EXHIBIT A

SCOPE OF SERVICES

Program Administration Services for the Transit Oriented Communities Economic Development Program

Pilot Investment Fund

September 8, 2026

Transit Oriented Communities Economic Development Program Pilot Investment Fund Program Administration Services

TABLE OF CONTENTS PAGE

Table of Contents 2

Glossary of Terms 3 Abbreviation and Symbols Definitions

Introduction 6

Background 9

Scope of Work 10 Task 1 Program Administration Task 2 Fund Implementation and Tracking Task 3 Technical Assistance and Marketing Plan Task 4 Fund Reporting and Auditing Task 5 Fund Close-Out Plan

Attachments

Attachment A EDP Board Report Attachment B Preliminary Administrative Guidelines (DRAFT subject to Board approval) Attachment C Tasks/Deliverables Schedule

GLOSSARY OF TERMS

Abbreviations and Symbols

A/E Line Metro Line connecting Long Beach to Pomona

BIPOC Black, Indigenous, People of Color

Board Metro Board of Directors

CDC Community Development Corporation

CDFI Community Development Financial Institution

CPCFA Capital Programs & Climate Financing Authority

DFPI California Department of Financial Protection and Innovation

EDC Economic Development Commission

EDP Economic Development Program

FDIC Federal Deposit Insurance Corporation

FR The Federal Reserve

FSA Fund Service Area

Fund EDP Pilot Investment Fund

IBANK California Infrastructure and Economic Development Bank

K Line Crenshaw/Inglewood/LAX Line

LGBTQ+ Lesbian, Gay, Bisexual, Transgender, Queer, and More

NCUA National Credit Union Administration

OCC Office of the Comptroller of the Currency

PM Project Manager

QA/QC Quality Assurance/Quality Control

SAA Station Area Activation

SBDC Small Business Development Centers

SEDI Socially and Economically Disadvantaged Individuals State Fund Set-Aside

SOP Standard Operating Procedures

SOW Scope of Work

SSBCI State Small Business Credit Initiative Program

SSR Small-Scale Retail Program

TOC Transit Oriented Communities https://www.treasurer.ca.gov/news/releases/2025/45.pdf

Definitions

Business - Refers to entities registered with and defined by the Internal Revenue Service as a Sole Proprietorship, a Partnership, a Corporation, an S Corporation, or a Limited Liability Corporation.

Character - The conduct and practices of borrower's management will be reviewed to evaluate potential loan candidates and will be factored into an evaluation of the likelihood of repayment.

Repeated violations of local, state and federal laws, especially in regard to environmental and health and safety issues affecting the public, will be sufficient grounds to decline a loan request.

Commercial Property Owners - Defined as owners who rent or lease property for retail, office, or other non-residential use.

Contractor - An entity licensed by the DFPI, certified as a CDFI, or regulated by a federal financial agency (FR, OCC, FDIC, or NCUA). The Contractor may be a single entity or a team capable of fulfilling all minimum qualifications, preference criteria, and tasks outlined in the Scope of Work

(SOW).

Credit - Eligible borrowers must have a demonstrated history of clear credit or reasonable explanations for derogatory credit. Credit workouts and payment programs, where appropriate, must be in place prior to the disbursement of loan funds. In general, borrowers with a prior history of poor credit and/or a history of poor debt repayment who refuse credit workouts and/or payment programs will be declined assistance.

Disbursement Agreement - Outlines the specific conditions, manner, and schedule by which loan funds will be released. Key aspects of the agreement include fund management and transfer, conditions for release, roles and responsibilities, and default provisions.

Fees – Per United States Treasury Guidelines:

Rate cap. The interest rate for each individual loan, at the time of obligation and throughout the term of the loan, may not exceed the National Credit Union Administration’s (NCUA) interest rate ceiling for loans made by federal credit unions.

Prepayment fees. For loans with an original principal amount under $100,000, lenders may not include prepayment fees. For loans with an original principal amount of $100,000 or more, lenders may include prepayment fees so long as any such fees are reasonable, customary, and clearly disclosed to the borrower.

Upfront fees or charges paid by the small business, excluding fees to the jurisdiction program, cannot exceed 3 percent for loans greater than $25,000 or $750 for loans $25,000 and under.

FSA – Fund Service Area, a half mile radius of the K Line (Crenshaw/Inglewood /LAX Line) and the Little Tokyo segment (Regional Connector) of the A/E Line (see Scope of Work Figures 1 and 2).

Fund Creator – Metro established and capitalized the Fund, defined its policy objectives and service area, secured and coordinated strategic funding partnerships, and retains oversight authority to ensure the fund advances Board-approved economic development, equity, and transit-oriented community goals. This includes approval of Administrative Guidelines, participation in governance and reporting structures, and stewardship of public resources.

Ongoing Partner – Metro is a collaborative participant in the implementation, oversight, and long-term administration of the Fund that works with the Program Administrator, contractors, subcontractors, funding partners to ensure compliance with Board-approved guidelines, alignment with program goals, accountability in fund deployment, and successful economic development outcomes within the Fund Service Area.

