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HomeMy WebLinkAbout5.a. Discussion off Grants and Loans to Local BusinessesCITY OF ROSEMOUNT EXECUTIVE SUMMARY FOR ACTION PORT AUTHORITY COMMISSION MEETING DATE: AUGUST 4, 1992 AGENDA ITEM: DISCUSSION OF GRANTS AND LOANS AGENDA SECTION: TO LOCAL BUSINESSES OLD BUSINESS PREPARED BY: JOHN MILLER, ECONOMIC DEVEL P�00INATOR AGENDAM a (� # 5 ATTACHMENTS: MEMO, PAMPHLETS, APP ED BY: MEMO FROM ATTORNEY MILES The Port Authority directed me to look for information about grant and loan programs as a source of making capital for local businesses. The only agency I found currently doing this in the metropolitan area is the Minneapolis Community Development Agency. Minnesota statutes define the activities of port authorities as being more in the areas of land and infrastructure development. The commissioners should decide whether they want to be involved in the area of workiing capital, inventory, and refinancing of current debt. Other agencies and programs are available to small businesses whether start-up or expanding. RECOMMENDED ACTION• Informational item only. session. PORT AUTHORITY ACTION: Discussion should be continued at budget work �iiy of (Rosemount PHONE (612) 423-4411 2875 - 145th Street West, Rosemount, Minnesota FAX (612) 4235203 Mailing Address: P.O. Box 510, Rosemount, Minnesota 55068.0510 TO: Port Authority Chair Dunn Port Authority Commissioners: Anderson, Edwards, Mawe, McMenomy, Sinnwell, Wippermann FROM: John'Miller, Economic Development Coordinator DATE: July 29, 1992 MAYOR Edward B. McMenomy COUNCILMEMBERS Sheila Klassen James (Red) Staats Harry Willcox Dennis Wippermann ADMINISTRATOR Stephan Jilk To get information on this 1. St. Paul Po: 2. Bloomington 3. Minneapolis guidelines for the business assistanc of the city's Depa oornooa ;artnersnp r listing services of Plannina and Ec Agency. find a copy of the Program and a ad financing programs nomic Development. With regard to the Neighborhood'Partnershp`Program you will note that ineligible applicants are: 1. Single businesses 2. For-profit corporations It was explained to me that money in this program is meant primarily for small scale infrastructure items that can improve either quality of life or overall business climate. The Department of Planning and Economic Development offers mostly services in starting a new business or expanding an established business. They do offer financing for facade improvements but this is similar to what we saw in Hopkins for example. Again, St. Paul emphasizes things like business planning assistance, loan packaging, and feasibility analysis as opposed to cash grants or loans. (�vertyi Ings �oming (Up RosemounlY iJ fKycled Paper Bloomington Port Authority: I visited with Clark Arneson the Administrator :of the Port Authority. Arneson told me that Bloomington's mphasis was on infrastructure and land write down. He even questioned the legality of "...taking city dollars without special legislation." Certainly he felt strongly that grant or loan programs for local businesses was "...the banks business and not ours." On a more positive note, Arneson stated the Port Authority routinely directed businesses to the Small Business Administration 504 Program and in particular to the Twin Cities Metro Certified Development Company. Copies of the company's brochure are attached. Minneapolis Community Development Agency: This agency does provide working capital. Attached you will find the MCDA's Small Business Resource Directory. Page six provides an overview of the "Working Capital Program". Page seven outlines the "SBA 7(A) Guarantee Program" for, among other things, working capital and inventory. You will also note the MCDA operates loan programs for exterior building improvements (the 2% Small Business Loan Fund) and business start up (504 Loan Program and Industrial Revenue Bonds). Now, back to Rosemount. After visiting with these agencies I had found that the MCDA did indeed offer programs to provide working capital to small businesses. But at the same time the issue of Port Authority legality in this area had been raised by Clark Arneson. To resolve this I called Mike Miles the City Attorney. Mike's memo is also attached. In brief, this is what his findings were: 1. The Port Authority has no power or duty to make direct grants to any local business. 2. Port Authorities are designed to assist in the development of land and improvements to real estate. 3. We may want to direct businesses who contact us for assistance to the Small Business Administration or other agencies. If the Port Authority decides that it wishes to be engaged primarily in issues such as downtown redevelopment, industrial park creation, and senior housing then it may not have the resources of a_larger agency such as the MCDA for working capital loans. As your staff person I can direct any local business seeking aid to any of several organizations that may be of assistance. Examples includes: 1. Women Venture 2. Twin Cities - Metro Certified Development Company 3. Metro East 4. Service Corps of Retired Executives 5. Northern States Power Company 2 w SMALL BUSINESS RESOURCE DIRECTORY BUSINESS FINANCE DEPARTMENT Minneapolis Community Development Agency 1215 Marshall Street N.E. Minneapolis, MN 55413 Business Finance The City of Minneapolishas many creative financing tools available to businesses currently located in Minneapolis and for businesses considering relocation to the city. We hope you will find financing or other services that meet your company's need from the programs listed below: Page 1- Commercial&d is i n La M Assistance anee - initial point of contact for businesses seeking to locate or relocate within the City of Minneapolis. Page 2- 2% Commercial Rehab ProgWI financing that can be used for renovating commercial property or financing production equipment. Projects of $80,000 or less would potentially fit into this program. Page 3- 504 Loan Prograin - financing that can be used for purchase of land and buildings, rehabilitation and construction, leasehold improvements, machinery, and equipment. Projects that range from $100,000 to $2,000,000 would potentially fit into this Program. Page 4- Industrial Development Revenue Bonds - financing that can be used for the same type of expenses as the 504 loan program. This program is for projects that are $750,000 or more. Page 5- Neighborhood =munity Economic Development Funds - these two programs are for economic development projects that are carried out in neighborhood commercial areas of the city. The Neighborhood Economic Development Fund is only available for use by neighborhood non-profit groups. The Community Economic Development Fund provides gap financing on larger development projects and are approved on a project by project basis. Page 6- The Working CAWW m__ - financing that is available for new, growing small businesses (in business at least a year). A business can potentially borrow up to $60,000. Page 7- SBA 7(a) Guarantee Program - federal program that is generally packaged through lenders. This program guarantees 900 of the total bank loan up to $750,000. This program is generally used by businesses who cannot finance their project any other way or by start-up businesses. Page 8 - Emosin Small Business Pro=M-- City business opportunities, including procurement of goods, materials and services including construction and economic development projects. Page 10 - Business Technical Assistance Eand M Sincerely, arty Manager, Business Finance Department "Helping Small Business Succeed" The Minneapolis Community Development Agency 1215 Marshall St. N.E. Minneapolis, MN 55413 673 - 5195 I Business F COMMER CIALIIND USTRIAL LOCATION ASSISTANCE The Office for Small Business acts as a liaison between the business community and the city. It provides an initial point of contact for businesses seeking to locate or relocate within the City of Minneapolis. Staff can facilitate location decisions by providing an accurate listing of available buildings and/or sites. Sites are keyed to the specific requirements of businesses and is designed to reduce the amount of time needed to determine compatibility. Specific zoning and land use issues related to particular sites will also be identified. In addition to the above service, the office conducts an annual survey of Minneapolis businesses. This confidential survey provides a valuable tool for addressing company needs as well as forecasting business trends. This information is recorded and stored on computer, enabling staff to update company files and generate statistical data necessary for monitoring business activity. As an example, each year the office produces a business migration study that follows the movement of business in or out of the city. The staff is also responsible for marketing agency -owned, Industrial/Commercial land as well as some city -owned parcels. It prepares and administers the MCDA's Industrial/Commercial Land Inventory and assists businesses in the selection and preparation of suitable development sites. The staff also makes referrals and facilitates the search for existing buildings available in the Minneapolis area in cooperation with real estate brokers. Specj& Services • Review of business site needs • Identification of available compatible sites • Evaluation of zoning and land use issues related to sites • Provision of limited market area information Goals and DOfta zves • Encourage economic growth and new development in Minneapolis, • Preserve and expand local job opportunities for neighborhood residents, • Increase the citys' tax base, and • Create a favorable business climate within the city. Who is Eligible? Any business presently located in the City of Minneapolis or any business that is interested in locating their business within the City of Minneapolis. Q p limon Procedure Interested business owners should contact the MCDA Business Finance Dept. at 673-5190. "Helping Small Business Succeed" I The Minneapolis Community Development Agency 1215 Marshall St. N.E. Minneapolis, MN 55413 (1) 673-5195 Business Finance De 2% SMALL BUSINESS LOAN FUND What is the 2% Commercial Rehab Prog=? Applicant's property must be a conforming use or legal non -conforming use under the City's Zoning Ordinance. The 2% Commercial Rehab (2% CR) Program was created to provide financial and technical assistance to Minneapolis neighborhood retail, service and light manufacturing businesses through joint participation on behalf of the Minneapolis Community Development Agency and lending institutions. The fund was established