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HomeMy WebLinkAboutTracy J Sargeant - MDC IowaApril 30, 2023 STEM FACTORY 1927 Keokuk St, Iowa City INNOV8 LAB 1222 S Gilbert Ct, Iowa City 319-333-0600 I www-MDCIOWA.org Statement of Interest for Inclusive Economic Development Support for Underestimated Businesses & Entrepreneurs MDC Iowa is pleased to submit this Statement of Interest for the City of Iowa City's Inclusive Economic Development Support for Underestimated Businesses and Entrepreneurs grant program made possible through the American Rescue Plan Act (ARPA) Local Relief Fund. Project: Iowa City Incubate — a multi -year proposal for both physical space and program support, which will provide BIPOC-owned businesses, historically marginalized individuals, and community partner organizations with direct support to create a more inclusive economic development ecosystem. Lead Applicant: Multicultural Development Center of Iowa 1927 Keokuk Street Iowa City, IA 52240 Site addresses: 533 and S35 Southgate Ave Iowa City, IA 52240 In unity, Tracy Jon Sargeant Founder and Executive Director Applicant Point of Contact: Tracy Jon Sargeant Executive Director 319-333-0600 tracyjon@mdciowa.org I STEM FACTORY 1927 Keokuk St, Iowa City INNOV8 LAB 1222 S Gilbert Ct, Iowa City 319-333-0600 I www.MDCIOWA.org GENERAL DESCRIPTION MDC Iowa's project proposal for an Iowa City -focused BIPOC business support hub provides direct support for historically marginalized community members and community organizations which includes a commercial kitchen, shared retail space for micro -enterprises, incubator space, innovation center, and centralized resource and e-commerce platform. A This project expands on the organization's current BIPOC Business Accelerator program (INCUBATE) that focuses on aspiring entrepreneurs and small business owners who are socially and economically disadvantaged. The program empowers underserved and underestimated community members to achieve economic self-sufficiency and reduce economic inequity, as well as create generational wealth while closing the wealth gap that has increased during the pandemic for people from marginalized communities, including low-income individuals, racial and ethnic minorities, and immigrant communities, which are disproportionately people of color. To achieve these goals, MDC Iowa has developed a proposal with three critical components: Capital investment: purchase of commercial real estate to establish an indoor marketplace, incubator space, commercial kitchen, innovation center, and centralized resource and e-commerce platform. Micro -lending: increase funds available in the MDC Iowa Community loan fund for startup grants, forgivable loans, credit builder loans, and micro -loans. Operational Capacity: increase current operational capacity to include program support staff to engage with small business owners, individuals, and community partner organizations. SPECIFIC PROJECT GOALS FOR COMMUNITY BENEFIT 1. Increase Visibility and Access to Business Support Systems and Resources One of the top barriers identified in the Inclusive Economic Development Plan (IEDP) is the insufficient access to business support systems. This is due to several factors including lack of support resources in multiple languages, unawareness of business resources due to limited marketing and outreach, and the absence of centralized resources. A foundational component of the IC Incubate project is the development of a centralized platform that provides access to business support resources and a unified e-commerce tool that connects agencies and organizations throughout Iowa City. Connecting all available business support resources in one centralized platform will increase visibility and improve community resilience. By combining the centralized resource system with the e-commerce tool, in both a mobile app and web platform, individuals and businesses can buy, trade, source, and support other BIPOC-owned businesses while simultaneously getting access to the business resources they need. The platform will be available in English, French, Spanish, and Chinese, which is also supported by the IEDP. MDC Iowa also recognizes the ongoing need to bridge the gap of the digital divide which has been widened by the COVID-19 pandemic. The STEM Factory program will continue to provide access to technology and training to socially and economically disadvantaged people in our community. Public kiosks at community STEM FACTORY 1927 Keokuk St, Iowa City INNOV8 LAB 1222 S Gilbert Ct, Iowa City 319-333-0600 I www.MDCIOWA.org partner locations, computer literacy training in French and Spanish, Internet access, and computer equipment will continue to be provided as part of the existing STEM diversity and racial equity initiative. 