Non-profits - Refers to organizations qualified as tax-exempt by the Internal Revenue Service. For the purposes of this program, qualifying non-profit organizations must have an economic development social enterprise, such as Community Development Corporations (CDCs), Chambers of Commerce, Economic Development Corporations (EDCs), etc.

Program Administrator – A qualified, licensed, and regulated financial institution with a history of successfully lending to local businesses within the Fund Service Area will be selected to administer the Fund. The Program Administrator must have a Commercial Finance Lender License, be a certified Community Development Financial institution (CDFI), or regulated by one of the following federal entities: Federal Reserve (FR), Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC), or National Credit Union Administration (NCUA).

Repayment Terms - Loan terms will normally be geared to the useful life of the asset to be financed or to the borrower's repayment ability. Amortization schedules will be flexible to accommodate a borrower's ability to repay.

In general, borrowers are expected to have a positive net worth in their companies and maintain a positive working capital ratio. Ratios will be set in the loan agreement for each individual borrower and subsequent ratio analysis will be principally used as a tool of loan management.

Small Business - For the purposes of the Fund, small businesses include micro-businesses with less than 10 employees and small businesses with up to 100 employees.

SEDI - Socially and economically disadvantaged individuals.

Solvency - The ability to pay legal debts. Businesses in bankruptcy may still be considered solvent if they are reorganizing and have not filed Chapter 7 for liquidation.

INTRODUCTION

The Los Angeles County Metropolitan Transportation Authority (Metro) is issuing this Request for Proposals (RFP) to secure a qualified, certified, licensed, and/or regulated financial institution (“Contractor”) to manage and administer the Transit Oriented Communities (TOC) Economic Development Program (EDP) Pilot Investment Fund (“Fund”). The contractor may be a single entity or as a team capable of fulfilling all minimum qualifications, preference criteria, and tasks outlined in the Scope of Work (SOW). The selected Contractor will be responsible for overall program administration (Task 1), establishing and structuring the Fund in collaboration with public and private sector partners, developing final Administrative Guidelines, managing resource and infrastructure requirements, processing small business and non-profit eligibility, executing loan underwriting, and maintaining full accounting, reporting, and audit transparency.

The Fund is a 2-year pilot program or loan origination period, and the Contractor shall have a 3-year period of performance, including set-up, program administration and close-out, with two (2) one year options. The Fund Service Area (FSA) includes a half-mile radius of the K Line (Crenshaw/Inglewood /LAX Line) and the Little Tokyo segment (Regional Connector) of the A/E Line.

Figures 1 and 2 below illustrate the FSA.

This area intentionally left blank.

Figure 1 - EDP Fund Service Area, K Line

Figure 2 – EDP Fund Service Area, Regional Connector Little Tokyo Segment

BACKGROUND

The Metro Board of Directors (Board) approved the EDP and $5 million for the implementation of the Fund on December 1, 2022 (Attachment A), contingent upon Board approval of the Fund Guidelines. The EDP leverages the transit infrastructure investment, builds upon Metro’s two construction mitigation programs (the Business Solution Center and Business Interruption Fund), and serves as an economic development catalyst for neighboring communities. It outlines a comprehensive strategy to support, sustain, and grow small businesses and eligible nonprofit organizations near transit consistent with Board directives and Metro’s TOC policy goal to stabilize and enhance communities. The goal of the EDP is to create a safe and pleasant environment to access transit and increase transit ridership by facilitating commercial revitalization, stimulating private investment, preserving and beautifying commercial corridors, and generating commerce with resulting sales tax benefits.

The EDP is designed to prevent the displacement of small businesses near transit. It has two components, Markets at Metro and the Pilot Investment Fund (Fund). Markets at Metro promote commercial activity on Metro-owned property. This Request for Proposals (RFP) is specific to the EDP Fund, which will provide the following products:

Fixed Asset Loans

• Real Estate Acquisition Loans ($250,000 to $5 million)

• Commercial Façade and Tenant Improvement Loans ($25,000 to $250,000)

Short-Term and Long-Term Working Capital Loans ($500 to $500,000)

Grant programs and maintenance agreements for commercial facades structured as forgivable loans are also anticipated. Underwriting should be (1) commensurate with loan types and terms offered; (2) consider the nature of the markets where the loans are made; (3) consider the borrower’s willingness and ability to repay; (4) establish a credit review process; (5) take adequate account of concentration risks; and (6) be appropriate for the institution’s size, nature and business activity. The Contractor shall work with Metro to finalize the EDP Fund Administrative Guidelines and implementation process.

PARTNERSHIPS

The Board approved $5 million to establish the Fund. More resources are needed to implement the targeted two-year pilot program. The American Rescue Plan Act of 2021 reauthorized and expanded the State Small Business Credit Initiative (SSBCI) Program. California applied for funding and was awarded $1.81 billion to help small businesses over the next 10 years. The funds have been equally distributed between the Capital Programs & Climate Financing Authority (CPCFA) (formerly the California Pollution Control Financing Authority in the Office of the Treasurer and the California Infrastructure and Economic Development Bank (IBANK) in the Governor’s Office.

