Chapter 2.39 — CITY MANAGER--COMMERCIAL LOANS

Sections: 2.39.010 Purpose. 2.39.020 Definitions. 2.39.030 Scope. 2.39.040 City Manager’s authority to act--Duty to report to City Council.

The City Council finds as follows:

A. The City has a vital interest in ensuring the repayment of its commercial loans. These loan repayments are loaned to other small businesses and commercial property owners located in the target area. The purpose of these commercial loans is to aid in the expansion of local small businesses and generate employment opportunities for Berkeley residents.

B. City policies governing default of City commercial loans should to the maximum extent feasible, ensure that the borrower is given every opportunity to repay the loan without resorting to foreclosure and liquidation procedures.

C. The enactment of separate ordinances to authorize the City Manager to take specific actions in each instance of loan default would cause undue delay and thereby impair the City Manager’s ability to protect the City’s financial interests.

D. In enacting this chapter, the City is acting pursuant to the laws contained in the Uniform Commercial Codes and general laws of the state of California, which provide remedies to creditors with security interests in commercial assets, real and personal property. (Ord. 5635-NS § 1, 1985)

A. "Advancement" means monies paid by the City to a senior creditor to cure any default by the borrower of a commercial loan to that creditor, including amounts in excess of ten thousand dollars.

B. "Foreclosure" means proceedings to sell real property (commercial and/or residential) which secures repayment of a debt.

C. "Commercial loan" means any loan extended by the City to a business. Said loan being evidenced by a promissory note and secured by a deed of trust, UCC-1 filing and other applicable security instruments.

D. "Senior creditor" means any other creditor who is entitled by law to be repaid, prior to the City, out of the proceeds of a sale of property and/or other assets which are security for a commercial loan.

E. "Liquidation of other assets" means the sale of a business asset, excluding real property (see "Foreclosure") used to secure a City loan.

F. "Personal assets" means those assets owned by a borrower not related to the business but pledged as security for a City commercial loan. (Ord. 5635-NS § 2, 1985)

This Chapter shall apply to all commercial loans made by the City of Berkeley. (Ord. 5635-NS § 3, 1985)

A. Whenever a borrower of a commercial loan is in default on a debt to a senior creditor and the repayment of the loan is in jeopardy, the City Manager is hereby authorized to take all actions necessary to protect the City’s financial interests including but not limited to making advancement to senior creditors, foreclosures, bidding for and acquiring the secured property and expending sums in excess of ten thousand dollars.

B. Whenever a borrower of a commercial loan is in default on the debt to the City, the City Manager is hereby authorized to proceed with foreclosure and/or liquidation of assets pledged. Such proceedings are to be taken only after all efforts to cure the default have failed. The City Manager is also authorized to take all other action to protect the City’s financial interests including, but not limited to acquiring secured property and/or assets and expending amounts in excess of ten thousand dollars.

C. The City Manager is authorized to rent property and/or other assets acquired pursuant to this chapter on a month-to-month basis pending its ultimate disposition by the council.

D. A report from the City Manager setting forth the basis of any actions taken pursuant to this chapter, the amounts expended, and the sources of funds used shall be transmitted to the council within ten days after taking such actions. (Ord. 5635-NS § 4, 1985)