San Francisco County Municipal Code Art. III Loan Requirements

Sec. 50.20. Applicant's Plan for Facilities Maintenance and Capital Improvements. Sec. 50.21. Eligibility for Loans. Sec. 50.22. Maximum Loan Amount; Factors in Determining Terms and Conditions. Sec. 50.23. Loan Fees and Interest Rates; Deferrals and Waivers. Sec. 50.24. Security for Loans. Sec. 50.25. Insurance. Sec. 50.26. Transfer and Assignment of Loans.

Each loan applicant shall submit a proposed plan for facilities maintenance and capital improvements or acquisition as part of the loan application process. The proposed plan shall include provisions designed to correct all code violations and incipient code violations of applicable City and State fire, building, earthquake and other safety codes, and any other provisions which the Director in his or her discretion may require. In consultation with the Department of Public Works, the Fire Department and other relevant City and County agencies, the Director shall review the proposed plan to ensure that it meets all applicable code requirements for the subject property. (Added by Ord. 69-84, App. 2/15/84)

Each arts organization working in a facility in San Francisco which has been or is subject to being cited for code violations or incipient code violations or that intends to acquire or renovate a facility in San Francisco shall be eligible for a loan under this Chapter. Loans under this Chapter shall be available only to arts organizations with annual budgets of less than $2,500,000, and only for the repair and maintenance or acquisition of facilities containing 50 to 600 seats. Each arts organization shall apply for a loan in compliance with all applicable rules and regulations as promulgated by the Director; shall demonstrate to the satisfaction of the Director the ability to repay such a loan, and shall meet all applicable requirements as set forth in this Chapter. Priority for loans shall be given to arts organizations seeking funds to correct life safety code violations in the facility where they are presently working or acquisitions necessitated by life safety code defects and to arts organizations that have demonstrated compliance with repayment obligations on prior loans from the City or other lending institutions. It is the intent of the Board of Supervisors that the maximum degree of cultural and ethnic diversity be achieved among loan recipients, to insure that minority, disabled, lesbian/gay and other arts organizations may share in the benefits of this program. In administering this loan program, the Director shall give priority to this intent and shall insure that sufficient funds are available to achieve this purpose. (Added by Ord. 69-84, App. 2/15/84; amended by Ord. 160-91, App. 4/25/91; Ord. 114-06, File No. 051519, App. 6/1/2006)

The maximum amount of a loan under this Chapter shall be $200,000. The Director shall determine the terms and conditions of each loan, based upon the following factors: (a) Whether the arts organization owns the subject property or holds a longterm lease the life of which exceeds the anticipated repayment period; (b) The size, age, value and condition of the subject property; (c) The nature and extent of all Code and incipient Code violations; (d) The type of security to be given for the loan; (e) The verifiable financial soundness of the arts organization and its ability to complete the project for which the loan application is made; (f) The degree to which an arts organization can demonstrate community interest in and support for its artistic programs; and (g) Any other factors that the Director shall, by rule and regulation, establish. (Added by Ord. 69-84, App. 2/15/84; amended by Ord. 160-91, App. 4/25/91; Ord. 280-99, File No. 991737, App. 10/29/99)

A one percent loan fee on the principal of the loan shall be levied for all loans made under this Chapter. An interest rate of three percent simple interest shall also be levied by the Director. In individual cases of documented hardship, the Director may either waive payment of the loan fee or defer it until the termination of the loan. The Director shall promulgate rules and regulations which shall be applied in making determinations of such waivers and deferrals. (Added by Ord. 69-84, App. 2/15/84)

The owner of the subject property shall agree in writing to all alterations to the property to be financed by the loan as a prerequisite to granting a loan to any arts organization which is a tenant in the subject property. A copy of the arts organization's lease shall also be filed with the Director. Every loan made under this Chapter shall be fully secured. The Director shall evaluate the types of security offered by each loan applicant and shall give preference to those types and amounts of security that in his or her opinion will provide the greatest protection for the City's funds. Further, the Director shall determine that the liquidation value of any security equals or exceeds the full value of the loan and the expected costs of proceeding on such security and obtaining the proceeds of any collateral. Those types of security shall include, but are not limited to: (a) A deed of trust on the subject property, naming the City and County as beneficiary; (b) The guarantee of the owner of the subject property, in cases where the arts organization is the tenant of the property to be improved; (c) The independent, joint and several, collateral guarantee of the Board of Directors of an arts organization; (d) A chattel mortgage or financing statement on equipment or other personal property owned by the arts organization. (Added by Ord. 69-84, App. 2/15/84; amended by Ord. 160-91, App. 4/25/91)

All loans made under this Chapter shall provide that the loan applicant shall maintain, throughout the term of the loan, fire and lightning insurance with an extended coverage endorsement and a vandalism and malicious mischief endorsement. Such insurance shall be in an amount equal to 100 percent of the replacement cost of the improvements or other work to be financed by the proceeds of the loan. If a loss occurs which results in the total destruction of the subject structure, the insurance policy shall provide payment to the City in the amount of the then outstanding loan balance. The Director shall promulgate regulations, in consultation with the Risk Manager, to determine the circumstances in which any additional insurance requirements may be imposed. (Added by Ord. 69-84, App. 2/15/84)

(a) The unpaid amount of any loan shall be due and payable upon the occurrence of any of the following events: (1) Sale or transfer of ownership of the property, if the arts organization is the owner of the subject property. (2) The vacation of the property by the arts organization, if the organization is the tenant of the subject property. (3) Cessation of activities by the borrower as a nonprofit performing arts organization, whether or not the property is transferred or vacated. (4) Cessation of use of the property as a performing arts facility.

(b) Assignment of the unpaid amount of such a loan to a purchaser or transferee may be permitted where the Director determines that the purchaser or transferee is an arts organization which qualifies for a loan under current loan eligibility standards. The Director shall promulgate rules and regulations which shall be applied in making the determinations required under this subsection. (Added by Ord. 69-84, App. 2/15/84; amended by Ord. 160-91, App. 4/25/91)