(a) Art district loan account. There is hereby established an account in the designated revenues fund to be known as the art district loan account. Moneys deposited in this fund shall be used to provide long-term real estate debt financing to artists, art-related businesses, and developers of art-related spaces for the purpose of developing or redeveloping properties for art-related uses in the Original Aurora Art District.

(b) Written agreement. The art district loan program shall be operated in accordance with lending practices generally accepted as prudent for public loan programs. The terms and conditions of any loan made under the art district loan program shall be as determined by the art district loan committee and shall be set forth in a written agreement between the city and the borrower.

(c) Use of loan proceeds. The proceeds of any loan made under the art district loan program shall be used solely for the acquisition and/or renovation of real property and the purchase of furniture, fixtures, and equipment to be used by an artist or artists and/or an art-related business or businesses. Under no circumstances shall any loan proceeds be used to provide working capital.

(d) Maximum principal amount. In no event shall the total outstanding principal amount of any loan or loans made to a single artist, art-related business, or developer of an art-related space exceed $250,000.00.

(e) Interest rate. The rate of interest on any loan made under the art district loan program shall be no greater than the then current prime interest rate as reported by the Federal Reserve Bank of St. Louis and no less than four full points below said rate.

(f) Default. In the event of a default by the borrower on any of the terms of the loan agreement, the city shall have the right to assess such penalties as may be negotiated between the city and the borrower, including, but not limited to, penalty interest of no less than 15 percent.

(g) Revolving nature of account. Principal and interest payments on any loan made under the art district loan program shall be deposited in said account and, subject to the appropriation of such funds by the city council, made available for future loans.

(h) Administration. All marketing of the arts district loan program, processing of loan applications, managing of the loan portfolio, and communications with borrowers shall be under the direction of the urban renewal division of the development services department. All loans will be serviced under the direction of the City's community development office. (Ord. No. 2002-08, § 2, 2-25-2002)