Feb. 22, 2007

  

A Publication of the Economic Development Corporation of Utah
CEO Jeff Edwards

PRESIDENT'S  

MESSAGE

Making Affordable Capital Available for Small- to Medium-Sized Businesses

Access to affordable capital is essential for business growth. For various reasons, however, a business may not qualify for financing from conventional sources. Today's feature highlights the work of the Intermountain Community Capital Corporation, a Community Development Financial Institution (CDFI), and its work to make affordable capital available to small- to medium-sized businesses in the low to moderate income areas of the state.

In addition, this issue of the Economic Review includes links to many of the ED-related news stories from the past week. If you have comments, suggestions or topics you’d like to see in the Economic Review, please contact us by clicking the “Comments” link on the bottom of this page.

Enjoy!

Jeff Edwards
Jeff Edwards
President and CEO

FEATURE

Utah's CDFI Offers Affordable Financing Option for Growing Businesses


One of the biggest challenges to growing a business is access to affordable capital. What’s a business to do when it doesn’t fit the bank loan model, but it’s too big for a micro enterprise loan? The answer might be a loan from a Community Development Financial Institution (CDFI).

CDFIs are private-sector, financial intermediaries with community development as their primary mission. All are market-driven, locally-controlled, private-sector organizations. Nationwide, there are approximately 800 CDFIs serving economically distressed communities by providing credit, capital and financial services that are often unavailable from mainstream financial institutions. CDFIs have loaned and invested billions in our nation’s most distressed communities. What’s more, their loans and investments have leveraged billions of dollars from the private sector for development activities in low wealth communities across the nation.

Utah's CDFI

Utah has a CDFI—the Intermountain Community Capital Corporation (ICCC), which is based in Salt Lake City. Garth Daniels, CEO, says the ICCC has been operating for about three years, serving small- to medium-sized businesses looking for loan capital in the range of $100,000 to $5 million.

Daniels says his CDFI serves a nitch market, targeting the best of the business loan applications turned down by the local banks. “We know there are literally hundreds of loan applications out there that are struggling to get funded,” he says. Still, there are some fairly stiff qualifications for a CDFI loan. For example, the business must have:
The business must also be privately held and located in a low to moderate income area of the state (which includes nearly the entire state, aside from St. George, Park City, and half of the Salt Lake Valley, according to Daniels). So far, all of ICCC’s loans have been in rural Utah. “We are doing deals in Vernal, Moab, and Price,” says Daniels.

Business Mentoring

In addition to providing low interest loans (Daniels says his CDFI’s interest rates range from 6 ½ percent to 8 ½ percent, fixed, for up to 25 years), part of the CDFI charter is to provide business consulting services to borrowers. ICCC has contracts with business consultants around the state to assist its borrowers with a variety of consulting services, including business plans, financial projections, and marketing—essentially anything the business needs in the way of mentoring and guidance.

Another key difference that separates a CDFI from other lenders is that CDFI loans must be tied to a public purpose—they must be used to help businesses provide jobs for people in low to moderate income areas. Daniels says one of the goals of ICCC is to also help lower the overall debt burden of a business. “The CDFI industry is trying to help small business owners become more financially self-sufficient. One way we do that is to lower a business’ overall debt burden,” Daniels says.

ICCC’s loan loss rate is on par with the banking industry, at about one percent, according to Daniels, yet his CDFI is able to take on higher risk loans than other lenders, with loan-to-values up to 90 percent, depending on the size of the loan.

New Markets Tax Credit Program

Economic developers interested in more information about the services provided by ICCC, or the New Markets Tax Credit Program (which attracts private-sector capital investment into the nation's urban and rural low-income areas to help finance community development projects, stimulate economic growth and create jobs), should call Daniels at (801) 746-1050.

Decline in Utah's Residential Construction Slower than Other States


The "Utah's Economy" monthly newsletter from Commerce CRG forecasts a 10-15% decline in residential construction for 2007 and another 10% decline in 2008.

The good news: In the Western states (from 2005-2006), Utah was one of four states who had the least decline in residential building permits (joined by Alaska, Montana and Washington).  The States declining the most: Arizona, Hawaii, California, Idaho and Nevada.

CALENDAR

Mar. 14:

Quarterly Investor Update

Mar. 22:

Governor's Economic Summit, Grand America Hotel

April 5-6:

Utah League of Cities and Towns Conference (St. George)

April 11:

EDCUTAH Ribbon Cutting Ceremony and Open House

April 29-May 2:

CoreNet (Denver)

May 6-9:

BIO 2007, Boston

June 6-8:

The New West Summit, in Big Sky, Montana will bring together business leaders, entrepreneurs, politicians, journalists, academicians, and engaged citizens to talk about the future of the Rocky Mountain West.

June 20:

EDCUTAH Golf Tournament


IN THE NEWS

Economic Development Headlines

740,000 Square Foot Office, Retail Project Planned in Lehi

- Thanksgiving Development LLC, is making plans for a 38-acre project in Lehi that would consist of 710,000 square feet of Class A office space and 30,000 square feet of retail uses. (SL Enterprise)

Larry H. Miller Group to Resurrect One Dining Concept, Establish Another

- The Larry H. Miller Group is preparing to resurrect an Australian dining concept it briefly operated in 2000 and to launch a Bavarian deli restaurant, at its Jordan Commons complex in Sandy. (SL Enterprise)

Fully Automated Meeting Center Opens, Another is Planned

- Noah Center, the first fully automated, high-tech meeting/recreation/ reception center in the country has opened its doors in Lindon and a second is expected to break ground this spring in South Jordan.(SL Enterprise)   

