HomeMy WebLinkAboutAgenda - 09-20-2018 6-b - Discussion on Proposed Nonprofit Capital Funding Policy and Criteria 1
ORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: September 20, 2018
Action Agenda
Item No. 6-b
SUBJECT: Discussion on Proposed Nonprofit Capital Funding Policy 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 Approved June 12, 2018 Paul Laughton, (919) 245-2152
BOCC Work Session Minutes
PURPOSE: To discuss a proposed policy and criteria for providing loans to nonprofits for capital
projects and provide direction to staff.
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.
2
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.
3
NONPROFIT FINANCIAL CAPACITY REVIEW
TARGET KEY PERFORMANCE INDICATOR FOCUS
1.QUICK RATIO
Cash,investments,and AR 2x and higher The organization's financial capability to quickly liquidate assets to meet short-term financial obligations.
Current Liabilities
2.DEBT RATIO
Total Debt Not more than 15% The organization's available and unrestricted assets to meet its short-term and long-term debt obligations.
Unrestricted Net Assets
3.EXPENSE EFFICIENCY RATIO
Program Expenses Not less than 80% The organization's efficiency in fulfilling its mission through dedicated funds for program expenses.
Total Expenses
4.OPERATING RESERVES RATIO
Operating reserves Target range of 16%to 25% The organization's capability to fund expenses with reserves due to a lack or loss of operating revenues.
Total Expenses
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
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 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 approves a 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 discuss a proposed policy
and criteria for providing loans to nonprofits for capital projects and provide direction to staff.
4
AdomR
C)RANGE COUNTY
NORTH CAROLINA
Proposed Nonprofit Capital Funding
Policy and Criteria
September 20 , 2018
BOCC Regular Meeting
5
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
6
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
7
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
S
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
9
Nonprofit Financial Capacity Review
NONPROFIT FINANCIAL CAPACITY REVIEW
TARGET KEY PERFORMANCE INDICATOR FOCUS
1.QUICK RATIO
Cash,investments,and AR 2x and higher The organization's financial capability to quickly liquidate assets to meet short-term financial obligations.
Current Liabilities
2.DEBT RATIO
Total Debt Not more than 15% The organization's available and unrestricted assets to meet its short-term and long-term debt obligations.
Unrestricted Net Assets
3.EXPENSE EFFICIENCY RATIO
Program Expenses Not less than 80% The organization's efficiency in fulfilling its mission through dedicated funds for program expenses.
Total Expenses
4.OPERATING RESERVES RATIO
Operating reserves Target range of 16%to 25% The organization's capability to fund expenses with reserves due to a lack or loss of operating revenues.
Total Expenses
ORANGE COUNTY
NORTH CAROLINA
10
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
11
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
ORANGE COUNTY
NORTH CAROLINA
13
ORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: December 13, 2016
Action Agenda
Item No. 7-c
SUBJECT: Financial Policy for Outside Agency Funding
DEPARTMENT: Finance and Administrative
Services
ATTACHMENT(S): INFORMATION CONTACT:
Bonnie Hammersley, (919) 245-2300
Attachment 1: DRAFT Outside Agency Gary Donaldson, (919) 245-2453
Funding Financial Policy
Attachment 2: Bond Counsel
Communication
NOTE: THIS ITEM WAS DELAYED
FROM CONSIDERATION AT THE
DECEMBER 5, 2016 BOARD OF
COMMISSIONERS MEETING.
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
14
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.
15
Attachment 1
Financial Policy
Outside Agency Funding
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.
16
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
17
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.
18
1
1 APPROVED MINUTES
2 ORANGE COUNTY BOARD OF COMMISSIONERS
3 BUDGET WORK SESSION
4 June 12, 2018
5 7:00 p.m.
6
7 The Orange County Board of Commissioners met for a budget work session on Tuesday, June
8 12, 2018 at 7 p.m. at the Whitted Human Services Center in Hillsborough, N.C.
9
10 COUNTY COMMISSIONERS PRESENT: Chair Dorosin and Commissioners Mia Burroughs,
11 Barry Jacobs, Earl McKee, Mark Marcoplos, Renee Price and Penny Rich
12 COUNTY COMMISSIONERS ABSENT: None
13 COUNTY ATTORNEYS PRESENT: None
14 COUNTY STAFF PRESENT: County Manager Bonnie Hammersley, Deputy County Manager
15 Travis Myren, and Clerk to the Board Donna Baker (All other staff members will be identified
16 appropriately below)
