REGIONAL ECONOMIC DEVELOPMENT CORPORATIONS

ECONOMIC DEVELOPMENT; REGIONAL GOVERNMENT;

OLR Research Report


September 26, 2003		2003-R-0472
REGIONAL ECONOMIC DEVELOPMENT CORPORATIONS

By: John Rappa, Principal Analyst

You wanted to know how many nonprofit regional economic development corporations (REDCs) operate in Connecticut, their missions, the types of services they provide, and their contracting policies and procedures. This report discusses only the REDCs’ missions and services; we will examine their contracting policies and procedures in a separate report.

SUMMARY

At least 10 nonprofit economic development corporations in Connecticut provide financing and other assistance to businesses and towns throughout a specified region, an Internet search found. Their formal mission statements call for stimulating economic growth, but some also mention specific approaches, such a “creating jobs through 90% fixed asset financing assistance to small businesses creating jobs or expanding facilities” (Housatonic Industrial Development Corporation).

Most RECDs provide financial and technical assistance to businesses. Most receive state funds to capitalize revolving loan funds or to implement redevelopment projects. The Bridgeport Economic Resource Center (BERC) and the MetroHartford Alliance receive private funds as well. The New Haven-based Connecticut Community Investment Corporation and the Housatonic Industrial Development Corporation administer federal Small Business Administration loans.

The REDCs differ in the range of technical assistance they provide. BERC and MetroHartford provide the widest range of services, which include helping businesses find sites for new facilities, securing regulatory approvals, and preparing business plans. All REDCs help businesses access tax incentives and bank loans (especially if the REDC provides loan guarantees), apply for state and federal economic development programs, and find consultants. MetroHartford also provides economic development training for local officials.

BREC and MetroHartford compile and analyze economic data and prepare market and feasibility studies. BERC and the Naugatuck Valley Development Corporation also implement large-scale redevelopment projects.

Attachment 1 compares the REDCs regions, missions, targeted businesses, types of assistance, and funding sources. Attachment 2 shows the state funds allocated to the RECDs for loan pools, regional planning, and physical development projects.

REGIONS

All RECD regions are coterminous with town boundaries, and most include just those towns that immediately surround the region’s central city or town. As Table 1 shows, the size varies from the MetroHartford Alliance’s 34-town region to BERC’s six-town region. In contrast, the Housatonic Industrial Development Corporation’s region includes all of the 110 towns west of the Connecticut River.

Table 1: REDC Regions

*REDC*	*Regional Center*	*Total Towns*
Bridgeport Economic Resource Center	Bridgeport	6
Central Connecticut Economic Alliance	New Britain	7
Connecticut Community Investment Corporation	New Haven	15
Greater Hartford Business Development Center	Hartford	34
Housatonic Industrial Development Corporation	Many	110
MetroHartford Alliance	Hartford	34
Middlesex County Revitalization Commission	Middletown	16
Naugatuck Valley Development Corporation	Waterbury	17
Northeast Connecticut Economic Alliance	Windham	21
SouthEastern Connecticut Enterprise Region	New London	21

SERVICES

Type and Range

As Table 2 shows, the REDCs differ in the range of services they provide. Most administer loan programs and provide technical assistance, which includes helping businesses prepare plans and obtain tax incentives. Some also manage large-scale development projects, prepare economic studies, and train local economic development officials. For example, the MetroHartford Alliance provides loans, economic analysis, technical assistance, and training for local economic development for local officials. Four other REDCs operate only revolving loan programs.

Table 2: Range of RECD Services

*REDC*	*Economic* *Analysis*	*Financial* *Assistance*	*Technical* *Assistance*	*Project* *Management*
Bridgeport Economic Resource Center	X		X	X
Central Connecticut Economic Alliance		X
Connecticut Community Investment Corporation		X	X
Greater Hartford Business Development Center		X
Housatonic Industrial Development Corporation		X
MetroHartford Alliance	X	X	X
Middlesex County Revitalization Commission		X
Naugatuck Valley Development Corporation		X		X
Northeast Connecticut Economic Alliance		X	X
SouthEastern Connecticut Enterprise Region		X	X

Financial Assistance

As Table 3 shows, nine RECDs lend money at below market rates for developing property, purchasing machinery and equipment, and covering day-to-day operating costs. Most target the loans at businesses that do not qualify for conventional financing, and three require borrowers to create or retain jobs. Three REDCs administer other loan programs for specified purposes, such as helping commercial fishermen diversify their operations.