to provide low interest, long term financing as an incentive to business owners to upgrade the appearance of their place of business. The business would provide an improved service to the community with opportunities for the retention or expansion of jobs in the area. • Interior improvements • Exterior improvements • Site improvements • Production equipment • Refinancing of existing debt • Non -fixed improvements • Working capital • Inventory • Sweat equity WITITM4, Applicant may be owner, partnership, corporation, tenant or C/D purchaser located in the City of Minneapolis (excluding the downtown area). Applicant must have the ability to repay the loan and be an acceptable credit risk, as determined by a lender. Applicant must obtain preliminary approval from a lender that is willing to participate in the program before an application can be taken. "Helping Small Business Succeed" Only one time funding is allowed per property through the 2% CR Program. Upon completion of the improvements the applicant's property must comply with all applicable code, permit and license requirements. The 2% CR Program is set up so that it provides loans up to a maximum of $30,000, at 2% interest, which are matched by a lender, dollar for dollar. However, the lender can participate with a loan greater than the $30,000 limit. The lender's interest rate cannot exceed 2% above the prime rate, which can be a fixed or variable rate. The maximum term on the loan is up to ten years and is set by the lender. The contractor and sub -contractors which the applicant selects to perform the improvements to the property must be licensed, bonded and insured. They must also adhere to Davis - Bacon Act requirements. The applicant is also required to executes First Source Agreement with the City of Minneapolis' Employment and Training Program for a maximum of five years or the term of the loan, whichever is less. All participants may use NET to fulfill the First Source Agreement. If a business owner is interested in applying for the 2% CR Program, he/she needs to get an estimate of what the project costs will be. Then call Susan Thompson at 673-5177 to see if your project qualifies for the program. If the project is eligible, the business will be referred to their bank to see if the bank will participate with MCRA on the loan. If the bank indicates approval, MCDA will set up an appointment with the business to get an application in process. The Minneapolis Community Development Agency 1215 Marshall St. N.E. Minneapolis, MN 55413 (2) 1 673-5195 Business Finance nt 504 LOAN PROGRAM What is the SO4 Loan Program? The Minneapolis 504 Loan Program provides long term, fixed rate financing of up to 90% of the necessary capital to eligible Minneapolis retail, commercial and industrial businesses. The 504 Loan Program is a "bricks & mortar" program which does not include working capital. The funds are used for activities such as: purchase of lard and buildings, rehabilitation and construction, leasehold improvements, machinery and equipment. Who is Eligible? A new or existing for-profit business which: is located within the City of Minneapolis. has an existing cash flow sufficient to handle loan payments. has a net worth of less than $6 million. has an average net profit after taxes of $2 million or less for the last 2 years. Not Eligible: real estate development, lending institutions, recreational facilities, gambling establishments or entertainment centers. How does the 504 Program Work? The 504 Loan Program will provide up to 90% of the project costs. 10% business equity is required. Debentures sold in the capital markets will provide 40% of project costs, private lenders will provide 50% of the project costs. A typical $400,000 project would look like this: 1 •, � , 1!1 li, • $200,000 8.5 20yrs Bank $1,968 168,000* 8.0 20yrs 504 Debenture 1,249 Equity $408,000 $3,217 * includes fees The 504 loan is take-out financing. In projects involving construction or renovation, the loan proceeds are not disbursed until all work is 100% complete. Interim financing will be provided by the lender during the construction period. "Helping Small Business Succeed" What are the Rates. Terms. and Fees? The 504 Loan Programs' effective interest rates have generally run 1 to 2 points below market rates. The rate is , and is established at the time the loan is closed. The 504 Loan Program provides a loan term of either 10 or 20 years on the government guaranteed position (40%) of the project costs. The minimum amount of the debenture for a 504 loan is $50,000, the maximum amount is $750,000. The Bank portion of the loan has no maximum. Project size may be as large as $2,000,000. Fees include a reserve account, debenture processing fee and underwriting fees. These fees are financed in the 504 loan and do not constitute a cash outlay to the borrower. They are included in the loan by increasing the debenture amount by approximately 3.0% of the 504 portion of the Project Job CreadonlCommuni& LM Each 504 loan must create an average of 1 job per $35,000 of debenture financing during the first two years or assist in the retention of jobs or modernization of existing facilities in distress areas of the City. What is the Process? Locate a lender willing to finance 50% of the project costs. Have the lender contact the Small Business Office of Minneapolis Community Development Agency at 342-1389 regarding current rates and procedures. Next, contact the Small Business Office to set up a meeting with a 504 Loan Specialist. You will need to bring the following items to the meeting: - Complete financial statements for the past 3 years. - Interim financial statements less than 60 days old. - Personal financial statements of any one owning more than 20% of the Company. Processing time takes approximately 45 days. Any questions or requests for additional information should be directed to Russell Knighton at (612) 673-5181 The Minneapolis Community Development Agency 1215 Marshall St. N.E. Minneapolis, MN 55413 (3) 1 673-5195 Revenue Bond Finance Department INDUSTRIAL DEVELOPMENT REVENUE BONDS (IRBs) What is the IRB Program? Industrial Development Revenue Bonds can be used to finance industrial, housing and commercial projects consisting of the acquisition of land and construction of new facilities; additions to existing facilities; purchase and renovation of an existing structure; and the purchase of production equipment. In order for this type of financing to be cost effective, total project costs are usually at least $500,000. IRBs issued for an industrial/manufacturing project are generally tax-exempt, while those for commercial projects are issued as taxable revenue bonds. Who is k? Any owner or business within the City of Minneapolis, or business owner or developer planning to locate in Minneapolis. Bars, restaurants, entertainment facilities and start up firms are usually not eligible for financing under the program. The tax-exempt bond program carries further restrictions. Please inquire about your specific project. How Does the IRB Program Work? IRBs are issued either freestanding or through the MCDA's Common Bond Fund (CBF). Freestanding revenue bonds are issued with the strength of the project dictating the interest rate. The CBF is a financing vehicle through which a revenue bond is used. The bonds are investment grade instruments with the security provided by the CBF. The investment grade sating of the CBF is reflected in a lower interest rate. What are the Rates. Terms and Fees? A tax-exempt bond issue means a below commercial market interest rate. A taxable bond rate is competitive with market rates. "Helping Small Business Succeed" The major benefits of tax-exempt and taxable financings through the CBF area fixed interest rate, 20 to 30 year term and equal or below market rates. Fees include a reserve account, underwriting fees, bond counsel expense and other fees. These fees may be financed through the bond issue. What is the Ere=? Call the Revenue Bond Finance staff at the MCDA to discuss and review your project. Approval of IRBs by the MCDA and the City is based on financial strength, the "public purpose" served by a project, such as preserving existing jobs, providing new employment opportunities and increasing the tax base. You will be asked early on in the process to provide: 1. Complete financial statements for the past 3 years. 2. Interim financial statements less than 60 days old. 3. Personal financial statements of anyone owning more than 20% of the company. The complete approval process takes approximately 60 to 90 days. Any questions or requests for additional information should be directed to Robert Lind at (612) 673-5068 The Minneapolis Community Development Agency 105 Fifth Avenue South Minneapolis, MN 55401-2538 (4) I 673-5068 Business Finance NEIGHBORHOODICCOMMUNITY ECONOMIC DEVELOPMENT FUNDS NEIGHBORHOOD ECONOMIC DEVELOPMENT FUND (NEDF) I,T, ,1„, This program provides loans or grants to neighborhood non-profit groups for highly visible brick and mortar activities which accomplish the rehabilitation, revitalization or expansion of neighborhood commercial centers. 