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CREATINGANDSUSTAININGSMALLBUSINESSJOBS2013ECONOMICDEVELOPMENTREPORT SincerelyJamesR.BairdExecutiveDirectorCEOThisreporthighlightswhatwehavebeenabletoaccomplishinthelastyearandsinceinceptionandsuggestshowmuchmorecanbedonewith504fnancinginthecomingyears.Hugeprogresshasbeenachievedthroughtheessentialcollaborativeworkwithyouourpartnerswhoareacriticalelementineachandeveryprojectwefnance.WethankalloyouoryourworkwithusincludingTHESMALLBUSINESSESwearesoortunatetoworkwithwhoareincrediblydiverseandingeniousindevelopingstrategiesandauniqueblendoproductsservicesandmarketnichesinordertosurviveandthriveinthesechallengingandevolvingtimes.Theirworktrulyinspiresus.OURLENDINGPARTNERSOurCDCandthevitalityo504fnancingdependsonthelenderswhoactivelyparticipateinourprogramthroughthickandthin.Ahugedebtogratitudegoestoallothelenderswhohavecontinuedtoworksohardtohelptheirclientsgetthebestpossibleloantermsineveryeconomicenvironmentbyworkingwithusinthe504program.THESMALLBUSINESSADMINISTRATIONwhoseemployeescontinueyearateryeartoepitomizecommitmenthardworkanddedicationtosmallbusinesssuccess.TheSBAsguarantyenablesaccesstocriticallyneededwell-structuredcapitalsothatmanythousandsocompanieseachyearcanbecomemoresustainablegrowandcreatejobs.ATREMENDOUSTHANKYOUgoestoalloourpartnerswhocontinuetoworkwithusthroughouttheseunprecedentedtimes.Weinviteyoutoreviewour2013AnnualEconomicDevelopmentReportandtoexaminethebig-pictureimpactsoourpartnership.Byworkingtogetherwehaveallbeenpartothesolutionandwethankyousomuchorthis.TOOURPARTNERS BAYAREADEVELOPMENTCOMPANY3Helpingsmallandmid-sizedcompaniesbuythespacetheyneedtogrowtheirbusinesseswiththebestpossiblefnancingtermsandallowingthemtopreservemaximumworkingcapitalhelpsourclientscreatemorejobswhichisthecoremissiono504lending.Thishasnotwaveredthroughoutthegreatrecessionortherecovery.504fnancingworksbestortheseentrepreneursbecauseitSpecializesonlyinsmallbusinessowner-occupiedcommercialrealestateLeveragestheSBAguarantywithprivatelenderfnancingandexpertiseIsdeliveredbyCDCsthelowestcostserviceprovidersinthemarketplaceProvidesaWindowtoWallStreetorAmericassmallbusinessesProvidescapitaltoAmericassmallbusinessesatthelowestpossiblecostThegreattermsobtainedthrough504fnancingprovidetheuelsmallbusinessentrepreneursneedtoexpandandcreatemorejobs-butthereismuchmorethat504couldaccomplish.Theotheressentialingredienttotherecoveryistohelpthesuccessulsmallcompaniesthatsurvivedthegreatrecessionoptimizetheirexistingdebtstructuresotheycansustainthejobstheyhaveandimplementuturegrowth.504refnancingwasenactedbytheSmallBusinessJobsActo2010inordertoaddresstheneedsogoodcompaniesthatalreadyowntheirownpropertiesandarecurrentontheirexistingloansbutaresaddledwithpoorlystructureddebtorhaveequitytrappedintheirrealestate.Thetremendouslyimprovedtermsprovidedby504refnancinghelpthesecompaniesbecomemoresustainablebusinessesandtogrowandcreatejobs.Unortunatelythe504refnancingprogramsunsetin2012buteortsareunderwaytore-enacttheprogram.Doingsowouldprovideaverysmarttooltobothsustainandcreatesmallbusinessjobswhichareoparamountimportancetoourcountrysrecoveryandlongtermeconomicsuccess.ACCOMPLISHINGANDMAXIMIZINGTHE504MISSION