17
18 Chair Dorosin called the meeting to order at 7:02 p.m.
19
20 1. Discussion of the FY 2018-19 Operating Budget (PowerPoint Presentation)
21
22 • Funding Decisions on the Operating Budget Amendment List
23 • Funding Decisions on the Other Funds Budget Amendment List
24
25 Travis Myren noted the following items at the Commissioners' places:
26 - Blue sheet: summary amendments
27 - Purple sheet: special revenue fund amendment
28 - Peach sheet: CIP amendments
29 Travis Myren made the following PowerPoint presentation:
30
31 Intent to Adopt
32 Budget Work Session
33 June 12, 2018
34 Whitted Meeting Facility
35
36 Decision Points
37 1. FY2018-19 Operating Budget
38 Consider and Approve Amendments to the County Manager's
39 Recommended Operating Budget (General Fund
40 • Consider and Approve Amendments to Other Funds
41 • Consider and Approve School Funding for Current Expense and
42 Deferred Maintenance for Chapel Hill-Carrboro City Schools and Orange
43 County Schools
44
45 2. FY2018-23 Capital Investment Plan (CIP)
46 • Consider and Approve CIP Amendments
47 • Accept the FY2018-23 Capital Investment Plan and Approve Capital
48 Funding for FY2018-19
49 3. FY2018-19 County Fee Schedule
50 • Consider and Approve County Fee Schedule
19
2
1 4. FY2018-19 Tax Rates
2 • Consider and Approve the Ad Valorem Tax Rate
3 • Consider and Approve the Chapel Hill-Carrboro City Schools Special
4 District Tax
5 • Consider and Approve the County Fire District Tax Rates
6 5. Break
7 6. Resolution of Intent to Adopt
8 Consider and Approve the Resolution of Intent to Adopt the FY2018-
9 19 Operating Budget at the Board of County Commissioners Regular
10 Meeting on June 19, 2018
11
12 FY2018-19 Operating Budget
13
14 Operating Budget Amendment#1 (General Fund) Provide Funds For IFC Capital
15 Campaign
16 — Current Policy on Outside Agency Capital Funding
17 — Request is for$100,000 per Year for Three (3) Years
18 — Funding Source — Other Post Retirement Employment Benefits - $485,000 in
19 Manager's Recommended Budget
20 — Letter from Inter-Faith Council
21 — Zero Interest Loan Program - Feasible
22
23 Chair Dorosin said he looked at the Board of County Commissioners' (BOCC) policy,
24 and he would still support this amendment. He said he believes this would be a reasonable
25 amendment for the Board to make, and fits squarely within the scope of the County to provide
26 for, and this falls within an exception to the policy.
27 Commissioner Price reiterated Chair Dorosin's comments, and said the Board can
28 revise the policy, if necessary, but she thinks this amendment fits within the policy as currently
29 written.
30 Commissioner Marcoplos said this is an undoubtedly worthy project, and does serve a
31 lot of people in the County. He said the policy is a bare bones statement that says the County
32 will not award capital money, and does not incorporate ways for the Board to engage with
33 projects that want some capital funding from the County. He said this particular project does not
34 need the money right now, and he proposed that the Board revisit this policy some time in the
35 fall, or at the retreat, to talk about setting up a policy that works, and can be understood by all.
36 Commissioner Rich said she fought against this policy, the last time it was discussed, as
37 she wanted to support the Rape Crisis Center in its capital funding; and, at that time, she asked
38 if exceptions could considered, and Gary Donaldson, Chief Financial Officer, said yes. She
39 read an excerpt from previous BOCC minutes, highlighting her desire to find exceptions to this
40 policy, and the BOCC voted against her request at that time. She said all of these agencies are
41 doing important work, and it is unclear to her how the Board can decide to fund one agency
42 over another.
43 Commissioner Rich said she liked the suggestion of discussing this policy further, at a
44 later date. She said she cannot support this amendment, as two similar requests were denied
45 last year, and it seems unfair to now fund this one.
46 Commissioner Jacobs said he agreed with Commissioner Rich and Commissioner
47 Marcoplos, and if the Board agreed to the request, it would be committing a lot of funding up
48 front, without ever inviting other entities to apply, regardless of the merits of IFC's proposal. He
49 said if the BOCC is going to fund capital projects, there needs to be criteria; and if the funding
20
3
1 is above a certain cost, the Board may want to require value engineering. He asked if staff
2 would bring back talking points in the fall.
3 Commissioner McKee said this policy needs more in depth discussion, and he still has
4 concerns about how the Board controls the amount it provides. He endorsed what
5 Commissioner Marcoplos said about bringing this item back in the fall or at the Board retreat.
6 Commissioner Burroughs agreed with all that has been said. She said staff may want to
7 consider over the summer about having non-profits demonstrate that owning is better than
8 renting. She asked what would happen if the non-profit were to sell a building, in relation to the
9 amount of money invested by the County. She said she remembered the past discussion, and
10 the Board must be fair.
11 Commissioner Price said she would like to consider partnerships between the County
12 and non-profits. She said she wanted to support this in order to begin the conversation.
