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HomeMy WebLinkAboutAgenda Item 3 - Discussion on Proposed Nonprofit Capital Funding Policy and Criteria1 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: September 6, 2018 Action Agenda Item No. 3 SUBJECT: Discussion on Proposed Nonprofit Caaital Fundina Policv and Criteria DEPARTMENT: Finance and Administrative Services ATTACHMENT(S): INFORMATION CONTACT: Power Point Presentation Bonnie Hammersley, (919) 245 -2300 December 13, 2016 Agenda Abstract with Travis Myren, (919) 245 -2308 Outside Agency Policy Documents Gary Donaldson, (919) 245 -2453 Excerpt from DRAFT June 12, 2018 Paul Laughton, (919) 245 -2152 BOCC Work Session Minutes PURPOSE: To discuss a proposed County policy and criteria for providing loans to nonprofits for capital projects. BACKGROUND: At the June 12, 2018 BOCC meeting, a request was made to develop a County nonprofit capital funding policy and loan criteria. This request was based on a pending $100,000 capital campaign request from the Inter -Faith Council for Social Services, Inc. with funds earmarked from the County's Social Justice Fund. The Towns of Carrboro and Chapel Hill have not indicated any capital funding for the Inter -Faith Council to date. The proposed funding source for nonprofits that meet the County loan criteria is the Community Loan Fund. The Community Loan Fund is an existing County revolving loan fund that could be expanded and capitalized further through our annual capital financing borrowings. The use of financing proceeds to capitalize a loan fund is a permissible use of proceeds under the North Carolina statutes. The Community Loan Fund was established in FY 2012 -13 through appropriated General Fund balance appropriation of $100,000 to provide no interest loans for residents to obtain water and sewer connections. The loans to residents ranged from $3,500 to $10,000 with a maximum term of 10 years. The Community Loan Fund received additional funding of $200,000 in FY 2017 -18 from capital financing proceeds; and there is a current balance of $282,837 earmarked for loans to residents for utility connections. Staff recommends that the nonprofit loan program be capped at $500,000 annually and no individual loan to a nonprofit entity would exceed $100,000. There would be no minimum loan threshold. If the revolving loan balance remained stagnant with no borrowers over a three year period, then staff would recommend to the Board that the loan balance be repurposed for other County capital project use through a Budget Amendment. PIA The proposed nonprofit capital timeline and process would be implemented parallel to the Outside Agency Operating Budget timeline and process as indicated below: November County Posts Applications on Websites November-January Outside Agency Prepares Applications December - January Question & Answer Sessions End of January Outside Agency Applications are Due March-May Application Review & Outside Agency Presentations June Outside Agency Approval by Board July Contracts Executed & Programs Begin Nonprofits seeking a capital loan would make a formal written loan request to the County Manager by the end of November. The Department of Finance and Administrative Services has proposed the following capital funding policy and loan criteria for consideration. Proposed capital funding policy: 1) Loans Not to Exceed $100,000 and subject to available Revolving Loan Balances 2) BOCC approved loan agreement; recourse, default and nonprofit bylaw dissolution provisions 3) Loans secured by Deed of Trust 4) Revolving loan structure to recapitalize County funding source 5) Five to ten year maturities at no interest; maturity term contingent on loan amount; and monthly repayment Proposed loan eligibility criteria: 1) Current Outside Agency recipient with three -year average score of at least 85% 2) Clean Audit opinion 3) Three years Audited Financial Statements for completion of Nonprofit Financial Capacity Review The Inter -Faith Council has met the proposed loan eligibility requirements and has a three year average score of 86% from its Outside Agency applications. Nonprofit Financial Capacity Review A review of the nonprofits audited financial statements will be used to complete the Financial Capacity Review which assists in determining the nonprofits ability to repay County loans. Key performance indicators (KPI) 1) Quick (Liquidity) Ratio, 2) Debt Ratio, 3) Expense Efficiency Ratio, and 4) Operating Reserves Ratio are often used by public, private entities and financial institutions to determine financial condition and ability to