Using CDBG to Bridge Economic Development financing gaps
23
Georgia Department of Community Affairs
description
Georgia Department of Community Affairs. Using CDBG to Bridge Economic Development financing gaps. States have programs to: Recruit (usually state funded) Market (federal and state mix) Develop Products (federal and state mix) Existing Business Expansion New Business Development - PowerPoint PPT Presentation
Transcript of Using CDBG to Bridge Economic Development financing gaps
Georgia Department of Community Affairs
States have programs to: Recruit (usually state funded) Market (federal and state mix) Develop Products (federal and state mix)
Existing Business Expansion New Business Development Entrepreneur and Micro-Enterprises
CDBG can be used in ALL Product Development to Bridge the Financing Gaps
Some Businesses are prepared to move forward with investments; however,
Bank’s are reluctant to provide traditional business financing because of perceived credit and collateral risks.
These “grey areas” of perceived risks are more extensive than any time in the past 30 years.
Great projects exists in these “grey areas” of perceived risks that can be stimulated through public-private partnerships and…
Utilization of “gap financing” programs such as CDBG-Employment Incentive Program, Downtown Development RLF, Life Sciences Fund, etc.
SOLVENCY
PROFITABILITY
Solid Credit
High Risk
GREY AREA
GREY AREA
Need to protect, build & conserve capital
Need to increase reserves
Need to lower risks
Lower real estate values (less collateral)
SOLVENCY
PROFITABILIY
STRUCTURING a CDBG GRANT–LOAN TO PRIVATE FOR-PROFIT BUSINESS
Loans to for-profit for purchase of fixed assetsAcquisition, construction and rehabilitation of commercial or industrial land, building(s), machinery and equipment and other real property improvements
* Loan repayments may capitalize or be placed into a Local, Regional or State RLF
Recipient – City of Quitman Sub-Recipient – Crown Health Care Laundry Services, Inc.
Grant/Loan Amount - $500,000
Project – Building Improvements
Private Investment - $500,000
Jobs – 140
Source Amount Use Amount
CDBG-EIP $ 500,000 Building Improvement $ 470,000
Grant Administration $ 30,000
City $ 1,000,000 Building Acquisition $ 1,000,000
City RLF $ 255,000 Building Improvement $ 255,000
OneGA EDGE $ 375,000 Building Improvement $ 375,000
CHLS $ 2,500,000 Equipment $ 2,100,000
Working Capital $ 375,000
Inventory $ 25,000
Total $ 4,630,000 Total $ 4,630,000
Eligible Activities: Projects must alleviate a “slum or blighted”
condition Public infrastructure, public facilities Loans to acquire and alleviate blighted
buildings/facilities Loan/lease payments may be capitalized into
a local RLF Any new jobs must be available to low- and
moderate-income persons
Acquisition and clearance of blighted property
Renovation and reuse of abandoned historical buildings
Commercial revitalization through façade improvements
Removal of environmental contaminants on property to enable it to be redeveloped for a specific use
Recipient – City of Boston Grant Amount - $343,591 Project – Renovate a blighted storefront alleviated deteriorated building conditions and stabilize the structure of the adjoining businesses.
Private Investment - $35,000
Source Amount Use Amount
CDBG-RDF $ 308,591 Acquisition $ 7,400
Construction $ 257,000
Architectural $ 25,700
Grant Administration $ 18,491
City of Boston $ 35,000 Architectural $ 35,000
TOTAL $ 343,591 TOTAL $ 343,591
CDBG-EIP GRANTSPUBLIC INFRASTRUCTURE
Public InfrastructureAcquisition, construction and rehabilitation ofWater - lines, tanks, wells, treatment plants, Sewer -
gravity lines, force-mains, pump stations, treatment plants,
Rail spurs - switches, track, track base, derails, stopsOther - wastewater pretreatment plant, gas lines
(“red”)Public FacilitiesWorkforce development centers / Child care facilities
Count your temporary construction jobs !!
Recipient – Oconee County Sub-Recipient – Zoom Bait Company, Inc. & St. Mary’s Healthcare Systems, Inc.
Grant Amount - $373,422 Project – sewer line extension Private Investment - $7.5 Million
Jobs – Create 12, Retain 127 (172 existing jobs)
Source Amount Use Amount
CDBG-EIP $ 373,422 Sewer Line Construction $ 157,778
Engineering Fees $ 18,933
Grant Administration $ 10,000
County $ 186,344 Sewer Line Construction $ 157,777
Engineering Fees $ 28,567
Zoom $ 2,000,000 Existing Capital Investment $ 2,000,000
St. Mary’s $ 5,500,000 Building, M&E and F&F $ 5,500,000
Total $ 7,873,055 Total $ 7,873,055
Zoom Bait Company, Inc.St. Mary’s Healthcare
Systems Inc.
Program Income! LOCAL REVOLVING LOAN
FUNDS (RLF)
EIP/RDF loan payments capitalize local RLF RLFs can be used for local economic
development needs Opportunities available to partner with
local banks to finance eligible activities (same as EIP&RD) that create employment for L/M persons, eliminate blight, etc.
Unused funds can be recaptured or returned to regional RLF fund or state
Georgia Department of Community Affairs
Community Development Financewww.dca.ga.gov
(404)679-1587
