Tuesday, October 1, 2013

Strong Commentary on the BDC and Brunswick Taxi

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.


Putting the BDC on the up and up



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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1 comment:

  1. Glad to see outrage being expressed at the goings on in Brunswick, which is just a mirror image of the goings on in the state. I concur with all of Dale Ford's observations and questions but I wonder if he is unaware, as I once was, that what we see going on in Brunswick is just following the lead of our state legislature. Mr. Ford is surprised that there could be such a thing as a "forgivable loan" but this is just par for the course in a state that has a tax-payer subsidized high growth investors corporation (The Small Enterprise Growth Fund) in which the involuntary taxpayer investment always "rolls over" as in a non-profit investment- while the other 90 % of the investors demand an "exit strategy" (selling the business) so that they can realize their high growth profits- all for the good as asserted in the statute that chartered the Financial Authority Of Maine when it says :

    "The authority will serve a public purpose and perform an essential governmental function in the exercise of the powers and duties conferred upon it by this chapter. Any benefits accruing to private individuals or associations, as a result of the activities of the authority, are deemed by the Legislature to be incidental to the public purposes to be achieved by the implementation of this chapter. [1985, c. 344, §5 (AMD).]"

    Then we have The Maine Technology Institute- chartered by special act of legislation as "a nonprofit corporation with public and charitable purposes" Those charitable purposes being to give matching grants to private corporations, which, from what I have been able to determine, they can then add to the total amount of the capital seed investment from which they can get up to a 60% refund from the taxpayers- in other words a direct transfer of wealth from the taxpayers to the private corporations.

    And of course there is the unconstitutional city-state of the MRRA for which Brunswick sold its soul. The MRRA is chartered by special act of legislation as a municipal corporation that serves as an instrumentality of the state - a legal impossibility.

    And then we have the state owed means of production at the University of Maine- The U of M Advanced Manufacturing Center- funded in part by the Maine Technology Institute, which accounts for about 25% of MTI's projects.

    The list goes on and on- the economic development power elite of Maine is materialistically covetous, spiritually impoverished, legally arrogant, and moralistically insane and they tell us that whatever they do is for the "public benefit"

    The Brunswick Development private non-profit corporation is just a new link in that same chain that exists to make sure Brunswick gets its "fair share" of the redistributed wealth channeled down from the federal governemnt. All of these state and quasi governmental agencies talk about procuring state and federal funds but every body knows that the federal government is broke and is dumping worthless money on the economy which benefits the special interests for whom the quasi networks are formed, but it is robbing the purchasing value out of the money of all the people. The proper name for it is public theft.

    Then after the federal government prints up planeloads of worthless money and redistributes it through state government, the federal government prints up food stamps - now needed by an increasing number of people to supplement the purchasing power that has been stolen from their money earned through the fruits of their labor- which is the only place that real wealth comes from.