Item 456/2024
Final
City of Garden Grove
INTER-DEPARTMENT MEMORANDUM
To:
Lisa L. Kim From: Ursula Luna-Reynosa
Dept:
City Manager Dept: Economic Development and
Housing
Date: 11/12/2024
Subject: Award a contract to National Council for Community Development, Inc. DBA Grow America for business technical assistance and loan underwriting services. (Cost: Not-to-Exceed: $75,000)(Action Item)
OBJECTIVE
Request City Council approval to award a contract to the National Council for Community Development, Inc. (DBA Grow America) to provide technical assistance and loan underwriting services to local businesses.
BACKGROUND
The City has implemented the Garden Grove MicroBiz Program, which is a new program for small businesses looking to start or expand operations in Garden Grove. The program will focus exclusively on microenterprise businesses, which is defined by the U.S. Department of Housing and Urban Development (HUD) as a commercial enterprise with five or fewer employees, one or more of whom owns the enterprise.
The MicroBiz Program will have a one -on-one technical assistance component that will be required for each business that participates in the program. An initial assessment will be performed for each business to identify the ir technical assistance needs, and each business will be provided a work plan to complete before submitting a loan application for consideration. Participating businesses are required to receive a minimum of five (5) hours of business counseling, and all start-up businesses and those open for less than one (1) year will be required to receive ten (10) hours of business counseling . One-on-one business counseling and technical assistance will cover the following topics (if necessary): self-esteem building; skill development; business planning and counsel ing; financial management and budgeting; workforce development; sales and marketing; and technology, etc.
Additionally, the MicroBiz Program will allow business owners to apply for a loan up to $50,000 once they have completed the required technical assistance component of the program. The loan amount will be based on the need of each business and will not exceed $25,000 per full- time employee the business plans to hire or retain. The term of the loan will be a maximum Item 456/2024
of 5 years and will accrue simple interest at a rate no lower than 3%, but no higher than 75% of the current U.S. prime rate. As of November 1, 2024 the U.S. prime rate is 8%, therefore the current maximum interest rate for the loan would be 6%. Eligible loan expenses include:
working capital, including inventory, business license and building permit fees, and payroll reimbursement; purchase of equipment; r efinancing or consolidating existing debt ; and reimbursement of soft costs for insurance, legal or accounting expenditures.
DISCUSSION
A RFP was issued on August 27, 2024, to identify qualified firms to deliver business assistance and loan underwriting services. By the September 24, 2024 deadline, four (4) proposals were received and evaluated based on qualifications, proposal quality, budget, time management, and past performance with government agencies.
An internal review committee conducted the proposal assessments, with the following final scores:
Rater Grow America
RightSource
Services
Upwind
Strategies
Community
Collaborative
A 90 88 82 68
B 86 82 77 64
C 87 81 77 66
TOTAL 263 251 236 198
The internal review committee chose the top two proposals (Grow America and RightSource Services) for further interviews to assess their experience in direct technical assistance and loan underwriting. Following these interviews, Grow America emerged as the most suitable candidate due to its proven expertise and track record.
Grow America i s the nation’s oldest non -profit community development organization and serves as a technical assistance provider in the areas of affordable housing, economic development, community development planning and policy development, and federal grants administration. Grow America is uniquely qualified to deliver the requested services as it has been an innovator in helping over 100 communities throughout the U.S. develop, implement and refine their economic development policies and programs. Grow America’s most r ecent and relevant experience includes administration of the San Joaquin County and City of Long Beach revolving loan fund programs.
Staff recommends awarding the contract to Grow America for the remainder of FY 2024-25, with the potential to extend for up to five years, based on performance.
FINANCIAL IMPACT
There is no impact to the General Fund. The contract amount will not exceed $75,000 for FY 2024-25. For subsequent years, the budget will increase to $85,000, with a 3% annual cost- of-living adjustment for each renewal. Funding will come from Community Development Block Grant (CDBG) funds, as ap proved in the City’s FY 2024 -25 Annual Action Plan on April 9, 2024, and was included in the biennial budget for FY 2024-25.
Item 456/2024
RECOMMENDATION
It is recommended that the City Council:
Award the contract to the National Council for Community Development, Inc. (DBA Grow America) for technical assistance and loan underwriting services, in a not-to- exceed amount of $75,000 for FY 2024-25, with the potential to extend the contract for up to five (5) years.
Authorize the City Manager, or designees, to execute the contract referenced above, and make minor modifications as appropriate thereto, on behalf of the City; and Authorize the City Manager, or designees, to exercise option year terms and sign the option year amendments.
ATTACHMENT(S)
1. Microenterprise Technical Assistance Services Agreement
2. MicroBiz Program Flyers