After postponing action at their Sept. 18 meeting, Washtenaw County commissioners gave final approval to a new countywide micro loan program for small businesses. The action took place at the county board’s Oct. 2, 2013 meeting on an 8-1 vote, over dissent from Dan Smith (R-District 2).
Initial approval had been given on Sept. 4, and the item had been on the Sept. 18 agenda for final approval. However, at that Sept. 18 meeting only six of the nine commissioners were present, and supporters of the program didn’t think there were sufficient votes to pass the measure at that time so a final vote was postponed.
Under the county board rules, a resolution requires votes from “a majority of the members elected and serving” in order to pass – that is, five votes. A resolution regarding the state’s “Stand Your Ground” law had been pulled from the Sept. 18 agenda for the same reason. That resolution did not appear on the Oct. 2 agenda, and it’s unclear when it will be brought forward again.
Dan Smith had also cast the only dissenting vote against the micro loan program when the initial vote was taken on Sept. 4. He objects to using taxpayer dollars for a program where funds are allocated without the opportunity for input at public meetings, and believes there are other avenues that small businesses can use for financing.
The resolution would authorize the county’s office of community & economic development to contract with the Center for Empowerment and Economic Development to manage this program. CEED already handles a smaller micro loan program focused on the eastern side of the county. [.pdf of CEED micro loan proposal]
Micro loans would range from $500 to $50,000, for businesses that can’t get conventional financing. CEED has a $5 million borrowing capacity from the U.S. Small Business Administration, and expects to make $300,000 in micro loans in the next two years in Washtenaw County. The county would provide $45,000 out of revenues from levying the Act 88 millage. Of that amount, $35,000 would be used to seed a loan loss reserve fund and $10,000 would be designated for initial operating costs.
To be eligible for a micro loan, businesses must be based in Washtenaw County and have been turned down by two financial institutions for loans over $20,000. Other requirements include: (1) a business plan for businesses that are less than 3 years old; (2) a marketing plan for businesses that are 3 years or older; (3) two years of financial statements and tax returns; and (4) a personal financial statement.
The county is allowed to levy up to 0.5 mills under Public Act 88 of 1913, but currently levies a small percentage of that – 0.06 mills, which will bring in $696,000 this year. It’s used for programs run by the county’s office of community & economic development, and to fund the county’s MSU extension office. Act 88 does not require voter approval. It was originally authorized by the county in 2009 at a rate of 0.04 mills, and was increased to 0.043 mills in 2010 and 0.05 in 2011.
Last year, Conan Smith (D-District 9) of Ann Arbor proposed increasing the rate to 0.06 mills and after a heated debate, the board approved the increase on a 6-5 vote. [See Chronicle coverage: "County Board Debates, OKs Act 88 Tax Hike."] Increasing this tax was one of several revenue options that the county commissioners discussed at their Aug. 8, 2013 working session, as part of a broader strategy to address a projected $3.9 million budget deficit in 2014. [See Chronicle coverage: "County Board Eyes Slate of Revenue Options."]
A proposal to increase the Act 88 tax to 0.07 mills will be presented on Oct. 16. At its Oct. 2 meeting, the board set a public hearing on that increase, to be held on Oct. 16. That increase is built in to the county administration’s four-year budget proposal, which was presented on Oct. 2.
The county has identified economic development as one of its main budget priorities.
This brief was filed from the county administration building at 220 N. Main St. in Ann Arbor. A more detailed report will follow: [link]