6.1. EDSR 03-17-2014 City of
Elk Request for Action
River
To Item Number
Economic Development Authori 6.1
Agenda Section Meeting Date Prepared by
General Business March 17, 2014 Brian Beeman,Director of Economic
Development
Item Description Reviewed by
Minnesota Community Capital Fund (MCCF) Jeremy Barnhart,Deputy Director, CODD
Reviewed by
Action Requested
Hear update considering the dissolution of the Minnesota Community Capital Fund (MCCF).
Background/Discussion
Effective April 30, 2014, the Minnesota Community Capital Fund (MCCF) will be dissolved. The MCCF
Board was unable to attract loan purchase commitments from secondary market investors. The Board
was also unsuccessful in seeking an amendment to the State Loan Guarantee Program that would provide
$7 million in funding for the Program's Trust Fund and add statutory language that would make MCCF
loans marketable once again.
Elk River joined the MCCF as a Charter Member on August 8, 2002,with a membership deposit of
$50,000. MCFF was established to leverage local community resources in order that much larger, risk-free
small business gap financing was available in the member communities. With a $50,000 member deposit,
Elk River had the ability of sponsoring loans of up to $500,000 each for qualified, credit-worthy small
businesses. MCCF did not make any loans in Elk River during the period of the city's membership.
The membership deposit will be returned directly by Bremer Bank Investment&Trust; the initial
investment was $50,000. Once the deposit is received,it can be put into the Cash Fund and be used to
support other projects, such as land purchases or other loan programs.
Greg Hohlen,a representative from Bremer Bank,will be available to answer any questions.
Financial Impact
N/A
Attachments
■ Letter from MCCF dated February 21, 2014
Paw IREO AY
UREJ
MINNESOTA COMMUNITY
CAPITAL FUND
February 21, 2014
Brian Beeman
Economic Development Director
City of Elk River
13065 Orono Parkway
Elk River, MN 55330
Dear Brian,
regret to inform you that the Minnesota Community Capital Fund (MCCF) Board of Directors has decided to
move forward with the dissolution of MCCF effective April 30, 2014.
The Board's decision was made in light of numerous, but unsuccessful attempts over the past several years to
secure new capital sources to fund MCCF loans.
The last straw was our inability to secure loan purchase commitments from secondary market institutional
investors who previously bought MCCF loans through securitized loan pools administered by the Community
Reinvestment Fund (CRF)---even after MCCF was successful with its legislative initiative to establish the State
Small Business Loan Guarantee Program in 2011. Since our Annual Membership meeting last September,
we've..been actively pursuing an amendment to the State Loan Guarantee Program that would provide$7 million
in funding for.the Program's Trust Fund and add statutory language that would make MCCF loans marketable
once agairi,"Unfortunately,this effort stalled due to complications in our negotiations with Standard&Poor's and
institutional investors who we need to buy our loans.
Your membership deposit will be returned to you directly by Bremer Bank Investment &Trust, the MCCF Loan
Fund Escrow Agent and Portfolio Manager, within the next 30-45 days depending upon the time period required
to fully liquidate the Fund's investment portfolio.
The Board and I are very disappointed that we were unable to overcome the many external pressures and
uncontrollable events associated with the global Financial Crisis that embroiled world capital markets starting in
the fall of 2008—and continues to impact us today. Naturally, we all wish things would have worked out
differently to secure the long term success of MCCF.
Thank you for your many years of MCCF membership—and for your patience and continued support during
these past challenging years,
i
Sincerely,
Scott A. Martin:
President
enclosures
Activating Capital for your Community
13911 Ridgedale Drive I Suite 260 1 Minneapolis,MN 55305
direct:952 546-9049 1 .toll-free:800 860-6223 1 fax:952 541-9684 1 website:www.mneommuniVcapitalfund.org