repay short and long -term obligations. NONPROFIT FINANCIAL CAPACITY REVIEW TARGET KEY PERFORMANCE INDICATOR FOCUS 1. QUICK RATIO Current Liabilities 2. DEBT RATIO Total Debt Unrestricted Net Assets 3. EXPENSE EFFICIENCY RATIO Program Expenses Total Expenses 4. OPERATING RESERVES RATIO Operating reserves Total Expenses 3 2x and higher The organization's financial capability to quickly liquidate assets to meet short -term financial obligations. Not more than 15% The organization's available and unrestricted assets to meet its short -term and long -term debt obligations. Not less than 80% The organization's efficiency in fulfilling its mission through dedicated funds for program expenses. Target range of 16% to 25% The organization's capability to fund expenses with reserves due to a lack or loss of operating revenues. The below chart indicates that Inter -Faith Council has the financial capacity to repay a $100,000 County loan based on the four Financial KPI measurements. For purposes of the proposed loan eligibility criteria, a nonprofit organization that meets all four of the KPIs would successfully meet the County Nonprofit Financial Capacity Review. IFC NONPROFIT FINANCIAL CAPACITY REVIEW LL130:11 C4WAaI a1daIVirt1Z14411 ill 1idtr to] ;;&l 1. QUICK RATIO Cash, investments, and AR 2xtimes and higher 7.9 Current Liabilities 2. DEBT RATIO Total Debt Not more than 15% 7% Unrestricted Net Assets 3. EXPENSE EFFICIENCY RATIO Program Expenses Not less than 80% 81% Total Expenses 4. OPERATING RESERVES RATIO Operating reserves Target range of 16% to 25% 30% Total Expenses Source: June 30, 2017 Inter -Faith Council Audited Financial Statements FINANCIAL IMPACT: The proposed Inter -Faith Council loan of $100,000 would be funded from the Social Justice Fund. The Social Justice Fund balance is currently $328,199. If the Board approved the proposed policy and criteria for subsequent loans, then the Community Loan Fund is the staff recommended funding source and would be funded up to $500,000. SOCIAL JUSTICE IMPACT: The following Orange County Social Justice Goal is applicable to this agenda item: • GOAL: ENSURE ECONOMIC SELF - SUFFICIENCY The creation and preservation of infrastructure, policies, programs and funding necessary for residents to provide shelter, food, clothing and medical care for themselves and their dependents. RECOMMENDATION(S): The Manager recommends that the Board receive the proposed policy and criteria and direct staff on final recommendations. 5 ORANGE COUNTY A'Vol Proposed Nonprofit Capital Funding Policy and Criteria September 6, 2018 BOCC Work Session Background 0 At the June 12, 2018 BOCC Meeting Board Directed Staff to: ➢ Develop Capital Funding Policy for Nonprofits ➢ Establish Loan Eligibility Criteria for Nonprofits ➢ Determine terms for $100,000 loan to Inter -Faith Council for Social Services, Inc. ➢ No indication of funding from the Towns ➢ Identify future funding sources for Revolving Loan structure; Finance recommends Community Loan Fund ORANGE COUNTY NORTH CAROLINA 7 Community Loan Fund ➢ Established in FY 2012 -13 with $100,000 General Fund balance appropriation ➢ Provide no interest loans for Residents to make water and sewer connections ➢ Loans range from $3,500 to $10,000 with repayment terms up to 10 years ➢ Loans secured by Deed of Trust ➢ Five Loans Outstanding; Tax Office bills each of these residential parcel owners annually ➢ FY 2017 -18 additional $200,000 transferred to the fund via Budget Amendment 10 to support additional sewer connection loans ➢ Current balance in the Community Loan Fund is $282,837 ORANGE COUNTY NORTH CAROLINA Proposed Nonprofit Capital Funding Policy 1) Individual Loans Not to Exceed $100,000 and subject to available Revolving Loan Balances 2) Loan Program amount capped at $500,000; no minimum amount stipulation for a nonprofit 3) BOCC approved loan agreement; recourse, default and nonprofit bylaw dissolution provisions 4) Loans secured by Deed of Trust 5) Revolving loan structure to recapitalize County funding source 6) Five to ten year maturities at no interest; maturity term contingent on loan amount; and monthly repayments 7) Nonprofits make formal written request to County Manager by November each year to coincide with Outside Agency Process and Timelin ORANGE COUNTY NORTH CAROLINA 6C Proposed Nonprofit Loan Eligibility Criteria 1) Current Outside Agency recipient with three- year average score of at least 85% 2) Clean Audit opinion 3) Three years Audited Financial Statements to complete Nonprofit Financial Capacity Review 4) lFC Outside Agency three -year average score of 86.6% and