Meeting_Body
PLANNING AND PROGRAMMING COMMITTEE
MAY 14, 2025
Subject
SUBJECT: TRANSIT ORIENTED COMMUNITIES ECONOMIC DEVELOPMENT PROGRAM PILOT INVESTMENT FUND PROGRAM ADMINISTRATOR
Action
ACTION: APPROVE CONTRACT AWARD
Heading
RECOMMENDATION
Title
AUTHORIZE the Chief Executive Officer (CEO) to award a firm fixed price Contract No. PS122552000 to Vermont Slauson - LDC, Inc. for the administration of the Transit Oriented Communities Economic Development Program (EDP) Pilot Investment Fund (Fund) in the amount of $1,370,495 for the three-year base term, $310,740 for the first option year, and $253,745 for the second option year, for a total combined contract amount of $1,934,980, effective June 1, 2025, subject to the resolution of any properly submitted protest(s), if any.
Issue
ISSUE
In response to direction from the Metro Board of Directors via a series of motions from 2015 to 2021(Attachment A) to strengthen small business support and prevent displacement near transit , Metro developed the Transit Oriented Communities Economic Development Program (EDP), including the Pilot Investment Fund (Fund) which the Board approved December 1, 2022. The EDP consists of two components, station area activation and the Pilot Investment Fund (Fund). The station area activation component of the EDP has progressed with grant agreements for Station Managers at the three pilot stations Leimert Park, Westlake/MacArthur Park, and Willowbrook/Rosa Parks, program management plans, and program launch scheduled in June 2025. Metro now plans to implement the Fund component of the EDP to assist small businesses and eligible nonprofit organizations.
The Fund is designed to leverage Metro’s significant transit infrastructure investment and serve as an economic catalyst for Equity Focused Communities (EFCs). It partners with other agencies and private financial institutions for additional resources and requires a community development financial institution (CDFI) for program administration. To successfully structure, launch, and administer the Fund, Metro conducted a competitive solicitation seeking a qualified CDFI. CDFIs are mission-driven lenders dedicated to expanding economic opportunity in communities underserved by traditional financial institutions.
Board approval is required to select the recommended CDFI as the Fund Program Administrator to help finalize the program guidelines prior to returning to the Board and implementing the Fund. This action is a critical next step to establish the Fund and ensure timely deployment of resources that will protect, strengthen, and grow small businesses in these communities, mitigating displacement and helping these communities thrive alongside Metro’s transit investments.
Background
BACKGROUND
The EDP builds on a history of Board-supported efforts to assist small businesses impacted by transit projects. In August 2016, the Board approved $1 million for the Small Business Assistance Loan Program. However, uptake of that program was limited due to restrictive lending parameters. As the COVID-19 pandemic unfolded, Metro quickly partnered with the Los Angeles County Development Authority to create the COVID-19 Recovery Loan Program in May 2020, reallocating $1 million from the Small Business Assistance Loan Program to help struggling businesses. Repayment proceeds up to $853,000 from the Recovery Loan Program are now reserved to help fund administrative costs for the EDP Pilot Investment Fund.
Throughout 2021 and 2022, Metro staff engaged in an extensive process to redesign and modernize its small business support programs to better meet community needs. This included sponsoring two economic development roundtable discussions, conducting outreach meetings, and interviewing more than 100 stakeholders from financial institutions, community-based organizations, small business associations, economic development corporations, and public sector agencies. The feedback from these conversations directly informed the structure of the Fund and Metro’s broader, innovative, and more sustainable approach to post-construction small business support.
The Board approved the EDP and $5 million for the implementation of the Fund on December 1, 2022, contingent upon Board approval of the Fund Guidelines. The Fund Service Area (FSA) also approved by this Board action includes a half-mile radius of the K Line (formerly Crenshaw/LAX Line) and the Little Tokyo segment of the A/E Line. To leverage Metro’s $5 million loan seed funding, Metro has entered into an Agreement with the California Pollution Control Financing Authority (CPCFA) securing an additional $15 million in resources through the State Small Business Credit Initiative (SSBCI) to assist socially and economically disadvantaged individuals (SEDI) and business enterprises.
Discussion
DISCUSSION
Access to capital remains a persistent barrier for small businesses, especially those owned by Black, Indigenous, Latino(a), Asian American, Pacific Islander, and other historically underserved groups. These communities, disproportionately impacted by the COVID-19 pandemic and economic disinvestment, are now at a pivotal moment as Metro expands rail service. Without immediate, targeted intervention, these businesses risk permanent displacement, undermining community stability, cultural heritage, and the intended benefits of Metro's transit investments.
