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HomeMy WebLinkAboutItem #23 - Discussion Item4k% CITY OF MIAM1. FIORIOA INTER -OFFICE MEMORANDUM TO Howard V. Gary DATE: January 26, 1983 MCL City Manager su ECT: Review of Miami Capital Development Incorporated Charlotte Gallogly 1 Director rcnEHe:Es: "OM Department of Economic R; Development ENc�osu"Es: I �I During the past six months, Miami Capital Development Incorporated (MCDI) has been evaluated by three separate organizations: the National Development Council (NDC), Urban Development Services, Inc. (UDS), and the City's Department of Economic Development (DED). All of these organizations have come to the same conclusions regarding the role and operation of MCDI which is that Miami Capital has not performed as originally intended and has performed poorly in terms I of staff and program. . The most recent evaluation was performed by the Urban Development Services, Inc. (see attached) which was engaged through a contract with the City's Department of Economic Development to evaluate Miami Capital because they were the original consulting group which assisted the City to establish the Corporation in September 1979. UDS was directed to conduct a thorough review and evaluation of Miami Capital's performance, to review its contract with the City of Miami and to recommend measures to improve Miami Capital Development Inc.'s operation. It is important to summarize the major findings of UDS in that they are similar to the findings of the City's Department of Economic Development and the National Development Council (see attached). Specifically, the major findings from the UDS report are as follows: 1) "MCDI 'is not in the business' it was intended to be in and is not performing the important role of business development which still needs to be carried out in the City of Miami." 2) "Generally speaking, Miami Capital has not carried out its original mandate and is performing poorly in terms of its staff and program." 3) Miami Capital is "not serving as an implementation mechanism for a broad enough constituency of small and mediu_n-sized businesses, including participation in major downtown projects": 4) miami Capital "needs to achieve balance in the kinds and sizes of its projects and in the constituencies it serves through better marketing, staffing, relations with the private sector, banks and programs within the neighborhoods." i AL. Page 2 5) "At the Policy Leadership level, there is an urgent need for organizational clarification with respect to responsibility and accountability for the policy direction and the perform- ance of the organization within the City's Economic Development Planning Process and Strategy." 6) "At the Program Management level, it is evident that the absence of a simple, clear-cut Annual Program Plan in the past has contributed to the poor performance of MCDI and the lack of accountability of its Executive Director. i Further, the experience and qualifications of the current „ Executive Director need to be discussed and clarified." 7) At the Professional Technical level, a major improvement, in the quality and experience of the Professional Staff needs to be accomplished by the hiring of three (3) expe- I rienced professionals to head up the three divisions of the organization. This is critical to the projected im- proved quality, direction and performance of Miami Capital." 8) "The City bears some of the responsibility for the perform- ance of MCDI over the past three years because the contract • with the City has been poorly written and did not clearly set the objectives and basic character of the organization." 9) The City "has also been involved in the current confused _ - policy and leadership situation and needs to help clarify this issue in.a recommended meeting of all parties." 10) "Miami Capital has not developed nor been operated as it was intended at its inception. 'It.'is now viewed as a kind of social, poverty program making 'hand-aut' type of loans to a limited type of constituency." In addition to the major findings of UDS, it is my opinion that there are other major policy and operational weaknesses within the current organization. The weaknesses which need to be corrected are as follows: 1) The Board of Directors of MCDI needs to be restructured a.nd then reconstituted to insure that there is proper representation and involvement of the private sector to elicit private capital commitments from the local business community. Individuals from the private sector should be drawn from various co,=ercial and industrial areas. Their expertise and involvement vould be critical to insure that MCDI's policy formulation accounts for and responds to the realities of South Florida's changing industrial mix. Once the Board has been reconstituted, it should be trained so that Board members may take a more active role in providing direction to MCDI. Page 3 2) The Board of Directors of MCDI has not been meeting on a regular basis, the meetings have not been well attended, and the Board has not been kept informed of the policy and operational activi- ties of MCDI. Monthly meetings should be convened of the Board to assure that the Board is setting policy and reviewing the implementation of that policy. 