meets proposed loan eligibility requirements ORANGE COUNTY NORTH CAROLINA 10 Nonprofit Financial Capacity Review NONPROFIT FINANCIAL CAPACITY REVIEW TARGET 1. QUICK RATIO Cash, investments, and AR 2x and higher Current Liabilities 2. DEBT RATIO Total Debt Unrestricted Net Assets 3. EXPENSE EFFICIENCY RATIO Program Expenses Total Expenses 4. OPERATING RESERVES RATIO Operating reserves Total Expenses Not more than 15% Not less than 80% Target range of 16% to 25% KEY PERFORMANCE INDICATOR FOCUS The organization's financial capability to quickly liquidate assets to meet short -term financial obligations. The organization's available and unrestricted assets to meet its short -term and long -term debt obligations. The organization's efficiency in fulfilling its mission through dedicated funds for program expenses. The organization's capability to fund expenses with reserves due to a lack or loss of operating revenues. ORANGE COUNTY NORTH CAROLINA 11 lFC Nonprofit Financial Capacity Review IFC NONPROFIT FINANCIAL CAPACITY REVIEW TARGET KEY PERFORMANCE INDICATORS 1. QUICK RATIO Cash, investments, and AR 2x times and higher 7.9 Current Liabilities 2. DEBT RATIO Total Debt Not more than 1S% 7% Unrestricted Net Assets 3. EXPENSE EFFICIENCY RATIO Program Expenses Not less than 80% 81% Total Expenses 4. OPERATING RESERVES RATIO Operating reserves Target range of 16% to 25% 30% Total Expenses Source: June 30, 2017 Inter -Faith Council Audited Financial Statements ORANGE COUNTY NORTH CAROLINA lim Outside Agency Timeline and Process November County Posts Applications on Websites November - January Outside Agency Prepares Applications December - January Question & Answer Sessions End of January Outside Agency Applications are Due March -May Application Review & Outside Agency Presentations June Outside Agency Approval by Board July Contracts Executed & Programs Begin Proposed Nonprofit Capital Funding Timeline and Process would parallel above process ORANGE COUNTY NORTH CAROLINA Questions /Next Steps 13 ORANGE COUNTY NORTH CAROLINA 14 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: December 13, 2016 SUBJECT: Financial Policv for Outside Aae DEPARTMENT: Finance and Administrative Services ATTACHMENT(S): Attachment 1: DRAFT Outside Agency Funding Financial Policy Attachment 2: Bond Counsel Communication NOTE: THIS ITEM WAS DELAYED FROM CONSIDERATION AT THE DECEMBER 5, 2016 BOARD OF COMMISSIONERS MEETING. Action Agenda Item No. 7 -c Fundin INFORMATION CONTACT: Bonnie Hammersley, (919) 245 -2300 Gary Donaldson, (919) 245 -2453 PURPOSE: To establish a financial policy for Outside Agency Funding that provides guidance on the appropriation of County funds to the non - profit community, with the scope of the policy establishing funding targets and criteria. BACKGROUND: Each year as a part of the budget process, Outside Agencies' applications and scorecards are provided to the County Manager to assist in recommending funding decisions as part of the Manager's Recommended Budget. The Board of County Commissioners then approves funding as part of the Budget Adoption process in June of each year. November 2016 Work Session Following a presentation and work session on November 10, 2016, the Board of County Commissioners directed staff to develop a financial policy which specifies the funding methodology for funding Outside Agencies. The following five funding scenarios were presented; 1) Percent of Budget 2) Previous Year's Allocation as Base 3) Incremental Unit of Tax Rate 4) Dollars Per Capita 5) Fixed Dollar Amount 15 The percent of budget methodology was determined to be the most appropriate funding option for the County. The County has historically funded Outside Agencies at 1% of the County Budget (Less the Education Appropriation). The BOCC directed staff to increase the funding target from 1% to 1.2 %. Based on the FY 2016 -17 Approved Budget (Less the Education Appropriation), 1 % equates to $1,121,467 and 1.2% equates to $1,345,761. The work session included discussion on the merits of capital funding as part of Outside Agency Funding. The general sentiment was that the financial policy be primarily for funding operating expenses, but that there may be an exception for BOCC consideration. The financial policy provides guidance for a capital funding exception (Attachment 1). FINANCIAL IMPACT: The policy will generate additional expense of approximately $200,000 based on FY2016 -17 Adopted budget compared to the current 1 % allocation. SOCIAL JUSTICE IMPACT: The following Orange County Social Justice Goals are applicable to this agenda item: • GOAL: FOSTER