HomeMy WebLinkAbout5.b. MCCD Proposal 4 ROSEIVIcUI\TTr EXECUTIVE SUMMARY
PORT AUTHORITY
Port Authority Date: July 17, 2012
AGENDA ITEM: Metropolitan Consortium of Community AGENDA SECTION:
Developers Proposal Old Business
PREPARED BY: Kim Lindquist, Deputy Director AGENDA NO. 5.b.
ATTACHMENTS: Revised Proposal APPROVED BY:
D4)
RECOMMENDED ACTION: Review and Provide Comment.
ISSUE
On May 15, 2012 Staff brought a proposal from the Metropolitan Consortium of Community
Developers (MCCD regarding a business development assistance program. At that time, the Port
Authority expressed some reservations about the cost allocation and requested additional information
about the programs and people served. Some of this information is provided in the Q &A included in
the packet. Please also note that it is intended that the program will be evaluated annually and MCCD
is not looking for a longer term commitment from Dakota County.
Administrator Johnson indicated that the program was also discussed at a recent City Administrators
meeting. He indicated that most of the cities were supportive of the program and intended to budget
funds for 2013 to allow participation. Under the current draft budget, Rosemount would have funds
to participate at the $5,000 level (CDA picking up 1/2 of the cost allocation). The County has approved
the 2013 budget which would provide for the '/z cost match.
A representative from MCCD is willing to attend a future Port Authority meeting if the Commission
desire. Please let staff know and we will make further arrangements.
RECOMMENDATION
Discussion Item.
MCCD Open To Business Proposal
Follow Up Questions
1. Past Success. Business start-up success in Hennepin County?
The following (and attached report) is a response from Lee Hall, MCCD
CFO:
Getting back to you on the program results, I am attaching our 2011 loan
report. This report outlines the financing we provided last year, broken out
by city. As we've been developing the program, we have done financing in
cities that are not Open to Business cites, so there's quite a range of locals
listed. This report also lists total number of clients and hours for technical
assistance. While it does not break those numbers out by city, the vast
majority of our work- both assistance and financing- was in Hennepin
county, so taking the reported results as a whole I think gives a fair picture
of the kind of impact the program can have in the county.
Open to Business as a brand /approach really began in 2011. Specifically,
we operated programs in Brooklyn Park, and Minnetonka from the
beginning of the year, and St Louis Park and North St Paul from 2nd
quarter on. We saw the following clients in each of those cities:
Brooklyn Park- 75 clients, 5 direct loans, $87,5000 in financing
Minnetonka- 44 clients, no direct loans
St Louis Park (3 quarters)- 15 clients, no direct loans, $50k in facilitated
private financing
North St Paul (3 quarters)- 13 clients, 2 direct loans, $110k in financing
Customer counts and financing vary pretty widely from city to city, so it's
hard to say what's "typical Any new program will take some time to
promote and build momentum. Those 1st year programs all renewed, and
they are busier now than the program cities that began in 2012. For
instance; in the first 5 months this year we've spent 88 hours on St Louis
Park clients, and 108.50 on Brooklyn Park clients vs. 30 -40 hours in each of
the new programs cities.
In our experience, how much activity an individual city gets will depend
largely on how the city markets the program. Population size certainly
plays a role, but you can see from the numbers above that the city of North
St Paul generated similar clients and more financing requests than St Louis
Park with approximately 1/3 the total population- largely as a result of the
city staff's efforts to make its business community aware of the program.
2. Inclusion of Carver County. Question the link between Carver and Dakota and
whether it is the right fit. Is the fee /staffing demand insufficient to serve only
Dakota? If another county is included in the service area for an expanded
program, is there more synergy /geographic consistency with Hennepin? Where
would the staff person be located when serving Carver county
residents /businesses /potential businesses?
MCCD confirmed that there is no link between Carver and Dakota. This was
an internal issue that shouldn't have been reflected in our proposal. MCCD
confirmed that Dakota County will receive the services of an F.T.E. While
the staff person located in Dakota County might provide services to Carver
County, MCCD's other staff will be available to ensure FTE services to
Dakota County.
3. Need better understanding of service allocation among DC cities.
a. Identify an amount of time (e.g. '/z day every 2 weeks) staff is available to
hold office hours at the individual cities?
b. Estimate for what each city can expect for their fee. Number of business
visits, number of loans
MCCD established minimum and maximum service hours when they
started the Open to Business program in Brooklyn Center. They found it to
be an inefficient and less effective method than simply responding to
demand. They are not establishing minimum levels of service for each city,
but are also not establishing caps. They view this service as a two -way
street, expecting cities to promote the services widely. The goal is to
ensure that everyone has the opportunity to access services and that
businesses and potential startups countywide have the help and support
they need.