3) In the past, the Board has allowed the Executive Committee to be responsible for some of the major policy decision making, but in the future the Board should restrict the duties of the Board's Executive Committee to that of simply.. managing the day-to-day operations.of MCDI with substantive policy decisions reserved for the Board. Also, the Executive Committee should be reconstituted to have 4 City representatives, 2 individuals representing the banking community and one.' representative from the community. 4) Only 4g.7%($1,4930,850) of the loanfunds in the EDA Revolving Loan Fund have gone to Black businesses. The balance of the loans have gone to Hispanics (37%-$1,136,462) and Anglos (14.3%-$438,000). 5) The seventeen (17) separate loan guidelines recommended by NDC in an attempt to improve the loan administration process should be implemented by MCDI. 6) Different loan review policy and procedures for small and large loans should be established. 7) Once loans are approved by the Loan Committee, the funds should be released within a thirty day period. 8) A Work -Out Committee for loans in default should be established. 9) Miami Capital marketing efforts -should concentrate on the key business individuals in the economic development process, i.e., bankers, retailers, developers, real estate and non-profit neighborhood developers who properly approached and involved will come to realize that Miami Capital is available to provide business development and financial packaging services to projects on a city-wide basis. 1 10) The Loan Portfolio of 14iami Capital leaves a great deal to be desired. It is made up of smattering of loans across various industrial sectors, ranging from $10*000 up to $250,000. They have basically not done the job in terms of generating a large number of jobs and expanding a substantial number of businesses in this community. The present mix of loans does not properly`, - address the greater employment needs of the City's neighborhobds. 11) Both NDC and we have recommended that MCDI's role be expanded to include greater emphasis on the SBA loan program and other federal programs and more *specifically to establish a production schedule to significantly increase loans to the business community. %.I rCLyC -, '12) The administrative staff of Miami Capital should be under the direct supervision of the City Manager or his designee in order to insure that the City meets its fiduciary responsibility to the citizens of the City of Miami. 13) MCDI staff is not producing the volume of loans as called for by the size of its staff. One of the important points made in the NDC report was that when NDC compared the volume of loans per employee between MCDI and the Business Loan Improvement Fund in Atlanta, a similar corporation, it was found that MCDI was operating at about 30% of its full capacity or that it had three times as many people as needed to produce the work. NDC recommended that the RLF/HUD programs be staffed by a maximum of two financial analysts. It should be noted. that MCDI has complied with this and has changed its staffing to where there are now only two people handling the RLF and' two people that have been assigned to the SBA loan area. It is important that the staffs abilities be upgraded. -in that all the staff are young and inexperienced. it is critical that one or two Senior Loan Officers be appointed. Also, the City should approve, prior to hiring, all appointments to professional and managerial positions. 14). Although, NDC indicated from an overall point of view that MCDI has complied with the general guidelines of both the EDA and HUD grant agreements, the City recently learned that MCDI drawdowns with respect to HUD Discretionaly funds were in violation of the U.S. Treasury Department's three-day rule. This infraction has pointed out the need to develop a new procedure to allow for improved financial and program monitoring for N,CDI. Clearly, the City has been at fault for not doing this over the past years. 