17 1L [ ;,,1' , / 7 - Acquisition of land and/or buildings. - Rehabilitation of commercial buildings, storefronts and streetscape improvements. Who is_lig' rel ? The applicant must be a neighborhood based non- profit corporation, such as a: Business Association, Residents Group, or Community Development Corporation. All recipients must have a federal tax identification number. There are no set rates or terms for this program. The rates and terms are set on a project by project basis. They are determined through an analysis of a recipients ability to repay and then negotiated by the Agency with the recipient. r.,71Wi174 „ ,a , In January of each year a request for proposals is mailed to all Neighborhood Nan -Profits. These proposals are due to the MCDA around the end of March after which no requests will be accepted. A committee is formed and projects are ranked and recommended for funding on the basis of this ranking. The MCDA Board of Commissioners makes final allocation decisions. Any questions or requests for futher information should be directed to Nila McDonald at 673-5189. "Helping Small Business Succeed” COMMUNITY ECONOMIC DEVELOPMENT FUND (CEDF) . ,. , , ' ., u � ,, This program provides GAP Financing to supplement traditional development tools on larger development projects. - Acquisition - Disposition - Relocation - Rehabilitation - Demolition A development which is located within the seven community commercial nodes which are: Hennepin and Lake, Nicollet and Lake, Lowry and Central, Chicago and Lake, East Hennpin, and Broadway. General strip commercial areas are also eligible. Commercial centers and areas which have approved redevelopment plans will be given the highest pnoity.. What are the Rates and Terms? There are no set rates or terms for this program. The rates and terms are set on a project by project basis. They are determined through an analysis of a recipients ability to repay and then negotiated by the Agency with the recipient. What is the Anolica&n Process? Funds are available on a first-come, first -serve basis. Interested parties may submit a statement of interest or the MCDA staff may propose specific uses. The MCDA Board makes final allocation decisions. Any questions or requests for further information should be directed to Susan Thompson at 673-5177. The Minneapolis Community Development Agency 1215 Marshall St. N.E. Minneapolis, MN 55413 (5) I 673 -5195 Business Finance De U 1, 1' ., ..r' [t .t Itlt[t The program provides working capital loans for new, growing small businesses in Minneapolis. Any owner of a small business in Minneapolis may apply for a loan if the firm has been in operation far at least a year prior to the date of the loan application. Owners of businesses not currently located in the City of Minneapolis are eligible to apply if the business intends to relocate in the City. Bars and restaurants are not eligible for financing under the program. 1[, <t i t -4 t[ 1 The MCDA helps business owners arrange financing by partially guaranteeing loans provided by private lenders. Borrowers may use their own lender for the loan. The MCDA will also refer borrowers to lenders who have agreed to participate in the Program. Owners are generally able to borrow up to $60,000 under the program. The amount of the MCDA's guarantee for any one loan can not exceed $30,000. U17TY7 The interest rate on the loan cannot exceed 3% over the prune rate. The term on the loan cannot exceed 5 years. The lender establishes its own collateral requirements. How can the Funds be Used? Loans may be used to finance working capital, production contracts, inventory, equipment and fixtures. Borrowers must demonstrate that they can meet one or more of the following goals: demonstrating the potential for growth, serving new and emerging markets, providing job opportunities for Minneapolis residents, strengthening the City's property tax base, and revitalizing target neighborhoods. Borrowers must demonstrate that they have the ability to repay the loan and must agree to repay the loan if they relocate their business outside of the City of Minneapolis. If you would like further information about the Working Capital Program, please contact Iric Nathanson at 673-5183 MICRO LOANS Community Based Business Development Project The Micro Loan Program provides business loans of up to $10,000 to very small neighborhood -based businesses. The Program is operated by the Minneapolis Consortium of Non -Profit Developers in cooperation with the MCDA. Micro loans are available in neighborhoods served by the following Consortium member organizations. Northside Residents Redevelopment Council (Near North, Willard Hay, Harrison) 348-6326 Whittier Community Development Corporation (Whittier Neighborhood) 871-7756 Seward Redesign (Seward Neighborhood) 338-8729 "Helping Small Business Succeed" Farview Neighborhood Development Corporation (West Broadway, Jordan, Hawthorne) 521-0716 Phillips Community Development Corporation (Phillips Neighborhood) 871-2435 West Bank Community Development Corporation (Cedar Riverside) 332-6910 The Minneapolis Community Development Agency 1215 Marshall St. N.E. Minneapolis, MN 55413 (6) 1 673-5195 Business Finance SBA 7(A) GUARANTEE PROGRAM The SBA 7(a) program, by guaranteeing 90% of principal and interest, enable banks and other financial institutions to make loans they otherwise would not. The program is for viable credit risks unable to obtain conventional financing at comparable rates, terms. .„ I1 1771 AM,1 , • Working capital, inventory • Machinery and equipment • Purchase of land and buildings • Renovation and construction of facilities The SBA 7(a) program guarantees 90% of the total bank loan up to $750,000. The smallest project is likely to be at least $50,000. The average is about $200,000. Existing businesses can finance up to 100% of project costs, while start-up businesses must provide 25-35% of project costs as equity. • Manufacturing - less than 250 employees • Wholesaling and construction - annual sales less than $9.5 million • Retailing and services - annual receipts under $2 million What is the Process? Contact your bank of account or bank ileal• your proposed place of business. Present personal financial information, a business plan and 3 years financial data on the existing business or projections on the new business. Discuss a conventional bank loan with lender. If they are unwilling to approve the request internally, suggest a possible SBA guarantee. If the bank is interested, they can contact SBA for all necessary forms. After receipt of all necessary information, SBA approval time averages approximately 3-4 weeks. "Helping Small Business Succeed" Equity requirements vary by projects and company strength. Start-up business requires 25-35% equity investment. Interest rates may not exceed 2 3/4% over the established prime rate. The lender can establish either a fixed or variable rate over the term of the loan. Loan maturities are: • Working capital - up to 7 years • Equipment - up to 10 years • Real estate - up to 25 years • Access to credit - encourage banks to make loans they otherwise would not. • Banks can offer longer terms with SBA guarantee • Lower debt service based on longer term What is the Bank's Advantage? • Security - SBA guarantees up to 90% of principal and interest • Liquidity and increased yields SBA guarantee can be sold on the secondary market • Larger loans possibly only unguaranteed portion of the loan counts against banks' legal lending limit If this program fits your financial and credit requirements„ MCDA is available to package these loans for you. Any questions or requests for additional information should be directed to Minneapolis Economic Development Company, MCRA, 1215 Marshall St. NE Mpls. 55413 (612) 673-5176 The Minneapolis Community Development Agency 1215 Marshall St. N.E. Minneapolis, MN 55413 (7) 1 673-5195 Business Finance De EMERGING SMALL BUSINESS PROGRAM Programa Ob e� ctive Emerging Small Business Goals Increase the volume of City business with Emerging Small Business in the areas of contracting and professional services without compromising the bidding procedures required by the Minnesota Uniform Municipal Contracting Act. Program Polky It is the policy of the City of Minneapolis to provide Emerging Small Businesses with access to City business opportunities, including the procurement of goods, materials and services including construction and economic development projects. Definition ofEmerging Small BusLnes-s The ESB must have been in business at least one year. The ESB must be located in the state of Minnesota. The ESB must be comprised of 25 or less employees. The ESB must not have gross sales in excess of Three million dollars over the past three years. Emerging Small Business goals will be 20% of the value of any construction project which exceeds $100,000. Emerging Small Business goals will be 20% of the value of any non construction contract which exceeds $50,000. Emerging Small Business to be counted towards ESB goal must have been certified by the City of Minneapolis Emerging Small Business Office. ESB Contractors count 100% of contracted amount toward ESB goal. ESB Suppliers count 50% of contracted amount toward ESB goal. Covers City of Minneapolis Purchasing, MCDA Purchasing, and all City -assisted Development projects. Ap_plicai on Procedure If your firm qualifies for this program contact the Emerging Small Business Office at 3745129. "Helping Small Business Succeed" I The Minneapolis Community Development Agency 1215 Marshall St. N.E. Minneapolis, MN 55413 (g) 673-5195 Business Finance nt CITE' JOB PROGRAMS Job Linkage Program Avis Poupaiit - 673-2259 The Neighborhood Employment Network of Minneapolis (NET) is an innovative employ- ment program that helps Minneapolis residents find jobs close to home. NET facilitators are located in Job Banks in nine sections of the city. These NET facilitatorsact as a liaison between businesses looking for employees and the residents looking for jobs in their neighborhood area. Job Training Partnership Act (JTPA) Chip Wells - 673-2630 Through the JTPA program, vocational training, placement, and subsidized on-the-job training are offered to Minneapolis residents. The needs of companies are matched with the skills and abilities of METP clients for job placement and where appropriate, on-the-job training contracts are used to reimburse employers for up to 50% of wages for extraordinary training costs. The NET Program Mike Brinda - 673-2100 The Neighborhood Employment Network of Minneapolis (NET) is an innovative employment program that helps Minneapolis residents find jobs close to home. NET facilitators are located in Job Banks in nine sections of the city. These NET facilitators act as a liaison betweeen businesses looking for employment and the residents looking for jobs in their neighborhood area.. "Helping Small Business Succeed" I The Minneapolis Community Development Agency 1215 Marshall St. N.E. 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'�iF^M St.%-e&t�`r Sf �'aTWy��3�. � jz`3�kw . �x.'Croc " NEIGHBORHOOD DEVELOPMENT OMS, ON �� a �''_� �`��` �`"'"� �°� h . OEPARTMENT.OF.PIANNINGRNO ECONOMIC DEVELOPMENT � '� � ' '' -PAUL CITY HALLsANNEX,: 25 WEST FOURTH STREET SAINT PAUL, MINNESOTA, 'TELEPHONE 612-228-3200 ' °=`'• , s �:�'�' `.�":v. �"`'��:. , Es. r :,.s�`".rr-y . .'. �� ,<:�ii� � ,>...ekr. � .. - �' , . � . '' ""�' - ..'•'-'"� � k :'. t .. � '� _ . 