Table 3: RECD Revolving Loan Programs


*REDC*	*Business Loans*			*Other Financing*
*REDC*	*Type*	*Targeted Businesses*	*Special* *Considerations or Requirements*	*Other Financing*
Central Connecticut Economic Alliance	Real estate, machinery and equipment, and working capital	Manufacturers Retailers	Businesses that can’t secure private financing	No
Connecticut Community Investment Corporation	Funds available for any type of project	Existing businesses	Net profit less than $ 2 m for two years Net worth less than $ 6 m Project must create specified number of jobs based on loan amount	Federally funded microloans Equity available for technology based firms
Greater Hartford Business Development Center	Real estate, machinery and equipment, and working capital	None	No	Loans for short-term labor and material expenses
Housatonic Industrial Development Corporation	Real estate and machinery and equipment	None	No	No
MetroHartford Alliance	Real estate and machinery and equipment	All	Project must create specified number of jobs based on loan amount	No
Middlesex County Revitalization Commission	Real estate, machinery and equipment, and working capital	Manufacturers & retailers	Projects creating or retaining at- risk jobs	No
Naugatuck Valley Development Corporation	Real estate, machinery and equipment, and working capital	All	Show inability to get financing from other private and public sources	No
Northeast Connecticut Economic Alliance	Business development	Small and medium sized businesses	Show inability to obtain conventional financing	Will provide equity as compensation for unusual risks
SouthEastern Connecticut Enterprise Region	Business development	Manufacturers Processors	Borrower must obtain funds from other sources Project must create specified number of jobs based on loan amount Special consideration for defense diversification projects, dislocated workers, and minority- and women-owned businesses	Separate loan fund for commercial fishermen Up to $ 25,000 micro loans

Technical Assistance

As Table 4 shows, seven REDCs provide technical assistance, but differ with respect to the number of services they provide. BERC and MetroHartford Alliance’s provide the largest number. They help businesses find sites, prepare business plans, access bank loans and tax incentives (i. e. , brokering), and obtain regulatory approvals. They have large staffs and receive funds from public and private sources. The Northeast Economic Alliance, which as fewer staff, helps businesses apply for bank loans, which it may guarantee with its own funds.

Table 4: RECD Technical Assistance

*REDC*	*Bus.* *Outreach &Recruit.*	*Site* *Select.*	*Bus.* *Plan*	*Brokering*	*Obtaining* *Regulatory Approvals*	*Designing Job* *Training* *Programs*	*Procurement* *Assistance*	*Mun.* *Training*	*Mun.* *Grant* *Writing*	*Consulting*
Bridgeport Economic Resource Center		X	X	X	X	X	X			X
Connecticut Community Investment Corporation			X	X						X
Greater Hartford Business Development Center				X
MetroHartford Alliance	X	X		X	X			X	X	X
Naugatuck Valley Development Corporation		X		X
Northeast Connecticut Economic Alliance				X
SouthEastern Connecticut Enterprise Region		X		X			X

Other Services

The BERC and the MetroHartford Alliance compile and analyze demographic and labor statistics and prepare project feasibility studies and strategic economic plans for area businesses and municipalities. The former was also retained by the City of Bridgeport to implement two redevelopment projects. Implementing these types of projects appears to be a major function of the Naugatuck Valley Development Corporation (NVDC). As Attachment 2 shows, the state has allocated about $ 123 million to projects the NVDC managed.

