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Foley council approves commercial rehab forgivable loan program using Small Cities CDBG funds
Summary
City staff presented and the council approved a forgivable, 0% commercial rehab loan program backed by roughly $88,480 in Small Cities Development Block Grant program income; loans up to $40,000 will be forgivable upon satisfactory completion and are subject to federal Davis-Bacon and environmental-review requirements.
The Foley City Council on April 7 approved a commercial rehabilitation forgivable loan program that will use roughly $88,480 in Small Cities Development Block Grant program income to help downtown businesses with exterior and interior improvements.
Amanda Outhout, representing the city's BEP, explained the program and eligibility criteria. The forgivable loan would be structured as up to $40,000 per eligible commercial applicant, with a program contribution cap and required owner contribution of 20 percent (the program covers up to 80 percent). “This commercial rehab forgivable loan program is to provide forgivable no interest loans of up to $40,000 to assist eligible small commercial businesses,” Outhout said. Eligible uses include exterior building improvements, ADA and code upgrades, roofing, masonry, sprinkler systems and HVAC replacement; ineligible uses include businesses deriving income primarily from passive investments, gambling activities, adult-oriented businesses and corporate chains.
Because the dollars are program income generated through the federal Small Cities CDBG program, federal requirements apply. Amanda Outhout told council that any project with total cost above $2,000 is subject to Davis-Bacon prevailing-wage rules and an environmental review. She noted the EDA recommended approval and would vet applications and forward recommendations to council for final award. Council members asked whether prevailing-wage requirements would undercut the program’s usefulness in rural contexts; staff said higher wages can add about 25–30 percent to project cost in the Central Minnesota region but that many eligible projects (for example, HVAC upgrades) are often performed by contractors already paying elevated wages and could still benefit from the program.
The council moved, seconded and approved the program by voice vote. Staff said the program will be posted on the city website, with an anticipated application period (the EDA suggested a one-month window to advertise and solicit applications). Because funds are limited, staff emphasized a first-come, first-served approach.
Next steps: staff will publish program guidelines and application materials, accept and vet applications through the EDA, and return recommendations to council for approval of individual awards. The program is a revolving forgivable-loan model; once funds are disbursed and repaid per the policy, they will be available for future applicants.
