EXECUTIVE SUMMARY
In its twenty-fifth year as a New York (501)(c)(3) not-for-profit corporation, the Brooklyn Economic Development Corporation (BEDC) has remained true to the roots of its formation--maximizing adult employment opportunities in Brooklyn through a variety of real estate, financing, training and counseling, and collaborative activities aimed at promoting Brooklyn as the best place in New York City to establish a business and to work.

BEDC’S FIRST 10 YEARS (1979-1988)
In the wake of economic devastation in New York City resulting from the 1977 blackout and concomitant downturns in the City’s economy (rise in gas/oil prices, New York City’s budget crisis, etc.), local delegates from the five boroughs and from the City Administration petitioned Washington, D.C. for federal economic assistance. The U.S. Economic Development Administration worked with the NYC Office of Economic Development, which then worked with county planning commissions to prepare an overall economic development plan for each borough.

Under the auspices of Brooklyn College, a commission of 77 people met to write the Overall Economic Development Plan for Brooklyn. The commission then set up a standing committee to implement the plan. This standing committee became the founding Board of BEDC. With US EDA funding, BEDC was incorporated in November 1979 under the auspices of the Brooklyn Borough President’s Office (but not funded through them).

According to its Certificate of Incorporation and its By-Laws, BEDC was formed for the following purposes:

-- "To plan and promote, and if necessary, to coordinate and execute programs in Brooklyn aimed at improving the quality of life of its residents;
-- To achieve certain charitable objectives and public purposes of relieving and reducing adult unemployment, promoting and providing for additional and maximum adult employment opportunities in Brooklyn by the following activities:

• Residential rehabilitation and development;
• Developing, operating, and maintaining commercial and recreational facilities;
• Constructing, acquiring, rehabilitating, and improving for use by other industrial or manufacturing plants in Brooklyn;
• Giving financial assistance in such construction, acquisition, rehabilitation and improvement and maintaining such plants for others in Brooklyn;
• Obtaining municipal improvements and improved transportation services;
• Providing managerial, technical, administrative advice, counseling, training, and financial aid to assist residents of Brooklyn to develop necessary business skills and other business alternatives;…."

BEDC’s first task in the early 1980’s was to help rebuild the economic infrastructure in Brooklyn via local development corporations, grassroots community groups dedicated to fostering storefront and small business development block by block, community by community. BEDC met with commission leaders to foster grassroots organizing. The commission provided the impetus for the creation of a network of local community development corporations, and the City provided funding for technical assistance to and nurturing of these local community development organizations (capacity-building).
The heart of local economic development is job creation and retention. As retail stores started to come back to local communities, BEDC’s role expanded into how to help local employers (small business owners and entrepreneurs, especially manufacturers) grow and create more local jobs. BEDC added a business financing specialization, and naturally progressed from community planning (an area needed a shoemaker, a bakery, a major employer, etc.) to direct client service (financing the shoemaker, the bakery, the local manufacturer, etc.). Through the NYC Revolving Loan Fund, BEDC closed 8-10 loans per year, averaging $250K-$300K per loan.

By 1984, BEDC’s community organizing was growing and its small business financing component was becoming more and more important. Joan Bartolomeo was hired in 1984 to foster energy efficiency among small business owners through a New York State-funded program.

By the mid-1980s, BEDC looked to HUD’s Community Development Block Grants (CDBG) for additional funding. These are entitlement grants based on the number of people in particular census tracts whose income is below the poverty level. While 99% of these grants go to public housing or to housing preservation, 1% goes to general economic development (but only in census tracts or to individuals below the poverty level). City tax levies and Community Development Block Grants funded commercial revitalization programs under NYC Department of Business Services (now, NYC Department of Small Business Services).

During the mid-to-late-1980s, through a confluence of city and local policy (loan funds, relocation grants within the city, local retail and community services), BEDC expanded into business attraction, and so brought on a real estate staff. Under a general scope of work, BEDC was funded to assist 80-90 manufacturing companies to relocate to Brooklyn.

Under a NYS grant, BEDC created a manufacturers and wholesalers directory and printed 25,000 copies. The Brooklyn Borough President’s office supplemented this contract with a $300K contract for BEDC to provide marketing services for Brooklyn. BEDC staff traveled and exhibited at trade shows, promoting Brooklyn as a good place to do business and working collaboratively to showcase Brooklyn companies.

