A Franklin not-for-profit agency is again looking to give up to $1.3 million to spur economic development projects in the city.
The Franklin Development Corp., which was created by the city and funded with tax money, is asking for a second round of proposals after awarding a total of $1.3 million in grants and loans to four projects in October.
The new funding will be offered as grants only, which do not need to be paid back. Any company or group can apply as long as the proposal ties to the goal of economic development in the city.
But Franklin’s mayor is concerned the group is giving out too much money too quickly and also questions whether the organization has enough operating funds to remain open until the projects are complete.
Proposals: The Franklin Development Corp. is asking for proposals of how to spend $1.3 million in grants on projects that would lead to economic development.
Requirements: Projects must develop or promote redevelopment in an area of the city and lead to economic growth. Projects must be completed within a year-and-a-half.
Who can apply: Individuals and companies or groups, who must be prepared to be financially transparent.
Deadline: Proposals will be due in May and reviewed by board members.
Previous proposals: The board approved spending $1.3 million on four projects in October. The effort was deemed a success by the organization. Three of the four projects approved in October have not been completed.
The organization is looking for proposals with the goal of spurring redevelopment of existing locations in Franklin and promoting new development. By providing only grants and not loans, the organization hopes to attract proposals from more developers, officials said.
The money that would pay for the grants is coming from $5.6 million in tax dollars originally given to the group by the Franklin Redevelopment Commission. Those funds came from taxes collected in the city’s tax-increment financing districts, or TIF districts, which set aside property taxes from certain businesses in the city.
Franklin Mayor Joe McGuinness said he was concerned about whether the agency had enough operating money to remain open in order to oversee the grants and the projects it would fund.
The organization is not in danger of shutting down, president and chief executive officer Craig Wells said.
In December 2011, Franklin Development Corp. officials told the city that it was considering spending the rest of its funding, or about $4 million, within 18 months because operating funds were expected to run out during that time frame.
Three years of operating expenses, including salaries and office costs, originally were funded with $600,000 from the city. The expectation was that the group would become self-sustaining by 2012, such as through interest earned on loans or by getting a grant that paid for operating expenses.
According to the group’s February financial report, the organization’s operating fund bank account had a balance of $105,301.
For January and February, the organization had about $3,100 in income compared to $103,000 in expenses including salaries, office expenses, rent, consulting services, advertising and $54,000 for project expenses.
The Franklin Development Corp. is in good financial health, and not in danger of shutting down, Wells said.
“All of the interest we earn on the loan funds get swept into the operating. Plus, with the investments we’ve made with the direct investment funds, that’s what we’re using to continue operating,” Wells said.
Direct investments can include providing loans to companies or groups or buying a property, fixing it up and selling it for a profit, Wells said.
Whether the organization has completed any of those projects was unclear. Wells could not be reached to provide more details about the organization’s income and current finances.
The organization should have enough operating funds to make it through the rest of the year and is looking into options to increase income, board member Steve Hougland said.
The organization is continuing to find ways to be sustainable, said board member John Ditmars, but he declined to discuss specific details.
One cost-saving measure the organization is using is purchasing its office building on East Jefferson Street for $100,000. The payment will come from direct investment funds and will eliminate an $800-per-month rent payment from the organization’s operating expenses, Wells said.
McGuinness said he would not want the city to provide more money to the organization, and city council president Steve Barnett also is opposed to providing more operating funds.
The mayor also expressed concern that the group was already offering more large-scale grants, less than a year after awarding $1.3 million for projects.
“They made a comment that the first round was successful. I don’t know how you measure success after a handful of months,” McGuinness said.
‘Franklin on the radar’
The board received good proposals in the first round, but several developers weren’t prepared to present projects at that time, Wells said. By offering more money now, Wells expects some of those developers will now be able to propose more projects.
“The projects we ended up doing, we liked those and that round. It kind of put Franklin on the radar, on a lot of developers’ radar. The first round, a lot of developers weren’t ready to do anything,” Wells said.
The organization is looking for ideas that will promote economic development and isn’t setting specific guidelines about who can apply, Wells said. Board members will consider the new proposals in May.
The group will add some stipulations to the application during this round after board members rejected some proposals last year, mainly because people applying didn’t own the property they wanted to develop. Wells said.
“The preference will be for projects that the applicants have control of the property or whether they are partnering with the owner of the property. And the other stipulation would be that, we would not be funding 100 percent of a project,” Wells said.
The projects also would need to be completed within a year or year-and-a-half, board member Ted Grossnickle said.
The new projects wouldn’t help generate funds for the organization. Franklin Development Corp. will not provide loans or ask to take an equity stake in any of the projects, Wells said.
The board reviewed 11 proposals and chose to fund four in October. Those projects included a grant to study the possibility of forming a sports corporation to promote local athletic facilities, a grant to help pay the start-up costs of a cafe next to city hall, a grant to help Ivy Tech Community College purchase land for a future expansion and a grant and loan for the renovation of a building on East Monroe Street for new shops and upstairs condos.
Some of the proposals that were not funded included ideas to establish a visitors center and build a permanent structure downtown for farmers markets and other downtown events.