Metro continues to work with private financial institutions, the State of California, County of Los Angeles, cities, and other eligible entities to contribute to the Fund. These partnerships will be more clearly defined once the Contractor has been selected.

SCOPE OF WORK

The Contractor will process business eligibility and apply the best suited resource for technical assistance, financial resources, and marketing benefits to assist small businesses and nonprofit organizations within the FSA. The Contractor shall analyze and underwrite loan applications with an experienced loan review committee. The Contractor shall be responsible for meeting administrative resource requirements, including administrative infrastructure and personnel to implement Fund services.

To be considered technically qualified to perform the services required, the Contractor must meet at least one of the following eligibility requirements:

• Hold a valid Commercial Finance Lender License issued by the California Department of Financial Protection and Innovation (DFPI), and be in good standing with the California Secretary of State

• Be a certified Community Development Financial Institution (CDFI), OR

• Be regulated by one of the following federal entities:

The Federal Reserve (FR) Office of the Comptroller of the Currency (OCC) Federal Deposit Insurance Corporation (FDIC) National Credit Union Administration (NCUA)

The Contractor must have the expertise to analyze small business financing applications, evaluate the creditworthiness of small businesses, regularly monitor small business transactions, developing a process and timeline for evaluation, and scheduled reporting to Metro among other things. The Contractor shall review every application to determine the feasibility of the proposed use of the requested financing by the applicant, the likelihood of repayment, and the potential that the transaction will generate economic development and jobs within the FSA as well as compliance with SSBCI program requirements.

Program reporting shall be provided as requested by Metro and as described in Task 4 of this scope. In accordance with Board approval of the EDP, the Contractor will work with Metro to finalize preliminary EDP Administrative Guidelines for approval by the Board. Furthermore, the Contractor shall manage the Fund Account and ensure that the Administrative Guidelines and Disbursement Procedures are followed.

Task 1 – Program Administration

The Contractor is responsible for providing resource requirements, including personnel and the infrastructure to administer the Fund. The Contractor will provide a personnel plan outlining the roles and responsibilities for each staff member and a framework outlining the infrastructure for implementing the Fund and overseeing certain activities. Administration of the Fund includes, but is not limited to delivering the following:

Task 1.1 Personnel Plan

Provide personnel resources to administer and implement the Program. This shall include personnel resources to manage the day-to-day operation of the Fund and fulfill the duties required for implementation. A personnel plan shall be provided to Metro.

At a minimum, it shall include a Project Manager and fund specific loan officers identified by Contractor.

Task 1.2 Infrastructure Framework

The Contractor must have sufficient expertise to analyze small business financing applications, evaluate the creditworthiness of small businesses, regularly monitor small business transactions, develop a process and timeline for evaluation, and schedule reporting to Metro among other things. Metro will rely upon the Contractor to review every application to determine: the feasibility of the proposed use of the requested financing by the applicant; the likelihood of repayment; and the potential that the transaction will generate economic development and jobs within the FSA as well as compliance with SSBCI program requirements.

The Contractor shall provide an infrastructure framework for implementation of the Fund. This Framework shall include, but is not limited to infrastructure to allow the Contractor to:

▪ Maintain and disburse funds from Metro and its partners complying with all policies, regulations, reporting and audits;

▪ Identify eligible small businesses and nonprofit organizations for assistance within the FSA*;

▪ Validate accuracy of financial documentation submitted by Fund applicants;

▪ Perform funding analysis to determine type of loan, appropriate loan structure, amount of funding, and terms for repayment;

▪ Process loan applications meeting SSBCI program requirements and final

Administrative Guidelines;

▪ Prepare loan packaging, dispense and track funds throughout life of the Fund;

▪ Maintain a database for accurate tracking, accounting and reporting throughout the life of the Fund; and

▪ Recommend changes as needed.

*The Fund focuses on small businesses that have difficulty securing conventional lending. Portions of the FSA include major employment centers such as downtown Los Angeles and near the Los Angeles International Airport. To maximize resources and address the needs of the most impacted businesses, businesses within major employment centers are not eligible.

Task 1.3 Administrative Guidelines

Preliminary Administrative Guidelines (Attachment B) for the Fund includes:

▪ Location: a half mile radius of the K Line (Crenshaw/Inglewood /LAX Line) and the Little Tokyo segment (Regional Connector) of the A/E Line

▪ Micro Businesses: less than 10 employees

▪ Small Business: less than 100 employees

▪ Legacy Businesses: operating in the FSA for more than 5 years

▪ Nonprofit organizations with social enterprises: Community Development

Corporations (CDCs), Chambers of Commerce, Economic Development Corporations (EDCs), etc.

▪ Operations:

o independently owned and operated o average annual gross receipts o not dominant in its industry

▪ Applicants must be in good standing with local, state, and federal taxing and licensing authorities.

The Contractor shall work with Metro to refine and finalize EDP Fund Administrative Guidelines, including requirements tied to financial contributions from the private and public sector, foundations, and any other participating entities.