Looking to see what other needs could be fulfilled, in 1988 BEDC established and implemented a Brooklyn commercial loan program (offering loans from $25K-$125K) to help retailers make storefront improvements. While the loan principal was funded by Citibank and Chase, BEDC used HUD subsidy money under the Community Development Block Grant to subsidize interest (from double-digits to two-thirds of Prime). BEDC funded about 40 loans in Brooklyn.

For 10 years (from its inception in 1979 through 1988), all of BEDC’s rent and other overhead expenses had been paid by the Brooklyn Borough President’s office. By the late 1980s, BEDC’s client and community services were strong, necessitating a staff of 22 (including a full complement of support staff). BEDC’s contract with NYC was $1.0 MM out of a total budget of about $1.2 MM, and BEDC had approximately $200K in cash reserves.

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TRANSITION (BEDC’S NEXT 10 YEARS—1989-1998)
In January 1989 Joan Bartolomeo was promoted to President of BEDC. Over the next three years, as political changes and the city’s economic recession led to a 50% reduction in NYC’s funding of BEDC, President Bartolomeo’s primary focus became the survival of BEDC.

In 1990, having already laid off all of its support staff, BEDC fought for every new dollar. Seeing an opportunity, BEDC hired the National Development Council to write a business plan and to market the concept for a separate not-for-profit organization—the Regional Economic Development Assistance Corporation (REDAC)—to run a citywide commercial loan program capitalized via bank loans to REDAC. REDAC would be housed at BEDC, and some of REDAC’s funding could be used to cover BEDC’s expenses.

By 1991, a coalition of 11 banks (led by Chase) had provided $1.1MM in loan capital to REDAC as well as enough funding to support a business manager, a loan officer, and full-time clerical support. REDAC nicely complemented BEDC’s program staff, including one person dedicated to loan packaging and referrals as well as two full-time real estate staff engaged in brokering, operating a space bank, and reviewing space with clients and brokers. (Ultimately, this costly real estate program was eliminated due to budget cuts.)

As the economic recession led to continued budget constraints at the city and state levels into the mid-1990s, BEDC continued to fight for federal dollars for client services (financing, real estate-related services such as IDA applications and loan packaging). BEDC’s low overhead and cash reserves (by 1995, down to $25K-$30K) allowed for resiliency.

By the mid-1990s, BEDC received its first federal Small Business Administration (SBA) grant to provide technical assistance to entrepreneurs. In addition, BEDC won a Department of Education grant for school-business linkage ($130K-$150K) and the Summer Youth Employment Program (1996-98).

Through efforts “above and beyond” during Joan Bartolomeo’s first 10 years as President, BEDC explored new opportunities, established new relationships, and developed new and diverse sources of funding, resulting in BEDC’s return to its $1.2MM budget level.

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BACK TO BEDC’S ROOTS (1999 – PRESENT)
As the city, state and national economies all soared in the late 1990s, BEDC continued to benefit from its original funder, the federal government.

From 1999-2001, BEDC and the Queens Overall Economic Development Corporation (QOEDC) joined forces under a three-year federal Department of Commerce grant to form the Brooklyn-Queens Minority Business Opportunity Center (MBOC), fostering certification and contract opportunities for minority business owners in both boroughs.

In 2000-2001, BEDC was invited to join the working group trying to save a federal building for community use. When it appeared as if BEDC might be able to take the lead on this project, BEDC hired a Real Estate Director to establish capacity in this area; i.e., (a) to define and develop BEDC’s role in real estate so that the “D” in BEDC (Development) would stand for bricks and mortar; and (b) to help BEDC maximize revenue / minimize cost when assisting clients looking for commercial space.

When revenue opportunities from individual client service did not appear to take hold, BEDC used US EDA funding to develop a real estate-related website to which it could refer clients. In the meantime, BEDC began to be invited to join in more real estate-related projects, all with significant strategic advantage and long-term potential for BEDC but no funding to support staff time and other pre-development investment. However, the long-term potential for BEDC to both diversify its revenue sources beyond government funding and to put real estate assets on its balance sheet have made these projects good strategic investments of time and effort thus far.

Over the last year, BEDC’s perseverance in real estate and its expertise in community relations and minority business have led to one of its most promising current opportunities. In addition, BEDC has begun to build expertise in training and technical assistance for disabled entrepreneurs (a recently-identified area of emphasis for the federal Small Business Administration).