15) in view of this department's findings that MCDI did not have a strong program.plan, work objectives and properly detailed budget, I requested that the new Executive Director for k1CDI develop such a plan. Upon his appointment in August, 1982, the Executive Director developed the required materials with the assistance of the National Development Council and submitted it to the City in mid -October. The City has since approved the plan, MBO's and budget. During the week of - January 17, 1983, the City monitored Miami Capital's first quarter compliance. We found substantial compliance with the management by objectives but limited compliance with changing the mandate and direction of the corporation. Recommendations Given the history and performance of MCDI during the past three years, it is critical that the recommendations of UDS, NDC and this department be implemented. It is critical that Miami Capital's role in the City's economic development process be redefined and broadened so that Miami Capital carries out the highly professional broader business development, financial packaging and implementation functions required of a City-wide economic development agency. In order to do so, MCDI will have to reorganize its staff to improve the quality and breadth of its operation. ILI 7Ij Page 5 I would like to suggest that, with the assistance of the UDS, a meeting be convened between top City staff, including yourself, and key members of the Board of MCDI for a day long or two half -- day sessions to redefine Miami Capital's role and determine its future work program. Critical discussion items are an aggressive and improved financial packaging and business development program, strong marketing program, outreach program for qualified entre— prenuers, assistance to businesses to develop complete business plans in formulating loans and provision of technical assistance to businesses once the loans have been approved. MCDI also needs to take a leadership role in acquisitions, franchising, neighborhood revitalization and all other activities that focus on expanding the City's revenue base and generating jobs. Once this meeting has been concluded, the contract with Miami Capital should be rewritten by this department so that there is clarity concerning Miami Capital's role and so that an aggressive work program is established for the balance of the year. CG/j u Attachments NEW EXISTING AD !?UACY OF conpA,lY LOAN AM011N'r $ PRIVATE $ LEVERAGE USE OF PROCEEDS JOBS BUSINESS BUSINESS FINANCIAL ANALYSIS COLVA' E-RAI. dates S 11crandcz 20 11 -0- -0- WC - 17 M 9 X b, d - a FA - 3 M moat rellinr ranting 175 11 161 1.1 WC - M 20 X b, c b r•A - 125 M Williams Fence 50 :i -0- -0- WC - 50 M 16 X b, c b Unlimited Indoor -60 11 -0- -0- WC - 50 M 5 X b, c, e b Outdoor FA - 10 M MY - tality X-Rap 25 11 -0- -0- WC - 25 M 6 X b, c, e b l . Cremack 30 M -0- -0- WC - 30 M 8 X b, c c My Place Fish 15 M -0- -0- WC - 15 11 5 X b, d, 3 a Community Tire 25 M -0- -0- WO - 25 M 6 X b, c c Onvx Broadcasting 150 M 250 M 1.7 FA-- 150 M 8 X b, d b Oya Eisi 15 11 -0- -0- WC - 15 Pi 2 X b, d, c c Ellison 6 Company 100 11 65 M .7 FA - 50 M 8 X b, d h WC - 50 It 11, Cleaners 12 M -0- -0- FA - 8 M 4 X a, d c WC - 5 M IBas Specialist3 300 M 375 1.3 FA - 250 M 112 X' b, d a �- WC- 50 M' Allstate• office FA - 250 M Furniture 325 11 135 .4 WC - 75 H 23 X b, d C Paris Ornamental FA 11 11 Iron 17 M -0- -0- WC - 6 M 6 X b, d Aulli.nFs Electrical 20 M -0- -0- WC - 20 M 5 X a, c c RO1101 Funeral 104.5 M- 124.5 M- 1.2 FA - 94.5 M 3 Aquisition b, d ; WC - 10.0 M REVIEW AND EVALUATION OF MCDI AND RECOMMENDED MEASURES TO IMPROVE ITS OPERATIO14 Prepared By: Urban Development Services, Inc. January 14, 1983 TABLE OF CONTENTS SECTION I - INTRODUCTION - OUR APPROACH TO CONTRACTUAL ASSIGNMENT SECTION II - SUMMARY/HIGHLIGHTS - MAJOR FINDINGS AND RECOMMENDED MAESURES TO IMPROVE MCDI OPERATIONS SECTION III - THE OVERVIEW - CONCEPTUAL APPROACH TO REVIEW AND EVALUATION OF MCDI OPERATION SECTION IV - REVIEW AND EVALUATION OF MCDI PERFORMANCE SECTION V - REVIEW AND EVALUATION OF ORGANIZATIONAL STRUCTURE - BOARD/STAFF/PRODUCTIVITY SECTION VI - REVIEW AND EVALUATION OF PERFORMANCE OF CONTRACT WITH CITY AND OTHER RELATIONSHIPS c^ V LIST OF INDIVIDUAL INTERVIEWS '. City of Miami 1.. Charlotte Gallogly - Director of Economic Development 2. James Reid - Assistant City Manager 3. Herbert Bailey - Assistant City Manager 4. David Whittington - Asst. Director of Economic Development 5. Frank Castanedo - Assistant Director Community Development Miami Capital Development, Inc. 6. Juan Del Cerro - Chairman 7. Edward Timberlake - Member of Board/Executive Committee 8. Dr. Roosevelt Thomas - Member of Board/Executive Committee 9. Claud Anderson - Executive Director 10. Lorenzo Simmons - Staff 11. Pauline Walton - Staff Community Based Organizations 12. Joe Wilson - Dir., Overtown Economic Dev. Corporation 13. Jerry Geekel - Dir., Little River Econ. Dev. Corp. 14. George