4. Is MCCD asking for a minimum time commitment (e.g. 1 year? 2 years
The initial contract will be for a 1 year period. MCCD is not asking for
commitment beyond this.
5. Fee for small cities and townships. Several comments that $20,000 for rural
areas too high.
MCCD will reduce this to $10,000
6. Long term commitment. Question for MCCD: If, after one year, some cities
want to continue program and others do not. How could MCCD restructure its
services to continue to provide services to cities with longer term commitment to
the program?
All cities in Hennepin County re- committed for a second year, as did North
St. Paul. MCCD is confident that the service will demonstrate value and
that there will be sufficient demand to continue a program in Dakota
County. In the event that some or several cities choose to not renew the
service, MCCD will make every possible effort to continue services in
some form to cities that want to participate in future years. That said,
depending on the participating city(ies), there may be geographical
challenges that would require revising the service model.
7. Coordination with MN Community Capital Fund
Absolutely. Will co- promote and/or coordinate with any other business
lending group requested by the cities.
MCCD at Meetings:
Lakeville: June 26, 4:30 confirmed
Hastings HEDRA July 12; 6:00 p.m.
Others?
2011 Open to Business Lending Report
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x 2011 Highlights
MCCD helped 86
entrepreneurs secure capital
a4 to start, expand or improve
8 1"
their businesses.
f ,tir` t These 86 entrepreneurs were
located in 20 communities i. throughout the metro area.
MCCD support enabled our
*.Lb, f F. B entrepreneurs to access nearly
ii NiCes LLC $5 million in capital for their
inneapolis
F business projects.
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MCCD staff provided valuable
technical assistance to 400
About MCCD's Open to Business Loan Program entrepreneurs.
Small businesses provide the economic governments. Through our Open to
lifeblood for their communities by Business partnerships, we help local Twenty seven metro area
generating jobs, filling empty governments create their own business residents received credit
storefronts, providing needed goods building loans.
support programs targeted at residents
and services, and creating wealth. and entrepreneurs in their communities.
Credit building borrowers who
MCCD has always been "Open to At the end of 2011, six suburban had completed the program
Business" a term that describes our municipalities were Open to Business saw their credit scores
on -going efforts to provide business partners with another 10 scheduled to increase an average of 33
advice and financing for emerging enroll in 2012. points.
entrepreneurs in partnership with
metro -area municipal
2011 Lending Program Report
MCCD helped 86 entrepreneurs MCCD helped 30 businesses affected
secure capital to start, expand or by the May 2011 tornado in north
improve their businesses. Thirty -two of Minneapolis access business recovery
MCCD's Mission:
these entrepreneurs also received loans from the city to help with
loans from MCCD. Altogether these 86 building repairs. MCCD also helped To work collectively to
entrepreneurs created or retained 488 another 14 businesses obtain
jobs for their communities. forgivable loans to help offset some of build strong stable
their decline in sales as a result of the
light rail construction. communities by
Entrepreneurs by Ethnicity
In 2011, MCCD provided nearly
African 13% $730,000 in direct loans to leveraging resources
businesses and leveraged another
African American 33% $4.1 million in capital from other for the development
Asian 8% sources including banks, our
community lending partners, and of people and places.
Caucasian 46% owner equity.
Latino 1%
Location of Businesses that Received
Sources of Financing for Assisted
Financing Businesses
of Total Project Other
Businesses MCCD Cost* $115,000 MCCD
City Assisted Financing Other $729,902
Andover 1 7,400 Nonprofits
$604,500
Blaine 1 40,000 1,070,000
Bloomington 2 65,000 235,000 Govern't
Brooklyn Park 5 87,500 682,626 $488,951 Equity
Burnsville 2 20,000 27,500 $962.826'
Crstal 2 25,000 25,000
Elbow Lake 1 5,800
Golden Valley 1 25,000 25,000
Minneapolis 58 179,902 1,107,325 Bank
North St. Paul 2 110,000 110,000 $1,939,471
Oak Grove 1 25,000 25,000
Plymouth 2 40,000 625,000 i
Robbinsdale 1 25,000 110,000
Roseville 1 15,000 17,000 Pumphouse Creamery Corporation
Saint Paul 2 47,500 615,500 Minneapolis
St. Anthony 1 25,000 80,000 tpo+ „nh
St. Louis Park 1 50,000 �`,.�"c' rd ra+ `d "'fi.. 4 s i.