Selection of the Fund Program Administrator is a critical step in advancing the agency’s commitment to stabilizing and strengthening small businesses and nonprofit organizations in historically underserved communities near our transit corridors. With federal investment in equity programs slowing and economic markets becoming increasingly volatile, the need for Metro to take proactive, locally-driven steps to foster economic resiliency has never been more urgent.
The Fund will provide: 1) technical assistance and access to capital with favorable terms, 2) access to private equity financing to fund startups, early-stage, and emerging companies, and 3) a pipeline to sustainability and growth for small businesses and nonprofits with a social enterprise. A social enterprise is an organization or venture (within an organization) that advances a social mission through market-based strategies. By supporting these businesses, the Fund also supports Metro’s goals to create vibrant, culturally rich, and economically sustainable station areas that increase ridership and community confidence in our transit investments.
Metro released a highly specialized Request for Proposals to identify a Program Administrator for the Fund, prioritizing expertise in lending, outreach, technical assistance, and deep community ties within the FSAs. The EDP Fund Program Administrator contract is structured to include a three-year base contract with two, one-year options to be exercised at Metro’s discretion. The base contract includes internal and external stakeholder engagement, Fund set-up, program administration, and close-out. The program administrator is responsible for meeting the five tasks described below.
Task 1 - Program Administration: meet resource requirements, including personnel and the infrastructure to administer the Fund. Deliverables include the Personnel Plan, Infrastructure Framework, Fund Administrative Guidelines, Disbursement Agreement, and the Review and Dispute Process.
Task 2 - Fund Implementation and Tracking: process business eligibility by developing a timeline for evaluation, underwriting loan applications, ongoing monitoring, and loan payment guidance. Deliverables include administering the Fund account, providing match requirements, developing standard operating procedures, and completing the End of the Loan Origination Period Report.
Task 3 - Technical Assistance and Marketing Plan: provide in-house technical assistance to eligible small businesses and nonprofit organizations to secure Fund resources and offer referral services to businesses denied or approved, including but not limited to service providers CPCFA, IBANK, Go Biz, Small Business Development Centers (SBDC), Financial Development Corporations, L.A. County Department of Economic Opportunity, the economic development departments of local jurisdictions, discounted utility services, and marketing resources. Deliverables include a Marketing Plan and Technical Assistance Services Summary and Execution Plan.
Task 4 - Fund Reporting and Auditing: provide progress reports commensurate with the Loan Approval Committee frequency, summary reports, quarterly reports, and an annual report to Metro’s Project Manager. Respond to annual and Office of the Inspector General audits that may occur from time to time.
Task 5 - Fund Close-Out Plan: develop a Fund Close-Out Plan that identifies the processes for closing out the Fund when all loan repayments have been received and illustrate longevity to service loans throughout extended terms required for real estate acquisition loans.
The proposed Program Administrator, Vermont Slauson Local Development Corporation (VSLDC), brings decades of mission-aligned experience to this effort. VSLDC is a certified CDFI located in South Los Angeles only 1.5 miles east of the K Line. VSLDC’s current service area includes most of the K Line portion of the FSA except for a small southwest portion. To meet contract requirements, this area and Little Tokyo will be incorporated for all program activities. VSLDC is also partnering with, Mega Bank, a Minority Depository Institution (MDI), to perform commercial real estate loans in the FSA. Their model integrates tailored technical assistance, proactive marketing, culturally competent outreach, and financial products designed specifically for the challenges faced by businesses within the FSAs.
Approving this recommendation will position Metro as a leader in equitable transit-oriented development, while also leveraging additional private and public sector resources to amplify its impact. Given the increasing challenges small businesses face, compounded by macroeconomic uncertainty, it is imperative that Metro acts swiftly and thoughtfully. The EDP Fund represents a meaningful, actionable response, one that honors the resilience of our communities and helps ensure that Metro’s investments uplift the neighborhoods we serve.
Determination_Of_Safety_Impact
DETERMINATION OF SAFETY IMPACT
There is no direct safety impact associated with the recommended action.
Financial_Impact
FINANCIAL IMPACT
Since this is a multi-year contract, the Cost Center Manager and Project Manager will be responsible for allocating budget for the overall expenditure across subsequent years until project completion, including any options exercised. Up to $853,000 in repayment proceeds from the COVID-19 Recovery Loan Program is also designated for program administration.
