City of Minneapolis Request for Committee Action. Subject: Business Technical Assistance Program (B-TAP) funding recommendations

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1 City of Minneapolis Request for Committee Action To: Community Development & Regulatory Services Date: 3/1/2016 Referral: N/A From: Community Planning & Economic Development Prepared by: Daniel Bonilla, Sr. Project Coordinator Presented by: Daniel Bonilla File type: Action Subcategory: Contracts & Agreements Subject: Technical Assistance Program (B-TAP) funding recommendations Description: Authorizing Community Planning & Economic Development (CPED) Staff and the appropriate City Officers to negotiate and execute contracts for the Technical Assistance Program (B-TAP), consistent with the recommendations given in the body of this report, subject to modifications as approved by the CPED Director. Previous Actions: On March 9, 2012, City Council directed CPED staff to develop a Technical Assistance Program and issue a Request for Proposals (RFP) for non-profit community development organizations to provide technical assistance services to Minneapolis businesses. The City Council authorized contracts for the first round of B-TAP funding on June 15, 2012; the second round on December 6, 2013; and the third round on December 12, Ward/Address: All Wards Background/Analysis: The City of Minneapolis Technical Assistance Program (B-TAP) provides funding for business-consulting services that support new business development, retention, and growth. B-TAP allows the City to expand its capacity by providing funding to local, non-profit business development organizations that already have community organizing expertize, cultural competency and technical skills. The City awarded B-TAP funding to ten nonprofit providers in 2015 and to eleven providers in The term of the agreements is two years. For the 2016 funding round, B-TAP will support technical assistance activities with the following objectives: Evaluate the feasibility of business ideas to prepare prospective entrepreneurs interested in opening a business in the city. Successfully operate, launch and operate new businesses in Minneapolis. Retain existing business in Minneapolis. Expand existing businesses in Minneapolis through revenue growth, job creation, and facility expansions. The B-TAP program utilizes a combination of flexible City dollars and Community Development Block Grant (CDBG) dollars. The flexible City dollars are directed to support second stage business growth and business retention. The CDBG dollars are directed to serve low-income micro entrepreneurs that meet Federal eligibility and reporting requirements.

2 The following table shows how the dollars are allocated to the four objectives of the program: Category Stage of Total Available Funding Unit Price Max hours per Expected # of es A Feasibility $100, $ per hour Hours (Approx. 200 es) B New es $ 150, $ 5, per N/A 30 new businesses C Retention $ 175, $ per hour Hours (Approx. 117 es) D Expansion $ 150, $ 5, per N/A 30 business expansions Total $ 575, businesses Funding to support new businesses (category B) and expansions (category D) is based on an outcomes model with flat payment of $5,000 for each demonstrated business start and growth (measured as revenue, real estate or jobs), regardless of the time invested. Funding to support feasibility evaluation (category A) and business retention (category C) is paid on an hourly basis. Payments of $50 per hour with a cap of 10 hours per business are paid for services in feasibility evaluation, and $75 per hour with a cap of 20 hours per business for services in business retention. The program is also reserving $25,000 in bonuses to incentivize technical assistance to register Disadvantaged Enterprise (DBE) certification. Bonuses are given under a first-come, first-served basis until available funds are exhausted. In 2016, B-TAP will allocate 44% of its funding to foster new business development, 31% for business retention, and 26% for business growth. Program Performance In previous years, the B-TAP program was crucial in assisting business retention, helping companies to remain in operation during the recession. With the economic recovery the program is focused on developing new businesses and supporting businesses expansion as well as incorporating new disadvantaged businesses in the general economic growth. Service providers report in a quarterly basis to B-TAP Staff (see reports packages attachment B) The B-TAP Providers contracted for the term served 173 businesses, of which 40 were new businesses. The business consulting services supported the creation of 278 new jobs and the retention of 797. The term performance of BTAP providers resulted in providing service for a total of 144 businesses, of which 41 were new businesses. The business consulting services supported the creation of 149 new jobs and retention of 571. The B-TAP program works primarily with low-income entrepreneurs and with businesses that provide employment opportunities to individuals from socially and economically disadvantaged groups. In % of service recipients were of low- to extreme-low income.