A COMMUNITY CULTURE THAT REJECTS OPPRESSION AND INEQUITY The fair treatment and meaningful involvement of all people regardless of race or color; religious or philosophical beliefs; sex, gender or sexual orientation; national origin or ethnic background; age; military service; disability; and familial, residential or economic status. • GOAL: ENSURE ECONOMIC SELF - SUFFICIENCY The creation and preservation of infrastructure, policies, programs and funding necessary for residents to provide shelter, food, clothing and medical care for themselves and their dependents. • GOAL: ENABLE FULL CIVIC PARTICIPATION Ensure that Orange County residents are able to engage government through voting and volunteering by eliminating disparities in participation and barriers to participation. RECOMMENDATION(S): The Manager recommends that the Board review and approve the Outside Agency financial policy. Attachment 1 Financial Policy Outside Agency Funding 0 Orange County provides grants to outside agencies to perform a variety of services for Orange County residents. On annual basis, the County will target 1.2% of the County's General Fund expenditures, less the appropriation for education expenses, for the purpose of funding outside agency operations. The education appropriation includes funds allocated to fund current expenses, recurring capital, long range capital, health and safety contracts, school debt service, and funds provided to the Durham Technical Community College. The County Manager shall design an outside agency application and scoring process. This process will be used to evaluate outside agency applications and make recommendations to the Board of Orange County Commissioners on individual outside agency grant awards. A brief justification will be available to the Board of Commissioners to explain the County Manager's recommendations. Outside agency grants shall be used to fund an agency's operating expenses. These operating expenses may include personnel, contracted services, debt or loan payments, or other expenses related to the day to day operations of the agency. The County will not provide capital grants to outside agencies for the purpose of financing facility acquisition or construction, including contributions to capital campaigns. Exceptions to this general policy include the acquisition or construction of a facility owned or leased by the County for the purpose of providing space to outside agencies or space provided to outside agencies that were initiated by or originated as programs of County government. The Board of Commissioners may also consider capital funding request that include a repayment feature. The terms and conditions of this repayment would be approved by the Board of Commissioners in a formal agreement between the County and the outside agency. 17 SanfordHolshouser www.Sanfordholshouserlaw.com October 31, 2016 Orange County — capital funding for outside agencies There are a variety of ways in which the County could provide capital funding for outside agencies if it decided to do so. In each case, the legal basis for our approach represents a combination of the statute that allows the County to contract with private entities to carry out work that the County could carry out itself (Section 153A -449), and the statute that allows the county to enter multi -year continuing contracts for services (Section 153A -13). In many ways, these approaches mirror approaches used for affordable housing programs in which the units will be privately owned. Build a building, lease it out long -term The County would build a building for use by the agency. The County would continue to own the building. The County could either pay cash for the building or undertake an installment financing for the building (whether the financing would qualify for tax - exempt financing or would require more expensive taxable financing would have to be determined at that time). The lease could either require a cash payment or provide that the use of the building is part of the County's consideration for the services to be provided by the agency. Matters of maintenance, taxes and insurance would also have to be resolved in connection with the lease. The construction of the building would likely be subject to the construction and bid laws otherwise applicable to County projects. As an alternative, the County could establish a nonprofit corporation of its own to undertake the financing and construction, although the lenders would still look to the County to make the loan payments, and the construction and bids laws would likely still apply. Make a restricted