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HomeMy WebLinkAbout28. 18-202 APRIL 10, 2018 18-202 RESOLUTION (CARRIED 7-0 LOST LAID OVER WITHDRAWN ) PURPOSE: APPROVE CAPITAL CATALYST MATCHING FUNDS FROM ECONOMIC DEVELOPMENT REVOLVING LOAN FUND INITIATED BY: DEPARTMENT OF COMMUNITY DEVELOPMENT WHEREAS, the Greater Oshkosh Economic Development Corporation (Greater Oshkosh) and the City of Oshkosh recognize the need for a targeted funding initiative to assist startups and entrepreneurs in greater Oshkosh; and WHEREAS, Greater Oshkosh received a$125,000 grant from Wisconsin Economic Development Corporation (WEDC) under the Capital Catalyst Program for a 1:1 matching grant to help entrepreneurs and companies with startup costs in 2016 and those funds have been disbursed; and WHEREAS, Greater Oshkosh approached the City to provide the matching grant funds from the City's Revolving Loan Fund for a second$125,000 grant from WEDC; and WHEREAS, Wisconsin Economic Development Corporation will require a $125,000 local match for a second Capital Catalyst Program for Greater Oshkosh; and WHEREAS, the $125,000 matching funds from the City's Revolving Loan Fund can be used as match for a second $250,000 Capital Catalyst Fund and comply with WEDC program requirements. NOW THEREFORE BE IT RESOLVED, that the Common Council of the City of Oshkosh hereby approves reallocating $125,000 from the Economic Development Revolving Loan Fund Manual to match a $125,000 grant from WEDC to create a second Capital Catalyst Program Fund and the proper City officials are hereby authorized to enter any documents necessary for purposes of same and to take those necessary steps to implement said program. TO: Honorable Mayor and Members of the Common Council FROM: Allen Davis, Community Development Director Trena Larson, Finance Director DATE: April 5, 2018 RE: Approve $125,000 in Capital Catalyst matching Funds from Economic Development Revolving Loan Fund BACKGROUND The Wisconsin Economic Development Corporation (WEDC) is offering grant funds through the Capital Catalyst Program to local Economic Development agencies to help entrepreneurs and start-up companies in their service area. The Greater Oshkosh Economic Development Corporation (GO -EDC) and the City applied for the WEDC grant in 2016 and was successful. With these funds depleted, GO -EDC is applying for a new grant from WEDC for $125,000 and this application will require a local match of $125,000, the same as the 2016 WEDC grant application. The Long Range Finance Committee and City staff have reviewed the proposal and support the grant application and RLF matching funds request. ANALYSIS The WEDC Capital Catalyst program is a $1 WEDC to $1 local matching grant program for funding. The request to use $125,000 from the RLF will be doubled by the WEDC grant of $125,000. In this way, the City's $125,000 will leverage another $125,000 in additional funds immediately. Additional private investment will multiply that city investment again. In 2016, WEDC awarded the $125,000 grant to GO -EDC with the condition that the local match is documented prior to the disbursement of the WEDC grant funds. There are a few critical points: • WEDC funds could be used with the company as grant funds, loan funds or equity stakes in the companies or any combination. The City's RLF match would be used as loans. City Hall, 215 Church Avenue P.O. Box 1 130 Oshkosh, WI 54903-1130 920.236.5000 http://www.ci.oshkosh.wi.us • GO -EDC could apply for more WEDC grant funds if the $250,000 Capital Catalyst program is invested within 18 months. • The program will be used to target the same types of businesses that are best fits for Oshkosh - advanced manufacturing, aviation and aerospace, information technology, software etc. • This funding program may also prove crucial in recruiting entrepreneurs to Oshkosh from UW -Oshkosh Aeroinnovate and other local entrepreneur programs. Both the GO -EDC RLF Committee and the GO -EDC Board of Directors have recommended support for another round of Capital Catalyst funding. The CHAMCO Board of Directors recently voted to