3 B-TAP 2015 Participant Income Level 14% 26% Extreme Low Income Very Low Income 25% Low Income Not Low Income 34% In 2015, businesses assisted were owned by a diverse set of entrepreneurs, including: African Immigrant (20%), American Indian (1%), Asian (2%), Black/African American (38%), Latino/Hispanic (16%), and White (23%). In total, 59% of the businesses were female-owned and 41% maleowned. B-TAP 2015 Service Recipients Cultural Background 23% 20% African Immigrant (20%) American Indian (1%) 1% 2% Asian (2%) Black/African (38%) 16% Latino/Hispanic (16%) White (23%) 38% In 2016 B-TAP staff will conduct an evaluation of the program to assess the number of businesses remaining in operation after three years from receiving the B-TAP assistance. Continuous Improvement and Innovation Staff evaluates and establishes B-TAP goals annually. The City s B-TAP team conducts an annual evaluation with the service providers to assess their technical capacity and the market opportunities for small businesses. An interdepartmental team takes this input and along with community members evaluates program outcomes, assesses trends, and sets goals for the next year (See attachment C for program updates). The team also takes this input to continuously improve internal program management systems including data tracking and reporting. In addition, in 2015 B-TAP undertook new activities to expand the reach of the program.

4 B-TAP 101 series B-TAP launched the B-TAP 101 training series to understand how businesses can better navigate the City of Minneapolis. Participants included 50 City employees, 25 community partners, and over 300 businesses. As a result of the B-TAP 101 Series, we created seven videos with captions in Hmong, Spanish, and Somali. The following videos are available on the City s website: B-TAP Introduction Navigating Development Review Getting a license with the City of Minneapolis Operating a food related establishment in the City Resources to support businesses in Minneapolis Disadvantage Enterprise certification Doing business with the City of Minneapolis Faces of Minneapolis B-TAP created a campaign called Faces of Minneapolis es to showcase the program s impact in the everyday lives of Minneapolis residents. Outreach resources were created to increase the City s visibility in the business community (see attachment D). Opportunities Fair In October, B-TAP hosted the first City of Minneapolis Opportunities Fair. The event included presentations on purchasing opportunities from seven department leaders including CPED, Human Resources, IT, Convention Center, Public Works, and the Minneapolis Parks and Recreation Board. Additionally the event included three trainings on how to do business with the City, presented by Procurement, Civil Rights, and CPED. Over 300 businesses attended. Current Funding Round An RFP soliciting proposals for the latest round of technical assistance support was released to neighborhood organizations, community development corporations, business associations, and other community partners, and posted on the City s website on December 22, An informational meeting was hosted on January 8, The RFP defined the eligible activities as those that support the economic vitality of local small businesses through technical assistance. Suggested activities support the creation, expansion and retention of businesses in Minneapolis, including activities like educational classes or one-on-one sessions regarding legal, regulatory, and tax issues; financial record keeping; marketing and merchandizing; financial management; business operations; and business planning (see attachment A for RFP) CPED received 12 proposals by the January 22 deadline requesting a total of $1,080, The total amount available was up to $575,000, making the evaluation process very competitive. All

5 proposals were reviewed and evaluated by staff from CPED, the Civil Rights Department, and representatives from the State of Minnesota Department of Employment and Economic Development (DEED) and the local office of the U.S. Small Administration (SBA). Recommendations Process The evaluation team reviewed each proposal based on the following criteria articulated in the RFP: a) Organizational background, capacity and historical performance (20 points) b) skills, tools and systems (25 points) c) Program approach and service model (25 points) d) Target population (20 points) e) Program timeline, budget and leverage (10 points) To define the dollar allocations, the team combined the average score of each proposal, with the level of available and requested funds and the organization s area of expertise and historical performance in creating, expanding and retaining small businesses in Minneapolis. If the organization received an award in a previous B-TAP funding round, the organization s performance and level of completion was taken into consideration. The selected service providers will enter into outcomes-based agreements with the City to deliver specified services to Minneapolis businesses and entrepreneurs. Service providers will be required to track and report to the City, at minimum, the following: demographic information, types of businesses assisted, number of hours assisted and nature of the assistance, number of jobs created or retained and number of businesses established or expanded. Staff provides all the report templates. Organizations are paid on a reimbursement basis after services have been provided and the deliverables have been received and reviewed by staff. Recommendation for current B-TAP Service Providers Staff recommends full or partial funding for eleven proposals (see table below). Staff is not recommending funding for one proposal. The rationale for the recommendations is described below. The Neighborhood Development Center (NDC) has expertise in translating training and technical assistance into jobs, training over 4900 entrepreneurs since 1993; their proposal offers a solid curriculum to create successful business owners. NDC has received B-TAP funding since 2012 and has performed above average in their level of completion. Metropolitan Economic Development Association (MEDA) has a well-established business model; last year, MEDA connected with more than 1,295 clients through their services, helped companies secure over $186 million in contracts with 10% going to Minnesota minority businesses, and created or retained 445 jobs, of which 55 were in Minneapolis. Metropolitan Consortium of Community Developers (MCCD) has provided exceptional technical assistance to Minneapolis businesses for decades; in 2015, its staff focused on economic development projects that increased both access to capital and technical assistance dollars resulting in their business borrowers retaining or creating 626 jobs. MCCD maintained a consistent performance in previous B-TAP contracts. Northside Economic Opportunity Network (NEON) has expertise working with entrepreneurs in North Minneapolis, providing business training and technical and financial assistance. NEON has shown strong performance in its previous B-TAP contracts. African Development Center (ADC) serves economically disadvantaged businesses in the African community and provides comprehensive business programs to business owners. ADC too has shown a strong performance providing B-TAP services. Lake Street Council extensive experience in providing one-on-one technical assistance and workshops on business retention issues; its proposal showed appropriate activities in line