capital grant The County would use cash on hand to make a larger than usual grant that the agency could use for a capital expense. The performance agreement would restrict the use of the funds for the planned capital expense, and would extend for a term W- SanfordHolshouser www.Sanfordholshouserlaw.com commensurate with the size of the grant. Because County money would be the intended source for the payment of the construction costs, the construction of the building would likely be subject to the construction and bid laws otherwise applicable to County projects. Make a multi -year grant that could be used for lease or loan payments The outside agency would contract for a capital project, and the County would enter a multi -year grant agreement that was sized to provide for the agency's lease or loan payments related to the project. Fund a loan -loss reserve to back loans to the outside agencies. As the County has done with its business loan programs, the County could fund a loan -loss reserve to support loans incurred by the outside agencies. Considerations for all approaches The function to be served by the outside agency must be a function the County is authorized to provide directly. Each arrangement should be supported by a contract with the outside agency that specifies the work to be done by the agency. If the County uses a multi -year grant approach, then the contract should extend for the term of the grant. If the County uses a lease approach, then the performance contract should extend for the term of the lease. There should in all events be some level of proportionality between the funding from the County and the service by the agency. In undertaking any program of this sort, the County should build a strong record documenting the public benefit expected from the arrangement. To the extent the County views the project and benefitting agencies as enhancing employment and business prospects in the County, the County would be well- served to also follow the statutory procedures (including public hearings) provided for in the business incentive statutes. * * * * * * * * * * * * * ** Please let me know if you have any questions for me. Thanks, as always. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 19 DRAFT MINUTES ORANGE COUNTY BOARD OF COMMISSIONERS BUDGET WORK SESSION June 12, 2018 7:00 p.m. The Orange County Board of Commissioners met for a budget work session on Tuesday, June 12, 2018 at 7 p.m. at the Whitted Human Services Center in Hillsborough, N.C. COUNTY COMMISSIONERS PRESENT: Chair Dorosin and Commissioners Mia Burroughs, Barry Jacobs, Earl McKee, Mark Marcoplos, Renee Price and Penny Rich COUNTY COMMISSIONERS ABSENT: None COUNTY ATTORNEYS PRESENT: None COUNTY STAFF PRESENT: County Manager Bonnie Hammersley, Deputy County Manager Travis Myren, and Clerk to the Board Donna Baker (All other staff members will be identified appropriately below) Chair Dorosin called the meeting to order at 7:02 p.m. Discussion of the FY 2018 -19 Operating Budget (PowerPoint Presentation) • Funding Decisions on the Operating Budget Amendment List • Funding Decisions on the Other Funds Budget Amendment List Travis Myren noted the following items at the Commissioners' places: - Blue sheet: summary amendments - Purple sheet: special revenue fund amendment - Peach sheet: CIP amendments Travis Myren made the following PowerPoint presentation: Intent to Adopt Budget Work Session June 12, 2018 Whitted Meeting Facility Decision Points 1. FY2018 -19 Operating Budget • Consider and Approve Amendments to the County Manager's Recommended Operating Budget (General Fund • Consider and Approve Amendments to Other Funds • Consider and Approve School Funding for Current Expense and Deferred Maintenance for Chapel Hill - Carrboro City Schools and Orange County Schools 2. FY2018 -23 Capital Investment Plan (CIP) • Consider and Approve CIP Amendments • Accept the FY2018 -23 Capital Investment Plan and Approve Capital Funding for FY2018 -19 3. FY2018 -19 County Fee Schedule • Consider and Approve County Fee Schedule 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 20 2 4. FY2018 -19 Tax Rates Consider and Approve the Ad Valorem Tax Rate Consider and Approve the Chapel Hill - Carrboro City Schools Special District Tax Consider and Approve the County Fire District Tax Rates 5. Break 6. Resolution of Intent to Adopt • Consider and Approve the Resolution of Intent to Adopt the FY2018- 19 Operating Budget at the Board of County Commissioners Regular Meeting on June 19, 2018 FY2018 -19 Operating Budget Operating Budget Amendment #1 (General Fund) Provide Funds For IFC