City weighing business loan fund
By News-Argus Staff
Published in News on October 25, 2015 1:50 AM
A proposal to give small loans to downtown businesses adversely affected by Streetscape was deferred for discussion by the Goldsboro City Council on Monday night until a later date.
The idea was brought up at the council's work session.
The program is called the Business Incentive Loan. City Manager Scott Stevens brought up the idea, which was first mentioned during a September meeting between city officials and downtown merchants.
"We didn't make that as a strong recommendation either way. It was just one of those things for the business community to say we've at least put that out there for the council to consider," Stevens said.
Stevens said the city cannot simply give the businesses money in the form of a direct loan to make up for lost profits, but that it can begin a Business Incentive Loan that is tied in with the existing Business Incentive Grant, since the latter is considered an economic development incentive.
"I did have a meeting called with Mayor Pro-Tem (Chuck) Allen and a number of business owners downtown who were concerned with the impact Center Street has had on their business," Stevens said. "One of the things they said would help is if we could loan them money. The answer is you cannot do a direct loan where you just loan them money because we're not a bank. But you can do a business incentive grant/loan."
The Downtown Goldsboro Development Corp. already has a business incentive grant program, in which businesses that have been open for six months or less are eligible to receive $400 per month for one year, but this loan program would be separate from that.
"The loan side came from our meeting with the merchants, where they felt like there ought to be money to help them for whatever purpose while the construction has gone on," Stevens said. "I think it's just a matter of the council trying to consider whether or not there's a way to do it."
The proposal presented Monday night was to determine whether or not council members were in support of setting aside money for the loan program, although there are very few specifics about how the money would be disbursed, where it would come from, and what the criteria would be to obtain it.
"We could mirror off our business incentive grant program where you have a loan and set it up to receive the amount of some number, whether it's $2,000 to $4,000, and it's paid back over a fairly short period of time," Stevens said. "It wouldn't be everyone It would be relatively new businesses, whether that's the last three years open, the last five years open or beyond that."
Allen said he had discussed the program with Stevens and recommended several ways to disburse the money.
"Maybe you could do 10 $2,000 loans, or seven $3,000 loans, or whatever we wanted to do, out of the Municipal Service (District) money and let them pay it back at no interest or very low interest over a course of something like two years," Allen said.
The Municipal Service District tax that Allen said could be used to fund the program comes from taxpayer funds collected from citizens in the district.
The tax itself is 23.5 cents on every $100.
Yet Stevens said the city has not officially determined whether or not they would use the MSD funds or find the money elsewhere in the city's budget.
But this proposal is directly contradictory to what the city has said in the past about providing funds for offsetting the costs incurred by businesses because of Streetscape.
In a story that appeared in the News-Argus on Dec. 28, 2014, Stevens said it was not the city's burden to offset the profit loss of businesses downtown during Streetscape.
"Some people might argue that we should make up the difference in lost sales, but we don't do that," Stevens said at the time. "I don't think we have a legal responsibility to do that. The other side of that argument is that when businesses begin profiting from improvements made by Streetscape, they should share a portion of their profits with us, but that's not going to happen either."
Stevens said while he had not necessarily changed his mind about giving the businesses loans to recoup some lost profits, the decision would ultimately be left up to the City Council.
Giving a downtown business money does not come without risks, he noted.
"You might loan to somebody who goes out of business, and you would have no collateral, I don't think, with which to claim it, but the hope would be to help them through this next cycle where they've been down in revenue, and try to buoy them up so they'll be here," Stevens said. "You can make the criteria, I guess, as strong or as weak as you want it in terms of what it was."
Stevens told the council that even though there would be no collateral to collect if a business defaulted on the loan, he felt that most businesses could easily pay the loan back.
The council almost unanimously agreed that they needed more time to think over the proposal and deferred any action on the matter.
"My thinking here is, you know, the people on Berkeley Boulevard are going to be inconvenienced and are going to lose some business because a lot of people aren't going down Berkeley Boulevard like they used to," said District 6 council member Gene Aycock, in reference to the current widening project there. "Especially in the last two weeks, it's been a nightmare. They're closing one lane so you have to have flag men on both sides, you sit in long lines and everything else. I'm like (District 3 council member) Mr. (William) Goodman on that -- if I had to vote today I'd say no."
Council members Michael Headen, Charles Williams, William Goodman and Bill Broadaway all agreed that more time was needed to think about the proposal before the council took any action.
Allen said if the council were going to create such a program, they need to do it in the next council meeting on Nov. 2 at the latest or else it would not be worth doing since Streetscape would be finished by then.