GOAL 4 – ADDRESS SPECIFIC ISSUES/OPPORTUNITIES TO BUILD ADDITIONAL ECONOMIC DEVELOPMENT CAPACITY
SPREDD’s mission is to build capacity for economic development leading to economic growth in the six municipalities of Southern Puerto Rico. In order to achieve that growth, there are several initiatives that should be undertaken. These are separate but interconnected, as most growth efforts are, and though independent, should be addressed by leadership as an interdependent ecosystem.
LEAD DEVELOPMENT OF MICROGRIDS FOR MORE RELIABLE ELECTRIC POWER
As documented in the SWOT analysis, electric power is both expensive and unreliable. One answer is to establish microgrids that can be more effectively managed, and that can help move Puerto Rico from generation using coal and crude oil to solar, wind, wave, and other forms of clean energy production. This can also reduce the cost of electricity as well. The levelized cost of energy generated by large scale solar plants is around $0.068/kWh, compared to $0.378 in 2010, according to the International Renewable Energy Agency. Implementation of a microgrid or other alternative system for the SPREDD region may be aided by American Recovery Act and/or Rebuild America Act (still in Congress) funding. Collaboration with Puerto Rico government and Federal government agencies will be a necessity.
TIMELINE: Conversion of 50% of the SPREDD region to alternative forms of electric power should be accomplished by September 30, 2025.
PURSUE ADDITIONAL PASSENGER AND AIR CARGO FLIGHTS/ROUTES FOR MERCEDITA AIRPORT
Mercedita airport in Ponce has potential to grow significantly if the right opportunities are pursued. A white paper drafted by ERSF contract support and FEMA ERSF mission support outlines these opportunities, including:
- Regional air cargo—Mercedita has an 8,000 ft. runway, but due to both natural and manmade obstacles, only 6,000 ft. is usable. This length limits both larger passenger and larger air cargo landings. However, smaller cargo jets such as the Boeing 757, 737-100, and Airbus A-318 can safely operate there.
- Passenger flights—Both of the above mentioned medium sized jets in passenger configuration, plus commuter jets such as the Bombardier CRJ series, can safely operate. Currently there is only one daily flight serving the airport, and it lands and departs in the 3 am timeframe. SPREDD should lead a concerted effort to add additional passenger flights, including offering incentives to draw new airlines and/or new flights.
TIMELINE: These initiatives should be launched no later than December 1, 2021.
SUPPORT ENTREPRENEURSHIP PROGRAMS
While currently there are efforts underway to stimulate entrepreneurship in the region, the advent of new opportunities such as the Blue Economy initiative should cause an examination of current programs and possible development of new ones. Teaching Entrepreneurship could start in primary and secondary education. The National Foundation for Teaching Entrepreneurship (www.nfte.com) provides a well-established program to integrate entrepreneurship into both, plus provides support for teaching outside the classroom, and for adults. Organizations such as NFTE can provide additional offerings for start-up and acceleration focused on transformative industries such as the Ocean Economy, and a strategy to attract venture funding containing features of best practice models should be initiated immediately. The Inter-American Development Bank guide to Best Practices in Creating a Venture Capital Ecosystem can provide a blueprint for such a strategy-(https://publications.iadb.org/publications/english/document/BestPractices-in-Creating-a-Venture-Capital-Ecosystem.pdf).
TIMELINE: This initiative should be launched no later than February 1, 2022.
SUPPORT A CENTER OF INNOVATION TO LINK UNIVERSITY RESEARCH WITH BUSINESS AND INDUSTRY
To support effective technology transfer mechanisms and increase commercialization of university research by business and industry, including startups, a Center of Innovation should be established. The Federal Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs (https://www.sbir.gov/funding) provide funding for technology transfer centers through periodic solicitations. Several agencies, including Department of Energy, National Institutes of Health, and National Science Foundation periodically offer grant funding for centers for technology development and commercialization. SPREDD should develop a business plan for a regional Center of Innovation to be prepared to apply for funding to establish and operate such a 35 Center, in partnership with universities in the region.
TIMELINE: SPREDD should complete the business plan by June 30, 2022 and plan to have the Center in operation by June 30, 2024.
DEVELOP CAPITAL ACCESS STRATEGIES (SBA 504, SBA MICROLOAN, CDFI, ANGEL INVESTOR NETWORKS)
Critical to building economic development capacity is access to capital by businesses at all phases of growth, from start-up to mature status. SPREDD will implement this initiative through both direct and indirect programs, as follows:
- SBA Certified Development Company/504 Fixed Asset Financing Program One popular program many EDDs administer is the SBA =504 program (https://www.sba.gov/funding-programs/loans/504-loans). The CDC/504 Loan Program provides long-term, fixed rate financing of up to $5 million for major fixed assets that promote business growth and job creation. SBA 504 loans are available through Certified Development Companies (CDCs), SBA’s community-based partners who promote economic development within their communities. CDCs are certified and regulated by the SBA. Funding for loans is provided directly by SBA, so there is no need for SPREDD to raise capital for these loans. There are underwriting and servicing requirements, and SBA provides a servicing fee to CDCs.
TIMELINE: SPREDD should consider this program and if it decides to move forward, should submit an application to SBA by August 31, 2022.
- SBA Microloan Program Another popular lending program is the SBA microloan program, which provides loans up to $50,000 to help small businesses and certain not-for-profit childcare centers start up and expand. The average microloan is about $13,000. The SBA provides funds to specially designated intermediary lenders, which are nonprofit community-based organizations with experience in lending as well as management and technical assistance. These intermediaries administer the Microloan program for eligible borrowers. To be eligible as an intermediary, SPREDD must have at least one year of lending experience and have the capacity to administer the program (https://www.sba.gov/document/support–how-become-microloanintermediary).