'z r'"�� ;��?s�' .. -. '' .. NEIGHBORHOOD PARTNERSHIP PROGRAM GUIDELINES Revised 1987 Adopted by St. Paul City Council April 14, 1987 File No. 87-499 Approved by St. Paul Planning Commission February 13, 1987 Resolution No. 87-14 Department of Planning and Economic Development Neighborhood Development Division 1000 City Hall Annex 25 West Fourth Street St. Paul, Minnesota 55102 NS r TABLE OF CONTENTS Program Purpose 3 Program Description 3 Application 7 Selection l o -- Program Development and Implementation 13 Robes 14 Program Evaluation 18 is IT - I. PROGRAM PURPOSE The Neighborhood Partnership Program (NPP) is a self help program designed to improve St. Paul's neighborhoods. The program's goal is to create a partnership of cooperative efforts among residents, property owners, business persons and the City that leads to more attractive and livable neighborhoods. Program objectives are: A. Promoting neighborhood self reliance by enabling neighborhood residents, property owners, and business persons to initiate, develop and manage their neighborhood improvement efforts. B. Leveraging private improvement efforts through use of NPP funds. C. Directing program efforts toward economic, physical, and/or social needs within St. Paul neighborhoods. D. Promoting flexibility which will allow each individual neighborhood to develop program activities that meet their particular needs, and allow them to respond to special opportunities. E. Coordinating public and private neighborhood improvement efforts within concentrated program/project areas. II. PROGRAM DESCRIPTION The NPP is a self help program for neighborhood organizations, business associations and others who wish to initiate and carry out neighborhood improvement efforts. Twice a year, through a competitive selection process the City awards grants or loans for improvement projects developed by neighborhood groups. Selected neighborhood groups are responsible for designing the projects, coming up with matching private contributions and managing project. activities. Program features are: A. Funding I. There are two funding cycles per year. 2. Approximately $600,000 to $700,000 is awarded as grants or loans each funding cycle. 3. There are no maximum or minimum levels for grant or loan awards. 4. The NPP Funds presently come from two sources: Community Development Block Grand Funds (CDBG); and Capital Improvement Bond Funds (CIB). CIB funds can be spent anywhere in the City, but must be spent on public capital improvements. CDBG funds can only be spent in areas designated as CDBG eligible or.eitywide on households whose income is less than 80% of SMSA median income. Eligibility criteria are determined by the U.S. Department of Housing and Urban Development (HUD). Other sources that provide more flexibility may be added in the future. 3 B. C. S. The amounts of CDBG and CIB funds available for each cycle are announced at the beginning of that cycle. If exchanges between these funds are desirable to better reflect the actual demand by different types of projects, such exchanges shall be made at the end of a cycle after the City Council's funding decisions and shall be announced at the beginning of the next cycle. Eligible Activities NPP funds may be used for: 1. Minor public improvements such aftlantings, benches, beautification of public space, decorative lighting, etc. on city owned property. The Fund is not intended or normally sufficient to do major public improvements such as street paving, curb and gutter, sewer and water. Major public improvements should be channeled through the city's CIB process. When additional operation or maintenance costs result from the public improvements, the NPP proposal must identify how this project area will privately pay for their costs. 2. Neighborhood improvements such as rehabilitation, maintenance and general improvements to residential, commercial and industrial property through such means as loans, deferred loans, matching grants, loan, guarantees, and other means. 3. Economic development efforts such as new development, business attraction and expansion, and job creation through such means as loans, deferred loans, matching grants, loan guarantees, interest supplements and other means. 4. Public service programs such as neighborhood based crime watch/prevention, block nursing programs and other efforts'that rely heavily on neighborhood participation. However, public-service proposals must document that they won't duplicate or be replacement funding.for services currently available to that neighborhood. No more than 10% of the NPP funds available for each six month cycle may be spent on public service programs. S. Eligible activities are not limited to the above examples.- Innovative proposals are encouraged. -Ineligible Activities include: 1. Planning or study activities. 2. Use of NPP funds to develop an NPP proposal or to organize an entity to manage an NPP proposal. 3. Activities located outside the city limits: 4. Major public works projects, i.e., street_ repaving, sewer wgrk, recreation center, etc. S. Public capital improvements on non city owned property, unless there is a joint use agreement in effect prior to the NPP application. 6. Property acquisition unless it is part of a program effort to rehab and sell such property within one year from the date of acquisition. _ 7. Equipment purchases. t D. Eligible Areas All neighborhoods including the downtown are eligible for NPP funding. '- E. Eligible applicants include any of the following which reside or overate within the City of St -Paul I. District Councils 2. Residential Block Club Organizations 3. Business Associations and Commercial Clubs 4. Non-profit organizations whose service area is primarily St. Paul neighborhoods and/or clientele are St. Paul residents. A' .moi F. Ineligible applicants include: 1. Single individuals 2., Single businesses 3. For-profit corporations 4. Political parties and related political action groups S. Churches and religious organizations 6. Federal, state, county and local governmental agencies 7. Public and private educational institutions 8. Special interest groups G. Activities funded by the NPP must be completed or self sustaining within a 24 month time frame. H. Continuation Funding Projects that wish to continue beyond the 24 -month NPP maximum may apply for continuation funding for a second cycle. These projects or programs must complete an evaluation of their project prior to the format application. Forms for this purpose are available from PED staff. The amount of money allocated to administrative costs will be half of the amount approved for the original project. No more than 40% of the funding for any NPP cycle can be used for refunding projects. l_ s After an NPP application has been selected for funding by the City Council, the applicant is not eligible to apply to the CIB Committee for off -cycle, supplemental funding for the project. J. Neighborhood Administrativ Neighborhood administrative expenses for NPP funded projects are eligible. Such expenses (which may include personnel salaries, office space, insurance costs, minor supplies, etc.) must be for actual expenses that are necessary to support the implementation of the NPP project. (To illustrate: If additional office space must be rented for NPP project staff, the rent would be an eligible administrative expense. If the NPP project staff can use existing office and desk space but must have a new phone line, only the new phone line would be an eligible administrative expense.) Equipment and property purchases are not eligible. NPP funding for administrative expenses may not exceed 15% of the NPP project funding except in unusual circumstances. Requests for a higher amount must be justified by the nature of the project. (For example, suppose a neighborhood rehabilitation proposal consists of matching grants for exterior residential improvements. The matching grant fund, as the primary implementation activity, should take at least 85% of the NPP project's budget. All the other activities done in support of the matching grant program are subject to the 15% limitation for administrative expenses, i.e., office, supplies, publicity, and salary for project management, volunteer coordination, and fund raising. In another example, suppose a neighborhood crime watch proposal consists of the recruitment and coordination of volunteers who will observe and report suspected criminal activities to the police. The recruitment and coordination of the crime watch volunteers is the primary implementation activity. Even though most of the expense is for the salary of the volunteer coordinator, this expense would not be bound by the 15% limitation. All other activities in support of the crime watch program are considered to be administrative and subject to the 15% limitation, i.e., office supplies, publicity, and salary for accounting, required paperwork, fund raising, and other program management activities.) The key to distinguishing implementation activities from administrative activities lies in the question: what is the project being selected and funded to accomplish fortheneighborhood? The central purpose or purposes should be shown on the NPP application as implementation, or program, activities. Applications contain both a line item and a program budget, so applicants are required to detail their requested funding for both program activities and administrative expenses. Applicants are encouraged to match their NPP funding for administrative expenses with outside private resources, i.e., foundation grants, cash donations, etc. K. Neighborhood Contributions ; Each NPP proposal must be backed with neighborhood contributions. Eligible contributions must be: 1. solely from the private sector (including nonprofit agencies) 6 III. 2. directly related to the activities within the applicant's NPP proposal 3. leveraged. by the NPP proposal -•that is, the contributions would not occur but for the NPP proposal 4. contributed or occur after the prc-application deadline Contributions may include direct financial resources such as private expenditures for commercial or residential physical improvements, contributions or funds raised from within the neighborhood, foundation and corporate grants, and the value of local lender below market commitments. Indirect contributions can include: in kind services from neighborhood residents and businesses such as personnel, office space and supplies, volunteer L labor, and sweat equity in physical improvements. The value of labor performed by the resident or owner may be estimated at S1O per hour for sweat equity, and $10 per hour for volunteer time. Under no circumstances will any neighborhood contribution be reimbursed with NPP funds. The required neighborhood contribution for each NPP proposal will be determined by a sliding scale leverage ratio based on the low and moderate income population of the the census tracts the proposal's target area or target population falls in: Percent of Low/Moderate Income Persons.in Leverage Census Tract Ratio 0-50% 3:1 51 -61% 2:1 .,.. More than 6296 1:1 Target areas that include more than one leverage area should determine their required leverage amounts based on the proportion of the target area within each leverage area. Current leverage area maps are included at the end of these guidelines. Ineligible contributions include: 1. Property acquisition. 