13 Commissioner Jacobs said if the Board is going to consider funding a kitchen, then it is
14 important to recall that the County has a policy that a certain percent of the food it serves needs
15 to be locally grown; and this may be one of the strings the County wishes to attach to any
16 funding.
17 Chair Dorosin asked Commissioner Marcoplos and Bonnie Hammersley if they had
18 talked with IFC about the ramifications of the Board not providing an answer this evening.
19 Commissioner Marcoplos said he had not spoken with IFC.
20 Bonnie Hammersley said there is a copy of an email at the Commissioners' places from
21 Robert Dowling, Community Home Trust Executive Director. She said she spoke with him
22 about funding, as well as the possibility of an interest free loan. She said staff can continue to
23 talk with the IFC about partnering,
24
25 From: Robert Dowling fmailto:rdowling(d_)communityhometrust.org]
26 Sent: Monday, June 11, 2018 5:31 PM
27 To: Bonnie Hammersley
28 Cc: Jackie Jenks; kevincfoy(cbprotonmail.com
29 Subject: RE: Information Needed
30
31 Hi Bonnie,
32
33 First, I want to let you know that we are grateful for your support in trying to identify a way
34 forward. Not every County Manager would have done that.
35 We are also very grateful for Commissioner Dorosin's willingness to assist IFC. And ideally, if
36 four commissioners will agree, we would love for the County to grant funds to FoodFirst.
37
38 However if it's not possible to obtain approval for a grant, a zero-interest loan would be helpful.
39 But as you know Bonnie, a loan does not contribute to the $5.3MM needed to build FoodFirst.
40
41 A zero-interest loan would be useful if our financial pledges come in more slowly than we
42 expect. It would be even more useful if the County would forgive any amounts outstanding two
43 years after completion of construction. That way, IFC would not be burdened with a repayable
44 loan, even if some pledges are never collected.
45 1 hope this is an adequate response for your discussion tomorrow evening.
46 Please let me know if you have questions.
47 Thank you again Bonnie for your support of FoodFirst.
48
49 Robert
50 Robert Dowling
21
4
1 Executive Director
2 Community Home Trust
3 PO Box 2315
4 Chapel Hill, NC 27515
5 919-967-1545 ext. 307
6
7 Commissioner Price asked if the IFC were going to leverage grants next year.
8 Bonnie Hammersley said she and Chair Dorosin met with the leaders of the capital
9 campaign who said the level of funding commitments needed to reach a certain level before
10 they start leveraging grants.
11 Chair Dorosin said there is the option of a zero percent loan, and if the Board were in
12 support of one, it could start with this, and could possibly convert it to grant funding, or a
13 forgivable loan, after further discussion. He said he does not want the Board's decision to have
14 an adverse effect on the IFC tonight.
15 Commissioner McKee said a forgivable loan is the same as a grant.
16 Chair Dorosin said the Board could put some conditions on it, such as forgiving the loan
17 if IFC fails to raise the additional funding after a certain time period. He said if IFC could raise
18 the money than it would pay back the loan.
19 Commissioner McKee said he is concerned about going down that path, and if the
20 Board is going to provide a grant then that should be done from the get go. He said loans that
21 are potentially forgivable are always forgiven. He said the Board put the policy in effect, and it
22 does not need to do a work around tonight without having further discussion. He said there are
23 too many agencies that would want, and be worthy of, this same treatment.
24 Commissioner Jacobs said he would be more comfortable if staff would bring back
25 some criteria of what the zero interest loans would look like at the next BOCC meeting on 6/19.
26 He said he would be inclined to give IFC one third of what it is asking for. He said the County
27 should not go into this thinking it will waive the amount of the loan, since it makes it
28 psychologically harder for IFC to raise funds.
29 Chair Dorosin said he likes the idea of a matching grant, as opposed to outright cash
30 without conditions.
31 Commissioner Burroughs said she agreed with Commissioner Jacobs about the
32 psychological impact on fundraising when knowing a loan can be potentially forgiven. She said
33 she still supports discussing this topic further in the fall.
34 Commissioner Rich asked if any other local government entities have committed to the
35 IFC campaign.
36 Bonnie Hammersley said the Town of Chapel Hill received a request, which she thinks
37 the Town is honoring, but she will find out.
38 Jackie Jenks, IFC, thanked the Board for even considering this item, and said the IFC is
39 working with Chapel Hill on a potential funding source.
40 Commissioner Rich asked if those funds would be a grant or loan.
41 Jackie Jenks said a grant.
42 Chair Dorosin asked if the Town of Carrboro has made a commitment.
43 Jackie Jenks said IFC has not received a commitment from Carrboro, but the Town has
44 offered to waive some fees and the IFC may share its parking with the Town.
