|
BURBANK REDEVELOPMENT AGENCYTuesday, January 11, 2005Agenda Item - 1 |
|
|||||||||||||
|
|||||||||||||
PURPOSE
The purpose of this report is to provide information to the Redevelopment Agency Board and City Council to discuss the possibility of creating a low-interest loan program for local community-based non-profit organizations.
BACKGROUND
At the November 2, 2004, Council Meeting, Mayor Marsha Ramos asked that the Council discuss the possibility of developing a low-interest loan program for non-profit organizations in the City that wish to purchase or build new facilities.
DISCUSSION
In anticipation of this discussion item, staff researched various options for providing assistance to non-profit organizations including a low-interest loan program. The following outlines several options:
� Community Development Block Grants (CDBG) Use CDBG funds to provide small grants to non-profits. CDBG funds are very limited and the City would need to require the non-profits to satisfy HUD requirements of blight elimination, job creation or retention and increasing services to low and moderate-income residents.
This may be a possible option for perhaps a very limited number of organizations; the primary drawback of this option is that services must be directed to CDBG eligible areas and population only.
� Non-profit Incubator Another option is to develop an incubator environment for non-profit organizations by applying a business incubator model: office space; conference
rooms; and business services housed in one building that support the growth of multiple organizations until they are prepared to purchase their own buildings. The incubator may provide access to facilities and equipment otherwise unavailable or unaffordable to non-profit organizations (again, such as office space, multipurpose/conference rooms and other meeting space, shared office equipment and staffed reception area). The incubator may provide office rental space on a sliding scale based on the size and other established criteria.
Setting up such a facility would be fairly costly. In addition, space in the building would be limited to accommodate only a few organizations and the City/Agency would have an on-going role developing criteria for eligibility and monitoring the organizations selected to be housed in the incubator as well as possibly administering the operations of the facility.
� Redevelopment Agency �Loans� as Funding Leverage Use Redevelopment Agency funds to provide loans structured similarly to economic development loans (i.e. Porto�s Bakery, Urban Outfitters, etc.). Depending on the structure of the program the loan amount would be dependent on the non-profit organization�s ability to service the debt� or if structured as a type of �forgivable loan,� clear performance measurements would likely need to be established to support the loan forgiveness schedule.
Another option would be to develop a program to leverage Redevelopment Agency funds with grants from foundations, other organizations or public agencies. The Agency could appropriate funds and award assistance to local non-profit organizations on a case-by-case basis as a way to leverage other funds. The Agency might allocate funds as �matching� or �partial matching� dollars once an organization proved funds from other sources have been awarded or secured.
We hope this brief report provides an initial overview of some options for a low-interest loan program for community-based non-profit organizations.
CONCLUSION
The purpose of this report is to provide the Redevelopment Agency Board and City Council information on establishing a low-interest loan program for local community-based non-profit organizations to purchase or build new facilities.
RECOMMENDATION
Staff requests direction on how to proceed with this matter.
_____________________ � After preliminary research and conversations with existing non-profit community lenders in the Los Angeles area, staff has learned that a low-interest loan program for property acquisition or construction may be difficult to develop. It has been the experience of at least two non-profit lenders (Los Angeles County Community Development Commission and Pasadena Development Corporation) that organizations may have difficulty demonstrating repayment ability and if funded may not be able to service the debt.
|