Capital Campaign — Current Policy on Outside Agency Capital Funding — Request is for $100,000 per Year for Three (3) Years — Funding Source — Other Post Retirement Employment Benefits - $485,000 in Manager's Recommended Budget — Letter from Inter -Faith Council — Zero Interest Loan Program - Feasible Chair Dorosin said he looked at the Board of County Commissioners' (BOCC) policy, and he would still support this amendment. He said he believes this would be a reasonable amendment for the Board to make, and fits squarely within the scope of the County to provide for, and this falls within an exception to the policy. Commissioner Price reiterated Chair Dorosin's comments, and said the Board can revise the policy, if necessary, but she thinks this amendment fits within the policy as currently written. Commissioner Marcoplos said this is an undoubtedly worthy project, and does serve a lot of people in the County. He said the policy is a bare bones statement that says the County will not award capital money, and does not incorporate ways for the Board to engage with projects that want some capital funding from the County. He said this particular project does not need the money right now, and he proposed that the Board revisit this policy some time in the fall, or at the retreat, to talk about setting up a policy that works, and can be understood by all. Commissioner Rich said she fought against this policy, the last time it was discussed, as she wanted to support the Rape Crisis Center in its capital funding; and, at that time, she asked if exceptions could considered, and Gary Donaldson, Chief Financial Officer, said yes. She read an excerpt from previous BOCC minutes, highlighting her desire to find exceptions to this policy, and the BOCC voted against her request at that time. She said all of these agencies are doing important work, and it is unclear to her how the Board can decide to fund one agency over another. Commissioner Rich said she liked the suggestion of discussing this policy further, at a later date. She said she cannot support this amendment, as two similar requests were denied last year, and it seems unfair to now fund this one. Commissioner Jacobs said he agreed with Commissioner Rich and Commissioner Marcoplos, and if the Board agreed to the request, it would be committing a lot of funding up front, without ever inviting other entities to apply, regardless of the merits of IFC's proposal. He said if the BOCC is going to fund capital projects, there needs to be criteria; and if the funding 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 21 is above a certain cost, the Board may want to require value engineering. He asked if staff would bring back talking points in the fall. Commissioner McKee said this policy needs more in depth discussion, and he still has concerns about how the Board controls the amount it provides. He endorsed what Commissioner Marcoplos said about bringing this item back in the fall or at the Board retreat. Commissioner Burroughs agreed with all that has been said. She said staff may want to consider over the summer about having non - profits demonstrate that owning is better than renting. She asked what would happen if the non - profit were to sell a building, in relation to the amount of money invested by the County. She said she remembered the past discussion, and the Board must be fair. Commissioner Price said she would like to consider partnerships between the County and non - profits. She said she wanted to support this in order to begin the conversation. Commissioner Jacobs said if the Board is going to consider funding a kitchen, then it is important to recall that the County has a policy that a certain percent of the food it serves needs to be locally grown; and this may be one of the strings the County wishes to attach to any funding. Chair Dorosin asked Commissioner Marcoplos and Bonnie Hammersley if they had talked with IFC about the ramifications of the Board not providing an answer this evening. Commissioner Marcoplos said he had not spoken with IFC. Bonnie Hammersley said there is a copy of an email at the Commissioners' places from Robert Dowling, Community Home Trust Executive Director. She said she spoke with him about funding, as well as the possibility of an interest free loan. She said staff can continue to talk with the IFC about partnering, From: Robert Dowling fmailto: rdowling (a-)_communityhometrust.org] Sent: Monday, June 11, 2018 5:31 PM To: Bonnie Hammersley Cc: Jackie Jenks; kevincfoy(cbprotonmail.com Subject: RE: Information Needed Hi Bonnie, First, I want to let you know