Agenda - 12-13-2016 - 6-a - Minutes

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4 1 require more expensive taxable financing would have to be determined at that time). The lease 2 could either require a cash payment or provide that the use of the building is part of the 3 County's consideration for the services to be provided by the agency. Matters of maintenance, 4 taxes and insurance would also have to be resolved in connection with the lease. The 5 construction of the building would likely be subject to the construction and bid laws otherwise 6 applicable to County projects. 7 8 As an alternative, the County could establish a nonprofit corporation of its own to 9 undertake the financing and construction, although the lenders would still look to the County to 10 make the loan payments, and the construction and bids laws would likely still apply. 11 12 Make a restricted capital grant 13 The County would use cash on hand to make a larger than usual grant that the agency 14 could use for a capital expense. The performance agreement would restrict the use of the funds 15 for the planned capital expense, and would extend for a term commensurate with the size of the 16 grant. Because County money would be the intended source for the payment of the construction 17 costs, the construction of the building would likely be subject to the construction and bid laws 18 otherwise applicable to County projects. 19 20 Make a multi-year grant that could be used for lease or loan payments 21 The outside agency would contract for a capital project, and the County would enter a 22 multi-year grant agreement that was sized to provide for the agency's lease or loan payments 23 related to the project. 24 25 Fund a loan-loss reserve to back loans to the outside agencies. 26 As the County has done with its business loan programs, the County could fund a loan- 27 loss reserve to support loans incurred by the outside agencies. 28 29 Considerations for all approaches 30 The function to be served by the outside agency must be a function the County is 31 authorized to provide directly. 32 33 Each arrangement should be supported by a contract with the outside agency that 34 specifies the work to be done by the agency. If the County uses a multi-year grant approach, 35 then the contract should extend for the term of the grant. If the County uses a lease approach, 36 then the performance contract should extend for the term of the lease. There should in all 37 events be some level of proportionality between the funding from the County and the service by 38 the agency. 39 40 In undertaking any program of this sort, the County should build a strong record 41 documenting the public benefit expected from the arrangement. To the extent the County views 42 the project and benefitting agencies as enhancing employment and business prospects in the 43 County, the County would be well-served to also follow the statutory procedures (including 44 public hearings) provided for in the business incentive statutes. 45 46 A big issue at looking at capital funding is you have to look how much of a commitment 47 they would want to do. 48 49 Chair McKee asked Bob Jessup what would happen if the County had a five-year 50 contract with an agency for a building, and in year two the agency stopped performing, and the 51 County had to evict the agency.