2. Improve Access to Startup Funds and Working Capital A major barrier for historically marginalized members of our community as identified in the IEDP is equitable access to micro -lending for business startups and working capital for early -stage businesses. To create a more resilient community we need to address these barriers that disproportionately affect BIPOC entrepreneurs. The MDC Iowa Community Loan Fund will provide affordable and responsible financing, and technical assistance for community stabilization and community development. The loan efforts will benefit low to moderate -income neighborhoods with a lens toward minority micro -enterprise. Additionally, the MDC Iowa Loan Fund will create nimble and flexible programs that will fill credit gaps in Iowa City for those who are deemed as higher risk in traditional lending platforms. To create a scalable micro -lending program, MDC Iowa will leverage a pool of funds from a surrounding network of financial institutions that will provide loan loss reserve funds in addition to the ARPA funds. Hills Bank, GreenState Credit Union, and Iowa Community Capital have pledged their support for a multi- year plan that will create the momentum needed to keep the lending program thriving for years to come. 3. Develop Sustainable and Affordable Business Infrastructure As outlined in the Inclusive Economic Development Plan by Astig Planning, one of the main challenges that limit small businesses from scaling beyond a home -based business is access to a commercial kitchen for food service businesses and affordable rent for retail -based businesses. To address this problem, MDC Iowa's proposal will invest in a commercial real estate property that has an existing commercial kitchen as well as space that can be converted into a shared retail and incubator space for small businesses that can accelerate their growth with access to a cost-effective retail outlet. Creating new commercial businesses that create local jobs, healthier food, and revitalizes empty retail space is at the core of the Iowa City Incubator project by MDC Iowa. Intentionally locating the incubator space in the South District neighborhood will improve access, increase local economic contribution, and demonstrate a model for investment in the district. This also directly aligns with the city's strategic values and community impact plan. 4. Increase Community Resilience As a result of the COVID-19 pandemic, countless members of our community have suffered from financial challenges that continue to affect them today. Not everyone has an appetite to become an entrepreneur which should not exclude someone who needs help improving their financial situation and credit profile. As such, MDC Iowa will provide financial literacy training workshops and credit builder loans to assist community members that have experienced financial challenges. The credit builder loan program will be STEM FACTORY 1927 Keokuk St, Iowa City INNOV8 LAB 1222 S Gilbert Ct, Iowa City 319-333-0600 I www.MDCIOWA.org paired with a credit builder course and will use our experienced community partners, Hills Bank and GreenState Credit Union, to provide ongoing support and access to additional financial services. For entrepreneurs and existing small business owners, the same initial credit builder program will be available with one main difference. After one year, credit builder graduates are eligible to access a loan pool of $2500 to $5000 with a demonstrated business loan need. MDC Iowa will also provide continued business coaching to support those who graduate from the Credit Builder course. S. Create Sustainable Capital Infrastructure Part of the perpetual trauma that exists for historically marginalized people is the inconsistency in the help offered by agencies and organizations. Well-intentioned programs that are not properly funded or sustainable due to poor planning and inexperience eventually leads to the termination of services which actually causes more harm than good. As part of the sustainability plan, MDC Iowa will become a Community Development Financial Institution (CDFI) which is funded by the CDFI Fund. This fund plays an important role in generating economic growth and opportunity in some of our nation's most distressed communities. As a local, BIPOC-operated CDFI, MDC Iowa would be able to offer resources and innovative lending programs that meet the needs of social and economically disadvantaged people in Iowa City. After becoming a CDFI, MDC Iowa will already have an established Community Loan Fund with dozens of loans for BIPOC-owned businesses and be able to leverage additional federal funding options that will directly support the sustainable capital infrastructure that will fund the micro -lending program for years to come. 6. Create Racial Diversity in Financial Lending We are past the time to change the racial equity and diversity of the financial lending landscape in Iowa City. If we continue