HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 10/15/2019 - SECOND READING OF ORDINANCE NO. 120, 2019, APPROPRAgenda Item 4
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AGENDA ITEM SUMMARY October 15, 2019
City Council
STAFF
SeonAh Kendall, Economic Health Manager
Shannon Hein, Economic Health Business Specialist
John Duval, Legal
SUBJECT
Second Reading of Ordinance No. 120, 2019, Appropriating Prior Year Reserves, Unanticipated Revenue and
Authorizing Transfer of Funds for the Small Business Revolving Loan Fund Program.
EXECUTIVE SUMMARY
This Ordinance, unanimously adopted on First Reading on October 1, 2019, authorizes the transfer of funds
from the Keep Fort Collins Great Fund to the General Fund and appropriate therein and to appropriate
reserves and current year revenue from Platte River Power Authority (PRPA) Economic Development Program
funds in the General Fund to create the City of Fort Collins Revolving Loan Fund for small businesses and
startup companies operating in Fort Collins. The City will use the funds to support access to capital for small
businesses in Fort Collins, which have historically not had access to traditional financial capital markets
(“under banked” or “non-bankable”) The demographic focus of this program will be low-income, minority,
veteran, and women-owned small businesses.
STAFF RECOMMENDATION
Staff recommends adoption of the Ordinance on Second Reading.
ATTACHMENTS
1. First Reading Agenda Item Summary, October 1, 2019 (w/o attachments) (PDF)
2. Ordinance No. 120, 2019 (PDF)
Agenda Item 4
Item # 4 Page 1
AGENDA ITEM SUMMARY October 1, 2019
City Council
STAFF
SeonAh Kendall, Economic Health Manager
Shannon Hein, Economic Health Business Specialist
John Duval, Legal
SUBJECT
First Reading of Ordinance No. 120, 2019, Appropriating Prior Year Reserves, Unanticipated Revenue and
Authorizing Transfer of Funds for the Small Business Revolving Loan Fund Program.
EXECUTIVE SUMMARY
The purpose of this item is to authorize the transfer of funds from the Keep Fort Collins Great Fund to the General
Fund and appropriate therein and to appropriate reserves and current year revenue from Platte River Power
Authority (PRPA) Economic Development Program funds in the General Fund to create the City of Fort Collins
Revolving Loan Fund for small businesses and startup companies operating in Fort Collins. The City will use the
funds to support access to capital for small businesses in Fort Collins, which have historically not had access to
traditional financial capital markets (“under banked” or “non-bankable”) The demographic focus of this program
will be low-income, minority, veteran, and women-owned small businesses.
STAFF RECOMMENDATION
Staff recommends adoption of the Ordinance on First Reading.
BACKGROUND / DISCUSSION
A revolving loan fund (RLF) is a gap financing tool used for the development and expansion of small businesses
and startup companies. This Ordinance will support the first step in the development of the City’s RLF that over
time will become an “evergreen” source of capital for underserved and disadvantaged borrowers in the
community. “Evergreen” is the term used to refer to a self-replenishing pool of money through interest and
principal payments from previous loans to be used for new loans as budgeted and appropriated in future years.
Businesses with 1-100 employees make up 98% of all firms in Fort Collins. These businesses employ 47% of
the workforce and provide 40% of the total wages in our community.
Demonstrated need:
Data from the small business needs assessment deployed in 2018 demonstrated the need and interest
for capital resources from women-owned businesses, specifically women-owned businesses in the
revenue band of $100,000 - $499,000.
A report by Minority Business Development Agency <http://www.mbda.gov/sites/default
/files/DisparitiesinCapitalAccessReport.pdf>, found that, “Among firms with gross receipts under
$500,000, loan denial rates for minority firms were about three times higher, at 42 percent, compared to
those of non-minority-owned firms, 16 percent.”
