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HomeMy WebLinkAbout5.a. Metropolitan Consortium of Community Developers Proposal 4 ROSEMOUNT EXECUTIVE SUMMARY CITY COUNCIL Port Authority Date: May 15, 2012 AGENDA ITEM: Metropolitan Consortium of Community AGENDA SECTION: Developers Proposal Old Business PREPARED BY: Kim Lindquist, Deputy Director AGENDA NO. 5.a. ATTACHMENTS: Proposal APPROVED BY: ohJ RECOMMENDED ACTION: Review and Provide Comment ISSUE At a recent meeting with the CDA and Community Development Directors there was a presentation from the Metropolitan Consortium of Community Developers (MCCD). This is a group that assists small business owners and entrepreneurs with financial and administrative assistance. The proposal notes three specific programs the MCCD undertakes: Emerging Small Business Program, Convening, and Public Policy. The vast amount of time at the meeting was devoted to the Emerging Small Business Program and how that program could be implemented in Dakota County. The proposal included in the packet is in response to an expressed interest by the County and County cities in attendance. The main focus is the Open to Business program which would be housed in Dakota County. The MCCD, should there be a minimum participation and funding level, would hire a full time staff person who would work exclusively in Dakota and Carver Counties. The employee would act as a business advisor to businesses in those two counties. Similar to the model the MCCD currently employs in Brooklyn Park, Minnetonka, and St. Louis Park, the staff member would be housed in a central location but would go to various city halls or public spaces to assist people on a drop -in basis. The proposal notes that they can provide: Business plan development Feasibility studies Cash flow and financing projections Marketing plans Licensing and filing requirement Development and implementation of sound financial management and tracking systems On the final page of the proposal the MCCD lists the financial proposal. They are looking for a minimum $100,000 commitment to service Dakota County. Should the whole County have access to the services they are requesting $150,000. Each community would pay a share, based upon population. The CDA has indicated they may be willing to subsidize half of each participating city's share. The Board would have to approve that expenditure. In the case of Rosemount the fee would be $10,000 or $5000 /year should the CDA provide assistance. Many questions remain so the final decision does not need to be made this evening. Funding, partnership with Carver County, and allocation of staff time all need more clarity. However, if the Port Authority is interested in the program, staff would like to convey that sentiment to the CDA. From staff's perspective, this is an opportunity at a fairly low cost to assist local businesses and entrepreneurs. In previous discussions the City has struggled with ways to help current businesses due to cost and technical expertise. This allows an agency that is not connected to the City to provide those services. The CDA group is not meeting until the 17 so I will not have any additional information for the meeting on Tuesday. Should Port Authority members have specific questions, please raise them at the meeting so we can get additional information for future decision making. RECOMMENDATION Review existing information and provide feedback. No action necessary at this time. 2 OPE MCCD is TO susiNess in your community Who is MCCD? The Metropolitan Consortium of Community Developers (MCCD) is a 49 member association committed to increasing opportunities for development of quality, community -based projects through collaborative action on public policy issues, loan fund development, public education efforts, and long -term strategic planning. Through these efforts, we have been able to demonstrate the effectiveness and efficiencies gained by a shared vision and cooperation. Our mission is to: "work collectively to build strong stable communities by leveraging resources for the development of people and places." Our goals are to: 1) increase popular, political, business, and financial support for community -based housing a nd small business development organizations; 2) create access to loan capital and technical assistance for emerging entrepreneurs; and 3) increase the effectiveness of community -based development through coordination, collaboration, and capacity building activities. MCCD's work is centered on three distinct program areas: Emerging Small Business Program, Member Convening, and Public Policy. Emerging Small BusinessProgram: Provides capital access and technical assistance for existing businesses and aspiring entrepreneurs who are unable to fully access the commercial banking system. The organization funds or participates in an average of 50 loans per year, with loan amounts of up to $100,000. Along with capital, MCCD staff provides more than 2,000 hours of direct technical assistance to entreprenuers. Technical assistance services include business plan development, loan packaging, feasibility studies, cash flow and financing projections, marketing plans, assistance with licensing and filing requirements, and development of sound financial management and tracking systems. Historically, more than 80% of MCCD's loans have been to minority borrowers. For many of our borrowers the loans provide self employment, and unique opportunities for advancement and personal enrichment as business owners that may not be available to them as employees. Open to Business is a part of the Emerging Small Business Program. Convening: MCCD acts as a convener for our