The EDP Fund Administrative Guidelines shall be specific to the FSA and ensure objectivity and transparency. The Administrative Guidelines and any communications to eligible small businesses and nonprofit organizations must be concise and clearly stated to increase interest and prevent confusion regarding the Fund. The Contractor must acknowledge that Board approval of the Administrative Guidelines is a condition precedent to disbursing resources from the Fund. Businesses and nonprofit organizations participating in the Fund must acknowledge and verify their willingness to be identified as a Fund participant and included in Metro marketing materials. The Contractor will also consider transition strategies for Fund participants.

Task 1.4 Disbursement Agreement

After the Program Guidelines have been developed, the Contractor shall work with Metro on the Disbursement Agreement between parties for the Pilot Investment Fund.

▪ Metro funds will be first in and can help to improve loan terms and attract private capital. Examples are provided below.

o Interest Rate Buy Down (Borrower Rate Subsidy) - pays a portion of the interest so the borrower receives a lower effective rate, while the lender receives full market yield.

o First Loss Capital/Subordinate Tranche - absorbs the first losses in a loan or loan pool before the lender takes any loss.

o Loan Loss Reserve (LLR) - sets aside cash in a reserve account to reimburse lenders for losses up to a capped percentage.

o Partial Principal Guarantee - guarantees a fixed percentage of each loan’s principal.

o Debt Service Reserve (DSR) - pre-funds several months of debt service that can be drawn if the borrower experiences temporary disruption.

o Collateral Enhancement/Gap Collateral - pledges cash or accepts subordinate lien position to fill collateral gaps.

o Origination Fee Buy-Down - pays some or all of lender origination and closing fees.

o Flexible Repayment Buy-Down (Interest-Only / Extended Amortization) -compensates lender for delayed principal or extended amortization.

o Portfolio-Level Yield Support - backstops lender yield if defaults or restructurings reduce returns below an agreed threshold.

▪ Funds will be housed with the Contractor who will also underwrite the loans.

▪ Depending upon the SSBCI funding utilized (Collateral Support, Small Business Assistance, Loan Guarantee and/or Venture Capital) private sector partners helping to leverage the Fund may provide a set aside to the Contractor in advance or subsequent loan approval.

▪ The SSBCI private capital at risk (PCAR) requirement is met by showing that the originating lender will retain at least 20 percent of the risk of loss of each loan at a transaction level, regardless of the structure of the special-purpose vehicle or other pooled entity. In other words, regardless of a pooled fund or special entity, if a lender makes a $1 million loan using the program, the lender must keep at least $200,000 of its own money at risk, so if the borrower defaults, the lender, not just the state, Metro, or investors, absorbs at least 20% of the loss.

▪ The Contractor shall assist small businesses with real estate, long-term and short term capital loans. Real estate loans include acquisition, tenant improvements, etc.

The contractor must be able to lend up to $5 million for a single transaction.

▪ There may be loans more suitable for applicants not associated with any of the

State programs that could be funded with Metro seed funds and bank lending with or without SBA funds or a Metro and SBA funding scenario.

Due to the Partnerships leveraging the Fund, the Contractor must be knowledgeable of and willing to participate as a financial institution in the CPCFA California Capital Access Program (CalCAP) and the Collateral Support Program. To begin enrollment, use this one-page form (https://www.treasurer.ca.gov/cpcfa/calcap/forms/application.pdf). The Contractor should also be familiar with IBANK Financial Development Corporations (FDCs) to provide loan guarantees through the California Small Business Credit Initiative. To enroll in the IBANK’s Small Business Loan Guarantee Program, email them here (mailto:SSBCI@IBank.ca.gov).

The Contractor shall meet with, review, and provide recommendations to Metro to ensure the most effective and efficient manner to proceed with the Distribution Agreement. The Contractor shall also work to implement these services to ensure that the programmatic and financial activities of the Fund support and are consistent with its goals. The Contractor shall consult with Metro on all significant elements of the Fund.

Task 1.5 Review and Dispute Process

The Contractor shall provide a review and dispute process for applicants to address denial or amount of funds committed to the loan. The appellant process should include a member of Metro’s staff.

Deliverable(s) Task 1 deliverables require a draft document for review by Metro. Each deliverable will be considered completed once approved by Metro and a final document prepared.

1.1 Draft and Final Personnel Plan

1.2 Draft and Final Infrastructure Framework

1.3 Draft and Final EDP Fund Administrative Guidelines

1.4 Draft and Final Disbursement Agreement (participate, review, recommend, and execute)

1.5 Draft and Final Review Dispute Process and Document Management Plan

Task 2 - Fund Implementation and Tracking

The Contractor shall be responsible for processing business eligibility, developing a timeline for evaluation, underwriting loan applications, ongoing monitoring, and loan payment guidance. This requires collecting information from business owners including financial data and records, https://www.treasurer.ca.gov/cpcfa/calcap/forms/application.pdf https://www.treasurer.ca.gov/cpcfa/calcap/forms/application.pdf mailto:SSBCI@IBank.ca.gov mailto:SSBCI@IBank.ca.gov conducting site visits of business locations, underwriting loan applications, the distribution process, applicant monitoring, and loan closeout.