The City’s Economic Health Office (EHO) has identified access to capital as a barrier to the small business
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community within the Economic Health Strategic Goal, B.4, Increase Capital to Support Startup
Companies and Entrepreneurs. As such, EHO believes a revolving loan fund can support in meeting
Strategic Objective B.4.
Goals
The goals of the RLF include:
A. Encouraging business starts, strengthening and/or expansion of businesses through self-employment. This
in turn facilitates job creation as a means of economic self-sufficiency for low-and moderate-income
individuals.
B. Helping bridge the financial gap for small businesses which might eventually qualify for bank financing and
preparing the small business owner for traditional bank relationships.
C. Foster diversity in the business community by encouraging business ownership among traditionally
underserved minorities, women, and the disabled.
D. Promote entrepreneurship and business innovation as a means of harnessing the creative potential of small
businesses and investing in the economic success of the community.
Contributions to this RLF comes from two sources:
Platte River Power Authority (PRPA) support of economic development efforts (2017, 2018, 2019 and
beyond)
2019 City of Fort Collins Cluster Funding (one-time contribution)
Since 1982, Platte River has granted funds annually to support economic development efforts. Prior to 2017,
these contributions received by the City of Fort Collins were directed toward Rocky Mountain Innosphere
(Innosphere). In August 2017, the City requested PRPA to remit the funds directly to our organization in order to
support the development of a small business lending program. These funds were received in 2017 and 2018
and are in the City’s General Fund reserve available for appropriation. Funds to be appropriated are as follows:
Source Fund Amount
2017 PRPA Contribution General Fund $21,878
2018 PRPA Contribution General Fund 21,916
2019 PRPA Contribution General Fund 36,436
City of Fort Collins Cluster Contribution KFCG (transfer to General Fund) 98,500
Total RLF Appropriation and Transfer $178,730
Summer 2019, the City issued Request for Proposal (RFP) #8963 seeking a qualified, licensed and accredited
capital vendor to manage and administer the revolving loan fund on the City’s behalf (Attachment 1).
Term loans would be available to eligible small businesses for up to $50,000 for the following purposes:
Working capital
Equipment
Inventory
Business purchase
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Oversight
A representative from the selected vendor will meet with City of Fort Collins staff at least semi-annually to review
the program, lending data, and to provide updates. Staff will provide updates to City Council annually.
City Manager Recommendations
The City Manager is recommending the supplemental appropriations in this Ordinance. He has determined that
these appropriations, together with all other previous appropriations for this fiscal year, will not exceed the City’s
current estimate of actual and anticipated revenues for this fiscal year.
The City Manager is also recommending the transfer in this Ordinance of the $98,500 in the Keep Fort Collins
Fund to the General Fund. He has determined that these transferred funds, which were previously appropriated
this fiscal year for expenditure in the City’s Cluster Program to support small business, will continue to be used
for the same purpose in the RLF.
CITY FINANCIAL IMPACTS
Total PRPA contribution of $80,230 was received and earmarked for this program in 2017, 2018, and 2019.
Additional PRPA contributions from 2020 and beyond may also be used to expand this program. The remaining
$98,500 is from the strategic redeployment of 2019 appropriated cluster funds to support small businesses as
the Economic Health Office re-evaluates the City’s cluster program.
The City intends to work with a vendor who can leverage these dollars up to ten times the initial investment,
creating a larger loan pool for small businesses and creating a true evergreen fund in Fort Collins.
