Creating a downtown loan guarantee program under the purview of the economic development authority

This bill creates a downtown loan guarantee program to be administered by the economic development authority and the Iowa finance authority. The purpose of the program is to encourage downtown businesses and banks to reinvest and reopen following the COVID-19 pandemic. In order for a loan to be guaranteed under the program, numerous conditions apply, including the following: the loan finances an eligible downtown resources center community catalyst building remediation grant project or main street Iowa challenge grant within a designated district; the loan finances a rehabilitation project or acquisition or refinancing costs associated with the project; percent of the project cost is used for construction on the project or renovation; the financed project includes a housing component; the loan is used for the construction or permanent financing of a project; a federally insured financial lending institution issued the loan; the loan does not reimburse the borrower for working capital or operations; and the project meets certain design reviews. The bill requires the loan to be secured by a mortgage against the project property, prohibits the loan guarantee to be transferred, and charges the lender an annual loan guarantee fee as set forth by rule. The bill limits the amount of the loan guarantee as follows: for a loan amount of less than or equal to $500,000, the loan guarantee shall not exceed percent of the loan; for a loan amount greater than $500,000, the economic development authority may provide a maximum loan guarantee of up to $250,000. The economic development authority may guarantee the loan for up to five years, which may be extended by the authority for an additional five years. The authority may also deny a loan guarantee for any unreasonable bank loan fees or interest rate. In the event of a loss due to default, the bill requires the loan guarantee to proportionally pay the guarantee percentage of the loss to the lender.106A(1)(o).