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City likely to keep business loan program with changes
Monday, February 2, 2009 by Austin Monitor
Last week, City Council members responded favorably to a presentation on the Business Retention and Enhancement pilot program, which was created in 2007. The program provides low-interest loans to local retail and restaurant businesses on Congress and
The program was created to help the venerable downtown restaurant Las Manitas after it lost its lease. The Perez sisters, who own Las Manitas, turned down that loan, but two other businesses took advantage of the program in 2008. Apple Annie’s, a café, bakery and catering business, received a loan to purchase and renovate the first floor of
Rodney Gonzales, acting director of the city’s Economic Growth and Redevelopment Services Office gave council the presentation. The EGRS office has been administering, monitoring and evaluating the program over the last 24 month period. “The program is an effective one that is meeting its intended goals,” Gonzales told the City Council. “EGRS recommends continuation of the program.”
Gonzales reported that $661,805 to fund the program had been collected through December 2008, with $451,889 coming from fees generated by temporary use of right-of-way permits. After February, the city will also begin pulling in interest from the two loans, which will eventually provide an additional $156,369 for the program.
Gonzalez said that staff recommends the “special circumstances provision” be removed from the program. The “special circumstances provision” allowed certain businesses to get more than the $250,000 maximum loan amount. Specifically, an existing business in the BRE area moving to another location still in the BRE area could get up to $750,000. The provision also allowed such businesses to be forgiven the outstanding debt. The city can forgive the balance of a loan after five years of successful operation and timely payments.
Council Member Mike Martinez asked why the special circumstances provision should be removed. Gonzales responded that the “BRE is a revolving loan program and…when you forgive them that also prohibits you from making future loans.” Council Member Lee Leffingwell agreed. “I don’t think the forgivable aspect of this program adds anything to it,” he said. “In fact, it tends to deplete the fund over time.”
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