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:
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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