC Low Interest Revolving Loan. Tenants with leases equal to the term of the loan, and those buying property on contract, may also be eligible.

* The loan area was expanded in 2002 to correspond with the C-4 district as defined by the City of Warsaw Zoning Ordinance and outlined in red in the attached map. This C-4 district is bounded on the north by Lyon Street, on the east by the railroad tracks, on the south by Winona Avenue, and on the west by Columbia Street.  This district also encompasses what is referred to as the Historic Courthouse District.

 

Program Funding

Initial sponsors contributing funds for the program included

• Lake City Bank - $50,000

• City of Warsaw - $25,000

• Farmer's State Bank - $25,000

• First National Bank (now National City) - $50,000

• Mutual Federal Savings Bank - $25,000

• RR Donnelley and Sons - $25,000

• City of Warsaw - $25,000
  
  

The original loan commitment was for $200,000

The Current Investors and their current pledged amounts are as follows

• Lake City Bank - $75,000

• National City Bank of America - $80,000

• Farmer's State Bank - $55,000

• 1^st Source Bank - $50,000

• Key Bank - $50,000

• Mutual Federal Savings Bank - $50,000

• Bowen Center - $25,000

• Campbell and Fetter - $25,000

• RR Donnelly - $25,000

• Sprint/United Telephone - $25,000

• Beacon Credit Union - $25,000
  
  

There is presently $485,000 pledged to the WCDC revolving loan fund.

When AmeriTrust and Society merged, and Society subsequently merged with Key; Key took over AmeriTrust's and Society's portion of the loan fund.  Likewise, when First National Bank merged with National City, National City took over First National's portion of the loan fund.  The City of Warsaw is no longer a contributor to the loan pool.

Each participating investor may have a representative on the WCDC Low Interest Revolving Loan Fund Committee.

First National Bank of Warsaw acted as Trustee for the program from its inception to June 9, 1999. Lake City Bank is currently serving as Trustee of the program and has served in this capacity since 2003.

The duties of the Trustee Bank are as follows:

• To collect funds from all fund contributors

• Disburse loans

• Invest surplus funds

• Prepare an annual accounting to all fund contributors and the WCDC, which acts as program coordinator.

• Distribute net earnings (interest earned on WCDC loans and surplus funds) to participating fund contributors on an annual basis.

• Issue a quarterly status report to the program coordinator and loan committee showing loan funds disbursed, payments received, and any delinquencies. (A loan must be 30 days or more past due to be regarded as delinquent.)
  
  

Should a participating lender elect to discontinue program funding, such lender must write a letter to the Trustee giving at least 60 days notice of its intent to withdraw. The Trustee will notify both the program coordinator and remaining lenders of the action being taken by the withdrawing lender. The Trustee will also recompute the percentage of participation by the remaining lenders.

The withdrawing lender will be officially "out" of the program when all loans in which it has participated have been repaid in full and the Trustee has completed the annual distribution of funds to all participating lenders.

Program Coordinator

Warsaw Community Development Corporation acts as program coordinator. As such, the WCDC's duties include the following:

• Promoting the program

• Consulting with potential applicants

• Receiving loan applications

• Assisting the applicant in developing the project work program

• Monitoring and consulting during the conception phase of the project

• Handles the day-to-day operational aspect of the program

 

Project Funding

Owners of individual projects may receive loans up to $40,000 (up to $20,000 for exterior façade renovation, up to $20,000 for second and/or third floor renovation for either residential or commercial use, and up to $20,000 for first floor renovation for commercial or retail use – the total amount of the loan cannot exceed $40,000). The loan may be taken out for a term up to ten (10) years, and there is no prepayment penalty. The interest rate charged is 75% of New York Prime as quoted in the WallStreetJournal on the date of the commitment letter. The commitment shall be valid for 90 days. In the event the project is not complete within the 90-day commitment period, the Loan Committee may at its discretion, recommit at the same or different rate for a time deemed prudent under the circumstances.

All loans with a maturity of no longer than five (5) years will be repriced at the end of the first five-year period at 75% of the then current National Prime Rate. Should any participant contribute funds to the program for which no interest return is requested, such funds will become a part of the loan pool and will serve to lower the rate charged to borrowers.

If the borrower's WCDC membership goes unpaid for 60 days or more during the life of the loan, the interest rate of the loan will be set at a default rate of NY Prime + 2.00% until the borrower's membership is paid.
 

Project Initiation

Once each loan project is approved, the Trustee will withdraw funds from the participating lenders’ interest bearing accounts, held at the Trustee’s institution, for the lender’s proportionate share of the loan proceeds. A representative from the WCDC (usually the Board President) must sign written authorization before loan funds are distributed. The method of distribution is up to the Trustee, but typically loan monies are disbursed only as work progresses.

 

Applications

Individuals may apply for the Low Interest Revolving Loan through the WCDC. Applications are made on standard forms approved by all lending participants. The completed application is then forwarded to the Loan Committee for evaluation. The Loan Committee contains one representative from each lending participant and a representative of the WCDC Board of Directors. After review, the Loan Committee approves or denies the application based on the applicant’s financial background. * Review of the loan application should be completed within 30 days from the date of receipt, unless there is a request for additional information.

   

*The financial review by the Loan Committee takes place after a review of project merit by the WCDC Design Committee.The Design committee looks at project drawings, cost estimates, and plan of work. The Design Committee verifies that proposed changes fall within the Federal Department of Interior Guidelines, if the request is for exterior façade renovation. The Design Committee does not review the financial portion of the application.    

Collateral

Collateral may be asked for, if deemed prudent by the Loan Committee.

 

Work Program

The work program describes the project scope, including detail of design, materials, and methods of construction. The applicant and program coordinator will work together to develop a final work program that is acceptable to all participants. The work program should consider overall structural requirements. Exterior improvements must conform to the U.S. Department of Interior's Guidelines for the Rehabilitation of Historic Buildings. Likewise, all work shall comply with applicable building and zoning codes. Once approved, the work program guides the work and establishes the basis for evaluation and payment.

Project Development

The program coordinator may provide technical assistance and evaluation to the owner during the construction phase of the project. Changes in work, due to unforeseen circumstances, must conform to the Department of Interior Guidelines. Before proceeding, the property owner must secure approval of changes in the work program from the program coordinator. The program coordinator will make periodic visits during construction to inspect the work. 

Project completion

A project is considered complete upon notification from the program coordinator. Provisions of the work program, including changes, must be completely executed, in order to be considered a finished project. A final draw of funds may occur, once the program coordinator closes out the project.   

Information

Information about the Warsaw Community Development Corporation Low Interest Revolving Loan Fund can be obtained by contacting Warsaw Community Development Corporation