Wadena 1 7,500 f'
White Bear Lake 1 7,500
Woodbury 1 7,500 t
Total 86 $729,902 $4,840,651 fl
Source: MCCD Loan Program
*Includes MCCD Financing, Partner Financing and Owner Equity
Technical Assistance 1R'
Starting and growing a small business is not
easy. Often the technical assistance that MCCD
offers can be of more value to an entrepreneur
than financing. In 2011 our staff provided over
1,650 hours of technical assistance to 400 With the help of a loan from MCCD, Barb Zapzalka
entrepreneurs in the metropolitan area, helping was able to purchase new production equipment for
them improve their planning, marketing, and her business, Pumphouse Creamery Corporation.
financial management skills. Barb makes all- natural, handmade ice cream and
home brewed root beer at her shop at 48th and
Chicago in south Minneapolis.
R. F. Beardsley Services LLC
(pictured on page 1)
Established in 1964 under the name CLG Enterprises to manufacture and market equipment and gear used by
rodeo performers, the business was bought in 2003 by Richard Beardsley. The company has used its sewing
expertise to shift its market focus from rodeo gear to medical gear. For example, the padded vests initially
manufactured by the company to protect bull riders have been redesigned and adapted for use by individuals
suffering from cystic fibrosis. The company employs a workforce of 20 at its south Minneapolis manufacturing
plant. MCCD provided a loan for working capital.
MCCD Open to Business L end i ng Report 2011. (612) 789 -7337
Transactional Financing Program
Cash flow can be
challenging for small
contractors who have to
buy supplies and pay their
employees long before
they can bill their
customers for a
At
completed job. MCCD's
transactional financing
program provides a
44. tremendous benefit to
P t contractors working with
Salem, LLC community programs and
.::4.,.. Brooklyn Park partners.
Ilk
MCCD partnered with the Greater Metropolitan Housing Corporation's (GMHC) Housing Resource Center to provide a cash
flow loan for Salem, LLC, a residential remodeling contractor. The loan enabled the company to cover its early expenses
for a GMHC- funded home rehabilitation project in the Phillips neighborhood of south Minneapolis. Salem's Willie McAfee
is shown here in front of his company's completed project on 22 Avenue.
Credit Building Program
In 2011 MCCD worked in partnership with Project for Those borrowers who have been in the program for at
Pride in Living's Center for Working Families, Lutheran least a year and at the same time continue to work
Social Service's Eastside Financial Center, Build Wealth diligently to improve their credit are making great
Minnesota and the Neighborhood Development Alliance strides. Twenty -one participants saw their credit
to provide 27 credit building loans to area residents. scores increase by 33 points from an average credit
This brings the total to 68 credit building loans since the score of 592 to 625 since starting the program.
program started in 2009. Another 10 participants who started the program with
no credit score were able to achieve an average
Our partners provide financial counseling in conjunction score of 628, with two achieving scores of 700 or
with small personal loans from MCCD. This combination better.
of counseling with loans is helping program participants
improve their credit scores. Better credit scores can
mean lower interest rates on car and other loans, and
better access to affordable insurance and housing.
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Partnerships
MCCD has worked with the following partners
to help small businesses obtain capital:
African Development Center
Metropolitan Economic Development Metropolitan Consortium of
Association (MEDA)
Bank Cherokee Minneapolis Department of Community Community Developers
Brooklyn Park Development Corporation Planning and Economic Development
BuildWealth Minnesota Neighborhood Development Alliance
CCI Surety Neighborhood Development Center 3137 Chicago Avenue
Minnesota Department of Employment and Northside Economic Opportunity
Economic Development Network (NEON) Minneapolis, MN 55407
Housing and Redevelopment Authority of Northeast Bank
the City of Saint Paul Project for Pride in Living Center for
Latino Economic Development Center Working Families
Unity Bank Phone:
Lutheran Social Services Eastside Financial tY
Center Venture Bank (612) 789-7337
Capital Sources
a ;..;.n
MCCD's loan program is funded from a variety of sources, including:
Open to Business Program
Community Development Financial Institution (CDFI) Fund Rob Smolund, (612) 789 -7337
Brooklyn Park Development Corporation ext.11
Minneapolis Community Planning and Economic Development
Minneapolis Empowerment Zone Credit Building Program
Minnesota Department of Employment and Economic Development
Wells Fargo Community Development Corporation Mara O Neill, (612) 789 -7337
U.S. Bancorp Community Development Corporation OPEN ext. 10
William C. Norris Institute ro +uaNrSS
MCCD Open to Business Lending Report 2011. (612) 789 -7337