Consideration and Adoption of Resolution No. 2018-12:  A resolution of the City Council of the City of Flagstaff, Arizona approving the award to Rural Community Assistance Corporation and approving the transfer of the Economic Development Administration Revolving Loan Fund (EDA RLF).

The City of Flagstaff encourages entrepreneurial endeavors and seeks tools to assist them. The U.S. Department of Commerce, Economic Development Administration granted Arizona revolving loan fund monies. Those funds were transferred to the City in 2015 and now the City seeks to make the funds available to targeted industries within the four-county Northern Arizona Council of Governments (NACOG) region as previously approved. In addition, the City of Flagstaff worked with the Economic Development Administration to determine the most appropriate process to place the funds in the hands of the targeted businesses.

 

There is no direct financial implication. By transferring the Revolving Loan Fund, the City facilitates the management of the EDA RLF to a capable entity while allowing staff to focus on existing work programs.  If approved, the current amount in the EDA RLF transfer will be $267,050 (plus accrued interest).
 

Transferring the portfolio to Rural Community Assistance Corporation (RCAC) meets policy requirements to support small, minority-owned, start-ups, and existing business in targeted sectors in the four-county NACOG region.

Council Goal - Economic Development - Grow and strengthen the economy.
Regional Plan Goal ED.3 Regional economic development partners support the start-up, retention, and expansion of existing business enterprises.
Regional Plan Goal ED.4 Support efforts to recruit diverse new businesses and industries compatible with the region.

Council has not made a decision on the transfer of the portfolio to another organization from the City of Flagstaff.

- Approve award and authorize the City of Flagstaff to enter into the Transfer Agreement.
- Decline award and return the Revolving Loan Funds back to the Economic Development Administration (EDA).
- Reject all bids and develop an internal work program to market the program and service the loans.

The U.S. Department of Commerce, Economic Development Administration (EDA) in the 1980's granted to the Arizona Department of Commerce (ADoC) through their Revolving Loan Fund Grant Program monies to assist businesses in all Arizona counties except Maricopa and Pima. ADoC transferred the portfolio to the Northern Arizona Council of Governments (NACOG) in 1997. NACOG worked with the EDA and the City of Flagstaff to transfer the portfolio to the City of Flagstaff in 2015. In 2016, the City of Flagstaff developed a request for proposals seeking a financial lending institution to assist with servicing the EDA RLF program; there were no responses. After further internal consideration, staff developed an RFP to transfer the portfolio. The Rural Community Assistance Corporation responded to the RFP demonstrating great capacity and competence in working across various jurisdictions to assist targeted disadvantaged populations in 13 western states.

A formal solicitation was posted on November 30, 2017. The City was seeking proposals from qualified Proposers who are a public or non-profit entity and have the interest, capacity, and experience to administer an Economic Development Administration, Revolving Loan Fund Grant Program in Northern Arizona. The solicitation closed on December 22, 2017 with a total of two firms supplying their Statement of Qualifications for this service.  A panel of three evaluator's scored the proposals.  The highest ranked
scoring firm was Rural Community Assistance Corporation (RCAC).
 

Managing the EDA RLF program takes staff time. Even while the program has not been running, it has taken considerable staff time to manage the processes to date.

The EDA RLF has been inactive since 1997. Conceptually, the funds should be a great asset to a community and to an economic development office. The reality is that the program is cumbersome and has restrictions and requirements that can impede its success.  For instance, the program requires that applicants have two private dollars for every RLF dollar loaned. Such a requirement is more stringent than traditional lending.

By transferring the portfolio, the funds will be presented to targeted populations throughout the four county region that is overseen by NACOG.

Approval of the transfer of the portfolio to RCAC will place the revolving loan fund monies into the hands of an organization that has demonstrated an ability to successfully assist targeted populations in various jurisdictions across the western United States. RCAC will be able to market the program directly to the targeted audience. Their expertise will increase the chances of the revolving loan fund monies of being used in the region whereas the funds have been dormant since 1997.

Involve: Staff has involved the public and specifically local banks, lending institutions, regional economic development organizations
Collaborate: Staff worked with local financial lending institutions, local and regional economic development practitioners, and the Economic Development Administration to determine the best way to market this program and to connect the funds to the targeted audience.
Empower: Staff and the Economic Development Administration determined that a Request for Statement of Qualifications would be the most appropriate process, inviting through Planet Bids appropriate agencies to respond.