2. Volunteer meeting time, 3. In kind service donations from NPP applicants who are requesting NPP funds for project administrative expenses. In kind donations from parties other than the applicant are eligible. APPLICATION A. Process (See Figure 1.) B. Procedural Guidelines 1. Applicants interested in the NPP notify their respective district councils as to their intentions and the nature of the NPP proposals. 7 s FIG.I NEIGHBORHOOD PARTNERSHIP PROGRAM CYCLES MONTH PRE - APPLICATION FIRST CYCLE 2 MONTHS 2-5 MONTHS APPLICATION DEVELOPMENT rnvvns�m DEVELOPMENT V SECOND CYCLE uN- ' EIECTEO 1 MONTH NPP PRE �UrH NG PROPOSALS APPLICATION ��HS SOURCES APPLICATION NEW � DEVEL- OPMENT 2 MONM NPP SELECTION PROPOSALS 24 'MONTHS PROGRAM IMPLEMENTATN 2. Attendance at the orientation workshop held at the beginning of each cycle is strongly recommended. 3. District councils identify prospective NPP applicants within their planning district and notify PED by letter of those applicants. PED staff if requested will schedule meetings with prospective applicants to explain the program and formal application process. 4. If more than one application is developed within a planning district the district council sets priorities. One project in each cycle is eligible for technical assistance from PED. ' S. An applicant to the NPP should have a program committee. The program committee should have an adequate mix of residents, business persons and/or property owners and fonsist of S to 9 members. 6. The applicants program`committee will be responsible for developing and submitting the NPP pre -application and application. 7. All pre -applications and applications must be submitted to PED prior to the designated deadlines. Late pre -applications and applications will not be accepted. 8. Applications will not be accepted by PED if a pre -application was not submitted beforehand. 9. Incomplete and unsigned applications will not be accepted. 10. Applications may not be changed or modified once they are submitted to PED. *- 11. Applications not selected .in one cycle may be resubmitted the next ,in cycle. If the application is still not selected, the declaration of neighborhood contributions and information need to be updated before it is submitted again. C. Pre-At)olication Contents All pre -applications must contain the following: 1. A brief description of the project proposal. 2. An estimate of the amount of funds that will be requested from the NPP along with an estimate of neighborhood contributions. 3. The name of the organization that will develop and implement the project proposal. 4. A brief description of the level of coordination that the proposed project will have with other groups,projects, or programs. IV. D. Formal Aonlication Contents All applications must contain the following: I. A description of the proposed project, including but not limited to the following areas: a. Purpose of the proposal. b. Problems or needs which the proposal addresses. C. Documentation of the above problem or needs such as demographic data, statistics, and district and city plans, priorities and policies. d. Detailed description of the proposal's activities or elements. C. Neighborhood impact and projected results. f. Method and level of citizen participation. g. Applicants managing experience and capability. h. Requested NPP funding and designation as to whether it is a grant or loan request. i. Lever and source of neighborhood contributions. 2. Overall budget reflecting both NPP funds and neighborhood contributions. I Time schedule for project. 4. Map for project boundaries (if applicable). S. When public improvements result in increased maintenance and operation costs the applicant must address how they will privately pay for those costs. 6. Economic development proposals must include a detailed project proforma, including anticipated sources of private lender financing. SELECTION A. Selection Process 1. The selection process is competitive. The number of applicants funded will depend on the size and quality of the proposals and the availability of NPP funding. Projects considered to be of low quality will not be recommended for funding; even if NPP funds are available. 2. There will be two cycles per year as long as the program has funds. 10 3. The appropriate District Council reviews applications from their district and forwards their comments to PED. if a district has more than one application, the District Council identifies priorities. " 4. PED staff will review the applications and make staff recommendations to the Planning Commission, Mayor and the City Council. 5. The CIB Committee, based on the Capital Allocation Policies will review the applications and forward its comments to the Planning Commission, Mayor and City Council. The Committee will not review _._ service projects. 6. The Planning Commission, based on the City's Comprehensive Plan, strategy section of the Capital Allocation Policies and NPP selection criteria, will review and rate the applications and identify those applicants which should be funded. If the CIB Committee has not rated a project, the Planning Commission will determine the CIB Committee's - rating as well as its own. The Planning Commission recommendation will be sent to the Mayor and City Council. - 7. The Mayor will present both the Planning Commission recommendation and the CIB Committee's comments along with his comments to the Citti Council. B. The City Council will by resolution select NPP applications and set their budgets. :.,., B. Elitibility and Selection Criteria 1. Eligibility Criteria Evaluation of NPP applications is based on both eligibility and selection criteria. If an NPP application is in conflict with any eligibility criteria it will be dropped from the selection process. Eligibility criteria are: a. Proposal meets required leveraging ratio. (See Neighborhood Contributions Section.) b. Proposal is eligible program activity. (See Eligible and Ineligible Activities Sections.) C. , Proposal will be completed or self sustaining in 24 months. d. Proposal will not be a duplication of an existing private or public program or addresses a problem not adequately addressed by an existing program. C. Proposal will not be replacement funding for an existing program. f. Proposal is not in conflict with any city comprehensive plan element, capital allocation policy or operating policy. I1 S. Proposal is financially feasible with the public and private resources identified by the applicant. Selection Criteria a. Neighborhood Contributions - Proposals will be rated higher if: (1) they exceed the required minimum leveraging ratio (2) a large number of individuals contribute to the applicant's neighborhood contributions b. Management - Proposals will be rated higher if the managing organization has a strong active membership and a positive track record and the designated neighborhood project manager has the needed skills, experience and positive track record C. Citizen Participation - Proposals will be rated higher which have a large and appropriate mix of residents, property owners and/or business people included in the planning, development and implementation of the proposal. d. Neighborhood Impact Proposals will be rated higher if: (1) a documented priority need is being addressed (2) its activities appropriately address the identified need (3) Requested NPP funds together with other project resources are adequate to meet the identified need (4) anticipated results will have a noticeable neighborhood impact (S) its activities are concentrated (area concentration for physical and economic activities, programmatic concentration for public service related activities) (6) low and moderate income households will be benefited C. Innovation - Proposals that are innovative will be rated higher. f. Recycling- Proposals that recycle funds back to the NPP or within the neighborhood project will be rated higher. g. Coordination - Proposals that include direct coordination with other city/private programs and projects will be rated higher. Higher ratings will be given to direct coordination with the Department of Public Works sewer and street repaving program and other new programs in the Mayor's Better Neighborhood Initiative. 12 V. PROGRAMDEVELOPMENT AND IMPLEMENTATION Upon selection by the City Council, each NPP project will have five months to refine its program, secure its private match and enter into a partnership contract with PED. A. Pronosal Refinement The program committee for each selected NPP area shall be responsible for the development of specific program activities, the generation of cost —estimates, the securing of neighborhood contributions, the identification of and resolution of. maintenance issues and the verification that neighborhood contributions were completed or secured. B. Neiehborhood Staff Costs For each NPP program cycle, the city will set aside 2% of the NPP funds up to a` maximum of $15,000. This funding pool will be used to reimburse the selected NPP projects for neighborhood staff costs incurred during the program development phase. Only CDBG funded projects and areas are eligible for these funds. The exact amount reimbursed to each selected NPP project shall be determined by negotiations between the city and the selected areas. A development phase contract outlining the expenditure of funds will be signed by the Director of PED and the chairperson of the program committee. ' C. Neighborhood Contributions Each selected applicant will be responsible for securing the neighborhood contributions that match the declaration of neighborhood contributions contained in the application. At 60 and 120 days after an applicant's selection, PED staff will meet with the applicant and review their progress in securing private pledges. If progress is insufficient PED will work with the neighborhood applicant to review and possibly revise its contribution proposal and NPP funding request. If after 150 days an area fails to reach 80% of its declared neighborhood contribution, the Director of PED will notify the area's program committee that the area has been dropped from the Program. If an area secures between 80% and 100% of the declared amount, the area would proceed with an NPP Fund contribution reduced pro rata, unless failure to reach the full declared amount rendered the proposal unworkable. In this case the area would also be dropped. If any applicant is dropped, its funds will be reallocated to the next funding cycle. D. Partnership Contract Upon completion of the program development stage and prior to the y-- implementation of an applicant's project,'a partnership contract will be entered into between the ;City of; St. Paul and the selected applicant. The contract will contain a scope of services to be performed by all parties, a neighborhood contributions section and a budget section outlining funding sources. The contract will be signed by the Director of PED and the chairperson of the program committee. �. 