Transcript Economic Development Presentation – NCDA 2013 Annual Meeting

Economic Development
Presentation – NCDA 2013 Annual
Meeting
By James Barnes
Community Development Director
Lawrence, MA
1
My Background
• HUD 36 years
– UDAG’s
– 108’s
– CDBG Economic Development Training and
Monitoring
• City CD Director last five years
– 108
– CDBG Small Business Loan Fund
– Commercial Façade Program
2
Currently Working On
• Restarting Small Business Revolving Loan Fund
– On hiatus for 7 years
– Our loan portfolio either repaid or defaulted – no
more income
– We have $500,000 to work with
– Re-started in 2012
– First wave of applicants not qualified
3
Currently Working On - 2
• Starting a Micro Enterprise Lending Program
– Taking half of the fund
– Fewer compliance issues
– Hired a Technical Assistance Contractor with a
financial “boot camp” program
– Establishing a relationship with new CDC financial
stability center
– Most of our “applicants” last year were micro
anyway
4
Six Challenges to Doing Economic
Development with CDBG
From both a HUD and City
perspective
5
1. The Promoters vs The Realists
• Promoter's proposal: 108 loan to cut through
two floors of an historic mill to accommodate
a battery manufacturer’s cranes.
• Realist’s proposal: small loan to buy 4
computerized sewing machines to increase
growing company’s output. Located in old mill
with high vacancies
6
2. Markets Change
• A lot of time goes into developing a city
business loan program
• Big projects (such as one funded with 108)
take time
Our Gateway example
• Mill occupancy dropped instead of
increasing
• No longer demand for parking, no
parking revenues to pay 108 loan
7
3. A Program Without Focus
• Little Impact
• Susceptible to political
interference
• Difficult to market – audience too
broad
8
4. Staff Competencies
•
•
•
•
•
HUD Regulations
The lending culture and language
Internal processes and controls
Documents
The local business environment
9
5. Working with New Type of
Borrower
• New Immigrant Small Business
Owner
• Social Enterprise
• New Young Entrepreneur
10
6. Borrower Capacities
• New Immigrant entrepreneurs
– No banking relationships
– Cash basis
– Grey economy participants
– Borrowing at high rates
– Language and cultural barriers
11
Borrower Capacities (2)
• Recent college grads and social
entrepreneurs
– Large student loans
– Lots of energy & enthusiasm
– Impatient with city processes
– Pitch contests and instant
gratification
12
Recommendations
13
Build/Hire Expertise or
Contract for Expertise You Don’t
Have
•
•
•
•
•
Underwriting
Technical assistance and training
Closings
Servicing
Collections
14
Understand the Market
15
The Importance of Underwriting
• In house or consultant
• Double check the assumptions and
the market analysis
• Do it even if not required (for
instance with micro enterprises) –
OMB Circulars do apply
16
Avoid 570.203 Special Economic
Development Activities
If You Can Do It Another Way
17
Borrow from Best Practices
• Lowell, Massachusetts
• Davenport, Iowa
• Madison Development
Corporation, Wisconsin
18
Lowell, MA
• Small Business Loan
• Best Retail Practices (Matching
Grants)
• Downtown Venture Fund
–Start Up Retail in Downtown
• Contact Theresa Park
[email protected]
19
DDJ - The Genesis and Program Details

Why the Program Was Created


The City of Davenport sought to create an
extraordinary incentive in order to encourage
business creation and expansion in our
downtown.
Program Details

Businesses creating jobs in the DDJ can opt for
either:
 A $3,000 per job created 0% interest loan
for 60 months
OR
 A $1,000 per job cash grant (set up in the
City’s system as a forgivable loan pending
the actual job creation)

All businesses have two years to create the jobs
pledged and then must maintain them for three
additional years.
20
City of Davenport, Iowa
Please contact Bruce Berger at (563) 328-6706 or [email protected]
for additional information.
21
Madison Development Corporation
• Funding “hard to finance” local businesses and
creating jobs since 1977
• CDBG supported Revolving Loan Fund of $3.6 million
• Originated over 400 loans
• Helped create over 4,000 jobs
• Self-sustainable, receiving no operating grants, since
1980’s: Operations funded entirely from interest
earned and fees
• Meeting Madison’s changing credit needs
• Evolving to be a leader in financing Madison’s high22
technology sector
Frank Staniszewski, President
[email protected]
23
Use Available Training Resources
• Paul Webster, Mark Tigan Presentations to
NCDA
• National Community Development Council
• HUD’s Economic Development Toolbox
• HUD’s “One CPD” Technical Assistance
24
Final Thoughts
25
Complex Projects Take Time
26
New vehicle/ pedestrian
Bridge over the North Canal
Brownfield remediation, new storm
water system, and improved parking
Riverfront playground
and community gardens
Streetscape improvements
and utility upgrades
27
Non “Economic Development”
Projects are Economic Drivers
28
Union Crossing Phase One
50 Island Street/ One Union Street
29