DMC considers using public infrastructure funds to support small businesses

Destination Medical Center officials are exploring ways to get more public funding into the hands of downtown small business owners.

What is being dubbed the Small Project Capital Strategy comes with an acknowledgement that the existing process for applying for public infrastructure funding — first adopted in 2015 — is “in many ways biased toward larger, more sophisticated developers.”

The goal, according to DMC EDA staff, is revise that process to make funding more accessible and equitable — particularly for small business owners, first-time entrepreneurs, and under-served populations.

“We know that our capital has been accessed by large projects and by city infrastructure projects, but that same capital could be available to small business owners,” said Chris Schad, director of business development for DMC, during Thursday’s DMC Corporation Board meeting.

Since the start of DMC, public funding has largely been used to jump-start large developments like hotels and the Discovery Square campus, as well as public projects such as the reconstruction of roads and sewers.

While that strategy has led to some big wins, DMC leaders said the cumbersome process has created barriers, especially for businesses that do not have access to the same resources as larger companies.

“You shouldn’t have to have a professional grant writer on your staff or have an expansive development staff to pursue an inquiry about how your individual business entity can help us promote our vision,” said DMCC Board Member Pamela Wheelock, in support of updating the process.

The strategy discussed Thursday would not change how public infrastructure funds can be used — state law limits use to things like acquiring property and renovating buildings. (DMC infrastructure funds cannot be used to cover regular operating costs.) Instead, it would change how the funds can be accessed. It would also serve as a declaration of DMC’s intention to interpret infrastructure as more than roads and bridges.

“Small business is a piece of the infrastructure of making this a destination, and infrastructure in this case does include roads — but it also includes a unique business that is something that is attractive to other people that creates money in the local economy,” said Board Chair R.T. Rybak.

With details of the process are still being worked out, other board members offered additional considerations for supporting downtown businesses.

City Council President Brooke Carlson suggested funds be available for property owners being asked to meet historic preservation guidelines — a use DMC officials agreed could meet the definition of public infrastructure.

“Speaking with some of them, I think there is a lot of desire” to make the improvements, said Carlson, also a member of the DMCC Board. “But the challenges are the resources it takes to follow those guidelines.”

Board Member Paul Williams said he supports the spirit of the plan, though he noted any strategy should be paired with technical support, mentorship, and other ways to access funds that go beyond the building itself.

“More often than not, what I hear from smaller businesses is, ‘I really need a piece of equipment and I need something that still might be a physical element of the business, but isn’t so much about the building,’” said Williams, citing his experiences working in the Twin Cities.

Conversation around the small business strategy will continue next month with the City Council before coming back to the DMCC Board in November.

Sean Baker is a Rochester journalist and the founder of Med City Beat.