Task 2.1 Administering Fund Account

The Contractor shall be responsible for the administration of the Fund account. Fund agreements are exclusive to eligible applicants and must adhere to the final Administrative Guidelines and Disbursement Agreement. As the Fund creator, Metro will be an ongoing partner and recipient of Fund reporting. This includes post Contractor performance period activities for the full term of the loans disbursed.

A. Contractor shall ensure adherence to the Administrative Guidelines approved by the Board.

B. Contractor shall provide recommendations for changes to the Administrative Guidelines to improve efficiencies, as needed.

Task 2.2 Match Requirements

CPCFA has obligated fifteen million dollars ($15 million) in SSBCI funds in excess of the Fund’s initial $5 million seed funding. Under the terms of this commitment, SSBCI funds require a 1:1 match of private funding for distribution. Additionally, the SSBCI private capital at risk (PCAR) requirement is met by showing that the originating lender will retain at least 20 percent of the risk of loss of each loan at a transaction level.

SSBCI funds must be administered via loan participation and Metro funds may be used to improve loan terms and attract private capital. Therefore $15 million is needed in private sector contributions to ensure the full expenditure of the SSBCI contribution.

Private financial institutions have indicated interest in leveraging the Fund once the Contractor is identified. The cost of these funds varies by institution.

The Disbursement Agreement among resource partners and the Program Administrator will define the cost of the funds. The ability of the Contractor to prove access to additional investment (matching funds) and provide evidence of the commitment will receive up to 10 points. Any commitments made by the Contractor regarding additional investment to the Fund — including the level of funding evidenced by a Letter of Commitment from a private financial institution, private investor, or other eligible funding source — shall be binding and incorporated into this contract.

Note: The funding currently available for the investment fund to support local businesses and eligible nonprofit organizations is twenty million dollars ($20 million), $5M (LA Metro) plus $15M (CPCFA). This does not reflect compensation for the approved Program Administrator. Program administration and indirect costs should not exceed $2 million dollars. Metro encourages cost effective proposals that illustrate administrative efficiencies and consider the RFP submittal requirements and evaluation criteria.

Task 2.3 Standard Operating Procedures (SOP)

The SOP shall include the Scope of Work (SOW), schedule, budget, progress reporting details, and items A through H below.

The Contractor shall maintain SOP to provide guidance and consistency as the Fund is being implemented. The SOP shall at a minimum include the following:

A. Establish a communication process with Metro.

o Contractor shall communicate with Metro’s Project Manager and designated staff.

o Contractor shall participate in recurring monthly project meetings, community meetings, and others identified by Metro during program implementation.

B. Create and maintain a database of eligible small businesses and nonprofit organizations within the Fund Service Area, Fund applicants, and recipients.

o The database shall include data points as determined by Metro. Metro may request data and/or a copy of the entire dataset at any time throughout the contract term, and up to 3 months after contract closeout.

C. Disclose to Metro any potential conflicts of interest with businesses requesting financial assistance through the Fund, including if the Contractor has any open loan(s) with that business.

D. Create a loan application and process including a checklist for submission requirements. The application and its process should provide a seamless vehicle to access resources from all Fund contributors and translate easily to other lending programs offered by the Small Business Administration, State of California, L.A.

County Department of Economic Opportunity, and any other local jurisdiction or loan service provider should a referral be necessary.

o An online loan application is preferred.

o The application and accompanying process should be compatible with existing

Contractor service activities.

E. Create Document Management and Data Security/Cybersecurity Plan to protect private information. Financial documents received from Fund applicants are considered confidential. Safeguards for protecting the privacy of these files shall be put in place and followed.

F. Establish and host a recurring Loan Approval Committee Meeting for the review of all loan applications and provide an update of loans approved and awarded with timing commensurate to the Loan Approval Committee Meeting schedule.

o At minimum, the Loan Approval Committee shall consist of three of the

Contractor’s senior staff.

o Metro staff shall attend as guests.

G. Provide Metro staff with a written profile of a Fund loan recipient(s).

o This information will be used by Metro to provide online and/or print systemwide marketing benefits to participating applicants.

o Businesses and nonprofit organizations receiving assistance from the Fund may also be highlighted in materials of participating lenders and public sector entities contributing to the Fund.

H. Create and implement a dispute process and review for applicants to address denial or loan amount awarded under the Fund.

The Contractor shall use systems that are compatible with established Metro systems and software, policies, procedures, formats, and practices. All deliverables shall be accurate and of the highest professional quality in terms of writing and graphics, being straightforward, concise, organized, and easy to understand. Metro will not accept work products that require content editing and revising in terms of writing and graphics quality, and submission of such work will not be counted against project schedule or budget. The Contractor is responsible for overseeing Quality Assurance/Quality Control (QA/QC) and ensuring that all deliverables are in line with Metro's expectations. Upon approval by Metro, the SOP shall be the document guiding the progression of the overall Fund.

The Contractor shall notify the project team about any updates to the SOP, and any proposed changes that impact the overall SOP must be approved by Metro.

Task 2.4 Contract Performance Period Report The Contractor shall develop a plan that provides a detailed report at the end of the Contract Performance Period. The Contract Performance Period Report must include a process for providing final reporting to Metro, and other activities deemed necessary.

