Council Provided Information - 11/19/2024CITY COUNCIL OF SALT LAKE CITY
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COUNCIL STAFF REPORT
CITY COUNCIL of SALT LAKE CITY
TO:City Council Members
FROM: Austin Kimmel
Public Policy Analyst
DATE:November 19, 2024
RE: ORDINANCE: ECONOMIC DEVELOPMENT LOAN FUND LOAN TO GK FOLKS
FOUNDATION, AT 1506 SOUTH REDWOOD ROAD
ISSUE AT-A-GLANCE
The Council will consider approving a loan from the City’s Economic Development Loan Fund (EDLF) to a non-
profit organization called GK Folks Foundation, which provides mental health, educational, and entrepreneurial
resources for African immigrants and refugees, at 1506 South Redwood Road. The City’s Economic
Development Loan Committee recommends the Council approve a $250,000 loan at a 9.50% fixed interest rate
over seven years. This loan will assist in the creation of two jobs in the next year and the retention of one
existing job. Additionally, funds will pay for renovation, working capital, equipment, furniture and fixtures, and
will help fund the creation of a community events center for the African immigrant and refugee community.
The interest rate reflects the 8.50% prime rate at the time of the application (March 1, 2024) plus the standard
EDLF four percentage points. The project did qualify for a three percentage-point reduction based on location
within a priority area (West of I-15), being owned by a socially and economically disadvantaged individual, 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 November 19 formal meeting agenda.
Goal of the briefing: Consider a potential $250,000 loan from the Economic Development Loan Fund to a
non-profit organization called GK Folks Foundation.
Item Schedule:
Briefing: November 19, 2024
Public Hearing: N/A
Potential Action: November 19, 2024
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ADDITIONAL AND BACKGROUND INFORMATION
A.Interest Rates. For context, the nationwide median rates for urban small business commercial and
industrial loans in the second quarter of 2024 (the most recent data available) were 7.77% for fixed-rate
loans at and 8.88% 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:
GK Folks Foundation
8.50% prime rate
+ 4% ELDF charge
– 1% for location within a priority area
– 1% for owned by a socially and economically disadvantaged individual
– 1% for sustainability
___________________________
9.50% 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 approximately $8,200,000 on September 30, 2024, and outstanding loans totaled
$3,932,437 on October 1.
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 October 29, 2024, at https://www.kansascityfed.org/surveys/small-business-lending-
survey/new-small-business-lending-declines-as-credit-standards-continue-to-tighten/.