Attachment 1: Regional Economic Development Corporations

*Agency*	*Region*	*Mission*	*Eligible* *Businesses*	*Assistance*	*Funding Sources*
Bridgeport Economic Resource Center	Six Bridgeport area towns	Help business in Bridgeport to expand and attract new businesses to the city (other web sources state the mission as helping businesses within the greater Bridgeport region)	All businesses, municipalities	Data and studies Technical Assistance: • Selecting sites • Preparing business plans • Accessing public incentives & private financing • Developing job training programs • Contacting other business assistance providers Project Management	Private
Central Connecticut Economic Alliance	Seven New Britain area towns	Plan and promote regional policies and programs enhancing vitality, accessibility, and quality of life.	Manufacturers and retailers, with consideration given to those that cannot obtain conventional financing	Fixed asset and working capital loans and loan guarantees (administered by the Hartford Economic Development Corporation)	Department of Economic and Community Development (DECD)
Connecticut Community Investment Corporation	15 New Haven-area towns	Provide loans to federally qualified existing small businesses	Existing businesses, with special consideration given to those creating jobs	Technical Assistance: • Business plan preparation Financial Assistance: • Small business loans • Defense conversion loans • Microloans • Equity funding for technology companies	Federal
Greater Hartford Business Development Center, Inc.	34 Hartford area towns	Work in tandem with the Hartford Economic Development Corporation to stimulate economic development in the Hartford metro area by collaborating with concerned public and private organizations to help start, finance, retain, and recruit small businesses	Businesses	Generic and categorical fixed asset and working capital loan funds, including: • Contractor’s Loan Fund • Enterprise Zone Loan Fund Center administers two other loan funds serving other regions	DECD
Housatonic Industrial Development Corp.	110 towns west of the Connecticut River	Economic development by creating jobs through 90% fixed asset financing assistance to small businesses creating or expanding their facilities	Small businesses whose total net worth is less than $ 6 million and after tax net profit is less than $ 2 million in each of the last two years	SBA 504 matching fixed asset loans	Federal

Attachment 1

-Continued-


*Agency*		*Region*		*Mission*		*Eligible* *Businesses*		*Assistance*		*Funding Sources*
MetroHartford Alliance	34 Hartford-area towns		Dedicated to building Metro-Hartford’s economy through job creation and capital formation in the region’s 34 towns. The Alliance will retain and expand current business base, attract new businesses and build capacity in the region through education, collaboration, and strategic planning		All businesses and region’s towns		Business outreach Public education Economic development technical assistance Loans Technical Assistance: • Site selection • Accessing state public incentives • Data • Regulatory assistance		DECD Private
Middlesex County Revitalization Commission	16 Middletown-area towns		Promote positive economic development projects which promote the quality of life and employment in Middlesex County		Manufacturers Start-ups Minority-owned businesses		Matching loans (administered by Hartford Economic Development Corporation)		DECD:
Naugatuck Valley Development Corporation	17 Waterbury-area towns		Create and retain jobs in the Central Naugatuck Valley Region by providing financial assistance to eligible businesses in designated areas		All businesses that cannot obtain convention financing Businesses locating or expanding downtown or designated information technology zone		Loans (13 towns only) Site selection Project development Accessing tax incentives		DECD Office of Policy and Management
Northeast Connecticut Economic Alliance Inc.	21-northeast towns		Promote a variety of economic development activities within the 21 town northeast region. Such activities include, but are not limited to: Financial and business development advice, technical assistance, loan provision and/or support and grant application support.		Small- and medium-sized businesses that cannot obtain conventional financing		Loans & loan guarantees Loan packaging Equity financing Business counseling Grant writing Information & referral		DECD

Attachment 1

-Continued-

Agency

Region

Mission

Eligible

Businesses

Assistance

Funding Sources

SouthEastern Connecticut Enterprise Region

21 New London-area towns

Stimulate and support economic development and diversification

Manufacturers and processors relocating or expanding in the region and creating jobs

Commercial fishermen

Consideration given to projects located in targeted areas or that involve defense diversification, dislocated workers, women and minority owners

• At or below market rate matching loans and microloans

• Business incubators

• Site selection

• Procurement technical assistance

DECD:

Source: Connecticut Economic Resource Center, Program Finder (http: //products. cerc. com/brinfo. nsf/homepagefrm)

Attachment 2: State Funding for Regional Economic Development Corporations

1991-2002


*Corporation*	*Activity Type*
*Corporation*	*Financial Assistance*	*Technical Assistance*	*Project Management*	*Planning*
Bridgeport Economic Resource Center	0	0	0	0
Central Connecticut Economic Alliance	1,000,000	0	0	0
Connecticut Community Investment Corporation	0	0	0	0
Greater Hartford Business Development Center, Inc.	3,000,000	0	0	0
Housatonic Industrial Development Corporation	0	0	0	0
Metro-Hartford Alliance	2,000,000	100,000	0	175,000
Middlesex County Revitalization Commission	772,500	0		50,000
Naugatuck Valley Development Corporation	5,000,000	0	123,000,600	770,000
Northeast Connecticut Economic Alliance, Inc.			9,900,000	330,000
SouthEastern Connecticut Enterprise Region	3,000,000	2,800,000	170,000	180,000

Source: Department of Economic and Community Development, Report on New and Outstanding Financial Assistance July 1, 1991-June 30, 2002.

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