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Evanston Community Development Corporation (ECDC) has requested funding from the City’s Economic Development Committee to enable small minority contracting businesses to work on homes being rehabbed under a federal grant.
Last year the City received an $18.1 million Neighborhood Stabilization Program (NSP2) grant from the Department of Housing and Urban Development to purchase, rehab and return to the market 100 vacant and foreclosed homes in the Fifth and Eighth Wards. The City selected Northbrook-based Brinshore Development as its private partner in this venture.
ECDC has requested $120,000 for a “materials revolving loan fund” to help local contractors obtain funding for the work. Eligible contractors would be able to receive up to about $2,000 to purchase materials for the specific NSP2 job, said Precious Wright, interim director of ECDC. ECDC would be repaid as the contractors are paid. “It’s not a micro-loan, but it’s a revolving-loan credit,” she told the members of the Economic Development Committee on March 23.
“The qualified contractors can’t bid on jobs, because they have no credit. They have no terms with suppliers. [Without the EDC grant for the loan fund] the goal of hiring minority-owned, women-owned and Evanston-based businesses [MWEBEs] is going to fall short,” said Ron Fleckman, one of the directors of ECDC.
Alderman Delores Holmes, who attended the EDC meeting and who served as president of the ECDC board before she ran for alderman, said the loan program is “a very [important] piece of this puzzle if we are serious about hiring minority contractors.”
While several members of the Economic Development Committee appeared to favor at least the idea of the materials-loan program, they seemed reluctant to approve the funding without learning more about the program and seeing whether the City should be responsible for it.
Alderman Ann Rainey, 8th Ward, said she felt that having ECDC handle loans would create an additional and unnecessary layer of bureaucracy.
“I just don’t know why we have to create another source of staff to oversee this. Why do we need this other layer of ECDC to do this? Why can’t we just use the staff we’re already paying?” she asked.
Ms. Flax said, “We don’t think it’s a good idea for the City to be involved in a loan fund.”
On April 11, Ms. Flax told the RoundTable, “Brinshore will purchase some construction materials such as cabinets, countertops, windows and appliances. The list of materials that could be handled this way and other details are being finalized.”
A second part of ECDC’s request for funds was to administer a second fund that would essentially provide bridge loans for the contractors between the time they completed their work and the time they would receive payment.
That time is about 90 days, Ms. Flax said. “A significant amount of due diligence [on the part of Brinshore and the City] is required [after a project has been completed.” She said though it typically takes 30-45 days, she is “working with Brinshore to get speedier payments” for the minority contractors.
On April 11, Ms. Flax said the City now “will process two draws per month instead of a single draw. This will speed up payments by enabling subcontractors to submit payments more frequently, thereby reducing their carrying costs.”
The Economic Development Committee asked for additional information from ECDC; they may vote on the funding at the April 27 meeting.