TIMELINE: Due to the lending experience requirement, SPREDD should not apply before January 31, 2023, or when it can demonstrate one year of lending experience.
- Community Development Financial Institution (CDFI) Program Many automatically think of New Markets Tax Credits, the largest CDFI program initiative, that is incredibly competitive and has significant barriers to entry. However, the CDFI grant and technical assistance funding programs, while still given on a competitive basis, can be a good source of funding for lending and technical assistance programs. The CDFI Program (www.cdfifund.gov ) offers both Financial Assistance and Technical Assistance awards to CDFIs. These competitive awards support and enhance the ability of these organizations to meet the needs of the communities they serve. Financial Assistance awards are made in the form of loans, grants, equity investments, deposits, and credit union shares, which CDFIs are required to match dollar-for-dollar with non-federal funds. This requirement enables CDFIs to multiply the impact of federal investment to meet the demand for affordable financial products in economically distressed communities. Technical Assistance grants are offered to CDFIs and Certifiable CDFIs (see eligibility below) to build their organizational capacity.
TIMELINE: SPREDD should explore becoming a Certified Development Entity, the first step toward CDFI funding, and then consider applying for either/both matching loan/grant/equity and technical assistance grants and decide by February 28, 2023.
- Angel Investor Network(s) Focusing regional wealth on new venture creation has been successfully implemented in many regions. In fact, angel investors support up to 90% of outside equity raised by startups (after friends and family). Angel networks provide start-ups with seed capital through accredited investors who come together to jointly invest, spreading risk for them and allowing greater opportunity for entrepreneurs. The Angel Investor Network (https://www.angelcapitalassociation.org/) an industry association of over 250 angel investor networks, can provide guidance on structuring a successful network.
TIMELINE: SPREDD should develop a Southern Puerto Rico angel network and have it in place by September, 2022.
FUTHER DEVELOPMENT OF TOURISM, ARTS/CRAFTS, AND ENTERTAINMENT INDUSTRIES (CRUISE SHIPS)
Tourism is a mainstay of the SPREDD region. Each Municipality has compelling food, hospitality, historic sites, lodging and amenities, plus activities such as ocean-related and experiential/ecological tourism. Puerto Rico has an advantage in that it is a unique part of the United States, and there are no international barriers for U.S. Citizens. Southern Puerto Rico should fully capitalize on this opportunity, through advocacy for the region with destination marketing organization Discover Puerto Rico and the Puerto Rico Tourism Company. SPREDD should also work with the Municipalities and the tourism industry in seeking federal funding to upgrade facilities Sustainable tourism, including experiential tours in which participants help restore and protect ecosystems, is increasing rapidly. A 2018 report by the Organization for Economic Cooperation and Development provides guidance on how to attract financing and investment in this fast-growing segment: //www.oecd-ilibrary.org/docserver/tour-2018- 7en.pdf?expires=1619027621&id=id&accname=guest&checksum=2B0490C0CA153E27D4DF0512AD7 70D3F.
TIMELINE: SPREDD should begin implementation of this initiative no later than November 1, 2021.
HAVE A ROBUST WORKFORCE TRAINING PROGRAM AND TALENT RECRUITMENT INITIATIVES READY WHEN NEEDED
Rapid changes in technology and new ways of doing business already underway before COVID19, and accelerated greatly by the pandemic, make real time skill development critical for keeping workforce at optimum productivity. No longer is it enough to implement stagnant programs that train people for jobs that could be obsolete by the time they complete training. A new approach is needed, one that can be quickly implemented in real time to ensure training is literally up to the minute. By staging and continuously updating curriculum, institutions of higher learning will be ready when demand increases. This “flex-skills” approach is revolutionary in that it won’t train people in skills that may either be obsolete or may not be needed in Puerto Rico, causing outmigration to the continental United States.
TIMELINE: SPREDD should begin working with education and training institutions to implement flex-skills by May 31, 2022.
IMPROVE INFRASTRUCTURE THROUGH GRANTS AND PPPs; CREATE A ROBUST INVENTORY OF BUILDINGS AND SITES
Though SPREDD is not being created to recruit new investment and jobs, it will be responsible for providing improved infrastructure through federal grants and work with the Puerto Rico Public Private Partnership Authority to bring the region’s infrastructure to standard. The first step to that goal is to complete a prioritized assessment of infrastructure needs and begin seeking grant funding for their repair. As that initiative begins in earnest, SPREDD should then begin a comprehensive inventory of available buildings and sites for economic development organizations (EDOs) in the region, focusing on ensuring available buildings are fit for use, and documenting deficiencies so that EDOS are aware of those needs.
TIMELINE: SPREDD should begin the infrastructure assessment immediately and complete an initial 37 version by June 30, 2022, with full implementation of both infrastructure and building/site inventory by June 30, 2023.
DEVELOP A STRATEGY FOR UNIVERSAL BROADBAND ACCESS AND UTILIZATION PLUS CYBERSECURITY TRAINING
Access to broadband technology has continually increased in importance over the past two decades, and COVID19 exponentially accelerated the need for universal broadband access. That fact, along with the advent of cyberattacks and cybercrime, have created a pressing need for businesses to have access to and effectively utilize broadband and be trained in cybersecurity. As new industries emerge, the need for access and training will continue to increase. SPREDD will implement an initiative in partnership with business leadership to increase broadband access through both federal funding and public private partnerships, and work with capacity-building organizations such as the nonprofit Intelligent Community Forum (https://www.intelligentcommunity.org/), and implement cybersecurity training through training organizations such as Cybersecurity Non-Profit (https://www.csnp.org/ ).
TIMELINE: SPREDD should launch this initiative by December 31, 2022.