Rivero - Asst. Dir., Downtown Merchants Assoc. Others 15. Tony Crapp - Assistant Budget Director 16. Michael Schwartz - National Development Council 17. Ron Tigner - National Development Council C C 1 I. INTRODUCTION - OUR APPROACH TO CONTRACTUAL ASSIGNMENT A. UDS ROLE AT INCEPTION OF MIAMI CAPITAL DEVELOPMENT, T *T/1 Ilk_q 1TT The Urban Development Services, Inc. (UDS) played a major role as consultant to the then -existing Office of Trade and Commerce, City of Miami, in the preparation of a "Final Report and Addendum" on a "Financial Assistance Program" dated September 30, 1979. In the execution of its current assignment, UDS has placed great emphasis on that report and its contents to point out what the MCDI was intended to be, (concep- tually, programmatically, and organizationally), what the basic approach and assumptions were at the time, and specifically, whether the original mandate, in response to the perceived need, was carried out. This approach by the consultant is fully covered in the "Summary/Highlights" and Section III, "The Overview The Conceptual approach - to the Review and Evaluation of the MCDI -" in the body of the report. It suggests strongly that the assignment of the consultant would be most effectively carried out if this report concen- trated on the basic approach and assumptions underlying i 2 the MCDI operation and not the details of its oper- ation; further, as this report will document, there is strong evidence that the MCDI is "not in the business" it was intended to be in and is therefore not performing an important role which still needs to be carried out in the City of Miami. B. REQUIREMENTS OF CURRENT CONTRACT - CONTENT OF THE REPORT The Scope of Services - Paragraph 17 of Section II of the UDS Contract requires the consultant "to prepare a written report presenting: 1) a thorough review and evaluation of MCDI, 2) its contract with the City, 3) its operation and to recommend measures to improve the MCDI operation." With a few minor changes and additions this report will cover these matters and will also address all of the work items listed under "Scope of Services" in the Contract. It will place particular emphasis on two matters not explicitly stated above: "MCDI'-s role in the City's Economic Development Process: and "to determine what role MCDI should play in the City's Economic Strategy" since these issues are part of the fundamental emphasis the consultant has already indica- ted he will make in this report, i.e.on the basic V 3 approach and assumptions MCDI should take in its operation. -In the connection, the recommendations made in the National Development Council's "Review of MCDI" dated August 27, 1982, are accepted as made; the consultant wishes to stress, however, that while they are accurate as far as they go, with respect to lending and loan administration, they do not adequately address many of the essential, fundamental problems/ difficulties of the MCDI approach and operation. C. THE REPORT HAS BEEN ORGANIZED AS FOLLOWS: Section I Introduction Section II Summary/Highlights - Major Findings and Recommended Measures to Improve MCDI Operations Section III Review and Evaluation of Operation - The Overview/Conceptual Approach Section IV Review and Evaluation of Operation - - Performance of MCDI Section V Review and Evaluation of Organizational Structure/Board/Staffing/Productivity Section VI Review and,Evaluation of Contract Perfor- mance/Relationships with City of Miami * Each section will contain both "Major Findings of . Review and Evaluation" and "Recommended Measures to Improve MCDI" 4 SECTION II II. SUMMARY/HIGHLIGHTS INTRODUCTION 1. The report concentrates on the basic approach and assumptions underlying the MCDI operation, and not the details of its operation. 2. It contains strong evidence that the MCDI "is not in the business" it was intended to be in and is not performing the important role of business development which still needs to be carried out in the City of Miami. 3. The report places strong emphasis on the implementation role MCDI should play in the City's overall Economic Development Process and Strategy. III. OVERVIEW - CONCEPTUAL APPROACH TO REVIEW AND EVALliATION OF MCDI 1. A comparison between the "Basic Approach and Assumptions" contained in the "Final -Report" prepared at the inception of MCDI in September, 1979, and what has transpired in the actua_ operation since that time shows: It was not intended that MCDI operate solely as a lending institution, a sort of "Junior SBA;" but ra 0 5 rather as a business development institution acting as am implementation mechanism for the City of Miami in carrying out its City-wide Economic Development Plan and Strategy. — It was intended that MCDI have a broad -based Pro- gram Plan and Mix, achieving a political and eco- nomic balance between all constituencies, as well as kinds and sizes of business projects, to make sure that all of the people of the City of Miami benefit from its operations. It was intended that a highly professional, high quality staff and operation gain the respect and confidence of all the chief actors in the economic life of the City. 2. Generally speaking, MCDI has not carried out its original mandate and it performing poorly*in terms of its staff and program. It needs to•have its role in the City's economic affairs redefined in a fundamental manner, with respect to a new and broader character and direction for its operation to be achieved through a reorganized Staff and Program Plan. IV. REVIEW AND EVALUATION OF MCDI PERFORMANCE 1. MCDI is not performing as the Business Development and i 6 Financial Packaging Institution it should be, rather than the limited lending operation it has become. 2. It is not serving as an implementation mechanism for a broad enough constituency of small and medium sized businesses, including participation in major downtown projects. 3. It needs to achieve balance in the kinds and sizes of its projects and in the constituencies it serves through better marketing, staffing, relations with the private sectior/banks and programs in the neighborhoods. V. REVIEW AND EVALUATION OF ORGANIZATIONAL STRUCTURE/BOARD/ STAFF OF MCDI 1. At the Policy and Leadership level, there is an urgent need for organizational clarification with respect to responsibility and accountability for the policy direction and performance of the organization, within the City's Economic Development Planning Process and Strategy. 2. An early meeting of all.parties concerned is recommended, and could resolve this key issue at the same time this report and its recommendations are presented and acted upon. 7 3. At the Program Management Level, it is evident that the absence of a simple, clear-cut Annual Program Plan in the past has contributed to the poor performance of MCDI and the lack of accountability of its Executive Director. Further, the experience and qualifications of the Current Executive Director need to be discussed and clarified. 4. At the Professional/Technical level, a major improve- ment in the quality and experience of the Professional Staff needs to be accomplished by the hiring of three - (3) experienced professionals to head up the three divisions of the organization. This is critical to the projected improved quality, direction and performance of MCDI. VI. REVIEW AND EVALUATION OF PERFORMANCE OF CONTRACT WITH CITY AND RELATIONSHIPS WITH CITY OF MIAMI 1. The City bears some of the responsibility for the - poor performance of MCDI because the contract with the City has been poorly written and did not clearly set the objectives and basic character of the organization. 2. It has also been involved in the current confused policy and leadership situation and needs to help clarify this issue in a recommended meeting of all the parties. 0 E, ,. 3. This City can further help clarify the MCDI issues by involving MCDI as an implementation mechanism in a well organized Economic Development Planning Process and Strategy. G SECTION III III. THE OVERVIEW - CONCEPTUAL APPROACH TO REVIEW AND . EVALUATION OF MCDI OPERATIONS AND RECOMMENDED MEASURES TO IMPROVE MCDI OPERATION A. The overview necessarily should start with a review of the basic approach and assumptions underlying the original mandate and approach at the time of the creation and organization of MCDI. A comparison between what MCDI was intended to be and has become is best provided by a review of the key relevant items under the "Basic Approach/Assumptions" contained in the "Summary" of the "Final Report" dated September 30, 1979, together with a brief comment on what has transpired in the actual operation since that time. The key, relevant basic approach/assumptions are listed below in quotes, followed by a brief comment on each: "As indicated in our proposal, our approach to the project was predicated on a number of key assumptions: 1. "Developing,a comprehensive financial assistance program and organization structure to implement it as specified in the request for proposal should be based upon and be part of C 10 a comprehensive citywide economic and business development process." Comment - It was not intended that MCDI should be in the business of being a lending, financial institution, a sort of "Junion SBA" for minori- ties. It was expected that MCDI would become an impor- tant implementation mechanism in the City of Miami's "Comprehensive Citywide Economic and Business Development Process" and would be in the broader business of development as