HomeMy WebLinkAboutPre-LegislationJ-02-1095
9/26/02
RESOLUTION NO. 02-1072
A RESOLUTION OF THE MIAMI CITY COMMISSION
DIRECTING THE CITY MANAGER TO DESIGNATE AND
RESERVE $1,000,000 OF THE FISCAL YEAR 2002
SURPLUS AS STRATEGIC INITIATIVE RESERVES AND
$2,000,000 AS MANAGEMENT RESERVES TO FUND A
CITYWIDE POVERTY INITIATIVE.
e Sri\ Yi-lw hJ
BE IT RESOLVED BY THE COMMISSION OF THE CITY OF MIAMI,
FLORIDA:
Section 1. The City Manager is directed to designate
and reserve $1,000,000 of the fiscal year 2002 surplus as
Strategic Initiative Reserves and $2,000,000 as Management
Reserves to fund a citywide poverty initiative.
Section 2. This Resolution shall become effective
immediately upon its adoption and signature of the Mayor.1/
1/ 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.
CITY COMMISSION
MEETING OF
S E P 2 6 2002
Resolution blo.
02-1072
PASSED AND ADOPTED this 26th day of September
ATTEST:
PRISCILLA A. THOMPSON
CITY CLERK
APPROVED AS TO FORM AND CORRECTNESS:
0 VILARELLO
ATTORNEY
6889:ELF
Page 2 of 2
, 2002.
UEL A. DIAZ, MAYO
O2-1072
7?„., _a- .(
J-03-247
3/25/03
RESOLUTION NO. 0 3 "`"` 3 f 8
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 (ACCION M•IAMI - 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 COJIO1
MEETING CV
PP 1 1 2003
Resolution No.
03- 378
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 authorizedit' 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.
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
Section 4. This Resolution shall become effective
immediately upon its adoption and signature of the Mayor./
PASSED AND ADOPTED this loth day of April , 2003.
ATTEST:
PRISCILLA A. THOMPSON /
CITY CLERK
APPROVED AS TRM AND CORRECTNESS
tr
DRO VILARELLO
Y ATTORNEY
W7054:tr:AS:BSS
2/
EL A. DIAZ, MAYOR
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
CITYWIDE
CITY OF MIAMI, FLORIDA
1NTER-OFFICE MEMORANDUM MAYOR DIAZ
TO
FROM :
The Flammable lvletabers,
City of Miami Commission
Manuel A. Di
Mayar
DATE:
SUEEXCT
REFERENCES :
ENCLOSURES:
March 27, 200
City's Poverty Initiative
Phase 11— .Nficro-Lending
FILE:
F.EOUBST:
1 would respectfully revest your support of the accompanying resolution approving the
enclosed Poverty Initiative Plan and authorizing the expenditure of S200,000 to underwrite the
second phase of said plan.
Phase 11 of the initiative will consist of the following:
A micro -lending initiative operated by Am -ion USA - $200,000.
Funding for said initiative is available from an account entitled Special .Revenue Fund —
Poverty Initiative.
BACKGROUND:
The Mayor's Poverty Initiative consists of four (4) components all focused on helping
individuals: 1.) Access existing benefits, 2.) improve their financial litcra.cy, 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 -tending program operated by Accion
USA.
The second phase outlined below will help to address access to capital needs and expend
awareness within the community about readily available benefits that can: help increase incomes
and alleviate poverty. Future phases will seek to create opportunities for residents to expand their
Imowled.ge of various topics that impact their personal finPnces and seek to encourage savings
and asset accumulation through the u se o f s uch v ehicles a a Individual D evelopment A mounts
(IDAs). These additional ccrmponents will also be accompanied by additional outreach efforts
around other wage support benefits to increase Medicaid, Kideare, and Food Stamps enrollment.
PHASE II: Acciem USA - MIAMI MICRO -LENDING PROGRAM
A.eci5n Overview
A cei International the p arena c ompany o f A ccion USA which. operates and pextriers
with micro -finance organizations throughout Latin America, Africa and the United States to help
theni improve operational efficiency end reach more borrowers. in the T.Jnited States, Accidn
03- 378
03/18/2003 22:19 3052505442
MAYORS OFFICE PAGE 03
USA operates direct lending offices in A ia:eta, throughout New England, and Miami. Acciin
USA also h as a number o f a SSociatte p rogranls o perating izn California, Georgia, Tnietois, New
Mexico, New York, Rhode Island, and Texas. Through these local offices, Accidn works with
low- and moderate -income business owners that bave a desire to access capital, but are
economically margieslzzed aztd have no to limited access to camtzzercial business loans.
