COUNTY OF ALBEMARLE

 

EXECUTIVE SUMMARY

 

 

AGENDA TITLE:

Economic Opportunity Fund Guidelines

 

SUBJECT/PROPOSAL/REQUEST:

Adopt Guidelines for use of the Economic Opportunity Fund

 

STAFF CONTACT(S):

Messrs. Tucker, Foley, Davis, Graham, Ms. Stimart 

 

LEGAL REVIEW:   Yes

 

AGENDA DATE:

February 4, 2009

 

ACTION:     X          INFORMATION:   

 

CONSENT AGENDA:

  ACTION:           INFORMATION:   

 

 ATTACHMENTS:   Yes

 

 REVIEWED BY:  

 

BACKGROUND:

The Board created the subject fund in December 2006 (Attachment A).  At its October 2008 retreat, the Board directed staff to develop guidelines for this Fund.   Staff presented a discussion of possible guidelines to the Board on January 7, 2009.  Following this discussion, the Board directed staff to prepare guidelines to be considered by the Board.  The purpose of this executive summary is to (1) provide proposed guidelines for use in evaluating funding requests and (2) to discuss several outstanding issues.  While the guidelines should clarify the Board’s intent for the use of funds, the process used in making a final decision on funding also needs to be addressed.  This is particularly important given the growing list of funding requests received since the Board first began discussing this Fund. (Attachment D)

 

STRATEGIC PLAN:

Objective 1.3:  By June 30, 2010, the County will continue to maintain a strong and sustainable economy; increase the economic vitality of the County's development areas and increase the ability of those individuals and families, who are living in lower income households, to become self-sufficient.

 

DISCUSSION:

Staff has proceeded in the development of these guidelines based on previous direction provided by the Board and the assumption that this will move forward in some form and is not a one-time reserve to match State Governor’s Opportunity funds.  The guidelines should be seen as a starting point for finalizing the Board’s intent and staff expects that changes may be made by the Board to better clarify its intent in use of these funds.

 

Proposed Guidelines:

Based on the Board’s direction provided on January 7, 2009, staff has developed the attached guidelines which include a purpose statement, minimum requirement for consideration, evaluation criteria and conditions on the receipt of funds. (Attachment B)  To better evaluate projects as well as provide applicants a better understanding of what constitutes a strong application, staff recommends assigning a weight to each criterion.  Giving each criterion an equal weighting assures a strong application must address all five criteria.  Staff recognizes there will remain some subjectivity in this evaluation, but the guidelines and this weighting should allow applicants to better understanding how each proposal will be evaluated. 

 

Below is a brief description of each of the different components of the guidelines:         

 

Purpose:

Staff believes the purpose statement requires the applicant to demonstrate a strong commitment to higher wage jobs that will remain in the County or be generated for current residents.  Staff is already receiving inquiries from a number of potential applicants and believes many of these proposals fail to meet the Board’s original stated intent for this Fund.  To avoid being overwhelmed by applications that would rapidly exhaust this funding source and potentially not address the stated purpose of the Fund, staff believes the purpose statement serves as a “gatekeeper” in determining which proposals should be considered.  Assuming the project can meet the intent of creating higher wage local jobs, the project would then be evaluated against the funding criteria. 

 

Minimum Criteria for Consideration:

This section assures that projects requesting funds actually have a well thought out business plan and that the applicant has basic qualifications related to the business they are asking the County to invest in. 

 

Evaluation Criteria:

Staff has proposed an equal weighting of the five criteria (20% each) and attempted to clarify the intent of these by providing better definition. 

 

Conditions for Receipt of Funds:

This section clarifies that a performance agreement will be required for any funding provided to help assure that the commitments made are documented and monitored.  In addition, some form of guarantee would be required prior to providing funds.  Given that the vast majority of start up businesses in the country fails, this requirement would assure that the County is not subject to excessive risk in providing funds.  Finally, staff recommends that a minimum scoring threshold, similar to the ACE program, be established in determining whether or not to provide funding.  A minimum score of 75 out of 100 points is recommended for an application to receive further consideration.  