13 Key provisions of the Partnership and Development Phase contracts require: 0) the NPP project applicant has $600,000 of liability insurance which co- insures the City of St. Paul (2) adherence to Federal, State and Local compliance regulations, i.e., Davis Bacon,'First Source agreements, etc. The nature of the NPP project determines which regulations it has to comply with. PED staff will work closely with the NPP project representatives to identify appropriate regulations. (3) adherence to CDBG and CIB funding regulations. The nature of the NPP project determines which funding source it is eligible for and which regulation it must adhere to. PED staff will work closely with NPP project representatives to identify appropriate regulations. NPP soolicants are cautioned not to make any neighborhood commitments until they fully understand ootential compliance and funding regulations. E. NPP Fund Distribution All NPP Fund allocations made by the city under partnership agreements will be on a reimbursement basis, in accordance with federal and local regulations. At the time of completion of all activities contained in the partnership agreement or upon expiration of the agreement, any remaining fund balances will be reallocated by PED to future NPP funding cycles. V1. ROLES A. Application Stage 1. Applicant role a. Form application committee. b. Notify district council(s) of possible interest in program. C. Identify improvement needs/problems within area. d. Propose improvement activities which are consistent with district plans and city plans and policies. e. Develop declaration of neighborhood contributions. f. Provide for necessary communication within proposed area. g. Make arrangements for all committee meetings including meeting places, and meeting notifications. h. Submit pre-application and formal application to PED and district council(s). i. Provide committee representatives who can explain application during district council review and city selection process. 14 2. District council role a. Arrange for meetings within district where program information ' can be disseminated. b. Review all pre -applications, identify priorities and notify PED - which proposal should receive technical assistance. " C. May assist applicants in the preparation of application if - y requested and if the district council deems it appropriate. d. Review all applications from within district, identify priorities and forward to PED. - e. Provide for necessary communication among applicants within district. f. Coordinate review and priority -setting with other district councils if candidate area is located in more than one district. 3. PED role a. Conduct an NPP workshop prior to the beginning of each funding cycle. b. Provide staff spokesperson to disseminate program information at district council -arranged meetings. C. Disseminate program information through news media. d. Respond to specific requests for information or data dealing with application development. C. PED staff will if requested: (l) Give staff assistance for one area application per district - each cycle. (District may submit additional applications without PED assistance.) (2) Advise the district council and candidate areas on the feasibility and implications of application proposals and on compliance and funding regulations. (3) Present and discuss citywide goals, policies and considerations which may affect the district and candidate area's application. (4) Communicatewith city departments and agencies in order to find out about plans, programs, and other considerations which may affect the feasibility of application proposals. (5) Act as clearinghouse for all project proposals and provide _ information on proposals back to district councils. 15 rte' B. Selection Stave 1. Applicant role a. Provide neighborhood volunteers as well as staff members to be representatives who can explain the application to reviewers. b. Maintain communication within district and area about the selection process. 2. District Council role: " a. Evaluate applications. b. Forward recommendations and priorities to PED. 3. PED role a. Evaluate applications in terms of the selection criteria, comprehensive plans and capital allocation policies. b. Notify applicants of meeting dates of Planning Commission, CIB Committee, C. Make recommendations to the Planning Commission, Mayor and City Council. 4. Planning Commission role a. Tour NPP application areas. b. Evaluate applications in terms of comprehensive plan, Capital Allocation Policies, selection criteria, PED recommendations. C. Make recommendations to the Mayor and City Council. S. CIB Committee Role a. Evaluate applications in terms of Capital Allocation Policies. b. Make recommendations to Planning Commission, Mayor and City Council. 6. Mayor's role a. Review applications and recommendations from PED, Planning Commission and CIB Committee. b. Forward PED, Planning Commission, CIB Committee recommendation and his recommendation to City Council. 7. City Council role a. Review applications and recommendations. 16 b. Select projects for funding. s� 1 C. Approve budget for each selected project. C. Program Development and Implementation Stag 1. Selected NPP application role �- a. Refine proposal concept into a workable program or project. r - b. Establish and maintain a citizen participation process during the program development and implementation stages. C. , Secure private pledges to match declaration of neighborhood contributions. d. Identification and resolution of maintenance issues. C. Enter into a partnership contract with PED. ._ 'f. Certify that neighborhood contributions and maintenance agreements are carried out. g. Provide a program progress report to PED every three months, whish has been reviewed by the project committee. h. Complete an evaluation of the project at its completion. 2. District council role .�„ a. If requested, may assist selected NPP project in the development of its program. May sign development and partnership contracts for applicant if it is not incorporated. °ry b. Provide for necessary communication within the district regarding the status of the NPP area activities. C. Review and comment on ancillary program requests, i.e., UDAG, ;.y CIB, etc., originating from NPP area. 3. PED role a. Assign a PED staff person to each selected NPP project to assist them in the development and implementation of their program. asp, Specific responsibilities include assisting the NPP program committee in: (l) Finalizing program objectives (2) Selecting the tasks, activities, for achieving the program , objectives (3) Establishing program responsibilities J (4) Developing a program schedule 17 (S) Finalizing program costs (6) Drafting the final program (7) Securing necessary approvals for implementation x , (8) Monitoring program progress (9) Troubleshooting (10) Communicating with other city departments and agencies (11) Drafting Development phase and Partnership contracts (12) Regularly (every 6 months) inform the Planning Commission of the status of the NPP projects. b. Provide additional staff, as necessary, from PED's other divisions to assist NPP areas in the development and implementation of particular program segments. C. Enter into partnership agreement with NPP project, VII. PROGRAM EVALUATION Evaluation of the Neighborhood Partnership Program will be conducted at three year intervals and will involve the following processes: A. Accumulation of base data for individual NPP projects and the overall program. This will ensure that individual programs have viable objectives and provide the basis for measuring performance. B. Quarterly status reports will provide an ongoing monitoring process. This will also allow for timely adjustment of individual programs if necessary. Quarterly reports must document progress in meeting neighborhood commitments. C. An end evaluation of the individual projects will determine the extent to which the program has been successful. Since the program goals center on physical, economic and social improvements, the evaluation will be based on original objectives. D. An advisory task force with district council, nonproject agency, business association representatives and C.I.B., and Planning Commission members will be convened to assist PED in evaluations of the NPP. 18 vai ?i,�„ti t:.''.{s;.�` Y;;�1a�:t���`r 307.03 303 �N•e306.01 306.02 ri,i +, �iti• fv� 307.02 i' •►1(:��a Jam., •�t�l'%1i t,)"'� �rl f ►Lid ' t :yyS7'�w' I. � err �i`fy:-`��"'•f.14ti%•Y.�I.wf: •}LI•,?a ,r. 7`.s+�;,K;tai 3� . �• t5. AK �.•Y�J,��;l� ? 'PAN. PA7� 2 S a t r�aj�.f 311 +1 4...5 •,tR„t�r,�'9 •La f "."di►'� diel • -''l f � , � - S• 4i3� ••"i ! •'. ic •. 