The Contract Performance Period Report must also include a Lessons Learned Memo that will highlight key lessons-learned, recommended refinements, and new innovations that Metro should consider for future investment fund opportunities.

2.1 Administering Fund Account

2.2 Match Requirements

2.3 Standard Operating Procedures

• Communications Plan

• Project Schedule

• Fund Service Area Eligible Applicant Database with queries

• Application and Process

• Document Management and Data Security/Cybersecurity Plan

• Loan Approval Committee (members, location, regular meeting date and time)

• Loan Recipient Profile

• Dispute Process

• Ongoing Program Administration

2.4 Contract Performance Period Report

• Lessons Learned Memo

Task 3 – Technical Assistance and Marketing Plan

Task 3.1 Technical Assistance Services Technical assistance is a vital component of the Fund. The Contractor shall provide technical assistance and referrals services including, but not limited to the following:

▪ Provide in-house technical assistance to position small businesses, particularly legacy small businesses, upstart businesses, microentrepreneurs, and eligible nonprofit organizations to successfully secure financial resources from the Fund.

▪ Provide technical assistance to all businesses seeking assistance from the Fund that are either denied or approved, including referrals to resources and service providers such as, but not limited to 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.

Task 3.2 Marketing and Outreach

Marketing and outreach are critical to the success of the Fund. The Contractor shall provide direct services to small businesses and nonprofit organizations in the FSA including but not limited to socially and economically disadvantaged and historically underrepresented groups or underserved markets: Black, Indigenous, and People of Color (BIPOC), woman, Veteran, disabled, and LGBTQ+ owned small businesses and nonprofit organizations, low-moderate income, non-native English speaking, cooperatives, and commercial land trusts. The Contractor shall provide marketing and outreach for the Fund and may engage a subcontractor to perform some or all of these services.

The Marketing Plan must notify eligible small businesses and nonprofit organizations throughout the FSA of the opportunity to participate in the Fund. All advertising and notices shall include bilingual translation for any prevalent languages within the program service area and English. Translation and interpretation services should also be provided for applicants to access and comprehend public information materials regarding the Fund, the application, eligibility criteria, program guidelines, the selection process, as well as resources for frequently asked questions and applicant support. Public information materials must be provided in various mediums (print, online, etc.), and the Contractor must provide a rationale for the mediums selected.

3.1 Technical Assistance Services Summary and Execution Plan

Ongoing Technical Assistance Services

3.2 Draft and Final Marketing Plan

Task 4 – Fund Reporting and Auditing

Task 4.1 Reporting The Contractor shall provide progress reports commensurate with the Loan Approval Committee frequency, summary reports, quarterly reports, and an annual report to Metro’s Project Manager. These progress reports will detail information regarding the performance of the Fund, including number of applications received, claims processed or denied during the reporting period, statistics and trends, and related data on the number, categories and types of businesses assisted. Progress reports must include statistics on loan and/or grant applications submitted, approved, the percent approved, pending completion, deemed ineligible, denied, awarded, grant amount awarded, number of businesses receiving loans and/or grants, and businesses receiving multiple awards. The addresses of all businesses seeking assistance should be maintained in the Fund database. The Contractor may also be required to submit ad hoc reports per the request of Metro. Deadlines for submitting these reports will be included in the contract with the Contractor.

The Contractor shall:

A. Track Fund status (progress-to-completion) and budget at a detail and frequency necessary to prepare required reports to Metro, and to identify problems, barriers, and other issues related to the program that necessitate intervention to ensure expeditious resolution.

B. Maintain complete, detailed, and organized records related to the Fund and all elements of its implementation and provide a summary of the overall status and accomplishments of the Fund.

C. Provide a loan and grant award matrix that lists each award separately and includes the applicant’s name, name of owner, name of business or nonprofit organization, physical address, email address, phone number, years of operation, and other information determined by Metro.

D. Conduct client satisfaction surveys to measure the Fund’s effectiveness and include the results in the quarterly report.

E. Prepare and file all relevant financial statements and tax documents related to the Fund.

Task 4.2 Auditing The Program requires that an audit be conducted on an annual basis. In addition, Metro as well as other departments such as the Office of the Inspector General may audit at any time throughout the life of Program. Contractor shall make available to auditors all files and documents related to the approval, award and disbursement of Fund proceeds, as requested.

To ensure compliance, Contractor should at a minimum have the following information readily available:

▪ Contractor shall develop audit requirements that at a minimum meet Generally

Accepted Government Auditing Standards, Generally Accepted Auditing Standards, and applicable Office of Management and Budget circulars; and

▪ Contractor shall be available to meet with auditors as necessary and provide access to Program files as requested. Auditors have authority to access all Program information and shall not be limited in their inquiries for past or current information.

▪ Contractor shall meet with Metro’s Project Manager and/or designated staff for a post audit review meeting

4.1 Fund Reporting (written reports as described in Task 4 above)

4.2 Fund Auditing

Task 5 – Fund Close-Out Plan

The Contractor shall develop a process for closing out the Fund when all loan repayments have been paid. The Fund Close-Out Plan shall include, but is not limited to the following:

A. Contractor shall identify the processes for closing out the Fund when all loan repayments have been received. The process shall be provided to Metro in a written format.

