Community loans policy

Contents | Introduction | Framework for the policy | Implementation | Loans pool | Monitoring and review | Appendix

Appendix 1: Definition of a community group

Appendix 2: Monitoring the policy

The following information will be collected annually as part of routine monitoring:

Appendix 3: Implementing the policy

Guidelines for community loans implementation

These guidelines have been developed to provide a protocol for the management of the Community Loans Policy 2005.

Applicant eligibility criteria and guidelines

Eligibility criteria

• applicants must be non-profit making community, arts, sport, cultural or recreational organisations
• applicants must be legally constituted, such as an incorporated society or charitable trust
• applications must be for facility development or enhancement
• applications for large loans must be for facilities of citywide, regional or national significance or for capital works proposed by a legally constituted Mainstreet Association (the works having been previously approved by council) within the area of that Mainstreet.
• facility must be in Auckland City
• debt servicing and operating expenditure is excluded
• projects for core or primary health, education and welfare facilities or places of worship are excluded
• organisations applying must be willing to enter into a fixed price contract for the construction or redevelopment of the facility

Prioritisation criteria

Each application will be assessed as to the extent to which it meets or contributes to the following criteria:

Community benefit criteria

1. Strategic need as identified through Council's Strategic Plan and council's or others strategies for community, sport, recreation or arts and cultural facilities.
2. Other strategies of council eg; events, employment, tourism, transport, liveable communities and how it fits the requirements of the District Plan
3. Growth in participation (active, spectator or audience)
4. Catering for priority targeted communities of interest or targeted activities
5. Capacity building of the community
6. Relationship to proven regional and local need and proven gaps in provision
7. Community, agency, association support for the project and community involvement in the project
8. Acceptable community access
9. Optimising capacity
10. Impact on community is minimised (if negative) and maximised (if positive)
11. Demographic and social profile of who benefits aligns with an identified need or priority target group, those who do not benefit are also clearly identified

Project development criteria

1. How advanced planning and funding of the project is
2. The appropriateness of the scale of the project and the financial input sought
3. The willingness of the potential partner to develop and share in a shared vision for the facility
4. Track record that demonstrates ability to complete such a proposal and operate a facility as proposed

Financial criteria

1. Projected cashflows support the ability to meet loan repayments
2. Ongoing costs can be met
3. Potential for other funding
4. Financial track record of organisation applying is sound
5. Financial resourcing to complete project including level of financial contribution applicant is making to the project
6. Where a project is seeking a contribution of over 50 per cent of the project cost from council, the cost benefit analysis against alternatives is favourable
7. Economic impact of project
8. The applicants own resources and its access to other sources of funding/resources
9. Suitable security is offered to secure the loan.
10. Concessions sought on standard loan agreement

Those organisations that generate significant revenues; have a large business operation and/or easier ability to generate sponsorship, and obtain loan monies elsewhere, will receive lower priority.

Terms and conditions

• the interest rate for small and medium loans is calculated at 50 per cent of Auckland City's cost of capital (currently 4.5 per cent).
• the interest rate and term for large loans will be determined based on the amount of private benefit derived from the project in comparison to public benefit and the level of commercial activity involved in the project, ie: the higher the private benefit/good and commercial activity the higher the interest rate. The lowest interest rate will not be less than the council's current community loan rate for small and medium loans (currently this is 4.5 per cent)
• the term of the loan for five years for small loans, 10 years for medium loans and a maximum of 20 years for large loans
• loans will be limited to amounts of more than $15,000 and less than $1 million
• requests for less than $15,000 will be referred to funding agencies for grant applications
• requests for more than $1 million will be identified as specific one-off projects and addressed through annual plan processes
• loans will only be available to organisations which enter into fixed priced contracts for construction or redevelopment of the proposed facility and evidence of such contracts will be required
• where the applicant is on council land, the loan will be secured via variation of the default under the terms of lease
• where the applicant is not on council land, security to be in the form of first mortgage over the property or acceptable property or assets or other securities as appropriate. This will require the use of council solicitors
• security for loans to Mainstreet Associations will be by way of council retaining the right/ability to levy rates to recover the full amount of the loan even if the Mainstreet Association ceased to exist.
• standard commercial terms and conditions between borrowers and lenders will apply to these loans (except for the concessions relating to such matters as interest rates as acknowledged in the policy and agreed between the parties). In the case of loans to Mainstreet Associations, principal and interest will be deducted from the Mainstreet Grant collected by council prior to the balance of the annual Grant being paid to the Association.
• the applicant will incur all legal costs associated with the drawing up of all legal agreements and the disbursement of the loan. These amounts will either be deducted from the loan proceeds before funds are released or proof of payment of council solicitors will be required prior to the funds being released.
• all resource consent costs will not be included in any loan amount
• all planning permission and resource and other consents for the project must be in place before the loan can be uplifted
• a minimum level of community access will be included as part of the agreement
• promotion of the facility for community usage will be included as part of the agreement
• appropriate acknowledgment of council's contribution to the facility on publicity material and signs will be included as part of the agreement
• loan funds for facility development, or where re-financing another loan is concerned, will be paid out either upon receipt of proof of the assigned contractors first progress payment or upon suitable documentation and authorisation from council solicitors being received verifying that all arrangements are in place. This assumes the organisation has funds in hand for the project that can be used to meet the first progress payment and has in hand or pledged all funds required to complete the project. Evidence of this will be sought prior to the release of loan funds.
• all payments will be made in accordance with council's policy for accounts payable.
• loans, which have not commenced drawdown within 12 months of the approved date, will be deemed to have expired and the organisation would need to reapply.
• all loans are subject to final terms and conditions determined by the Director Finance.

Information requirements from applicants

• Proposal outline
• Estimated cost
• Funding sources including:
  • Proposed funding mix
  • Fundraising plan
• Who will benefit
• Who supports it
• Estimated operational costs and sources of income
• Target market
• Estimated use with
  • Expected usage breakdown
  • Membership trends, audience/spectator and their profile
• Stage of planning and funding and estimated timeline
• Organisation's financial and other resources
• Governance structure and senior personnel in organisation
• Business plan including:
  • Cashflow and financial projections
• Needs Assessment and Feasibility study
• Community input into proposal
• Public access proposal
• Economic and Community Benefits and impacts
• Identified need
• Financial accounts (including budgets) for last three financial years

Process for accessing a community loan

Small and medium loans

Small and medium loans will be considered by council committees throughout the year. Each community board within whose are the development is located will be invited to provide feedback on the proposal.

Large loans

Large loan applications will be considered in an annual round.

The three stage large loans process is outlined below:

Published July 2005