Council Provided Information - 10/1/2024CITY COUNCIL OF SALT LAKE CITY
451 SOUTH STATE STREET, ROOM 304
P.O. BOX 145476, SALT LAKE CITY, UTAH 84114-5476
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COUNCIL STAFF REPORT
CITY COUNCIL of SALT LAKE CITY
TO:City Council Members
FROM: Austin Kimmel
Public Policy Analyst
DATE:October 1, 2024
RE: ORDINANCE: ECONOMIC DEVELOPMENT LOAN FUND LOAN TO CITY CAKES SLC,
LLC, AT 1860 SOUTH 300 WEST, SUITE D
ISSUE AT-A-GLANCE
The Council will consider approving a loan from the City’s Economic Development Loan Fund (EDLF) to a
business called City Cakes SLC, LLC, at 1860 South 300 West, Suite D, for a local bakery specializing in vegan
and gluten-free pastries and wedding cakes. The City’s Economic Development Loan Committee recommends
the Council approve a $100,000 loan at an 8.25% fixed interest rate over seven years. This loan will assist in the
creation of four to six new jobs in the next year and the retention of eight existing jobs. Funds will pay for
acquisition, machinery and equipment, and working capital.
The interest rate reflects the 8.25% prime rate at the time of the application plus the standard EDLF four
percentage points. However, the project did qualify for a four percentage-point reduction based on location
within a priority area (CDBG low/moderate income census tract), being owned by a socially and economically
disadvantaged individual, with low to moderate income, and sustainability (see section B below).
Council staff reminder: EDLF loans are now scheduled for a vote on the same day as the briefing, so this is
scheduled for action on the October 1 formal meeting agenda.
Goal of the briefing: Consider a potential $100,000 loan from the Economic Development Loan Fund to a
business called City Cakes SLC, LLC.
Item Schedule:
Briefing: October 1, 2024
Public Hearing: N/A
Potential Action: October 1, 2024
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ADDITIONAL AND BACKGROUND INFORMATION
A.Interest Rates. For context, the nationwide median small business commercial and industrial loan rates
for the first quarter of 2024 (the most recent data available) were 7.85% for fixed-rate loans at urban banks
and 8.79% for variable rate loans, according to the most recent U.S. Federal Reserve Small Business
Lending Survey.i In the second quarter of 2022, these rates were 4.50% and 5.55% respectively. Interest
rates for EDLF loans consider an assessment of the risk level of different applicants, among other factors,
and include potential interest rate reductions. Interest rates have ranged from 7.25% for nearly all 2022
EDLF loans to an average of 9.55% in 2023 and 2024.
B.Interest Rate Reductions. The bases for potential reductions are as follows:
1.Location within a priority area: RDA Project Area; Opportunity Zone; West of I-15; or
Neighborhood Business Improvement Program (NBIP, previously known as Façade Improvement)
target area.
2.Socially and Economically Disadvantaged Individuals (SEDI)-Owned Businesses: 51%
of the business is owned by at least one SEDI individual.
3.Low Income Business Owner: Income does not exceed 80% of Salt Lake County average
median income (AMI) as defined by the U.S. Department of Housing and Urban Development
(HUD).
4.Sustainability: Either,
a. Membership in SLC Green’s E2 Business Program; or
b. Loan proceeds will be used for the purchase of electric vehicles, electric vehicle
charging stations and infrastructure, renewable energy including but not limited to
wind and solar, heat pumps, high efficiency equipment, and/or energy efficiency.
The interest rate reductions applied to this application are detailed below:
City Cakes SLC, LLC
8.25% prime rate
+ 4% ELDF charge
– 1% for location within a priority area
– 1% for owned by a socially and economically disadvantaged individual
– 1% for low to moderate income
– 1% for sustainability
___________________________
8.25% final interest rate
C.Program. The EDLF is administered by the Department of Economic Development, which is charged with
maintaining the corpus of the EDLF in a manner sufficient to perpetuate the program's goals. Each loan
application is pre-screened, and an underwriting analysis and economic impact statement are completed
before an application may be recommended for Loan Committee (see below) review. Information on
successful applications is transmitted to the Council to consider for final approval.
D.Available balance and amount of outstanding loans. The Department reported that the Fund’s
available balance was $8,300,000 on August 7, 2024, and outstanding loans totaled $3,205,765 on July 30.
E.EDLF Committee Membership. The Department of Economic Development lists nine members of the
EDLF Committee as follows:
City Employees Community Volunteers
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1. Finance Director, Community and
Neighborhoods Department
2. Salt Lake City Business Advisory Board (BAB)
member
3. Representative of the Mayor’s Office 4. Banker
5. Salt Lake City employee at large 6. Community lender
7. Representative of the Division of Housing
Stability
8. Business mentor
9. Director, Department of Economic
Development
10.
i
POLICY QUESTIONS
1. The Council may wish to have a policy discussion with the Administration about interest rates charged by
the City from this and other loan funds and whether it makes sense to reevaluate how interest rates are
determined for lenders, especially since the City typically offers loans as a lender-of-last-resort.
2. The Council may wish to ask the Administration whether the EDLF Committee considered any other unique
information about this business that would help Council Members evaluate how this application compares
to others. For example, are risk factors evaluated for each company, like outstanding loans, years in
business, etc.?
3.What outreach does the Department do to ensure a diverse pool of businesses successfully applies to the
EDLF? Are applications from diverse owners, particularly those whose businesses are located on the
Westside, offered additional support through the application process? Does EDLF staff have ideas for
improving access that would benefit from program changes or additional funding?
4. The Council may wish to request a more general update on EDLF use and processes. This could include the
number of applications, review criteria used, loan program goals, etc.
i Source: Small Business Lending Survey, New Small Business Lending Declines as Credit Standards Continue
to Tighten. Consulted on July 1, 2024, at https://www.kansascityfed.org/surveys/small-business-lending-
survey/new-small-business-lending-declines-as-credit-standards-continue-to-tighten/.