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Rls�kspvlffi� REQUEST FOR COUNCIL ACTION Date: 00/10/2008 Item No.: 12.b Department Approval City Manager Ap roval Item Description: Consider Membership in the Twin Cities Community Capital Fund (PROJO004) 1. BACKGROUND 1.1. From 1999 to 2005, the City implemented a Small Business Loan Program that offered up to $25,000 per loan in a low- interest loan to local businesses to help fund improvements to building interiors and exteriors, landscaping, signage, parking lots, stormwater management systems, and accessibility. In order to obtain these funds, a business needed to work through its bank the bank completed all underwriting on behalf of the City and, if a City loan was granted, the bank also serviced the loan. Upon loan repayment, the bank provided the City its principal and the bank retained the interest to cover its costs for the services described above. During the life of this fund, the City issued eight loans totaling $170,055, of which two are still in repayment. Repayment of the final loan should be completed by April 2012. 1.2. Currently, the City of Roseville does not have any programs designed to assist existing or new businesses within the community. one opportunity the City has to help small businesses with financing is by becoming a member of the Twin Cities Community Capital Fund (TCCCF). TCCCF, which started in 2005, is a mechanism by which a city, county, or economic development organization within the seven - county metropolitan region can leverage ten times its initial capital investment to assist small business within its borders or service area. The purpose of the fund is to assist small businesses fill financial gaps that cannot be closed through traditional bank lending. 1.3. Currently there are 27 members participating in the Community Capital Fund. Members can join at three levels -- $50,000, $100,000, or $200,000, which translates in to $500,000, $1,000,000, and $2,000,000 loan maximums per project. The Fund pools members' capital together, which allows it to create loans larger than any one member's individual contribution. 1.4. Membership in the TCCCF comes with a money -back guarantee. The funds remain the property of each respective member and may only be used to fund TCCCF loans; if, after three years, a member does not see the benefits it anticipated from membership in the fund, members may withdraw their money from the Loan Fund escrow or reduce their position in the Fund down to the $50,000 level. In addition to the equity contribution to the fund, members must pay a nonrefundable enrollment fee of $5,000. 1.5. with a TCCCF loan, small businesses can finance fixed assets, including land and building purchases; building construction (permanent financing only ) ; leasehold improvement and building renovations; machinery and equipment purchases, renovations, and moving expenses; and working capital (when secured by fixed assets with a fixed repayment schedule) . TCCCF Page 1 of 3