that we are grateful for your support in trying to identify a way forward. Not every County Manager would have done that. We are also very grateful for Commissioner Dorosin's willingness to assist IFC. And ideally, if four commissioners will agree, we would love for the County to grant funds to FoodFirst. However if it's not possible to obtain approval for a grant, a zero - interest loan would be helpful. But as you know Bonnie, a loan does not contribute to the $5.3MM needed to build FoodFirst. A zero - interest loan would be useful if our financial pledges come in more slowly than we expect. It would be even more useful if the County would forgive any amounts outstanding two years after completion of construction. That way, IFC would not be burdened with a repayable loan, even if some pledges are never collected. I hope this is an adequate response for your discussion tomorrow evening. Please let me know if you have questions. Thank you again Bonnie for your support of FoodFirst. Robert Robert Dowling 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 M Executive Director Community Home Trust PO Box 2315 Chapel Hill, NC 27515 919 - 967 -1545 ext. 307 WA Commissioner Price asked if the IFC were going to leverage grants next year. Bonnie Hammersley said she and Chair Dorosin met with the leaders of the capital campaign who said the level of funding commitments needed to reach a certain level before they start leveraging grants. Chair Dorosin said there is the option of a zero percent loan, and if the Board were in support of one, it could start with this, and could possibly convert it to grant funding, or a forgivable loan, after further discussion. He said he does not want the Board's decision to have an adverse effect on the IFC tonight. Commissioner McKee said a forgivable loan is the same as a grant. Chair Dorosin said the Board could put some conditions on it, such as forgiving the loan if IFC fails to raise the additional funding after a certain time period. He said if IFC could raise the money than it would pay back the loan. Commissioner McKee said he is concerned about going down that path, and if the Board is going to provide a grant then that should be done from the get go. He said loans that are potentially forgivable are always forgiven. He said the Board put the policy in effect, and it does not need to do a work around tonight without having further discussion. He said there are too many agencies that would want, and be worthy of, this same treatment. Commissioner Jacobs said he would be more comfortable if staff would bring back some criteria of what the zero interest loans would look like at the next BOCC meeting on 6/19. He said he would be inclined to give IFC one third of what it is asking for. He said the County should not go into this thinking it will waive the amount of the loan, since it makes it psychologically harder for IFC to raise funds. Chair Dorosin said he likes the idea of a matching grant, as opposed to outright cash without conditions. Commissioner Burroughs said she agreed with Commissioner Jacobs about the psychological impact on fundraising when knowing a loan can be potentially forgiven. She said she still supports discussing this topic further in the fall. Commissioner Rich asked if any other local government entities have committed to the IFC campaign. Bonnie Hammersley said the Town of Chapel Hill received a request, which she thinks the Town is honoring, but she will find out. Jackie Jenks, IFC, thanked the Board for even considering this item, and said the IFC is working with Chapel Hill on a potential funding source. Commissioner Rich asked if those funds would be a grant or loan. Jackie Jenks said a grant. Chair Dorosin asked if the Town of Carrboro has made a commitment. Jackie Jenks said IFC has not received a commitment from Carrboro, but the Town has offered to waive some fees and the IFC may share its parking with the Town. Chair Dorosin asked if there was a timeline in place. Jackie Jenks said IFC would like to start construction a year from now, but would need to have all of the funds committed in advance, and the IFC is looking to get the $5.3 million secured soon. She said the IFC has surpassed the 50% mark, which was needed in order to apply for some funding from various foundations. She said a loan will not help IFC reach the $5.3 million required to build, but IFC would consider it as a bridge loan allowing for 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 23 construction to begin, and repayment to occur in years 2 and 3. She said if pledges are made, but not received, IFC would