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M .f,'••tb 376.02 '1 >* •:� 2 to I Match I to I Match CREDITS NEIGHBORHOOD PARTNERSHIP PROGRAM Hermenia Cardenas EVALUATION TASK FORCE Rick Cardenas Alex -Edmund DaHinten Helen Dionisopoulous Mary Grace Flannery Linda Hirte David Lanegrans Joseph Levy Michael Mischke Mark Moeller Ronald Wesley Pauline Maxine Smiths• Mike Temalisss Sharon Voyda Ike Welborn Phyllis Willerscheidt Hardy Wright Kathy Ziemans 'Planning Commission Members s'CIB Committee Member '•'Unofficial Task Force Member ADMINISTRATION AND POLICY James J. Bellus, AICP, Director, PED DIRECTION Warren Hanson, Deputy Director, PED Peggy Reichert, Deputy Director, PED Gloria Bostrom, Project Manager, PED Lawrence Soderholm, AICP, Principal Planner, PED RESEARCH AND PLANNING Patricia James, Planner, PED James Zdon, AICP, Planner, PED BOARD OF DIRECTORS Russell Andrews Laventhol & Horwath Clark Arneson Bloomington Port Authority Win Borden Hessian, McKasy & Soderberg Dorothy Dolphin Dolphin Temporary Help Service Daryl Erdman College of St. Thomas John Ingebrand Minnesota Bankers Association Jim Lupient Lupient Oldsmobile Al Madsen City of Maple Grove Paul McDonald TCF Banking & Savings Jim Passeri Northern National Bank Jim Reissner First Bank Systems Dean Riesen Carlson Real Estate Co. Ron Sorenson Briggs & Morgan Jim Trucker Accent Real Estate Frank Weaver Norwest Bank TWIN CITIES -METRO CERTIFIED DEVELOPMENT COMPANY Small Business Administration 504 Loan Program GrwA 0 S.. I-,— d Financing For: Land, Building and Equipment TWIN CITIES -METRO 90 Percent Financing CERTIFIED DEVELOPMENT COMPANY Fixed Below Market Rates Suite 230- 10 20 Year Terms 8990 S rin b k D ' F g row nve Minneapolis, MN 55433 1 Telephone: (6 2) 786-9448 i Fax: (612) 786-9034 Who Are We? Twin Cities -Metro Certified Development Company (TCM -CDC) is a non-profit - corporation that was established to stimulate the growth of small businesses in the Twin Cities -Metro Area. The Staff of TCM -CDC has arranged financing for over 150 businesses under the SBA 504 Loan Program, with total loans exceeding $30,000,000. TCM -CDC provides secondary financing of 40 percent (not to exceed $750,000) of the project's cost, with fixed below market interest rates for qualified businesses, with terms of 10 - 20 years. Eligible project costs include: Land, building and related costs Equipment and related costs EXAMPLE: Uses of Funds Land, Building & related cost $ 750,000 Equipment and related cost 250,000 Total Uses of Funds $1,000,000 Who Is Eligible? The SBA 504 Loan Program Requires That Businesses: • Have a net worth of less than $6 million • Have a net profit after taxes averaging less than $2 million over the previous two years • Are located, or seek to locate in, the metropolitan area • Are for-profit corporations, partnerships or proprietorships • Have private -sector lender commitments for 50 percent of the project cost • Are able to provide 10 percent of project cost • Will be the actual "user" of the assets being purchased with the loan proceeds • Are not print media, lending institutions, gambling facilities, recreational facilities closed to the general public, or investment real estate companies • Retain or create one new job for every $35,000 of TCM -CDC funds • Maximum SBA 504 Loan is $750,000 • Minimum SBA 504 Loan is $50,000 - Sources of Funds _ - 50% First Mortgage Lender $ 500 000 40% 504 Loan 2nd Mortgage 400,000 10% Owner's Equity 100,000 Total Sources of Funds $1,000,000 To Apply Call: Robert Heck, Executive Director (612) 786-9448 or your local Bank or Savings & Loan ZOl cr_ MOSo )uuM 'pied 7uirls iJlji�, yljnoi t��.1� S ju.)wdojata(l .)}woua�.1 pur.,3utuueld;o iummird:)(I uoisi.+!Q tu,)tudoja.-,)(I pooyjoyt{ [.-).\ L _ ^.moi 4Z. It 14 04 cc ` Z , J s-� u J •`i 1. y� J ;J � t „�'.. "' J r ?' .n.. .n.., ill �: a W a o WHAT IS THE NPP? A neighborhood self-help program, the NPP gives grants and loans to neighborhood organizations, business associations and others to fund neighbor- hood improvement projects. The groups selected must design and manage the projects as well as find matcbing private contributions such as property improvements, "sweat equity," volunteer labor, in-kind services and foundation grants. WHO IS ELIGIBLE? Eligible applicants include District Councils, resi- dential block clubs, business associations and non- profit groups whose main purpose is serving Saint Paul residents or neighborhoods. WHERE CAN NPP PROJECTS BE? NPP projects can be agywhere in Saint Paul, including the downtown. '[1iere are some stipula- tions, though, on how NPP money is spent in different neighborhoods. Some of the money in the NPP pot is Community Development Block Grant (CDBG) funds and some is Capital Improvement Bonds (CIB) funds. CDBG funds can only be used in low income neighborhoods or for low income persons in other neighborhoods and CIB funds may only be used for physical improvements of public areas. ALICE AND JANE TALK ABOUT THE NEIGHBORHOOD PARTNERSHIP PROGRAM. HOW MUCH MONEY IS AWARDED? In the past, the awards have varied from $900 to $234,000. For each half-year cycle, about $550,000 to $700,000 is available, and five to eight applicants are selected. Funds are awarded as grants or low- interest loans. HOW MUCH PRIVATE MATCH IS REQUIRED? 'I1ic ratio of private to public dollars varies according to the income characteristics of the neighborhood. For highest -income neighborhoods, the project must match each public dollar with three private dollars in contributions. In the lowest income neighborhoods, each public dollar requires only one dollar in private match. WHEN CAN GROUPS APPLY? Groups can apply twice a year in the spring and fall. WHAT KIND OF PROJECTS ARE ELIGIBLE? • Property improvements for homes and busi- nesses, including renovation and repair. • Economic Development projects, including new construction, business attraction, business expan- sion and job creation. • Minorpublic improvements such as trees, decora- tive lights, benches and playground equipment. (But street paving, curbs, sewers, and recreation centers are generally not eligible.) • New public service programs such as neighbor- hood crime watches, block nursing services and other activities that rely on neighborhood participation. • Otherprojects benefiting neighborhoods. Innova- tive proposals are encouraged! BUSINESS ASSISTANCE, PLANNING AND FINANCING Whether you are just starting a small business or expanding an estab- lished, larger concern, you could benefit from PED's One -Stop Business Service. We offer a variety of services and financing programs that can help you, including: • Technical Assistance • Financial Services and Loan Packaging • Commercial Property Inventory • Small Business Incubator • Facade Improvement Financing • Wage Subsidies and Employment Center • Small Business Library • Commercial Real Estate Financing • Project Management Assistance • Site Location and Planning • Feasibility Analysis • Business Planning Assistance Contact: Department of Planning and Economic Development Economic Development Division 10th Floor -City Hall Annex 25 West Fourth Street Saint Paul, MN 55102 228-3265 I SAINT PAULMETRO EAST DEVELOPMENT CORPORATION: SMALL BUSINESS ADMINISTRATION 504 LOANS Program Purpose: To provide long term, below market, fixed rate financing through the SBA 504 Loan Program for established small businesses to expand their operations. How It works: The Saint Paul/Metro East Development Corporation issues debentures bought by private, institutional purchasers. These debentures carry a 100% guaranteed payback from the U.S. Small Business Administration. The development corporation lends the proceeds from its debenture sales to authorized small businesses. Minimum At least one new job for every $35,000 of Saint Paul/Metro East Requirements: Development Corporation's funds. Who Applies: Small businesses with a net worth of not more than $6 million and with net profits after taxes averaging less than $2 million over the previous two years. Eligible Costs: Businesses can use SBA 504 loans for land acquisition, construction or rehabilitation of a building, development costs, and acquisition of long- lived machinery and equipment. Working capital and refinancing are not eligible uses of funds. Amount Available: 40% of fixed asset costs up to $750,000. Minimum project size is approximately $120,000. Private Funds At least 10% owner equity or other local injection; 50% or the Required: balance from a bank loan. Interest Rate: About 2 points over the 10 year U.S. Treasury bond rate. Terms: 10 years for machinery and equipment; 20 years for real estate. Collateral: Second lien on land, building and equipment. Fees: Fees totaling about 3.3% of the SBA 504 loan amount are financed in the debenture. The development corporation also charges a $250 good faith application deposit refundable if the loan is closed or if SBA declines it. Approval Process: The application is reviewed by the SPEDCO Board of Directors and the SBA. A decision is made within 30 days after submission of a completed application. Depending on project need, SPEDCO may make additional loans in conjunction with SBA 504 financing. Contact: Saint Paul/Metro East Development Corporation, (612) 292-6155. SBA 7(a) GUARANTEED LOAN PROGRAM Program Purpose: To aid small businesses having difficulty obtaining conventional bank loans. How It Works: The SBA guarantees a commercial lender up to 90% repayment on its loans to eligible businesses. Start-up businesses may be required to finance 30% to 50% of the project with equity. PED staff prepare this loan application for businesses located in Saint Paul. Minimum Requirements; Enterprise must be a for-profit business with a positive net worth. Who Applies: Existing for-profit small businesses and start-up businesses. Eligible Costs: Working capital, machinery and equipment, leasehold improvements, land acquisition, construction and renovation of buildings, and purchase of businesses. Amount Available: SBA guarantees up to 90% of loans under $155,000 and up to 85% of loans of $155,000 or more. Maximum guarantee is $750,000. Private Funds Required: Depends on the net worth of the business. Interest Rate: Short-term maximum is 2-1/4% over prime; long-term maximum and 2-3/4% over prime. Terms: 10 to 20 years for land and building, 5 to 7 years for machinery, and 3 to 5 years for working capital. Collateral: Generally, first lien on assets being financed. Additional security is determined by lender on a project -by -project basis. Fees: PED charges an application fee of $2,000. In addition, SBA will charge a guaranty fee of 2% of the guaranteed portion of the loan. Approval process: Loan application must first be approved by a commercial lender. The lender then submits the package to the SBA for approval. After SBA approval the lender disburses the proceeds to the business. The process takes about 4 to 8 weeks. Contact: Saint Paul Department of Planning and Economic Development (PED), Economic Development Division, (612) 228-3265. COMMERCIAL VACANT BUILDING PROGRAM Program Purpose: To bring chronically vacant commercial buildings into productive reuse in a way that supports neighborhood revitalization, consistent with development plan objectives and design guidelines., _ How It Works: The City provides loans in an ongoing application process to provide gap financing. Minimum Project size may not exceed 25,000 s.f. nor $100,000 in program funds. Requirements: The building must be vacant one year and a financing gap must be documented. Who Applies: For profit and nonprofit developers, and the owners, leaseholders, or prospective purchasers of vacant buildings. Eligible Costs: Land acquisition, construction, rehabilitation, demolition, and other costs incidental to redevelopment as approved by the NDD. Rent subsidies may also be made available. Amount