For 25 years BEDC has remained true to its roots--maximizing adult employment opportunities in Brooklyn through a variety of real estate, financing, training and counseling, and collaborative activities aimed at promoting Brooklyn as the best place in New York City to establish a business and to work.

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BEDC TODAY
Today, BEDC is comprised of three strategic business units (SBUs), each of which includes individual projects/programs:
- Strategic Initiatives/Real Estate
- Entrepreneurial Development and Capital
- Finance and Administration

STRATEGIC INITIATIVES/REAL ESTATE SBU
In 2001 BEDC made a strategic decision to attempt to reduce BEDC’s dependence on government financing by developing income streams that could be used to finance internal and external projects. Its objectives were to create niche markets for services and to exploit those markets to generate unrestricted income for such services as:

• Business Consultation
• Securing Anchor tenants for real estate projects (e.g., malls and strip-malls)
• Identifying, securing and developing property (both commercial and residential)
• Partnering on income-generating projects or ventures
• Implementing and managing income-generating projects or programs
• Identifying growth income-generating companies

In order to implement this new strategy, BEDC decided that its first order of business was to develop its real estate development capability and capacity by hiring a Real Estate Director. The filling of this new position in 2001 enabled BEDC to become involved in the various real estate development projects and other strategic initiatives that have continued to present themselves to the organization.

These include such individual projects as:

Initiative for a Competitive Brooklyn (ICB)
As a result of BEDC’s long-standing relationship with the US Economic Development Administration (EDA), in October 20003 BEDC received a three-year planning grant from the US EDA for $275K ($250K to be matched with private funds) to participate in a collaborative effort with the Initiative for a Competitive Inner City (ICIC, founded in 1994 by Dr. Michael Porter of Harvard Business School) and a consortium of city, state and local organizations to help develop a comprehensive, cluster-based economic development plan for Brooklyn.

Doing research using various data sources and cluster models developed by Dr. Porter, ICIC (under a companion US EDA contract) is providing the Brooklyn consortium with an in-depth analysis of market and labor force trends in the borough; of the local, regional and national forces driving them; and, of the competitive advantages that Brooklyn offers certain economic clusters. (According to the related BEDC press release, “An example of an economic cluster for a bakery would include the suppliers of flour, pans and ovens, the trucks that transport the baked goods, and the stores that sell them.”)

By identifying and understanding the market and labor forces behind the sectors of the economy in which Brooklyn can best compete, the consortium expects to be able to create a plan for Brooklyn’s “future that identifies ways to increase the productivity and competitiveness of the Brooklyn business base so that firms in the borough can offer better, higher-paying jobs.”

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Prospect Park Plaza-Hope VI Project (Community Component)
Through BEDC’s persistence in leveraging existing relationships for new collaborative opportunities and in developing new collaborative relationships, BEDC has been invited by the NYC Housing Authority (NYCHA) and Michaels Development Corp., to join the Prospect Park Plaza-Hope VI Project Team as the community representative.

Because of BEDC’s extensive experience providing certification and contract opportunities to minority business owners (under the old MBOC Program), NYCHA and Michaels asked BEDC to assist Michaels in fulfilling the following two major community requirements of the development contract:

1. Section 3 Residents--All subcontracts for construction work entered into by Michaels Development Corp. and/or its construction manager (Gotham Construction Co.) in excess of $100K (and all second-tier subcontracts) must include a requirement that, to the maximum extent feasible, opportunities for training and employment will be made available to NYCHA residents and other low-income residents of the community where the redevelopment work will be performed (Oceanhill/Brownsville, CD #16), pursuant to Section 3 of the HUD Act of 1968.

   These subcontracts must require that the following goals be satisfied:
   a. 30% of the aggregate number of the contractors’ and subcontractors’ new hires shall be “Section 3 Residents”; and,
   b. 10% of the total dollar amount of all subcontracts are to be awarded to business concerns that are 51% or more owned or controlled by Section 3 Residents.

2. Resident Employment Program—All construction contracts entered into by Michaels Development Corp. and/or Gotham Construction Co. having a total value of $500K or more will be subject to NYCHA’s Resident Employment Program. Each such contractor will be required to spend at least 15% of the total labor cost component (including fringe benefits) of the total value of the subcontract on NYCHA Resident hires (who, in each case, have the relevant training or experience for the positions sought to be filled, in accordance with the following hiring priority:
   a. Residents who are participating in or graduates of NYCHA-sponsored or NYCHA-supported training/apprenticeship programs;
   b. Other Residents;
   c. NYCHA Residents from other nearby developments within CD #16; and,
   d. NYCHA Residents within other developments within the borough of Brooklyn.

