HomeMy WebLinkAboutProspera Bozeman RLF updatenror/
July 8,2008
222 lt.ast Nlain Street, Suitc 102
Bozcman, NIT 59715
Ph: 406.587.3113
lrx: 40(r.5fJ7.95(r5
B ozeman City Commis sion
P.O. Box 1230
Bozeman,lvIT 59771
Dear Bozeman City Commissionets:
I appteciate the opportunity to ptovide you all with an update on the City of Bozeman
Revolving Loan Fund (RLF) and to make a request for additional funding. As you know,
the RLF provides capital for business start-up and expansion, and supports economic
development and the cteation of high paylng lobs within the City of Bozeman The RLF
leverages private investment dollats and revenues from outside the atea, and tecycles
loan dollars as RLF repayments go back into the Fund to be re-lent to new borrowers.
As of June 30, there arc a total of 11 loans out to local Bozeman businesses representing
technology, e-corrlnefce, manufactunng, and bio-medrcal rndustries. These exrstmg
loans total $1,935,000, with a current balance of $1,337,000. To date, 236 quality jobs
have been created by companies in the Fund.
Ptospeta has been a good steward of the Fund. Srnce the ttansfer to Prospera rn2006,
there has been a significant increase in lending activity and a 0o/o loan delinquency rate.
(A summary update on the RLF is attached to this lettet.)
The increase rn lending activity has tesulted in a depletion of the funds available to lend
from the RLF, which will limit new lending activity for the rest of this year. Given the
current depletion of the RLF and its demonsttated success in creating quality jobs and
supporung economic growth, I am requesting that the Commission commit a minimum
of $200,000 ftom the City's Development Impacts Fund (Big Box Fund) to rc-capitalize
the Bozeman Revolving Loan Fund.
The Bozeman RLF is an rmportant economic developmerit program of the City that
expands the economy by bringtng in revenues from outside the area. This additional
funding will provide for the continued creation of high paying jobs and the continued
economic growth of the City of Bozeman. I thank you for your consideration.
Sincerely,
Bob Hietala
Chief Executive Officer
Prospera Business Network
Access the Opportanities
Prospero Busi nessNetwork. com
Bozeman Revolving Loan Fund Update
The City of Bozeman's Economic Development Revolving Loan Fund was established
through the repayment of economic development funds loaned to local businesses from
Community Development Block Grants (CDBG) obtained from the Montana
Department of Commerce in the 1980s. The Fund is designed to leverage pdvate
investment in new businesses for the pulpose of generating quality jobs withrn the City
of Bozeman. In May 2006, the City of Bozeman and Prospera Business Network (then
known as the Gallatin Development Corpotation) reached ^n ^greement to ftansfer the
Fund and the administration of the Fund to Prosoera Business Network.
Status of Revolvins Loan Fund at Start of Asreement fMav 2006):
B loans outstanding
$1,096,900 total loan amount
3 loans makrng interest-only paymeflts
Fund balance (available to lend): $277,692
Administrative responsibilities ttansferred to Prospera Business Netwotk
Independent, 7 memberLoan Committee (with representatives of the City of
Bozeman,local lenders and the business community) to make all lending
decisions.
Current Starus of the Revolvrns Loan Fund (as of lune 30. 2008):
11 loans outstanding
$1,935,000 total loan amount, cuffent pdncipal outstanding: $1,337,000
1 loan making interest-only payments
Fund balance (available to lend): $88,000
2 existing loans have been paid in full and a 3'd will be paid in fulI by the end
of 2008
236 jobs created by companies in the Fund
Pdvate investment leveraged: ranges from $1 RLF: $2 private investment to
$1 RLF: $50 private investment
Calculated total economic impact: $16.5 million
frs:#