Impact to Budget
To initiate program administration, funds for this contract in the amount of $1,000,000 have been requested in the FY26 budget (Cost Center 4530, Project 610026, Economic Development, Account 50316). Future funding obligations will be included in annual budget preparation by TOC staff.
The funding for this contract is General Funds. These funds are eligible for Metro bus and rail capital and operating expenditures.
Equity_Platform
EQUITY PLATFORM
The Fund has the potential to positively impact over 200 small, legacy and locally owned businesses, nonprofit organizations with social enterprises, the surrounding community, and transit riders located within 1/2 mile of the K Line and the Little Tokyo segment of the A/E Line. These lines traverse through EFCs in South Los Angeles and Little Tokyo. Business ownership is diverse and reflective of the local community. This action will ensure funds are available to secure a certified CDFI to administer and market the Fund.
The Diversity & Economic Opportunity Department did not recommend a Small Business/Disabled Veteran Business Enterprise (SBE/DVBE) participation goal for this procurement due to the lack of certified firms that perform these services (Attachment B). A total of 101 downloads of the RFP were included in the planholders list. A virtual pre-proposal conference was held on April 22, 2024, and was attended by four participants representing four firms (Attachment C).
Vehicle_Miles_Traveled _Outcome
VEHICLE MILES TRAVELED OUTCOME
VMT and VMT per capita in Los Angeles County are lower than national averages, the lowest in the SCAG region, and on the lower end of VMT per capita statewide, with these declining VMT trends due in part to Metro’s significant investment in rail and bus transit.* Metro’s Board-adopted VMT reduction targets align with California’s statewide climate goals, including achieving carbon neutrality by 2045. To ensure continued progress, all Board items are assessed for their potential impact on VMT.
As part of these ongoing efforts, this item is expected to contribute to further reductions in VMT. This item supports Metro’s systemwide strategy to reduce VMT through investment activities that will benefit transit oriented communities and further encourage transit ridership, ridesharing, and active transportation. This fund will support businesses that are located within walking distance of the A/E and K Lines and will provide Metro’s riders and local residents with opportunities to access goods and services without using a car. Metro’s Board-adopted VMT reduction targets were designed to build on the success of existing investments, and this item aligns with those objectives.
*Based on population estimates from the United States Census and VMT estimates from Caltrans’ Highway Performance Monitoring System (HPMS) data between 2001-2019.
Implementation_of_Strategic_Plan_Goals
IMPLEMENTATION OF STRATEGIC PLAN GOALS
These recommendations support Vision 2028 Strategic Plan Goals 3 and 4. The EDP and the Fund are grounded in enhancing communities and lives through mobility and access to opportunity (Strategic Goal 3) by working with economic development stakeholders to leverage the public transportation system to create a safe and pleasant environment to access transit and increase transit ridership by facilitating commercial revitalization, stimulating private investment, and supporting the preservation and growth of small businesses near transit. Additionally, the need for transforming LA County through regional collaboration and national leadership (Strategic Goal 4) is greater than ever with the anticipation of the World Cup and Olympics. Metro is well-positioned to partner with LA County jurisdictions to create a national model for supporting small businesses in underrepresented communities by leveraging transportation assets to spur revitalization, enhance the ridership experience, and address safety concerns.
Alternatives_Considered
ALTERNATIVES CONSIDERED
The Board could choose not to approve the Program Administrator for the EDP Fund. Staff does not recommend this action. This recommendation helps carry out a Board-approved program in furtherance of Metro’s Equity Platform and Strategic Goals. With rising inflation, increasing rents, and the lack of access to capital, the consequences of non-action include the potential displacement of small, BIPOC, legacy businesses renting along the proposed corridors, and disinvestment in the communities surrounding Metro’s multibillion-dollar transit investment.
Next_Steps
NEXT STEPS
Upon Board approval, staff will execute Contract No. PS122552000 with Vermont Slauson - LDC, Inc. for the Transit Oriented Communities Economic Development Program Pilot Investment Fund Program Administrator and return to the Board with program guidelines later this calendar year, marketing and launching the program in 2026.
Attachments
ATTACHMENTS
Attachment A - Metro Board Motions
Attachment B - DEOD Summary
Attachment C - Procurement Summary
Prepared_By
Prepared by: Michelle Banks-Ordone, Senior Director, (213) 547-4375
Nick Saponara, Executive Officer, (213) 922-4313
Holly Rockwell, Senior Executive Officer, (213) 547-4325
Carolina Coppolo, Deputy Chief Vendor/Contract Management Officer, (213) 922-4471
Reviewed_By
Reviewed by:
Ray Sosa, Chief Planning Officer, (213) 547-4274
