No General Fund impact. The funds are provided to Contra Costa County from the U.S. Department of Housing and Urban Development. CFDA No. 14.218  

The Department of Conservation and Development (DCD) has been administering the CDBG Small Business/Microenterprise Loan Program (Business Loan Program) over the last twelve years. The purpose of the County’s Business Loan Program was to provide business loans to eligible small businesses or microenterprises located in Contra Costa County. DCD was able to administer the Program and make business loans on an on-going basis by establishing a CDBG Revolving Loan Fund, a routine way of utilizing CDBG funds for ongoing loan programs. All loan repayments from previous business loans made under the Business Loan Program were deposited into the Revolving Loan Fund which made it possible for DCD to keep loan repayments readily available to make additional business loans. Over the last twelve years, DCD has provided 24 business loans to eligible Contra Costa County businesses, totaling $876,980.   
  
Over the past two years, DCD has had a lull in applications for business loans. Part of this lull is due to the economic climate, but staff believes that the primary reason is that business owners are required to meet strict federal requirements, such as creating jobs and making those jobs available to eligible low-income residents. For example, businesses receiving loans under the Business Loan Program had to document that it retained or created jobs that were held by or made available to low-income persons on a “full-time equivalent” basis. The administrative work to document this requirement can be burdensome to many businesses, and depending on the business, this requirement is not as easily attainable for small businesses until many years after the loan was made. Furthermore, staff has been advised that there has been a rise of loan programs provided by various private, non-profit organizations that can provide business loans in Contra Costa County without the strict requirements imposed by the CDBG program.   
  
In response to the above, in FY 2012/13 the County provided CDBG funds to support a new initiative, Contra Costa CAN!, to connect Contra Costa County business owners with the various Bay Area organizations providing business loans to Contra Costa County business owners. This new initiative is being provided via a partnership between the West Contra Costa Business Development Center (WCC-BDC) and the Contra Costa Small Business Development Center (SBDC), a center hosted by the County’s Workforce Development Board (see attachment). Although CDBG funds helped finance this new initiative, the CDBG funds are not the source of the loan funds, therefore eliminating many of the strict federal requirements that business owners had to meet under the County’s Business Loan Program. The CDBG funds are primarily used toward staff time associated with outreach and marketing of the initiative. The WCC-BDC provides the necessary marketing and outreach of the initiative and for the various loan programs available on a County-wide basis. Marketing and outreach strategies include but not limited to: direct mailers to various business entities and economic development agencies within the County; presentations to the various Chambers of Commerce in the County; and outreach to the various banks and traditional lending institutions within the County to develop a referral system. Additionally, the WCC-BDC and the SBDC provide the initial screening and loan packaging service of potential businesses and connects those businesses with the most appropriate loan provider. It is anticipated that at least 20 Contra Costa County businesses will obtain a loan through the various loan providing organizations, exceeding the average of two business loans per year under the County’s Loan Program.   
  
Re-purposing the Revolving Loan Funds: The County is currently in the middle of its two-year CDBG funding cycle (FY 2012/13 and FY 2013/14) and it is anticipated that all currently funded projects in the Public Service and Economic Development categories will be funded at their current amounts in FY 2013/14. Given that the County did not receive any Infrastructure/Public Facilities (IPF) applications for projects to be undertaken in FY 2013/14, staff has issued a Request for Proposals (RFP) for IPF projects to be carried out next fiscal year, provided the County receives CDBG funds in FY 2013/14. Applications answering the RFP were due on December 10, 2012. By suspending the County’s Business Loan Program, there will be up to an additional $180,000 that can be utilized for eligible IPF projects. This is in addition to the approximately $110,000 that is typically available for IPF projects in one funding cycle.   
  
Finance Committee: On November 13, 2012, the Finance Committee approved CDBG staff's recommendation to suspend the County's CDBG funded Business Loan Program and re-purpose up to $180,000 that is currently in the Revolving Loan Fund to be allocated to eligible FY 2013/14 CDBG IPF projects, and only for FY 2013/14.

Not approving the re-purposing of the Revolving Loan Funds and the Substantial Amendment would mean the County would not be able to redirect the CDBG Revolving Loan Fund balance to eligible Infrastructure/Public Facilities activities that could help meet the infrastructure/public facility needs of various non-profit and public agencies.

CDBG funded activities support one or more of the five community outcomes established in the Children's Report Cards.