NYCHA will require the developer’s subcontractors to include construction jobs and/or to provide trade apprenticeships to Residents during construction work.

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Prospect Park Plaza-Hope VI Project (Real Estate Component)
In addition to representing the community component of this significant residential rehabilitation project (see Community Relations component, above), BEDC may also be invited to become the owner of space on the first and second floors for potential leasing to Brooklyn business owners looking for retail space and/or for use as an incubator for Brooklyn businesses (particularly for those business in competitive clusters identified via the ICIC Project). BEDC is in continuing discussions with all parties at this time. Interns from New School University’s Milano School Financial Lab have picked up the incubator as a project and are preparing the pro-forma financial statements.

Federal Building Project
In 2000-2001, the federal government was about to abandon one of its buildings, allowing it to go to auction. Concerned about retaining community control of the use of this property for local job retention and creation, local Congressional officials set up a working group comprised of a coalition of community groups, to which BEDC was invited. As BEDC began to take a leadership position among this working group, BEDC began to explore the possibility of becoming developer and owner of the building, leasing out space to generate earned income.

In 2001, BEDC applied to the Port Authority for a grant to fund a feasibility study ($50K-$100K, to be paid directly to the consultants who conducted the study). BEDC was awarded the grant in 2002, and the study was completed in 2003. (All BEDC plans were held in abeyance, pending the feasibility study.)

During the last quarter of 2003, the building went through an official disposition process, in order of priority of use:

1. Can any other federal government agency use the building?
2. Is the building suitable for homeless services? (HUD-McKinney process decrees that if the building is suitable for homeless services, it must be used for homeless services.)
3. Is a city or state agency willing to buy the building for a public purpose? (One way for BEDC to implement this project would be for BEDC to convince a city agency to buy the building and to provide BEDC with a long-term lease.)
4. General auction

As of January 2004, HUD had determined that the building was not suitable for homeless services. BEDC is now in the process of trying to convince a NYC or NYS agency to buy the building and to give BEDC a long-term lease.

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Zoning for Jobs
Related to the Federal Building Project, BEDC is part of a coalition of Brooklyn community groups (NYIRN, SWIBDC, light manufacturers, etc.) advocating for public policies to preserve and protect manufacturing districts in Brooklyn (rather than automatic conversion to other types of space, primarily residential). BEDC’s role is to offer input during bi-weekly coalition meetings and to reach-out to other interested groups.

Community Economic Development Council (CEDC)
BEDC is funded by the US Economic Development Administration and the NYC Department of Small Business Services to be the coordinating organization for the Community Economic Development Council (CEDC). The purpose of the CEDC is to provide a forum for not-for-profit organizations (e.g., local development corporations) and local businesses that are interested in learning and working together to improve and revitalize the borough of Brooklyn. Engaged in a variety of local community economic development activities (housing, entrepreneurship, financing, etc.), CEDC members use the Council as a means of sharing and disseminating information and of fostering collaborative efforts and projects. BEDC’s role is to convene quarterly meetings that add value to these collaborations. The CEDC currently includes about 250 members
(about 30 are active).

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SUNY Downstate Advanced Biotechnology Incubator Project
In 2001, BEDC convened the Brooklyn Biotech Consortium, which included all of the major collaborative partners in the effort to develop a biotechnology incubator near SUNY Downstate. Today, the building has been built and is awaiting a Certificate of Occupancy and tenants. Although this consortium is no longer meeting, BEDC continues to work with SUNY Downstate to try to develop a master plan for the incubator companies that includes a second stage (after the companies outgrow the incubator).

Brownfields Project
Always on the lookout for new potential program opportunities, BEDC is working with the NY Metro Brownfields Fund and has engaged an intern to do a vacant land survey in order to get a sense of vacant land issues in Brooklyn. BEDC currently gets a steady stream of telephone calls from those interested in developing brownfield sites. With the completed land survey, BEDC might be able to provide a pipeline for these projects.