members. This is accomplished through monthly meetings of our Housing Committee, Economic Development Committee, and St. Paul Task Force. Agendas for each reflect the focus of the participating members. Meetings typically involve guest presenters on topics of relevance, strategy sessions related to common concerns, or general updating and sharing among the attendees. On at least an annual basis, staff from the City of Minneapolis' Community Planning and Economic Development (CPED), City of St. Paul's Planning and Economic Development (PED), the Minnesota Housing Finance Agency (MHFA), the Family Housing Fund, and Hennepin County among others, would be invited. Public Policy: With the combined expertise of the leading community development organizations, MCCD has become a recognized and respected voice on housing, small business development, and inner city commercial development. Through the work of our standing committees, MCCD shapes an annual policy platform and legislative agenda that is formally adopted by the board of directors. These documents provide direction to staff as to items MCCD takes the lead on, those that we support others, and those that we monitor. Aside from the adopted positions, MCCD responds frequently to new program proposals, changes in policy or procedures, and funding changes at the local, state and federal levels. H D P MCCD is ro susINes�s in your community What is Open to Business? MCCD's Open to Business program brings on -site business services specialists who can expand your community development staffs expertise in such areas as start-up financing and business plan development. We can respond to requests for business assistance when those requests are beyond the range of the services normally provided by your municipal agencies. Open to Business Technical Assistance Services in Dakota County: MCCD will provide intensive one -on -one technical assistance to small City /County business owners and aspiring entrepreneurs intending to establish, purchase, or improve a business in the City /County. Technical assistance includes, but is not limited to the following: Business plan development Feasibility analysis Marketing Cash flow and other financial projection development Operational analysis City and State licensing and regulatory assistance Loan packaging, and other assistance in obtaining financing Help in obtaining competent legal advice MCCD intends to hire a full time staff person once the minimum amount of contract is secured in Dakota County. This staff member will be based in Dakota and Carver County full time. The business advisor will be available to meet clients at the various city halls of municipalities that are OTB cities or at their place of business. This staff person will be based out of donated office space either at the Dakota CDA or another facility in the area. Currently in OTB cities in Hennepin County we hold two -hour "Test Drive Your Business Idea" sessions once a month. We plan to offer this service to Dakota County municipalities. MCCD has offered technical assistance services since 2003, primarily through our staff facilitator, Rob Smolund. Rob came to MCCD from the City of Richfield Enterprise Facilitation project a Hennepin County supported initiative. In the years since, our program has added specialists in the areas of business accounting, finance, real estate development, and regulatory compliance. We now offer a team of professionals and former business owners who can provide real world advice to clients, and tailor that support to meet each client's specific needs. Depending on the needs of the client, that assistance can include business plan development, feasibility studies, cash flow and financing projections, marketing plans, licensing and filing requirements, and development and implementation of sound financial management and tracking systems. Even if the client can obtain all their financing from a bank, staff will assist them in preparing their loan request and will advocate for the client with the bank. In essence, MCCD staff members become an advisor, an advocate, and a partner for that entrepreneur to lean on. In addition, each entrepreneur can draw on the diversity of backgrounds and expertise of our team OPEN MCCD is ro BUSINESS in your community of experts, gaining the kind of support more established businesses benefit from with hired professionals and/or Boards of Directors. Open to Business Access to Capital Access to capital will be provided to qualifying businesses through MCCD's Emerging Small Business Loan Program (see Exhibit B Small Business Loan Program Guidelines below). MCCD also provides its financing in partnership with other community lenders, banks or municipalities interested in making capital available to residents and/or businesses in their community. EXHIBIT B Small Business Loan Program Guidelines Loan Amounts: Up to $25,000 for start-up businesses Larger financing packages for established businesses Designed to leverage other financing programs as well as private financing provided by the commercial banking community. Eligible Projects: Borrowers must be a "for- profit" business. Business must be complimentary to existing business community. Borrowers must have equity injection as determined by fund management. Allowable Use of Proceeds: Loan proceeds can be used for working capital, inventory, building and equipment and general business operations. Interest Rates: Loan interest rate is dependent on use, term and other factors, not to exceed 10 Loan Term Length: Loan repayment terms will generally range from three to five years, but may be substantially longer for major asset financing such as commercial