well as lending for small and medium sized businesses. Under the present circumstances in the City of Miami, it is particularly 'important that MCDI take this broader approach to its operation in order to generate a maximum number of jobs. 2. "The financial assistance program and organization structure should be placed in the larger framework of an economic and business development strategy for the city." Comment - In a similar way, as stated under 1 _ above, it was intended that MCDI participate in and play an important role in the development- t c 11 and implementation of the economic and business development strategy for the City. MCDI has not played this role for reasons which will be expan- ded upon below. 3. "The basis for our recommendations with respect to the nature and scope of the proposed financial. assistance program and structure would be the program plan and mix to be developed by the organizatic.n. " Comment - It is clear from a review of the MCDI operation that the focus of its present operation is mainly a lending function, rather than the broader role that was envisioned for it in its Program Plan at its inception. In two chapters of the report, on."Opportunity Identification" and Program Plan/Mix, the report states: "The opportu- nity identification process as carried out by MCDI should start out with.a clear picture of the character, quality, and direction that the organiza- tion and the city want to develop in choosing the various projects, businesses, areas, and constituen- cies they want to work with in keeping with the stated objectives. Similarly, the choice of the 6 12 projects needs to achieve a political and economic balance to make sure that all of the people of the city benefit from the proposed activity and that there is clear agreement on "what it all adds up to." The report also states: "The key issue is that the organization become known to all of the chief actors in the economic life of the community ---bankers, retailers, developers, real estate and non-profit neighborhood developers, etc. ---who will come to recognize that the MCDI is ready and available to provide business development and financial packag- ing services to worthy projects on a citywide basis." The report continues: "As indicated, the projects have been prioritized by kind, size, and geographic location. With respect to kind, they contain minority businesses, small and medium-sized enterprises and identify opportu- nities for broader participation in larger projects. They represent efforts to retain and expand businesses, assist in developing interna- C 4' 13 ' tional trade, downtown projects, and will emphasize i �neighborhood commercial revitalization activities." I The report also states: "As indicated in other sections of the rerport, the program plan and mix has been predicated on a maximization of oppor- tunities, federal resources, local resources, leveraging of private investment and involvement of both the private and community sectors. Each of these elements will make -an important contribu- tion to the productivity of the -organization and the character, quality and direction of its activities and public image." Comment - The present MCDI operation does none of these things. 6. "The new entity would provide highly professional business development capabilities and financial I� resources on a centralized basis not now available in the City of Miami and in the various organiza- tions involved in related and similar work." Comment - This was intended to be the key attraction to persuade community -based organizations to forego their own unsuccessful efforts at economic develop- ment and to take advantage of the "highly profess- ional" capacity and resources being offered centrall _a �� 7 0 li 14 This has not worked out with respect to the character and quality of the staff services being offered by MCDI, which has not earned the respect and confidence of the community. 7. "The program of the proposed organization would be based on a broad set of parameters providing business development and financial services to minorities (Cubans and blacks), small and medium sized businesses, and encouraging broader participation in the larger project being developed in downtown Miami." Comment - This assumption sketched out of the broad approach, both in terms of constituencies and kinds and sizes of opportunities and business to be addressed and served by MCDI. In practice, this has been considerably narrowed down, so that MCDI does not carry out this broad mandate as originally intended. 