Destination Brooklyn Web Map
In order to heighten BEDC’s profile, to maximize BEDC’s productivity, and to lower BEDC’s cost of service delivery, BEDC has recently placed a real estate map on its website, along with the answers to the most frequently-asked real-estate questions. Now, most callers into BEDC with real estate questions are referred directly to the website. BEDC is currently working on revenue-generating opportunities for this site (e.g., brokers paying to be listed/linked via the site).

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ENTREPRENEURIAL DEVELOPMENT AND CAPITAL SBU
This strategic business unit includes all of BEDC’s direct client service programs and activities, such as:

Regional Economic Development Assistance Corporation (REDAC)
Founded in 1991 as a separate (501)(c)(3) not-for-profit corporation to meet the financing needs of microbusinesses (primarily start-ups) citywide, over the last year REDAC has been dramatically redesigned to meet today’s unmet need for entrepreneurial capital.

While retaining its citywide financing mission, REDAC‘s vision is to become the lender of choice for established businesses needing $50K-$150K in loan financing. Using a “family of funds” approach, REDAC will be able to differentiate rates of return based on the risk of various categories of business borrowers.

LAUNCH Program
BEDC has years of recognition and success in delivering high-quality entrepreneurial assistance programs. In November 2002, BEDC became the lead organization for the NYC Department of Mental Health & Hygiene’s (DHMH) $500K technical assistance program called Lead, Act, Undertake, Navigate, Change, and Heal (LAUNCH).

LAUNCH is an innovative entrepreneurial training program designed for individuals with a history of serious and persistent mental illness. Those clients screened for appropriateness receive a 15-week training curriculum consisting of business development and management courses, encompassing both formal classroom instruction and hands-on applications. In addition, LAUNCH provides a supported path for clients to develop their self esteem and self-sufficiency in becoming economically secure entrepreneurs. This is achieved through coaching, one-on-one technical assistance, and providing broad support in understanding and securing financing.

LAUNCH is a three-year program currently in its second year of operation. Through LAUNCH, it is BEDC’s objective to assist people with disabilities to break their cycle of dependence on Social Security disability insurance (SSI/SSD) by enabling them to become self-employed. Given that this is also a recently-identified area of emphasis for the US Small Business Administration (SBA), BEDC is looking at the LAUNCH Program as a prototype for future entrepreneurial development programs for people with a wide range of physical and mental disabilities.

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National Abilities Fund Loan/Loan Guarantee Program
Recognizing the need among LAUNCH entrepreneurs for small amounts of financing, BEDC is participating in the National Abilities Fund loan/loan guarantee program, whose mission is to support disabled entrepreneurs. In addition, BEDC and the Abilities Fund are working together to develop a new entrepreneurship program for people with physical disabilities.

Trickle-Up Program
BEDC is one of the American coordinating partners of the Trickle-Up Program. Founded in 1979 as a not-for-profit organization whose mission is to provide opportunities for self-employment to the most economically and socially disadvantaged individuals around the world, Trickle-Up helps low-income individuals start their own microenterprises by providing grants for seed capital along with business training materials. Trickle-Up coordinates with partner organizations to achieve this goal. As a coordinating partner, BEDC provides a venue for Trickle-Up to hold bi-monthly workshops for prospective applicants.

Entrepreneurial Assistance Program (EAP)
Funded by the Small Business Administration ($49K) and a $165 instruction fee charged to each student, the Entrepreneurial Assistance Program provides 60 hours of classroom instruction in business development and small business management for budding entrepreneurs as well as for those considering becoming self-employed. In addition to its client base, this program differs from LAUNCH in that it currently does not provide any coaching or one-on-one technical assistance.

FINANCE AND ADMINISTRATION SBU
More important than ever before, BEDC’s Finance and Administration area is the locus of both financial management and outcome management information and analyses for BEDC/REDAC, developing the link between financial and program outcomes via Cost per Result.

CONCLUSION
Recognizing its need for an infrastructure both strong enough and flexible enough to handle such rapid growth, BEDC is currently working on putting business-like financial management and outcome management systems in place. In combination with continuous process improvement techniques based on Appreciative Inquiry, these systems will enable BEDC to make "real time" adjustments to its programs and projects to achieve maximum return on investment for BEDC's funders and investors.

BEDC--25 years old and ever true to its roots--maximizing adult employment opportunities in Brooklyn through a variety of real estate, financing, training and counseling, and collaborative activities aimed at promoting Brooklyn as the best place in New York City to establish a business and to work.

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