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ECONOMIC DEVELOPMENT AGENCY
OF THE CITY OF SAN BERNARDINO
FROM:
Colin Strange, Project Manager
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SUBJECT:
GROW SAN BERNARDINO
FUND
DATE:
April 3, 2002
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SvnoDsis of Previous Commissioo/CouucWCommittee Action(s):
On April 4, 2002 the Redevelopment Committee recommended approval ofthis item to the Community Development
Commission.
Recommended Motion(s):
(Community DeveloDment Commission)
MOTION:
THE COMMUNITY DEVELOPMENT COMMISSION APPROVE AND AUTHORIZE THE
DEPOSIT OF AN ADDITIONAL $250,000 WITH THE GROW SAN BERNARDINO FUND USING
PROCEEDS FROM THE SALE OF THE PUBLIC ENTERPRISE CENTER.
Contact Person(s):
Gary Van Osdel/Colin Strange
NIA
Phone:
663-1044
NIA
Project Area(s)
Ward(s):
Supporting Data Attached: Ii'l Staff Report 0 Resolution(s) 0 Agreement(s)IContract(s) 0 Map(s) 0 LetterlMemo
FUNDING REQUIREMENTS Amount: $ 250,000
Source:
Land Sale Proceeds
SIGNATURE:
NA
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Colin Strange
Project Manager
Commissioo/Council Notes:
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Stephaniel AgendalCDCI4-15-02 Grow America
COMMISSION MEETING AGENDA
Meeting Date: 0411512002
Agenda Item Number: ~
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ECONOMIC DEVELOPMENT AGENCY
STAFF REPORT
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Grow San Bernardino Fund
BACKGROUND:
The National Development Council (NDC) is a Washington D.C. based non-profit consulting
organization with whom the Redevelopment Agency (the "Agency") has had a contractual
relationship for the last 18 years. Grow America Fund Inc. (GAF), a wholly-owned subsidiary of
the National Development Council, was created as a small business lending company to increase
access to capital and to meet the small business financing challenges within the NDC's client
communities. Grow America Fund is the nation's only small business lending company
authorized by the Small Business Administration (SBA) as a lending institution and is
recognized by the United States Treasury Department as a community development financial
institution. Grow America Fund is capitalized with equity contributed by the community in
which it operates and all contributed capital is earmarked for lending in that community under
the community's name. Through the Small Business Administration's secondary market, Grow
America Fund is able to "multiply" a community's investment 400%+ in small business loans.
On November I, 1999, the Community Development Commission (the "Commission") adopted
Resolution CDC/1999-39 approving a Capital Grant Participation Agreement between the
Redevelopment Agency and Grow America Fund Inc., establishing the Grow San Bernardino
Fund (the "Fund") and approving the deposit of $200,000 in CDBG funds with said Fund. To
assist the Agency in launching the Fund, the NDC set aside $200,000 ofGAF unrestricted capital
as well. Three months later, on February 22, 2000 the Commission approved the deposit of an
additional $300,000 in proceeds from the sale of the property at 70 I north "E" Street with the
Fund. These two actions by the Commission effectively resulted in the leveraging of $2,800,000
in lending capacity.
CURRENT ISSUE:
All funds loaned by the Fund ultimately return to the Fund to be re-Ioaned, either through the
sale of the SBA guaranteed portion of the loan (which can be as high as 80%) or through normal
principal and interest repayment. Demand for this program has been far higher than anticipated
and to date loans in the amount of $1,812,000 have been made or committed (against the original
Agency commitment of $500,000). All of the loans have been for the expansion of existing
business in San Bernardino with ajobs impact of94 people to date.
Since the inception of the program the Fund has received an additional $62,971 in principal and
interest payments leaving a balance in the fund of $1 ,050,971 available for further loans. This is
illustrated in the table below.
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Stephanie/AgendalCDC/4-15-02 Grow America
COMMISSION MEETING AGENDA
Meeting Date: 04/15/2002
Agenda Item Number: ~
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Initial Agency Investment November 1, 1999
NDC Contribution November 1, 1999
Further Agency Investment February 22, 2000
Total Cash Contribution
Leveraged 4 X
Principal and interest payment received in the past two years
$200,000 +
$200,000 +
$300.000 +
$700,000
$2,800,000
$62.971 +
Total Cash Available for loans
Less: Loans made or committed
Funds available for further loans
$2,862,971
- $1.812.000
$1,050,971
Owing to the popularity of the program amongst local businesses (there are currently four
additional loans under review) this program is about to experience a cash flow shortage and will
either have to have an additional injection of cash or be suspended until further principal and
interest payments are received from which new loans can be made. Therefore, staff proposes that
an additional sum of $250,000 be deposited with the Fund enabling the Agency to leverage an
additional million dollars worth ofloans to local businesses.
ENVIRONMENTAL IMPACT:
Pursuant to Section 15332, Class 32, this Project is categorically exempt from California
Environmental Quality Act (CEQA) requirements (infill project).
FISCAL IMPACT:
Proceeds ($580,000) from the Agency's sale of the Public Enterprise Building are currently on
deposit, have not been appropriated for any other purpose and are available for the proposed use.
RECOMMENDATION:
That the Community Development Commission approve and authorize the deposit of an
additional $250,000 with the Grow San Bernardino Fund using proceeds from the sale of the
Public Ente 'se Centt;r.
Gari Van gptel
Executive)'irector
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Stephanie/Agenda/CDC/4-15-02 Grow America
COMMISSION MEETING AGENDA
Meeting Date: 04/15/2002
Agenda Item Number: ~