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Toledo looks to invest more into small businesses, despite tighter budget for economic development

Posted By: Toledo Blade on December 3, 2024.  For more information, please click here to read the source article.

The Toledo Department of Economic Development has big goals for 2025, but like most departments in the city, it’s preparing to operate with a smaller budget.

Brandon Sehlhorst, director of economic development for Toledo, said the department views its budget through a futuristic lens, thinking about what can be done to bring in more jobs that pay income tax, and in turn, increase revenue in the general fund.

Councilman Sam Melden, chairman of the regional growth, development, and small business enterprise committee, wants to make sure the city’s administration is matching that.

“You said you think about your budget through the lens of what increases the income tax-based facility, which I think is really profound,” Mr. Melden said. “And I guess I would just ask in somewhat of a challenge, does the administration also make that their top priority?”

The comment comes as the city suffers auto industry layoffs, a growing decline of employees in the work force, and a decreasing amount of money to invest in the economy.

“I look at your budget, it’s actually a decrease, and that’s a concern for me,” Mr. Melden continued. “I get it, we got tough times, but … if we are serious about all these wonderful things we’re saying up here, why don’t we want to actually increase [the budget] if we’re seeing $100 million of return?”

In 2024, the Department of Economic Development had a budget of $3.9 million. Next year, its budget is estimated to be $3.3 million.

Mr. Sehlhorst said the difference between the two budgets, which is about $630,000, is due to the façade and white box grants that are funded through the city’s Vibrancy Initiative program.

The Vibrancy Initiative program reimburses property owners for façade and white box projects as a way to incentivize businesses to operate in the city. The money budgeted for the projects cannot be rolled over, so the number of projects budgeted for needs to be completed by the end of the year.

Mr. Sehlhorst, who is considered a part of the city’s administration, pushed back on Mr. Melden’s concerns about the shrinking budget, noting that not every project is a line item in the budget.

“I think we have made strategic investments where necessary in major economic development projects,” Mr. Sehlhorst said. “We’re more so project-based like acquiring Southland Mall, redeveloping North Towne, providing the infrastructure necessary to do that … so I want to be fair that we, as a city, have made those strategic investments. It just maybe doesn’t always show up in my general fund budget as a regular, recurring item.”

Mr. Melden agreed with Mr. Sehlhorst that the city has made investments to develop the city’s economy, but he said the department needs to continue the work.

“I guess what I’m saying, ultimately, is double down,” Mr. Melden said. “We’ve proven the theory of the case, so, let’s keep going.”

Mr. Sehlhorst outlined how his department plans to keep going in 2025 through his budget presentation. Next year, the department plans to launch the Storefront Microenterprise Assistance Loan program, which will offer financial support and technical assistance for small businesses.

The city would incentivize small businesses with five or fewer employees by loaning them up to $20,000 for expenses such as leasehold improvements, inventory, furniture and fixtures, equipment, and accounting software.

Each business would then pay back that amount but would be eligible to receive 90 percent loan forgiveness by completing a technical assistance training, provide proof of eligible expenditures, and make 10 on-time payments.

“If we’re going to grow out economy, it would be nice to bring in Intel or another GM plant, or a Chrysler plant, but it isn’t going to happen,” Councilman George Sarantou said. “But we have a lot of room to grow the small businesses, and we really need to reach out to them and give them incentives and give them an opportunity because that’s where the growth is.”

The Vibrancy Initiative, which was started in 2019, will cost the city $790,000 in 2025, which will be dispersed over 17 projects. In 2024, it cost the city $855,000 which helped 18 projects.

Overall, the façade improvement grant program has leveraged $73 million in private sector investments, and the white box grant program has leveraged over $35 million in private sector investments.

Mr. Melden asked Mr. Sehlhorst if he feels the city “plays defense” too much, instead of being ambitious with new projects. He acknowledged the hesitation from council members to preserve St. Anthony’s church. On Wednesday, the council will vote whether to allocate more funding for the church building.

“I mean, we’re doing the best we can by playing defense and offense at the same time with the resources that council gives us, and we think we do a fantastic job at doing that,” Mr. Sehlhorst said. “We don’t ask for more than we need in terms of people and resources, but I think that’s 100 percent of the problem.”