Op-ed: Programs Designed to Avert Engineering Crisis in Utah

- It's hard to imagine life without the technology we have come to depend on, which is why a shortage of engineers is causing concern both statewide and nationwide. A 2005 Reader's Digest article, "America's Brain Drain Crisis," states, "Scientists and engineers make up less than 5 percent of our population but create up to 50 percent of our gross domestic product." (Standard Examiner) 

Eminent Domain May be Restored

- HB365 Would reinstate a city's power of eminent domain - with certain protections for property owners.
Next step: Goes to House floor for consideration.
Utah cities would regain their right to condemn private property in order to remove urban blight under legislation given the nod by a House committee on Thursday. (SL Tribune) (Standard Examiner)

State Frees up Account for Tourism Promotions

- The Utah Office of Tourism was all set for an early launch of its upcoming summer promotional campaign when a ticklish problem arose. It had $3 million in an account, but no way to get the money out of that account. (SL Tribune)

S.L. Panel OKs City Creek Plan With 4 Towers

-The Salt Lake City Planning Commission on Wednesday unanimously signed off on four 100-foot-plus residential buildings planned for downtown, including one that would be among the state's tallest structures. The towers are planned as part of The Church of Jesus Christ of Latter-day Saints' proposed City Creek Center development. (Morning News) (SL Tribune)

Parking is a Big Problem in Sandy

- In the first City Council meeting since a Major League Soccer stadium was approved for construction in their city, Sandy officials wasted no time Tuesday night in planning for the future soccer mecca. As the city begins rounds of meetings with the governor's office and Real team officials to finalize details of an inter-local agreement, the south Salt Lake Valley city is also working on parking around the stadium. (Morning News)

Jobless Rate Indicates Utah Economy Slowing

- Utah's jobless rate remains well below the national numbers, but it does appear that the state's economy is starting to ease, according to the latest estimates from the Utah Department of Workforce Services. Utah's seasonally adjusted unemployment rate was estimated at 2.7 percent for January, according to department figures released Tuesday. (Morning News) (KCPW) 

Workers in Demand Pushes Utah Wages Up

- Although a nearly dry labor pool is stunting Utah's job growth, the dearth of workers is pushing up wages at the highest rate in more than a decade as employers try to sweeten the allure of their openings. (SL Tribune) (Utah Business Magazine)

Tourism Growing in County, State

- Davis County doesn’t have a Temple Square tourism draw. By the same token, Utah has no Disneyland. That means there’s room for tourism growth on both a local and national level, but headway continues, said Barbara Riddle, president/CEO of the Davis Area Convention & Visitors Bureau. (Clipper Today) 

Eateries Fail to Get a Bite of Hill Pie

- Having found the appetizer distasteful, a Senate committee on Monday still could not digest a substitute bill that would provide funding to promote the state's restaurant industry. The latest version of SB68 calls for 3 percent of the 1 percent Tourism, Recreation, Cultural and Convention Facilities Tax collected by restaurants in first- and second-class counties to be used by the state commissioner of agriculture and food to promote dining out. The figure is expected to be about $700,000 per year. (Morning News)

Rebecca Walsh: Soccer Saga Ending Was Low Drama 

- We have our hero and villain in the Real Salt Lake soccer saga. Capitol Hill power brokers have done their best to cast Gov. Jon Huntsman Jr. as suave knight and Salt Lake County Mayor Peter Corroon as the warty troll. (SL Tribune) 

Utah Companies Join Federal ‘Value-driven’ Health Care Proposal

- Mike Leavitt, secretary of the U.S. Department of Health and Human Services and former Utah governor, returned to Salt Lake City Friday to promote “value-driven health care,” a program embraced by many Utah businesses, including Intermountain Healthcare Inc., Flying J Inc., Qwest Communications of Utah and Zions Bancorporation. (Utah Business Magazine)

GOED Program Returns Millions to the State, Data Shows

- Officials from the Governor’s Office of Economic Development (GOED) reported Friday during the monthly board meeting that business recruitment efforts have brought 28 companies to the state during 2006 and the first part of fiscal year 2007. This will result in $3 billion in new wages being paid over 10 years to 8,000 new Utah workers. New business capital investment will exceed $2 billion during the same period, officials said. (Utah Business Magazine)

Residential Construction to Slow in 2007; Commercial Sector Continues Strong

-The residential housing boom in Utah is expected to slow this year, although commercial construction should bolster the overall industry so that it remains the strongest sector in the state, according to two recent reports. (Utah Business Magazine)

Utah Water Sports Ranks #67 in Boating Industry Magazine’s Top 100 Dealers for 2007

- Utah Waters Sports, a MasterCraft dealer in South Jordan, trumped more than 5,000 eligible boat dealers nationwide to be ranked 67th in Boating Industry magazine's Top 100 Dealers for 2007. The Boating Industry Top 100 is an annual ranking that recognizes American marine dealers for overall business operations, customer service, marketing and professionalism. (Utah Business Magazine)

Small Business Owners Take Concerns to Legislators

- About 40 small business executives met Monday on Capitol Hill for a Small Business Day sponsored by the National Federation of Independent Business (NFIB).
The event was open to all small business owners and was not limited to NFIB members. (Utah Business Magazine)

Salt Lake Chamber Seeks Members for Boards and Commissions

- Because of the tragedy that took place yesterday at Trolley Square, the Chamber has canceled the press conference that had been scheduled for today at 10 a.m. concerning the Chamber’s campaign to find people to serve on boards and commissions. (Utah Business Magazine)

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