property. Fees and Charges: Borrowers are responsible for paying all customary legal and other loan closing costs. OPEN MCCD is TO BUSINESS in your community Open to Business Loan Products MCCD manages a multi million dollar loan pool consisting of a mix of State, Federal, Bank and private capital sources. We are able to structure financing packages for a variety of business purposes that are flexible and designed to either enhance a business's opportunities to leverage private financing, or act as a bridge to future financing be traditional capital markets. Below are some examples of the financing packages available to Open to Business clients: Loan Packaging/Facilitation MCCD staff can assist potential borrowers with the preparation of business plans, cash flow and other financial projections and loan application materials. Our staff can assist entrepreneurs in identifying borrowing needs and accessing community lending programs that provide favorable terms and conditions for small business borrowers. We work with our clients to help them find the financing that best meets their unique needs. Micro Loans Direct loans from MCCD for a variety of business purposes, including inventory, working capital, asset and equipment purchases, and start-up costs. Typical loan terms of 3 -5 years, loan sizes up to $25,000 for retail /service businesses, or $50,000 for manufacturing businesses. This program is targeted to start-up and early stage businesses that cannot secure financing from traditional commercial lenders. Four Percent Loan Program MCCD loans in partnership with private lenders for physical improvements and hard asset/equipment purchases. MCCD can provide financing of up to $40,000 at an interest rate of 4% provided that its funds are matched by an equal or greater amount of bank funds. The 4% rate is available for bank partnership loans provided that the term on the MCCD loan does not exceed five years. Real Estate Participation Loans MCCD loans in partnership with private lenders to provide gap financing for real estate acquisition projects including projects financed through the SBA 504 program. MCCD matches the bank's rate. MCCD also matches the bank's term provided that the term does not exceed 10 years. Real Estate Acquisition Financing MCCD, in partnership with private lenders, provides permanent term financing for commercial real estate acquisition up to 90% of the property's appraised value. MCCD OPEN MCCD is TO BUSINESS in your community will provide up to 40% of the appraised value, with the bank providing 50% and holding first secured position. MCCD will match the bank's rate with terms up to 10 years (though amortizations may be longer). Transactional Financing MCCD provides short term loans for businesses whose cash flow cycle inhibits them from making regular monthly loan payments. Transactional loans are often used by construction contractors who have received or about to receive a construction contract with a community agency. MCCD can provide up front financing to cover the cost of labor and material associated with the contract. When the work on the contract is completed, the contracting agency issues a two -party check to cover the completed work, payable to MCCD and to the contractor. Larger loans are also available for businesses with performance bonds and escrow payment arrangements. Loan Origination and Servicing MCCD seeks to integrate its financing products with other available resources in its service areas. To facilitate that integration, MCCD may be able to originate, package, underwrite and potentially service loan funds or programs offered by the County, individual Cities, or other Development authorities. Partnerships in other Open to Business communities include management of community facade /fix -up grants, packaging of City controlled loan products, and full underwriting and servicing of Commercial loans with City funds "purchasing" a portion of the total financing. Where appropriate, MCCD and the municipal lending authority shall enact a separate agreement to govern the rights and duties of each party to such a partnership. ___{_m____ OPEN MCCD is TO BUSINESS in your community Dakota County Fees: Based on MCCD's current work load and resources, we would have to have a minimum of $100,000 in annual fees to begin work in Dakota County. The individual city pricing is listed below. To avoid confusion on what city is an Open to Business city, we would recommend covering all of Dakota County for $150,000 annually. W hole population 1 employment I county OTB (2010) (2011) Annual Fee Dakota County 400,000 170,582 $150,000.00 1 sort by population; largest to smallest j I Open To population employment Business (2010) i (2011) `Annual Fee I j Eagan _._..i___ _____._64,206 49,032 15,00000 [Burnsville 60,306 L 31,656 15,000.00 !Lakeville t 55,954 1 14,522 1 15000.00 Apple Valley 49,084 I 14,350 15,000.00 j IGH Hastings 22 88 8,3031 12,500 00 i g 10,00000 Rosemount 21,874 6,980 i 10,000.00 Farmington 21,086 1 4,461 10,00000 i_.._ rSSP 20,160 8,112 10,000.00 WSP 19,540 i 7,683 i 10,000.00 'LMH 11,071 1 11,528 7,50000 City Total 379,333 i 166,274 $130,00000 Marketing Open to Business: Inform all city staff of OTB program, especially staff that has contact with prospective entrepreneurs and existing businesses. Have OTB staff make short presentation at city staff meetings Feature OTB on website, especially advertise monthly walk in counseling sessions Include article in city newsletter Notices in utility bills Promote program through local chamber of commerce Coordinate meetings with key community bankers and OTB staff Press releases to community newspapers on businesses helped by OTB