Public money for entrepreneurs

Made up of the city, county and harbor, the Tri-Agency offers micro-enterprise loans for people wanting to start or 

improve their business.

Micro-enterprise loans of up to $25,000 at 1 percent interest are available only to low-income people (based on U.S. Department of Housing and Urban Development criteria), explained Executive Director Bill Renfroe.

Micro-enterprise loans can go toward paying for new equipment, marketing and advertising, overhead expenses such as rent and utilities or hiring permanent or temporary employees.

Renfroe said the micro-enterprise loans have helped start three businesses and created five new jobs in the community, Renfroe said.

The county applied for a Community Development Block Grant for $130,000 and granted it to the Tri-Agency to loan out, Renfroe explained.

About $25,000 of that original pot of money is still available, but “people are lined up for that,” he said.

However, the county will soon be applying for another CDBG grant. If approved, that would mean more money to loan.

“In addition, people have been paying their loans back,” Renfroe said, “that’s going back into the kitty.”

All available money has to be loaned out before applying for more funding from CDBG, Renfroe said.

Those interested in a micro-enterprise loan have to first go to the North Coast Small Business Center to get business counseling, attend courses on various aspects of running a business and complete all necessary paperwork.

Once the legwork is done, people have to submit a loan application and financial records such as tax returns and bank account statements to Renfroe, who makes sure “the numbers are right.”

Del Norte Economic Development Corporation

“We’re basically called a lender of last resort,” said Sharon Treptow, loan administrator for the DNEDC.

Typically, DNEDC loans to people who have been turned down by two banks, she said, but that’s not always the case. Sometimes DNEDC partners with banks on loans. 

Borrowers must be able to show that their business will create or retain jobs, she said.

Entrepreneurs can receive up to $250,000 or up to 75 percent of the project at 10.5 percent interest from the DNEDC for start-up capital, working funds or expansion, Treptow explained. 

Loans from DNEDC have helped 260 businesses and created or retained about 1,400 jobs, she said.

DNEDC is a private non-profit organization established at the same time as the Tri-Agency Economic Development Authority in 1976.

The Tri-Agency received a $2.6 million grant from the U.S. Economic Development Administration and made a revolving loan fund with $1.5 million of the money. 

But the EDA required that a non-profit administer the loans, so the DNEDC was created. 

Tri-Agency used to give conceptual approval of loans, but has since stopped doing so. It still oversees the revolving loan fund.

DNEDC later got a $1.8 million loan and a $279,000 grant from the U.S. Department of Agriculture to loan out to people, Treptow said.

There’s a little more than $300,000 available to borrow from DNEDC, she said, adding, “it’s still revolving.”

DNEDC “lives off” of the interest from loans, Treptow said, all of the principal repaid by borrowers goes back into the pot to be lent out again.

Most of the loans do get repaid, she said.

“Our lost ratio has been pretty good over the years,” Treptow said, adding that “the economy has hit everyone pretty hard; almost all of (the money) is out.”

To prevent borrowers from going under, DNEDC stays in touch with them and helps them try to keep their business going, Treptow said.

Redevelopment Agency

Under the umbrella of the city, the Redevelopment Agency (RDA) is a financing mechanism to fund economic development projects, explained City Manager Rod Butler.

There are two RDA areas within city limits: area one is essentially downtown and the second is Front Street and up the U.S. Hwy 101 corridor.

The downtown RDA area was established after the 1964 tsunami and is one of the oldest in California, Butler said.

The city has been getting about $1 million a year to fund projects in those two areas.

Funding is determined by how much assessed property values have grown from what they were the year the RDA area was established, Butler explained.

“Any growth in that defined area each year goes to the RDA for projects,” he said.

The amount of growth in property values affects the funding for each RDA area. Property values in the second RDA area have grown a lot over the years, Butler said, but that is not the case for downtown.

Merging the two RDA areas is a possibility, Butler said, which could mean more money for projects downtown.

Money from the RDA has been granted or loaned out to local businesses. There are three loans still being paid back to the city: the original loan amounts were $204,000 to Pacific Coast Plaza, $38,483 to the Front Street Inn and $250,000 to the Hampton Inn and Suites.

The city also has the ability to issue bonds and provide money up front for big projects such as revitalizing downtown or for roads, Butler said.

“As the revenue (from property taxes) flows in we can pay back the principal on those bonds,” he explained.

The City Council decided last week to contract with a consulting firm to analyze the RDA’s funding stream, the city’s current obligation to pay back money to the RDA fund to rehabilitate Fred Endert Pool and how much the city could issue in bonds.

The city will have to prioritize how much RDA money will be used on infrastructure and for assistance to businesses, Butler said.

The city has to be careful of who it grants or loans money to and under what terms and circumstances, he said, so that the city doesn’t lose out if the business goes under. Vacant buildings affect property values and therefore RDA funding, Butler added.

“We have to make the most out of every dollar because we don’t have extra money to burn,” he said.