PRESENTER: Presenter
Jeff Jewell, Economic and Community Development Director
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SUBJECT: Title
Approval of a resolution recommended by the New Braunfels Economic Development Corporation approving a project expenditure of up to $140,000 to the Spark Small Business Center to assist with the operation of an economic development program, an eligible project expenditure related to the operation of an economic development program in accordance with Local Government Code Section 505.102
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DEPARTMENT: Economic and Community Development
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COUNCIL DISTRICTS IMPACTED: All
BACKGROUND INFORMATION:
This expenditure will allow the Spark Small Business Center (SBC) to renew its contract with UTSA to operate the Small Business Development Center (SBDC) in New Braunfels for part of fiscal year 2021-2022. Since approximately 2011, SBC, formally known as the Center for Entrepreneurship, has facilitated and overseen a partnership with the New Braunfels and Seguin economic development corporations to provide local assistance to business owners and access to programs and services offered by SBDCs. Traditionally, Seguin and New Braunfels funded 1/3 and 2/3 of the total program costs annually. SBC supports the entrepreneurial and small business environment in New Braunfels by providing free services targeted to existing businesses and aspiring entrepreneurs. SBC primarily focuses on counseling sessions, expanding access to capital, business planning, training, contracting and procurement opportunities, and exporting initiatives.
In the spring of 2020, the SBC received an additional $40,000 above its normal funding levels from the NBEDC to provide additional resources and assistance to businesses affected by the pandemic. They used these resources to fund an additional counselor on a part-time basis and increased the counselor offerings in their 2020-2021 contract with these additional funds. Throughout 2020, the SBDC satellite center assisted local businesses with the Paycheck Protection Program, Economic Injury Disaster Loans (EIDL), Disaster Recovery and Assistance from FEMA and SBA Resources due to damages from the winter storm in February, as well as with access to additional grants/loans for particular sectors of the population to include veterans, women and minority-owned businesses. Between April 2020 and March 2021, the center facilitated the origination of nearly $1,600,000 in loans and retained 36 jobs. The center provided almost 1,800 counseling hours with 139 of these hours provided to new clients. They also provide ongoing counseling to existing clients that have utilized SBDC services in the past.
In its contract with the SBDC, SBC is responsible for financing SBDC’s costs, as well as the direct and indirect costs of running the center on West San Antonio Street. In total, this has cost approximately $163,000 for SBDC’s costs and another $47,000 in rent, utilities, and other expenses for a total annual budget of approximately $210,000 (typically funded by $70,000 from Seguin EDC and $140,000 from NBEDC).
In late 2020, the Seguin EDC left the partnership with NBEDC after the SBC signed a year-long commitment with SBDC from October 2020-September 2021. With an approximate $17,500 contribution in FY 2020-2021 from Seguin EDC, the SBC faces an approximate $52,500 deficit (25% of budgeted costs) if it is to fulfill its commitment through the end of the contract period in September. When Seguin EDC left the partnership, the development was presented in a briefing to the EDC and the board was made aware that an additional expenditure would be likely if they were interested in keeping the SBDC operations functioning in New Braunfels. They approved an additional project expenditure on May 20, 2021 of $140,000.
The SBC maintains a 60-day cancellation notice requirement to the SBDC and a 90-day notice to cancel the lease. Functionally, this means the SBC needs an additional 90 days of cash on hand after the decision is made to not renew the lease. The board plans to take up an extension renewal discussion in the summer/fall of 2021 with a planned execution date of October 1, 2021. If approved, the additional $140,000 will close the approximate $53,000 funding shortfall to keep the SBC open through the end of September 2021 and another approximate $87,000 for expenses for five months of operations through approximately the end of February 2022.
If the SBC board is considering the renewal of the contract with SBDC for another year starting October 1, 2021, they will likely ask the NBEDC to consider a prorated amount to fulfill the 2021-2022 contract with SBDC.
ISSUE:
None
FISCAL IMPACT:
Up to $140,000 to SBC. The NBEDC has adequate funding for this project expenditure.
Recommendation
RECOMMENDATION:
Staff recommends approval of the resolution.