to fund the existing financial institutions that do not represent the communities that they serve, we should not expect to change the equitable distribution of wealth, improve access to capital, or make changes to products and services based on the needs of a diverse community. By funding MDC Iowa's Community Loan fund and IC Incubate project, Iowa City has the opportunity to empower a new financial institution model with racial minorities represented in leadership positions and decision -making roles. Without the City's intentional investment in this new model, we risk reinforcing inequity, missing opportunities to drive innovation, improve decision -making based on shared lived experience, and reduce systemic racism and discrimination lending. STEM FACTORY 1927 Keokuk St, Iowa City INNOV8 LAB 1222 S Gilbert Ct, Iowa City 319-333-0600 I www-MDCIOWA.org INCLUSIVE ECONOMIC DEVELOPMENT PLAN AND CITY COUNCIL STRATEGIC PLAN ALIGNMENT MDC Iowa's project directly addresses several of the recommended action items in the Inclusive Economic Development Plan by Astig Planning. As one of the original collaboration partners in the development of the IEDP, MDC Iowa has already proven a commitment to providing programs and resources that offer both public -facing support and behind the scenes support. Some of the top barriers outlined in the IEDP plan was access to affordable rent, lack of access to financial systems, gaps in information, lack of relationships with business support systems, and short supply of mentors. Ik A MDC Iowa's program addresses all these barriers and with the help of an intentional and strategic investment of ARPA funds these problems can be reduced and eventually eliminated. The Iowa City Incubate project will provide: Affordable rent as part of the shared micro -retail space. Increased access to financial systems through monthly workshops and expanded micro -lending for higher risk borrowers. Improve relationships between a wider range of community members and MDC Iowa through expanded community partner engagement with CWJ, Refugee and Immigrant Association, Inside Out Reentry Enhanced mentoring program support and access to a more diverse mentor resource pool through a collaborative partnership with ICAD Group. 1 Chwes In policies 2. Internal work r Y/ procedures at local governments =111ple levels and business support institutions 3.1111olslerendtl!up��- 41tovide resout-1 arganitatlons that to the underestimated curreolly sapporl rial and small lbbpeekl ees/ J business community q to create spaces for the underestimated business community 1, Itirlve The Iowa City Incubate project and current INCUBATE program align with Iowa City's long-term strategic plan in both values and impact areas. Racial equity, social justice, and human rights are at the core of MDC Iowa programs. Climate action is a main influence and guiding principle at MDC Iowa's INNOV8 Lab and the BIPOC Business Accelerator program, which supports renewable strategies for individuals and businesses. The addition of a new joint program with Field to Family, IC Compassion's Global Food Project, and RSFIC is the most recent example of MDC Iowa's commitment to address Climate Action through sustainable practices. Both the Field to Family/ Global Food Project and MDC Iowa programs embody the future vision and put into action the changes necessary to greenhouse gas and carbon -emissions, increase buying local, and reducing energy consumption through a community -wide shared services framework. STEM FACTORY 1927 Keokuk St, Iowa City INNOV8 LAB 1222 S Gilbert Ct, Iowa City 319-333-0600 I www.MDCIOWA.org COMMUNITY RESILIENCY The IC Incubate project will build capacity and promote resiliency in Iowa City, helping community members better respond to future challenges. By improving access to economic opportunities, business education, entrepreneurial pathways, equitable financial lending, personal financial tools, and consistent support, the community will be better able to withstand economic instability and recover from crises. Increasing the current loan capacity to support underestimated businesses and entrepreneurs while expanding outreach through community partner organizations creates a scalable model to improve equitable access to services. Instead of a 1:1 model which supports an organization creating their own similar services, the IC Incubate project will leverage the years of experience that MDC Iowa has gained from delivering direct support to BIPOC- owned businesses. By creating a shared services model, IC Incubate can provide local partners with access to programs, resources, and reduce inefficiencies from duplication of efforts. A platform that is available in multiple languages is key to improving community resilience and building a more inclusive economic development ecosystem that includes our immigrant and refugee