Explanation
BACKGROUND: The Economic Development Division has had a small business loan program since the early 1980's. The program includes the Business Development Fund Loan (BDF), the Working Capital Loan (WC), the Neighborhood Commercial Revitalization (NCR) Loan Fund and the Urban Site Acquisition Loan (USAL). This loan program has been funded by both Community Development Block Grant (CDBG) and Urban Development Action Grant (UDAG) funds and $3,422,260 of Capital South revenue monies authorized under ordinances 2494-2000 and 1173-2001. Over 341 loans have been closed with small businesses located in the City of Columbus, totaling over $34,500,000 and creating over 900 jobs. Since its inception the Economic Development Division has not written off uncollectible loans each year. Now, some 27 plus years later, eighty-three (83) uncollectible loans totaling $6,936,007.66 plus accrued interest needs to be written off the City books. This averages out to 3 uncollectible loans per year. A complete list of the uncollectible loans is attached as Exhibit 1.
In 2004 the City of Columbus contracted with Community Capital Development Corporation (CCDC) to under-write, service and monitor the economic development loan programs. The City began to work with the CCDC to market the loans as part of a unified, one-stop, financing mechanism for businesses. CCDC has successfully closed over 30 City of Columbus loans since 2004 creating over 90 jobs. None of the eighty-three (83) uncollectible loans are attributed to loans under-written by CCDC.
This legislation authorizes the City Auditor to write off, as uncollectible, eighty-three (83) loans and to release any mortgages associated with these uncollectible loans.
Emergency action is requested to allow the loans to be written off the City books by the end of 2009.
Title
To authorize and direct the City Auditor to write off, as uncollectible, 83 Economic Development loans due the City of Columbus in the amount of $6,936,007.66 plus accrued interest; to authorize the Director of the Department of Development to release any mortgages associated with these uncollectible loans. ; and to declare an emergency.
Body
WHEREAS, the Economic Development Division has had a small business loan program since the early 1980's; and
WHEREAS, over 341 loans have been closed with small businesses located in the City of Columbus, totaling over $34,500,000; and
WHEREAS, uncollectible loans are typically written off the books yearly; and
WHEREAS, since the inception of the loan program the Economic Development Division has not written off any uncollectible loans; and
WHEREAS, eighty-three (83) uncollectible loans totaling $6,936,007.66 plus accrued interest needs to be written off the City books; and
WHRERAS, the eighty-three (83) uncollectible loans averages out to three uncollectible loan per year for the past 27 years; and
WHEREAS, the City Attorney has advised that these debts may be written off as uncollectible; and
WHEREAS, it is necessary to provide the City Auditor's Office with the authority to write off this debt as uncollectible; Now, Therefore and
WHEREAS, an emergency exists in the usual daily operation of the Department of Development, in that it is immediately necessary to authorize the City Auditor to write off uncollectible loans to allow the loans to be written off the City books by the end of 2009, thereby preserving the public health, peace, property, safety and welfare; Now, Therefore,
BE IT ORDAINED BY THE COUNCIL OF THE CITY OF COLUMBUS:
Section 1. That the City Auditor be, and hereby is, authorized and directed to write off as uncollectible eighty-three (83) Economic Development loans totaling $6,936,007.66 plus accrued interest as listed in Exhibit 1 as being in the best interest of the City.
Section 2. That the Director of the Department of Development be and is hereby authorized to release any mortgages associated with these eighty-three (83) uncollectible loans.
Section 3. That for the reason stated in the preamble hereto, which is hereby made a part hereof, this ordinance is hereby declared to be an emergency measure and shall take effect and be in force from and after its passage and approval by the Mayor, or ten days after passage if the Mayor neither approves nor vetoes the same That this ordinance shall take effect and be in force from and after the earliest period allowed by law.