contribute approximately $55,000 in residual funds to GO -EDC for the purpose of matching the Capital Catalyst application. When the $55,000 is made available, the City's contribution from the RLF would be reduced by the CHAMCO contribution. FISCAL IMPA The City's RLF has about $1,650,000 in the fund. The City has budgeted $250,000 for RLF loans in 2018 in addition to the $125,000 match to the WEDC grant. If the WEDC grant is awarded and the RLF loans the budgeted $250,000, the RLF could be reduced to $1,275,000 at the end of 2018. The balance remaining in the RLF should be adequate to serve the RLF needs to invest in other job creation or retention projects in the near term. RECOMMENDATION The City Council approves the $125,000 in Revolving Loan Funds to match the $125,000 in WEDC Capital Catalyst grant funds. Respectfully Submitted, v1l Allen Davis Community Development Director Trena Larson Finance Director Approved, Mark Rohloff City Manager City Hall, 215 Church Avenue P.O. Box 1130 Oshkosh, WI 54903-1130 920.236.5000 http://www.ci.oshkosh.wi.us GREATER O S H K! rS H CORPORAIO NT April 6, 2018 Mayor Steve Cummings City of Oshkosh 215 Church Avenue P.O. Box 1130 Oshkosh, WI 54903-1130 RE: Revolving Loan Fund — Quarterly Summary — Q4 2017/Q1 2o18 Dear Mayor Cummings: The Greater Oshkosh Economic Development Corporation appreciates the opportunity to administer the Greater Oshkosh Revolving Loan Fund (RLF). The Greater Oshkosh EDC Board of Directors and Revolving Loan Fund Committee believe that this program provides, and will continue to provide, necessary growth capital for area small businesses. Greater Oshkosh EDC promised to offer quarterly updates to the council on RLF activity and this letter serves as that update. A total of two loans have been administered by the Greater Oshkosh EDC RLF program to date. Thus far, one loan was repaid in full in April 2017 and all loan payments are current and loan reporting is being monitored for the outstanding loan. There are currently two RLF prospects with which we are working. We received an application from one prospect this week, and the other prospect is working with their lender to finalize the gap amount that they will need to fill. The Greater Oshkosh Capital Catalyst Fund completed its first round and has been an incredibly strong asset to businesses getting started in greater Oshkosh. As a reminder, this fund was developed by reallocating $125,000 from the Revolving Loan Fund and a 1:1 match from the WEDC Capital Catalyst Program, totaling a $250,000 fund for startups in Oshkosh. The fund has a minimum loan of $1o,000; maximum loan of $1oo,000; and grant eligibility of $1o,000 per entity. We currently have $o left in the fund for this round and are reapplying for another award from the Wisconsin Economic Development Corporation. Please find attached a report we have provided with further detailed information on both funds. The Greater Oshkosh EDC RLF Committee and Board remains excited and optimistic about future prospects for helping businesses grow in our own backyard. Please contact us anytime at (920) 230-3322 if you have questions or to provide more information. Sincerely, f "o�- VIA Jason E. White, CEO Greater Oshkosh Economic Development Corporation cc: Thomas Pech, Deputy Mayor Debra Allison -Ashby, Council Member Steve Herman, Council Member Caroline Panske, Council Member Jake Krause, Council Member Lori Palmeri, Council Member Mark Rohloff, City Manager Allen Davis, Community Development Director REPORT: Greater Oshkosh Revolving Loan Fund & Capital Catalyst Fund April 2018 FUNDS DISTRIBUTED: Greater Oshkosh Revolving Loan Fund: Company Amount Loaned Amount As of Outstanding Offbeat Press $75,000 $49410 4/1/2018 GR EATER $30,000 Fully Repaid April 2017 TOTAL $105,000 IT Bee Bella $65,000 ECONOMIC OSHK Roberts Defense $10,000 S H Upright Kids $10,000 Grant Advanced Manufacturing CORPORAT'IONT REPORT: Greater Oshkosh Revolving Loan Fund & Capital Catalyst Fund April 2018 FUNDS DISTRIBUTED: Greater Oshkosh Revolving Loan Fund: Company Amount Loaned Amount As of Outstanding Offbeat Press $75,000 $49410 