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Pulaski County staff propose new applicant fee structure to shield RLF from up-front due-diligence costs
Summary
Staff recommended a revised fee model for the county's revolving loan fund after two recent applicant withdrawals left the commission absorbing third-party due-diligence invoices; proposal would charge a modest base fee plus a capped due-diligence amount and require borrower reimbursement for excess costs.
Pulaski County staff told the Community Development Commission on May 12 that changes are needed to the revolving loan fund (RLF) application fees after recent applicants withdrew while the county had already paid third-party due-diligence bills.
"By the time we had gotten the invoices both had already withdrawn their applications," the Executive Director said, describing a situation in which the county temporarily covered regional development company and attorney costs from a donation fund. He proposed a fee structure with a modest base fee (discussed as $200), a standard cap for due-diligence charges (discussed as $1,500), and reimbursement to the county for any excess costs. For smaller loans staff discussed a higher base-fee alternative (discussed as $600) because those loans do not require the regional development company's full underwriting.
Commissioners and staff said the problem arose when a loan crossed the county's $20,000 due-diligence threshold and the regional partner began a full credit memo and underwriting. If the borrower then declines or does not supply required information, the county can be left temporarily out-of-pocket for professional fees.
Sheila, who has been involved in the program overhaul, said typical timing from an EDC consideration to a commission meeting can vary and that clarifying the fee and timing process would reduce the risk of unrecouped expenses.
The commission did not take a final vote on an ordinance or fee schedule at the meeting; staff said they will bring a draft policy to the Economic Development Commission (EDC) and then to the county commissioners for formal consideration.
Next steps: staff will develop specific fee amounts and the EDC will review the recommended structure before any formal adoption by the county commission.