populations. An inclusive economic development plan may look comprehensive, but if it fails to address the language barriers that prevent some members of our community from accessing resources, it will not be truly inclusive or effective. Building an inclusive economic development plan without addressing the lack of access to business support resources available in other languages is like setting the community table for dinner but forgetting to invite some of the guests. While the table may be set, without all the guests present, the dinner will not be truly inclusive or be an accurate representation of our community. MDC Iowa will ensure sure that everyone gets an invite to the community dinner table and the invitations will be available in their native languages. This togetherness, fairness, and shared connection will build community resilience. There should be no doubt that the COVID-19 pandemic has magnified how disconnected we are and highlighted the social and economic disparities for our communities of color. IC Incubate can help build a diverse and robust local economy through direct micro -enterprise support, reduce inequity within our community by improving access to economic opportunities and resources for BIPOC entrepreneurs, and build new connections across racial and socioeconomic statuses creating a shared sense of purpose and community. PROJECT BUDGET Amount $500,000 $250,000 $250,000 Amount STEM FACTORY 1927 Keokuk St, Iowa City INNOV8 LAB 1222 S Gilbert Ct, Iowa City 319-333-0600 I www.MDCIOWA.org Funding Source ARPA In -kind/ Match (Provisional) In -kind/ Match (Provisional) Funding Source Description Real Estate purchase & renovation of property Real Estate purchase & renovation of property Real Estate purchase & renovation of property :siness Support) Description rI $120,000 ARPA Operational capacity (Staffing) $60,000 In -kind/ Match (Committed) Operational capacity (Staffing) $300,000 CDFI (Provisional) Operational capacity (Staffing) $70,000 ARPA Technical Assistance (Professional Services) $70,000 In -kind/ Match (Committed) Technical Assistance (Professional Services) $7S,000 ARPA App, e-commerce & centralized resource platform $75,000 In -kind/ Match (Committed) App, e-commerce & centralized resource platform $50,000 ARPA Technical Assistance (Direct Business Support) $50,000 In -kind/ Match (Committed) Technical Assistance (Direct Business Support) $1,870,000 $1,055,000 Total In -kind/ Match Funding $815,000 Total ARPA Funding Request I STEM FACTORY 1927 Keokuk St, Iowa City INNOV8 LAB 1222 S Gilbert Ct, Iowa City 319-333-0600 I www-MDCIOWA.org PROJECT TIMELINE I here are several factors that could significantly affect or alter the project timeline. The below preliminary timeline outlines milestones for the proposed project. Create new materials for immigrant & refugee and Fresh Start accelerator Finalize floorplan for new shared retail marketplace Hire In of 3 new business coach Purchase commercial building - I" & 2"1 immigrant & refugee cohort - 111 & 2n1 Fresh Start returning citizen cohort 3 new BIPOC accelerator cohorts 00�w 2024 11 Q"- Remodel of incubate space & shared retail space Hire 2nd of 3 new business coaches Commercial Kitchen, Shared Retail & Incubate Space opens Launch IC Incubate app, e- commerce platform, and centralized resource center 3rd & 411 immigrant & refugee cohort 3.d & 411 Fresh Start returning citizen cohort 3 new BIPOC accelerator cohorts F11 Apply for CDFI certification St' & 611 immigrant & refugee cohort Slh & 61h Fresh Start returning citizen cohort 3 new BIPOC accelerator cohorts 7511 loan milestone 2V1 new business startup milestone 100t" financial literacy/ credit builder milestone 80", Extended Business Support member milestone FV2025 2026� - Bold items indicate activities/tasks that are budget expenditures. Based on the proposed timeline, all ARPA funds will be expended by December 31, 2026. STEM FACTORY 1927 Keokuk St, Iowa City INNOV8 LAB 1222 S Gilbert Ct, Iowa City 319-333-0600 I www.MDCIOWA.org COMMUNITY IMPACT IC Incubate has the potential to change hundreds of lives, families, and future generations through direct support. How community partners leverage these tools, resources, and support can only increase the impact that this project will have on our community. Below are some preliminary estimates on what funding this project would look like in terms of quantitative measurements. Some qualitative measurements for the IC Incubate project include: Increased Representation in Entrepreneurship, Employment & Lending eo t U A, Ak t Improved Cultural Competency & Normalizing Multicultural Marketing ' cuL*'-- 9'5 ADVERTISING 0. MULTICU T,URAID::-.�.� GROUPATEQ I MARKETING-."" STRATE6Y� _ T,9 VALUES= L1111 CULTURAL -=*, , .