 

Outstanding Issues:

The attached guidelines are designed to clarify the Board’s purpose and intent in making funding available and also establish minimum requirements and expectations in providing funds to any applicant.  Clarification will also be needed on several other issues: 

 

Reviewing Entity:

Who should review and evaluate proposals?  The process of assessing applications against the guidelines and measuring one proposal against another is also a matter that will need to be determined.  In addition, a decision will need to be made regarding the specific amount of funding to be provided to an applicant based on a thorough review of any particular proposal.  Based on initial inquiries regarding the program, before it has even been formally established, staff believes there is a potential for a very high number of applications.  Given that each applicant will be required to submit a business plan and there will be competition for a limited amount of funding, the process will need to be handled effectively and may be very time consuming.  Staff questions whether the Board would prefer to see every proposal, or instead rely on another entity, such as the Economic Development Authority (EDA), an organization like the Thomas Jefferson Partnership for Economic Development (TJPED), or a committee of representatives from various businesses and other organizations to screen applications using the Board’s guidelines to develop a recommendation for funding.

 

Application Submittal:

Does the Board intend this to be an ongoing request process until the funding is fully utilized or to establish a set application deadline?  If all applications are due at a set time, it may make the program more manageable, but may also prohibit the County from being able to respond to timely future opportunities that would better meet the intent of the funding.  

 

One-Time or Ongoing Program:

Does the Board intend this to be an on-going program or simply a one-time source of funds?  There is currently no on-going funding available in the Five-Year Financial Plan for this program and tracking and allocating additional revenue generated from a particular project to go back into this Fund after determining the net tax benefit would be difficult.

 

 

Specific Applications Submitted for Funding:

A total of six proposals have been submitted or are expecting to be submitted for funding as of this time.  A brief description of each proposal is included in Attachment D.  Given the number of proposals and the fact that complete guidelines are not currently in place, staff was unable to conduct an analysis of any one proposal against another.  The first submitted proposal, the Food Hub (Attachment C), was discussed at the Board’s January 7th meeting, with direction for the applicant to see if they could combine its requests with others.  The applicant submitted separate materials on January 22nd and staff understands it is unlikely it will combine its application with others.  Given staff did not have time to complete a thorough review before this report was finished and the fact that the Board has not yet established the guidelines, staff believes it is premature to act on this application.  However, based on staff’s recommendation to use the purpose statement in the guidelines as a “gatekeeper”, a cursory review by staff suggests it is unlikely that this proposal would satisfy the stated purpose of the Fund.  This suggests a different funding source, such as the Board’s Reserve, may be a better fit for this proposal if the Board has a particular interest in supporting it.  If that is the case, staff would need to know if any conditions would be required in providing funds.  

 

It is important to point out that State enabling authority does not permit a county to directly provide grants, donations, or loans to private entities unless expressly authorized.  Virginia Code § 15.2-953 expressly enables donations or grants to certain charitable organizations and to a list of nonprofits providing specified services.  None of the six proposals are from entities that the County could directly fund.  Typically counties fund these types of proposals indirectly through their economic development authorities.  Funding for any of these proposals could be accomplished by appropriating funds to the County’s EDA with an agreement that the funding would be passed through to the intended recipient with appropriate terms and conditions.

 

 

BUDGET IMPACT:

There is no direct budget impact from the proposed guidelines, but there could a staffing impact depending on how the Board chooses to proceed.

 

RECOMMENDATIONS:

1.         If the Board decides to proceed, staff recommends that the attached guidelines, with any amendments the Board feels are appropriate, be adopted for use in evaluating proposals and establishing expectations for recipients of funding.

2.         In addition, staff recommends that an outside entity be designated to conduct the evaluation and recommend a funding amount to the Board of Supervisors.

 

 

ATTACHMENTS

Attachment A – December 6, 2006 Board minutes

Attachment B – Proposed Guidelines

Attachment C – Food Hub proposal, submitted on January 22, 2009

Attachment D - Project Submissions & Inquiries

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