Fontana offers loans to attract businesses to its downtown

Fontana has launched a loan program that city officials hope will help revive its downtown.

The Downtown Revitalization Loan Incentive Program will encourage private investment in downtown Fontana, and strengthen the businesses that are already there, according to an introduction to the program on the city’s website.

The program’s goal is to speed up the effort to make downtown Fontana a popular place for businesses, entertainment, and community gatherings. Improvements will include better public infrastructure, streetscape upgrades, mixed-use development and more parking spaces.

Fontana can trace the demise of its downtown, to the closing of the Kaiser Steel Mill in 1984. That event, caused mostly by foreign competition and outdated facilities, cost Fontana and much of the Inland Empire thousands of well-paying blue-collar jobs.

As a result, hundreds of families and businesses left Fontana, an event that haunts the city to this day.

Reviving Fontana’s downtown will be a major undertaking, according to Mayor Acquanetta Warren.

“We’ve been considering dong this for awhile,” Warren said of the program, which is accepting applications. “Right now the market is soft, interest rates are up, and people are afraid to make a move. But we have to do something, and we already have a similar program for the entire city.

“Why not do one for downtown, where we have two parking structures?”

The program provides forgivable loans of up to $150,000, with eligibility based on several factors:

• The business must have been operating for no more than three months;
• It must have fewer than seven locations;
• The applicant must be the owner, lessee of record, or the pending lessee of the property where the business is, or will be, located;
• The business must be part of the Forge District, the official name of the pedestrian-friendly, mixed-use and entertainment district centered along Sierra Avenue and Arrow Boulevard. Forge District refers to the city’s years as a steel producer.

City-owned properties and buildings are not eligible for loans, which will be given out on a first-come, first-served basis. All loans must be approved by the city council.

A loan will help a new business get off to a strong start.  As long as it remains open, 20 percent of the loan will be forgiven each year, which will allow it to be paid off in five years, according to the program’s outline.

Only a few other California cities provide a financial incentive to businesses to locate in their downtown. Two of them are in the Inland Empire.

Beaumont offers loans of up to $150,000 that are meant to get restaurants, retail, and entertainment to set up shop along the Beaumont Avenue and 6th Street corridors. Those loans can be forgiven after five years, according to the city’s website.

Ontario provides $150,000 loans for businesses that set up shop along Euclid Avenue, one of the city’s strongest business thoroughfares. The money is intended to cover start-up costs, including equipment, permits, and fees.

The Downtown Ontario Restaurant Equipment Loan program offers up to $20,000 for the purchase of cooking and cooling equipment. It is designed to help breweries, wineries, and distilleries.

Ontario’s Downtown Storefront Façade Improvement Program provides grants of up to $25,000 for improvements to a business’ outdoor property.

Much of Fontana’s downtown loan program is based on Ontario’s, said Phil Burum, Fontana’s deputy city manager.

“We couldn’t come up with a plan, but Ontario had just approved one, so we based ours on that,” Burum said. “Obviously our program is designed for Fontana, but you could say it borrows heavily from Ontario’s plan.”

Fontana’s downtown loan program is expected to last three to seven years.

“We’re trying to attract people who want a shot at running a successful business,” said Burum, who spent more than 20 years as a developer before entering the public sector. “We’re trying to help alleviate the risk. We hope that some restaurants will open now, instead of having to wait three years for them to open.”

Because most business owners will want to purchase smaller items like appliances and fixtures, and the average business space size will be between 1,000 and 2,000 square feet, the typical loan size is expected to be between $70,000 and $100,000.

“I don’t think we’re going be giving out many $150,000 loans,” Burum said.

Five to 10 businesses are expected to have submitted loan applications within the next month or so, Burum said,.

A city will revive its downtown for a number of reasons, including recovering lost tax revenue, attracting residents, or replacing empty office space. Creating more foot traffic is always a top priority, as downtown is a natural spot for for offices, theaters, shops, hotels, and eateries, all of which generate revenue.

But reviving any downtown is difficult, whether it’s a city the size of Los Angeles or smaller city like Fontana, which has a population of 221,200.

High upfront costs, weak infrastructure, strict building codes, and not enough room for parking are some of the issues cities face when trying to revive their downtown.  Once those obstacles are cleared, any business that locates there must compete with malls, where it’s easier to park, and e-commerce, which is more convenient.

Convincing a business to sign a lease can be the most difficult part of the process.

“For the owner, the financial risk involved is terrifying,” Burum said, “You’re asking them to spend maybe $200,000 of their life savings, or more, on something that’s very risky. We think it will help them make up their mind if we deliver something for them.”