�- Increase in BIPOC Home Ownership & Intergenerational Wealth Transfer STEM FACTORY 1927 Keokuk St, Iowa City INNOV8 LAB 1222 S Gilbert Ct, Iowa City 319-333-0600 I www-MDCIOWA.org FINANCIAL MANAGEMENT MDC Iowa has a history of financial management of grants and public funds from Iowa City, Johnson County, numerous corporate partners, and private donations totally $3S0,000 over the past three years. Operating as a lean organization, majority of the funds have been used for direct business support in the form of technical assistance grants through the BIPOC Business Accelerator program. Financial statements like cash flow and financial position to support the responsible management of these funds is available if necessary. Due to the estimated number of new loan applicants, an increase in the number of cohorts and businesses supported, and the complicated application process and auditing requirements in applying to become a CDFI, it is the position of MDC Iowa's board of directors that the organization leverage a CPA to provide technical assistance. The organization has been working closely with the Aminata Taylor, a local CPA and owner of Tailored Tax and Accounting, LLC, to provide a range of financial management services. Part of the project budget includes retaining Ami as the comptroller to oversee fiscally responsible allocation and distribution of funds. There are several benefits including the direct support of a female Black -owned business in Iowa City, the intentional involvement of a certified public accountant in the internal controls of a growing organization with plans to become a CDFI, and the increased accuracy of financial reporting required by the city and federal government. Tailored Tax and Accounting will also assist with the management of any technical assistance or grants provided to program participants through MDC Iowa's INCUBATE program to ensure proper accounting of public funds that are distributed to small businesses in Iowa City. RELATED WORK As a nonprofit organization providing BIPOC-owned businesses with direct assistance and support in Iowa City since 2019, MDC Iowa has been committed to promoting inclusive economic development with an intentional focus on underserved and historically marginalized, underserved, underestimated, and historically disadvantaged members of our community. If awarded this grant, MDC Iowa would be able to accelerate wealth -building by improving racial equity in economic development and create a strong, thriving, and sustainable small business ecosystem for BIPOC-owned businesses. MDC Iowa's INCUBATE BIPOC Business Accelerator is a proven program with a track record of helping more than 60 BIPOC-owned businesses and works to ensure that the benefits of economic growth opportunities are more equitably distributed to those who have been historically marginalized or excluded. r� I I 43 Businesses Served in the first four cohorts 75% 312 Mentor Hours '$51 k in total small -dollar and micro -loans distributed to 15 entrepreneurs & businesses of participants ©, Businesses Received are women ©D 34 Technical Assistance 1815 New Companies Sessions 1 5 Launched of participants 99% identified as a . person of color s 14 New Jobs Created KNOWLEDGE I TRUTH I RESPECT EQUITY DIVERSITY STEM FACTORY 1927 Keokuk St, Iowa City INNOV8 LAB 1222 S Gilbert Ct, Iowa City 319-333-0600 I www.MDCIOWA.org LETTERS OF SUPPORT Please see the attached letters of support from community partner organizations. These letters of support may differ from other in that they not only affirm the work MDC Iowa has been doing but also show their commitment to support of this project in an active role as a partner. Resilient Sustainable Future for Iowa City (RSFIC) Iowa City Area Development Group (ICAD) Inside Out Reentry Community Hills Bank and Trust I Resilient Sustainable Future for Iowa City 1927 Keokuk St, Iowa City, Iowa, 52240 To our trusted selection committee, Funding MDC Iowa's proposal would make a long-lasting impact and create a sustainable infrastructure for Iowa City into the decades ahead of us. This is about an existing set of partnerships and programs that just need a kickstart to become self-sufficient and sustainable. RSFIC and its founders, Michal & Riley Eynon -Lynch, have supported MDC Iowa over the last two years and we have already seen tangible results. We have helped MDC Iowa with both cash donations and in -kind donations that assist with operating expenses to the tune of $100,000. We also plan to continue supporting MDC Iowa into the future. We will help make sure that any ARPA funds granted to MDC Iowa are magnified, and we are in a position to help them become self-sufficient and sustainable after the ARPA funds are depleted. Our future plans include leadership development, mentoring of business coaching staff, development of a business -focused volunteer program, and collaboration on micro -lending opportunities for BIPOC-owned businesses that align with our common