8. "It would be based on an economic development management system which would provide a prioritized, quantified, scheduled and balanced program plan and mix and a quantified and scheduled basis for Li • 15 staffing, the failure to achieve good leveraging of its resources, and its limited and poor relation- ships with the banks and private sector. B. To summarize, from the conceptual approach, the MCDI has not developed nor been operated as was intended at its inception. It is now viewed as a kind of social, poverty program making "handout" type of loans to a limited constituency. Its role in the City's Economic Development process and strategy development should be redefined and broadened so that it carries out the highly professional, broader business devel- opment, financial packaging and implementation functions contained -in its annual program plan. To develop this new character and thrust, MCDI will have to reorganize its staff in order to improve the quality and breadth of it operation and carry out a broader program plan and mix. measuring performance and benefits. Comment - This economic development management system approach was recommended at the outset. It is only now being installed (through the MBO process) in principle, but is is not starting out with a.simple, clear, balanced Program Plan and mix to repeat the kind of changed character and broader roles MCDI should be carrying out. 10. "Its structure would be a private quasi -public organization, on contract with the City of Miami to provide business development, financial assistance, commercial revitalization and technical assistance services. 11. "It would try to maximize the utilization and leveraging of local and federal resources and programs." 13. "It would work closely with the Private Sector leadership in the City, including banks, Cha.raber of Commerce, etc." Comment - These three "key assumptions" spelled out the intent with respect to organizational structure, of resources and relationships with the private sector. In each case the performance of MCDI has been poor in not carrvina out the nrininai ---date, particularly with respect to the poor quality of its 17 SECTION IV IV. REVIEW AND EVALUATION OF MCDI OPERATION AND PERFORMANCE A. Since the emphasis of this report, as indicated in Section III above, is on the basic approach and assumptions underlying MCDI's operation, many of the problems and difficulties besetting its performance have already been indicated. In this section, only the larger issues involved in its current performance and in the measures to improve its operation will be pointed out. At the present time, MCDI is operating mainly as a financial, lending institution. This is only a small part of what it should be doing. Its operation should include the key functions of a business development and financial packaging nature, such as opportunity identification, outreach for qualified entrepreneurs, development of complete business plans, financial packa- ging and post -packaging technical assistance. It. should be involved in acquisitions, franchising, neighborhood revitalization and all other activities _ focused on creating, expanding or relocating income - producing, job generating enterprises. I& This redefinition of its functions should become part of a new policy framework for MCDI. It will include raising its sights with respect to the kind and size of businesses it will serve (small and medium sized businesses and participation in major downtown projects) achieving a broader balance of activities. This will require a higher quality business/banking/financial experience on its staff. This improved quality of its staff is critical if i MCDI is to gain the respect and confidence of the i Y private sector, banks and minority business commu- nity. Some of the specific measures needed to carry out the improved operations indicated above are: 1. Broader professional outreach and marketing. 2. Recruiting of experienced finance -oriented staff. 3. Improved relations with banks leading to increased leveraging. 4. Use of Section 502 and 503 SBA Loan Programs. 5. Development of neighborhood commercial revital- ization programs with community -based organizations. It should be pointed out that the current emphasis on 19 the need for more jobs in Miami provides a good reason for stressing the importance of the business development functions of MCDI in assisting both existing and new businesses to expand and locate in the City of Miami. The point should be made that jobs are provided mainly by businesses such as those assisted by MCDI who can provide employment to those people in need of jobs. i 20 SECTION V V. REVIEW AND EVALUATION OF ORGANIZATIONAL STRUCTURE/BOARD/ STAFF ! A. Some of the problems and difficulties involved in the organizational structure and staffing of MCDI have been referred to in the previous section. It would, however, be useful to point out the key issues of policy and professional capacity involved at each of the three levels of the organization, that is at the policy, program management and professional/technical levels of the operation. 