6 with their values and objective for the Lake Street community, and a reasonably-sized fund request tailored to recent performance in its B-TAP contract. Women Venture is an established brand and aligns well with the City s goals and reaches a specific target market. Women Venture has a near-average performance in its current B- TAP contract. The Latino Economic Development Center (LEDC) has a near-average performance in their current B-TAP contract, and seems to be a better fit for offering feasibility education and ongoing technical assistance. The University of St. Thomas Small Development Center (SBDC) has good capacity and is able to provide assistance to entrepreneurs through direct contact, referrals, or contracted community partners. SBDC s performance is near-average and it works primarily with existing businesses. African Economic Development Solutions (AEDS) is recognized by the team to have increasing potential to assist businesses; it currently partners with MCCD and NDC to increase its technical capacity and access to leveraged funds. Recommendation for a new B-TAP Service Provider The evaluation team is recommending adding Comunidades Latinas Unidas en Servicio (CLUES) to the B-TAP family. CLUES is an established organization, recognized as having organizing expertise and serving the growing Latino community. While the review team had some concerns regarding CLUES limited experience in providing business consulting services, the organization was able to demonstrate enough experience assisting businesses in 2015 to obtain a recommendation. Rationale for Not Funding The evaluation team did not recommend funding Community Enhancement Services (CES) for this funding round; it applied for all four categories for a total of $142,500. The team decided not to fund CES at this time since its proposal lacked adequate leveraged funds, demonstrated no track record, and showed insufficient organizational capacity.

7 2016 Funding Recommendations Summary Organization Rating Scope Requested Recommended Neighborhood hours for Feasibility $150, $110, Development Center - 7 New es (NDC) hours for Retention - 8 Expansion Metropolitan Economic Development Association (MEDA) Metropolitan Consortium of Community Development (MCCD) Northside Economic Opportunity Network (NEON) African Development Center MN (ADC) hours for Retention $75, $60, Expansion hours of Feasibility $47, $45, hours of Retention hours of Feasibility $105, $82, New es hours of Retention - 2 Expansion hours of Feasibility $150, $80, New es hours of Retention - 4 Expansion Lake Street Council hours of Feasibility $42, $42, New es hours of Retention - 3 Expansion Women Venture hours of Feasibility $65, $35, New hours of Retention - 1 Expansion Latino Economic hours of Feasibility $50, $35, Development Center - 3 New es (LEDC) hours of Retention Small 77-2 New es $100, $30, Development Center (SBDC) - 4 Expansion African Economic Development Solutions (AEDS) Comunidades Latinas Unidas en Servicio (CLUES) hours of Feasibility $ 78, $30, New hours of Retention hours of Feasibility $ 75, $ 25, New es

8 Financial Review: No additional appropriation required, amount included in current budget. Future budget impact anticipated. Approved by the Permanent Review Committee. Meets Small and Underutilized Program goals. Attachments: A. Technical Assistance Program RFP B. Technical Assistance Reports C. Program Updates D. B-TAP Brochures