Available: Up to $100,000 per project. Private Funds Borrower equity and conventional lender participation is highly desirable. Available: Interest Rate: Determined on a project -by -project basis dependent upon the project's repayment ability. Terms: Negotiable; depending on project specifics, up to 20 years. Collateral: Subordinated mortgages and personal guarantees. Fees: Origination fee of 1-1/2% and other closing fees as required. Approval Process: Applications are reviewed by NDD staff for compliance with program guidelines and feasibility, and then by the Vacant Building Initiative Committee. Final approval is made by NDD staff and may include contingencies such as appraisal values or borrower compliance with additional requirements. Contact: Saint Paul Department of Planning and Economic Development (PED), Economic Development Division, (612) 228-3302. CITYWIDE AND NEIGHBORHOOD COMMERCIAL REHABILITATION LOAN PROGRAMS Program Purpose: To improve the appearance and to correct health,safety, and energy deficiencies of existing commercial properties. How It Works: The City of Saint Paul provides low interest loans to small and `medium- sized businesses, in conjunction with participating local lending institutions. Minimum For the Citywide Commercial Loan Program, the applicant's property Requirements: must be located in Saint Paul, be commercially zoned, and 200,000 s.f. or less (if owned) or 50,000 s.f. or less (if leased). For the Neighborhood Commercial Loan Program, applicant must meet at least one of the following criteria: 1) create jobs for low and moderate income residents; 2) serve low or moderate income residents; or 3) be located in a designated neighborhood target rehabilitation area. Who Applies: Individual building owners, developers, partnerships, corporations, tenant operators or contract for deed purchasers. Eligible Costs: Structural, mechanical and electrical repairs; exterior face lifting; parking lot resurfacing; landscaping; interior remodeling and redecorating; sign repair or replacement; architectural/ professional fees; and energy improvements. Amount Available: 50% of project costs up to $100,000, if a single project, or up to $150,000' for a multi -tenant building. Private Funds 50% or more of project funded through a bank loan. Required: Interest Rate: 4% for the Citywide Commercial Rehabilitation Loan Program, and 2% for the Neighborhood Commercial Rehabilitation Loan Program. Terms: Term matches that of the bank loan up to 25 years maximum. Collateral: Subordinated and/or equal lien position with bank. Fees: 1-1/2% origination fee on City's portion. Approval Process: Applications are reviewed by PED's Neighborhood Development staff. Processing should take from 3 to 4 weeks from receipt of a completed - application. Contact: Saint Paul Department of Planning and Economic Development (PED), Economic Development Division, (612) 228-3302. Minneapolis Economic Development How the Loan Works What's the Bottom Line? Company The Minneapolis Economic Development Company (MEDC) is a private, nonprofit corporation that assists small businesses in obtaining long-term financing. MEDC is certified by the Small Business Administration to process, package, fund and service SBA 504 loans. Who Qualifies? Any small business is eligible for MEDC 504 financing if it meets the following broad criteria: • Located within Hennepin County • Company net worth is less than $6 million • Profit after tax does not exceed $2 million • Positive cash flow for two of the last three years Who Doesn't Qualify? The following types of businesses are not eligible: • Nonprofit organizations • Investment or real-estate companies • Media firms which influence public opinion • Organizations involved with speculation or gambling Financing your project requires two loans — one from MEDC at below-market interest rates, and one from a local bank or other financial institution at current market rates. Typically, MEDC provides 40 percent of the project cost (with MEDC funds guaranteed by the federal government). The bank provides another 50 percent. You, the small business, provide the remaining 10 percent as equity. 50%— Financed by a financial institution 40% — Financed by MEDC with a subordinated lien position 10% — Your down payment or equity • The interest rate for the MEDC portion of your loan (a government guaranteed debenture) can be compared to the five and ten year U.S. Treasury bond rates at the time of loan closing. • The bank portion will be priced at its current market rate of interest. • The term of the MEDC loan will be either 10 or 20 years, determined by the useful life of the fixed asset being built or acquired. The Bank and You MEDC makes your loan request more "bankable" by subordinating its collateral position to the bank ( i.e., taking a second lien position on the assets being purchased). Eligible Uses of Loan Proceeds In addition, the bank's exposure is as little as 50 percent loan -to -value on the property or equipment while holding The MEDC offers fixed-rate financing to businesses acquiring capital assets such as:the first lien position on all the assets being financed. • Land • Building (new or used) • Equipment • Machinery • Leasehold improvements A business expansion is eligible for financing as long as the property is owner -occupied. Working capital (accounts receivable, inventory or accounts payable) is not eligible for financing under the 504 loan program. When you receive your 504 loan, not only are you helping your company, you're also stimulating the Minneapolis economy by: • Creating jobs • Expanding capital • Broadening the tax base • Positioning your company for long-term stability Also, local banks generate low- risk loans for their portfolios. More About the MEDC MEDC is staffed by the Minneapolis Community Development Agency (MCDA), the development arm of the City of Minneapolis. The MCDA provides funding and development programs to assist businesses and neighbor - floods with housing and economic revitalization. MEDC prides itself on giving personal attention to our clients. We will give you timely answers to your questions and help fill out all paperwork so that you can concentrate on what you do best... run your business! MEDC can assist in providing up to 90 percent financing for fixed- asset purchases between $125,000 and $2 million. Call the MEDC office at (612) 673-5176 to determine if the 504 program can help your business. Remember, the 504 program offers: • Up to 90 percent loan -to -value financing • Attractive fixed interest rates • Long-term financing (10 or 20 -year debentures) for lower monthly payments Let MEDC help you obtain the money you need to make your small business grow. You help your business, you help Minneapolis, you help your local banks. It's good business all around! The 504 program did for us what it was supposed to do --that is, keep the down payment low and allow us to increase our working capital to finance future growth... Minneapolis Oxygen Company "Fixed-asset financing for business acquisition, The program was super. MEDC I expansion and equipment" went out of its way to make things simple... We will use the 504 program again when the company expands. 1 � , rS�" AV F"t•0 M ` ,(l7 \ P^ `ij 1 ..... Handicaps, Inc. , t AV � . Q r C1 rel j^d r �' � i o N ,`, �� 'N '✓,�,\ i� Av � ,✓- For th"u%ival of our company, , , % `' ° °1, _ ' . ^ �I ��Ll + m every dollar counts. The 504program 1 was critical to our ability to 3 maintainthe business at this the the business at this location... a Sunburst Plastics, Inc. , _ .loo . '. The 504 program did for us what it was supposed to do --that is, keep the down payment low and allow us to increase our working capital to finance future growth... Minneapolis Oxygen Company TO: -John Miller, Economic Development Coordinator, City of Rosemount FROM: Mike MileAl DATE: July 27,, 1992 RE: Rosemount Port Authority Grants to Businesses You have asked whether the Rosemount Port Authority is authorized to issue direct grants to businesses in the community. I have re- examined the statutes relating to Rosemount's Port Authority (Minn. Stat. §469.048 et seq) and can find no power or duty under which the Rosemount Port Authority could make grants to area businesses. Generally speaking, port authorities are designed to assist in the development of land and improvements to real estate. Their direct involvement with individual businesses relates to land acquisition and business relocation, not infusing capital into specific enterprises. As we have discussed, you may wish to direct businesses which approach you for grants or similar types of assistance to contact the Small Business Administration or to call the State Department of Trade and Economic Development. JMM/pm MME O R A N D U M TO: -John Miller, Economic Development Coordinator, City of Rosemount FROM: Mike MileAl DATE: July 27,, 1992 RE: Rosemount Port Authority Grants to Businesses You have asked whether the Rosemount Port Authority is authorized to issue direct grants to businesses in the community. I have re- examined the statutes relating to Rosemount's Port Authority (Minn. Stat. §469.048 et seq) and can find no power or duty under which the Rosemount Port Authority could make grants to area businesses. Generally speaking, port authorities are designed to assist in the development of land and improvements to real estate. Their direct involvement with individual businesses relates to land acquisition and business relocation, not infusing capital into specific enterprises. As we have discussed, you may wish to direct businesses which approach you for grants or similar types of assistance to contact the Small Business Administration or to call the State Department of Trade and Economic Development. JMM/pm BUSINESS ASSISTANCE, PLANNING AND FINANCING Whether you are just starting a small business or expanding an estab- lished, larger concern, you could benefit from PED's One -Stop Business Service. We offer'a variety of services and financing programs that can help you, including: • Technical Assistance • Financial Services and Loan Packaging • Commercial Property Inventory • Small Business Incubator • Facade Improvement Financing • Wage Subsidies and Employment Center • Small Business Library • Commercial Real Estate Financing • Project Management Assistance • Site Location and Planning • Feasibility Analysis • Business Planning Assistance Contact., Department of Planning and Economic Development Economic Development Division 10th Floor - City Hall Annex 25 West Fourth Street Saint Paul, MN 55102 228-3265