Minneapolis Empowerment Zone (EZ) Governance Board June 9, 2005

							        Minneapolis Empowerment Zone (EZ) Governance Board
                         September 8, 2005
                          1:30 to 3:30 p.m.
               Crown Roller Mill, Conference Room 3

Board Members Present: Mike Christenson, Willie Dominguez, Arlene El-Amin,
Eric Eoloff, David Nasby, Council Member Don Samuels, Keith Sjoquist, Jeffrey
Washburne, Joyce Wisdom, Theresa Carr, Jason Geschwind, Peter Heegaard, Karen
Kelley-Ariwoola, Craig Lewis, Juan Linares, Jan Morlock, Paul Rebholz, Josephine
Reed-Taylor, Mayor R.T. Rybak, Osman Sahardeed, Missy Staples Thompson, Xang
Vang, Joe Werner, Paul Williams, Vusumuzi (Vusi) Zulu, Mike Sable for Commissioner
Mark Stenglein

Board Members Absent: Lee Antell, Charnaah Caldwell, John Williams,

Staff Present: Jonathan Palmer, Narin Sihavong, Laura Sether, Jenny Yanke, Becky
Boland, Denise Ryan

Introductions & Announcements
Board Chair Paul Williams called the meeting of the Empowerment Zone Board to order
at 1:42 pm. He asked board members to introduce themselves and to review the agenda.

Agenda and Minutes
Jonathan Palmer asked board members to note that the packet has been updated, with the
agenda having been shortened as the retreat portion has been cancelled. Additionally,
Jonathan noted that the request for proposals (RFP) for Northside Economic
Development has been changed in minor ways, i.e. graphics moved, et al. Paul asked for
approval of the agenda (Nasby/Eoloff) and approval of the minutes (Eoloff/Domingez).

Financial Report
Jonathan summarized the financial report, noting that a couple of adjustments have been
made, including an addition of $661,133.00 allocation from the Federal Government.
Jonathan also noted that Kim Havey had allocated $300,000 for small business façade
improvements that has never come to the Board for approval, and therefore never used
and has been add back into the overall financials yielding, along with the Federal
appropriation, the approximately $2 million in unallocated funds. Jeff Washburne asked
if there are any other items such as the previously mentioned $300,000. Jonathan replied
that Narin has been looking over all of the financial records of the Empowerment Zone
closely, and does not believe that there is. Vusi Zulu then asked if the Heritage Park
public works expense had been clarified, with Jonathan responding that the allocations
had been verified with paperwork from the project, and offered to provide copies of that
paperwork. Vusi indicated that he would like to see the paperwork. Paul inquired whether
or not there was to be anymore legislative allocations. Jonathan noted that he is not aware
of any currently. Vusi asked if there was any conversation of applying for federal funding
to use the funds in combination with Empowerment Zone mechanisms to address
Hurricane Katrina. Jonathan replied that the “Empowerment Zones” nation-wide have
been discussing whether or not there is something that they can do collectively, but that
currently there is nothing firmly planned. He also noted that “Empowerment Zones”
would address the long-term issues and concerns, and that HUD approval has been issued
for waivers. Vusi followed up noting that with 3,000 individuals coming to Minnesota the
long-term impact for housing and jobs would be great.

Economic Development
Northside Initiative Update and Draft RFP Review
Jonathan summarized the Northside RFP, noting that it focuses on four key commercial
nodes, and that the goal is to spur private investment in the Northside. (Mike Sable joined
the meeting at 1:57 pm) Paul inquired as to whether there is a cap on the grant/loan size,
and how long the contracts would run through. Jonathan commented that there is
currently a $250,000 cap, and that there is an expected $100,000 to $200,000 average for
each grant/loan made. He also noted that he expects around four projects, and that the
contracts would end in December of 2007, with a two-year grant/loan window. Jonathan
concluded noting that proposals will be received in November, and that recommendations
will be made at the December meeting of the Board. David Nasby noted that it would
make sense to not give a loan versus a grant on a non-profit/for profit basis, as each type
of organization has access to funds, only in a different way. He also noted that funding
jobs should be key. Paul noted that he felt that Empowerment Zone should invest on a
larger scale to make a larger impact, as opposed to an increased number of contracts with
a smaller impact. David made a motion that investments should be large enough to be
substantial, and should therefore all be at least $200,000 (Nasby/Carr). The motion
passed unanimously.