B. Contractor shall create a template document for closing out projects that collect information about the loan recipients’ business status and the Fund’s performance.

The template shall include certain data points, including a list of all loan recipients, number of loans awarded, and value of the loans.

C. Contractor shall develop a loan close-out process and required documentation.

D. Contractor shall illustrate longevity to service loans throughout extended terms that may be required for real estate acquisition loans. Any potential need to secure a third-party servicer for the loan portfolio or a portion thereof should be described and consider the following:

1. Lender - due to the goals of the EDP and the objectives of the Fund, mission driven, qualified, licensed, and regulated financial institutions with a history of successfully lending to local businesses within the FSA are preferred.

2. Due diligence - in terms of legal due diligence, the following are important:

o Transfer restrictions o Documentation and structure o Security o Regulation

3. Information – including full disclosure of relevant events relating to the portfolio (i.e., any defaults, waivers, amendments and extensions, any insolvency or bankruptcy actions taken against any borrowers whose loans are being transferred).

4. Regulation – due to the potential complexity of each loan a clear delineation of regulated agreements for each loan is required.

5. Ongoing restructurings of the loans to be serviced - is not preferred.

Note: The information provided in this document related to SSBCI is for informational purposes and proposers are advised to undertake their own independent research and determination relative to federal and state requirements. To the extent of any conflict or inconsistency between information provided herein and federal law or guidance published or provided by the U.S.

Treasury Department, such federal law or guidance shall control.

ATTACHMENTS

Attachment A EDP Board Report Attachment B Preliminary Administrative Guidelines (DRAFT, subject to Board approval) Attachment C Tasks/Deliverables Schedule

Metro

Board Report

Los Angeles County Metropolitan Transportation

Authority One Gateway Plaza

3rd Floor Board Room Los Angeles, CA

File #: 2022-0504, File Type: Program Agenda Number: 15.

PLANNING AND PROGRAMMING COMMITTEE

NOVEMBER 16, 2022

SUBJECT: TRANSIT ORIENTED COMMUNITIES ECONOMIC DEVELOPMENT PROGRAM AND

INVESTMENT FUND

ACTION: APPROVE RECOMMENDATIONS

RECOMMENDATION

CONSIDER:

A. APPROVING the Transit Oriented Communities Economic Development Program (EDP) and $5 million for the implementation of the Transit Oriented Communities Economic Development Investment Fund (“Fund”) with disbursement contingent upon the Metro Board of Directors (Board) approval of the Fund Guidelines; and

B. AUTHORIZING the Chief Executive Officer or designee to enter into multiple agreements with financial institutions, the State of California, County of Los Angeles, cities, and other eligible entities to contribute to the Fund.

ISSUE

The EDP, including the Fund, was developed in response to direction from the Metro Board of Directors (Board) to support and prevent the displacement of small businesses near transit and in, or adjacent to, Equity Focused Communities (EFCs). The proposed program includes a two-year pilot for businesses within a ½-mile radius along the recently completed K-Line and the Little Tokyo community along the soon-to-be-completed Regional Connector (Attachment A - Pilot Corridor Maps). Board approval is required to implement the EDP and establish the Fund.

BACKGROUND

The Metro Board approved a $1 million investment in the Small Business Assistance Loan Program in August 2016. There was limited interest in the original assistance program due to some of the lending parameters. The program was in the process of being restructured when the COVID-19 global pandemic occurred. The Board took immediate steps to assist impacted businesses and partnered with the Los Angeles County Development Authority to create the COVID-19 Recovery Loan Program in May 2020, with a directive for staff to return to the Board with revised program guidelines for a longer-term small business assistance program (Attachment B - Board Motions).

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ATTACHMENT A

File #: 2022-0504, File Type: Program Agenda Number: 15.

Approximately $853,000 in Small Business Assistance Loan Program funding was reallocated for the Recovery Loan Program, with repayment proceeds reserved for future iterations of the Metro small business assistance program.

In 2021, staff began restructuring the small business assistance program, to ensure that the program met the needs of businesses in the community. Metro sponsored two (2) roundtable discussions with economic development stakeholders, including financial institutions, community development financial institutions (CDFIs), chambers of commerce, community-based organizations, local jurisdictions, and business source centers. Metro has continued outreach meetings and interviews with more than 100 financial institutions-including retail and commercial banks, credit unions, investment banks, and brokerage firms-and other economic development stakeholders, including business associations, business improvement districts, chambers of commerce, community development corporations, economic development corporations, small business development corporations, think tanks, and other public sector entities helping small businesses.

TOC staff reviewed and analyzed comments received from the roundtable discussions and stakeholder interviews and conferred with colleagues from the Offices of Management and Budget, Diversity and Economic Opportunity, Countywide Planning and Development, and the Office of the Chief of Staff regarding other Metro community serving economic development activities. Metro currently offers the Business Solution Center, Business Interruption Fund, and Eat Shop Play programs to support businesses during construction, but currently there is no Metro program to support businesses near transit post-construction.