4/1/2018 5G Benefits $30,000 Fully Repaid April 2017 TOTAL $105,000 IT Greater Oshkosh Capital Catalyst Fund: Company Award Type of Award Industry RG Manufacturing $90,000 Loan Advanced Manufacturing ActiveEDU $10,000 Grant IT Bee Bella $65,000 Grant Loan Manufacturing/Agriculture Roberts Defense $10,000 Grant Advanced Manufacturing Upright Kids $10,000 Grant Advanced Manufacturing ICARUS Devices $10,000 Grant Aviation/Aerospace Fifth Ward Brewery $55,000 Loan Manufacturing/Agriculture TOTAL $250,000 *WEDCrequires $42,000 be distributed as grant awards Fund Remaining: $o POTENTIAL LEADS: Revolving Loan Fund: Greater Oshkosh EDC is working with multiple businesses, along with their lenders, that are considering an application to the Revolving Loan Fund (RLF) to fill a potential lending gap. One of these applicants is a small thriving business that is part of our strong quality of life in Oshkosh and is expanding because of their success. We also received an application this week from a local business that has been in business for more than 30 years and is need of capital for expanded manufacturing offerings to customers. GR EATER ECONOMIC OSHKEVELOPMENt SHCORPORAIONT Capital Catalyst Fund: The full $250,000 of the Capital Catalyst Fund were committed by February 1, 2018 (our contract end date with WEDC). Greater Oshkosh EDC is preparing a new application for a second award from the Wisconsin Economic Development Corporation (WEDC). Greater Oshkosh plans to have an application submitted by mid-April. Greater Oshkosh EDC would like to thank the City of Oshkosh and the City's Long Range Finance Committee for its support to replenish the Capital Catalyst fund through the match reallocated from the Revolving Loan Fund. Conversations with WEDC have been positive in the potential for another award, though nothing is guaranteed. This fund has been a tremendous asset for supporting businesses launching in our community, and for demonstrating the strength of entrepreneurial support in Oshkosh. Greater Oshkosh EDC has appreciated the partnership of organizations such as the UW Oshkosh Small Business Development Center, the Alta Resources Center for Entrepreneurship and Innovation, the UW Oshkosh Business Success Center, Rise & Grind — A Community Space, gener8tor, gBeta, and the City of Oshkosh. AWARENESS Greater Oshkosh staff and RLF Committee continue to promote the Revolving Loan Fund and Capital Catalyst Fund to our businesses, lenders, accountants, and other entities who assist businesses on a day-to-day basis. While word-of-mouth referrals from partners and testimonials from successful borrowers represents the best form of marketing. Over the past year, Greater Oshkosh has experienced a greater level of dialogue with primary lenders who are working with business clients and reaching out to us to see if we can partner in some way. These conversations have been incredibly encouraging to us and we look forward to continued growth and impact with these tools in our community's economic development toolbox. Thank you to the Oshkosh Common Council members, City of Oshkosh staff, and the Greater Oshkosh EDC board of directors, for supporting Greater Oshkosh EDC efforts in the administration of these funds and for providing resources. Please encourage potential borrowers with whom you interact to contact our staff for assistance. C!!.'iW11 1 Capital Catalyst - WEDC Blog Newsroom Newsletters Contact inwisconsin.com BUSINESS DEVELOPMENT ENTREPRENEURS EXPORT COMMUNITY INDUSTRY DEVELOPMENT MARKETING INSIDE WEDC 0, CAPITAL CATALYST PROGRAM GOAL: The goal of the Capital Catalyst program is to incent capital formation and investment in startups and emerging growth companies in the state of Wisconsin. The program primarily supports the following WEDC Strategic Pillar and Focus Area: Business Development: Entrepreneurship and Innovation PROGRAM DESCRIPTION: The program provides matching grants to seed funds managed by local communities and other eligible entities to provide capital to high-growth startups and emerging growth companies. The program increases the availability of