ATTACHMENTS
1. Request for Proposal Revolving Loan Fund (PDF)
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ORDINANCE NO. 120, 2019
OF THE COUNCIL OF THE CITY OF FORT COLLINS
APPROPRIATING PRIOR YEAR RESERVES, UNANTICIPATED REVENUE
AND AUTHORIZING TRANSFER OF FUNDS FOR THE SMALL BUSINESS
REVOLVING LOAN FUND PROGRAM
WHEREAS, the purpose of this Ordinance is to appropriate funds to be used to establish a
revolving loan fund program to provide a source of capital for underserved and disadvantaged
small businesses and start-up companies in Fort Collins that have historically not had access to
financial capital markets, such as those owned by women and minorities (the “RLF Program”);
and
WHEREAS, the RLF Program is intended to provide an “evergreen” source of funding,
meaning it will be a self-replenishing fund to be annually appropriated from the principal and
interest payments received from earlier loans to be used to fund new loans; and
WHEREAS, the RLF Program is consistent with and will further Goal B.4 in the City’s
Economic Health Strategic Plan adopted by City Council in Resolution 2015-059 (“Goal B.4”);
and
WHEREAS, Goal B.4 calls for increased capital to support start-up companies and
entrepreneurs by supporting the development of new and enhanced capital access tools, like the
RLF Program; and
WHEREAS, Article V, Section 9 of the City Charter permits the City Council, upon
recommendation of the City Manager, to make supplemental appropriations by ordinance at any
time during the fiscal year, provided that the total amount of such supplemental appropriation in
combination with all previous appropriations for the fiscal year does not exceed the current
estimate of the actual and anticipated revenues to be received by the City during the fiscal year
and such appropriations may include funds available for expenditure from reserves accumulated
in prior years, notwithstanding that such reserves have not previously been appropriated; and
WHEREAS, the City Manager has recommended the supplemental appropriations
described herein and determined that these appropriations are available and previously
unappropriated from the General Fund and will not cause the total amount appropriated in the
General Fund for this fiscal year to exceed the current estimate of actual and anticipated revenues
to be received in the General Fund during this fiscal year; and
WHEREAS, Article V, Section 10(b) of the City Charter authorizes the City Council
during any fiscal year, upon recommendation of the City Manager, to transfer by ordinance any
unexpended and unencumbered appropriated amount or portion thereof from one fund or capital
project to another fund or capital project, provided that at least one of the following criteria is
satisfied: (i) the purpose for which the transferred funds are to be expended remains unchanged,
(ii) the purpose for which the funds were initially appropriated no longer exists, or (iii) the
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proposed transfer is from a fund or capital project in which the amount appropriated exceeds the
amount needed to accomplish the purpose specified in the appropriation ordinance; and
WHEREAS, the City Manager has recommended the transfer of funds from the Keep Fort
Collins Fund to the General Fund as described herein and determined that the purpose for which
the transferred funds are to be expended remains unchanged; and
WHEREAS, the RLF Program and the appropriations and fund transfer described herein
to establish it will benefit the public’s health, safety and welfare and will serve the public purposes
of furthering Goal B.4, improving the community’s economic health, and making capital available
to underserved and disadvantaged small businesses and start-up companies in Fort Collins.
NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT
COLLINS as follows:
Section 1. That the City Council hereby makes and adopts the determinations and
findings contained in the recitals set forth above.
Section 2. That there is hereby appropriated from prior year reserves in the General
Fund the sum of FORTY-THREE THOUSAND SEVEN HUNDRED NINETY-FOUR
DOLLARS ($43,794) for expenditure in the RLF Program.
Section 3. That there is hereby appropriated from anticipated revenue budgeted in the
General Fund for this fiscal year, but not previously appropriated in the General Fund, the sum of
TWENTY-TWO THOUSAND DOLLARS ($22,000) for expenditure in the RLF Program.
Section 4. That there is hereby appropriated from unanticipated revenue in the General
Fund the sum of FOURTEEN THOUSAND FOUR HUNDRED THIRTY-SIX DOLLARS
($14,436) for expenditure in the RLF Program.
Section 5. That the unexpended appropriated amount of NINETY-EIGHT
THOUSAND FIVE HUNDRED DOLLARS ($98,500) in the Keep Fort Collins Great Fund is
hereby transferred to the General Fund and appropriated therein for expenditure in the RLF
Program.
Introduced, considered favorably on first reading, and ordered published this 1st day of
October, A.D. 2019, and to be presented for final passage on the 15th day of October, A.D. 2019.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk
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Passed and adopted on final reading on the 15th day of October, A.D. 2019.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk