HomeMy WebLinkAboutR-03-0378J-03-247
3/25/03
RESOLUTION NO. _03— 3 18
A RESOLUTION OF THE MIAMI CITY COMMISSION
AUTHORIZING THE EXPENDITURE OF FUNDS, IN AN
AMOUNT NOT TO EXCEED $200,000 TO UNDERWRITE
EXPENSES ASSOCIATED WITH THE IMPLEMENTATION
OF PHASE II OF THE MAYOR'S CITYWIDE POVERTY
INITIATIVE (ACCI6N MIAMI - MICRO -LENDING
INITIATIVE $150,000); FROM THE SPECIAL
REVENUE ACCOUNT ENTITLED, "POVERTY
INITIATIVE;" ALLOCATING FUNDS FROM FISCAL
YEAR 2002-2003 BUDGETED FUNDS; FURTHER
DIRECTING THE CITY MANAGER TO NEGOTIATE THE
NECESSARY AGREEMENT(S) TO IMPLEMENT SAID
PHASE AND PRESENT THE NEGOTIATED
AGREEMENT(S) TO THE CITY COMMISSION FOR
CONSIDERATION.
WHEREAS, in the 2000 United States Census the City of Miami
("City") was found to be the poorest, large city in the United
States; and
WHEREAS, the Mayor and Commissioners of the City of Miami
have resolved to use their best efforts to assist City residents
by appealing to the State and Federal government, foundations,
etc. to leverage and any funds available to the City to assist
its poor; and
CITY C0KK=01j
V-E1rT.jaG CIS?
Apr, 1 !I ?q�3
Resolution No.
03- 3'78
WHEREAS, on September 26, 2002, the City Commission
approved Resolution No. 02-1072 designating $2,000,000 of the
Fiscal Year 2002 surplus as Management Reserves to fund the
Citywide Poverty Initiative; and
WHEREAS, the goal of the Citywide Poverty Initiative is to
assist low and moderate -income individuals and families to: (1)
access existing public benefits, (2) improve their financial
literacy, (3) obtain access to quality sources of loan and
equity capital, and (4) save to build wealth and accumulate
assets; and
WHEREAS, on January 23, 2003, the City Commission approved
Resolution No. 03-94 adopting the Citywide Poverty Initiative
Plan and authorizing the expenditure of $150,000 to underwrite
the initial phase of the plan, a local outreach campaign to
increase awareness about the Earned Income Credit (EIC) and
Child Tax Credit (CTC); and
WHEREAS, the City Commission desires to implement Phase II
of said plan, to affirm the City's support of a local,
collaborative effort to expand access to sources of quality loan
capital among small business owners and entrepreneurs;
Page 2 of 4 03- 378
NOW, THEREFORE, BE IT RESOLVED BY THE COMMISSION OF THE
CITY OF MIAMI, FLORIDA:
Section 1. The recitals and findings contained in the
Preamble to this Resolution are adopted by reference and
incorporated as if fully set forth in this Section.
Section 2. The expenditure of funds, in an amount not
to exceed $200,000, to underwrite expenses associated with the
implementation of
Phase
II of
the Mayor's Citywide Poverty
Initiative (Accion
Miami
- Micro
-lending Initiative, $150,000)
is authorized with funds allocated from Fiscal Year 2002-2003
budgeted funds, for the Special Revenue Fund entitled, "Poverty
Initiative."
Section 3. The City Manager is authorizedll to negotiate
the necessary Agreement (s), in a form acceptable to the City
Attorney, to implement said Phase, and to present the negotiated
Agreement(s) to the City Commission for consideration.
1� The herein authorization is further subject to compliance with
all requirements that may be imposed by the City Attorney,
including but not limited to those prescribed by applicable City
Charter and Code provisions.
Page 3 of 4
03— 7a
Section 4. This Resolution shall become effective
immediately upon its adoption and signature of the Mayoral
PASSED AND ADOPTED this 10th
ATTEST:
PRISCILLA A. THOMPSON
CITY CLERK
day of April , 2003.
/4NUEL A. DIAZ, MAYOR
APPROVED AS T RM AND CORRECTNESS
PffDRO VILARELLO
QFfY ATTORNEY
W7054:tr:AS:BSS
If the Mayor does not sign this Resolution, it shall become
effective at the end of ten calendar days from the date it was
passed and adopted. If the Mayor vetoes this Resolution, it
shall become effective immediately upon override of the veto by
the City Commission.
Page 4 of 4
03- 378
-.- 03/18/2003 22:19 3052505442 MAYORS OFFICE pars a�
- CfT'Y OF MIAMI, FLORIDA CITYWIDE, A
INTER -OFFICE MEMORANDUM MAYOR DIAZ
TO
The Honorable Members,
City of Miami Commission
FROM: Manuel A. '
Mayor
DATE : FILE
March 27, 2003
SUBJECT;
REFERENCES_
ENCLOSURES:
City's Poverty initiative
Phase II — Micro -Lending
I would respectfully request your support of the accompanying resolution approving the
enclosed Poverty Initiative Plan and, authorizing the expenditure of $200,000 to underwrite the
second phase of said plan.
Phase II of the initiative will consist of the following:
a A micro -lending initiative operated by Action USA - $200,004.
Funding for said initiative is available from an account entitled Special Revenue .fund —
Poverty initiative.
BACKGROLTNTD:
The Mayor's Poverty baitiative consists of four (4) components all focused on helping
individuals: 1.) Access existing benefits, 2.) b prove their financial literacy, 3.) Obtain access to
capital, and 4.) Save to build wealth and accumulate assets. The initial components before you
for consideration would fund the establishment of a micro -lending program operated by Action
USA
The second phase outlined below will, help to address access to capital needs and expand
awareness within the community about readily available benefits that can'help increase incomes
and alleviate poverty. Future phases will seek to create opportunities for residers to expand their
knowledge of various topics that impact their personal finances and seek to encourage savings
and a sset accumulation through the u se o f s uch v ebicles a s Individual D evelopment A ceounts
(IDAs). These additional components will also be accompanied by additional outreach efforts
around other wage support benefits to increase Medicaid, KiidCare, and Food Statnps enrollment.
PHASE II: Accz6t USA - MiAmi Micno-LENDING PROGRAM
Action Overview
action International the p areat c o gmmy o f A eci6n USA which operates and partners
with micro -finance organizations throughout Latin ,America, Africa and the United States to help
them improve operational efficiency and reach more borrowers. In the United States, Acci6n
i:.
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03/18/2083 22:19 3852505442 MAYORS OFFICE PAGE 03
USA operates direct lending offices in Atlanta, tbroughout New England, and Miami. Acciotn
USA also has a number of a ssoeiate programs o peiating i n California, Georgia, Illinois, New
Mexico, New York, Rhode Islaxnd, and Texas. Through these local offices, Accion works with
low- and moderate -income business owners that bave a desire to access capital, but arc
economically marginalized exxd ba -.v no to limited access to commercial business loans.
To assist these small business operators, Acci6n provides them small, short-term loans at
interest rates that reflect the cost of lending. Aeci3n's loan methodology has been designed to
both meet the needs of micro-entmpreeneurs and to ensure that the local program office remanns
financially sustainable. Like traditional banks, Aocifm evaluates potential borrowers using
measurements like business assets -- which could be as small as a tin stall M' the market — amount
and cost of goods sold, cost ofraw materials, and household expenses. But unlike traditional
banks, our partner programs do not matte loans based upon revenue or collateral alone. Because
of the poverty of its target clients, Accidzt sends loan officer to meet potential bormwers in their
places of work, where they weigh intangibles like references from customers and neighbors, and
the loan officer's own "gut feelirW' about the micro-entreprences derive to succeed. This
character -based lending allows Accion to go "beyond the numbers" and develop a more complete
picture of a potential borrower than a traditional credit score provides.
Loans originated by Accion USA —!!Miami will typically range from $500 - $50,000.
Evidence of Local Need
The need for access to sources of quality capital for small business owners has long been
documented. Most recently in April of 2001, the FTU Metropolitan Center released the Economic
Development Implementation Plan (BDIP) with identified the followm finding:
"Without capital sources for equity and debt, entrepreneurial development in
Miami -Dade will continue to suffer. Access to small business loans is especially
difficult for start-up and growing companies. For instance, approximately 90% of
the County's minority-owned businesses are sole -proprietorships. Many of these
businesses struggle with accianulatinng personal business assets to help secure
their debts. Mawstream financial institutions, while having increased overall
small business lending, still do not have the capacity or business will to finance
these small minozity-owned'buswosses."
Based on this finding, the EDIP called for the development and leveraging of capital
resources for equity and debt to support local entrepreneurs.
In the September of the same year, Action USA received a grant from the
Congregational Church of Coral Gables and the Acme E. Casey Foundation to explore the
possibility of establishing an Acci6n leading office is Miami. Mitis! analysis and subsequent
work conducted to determine feasibility of the market's potential consisted of: I.) Interviews with
local community organizations, religious, business, and bw*mg leaders and other iniarested
parties; 2.) Four focus groups with potential clients; and 3.) Assessment of the size of the local
micro-enterphse market, its needs, acid current level to which, it is being served by other lenders
and small business providers.
Axnonxg the market study's most significant findings were:
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03/18/2003 22:19 3052505442 MAYORS OFFICE PAGE 04
•
It the Miami metropolitan statistical area (MSA), there exist 77,500 micro -entrepreneurs.
Approximately 39:400 are Hispanic, 13,500 are African-American, and the remaining
24,600 are others (Haitian, Asian, etc.).
• 68,800 of these eAnuvpreneurs have never received a loan from a bank or other
con -,=clonal lending source.
+ Focus group participants expressed strong negative feelings towards banks and other
lenders, underscoring the apparent lack of access to quality credit. Real perceptions of
discrimination and ethnic and racial stereotyping were voiced by focus group
participants.
• Very large gaps between the apparent demand and the present levels of service exist in
this area. Five (5) programs an currently being operated in Miami Dade senicing only
392 individuals. Existing programs are operated by small nonprofits or goveriment
related agencies that def^uue their mission very narrowly.
■ Greatest market oppordmities for this kind of a program exist in the communities of East
Lftde Havana and Little Ratti.
• Hispanics m East Little Havana and Hutians were less sophisticated than other segments
of time minority cotzmmaumity with respect to £matciallioat matters. Both had little
experience with the loan process, were 111mly to steer clear of banks, and were less likely
to have access to credit cards.
■ Haitzms voiced some uniquely different attitudes. They exhibited the strongest sense of
hopelessness and helplesmew. Virtually all echoed the sentiment they had nowhere to
turn. Their desire for a program like Acci6n was the strongest.
Proposed A,edon Plan
Grum the evident need for s uch a program we are p roposing t bat the City of Miami
provide $240.000 to support time operations of Accton LISA — Miami program for two years. This
cormritment will leverage an additional $730,000 in operating grant commitments and S1.7
million in loan capital over the neat three (3) years. Other programa underwriters and their level of
funding support are listed below
• Congregational Church of Coral Gables $300,000.00
• Anne E. Casey Foundation $150,000.00
• IF Morgan Chase $ 25,000.00
• Washington Mutual $ 10,000.00
• Ytj��umdation $200.000.00
Total Commitments $685,000.00
With this support, Arriba USA projects that it will be able to issue 382 loans totaling
$3.074 miDion in Miami by 2005. The average loam daring that same period will be
approximately $7,600 with a 4.2% loan default rate.
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