Willie commented that the concept of a loan versus a grant is fine, but wondered how the
criteria would be worded. Jonathan asked the board to turn to page four of the RFP to the
evaluation criteria. Paul responded to Willie noting that the criteria would hold, but that a
loan versus grant status would not be judged on a “profit” basis. Willie also noted that
grants better serve poor residents and struggling non-profits. Jonathan responded noting
that the Empowerment Zone’s Small Grants Program would more than likely better serve
individual residents for smaller needs. Paul noted that if the Board decided to go with a
loan or a number of loans, that it would have a revenue stream. He also commented that
loan versus grant will be decided by the committee on the basis of the project, i.e. an
expansion of a location would more than likely be a loan. He concluded by noting that
loan versus grant status is very dependent on the nature of the proposal. Joe Warner and
Peter Heegaard noted that a loan can be structured in many different ways so to benefit
both the Empowerment Zone and the recipient. Jonathan also noted that the goal of this
RFP is to have a large infusion of dollars into the Northside, to supplement what is
currently taking place. Eric Eoloff added that the RFP was well written, but would like to
see an increase in outcomes and goal specifications. Mike Christenson commented that
the RFP can be measured by sharpening in goals, and also to “change” the data provided
by the Federal Reserve on the maps in the packet.

Theresa asked if there was any follow-up on the initiative to have developers use the
Empowerment Zone bond dollars. Jonathan noted that he is looking into it, and will have
a response for the Board soon. He also added that California has done it successfully.
Theresa responded that the underwriting criteria is strict, but that it may be worth it. She
also noted that the jobs should be measured by dollar, i.e. 20 jobs for $200,000. Finally,
Theresa noted that if the Empowerment Zone is willing to be “patient capital” and come
in after banks (therefore be high risk) that may be a good option to increase loans versus
grants. Joyce Wisdom suggested that those receiving funding should be given a loan
versus a grant and that any forgiveness should be based on measurable outcomes. Don
Samuels noted that it is logical that those nodes be chosen, and also that investment will
yield with visible results. Don also suggested that a pre-analysis and post-analysis be
done of the nodes so that the Empowerment Zone can accurately note investment spurred.

Paul then summarized the Board’s discussion, noting the following:

1. Clear outcomes and goals for the RFP
2. Investments should be a minimum of $200,000
3. The Empowerment Zone should be “patient capital”
4. There should be focused analysis on the nodes before and after the Empowerment
Zone’s investment

Josephine Reed-Taylor inquired if the requirement for committed funds is that “serious”
of a requirement. Jonathan responded that organizations that apply are just asked to
identify their other funding sources and commitments. Paul noted that a match or
leverage is sometimes questionable, and that asking for clarification is key. Theresa
commented that the pending funds status should be part of the evaluation. Jonathan asked
the Board to look at the feasibility on page four for further clarification. Paul asked the
Board if they would be willing to compromise on a split between loans and grants of 60%
loans and up to 40% grants. Theresa noted that opens a “can of worms” and that it would
be better to leave it open. Peter responded that the RFP could end up being one large
deal—i.e. if St Paul is attracting businesses paying about $3,000 per employee, that we
could net 333 jobs with the same structure in the Northside. Peter also commented that
discipline is key in regards to new resources. Peter finished by noting that if the
Empowerment Zone could start with a loan approach, and turn the loan into a grant if
needed that would be ideal.