To assist these small business sex- tors, Ace -ion provides them small, short -terra loans at
interest rates that reflect the cost of lending. Accibn's loam methodology has been designed to
both meet the needs of inicro-entrepiesteurs and to ensure that the local program office reams
financially sustainable. Like traditicnsal banks, Aocifn evaluates potential borrower using
measurements like business assets — which could be as midi as a tin s tall in the taxarket — amount
and cost of goods sold, cost o fraw znaterials, and hcessehold expanses. But unlike traditional
banks, our partner programs do not make loans based upon revenue ar collateral alone. Because
of the poverty of its target clients, Aecien sends loam offz.cees to meet potential borrowers in their
places of work, where they weigh intangibles like references from customers and neighbors, and
the loan officer's own "gut feeling" about the micro-entreprentur's drive to succeed. This
character -based lending allows Acczon 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 $SOD - S50,000.
Evidence of Loral Need
The need for access to sources of quality capital for creel! business owners has long been
documented. Most recently in April of 2001, the FIU Metropolitan Center released the Economic
Development Implementation Plan (EDI?) with identified the folio w finding:
"Without capital sores for equity and debt, ezzireprcneurial 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 903/4 of
the County's minority -owned businesses are sole -proprietorships. Many of these
businesses struggle with accumulating personal business assets to help secure
their debts. Msthietreain financial institutions, while having increased overall
small business lending, still do not have the capacity ar business will to finance
these small minceity-owned businesses."
Based on this finding, the EDIP called for the development and leveraging of capital
resources for equity and debt to support local eterepreneurs.
In the September of the same yess, Action USA received a grant from the
Congregational Church of Coral. Gables and the Anne E. Casey Foundation to explore the
possibility of establishing as AcciOn lending office in Miami. In analysis and subsequent
work conducted to determine feasibility of the market's potential consisted of: I.) Interviews with
local community organizations, religious, business, and banking leaders and other interested
Pates; 2.) Four focus groups with potential clients; and 3.) Assessraerzt of the size of the local
micro-meterprise market, its needs, and current level to wbic1a it is being served by other lenders
and sznalI business providers.
Among the market study's most significant findings were:
2
03- 378
03/16/2003 22:19 3052505442 MAYORS OFFICE
PAGE 04
• In the Miazni metropolitan statistical area (MSA), there exist 77,500 micro -entrepreneurs.
Appraxinnately 39,400 are Hispanic, 13,500 are African -American, and the remaining
24,600 arc others (Haitian, Asian, etc.).
▪ 68,800 of these entrepreneurs have never received a loan from a bank or other
conventtozxal lending source.
• Focus group participants expressed strong negative feelings tawasds banks and other
lenders, 1132derseoring the apparent tack 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 are currently being operated in Miarai-}Jade servicing only
392 individuals. Existing programs are operated by salt nonprofits or government
related agencies that define their mission very narrowly.
• Crreatest market opportunities for this kind of a program exist in the cozz tnities of East
Little Havana and Little Haiti
• Hispanics in Bast Little Havana and Haitians were less sophisticated than other segments
of the minority community with respect to fxnencialflosn matters. Both had little
experience with the 10211 process, were likely to steer clear of banks, and were less likely
to ,have access to credit cards.
• Haitians voiced some uniquely different attitudes. They exhibited the strongest sense of
hopelessness and lielpl mess. Virtually all echoed the sentiment they had nowhere to
turn. Their desire for a program like A.ccion was the strongest.
Proposed Action Flan
Given t he a vident is eed for such a program, we are proposing that the City 4 f M
provide SZ00 000 to support the operations of A.ccion USA — Miami program for two years. This
commitment will leverage an additiocai $730,000 in operating grant commitments and $1.7
million in loan capital over the next three (3) years. Other program 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
• JP Morgan Chase $ 25,000.00
• Washington Mutual $ 10,000.00
• Knischt Foundation 200.,000.00
Total Commitments $685,000.00
With this rapport, Accibn USA projects that it will be able to issue 382 loans totaling
$3.074 million in Miami by 2005. The average loan during that same period will be
spptoximately 57,600 with a 4.2% loan default rate.
3
03- 378