missions. Sincerely, Riley Eynon -Lynch Executive Director and Cofounder Resilient Sustainable Future for Iowa City IOWA CITY AREA DEVELOPMENT D R I VI N G I N N O VAT 10 N March 15, 2023 City of Iowa City Attn: ARPA Grant Committee 410 E Washington St Iowa City, IA 52240 Re: ARPA Funding Request — City of Iowa City Dear Review Committee: I am writing today in support of the work being done by the Multicultural Development Center of Iowa and Tracy Jon Sargeant. Inclusive Economic Development is one of the core areas of focus for the Better Together work and ICAD has partnered with Tracy and MDC Iowa to deliver on that work over the past 3 years. The focus has been primarily on building entrepreneurial skills and support networks (financial, mentoring, + skill development) for historically marginalized residents of Johnson County. MDC Iowa's BIPOC Business Accelerator program has graduated over 45 participants in the past 3 years that have resulted in over a dozen new business starts while building the skills and confidence of dozens more future small business owners. The BIPOC Business Accelerator is a nice compliment to the entrepreneurial ecosystem and creates another pathway for entry into the Iowa City/Johnson County business community. The Builders and Backers program that ICAD leads works closely with MDC Iowa to provide resources and support in addition to Venture School and other regional entrepreneurial support organizations and programs. Given the success and momentum we've experienced in our collaboration and activation of this space we are excited to scale this work going forward. The investment from the city will help to provide foundational programs and resources to build and expand these collaborations going forward. Sincerely, Tom Banta President, Iowa City Area Development @MERGE 136 South Dubuque Street I Iowa City, IA 522401 319-354-3939 I www.icadgroup.com �1�/ Inside Out Reentry Community 500 N. Clinton St. Iowa City, IA. 52245 f� (319)338-7996 www. insideoutreen".ore April 28, 2023, Re: MDC Iowa's ARPA application Dear City of Iowa City: Inside Out Reentry Community is a comprehensive reentry community in Iowa City whose mission is to support people involved in the criminal legal system in changing from the inside out, and to educate the public, in order to promote healing, restore relationships and achieve success in the community. At Inside Out, we assist and support individuals in their reentry to the community after incarceration, and many individuals' express interest in entrepreneurship. We are writing this letter in support of the Multicultural Development Center of Iowa's application for the ARPA Inclusive Economic Development Program for their Returning Citizen Entrepreneurship program. Inside Out Reentry Community commits to support the Multicultural Development Center of Iowa's program by referring interested individuals to their program and by providing guidance on case management practices. They have completed multiple successful cohorts of their Business Accelerator Program and are a trusted community partner. Sincerely, Michelle Heinz Executive Director - Inside Out Reentry Community H HILLS BANK April 27, 2023 City of Iowa City 410 E Washington Street Iowa City, IA S2240 To Whom It May Concern, On behalf of Hills Bank, I am happy to provide this letter of support for the Multicultural Development Center of Iowa in their application to receive funds thru the American Rescue Plan Act (ARPA). Hills Bank was founded in 1904 on the principle that banks should care about the people they serve and provide ways to help them prosper. Our cultural focus is one of service to our customers, friends and neighbors. Hills Bank has 4 offices in Iowa City and 9 offices in Johnson County, which house over 300 of our S00+ employees. We are locally headquartered in Johnson County (Hills) with 19 total offices spread throughout Johnson, Linn and Washington Counties. We remain committed to remaining locally owned and located, which allows us to retain a truly local orientation and remain true to our Iowa roots. Hills Bank is proud to have partnered with the Multicultural Development Center of Iowa for the past two years, providing $25,000 for their programming plus volunteers to help teach financial literacy in Iowa City to their B►POC clients. We admire their mission to provide guidance and mentoring for the BIPOC business start-ups in our community and believe they add value to our community and residents. We look forward to continuing to provide funding and volunteers annually. We hope you will consider their mission and focus as a meaningful investment for Iowa City! Thank you for your time. Sincerely, avadw�� Amanda Arn (she/her) 1" VP, Community & Shareholder Relations Direct 319.679.2148 -H HILLS BANK 131 E. Main Street, PO Box 160, Hills, IA 52235 1.800.445.5725 hillsbank.corn in