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MOTION APPROVING COMMUNITY DEVELOPMENT BLOCK GRANT FUNDING TO LOCAL ORGANIZATIONS THAT SUPPORT BUSINESS START-UPS AND ENTREPRENEURS
recommended action
RECOMMENDATION
It is recommended that the City Council by motion:
1. Approve Community Development Block Grant funding to local organizations that provide support to business start-ups and entrepreneurs in Stockton.
2. Authorize the City Manager, or his designee, to take appropriate and necessary actions to carry out the purpose and intent of the motion.
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Summary
Under the guidance of the Council adopted Economic Development Strategic Plan (February 2015), the Economic Development Department created a new Business Entrepreneurship initiative. The initiative was designed to provide financial assistance to organizations that support start-up businesses and entrepreneurs located in Stockton. A competitive process resulted in a total of nine applications received with six organizations being recommended for funding. Community Development Block Grant dollars will be used to fund the six Business Entrepreneurship grants totaling $85,796.
DISCUSSION
Background
In April 2014, the City Council conducted a workshop to develop a Strategic Work Plan and, at that time, Economic Development was identified as a priority. The plan was recently reviewed by the Council and Economic Development, once again identified as one of the top strategic priorities.
In February 2015, the City Council adopted a comprehensive Economic Development Strategic Plan to help guide the City in determining where to allocate resources and identify priorities. The Plan outlines several key priorities, goals, and objectives to strengthening the local economy by creating new job opportunities, encouraging entrepreneurship and innovation, enhancing fiscal sustainability, and increasing private investment throughout the Stockton community.
One of the core strategic objectives is the development of an Entrepreneurship-Innovation program (Strategic Plan-Item D, p.19) that addresses the following:
“Statement of opportunity/need: Active entrepreneurial development programs, including initiatives to expand access to capital for growing firms, are essential components of comprehensive employment growth and cluster-development efforts.”
Present Situation
To help accomplish the goals and objectives outlined within the Plan, the Economic Development Department created a new Business Entrepreneurship initiative in 2016 to support new and expanding start-up businesses and entrepreneurs in Stockton. Some of the past recipients include:
• Huddle: Created the Entrepreneurship Lab and Entrepreneurship in Residence Programs; hosted successful pitch events; a total of 10 businesses received rent relief subsidy; a total of 19 individual program participants.
• Stockton Impact Corps: Offered personal finance workshops through local libraries to assist low to moderate income individuals; a total of 19 program participants.
• Downtown Stockton Alliance: Worked in conjunction with Centro Community Partners to offer financial and business training courses.
• Goodstock Productions: Utilized funding to enhance three local StockMarket events which supported: 90 vendors at StockMarket one, 115 vendors at StockMarket two and 105 vendors at StockMarket three.
• Small Business Development Center: Offered business consulting services to new and existing businesses, a total of 327 served with this program.
The competitive process began on February 13, 2018, with the release of a Notice of Funding Availability, known as a NOFA, which solicited the public to submit applications and concepts that provide support and services to entrepreneurs and start-up business owners. Applications were due March 26, 2018. In addition, announcements were posted to the City’s website, and Facebook page and an article was included in the March issue of the Economic Development Department’s monthly newsletter. The NOFA outlined areas of focus and specific criteria, such as:
• Providing business services and technical assistance to new start-ups and home-based businesses
• Providing outreach and connecting eligible entrepreneurs to capital financing
• Creating new, or enhance existing, programs for targeted industries identified in the City’s Economic Development Strategic Plan
• Linking workforce development programs with start-up businesses and entrepreneurs
A total of nine applications were received, three of which did not meet the criteria outlined within the NOFA and were not recommended for funding.
A Selection Committee met on April 24, 2018, to review and discuss the applicant’s proposals. The Selection Committee was made up of representatives from, the University of the Pacific, San Joaquin Delta College, and F&M Bank. City staff facilitated the selection meeting.
The Selection Committee made the following recommendations on applicant funding:
|
Applicant |
Amount Requested |
Amount Recommended |
|
HATCH Workshop |
$ 31,400 |
$ 23,451 |
|
Goodstock Productions |
$ 10,927 |
$ 5,000 |
|
Stockton Impact Corps |
$ 20,000 |
$ 10,000 |
|
Huddle Cowork, LLC |
$ 28,000 |
$ 17,345 |
|
Mexican Heritage Center and Gallery |
$ 30,000 |
$ 20,000 |
|
SBDC |
$ 20,000 |
$ 10,000 |
|
|
$ 140,327 |
$ 85,796 |
Following is a brief description of the types of services and activities each applicant proposes to undertake with the awarded grant funds:
• HATCH Workshop - plans to utilize funding to support a new program, Inspire Youth, to be run in connection with the San Joaquin County Office of Education. Inspire Youth is a live/work space and community workshop program that targets Stockton youth to provide an opportunity to develop a craft, market their skills, and build a career.
• Goodstock Productions - requested funding to increase and enhance its Stockmarket events through 2018. Stockmarket is an event held in Downtown Stockton featuring small boutique and “makers” retail space, allowing small start-up entrepreneurs a low-cost opportunity to showcase new and unique handcrafted and locally sourced products to a growing customer base.
• Stockton Impact Corps - requested funding to enhance its micro loan program by offering workshops, consultations, and working capital to its clients. The organization manages a micro-lending program for small businesses and entrepreneurs in Stockton. Its mission is to redistribute community assets to create financial stability by providing support to those wishing to start a business, and that might otherwise find it difficult to obtain start-up funds.
• Huddle Cowork - plans to expand its incubation program known as the Entrepreneur Lab. The Entrepreneur Lab provides prominent coworking space, office use, conference facilities and event space. The program will incubate 10-15 companies per round.
• Mexican Heritage Center and Gallery - will partner with Centro Community Partners to provide a Basic Entrepreneurship Program training for 40-50 low-to-moderate income Stockton-based entrepreneurs.
• NEC Small Business Development Center - will use the grant funds to enhance SBDC services, specifically targeting entrepreneurs. The SBDC offers businesses and entrepreneurs free and confidential one-on-one consulting services, business coaching, and classes. They currently work with the City by providing general technical assistance and Small Business Micro Loan support to business owners and individuals planning to open a business in Stockton.
Should Council approve the recommendations of the Selection Committee, formal agreements will be executed with each grant recipient and funding will be provided on a reimbursement basis.
FINANCIAL SUMMARY
The 2017-18 Annual Action Plan for the Community Development Block Grant (CDBG), Home Investment Partnerships, and Emergency Solutions programs allocated $80,000 for the Business Entrepreneurship initiative in Community/Program Services Account No. 054-8224-640.
During the 2016-17 Annual Action Plan for the CDBG, Home Investment Partnerships, and Emergency Solutions programs there were unspent funds in the amount of $5,796. These funds were from recipients that closed out their program years with grant funds remaining. The unspent funds will be utilized to provide additional support for grant recipients during the 2017-18 year, bringing the total available funding to $85,796.