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HomeMy WebLinkAboutAgenda - 06-16-20; 6-c - Approval of Small Business Program Modifications ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: June 16, 2020 Action Agenda Item No. 6-c SUBJECT: Approval of Small Business Program Modifications DEPARTMENT(S): Finance and Administrative Services and Economic Development ATTACHMENT(S): INFORMATION CONTACT: 1. PowerPoint Presentation Gary Donaldson, (919) 245-2453 Steve Brantley, (919) 245-2326 Paul Laughton, (919) 245-2152 Amanda Garner (919) 245-2330 PURPOSE: To: 1) Establish the Small Business Fund on the County’s Books and Chart of Accounts; 2) Approve the transfer of the remaining balance of $510,000 from the Small Business bank account to the County’s bank account, of which $410,000 is to be used for Emergency grants to small businesses and the remaining $100,000 and any residual balances to be deposited in the County’s bank account; 3) Approve the Staff and Small Business Loan Board recommendation for the eventual dissolution of the nonprofit entity named the Orange County Small Business Loan Company Program; and 4) Approve the Staff and Small Business Loan Board recommendation to make all 11 existing loans with an outstanding balance of $286,508.17 as zero interest and subsequent Small Business Loans as zero interest. BACKGROUND: In December 1997, the BOCC approved Articles of Incorporation and Bylaws establishing the nonprofit Orange County Small Business Loan (SBL) Company. Staff and the Small Business Loan Board are recommending the eventual dissolution of the nonprofit SBL and transferring all funds and the financial administration of the program to County’s books and existing policies and procedures. The rationale is that the County’s financial administration will provide enhanced system controls through a better financial ledger and software infrastructure, redundancy and systems support than the current SBL financial subsidiary ledger. Key historical milestones for the SBL Program nonprofit are as follows: October 6, 1998 BOCC Meeting Operating Policies and Procedures document was approved by BOCC. September 1999 - Articles of Incorporation for the Orange County Small Business Loan Program Company were issued by the N.C. Secretary of State. 1 March 21, 2000 BOCC Meeting The BOCC approved a Loan Program resolution which included a nine-member Board of Directors comprised of three county officials (County Finance Director, County Manager, and Economic Development Director) and six bank representatives. March 13, 2007 BOCC Meeting Economic Development staff presented recommendations to reorganize and provide capital to the Loan Program. The Economic Development Commission Advisory Board and SBL Board endorsed the recommended changes including $150,000 to the SBL to establish a revolving loan fund which was approved the BOCC. November 5, 2007 BOCC Meeting Economic Development staff presented revised Bylaws and requested a Resolution which was approved by the BOCC. January 15, 2008 BOCC Meeting The Board approved changes to the SBL Bylaws to modify the Board of Directors to the current composition: • 1 BOCC Member • 2 Small Business Owners • 2 Local Commercial Bankers • 1 Economic Development Commission • Orange County Economic Development Director • Orange County Finance Director 2010 – Former County Manager Frank Clifton directed $200,000 from the Orange County/Chapel Hill Visitors Bureau’s Fund Balance to the SBL program. November 2011 – The one quarter cent sales tax referendum (Article 46) was approved by Orange County voters in November 2011, providing the SBL Loan program $200,000 annually in additional lending capital. January 2016 – The Department of Economic Development’s active marketing of the SBL program resulted in the use of assigned Article 46 fund balance to supplement the original seeded funds to issue Small Business loans. February 7, 2020 The SBL Board of Directors endorsed recommended changes by the departments of Finance and Economic Development including: 1) Making all Small Business Loans zero interest 2) Enhancing Collections mechanisms to include electronic funds transfer and use of Collection Agencies 3) Revised Small Business practices to conform with the Department of Finance Policies and Procedures Manual FINANCIAL IMPACT: This item proposes to establish the Small Business Loan Fund on the County’s Books and Chart of Accounts, and transfer $510,000 from the SBL bank account, of which $410,000 will be used to provide Emergency Small Business grants to businesses impacted by the pandemic. Budget amendments are forthcoming to effectuate these actions. 2 SOCIAL JUSTICE IMPACT: The following Orange County Social Justice Goal is applicable to this 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. ENVIRONMENTAL IMPACT: There is no Orange County Environmental Responsibility Goal impact associated with this item. RECOMMENDATION(S): The Manager recommends that the Board: 1) Establish the Small Business Fund on the County’s Books and Chart of Accounts; 2) Approve the transfer of the remaining balance of $510,000 from the Small Business bank account to the County’s bank account, of which $410,000 is to be used for Emergency grants to small businesses and the remaining $100,000 and any residual balances to be deposited in the County’s bank account; 3) Approve the Staff and Small Business Loan Board recommendation for the eventual dissolution of the nonprofit entity named the Orange County Small Business Loan Company Program; and 4) Approve the Staff and Small Business Loan Board recommendation to make all 11 existing loans with an outstanding balance of $286,508.17 as zero interest and subsequent Small Business Loans as zero interest. 3 Small Business Program Modifications June 16, 2020 Business Meeting . 4 Background 1997- Board of County Commissioners (BOCC) approved Bylaws and Articles of Incorporation establishing the nonprofit Orange County Small Business Loan (SBL) December 1997 2008- BOCC Approved the current Small Business Loan Board Composition- -1 BOCC Member -2 Small Business Owners -2 Local Commercial Bankers -1 Economic Development Commission -Orange County Economic Development Director -Orange County Finance Director Source of funding is Article 46 Sales Tax revenue SBL program is managed by the Economic Development Department 5 Abstract Purpose Establish the Small Business Fund on the County’s Financial System Enhanced Policies and Procedures and Controls Transfer of all remaining balance of $510,000 and accrued balances from the SBL bank account to the County’s bank account Make all outstanding 11 loans (current balance $286,508.17) zero interest and all new loans zero interest Eventual dissolution of the SBL nonprofit as unanimously voted by the SBL Board 6 Dissolution of Small Business Nonprofit . Transfer funds from Small Business Loan Company to County General Account Establish County General Ledger Accounts for Income Statement and Balance Sheet reporting Loan Board Chair submits letter to County Manager ( date to be determined) Complete requisite dissolution forms to NC Secretary of State and Internal Revenue Service 7 Policies and Procedures Enhancements All Financial Transactions to mimic County Financial Policies Authorized Bank Signatures Defaults to County Manager and Finance Director Create Small Business Fund in Tyler MUNIS Financial System to record all financial transactions including tracking Accounts Receivables (A/R) Escalate all outstanding AR balances and take appropriate collection actions 8 Board Action Steps Approve Staff recommendations - Dissolution of SBL nonprofit - Conformance to County Policies and Procedures 9 Questions/Comments 10