capital to startups and emerging growth companies to support growth and attract additional private investment. ELIGIBILITY REQUIREMENTS: Applicants for Capital Catalyst funds must demonstrate organizational capability and the availability of entrepreneurial support to achieve the goals ©2018 Wisconsin Economic Development Corporation I Privacy Policy I Terms of Use https://wedc.org/inside-wedc/transparency/capital-catalyst/ CURRENT CAPITAL CATALYST PROGRAMS • Bridge To Cures • Doyenne Group • Greater Oshkosh EDC • Ideadvance • Milwaukee 7 Capital Catalyst Fund • Racine County Economic Development Corporation • Whitewater Community Development Authority DOWNLOAD PROGRAM INFORMATION C!6'iNG 1 Capital Catalyst - WEDC Applicants should have an established investment/selection committee, investment/funding criteria, and application process. Eligibility for the program requires a 1:1 match of the amount of funding provided by WEDC. This match must be documented prior to the disbursement of funds. Investment/funding decisions will focus on assistance to companies in industry sectors including but not limited to advanced manufacturing, agriculture or food processing, information systems or software, medical devices, biosciences and energy. Use of Funds: Capital Catalyst recipients are required to make grants, debt, royalty -based investments and/or equity investments in startups, early stage and emerging growth companies that are located in or will locate in Wisconsin. Recipients will agree to utilize a segregated account to receive direct grant funding from WEDC that may include the recipient's matching funds. Funds may not be used to support expenses related to the relocation of a business between communities in Wisconsin. Returns on loans and/or investments to the fund capitalized by WEDC and matching funds may be used only for additional awards to eligible businesses, direct administrative expenses of the recipient, and/or other purposes approved by WEDC. Returns may not be distributed to an individual or for- profit entity that was a source(s) of matching funds prior to the end of the final performance reporting period. INCENTIVES AND AVAILABLE FUNDING (FY18): $1,500,000 The program provides grants to approved Capital Catalyst recipients that establish seed funds and meet the eligibility requirements of the program. ACTIVITIES AND EXPECTED OUTCOMES: Award four organizations to support the financing of 45 startup and emerging growth companies, and support the creation of 60 jobs. Recipients will maintain an average co -investment ratio of 1:1, and companies financed by local seed funds will achieve a 3:1 leverage of other investment. PERFORMANCE REPORTING: Recipients will be required to periodically submit a performance report documenting job creation, job retention and number of organizations assisted, as well as any other contract deliverable. WEDC may impose additional reporting requirements to evaluate project performance and to ensure compliance with contract deliverables. APPLICATION AND AWARDS PROCESS: CONTACT For more information, contact WEDC Entrepreneurship Program Manager David Volz, 608.210.6773 Annlirant-, fnr a ranital rataly-,t nrant -,hniilrl rmmnlata an gnnlirgtinn thrniinh ©2018 Wisconsin Economic Development Corporation I Privacy Policy I Terms of Use O O (i) O https://wedc.org/inside-wedc/transparency/capital-catalyst/ 2/3 4/5/2018 Capital Catalyst - WEDC underwriter and go through the award review process. Applicants for Capital Catalyst program funding are required to provide to WEDC, in writing, information on the applicant organization, investment fund management and strategies, and the process for approving awards made from the fund. For more information on application review, internal process and award distribution, please refer to WEDC's award administration policies and procedures. CONTACT US TODAY � o ® 201 West Washington Avenue . Madison, WI 53703 o s 00"��e UeYe���� ` 608.210.6700 ©2018 Wisconsin Economic Development Corporation I Privacy Policy I Terms of Use O O (i) O https://wedc.org/inside-wedc/transparency/capital-catalyst/ 3/3