The following commentary appeared in The Ostrich on Friday, 27 September. We have not yet met the author, but he has kindly agreed to let us run the item here on our little publication, and we hope to meet him soon.
Meanwhile, we welcome him to the handful of local residents who are ‘not going to take it anymore.’ He certainly minces no onions, celery, or words in his essay.
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Putting the BDC on the up and up
BY DANIEL FORD
GUEST COLUMN
I attended last week’s meeting of the Brunswick Development Corporation to learn more about how this entity works and to ask questions about its operation. I remain skeptical the town’s best interests are being served by this board under its current bylaws, and I have to seriously question the validity of its most recent loan to Brunswick Taxi.
As a matter of background, I have over twenty years’ experience in a similar position for another quasi-public development corporation in Massachusetts- so I know from whence I speak. In my experience at the Lawrence (Mass) Economic Development and Industrial Corporation we managed loans ranging from $50,000.00 up to $300,000. We reported to the City Council through the Mayor and Community Development Director so as to assure the City’s economic development goals are being met. In addition to this volunteer position, I was employed as an analyst and capital markets trader for such firms as Lehman Brothers and EF Hutton.
In my career, I have never seen a forgivable loan from any source-either public or private. Indeed I was reasonably satisfied with the answers Board members provided another concerned citizen the BDC board members about their qualifications. One member said they were in banking, another is a CPA, yet another is a local businessman. So let me ask you this: With the seemingly varied and well-rounded backgrounds of the aforementioned individuals, have any of you ever seen a bank make a forgivable loan? Or even loan into a company that has a negative net worth? I think not- which brings me to one of many points I would like to raise- Why would Brunswick Taxi get such a forgivable loan? Why would the BDC commit nearly 10% of its net worth to one entity without any type of return?
Is this sound business? Not in any of my textbooks.
I had a number of questions when the chair called for one more and adjourned the meeting, so I will ask now:
What is the BDC policy on loans? What are the underwriting standards? Who reviews the terms and conditions of the loans? How does the BDC develop minimum performance standards? Who writes the loan documents? Do the documents have negative covenants? How does the BDC get leads? What is the relationship between the town and the BDC? Does the BDC employ outside counsel? If so, who and how much?. Are there other relationships between the BDC members and the Town Council? When was the last time the BDC called for outside candidates (not former elected politicians) to fill vacancies?
The business of the public should be seen and held in full view of the public, with public input. The fact that the BDC recommends its own members to the Town Council is stunning. It would be more seamless if the Town Council called for and interviewed candidates, thus securing a more representative body, rather than the current composition, which has led some to feel the BDC is an incestuous collection of political retreads.
This loan, and the BDC’s inattention to detail proves to me the banker, the economic development expert, the town manager, the CPA and the lawyer were a lot more than remiss in their duties. They are derelict in their duty to protect BDC from default.
Kudos to Bill Morrell whose refusal to support this boondoggle demonstrates his and his family’s sense of honor and commitment to the town.
Rather than call this a forgivable loan, why not identify it for exactly what it is: a sweetheart deal. The frustrating part is there is nothing we can do about it.
Meanwhile, Dale King is sitting behind his desk lighting cigars with our money while we have legitimate businesses that also need our help (i.e., the gluten-free bakery burned out 16 months ago).
If BDC members can look in the mirror and believe in their hearts the Brunswick Taxi Loan was a legitimate business deal, so be it.
If not then you have irreparably violated the public trust and should resign.
DANIEL FORD is a Brunswick resident and retired financial services executive.
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