DISCUSSION

To support Metro’s infrastructure and transit investment and maintain community partnerships, Metro proposes the EDP, which includes 1) the Fund and 2) Station Area Activation. The EDP outlines a comprehensive strategy to support, sustain, and grow small businesses and eligible nonprofit organizations near transit consistent with Board directives and Metro’s TOC Policy Goal to stabilize and enhance communities. The EDP, including the Fund, provides critical tools to prevent the displacement of small businesses and nonprofits near transit and in or adjacent to an EFC.

The goal of the EDP is to create a safe and pleasant environment to access transit and increase transit ridership by facilitating commercial revitalization, stimulating private investment, preserving and beautifying commercial corridors, and generating commerce with resulting sales tax benefits.

The EDP and the Fund are consistent with the U.S. Department of Transportation Justice40 initiatives, and the responsibilities outlined in Metro’s enabling statute in the California Public Utilities Code Section 130001 including:

“(h) Transportation planning should recognize that transportation systems have significant effect on the physical and socioeconomic characteristics of the area served, and emphasis should be given to the protection and enhancement of the environment and restoration of blighted neighborhoods near community centers.”

Need

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Small businesses are an important component of the economy and a key driver of production, employment, and growth. They employ approximately half of the private workforce in the U.S. There are more than 250,000 local small businesses and nearly 1.1 million sole proprietors in Los Angeles County. These businesses account for 43 percent of the local workforce and make L.A. County the country's largest small business economy. Access to capital has been a longstanding challenge for small businesses particularly those in historically disadvantaged communities. According to the National Bureau of Economic Research, since the start of the pandemic, Black-, Latino(a)-, and Asian -owned businesses have had higher closure rates than White-owned businesses nationwide.

JPMorgan Chase Institute reported that over the same period, Black, Indigenous and People of Color (BIPOC) owned firms have faced larger cash balance and revenue declines than non-Latino(a) and White-owned firms, with the impact of the crisis particularly severe among Black- and Asian-owned businesses.

The Los Angeles County Small Business Ecosystem Assessment indicates that there has been a historic unmet demand of $60 billion in capital for small businesses in L.A. County annually, with pronounced gaps of traditional and alternative lending in BIPOC neighborhoods. This unmet demand has been magnified through the COVID-19 crisis and exacerbated in BIPOC communities surrounding the K Line and Little Tokyo. The K Line opened on October 7, 2022, and the Regional Connector is scheduled to open in the coming months. Inflation is on the rise, and time is of the essence to create a program that positively integrates Metro’s goal of transit expansion and the consideration of community impacts, including impacts to small businesses and nonprofits with social enterprises related to economic development.

Pilot Corridor(s)

Staff recommends launching the EDP and establishing the Fund as a two-year pilot program for businesses within a 1/2-mile radius of the K Line alignment and Little Tokyo segment of the Regional Connector (Attachment A) to maximize business preservation after construction of new rail lines.

These culturally rich and vibrant communities are recognized as cultural destinations and points of interest that draw visitors. They are comprised of resilient family, women, BIPOC owned businesses and nonprofits that serve their surrounding communities. According to Civic Economics, approximately 68 percent of revenue generated by local businesses stays within the community through employment of community residents, compared to 43 percent of revenue generated by non-local businesses. The two-year pilot Fund will provide ample time to review and assess best practices, challenges, the transit experience, and ridership. It will also provide an opportunity to refine and enhance the program where challenges have been identified. The diversity of business types, sizes, and need along these corridors create an excellent opportunity to creatively address a plethora of financing challenges.

TOC Economic Development Program Components

In response to stakeholder feedback and research, the EDP includes two critical program elements:

the Fund and Station Area Activation:

1. The Fund will be managed by a Program Administrator and provide financial resources and technical assistance to small businesses and eligible nonprofit organizations along the pilot

Metro Printed on 11/11/2022Page 3 of 8 corridors. Metro is proposing a one-time $5 million investment and up to $816,000 in repayment proceeds anticipated from the COVID-19 Recovery Loan Program to establish the Fund. Metro’s contribution will be leveraged with private investment and public partners to maximize the Fund’s ability to assist small businesses and nonprofit organizations and transform transit-oriented communities. The Fund is intended to provide access to capital through the following products:

- Fixed Asset Loans o Real Estate Acquisition Loans ($25,000 to $5 million) o Commercial Façade and Tenant Improvement Loans ($25,000 to $250,000)

- Short-Term and Long-Term Working Capital Loans ($500 to $500,000)

Underwriting should: (1) be commensurate with the loan types and terms offered; (2) consider the nature of the markets where the loans are made; (3) consider the borrower's willingness and ability to repay; (4) establish a credit review process; (5) take adequate account of concentration risk; and (6) be appropriate for the institution's size, nature, and business activity.

Eligibility criteria, funding partners and their respective contributions, metric-based results, and underwriting guidelines (“Fund Guidelines”) will be refined in consultation with the Program Administrator and presented to the Board prior to program launch and Metro’s $5 million contribution.

Technical Assistance

Technical assistance is a vital component of the Fund. Business technical assistance efforts develop sustainable and financially stronger businesses.