1. POLICY LEVEL: There is a great deal of confusion and need for organizational clarification at MCDI's policy and leadership level. While MCDI was created by and was and is funded by the City of Miami, there is a need to clarify the issue of responsibility for policy direction and accountability between the Board/Executive Committee/Executive Director and the City. At the same time, it is also clear that MCDI should become part of the City's broad Economic j Development Planning Process and Strategy and serve as an important implementation mechanism of that ■ strategy. a 21 All of the parties involved have expressed a concern and willingness that this issue be addressed and clarified as soon as possible. It is the opinion of the consultant that this can be done in an early meeting of the parties at which time this report will also be presented with its major recommendations for changes in the character, direc- tion and operation of MCDI. There is also a need to review the composition of the Board to make sure that it adequately repre- sents the private sector and the business/banking community, in order to carry out .the proposed changes in the operation of MCDI involving the pri- vate sector, leveraging, etc. 2. PROGRAM MANAGEMENT LEVEL: This aspect of the oper- ation has not been properly separated from the policy and professional technical levels of the organization. In the three year history of the organization, there has not been.a clear cut basis for holding the director of MCDI responsible for performance against a quantified and scheduled annual Program Plan contained in its contract with the City. Throughout its history, the absence of 22 carefully monitored program plans have permitted MCDI to operate increasingly on a narrow, unaccept- able basis, in effect putting it "in the wrong business" with an inadequate staff. While the Board must take major responsibility for permit- ting this poor performance, there is no question that a competent, experienced executive director working with an agreed upon Program Plan could make a big difference. This situation needs to be clarified with respect to the present director, who has personal stature but lacks specific program experience in an MCDI type of operation. 3. PROFESSIONAL AND TECHNICAL LEVEL: While the performance of MCDI is dependent, to a large extent, on the professional capabilities of its staff members, it should be pointed out that the staff did not hire itself or set the objectives and character of the operation. This was and is the responsibility of MCDI's Board and Executive Director, and changes need to be made as indicated in the foregoing sections. The quality and exper- ience of the present staff is typical of the staffs of social programs and needs to be improved substan- 4 23 tially by the hiring'of three key experienced professionals to head up each of the major divisions of the organization. Such personnel is available at $ 5,000.00 to $ 7,500.000 higher salaries than are now being paid. The higher budgetary expense would be well worth the difference in the improvement in organizational performance and image and may be made up by some reduction of staff size. i SECTION VI 24 '�. VI. REVIEW AND EVALUATION OF PERFORMANCE OF CONTRACT WITH THE CITY AND RELATIONSHIPS WITH THE CITY OF MIAMI The foregoing sections have already covered the basic issues and problems involved in the performance of MCDI's contract with the City of Miami. While the performance has been poor, the consultant believes that the city bears some of the responsibility for this because: 1. The contract with MCDI was poorly written and did not clearly and specifically set the objectives of the MCDI operation as to its basic character and thrust in a well drawn Scope of Work and Program Plan. 2. The city has been part of the confused Policy and Leadership situation now besetting the operation, _ as described in Section V on Organizational I Structure. The consultant believes that a good part of this problem can be resolved if the City organizes and clarifies its Economic and Business Development Planning Process and Strategy under a well -planned Economic Management System. MCDI should play a well-defined implementation role 0 " -" 6 25 in this system. Also, many of the recommendations made under "Organizational Structure" involve the City at MCDI's policy and program management levels. If and when these issues are a-s resolved as recommended, the basic relation- ships with the City as well as the MCDI operation will be improved substantially.