David offered to sit on the committee, and also noted that the policy should be to favor
loans over grants. David also used Heart of the Beast as an example. Jonathan reminded
the board that this is to spur investment primarily. Willie noted that people of color and
non-profits really need help, and that grants are key over loans. Paul asked Theresa and
Vusi and developers how flexible a low-interest loan would be to them in terms of a
project. Theresa responded that patient capital is again key, and that the equity must be
light. Vusi noted that Willie’s point is well-taken, but that having last position loans
should satisfy the needs of all. Paul asked the Board if David’s statement for the
Empowerment Zone favoring loans over grants would work. Vusi responded that the
board “might as well say what it will do” and note that loans should be stated. Paul asked
the Board to approve a motion to change the RFP to read that contracts will be loans,
with structuring flexibility, for example the Empowerment
Zone will take last position. (Heegaard/Carr). One member voted no. Joyce asked that
page three be changed to reflect that the loan can be unsecured. Jonathan noted that he
will clarify that the Empowerment Zone loan would be last position in the RFP. Jonathan
also noted that he will clarify the goals and outcomes piece per the Board’s direction in
the RFP, then asked for the Board’s official approval. Paul asked for a motion to approve
the RFP as amended in the board meeting (Warner/Heegaard). Motion was unanimously
approved. Peter suggested that the goals revolve around jobs, sustainability and leverage.
Paul thanked the staff on the RFP, and noted that it was good work. Mike Christenson
then introduced Erik Hansen, and summarized the City’s work around commercial nodes
in the Northside. Mike then introduced Mike Sable, of Commissioner Stenglein’s Office,
and thanked him for attending the meeting. Mike noted that the City and County are
working in collaboration on a partnership for West Broadway that will focus on the big
picture and next steps.

Administrative Update
Director Funding Allocations
Paul asked Jonathan to summarize the Board report. Jonathan first thanked the Board for
their help and efforts Community Crime Initiative to help keep parks open in the summer
for youth, $5,000 to the Midtown Safety Center, and $5,000 for a community
collaboration in North Minneapolis in partnership with General Mills, CUB Foods, and
others.

Master Contract List
Jonathan also noted that he is working in partnership with the Minneapolis Employment
and Training Programs to compile a list of potential contractors that the City may
contract with for over $50,000. He noted that he will send this information to the Board
when he has it available, and asked others to recruit individuals as well.

Bobbie Fern project
Jonathan then updated the Board on the Bobbie Fern contract, noting that there have been
concerns with the contract for a long while. There is a cash flow issue, Jonathan
continued, and noted that currently Bobbie Fern wants more dollars out of his contract
with no outcomes produced. Jonathan committed sending a letter on behalf of the
Empowerment Zone giving Bobbie Fern a week respond to Empowerment Zone requests.
Arlene El-Amin asked that it be 72 hours—not a week—and also noted that 2003 to 2005
is too long not to have a project completed.

Jonathan also noted that currently the Empowerment Zone Administrative Analyst
position is not filled, and that he is working with CPED leadership to determine next
steps. Jonathan noted that either it would be filled fully, modified to reflect the
Empowerment Zone’s new goals, or be contracted out. Jonathan noted that he will update
the Board as he knows more.
Review Framework
Paul briefly summarized the framework as seen in the packet, and asked that the Board
review it and get comments back to Jonathan or himself. The following changes were
suggested:

   •   Vision Statement: Vusi asked that the vision statement be “tightened” to note that
       ownership is a key goal of the Empowerment Zone.
   •   Section One: Additionally, Jonathan noted that Missy Thompson had asked that
       collaborative be added, for example with businesses. David asked that the word
       leverage also be added.
   •   Section Two: Jonathan noted that Missy also asked that homeownership be
       included to read preservation of existing stock. Joe also asked that employment be
       clarified that it is Minneapolis residents, not just “people.” Peter also asked that
       this be changed to add “living wage jobs.”
   •   Section Three: Peter asked if the City has computerized the businesses in the City
       yet, in terms of employees, needs, et al. Jonathan noted that he will check and see
       what is currently being done, and what else could be done better. Jonathan noted
       that Missy asked small to mid-level be added, and by engaging Board members,
       and noting that individual experience is key.

Jonathan then asked that Board members continue to send him thoughts regarding these
statements. Paul summarized noting that a document will be taken to the Executive
Committee in November, and to the full Board in December for approval. Jonathan
committed to having the document out to individuals long before each meeting so that
there is time to read it.

Meeting Schedule

Next Executive Committee Meeting
The next scheduled Executive Committee meeting is Thursday, October 13, 2005 from
7:30 to 9:30 a.m. Crown Roller Mill, Conference Room 3

Next Governance Board Meeting
The next scheduled Governance Board meeting is Thursday, December 8, 2005 from
1:30 to 3:30 p.m. at the Crown Roller Mill, Conference Room 3

Adjournment
Paul ended the meeting at 3:15 pm. The next meeting is December 8, 2005.

Respectfully Submitted,
Becky Boland and Jonathan Palmer