45 Chair Dorosin asked if there was a timeline in place.
46 Jackie Jenks said IFC would like to start construction a year from now, but would need
47 to have all of the funds committed in advance, and the IFC is looking to get the $5.3 million
48 secured soon. She said the IFC has surpassed the 50% mark, which was needed in order to
49 apply for some funding from various foundations. She said a loan will not help IFC reach the
50 $5.3 million required to build, but IFC would consider it as a bridge loan allowing for
22
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1 construction to begin, and repayment to occur in years 2 and 3. She said if pledges are made,
2 but not received, IFC would ask that this portion of the loan be forgiven.
3
4 Chair Dorosin said there is consensus to review the policy in the fall, and asked if the
5 Board would accept leaving the no interest loan on the table, in order to get more information
6 from staff on the 19th. He said if the Board does not do a loan, then the $100,000 can go to the
7 reserve.
8 Bonnie Hammersley said the Board can park the monies in the social justice fund, which
9 is at $250,000 in the budget.
10
11 A motion was made by Commissioner Marcoplos, seconded by Commissioner Price to
12 revisit this policy in the fall, and to add the zero interest loan criteria item tentatively for the June
13 19th meeting.
14
15 Commissioner Price asked if Commissioner Marcoplos meant to discuss this at a work
16 session in the fall or at the retreat in January 2019.
17 Commissioner Marcoplos said the fall.
18 Commissioner Rich said the loan part sounds too open to her, and asked if the vote
19 could be split into two motions.
20 Chair Dorosin said yes, and the first vote would be to discuss the policy at a work
21 session as early as possible in the fall.
22
23 VOTE: UNANIMOUS
24
25 A motion was made by Chair Dorosin, seconded by that the Board will put aside
26 $100,000 in the social justice fund to be earmarked for a zero interest loan with staff bringing
27 back the criteria will work for the repayments and terms on June 19, 2018.
28
29 Travis Myren said the policy states that staff would negotiate the terms with the
30 applicable outside agency, but staff can bring a general framework.
31 Commissioner Rich asked if this is $100,000 over three years, or $100,000 per year, for
32 three years.
33 Chair Dorosin said he was thinking it would be $100,000 for this year.
34 Bonnie Hammersley said she would assume this would be reviewed each year.
35 Chair Dorosin said to do this for a year, have the policy discussion and then re-visit this
36 at next budget cycle as a loan or something else.
37
38 Commissioner Rich asked if this is part of the motion.
39 Chair Dorosin said yes.
40
41 Commissioner Rich said she has questions about possibly forgiving the loan.
42 Chair Dorosin said that is not part of the discussion now.
43 Commissioner Rich said the Board is talking about the loan and voting now, and asked
44 if the Board is committing to making the loan this evening.
45 Commissioner Price said no, not until next week after staff brings back information.
46 Bonnie Hammersley said moving the funds from the social justice fund would be a
47 simple budget amendment, and can be done at any time during the year.
48 Bonnie Hammersley asked if more clarification would be provided on what the Board
49 seeks from staff next week.
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1 Chair Dorosin said the Board wants to know the repayment terms, when the repayment
2 starts, the number of payments, etc.
3 Bonnie Hammersley said staff would need to negotiate that with IFC, and she is not sure
4 that can be accomplished by next Thursday.
5 Commissioner Jacobs said the Board would also want default terms. He said the Board
6 may want to put funds into social justice fund until the fall, and invite the other two entities that
7 are running capital campaigns into the discussion to see if they are interested in zero interest
8 loans or grants.
9 Commissioner McKee said in his opinion the Board just voted to revisit this in the fall,
10 but is now trying to do a work around. He said the Board should vote now on an interest free
11 loan or grant, or wait until the fall to do anything at all. He said policies exist for a reason.
12 Commissioner Burroughs asked if the Board can get money out of the Other Post
13 Employment Benefits (OPEB) at anytime.
14 Bonnie Hammersley said no, the funds need to be moved into the social justice fund, if
15 the Board wishes to access them. She said once the funds go in to OPEB, the Board cannot
16 get them back out.
17 Commissioner Burroughs said she appreciates Commissioner McKee's concerns, but
18 said putting money aside allows the possibility of taking action in the fall.
19 Chair Dorosin said the "work around" is an attempt to incorporate everyone's comments.
20 Commissioner Burroughs said this is not a work around, but is putting money in a place
21 until the Board decides what it wants to do with the policy in the fall.
22 Commissioner Price agreed with Commissioner Burroughs.
23 Commissioner Marcoplos also agreed.
24
25 A revised motion was made by Chair Dorosin, seconded by Commissioner Rich, to
26 move the $100,000 to the social justice fund pending review of the policy change in the fall.
27
28 Commissioner McKee said he will park his reservations until then.
29 Commissioner Jacobs apologized for not paying attention to Commissioner Burroughs'
30 earlier comments.
31
32 VOTE: UNANIMOUS
33
34