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2151-2. Fund Structure and Activities.
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(a) Investments in the community will be made in three categories:

(1) Revolving Loan Fund.

(A) Investments in businesses and non-profit organizations will be made through the Revolving Loan Fund administered by qualified financial institutions working under Board of Supervisor approved contracts. (Ord. 2289, § 1, 12/17/2002)

(B) Potential financing investments include debt, near-equity, and equity financing to businesses and non-profit organizations. (Ord. 2289, § 1, 12/17/2002)

(C) Financing will provide capital to a wide range of businesses to fill gaps in the market for available financing, while still maintaining good banking practices. (Ord. 2289, § 1, 12/17/2002)

(2) Community Investment Fund.

(A) The Community Investment Fund is a grant and loan program intended for community endowments, revolving loan programs and infrastructure projects that will result in permanent, tangible benefits to the community. Eligible endowments and revolving loan fund projects must demonstrate the ability to operate sustainable programs with the funds provided from the Community Investment Fund. (Ord. 2289, § 1, 12/17/2002)

(B) The Fund is administered by the Headwaters Fund Board, with the Board of Supervisors having final authority. (Ord. 2289, § 1, 12/17/2002)

(C) Government jurisdictions and non-profit organizations are eligible for funds. (Ord. 2289, § 1, 12/17/2002)

(D) Endowments and revolving loan fund projects must obtain a minimum of 50% of the funding required from other sources. Infrastructure projects must obtain a minimum of 75% of outside funding and demonstrate the value of the project to the growth of base industry clusters. (Ord. 2289, § 1, 12/17/2002)

(3) Grant Fund.

(A) The Grant Fund provides grants for community projects. Non-profit organizations and government jurisdictions are eligible to apply for funding. (Ord. 2289, § 1, 12/17/2002)

(B) The Grant Fund is administered by the Headwaters Fund Board, with the Board of Supervisors having final authority. (Ord. 2289, § 1, 12/17/2002)

(C) Government jurisdictions and non-profit organizations are eligible to apply for funds. (Ord. 2289, § 1, 12/17/2002)

(b) Headwaters Liquidity Fund.

(1) The Humboldt County Treasurer’s Investment Pool acts as bank for the funds that are not committed to financing investments or grants in the Revolving Loan Fund, Community Investment Fund, and Grant Fund. Funds in this “Headwaters Liquidity Fund” are invested by the Treasurer/Tax Collector for safety, liquidity, and yield. (Ord. 2289, § 1, 12/17/2002)

(c) Distinction between Headwaters Funds and County Funds.

(1) Timber Yield Tax Payments. As stipulated by the Board of Supervisors, a one-time lump sum of $4,013,243 will be deducted from the Headwaters Fund and deposited in a separate Treasurer/Tax Collector administered interest bearing trust account entitled “Headwaters Sale Timber Yield Tax Loss.” This lump sum is based on an estimate of the reduction of Timber Yield Tax Payments to the County General Fund resulting from the sale and preservation of the Headwaters Forest. The lump sum equates to an annual series of payments in the amount of $308,711 per year for a 13 year period. These funds are unrestricted and may be used for general purpose County expenditures at the discretion of the Board of Supervisors. (Ord. 2289, § 1, 12/17/2002)

(2) County Economic Development Division Payments. As stipulated by the Board of Supervisors, a one-time lump sum of $1,800,000 will be deducted from the Headwaters Fund and deposited in a separate Treasurer/Tax Collector administered interest bearing trust account entitled “Headwaters Sale Economic Division Administrative Fund.” This lump sum is equivalent to an estimate of the annual administrative costs required by the County’s economic development program. The lump sum equates to an annual series of payments in the amount of $90,000 per year for a 20 year period. These funds are restricted to the County’s economic development program. The Board of Supervisors approves expenditures from this fund through standard County budgeting procedures. (Ord. 2289, § 1, 12/17/2002)

(3) Other than the two preceding exceptions, Headwaters Funds are segregated from the General Fund and budget of the County. The funds are irrevocably committed to the Headwaters Fund and cannot be used for financing on-going government operations. The funds are considered “un-available” to the County for general purpose spending or working capital, even during times of fiscal emergencies. (Ord. 2289, § 1, 12/17/2002)

(d) Variances to guidelines for the Revolving Loan Fund, Community Investment Fund, and Grant Fund can be granted for specific projects under select circumstances where it can be shown that the variance will further the ultimate goals of the Fund. To qualify for a funding criteria variance, a project must provide extraordinary benefits in line with the appropriate ranking criteria. Funding variance applications must fit under the “Extraordinary Project Criteria” in the Community Investment Fund manual and shall be approved by the Board of Supervisors by a four-fifths super-majority vote. However, variances cannot include any use of Headwaters Fund monies for general County purposes. (Ord. 2289, § 1, 12/17/2002)

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