JOBSCREATEDRETAINEDWITH504PROJECTS504loansprovideourclientswithaccesstoexpansioncapitalatoptimalfxedratesandterms.Asaresult504fnancinghashelpedourclientscreateover18400jobs.1300015000170001900011000JOBSCREATEDANDRETAINEDFISCALYEARSENDING9302007200920112013 BAYAREADEVELOPMENTCOMPANY5BUILDINGCOMMUNITIESWITH504FINANCING504fnancingworksthroughoutoureconomyandeverysectoroourdiversecommunities.Inadditiontohelpingcompaniescreateandretainjobs504isalsoactiveinrevitalizingcommunitiesinassistingbusinessesownedbywomenveteransandminoritiesandinhelpingcompaniesadvancetechnologies.MAXIMIZINGPRIVATECAPITALWITH504LOANSAll504projectsincludeaconventionalfrstmortgagewhichmakesupapproximately50othetotalfnancing.Asaresultour504activitytodatehasleveragedtotaldirectcapitalinvestmentso3.5billion.ManuacturingVeteranOwnedCompaniesRenewableEnergyEnhancedTechnologyProductExportsorRuralBusinesses.BORROWERCONTRIBUTION507MILLION13.7504FINANCING1.2BILLION34.9BANKFINANCING1.8BILLION51.4LOWMODERATEINCOMEAREAS34.3MINORITYOWNEDCOMPANIES26.3WOMENOWNEDCOMPANIES14.3OTHERSBAGOALS25.9BUSINESSDISTRICTREVITALIZATION18.7 KenLindbergco-oundedPowerEngineeringConstructionCompanyin1986andocusesoncomplexmarineengineeringandconstructionprojects.Thecompanyismadeupoahighlyregardedandskilledteamoengineersandcratsmenwhoupholdthecompanyscorevaluesloyaltyresponsibilitydependabilityempathyenthusiasmandquality.SpecializedprojectsrequirespecializedequipmentandamajorclientconvincedPowerEngineeringsmanagementthatitwastimetomakeabiginvestmentliterallyandfguratively.WorkingwithJoeLampeofBayAreaDevelopmentCompanyandCaliforniaBankofCommercethecompanysecuredthefnancingtopurchaseandwithLindbergservingasProjectManagercompletelyoverhaulaDerrickBargeandcranePOWERENGINEERINGCONSTRUCTIONAlamedaThePoweroThinkingBigIttookalotofgreatmindsalotoftimetobuildthisbargesowatchingitworkisahugepointofpride. BAYAREADEVELOPMENTCOMPANY7capableohandlingextremelylargecomplexmarineconstructionprojects.LindbergwhoworkedwithBayAreaDevelopmentin2004topurchaseabuildingorPowerEngineeringsaysthislatestacquisitionopensthedoorsorsignifcantnewcontractsasthereareonlyoursuchbargesinNorthernCaliornia.BeingpartosuchanelitegrouphasalsoallowedthePowerEngineeringteamwithover100employeestogrowandexpandtheirindividualskillsetsorthebeneftotheirclientsproothatbigthinkingcanmakeabigimpact. AnetteMadsen-YazidihasalwayshadaheartordessertsandorherhometownoNapa.In1991sheopenedAnettesChocolateswithherbrotherBrentMadsen.TheirlocationchoicewasabigstepasdowntownNapawasjustbeginningamajorredevelopment.Thefrstgoalwastoestablishtheretailaspectotheshopandthenocusonwholesale.BrentswieMaryStornettaMadsenjoinedtheteamverysoonastheMarketingandWholesaleDepartmentandisinstrumentalintheircontinuedgrowthinsales.BrentistheMasterChocolatierwithakeeneyeandtasteorthebestincreativeArtisanChocolates.Theyhavemadeanameorthemselveswiththeirlineothehighestqualitygourmetchocolatesbeerbrittlesanddessertsauces.AnetteocusesontheretailsideothebusinessandherhusbandMajYazidiassistswithseveralretailshowsandevents.ANETTESCHOCOLATESNapaAStoryoSweetSuccessWeareproudthatwegettodosomethingweloveandthatwecansustainourselvesandourcurrentandnewemployees. BAYAREADEVELOPMENTCOMPANY9Togethertheyhavebigideaswhenitcomestoinnovativefavorcombinationsandproductlinesbutbringingthoseideastolierequiredmorekitchenspace.WorkingwithBobThompsonofBayAreaDevelopmentCompanyandJPMorganChaseBanktheypurchasedanewbuildinginNapathattripledtheirproductionandwarehousingcapacity.ThemovealsomeanstheycanexpandtheirworkorceandseamlesslyserveclientsincludingDeanDelucaandWilliamsSonoma.CombinedwithtwothrivingNapa-basedretaillocationsAnettesChocolatesenjoysnationalsuccesswhilecelebratingitshometownroots. AtanearlyageMicheleVanOrnumsethereyesonacareerworkingwithchildrenandaterearningadegreeinearlychildeducationshespentthenextseveralyearsservingasthedirectorovariouspreschoolsintheFresnoarea.Buthertruedesirewastoopenadaycareandschooloherownaplacewhereyoungchildrencouldlearnandbenurturedandwheretheiramiliescouldcometogetherandfndasenseocommunity.CREATIVEMINDSLEARNINGCENTERFresnoTheImportanceoaGreatStart In2011VanOrnumandherbusinesspartnerJeJohnstonworkedwithCalCainofBayAreaDevelopmentCompanyandCitizensBusinessBanktopurchaseabuildingthatwouldbecomeCreativeMindsLearningCenter.JohnstonaconstructioncontractorrenovatedthespacetomakeVanOrnumsdreamareality.Solarpanelsmaximizethebuildingsefciencybrightclassroomsengageyoungmindsandagardenbehindtheschoolnourishesstudentsandprovidesoodorthoughtastheystudythegrowingplants.WhenCreativeMindsLearningCenteropenedintheallo201170studentsandtheiramilieswerewelcomedintothenewspaceand22newjobswerecreatedintheprocess.TodaytheschoolisnotonlyatcapacitybuthasawaitinglistreinorcingVanOrnumsbeliethatshewasbuildingmorethanaplacetolearnshewasbuildingacommunity.Thisbrightbeautifulnewschoolisasourceofprideforourstaffourcommunityandourstudentsandtheirfamilies.BAYAREADEVELOPMENTCOMPANY11 ClaudiaFolzmanandDavidEdgarwereenjoyinggreatsuccessintheirrespectiveconstructionjobsduringthedotcomboombutoundsomethingwasmissingthepersonalsideointeractingwithclientsromstarttofnish.In2001theypooledtheirdeepindustryexperienceandtheirdesiretobemoreinvolvedineveryaspectoeveryprojectandopenedthedoorsoIronConstruction.FromthebeginningthecompanyocusedonexceptionalIRONCONSTRUCTIONSunnyvaleBuildingRelationshipsandInnovation BAYAREADEVELOPMENTCOMPANY13qualityon-timedeliveryandgreatemployeebeneftsandteamwork.FolzmanandEdgaralsobuiltaspecializedteamthatcoulddeliveronawiderangeoprojectsincludingcommercialinteriorsdatacenterscleanroomsandlabs.AsdemandorIronConstructionsservicesincreasedFolzmanandEdgarknewitwastimetostoprentingandbuildapermanenthomeortheircompany.PartneringwithSpencerStrattonofBayAreaDevelopmentCompanyandWellsFargoBanktheypurchaseda27000squareootspacein2013andbeganextensiverenovationsthatincludeutilizinggeothermalenergyandmakingthespaceLEEDGoldCertifed.InadditiontobeingextremelyenergyefcientthenewlocationgivesFolzmanandEdgartheroomtheyneedtodoubletheirworkorceoover25employees.Ournewspaceisveryfexiblesowecanaddstaffandnothavetoworryaboutwherewearegoingtoputthem. WhenRobertShibatatookthehelmatMt.EdenFloralCompanyin1994ithadalreadybeeninbusinessornearly90years.Foundedbyhisgrandatherin1906thecompanyhasseenitsshareotriumphsandhardtimes.Mt.EdennearlyendedduringtheGreatDepressionandagainwhenShibatasparentsandgrandparentsweresenttoJapaneseinternmentcampsduringWorldWarII.Aterthewarthecompanygrewtobecomethelargestroseproducerinthenation.Theymovedintowholesalingdomesticandoshorereshfowersandforalsuppliesastheirownfowerproductiondeclined.AsMt.EdensthirdgenerationownerShibataexplainsthatthecompanyhasstayedcompetitivebyretaininggoodpeoplecapitalizingonindustrytrendsadaptingtochangeandworkinghard.MT.EDENFLORALCOMPANYSanJoseOveraCenturyoPersistenceandSuccessOwningourbuildingsecuresthelongtermfutureofourcompanyandemployeesandisanassetforthenextgeneration. BAYAREADEVELOPMENTCOMPANY15AsShibatalookedtothefutureheknewexercisingthepurchaseoptiontobuyMt.EdensSanJoselocationwouldhelpsecurethefutureofthecompanyandcreatejobs.In2011hepartneredwithJoeLampeofBayAreaDevelopmentCompanyandCityNationalBanktopurchasethe62000squarefootspacethusstreamliningoperationsandestablishingapermanenthomeforthecompanyandits30employeeswithroomformore.Shibatasaysoneofhisproudestmomentswaswatchinghis95yearoldfathercuttheribbonforthegrandopeningceremonyofthenewfacilitymakingwayforMt.EdenFloralCompanysfourthgeneration. Owningmybuildingsgivesmycompanyandemployeessecurityandletsusenjoymakingourbusinessbettereveryday.SteveKahnhashadalielongloveorcars.Asachildhebuiltmodelcarsandgocartsthenmovedontofxingtheamilycarasateen.OnceoutoschoolKahnworkedorasmallrepairshopandthenoracardealershipmakinghiswaythroughtheranksandlearningeverythinghecouldaboutmachiningsalesservicemanagementeveninterpersonaldevelopment.ArmedwithawealthoknowledgeandwithaocusondeliveringvalueandintegrityheopenedhisownrepairshopinAlbanyin1997andquicklyestablishedalargeloyalcustomerbase.KahnfrstworkedwithBayAreaDevelopmentCompanyin2005whenheopenedasecondshoptomeetgrowingdemand.Hisbusinesscontinuedtothriveandin2012heexpandedforaSTEVESAUTOCAREElCerritoFollowingTheirPassionandCreatingJobs BAYAREADEVELOPMENTCOMPANY17thirdtimeagainteamingwithJoeLampeofBayAreaDevelopmentCompanyandBankofAmericatobuya56000squarefootbuildingtentimesthesizeofhisAlbanylocation.AsaresultKahnwasabletohire22newemployeesandhisclientlisthasswelledtomorethan4000.TheloyaltyofthoseclientsisevidentinthathewasnamedBestMechanicof2013byBayAreaNewsGroupreadersagreatcomplimenttoacarloverwhostartedoutwithonesmallshopthreeemployeesandthehopethathewouldbeabletokeepthembusy. WhenRichardAlvaradomovedtoFresnoromChicagotwentyyearsagohisfrstgoalwastogetajob.Hedidjustthatputtinghisengineeringbackgroundtoworkoracompanythatmanuacturedpheromonesandtraps.WhenthecompanyrelocatedAlvaradowasletwithitscustomerlistandequipmentalongwithaworkingknowledgeopestcontroldevicesandABetterTrapwasormed.AlvaradoandhiswieJanieinitiallycontractedouttheproductionotheirtrapsABETTERTRAPFresnoBuildingaBetter...Trap BAYAREADEVELOPMENTCOMPANY19andintruestart-upashiondidthemanualworkthemselvesinthelivingroomotheirapartment.TodayABetterTrapspecializesindesigningmanuacturingandsellinginsectpesttrapsthatareusedthroughouttheworld.Thetrapsarepesticide-reesotheyarebetterortheenvironment.AndbecausetheyarepatenteddemandorABetterTrapproductsspecifcallyhasgrownconsiderably.In2013theAlvaradospartneredwithCalCainofBayAreaDevelopmentCompanyandCaliforniaBankTrusttopurchasea53000squarefootbuildingquadruplethesizeotheirpreviouslocation.TheadditionalspaceallowedAlvaradotoimmediatelyaddfvenewemployeestotheteamaswellasbringinnewspecializedequipmentthatwillimproveefcienciesandgreatlyexpandthecompanyscapabilities.ItalsogivesAlvaradoroomtodowhathetrulylovestalkingwithcustomersandinnovatingontheirbehal.Itisablessingtoseethisbusinessgrowandtoknowwehaveapartinmakingabetterworld. Somepeopleaspiretocreateabettermousetrap.PatCoashsetouttogrowabetterstrawberryplant.CoashsunclestartedKoppesPlantsin1949andCoashpurchaseditin1999whenhisunclepassedaway.EarlyonKoppesPlantsfoundsuccessgrowinganddistributingstrawberryplantstonurseriesandfarmersthroughoutthenation.Inthe1980sCoashandhisuncledevelopedaverycompactplantthatcouldproducethesameamountKOPPESPLANTSWatsonvilleGrowingSuccessSince1949 BAYAREADEVELOPMENTCOMPANY21oruitasaconventionalplant.Thenewhybridmeanthomegardenerscouldusestrawberriesasbeddingplantsandsuccessullygrowtheruitveryeconomically.ThisopenedupatremendousnewrevenuestreamorKoppesPlantsandtodaynearly95oitssalesistogardencentersincludingHomeDepotLowesandWalmart.In2012workingwithSpencerStrattonofBayAreaDevelopmentCompanyandSantaCruzCountyBankthecompanyreceiveda504loanandpurchaseda6000squareootbuildingspecifcallysuitedtostrawberryplantstorageanddistributionandtogrowingKoppesPlantsasacompany.CoashwhorunsthecompanywithhiswieMelissaestimatesthathewillnowbeabletoaddasmanyasadozennewjobstomeetthedemandorhisproduct.Allbecauseoanideaoralittleplantthattookrootandtookoinabigway.Wehaveplentyofspaceinthisnewbuildingwhichmeanswecanaddnewcustomersandnewemployees. www.acsbdc.orgwww.sfsbn.orgwww.breadproject.orgwww.smallbusinesscalifornia.orgTheAlamedaCountySBDCprovidesclassestechnicalassistanceandpersonalizedtrainingtobuddingentrepreneursandtoexistingbusinessownersinterestedinacceleratingthesuccessotheirventures.WehavesponsoredclassesandworkshopsortheSBDCandourstaparticipatesinmanyAccesstoCapitaleventseachyear.TheSanFranciscoSmallBusinessNetworkservesasastrongclearunifedvoiceothesmallbusinesscommunityinSanFrancisco.BDCisamemberothisimportantassociationandhelpstosponsortheirannualsmallbusinessawardsevent.TheBreadProjecthelpsindividualswithlimitedresourcesachievesel-sufciencythroughskillsinstructionon-the-jobtrainingandcareerplacementintheoodindustry.BDChasprovideddonationstoassistinurtheringthisimportantwork.SmallBusinessCaliorniaisaproactivenon-partisansmallbusinessadvocatewhoseonlyagendaisthewell-beingoCaliornias3.2millionsmallbusinesses.BDCisamemberoSmallBusinessCaliorniaandsponsorsmanyotheirimportantbusinessoutreachandadvocacyactivities.OTHERECONOMICDEVELOPMENTACTIVITIESInadditiontoallothejobscreatedandothereconomicdevelopmentbroughtonthroughourSBA504fnancingactivitiesBayAreaDevelopmentiscommittedtothecommunitiesweservebysupportingmanyothersmallbusinesseconomicdevelopmentactivities.Herearejustaewotheexcellentprogramsandorganizationsthatweassistedoverthelastyear OURMISSIONAtBayAreaDevelopmentCompanygreatcustomerserviceiswhatweliveby.Since1981weveofferedcommonsenseexplanationsandcreativesolutionsforthemostcomplexsmallbusinesssituations.Andwhilewereproudtobeamongthetoptwentyofover300SBA504lendersnationwidethesuccessofeachofourclientsiswhatmotivatesuseverydayandisthetruemeasureofourimpact. BAYAREADEVELOPMENTCOMPANYwww.bayarea504.comHEADQUARTERS1801OaklandBlvd.Suite100WalnutCreekCA94596Phone925926-1020888504-0504CENTRALVALLEYLOSANGELESCOUNTY114E.ShawAve.Suite207FresnoCA9371050EFoothillBlvd.203ArcadiaCA91006Phone559226-3700Phone626926-5634