ask that this portion of the loan be forgiven. Chair Dorosin said there is consensus to review the policy in the fall, and asked if the Board would accept leaving the no interest loan on the table, in order to get more information from staff on the 19th. He said if the Board does not do a loan, then the $100,000 can go to the reserve. Bonnie Hammersley said the Board can park the monies in the social justice fund, which is at $250,000 in the budget. A motion was made by Commissioner Marcoplos, seconded by Commissioner Price to revisit this policy in the fall, and to add the zero interest loan criteria item tentatively for the June 19th meeting. Commissioner Price asked if Commissioner Marcoplos meant to discuss this at a work session in the fall or at the retreat in January 2019. Commissioner Marcoplos said the fall. Commissioner Rich said the loan part sounds too open to her, and asked if the vote could be split into two motions. Chair Dorosin said yes, and the first vote would be to discuss the policy at a work session as early as possible in the fall. VOTE: UNANIMOUS A motion was made by Chair Dorosin, seconded by that the Board will put aside $100,000 in the social justice fund to be earmarked for a zero interest loan with staff bringing back the criteria will work for the repayments and terms on June 19, 2018. Travis Myren said the policy states that staff would negotiate the terms with the applicable outside agency, but staff can bring a general framework. Commissioner Rich asked if this is $100,000 over three years, or $100,000 per year, for three years. Chair Dorosin said he was thinking it would be $100,000 for this year. Bonnie Hammersley said she would assume this would be reviewed each year. Chair Dorosin said to do this for a year, have the policy discussion and then re -visit this at next budget cycle as a loan or something else. Commissioner Rich asked if this is part of the motion. Chair Dorosin said yes. Commissioner Rich said she has questions about possibly forgiving the loan. Chair Dorosin said that is not part of the discussion now. Commissioner Rich said the Board is talking about the loan and voting now, and asked if the Board is committing to making the loan this evening. Commissioner Price said no, not until next week after staff brings back information. Bonnie Hammersley said moving the funds from the social justice fund would be a simple budget amendment, and can be done at any time during the year. Bonnie Hammersley asked if more clarification would be provided on what the Board seeks from staff next week. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 ME Chair Dorosin said the Board wants to know the repayment terms, when the repayment starts, the number of payments, etc. Bonnie Hammersley said staff would need to negotiate that with IFC, and she is not sure that can be accomplished by next Thursday. Commissioner Jacobs said the Board would also want default terms. He said the Board may want to put funds into social justice fund until the fall, and invite the other two entities that are running capital campaigns into the discussion to see if they are interested in zero interest loans or grants. Commissioner McKee said in his opinion the Board just voted to revisit this in the fall, but is now trying to do a work around. He said the Board should vote now on an interest free loan or grant, or wait until the fall to do anything at all. He said policies exist for a reason. Commissioner Burroughs asked if the Board can get money out of the Other Post Employment Benefits (OPEB) at anytime. Bonnie Hammersley said no, the funds need to be moved into the social justice fund, if the Board wishes to access them. She said once the funds go in to OPEB, the Board cannot get them back out. Commissioner Burroughs said she appreciates Commissioner McKee's concerns, but said putting money aside allows the possibility of taking action in the fall. Chair Dorosin said the "work around" is an attempt to incorporate everyone's comments. Commissioner Burroughs said this is not a work around, but is putting money in a place until the Board decides what it wants to do with the policy in the fall. Commissioner Price agreed with Commissioner Burroughs. Commissioner Marcoplos also agreed. A revised motion was made by Chair Dorosin, seconded by Commissioner Rich, to move the $100,000 to the social justice fund pending review of the policy change in the fall. Commissioner McKee said he will park his reservations until then. Commissioner Jacobs apologized for not paying attention to Commissioner Burroughs' earlier comments. VOTE: UNANIMOUS