Guilford County Commissioner Kay Cashion was in rare form when she pointed out, at a public meeting, the irony of the request from the Nussbaum Center for Entrepreneurship – a business incubator designed to teach budding companies good business practices.
The Nussbaum Center borrowed $75,000 from Guilford County in 2001 and, on Thursday, April 6 – 16 years after that loan was made – the center was asking Guilford County to “forgive” the loan because it wasn’t “convenient” for the center to pay it back.
In the end, the Board of Commissioners voted 5 to 3 that the Nussbaum Center didn’t have to pay the money back. However, at the meeting, Cashion, a Democrat who voted against the move, played the role of staunch conservative. She did not mince words regarding the request from Nussbaum Center President Sam Funchess not to pay back that money after getting extensions through the years.
“You have a loan that was given to you,” Cashion said. “You ask for an extension; you ask for [another] extension and then you come back and say, ‘Well, we’ve got the money, but it’s not convenient … It just bothers me that a group that is based on entrepreneurship and helping people start out young businesses – well, it’s not a really good example for them.”
Guilford County Board of Commissioners meetings rarely get more uncomfortable than they did at the April 6 meeting, since three commissioners seemed very put off by the fact that the Nussbaum Center was making the request – though in the end a bipartisan majority on the board told the center it could keep the $75,000 of taxpayers money.
Cashion said she would have hoped instead that Funchess had come to the county and said, “Can we make a payment on this – or some arrangement on the deal.”
“This is just a matter of principle,” she said. “This was a loan, no payment has been made and now you expect us to ignore it.”
Guilford County approved the $75,000 interest-free loan in March 2001 with that amount to be paid back to the county within 10 years. The loan was used to renovate office space at Revolution Mills on Yanceyville Street in Greensboro. The Nussbaum Center then moved to the former Carolina Steel building at 1451 S. Elm-Eugene St. in Greensboro and, in both 2011 and 2014, Guilford County granted extensions on the time for the Nussbaum Center to repay the loan. The last extension expired on Thursday, March 30, 2017, and the entire loan was still outstanding when Funchess appeared before the board at the April 6 meeting.
Before making the request, Funchess spoke on the success of the center and how it had grown since the time, at the turn of the century, when the organization was the only tenant at Revolution Mills. He also spoke about how the center had made $2.8 million in renovations to the Carolina Steel building, which was donated to the center by local businessmen D.H. Griffin and Jimmy Clark, and now there are 46 small businesses in the building, which Funchess said, pay higher-than-average wages for the county.
“We’re pleased to report, for 2015-2016, the organization is operationally cash flow positive,” he said, adding that only two of 50 business incubators in the state were “operationally positive.” Most of the others in North Carolina are run by colleges and universities, he said.
Kindermusik, Identity Branding and MyThreeSons Gourmet are three companies who are success stories over the past 30 years that the incubator has been in existence.
“That’s a very impressive report that you’ve given,” Cashion said after Funchess finished. “What I have a question about is, with all the success that you’ve had, it bothers me that no effort has been made to pay any of the loan – I wonder if you could address that.”
Funchess told the board that, though the Nussbaum Center had the money, it would be a struggle to pay off the loan.
“At this time it would put a financial strain on us to make that payment,” Funchess said. “It would leave me literally with $631 in my account.”
Cashion pointed out that the loan dates back to 2001 and asked: “Has there not been any money available to make a payment on the loan? I’d feel better if at some point you had made an effort to repay this loan because it is a loan from the citizens of Guilford County that we are responsible for overseeing. I would feel better if you came in with a plan for a payment rather than just saying, ‘Forgive it.’”
At the same time the county loaned the money to the Nussbaum Center, the City of Greensboro also made a $75,000 loan to the center. Greensboro forgave that loan years ago. In 2011, the Greensboro City Council loaned $1.27 million to the Nussbaum Center and two years later forgave that loan as well.
Cashion pointed out that the Nussbaum Center did nearly $3 million in renovations to the Carolina Steel building and added that she didn’t want to “belabor this” but said it seemed to her that, with the amount of cash flow the organization has had over the years, at some point it could have paid the county back something.
Commissioner Alan Perdue, another no vote on the losing side, said he thought Cashion’s points were very well taken.
“That’s my concern too,” Perdue said. “Between 2001 and 2017, not a penny has been paid back.”
He said the center clearly has had funds during that time but the center had never made a plan to pay back the county.
Commissioner Alan Branson was the third commissioner opposed to the move.
“There’s no doubt in my mind what you’re doing in the community is a good deed for those that are starting out in business,” he said before dropping the other shoe.
“I’m a small business guy,” said Branson, who runs a family-owned trucking business. ”Nobody’s ever given me the opportunity to take $75,000, or $25,000. You have to get out there and bust your tail 365 to make ends meet.”
Branson said after the meeting that he wonders if those businesses renting space from the Nussbaum Center can just come to Funchess and say, “We don’t want to pay rent this month.”
At the meeting, Branson made that same point in a slightly less direct manner.
“These folks in there, are they paying rent to you?” Branson asked. “And, also, this property was gifted to you?”
Branson added that forgiving the loan would set a bad precedent for the county.
“If we do for one, this is going to open the floodgates,” he said. “They will come out of the woodwork. Give $75,000, and another half dozen will be lined up outside county offices tomorrow morning.”
But those three commissioners were in the minority; the other five favored forgiving the loan. (One of the nine, Democrat Ray Trapp, had resigned from the board earlier in the week to take a job with North Carolina A&T State University.)
Commissioner Carolyn Coleman argued that the board gives money to, and cuts deals with, large businesses and area developers all time, and she said forgiving this loan would be a chance to do something for small businesses.
“All of us know with our personal finances that sometimes it’s hard to come up with the money,” she said.
Coleman was home sick that night and participated in the meeting by phone.
Chairman of the Board of Commissioners Jeff Phillips had recently taken a tour of the Nussbaum Center and met many of the business owners there. Phillips said the Nussbaum Center offers guidance for growing businesses and other valuable services and contributes to economic development in the area.
“We talked a lot about incentives for large expansions; we have talked a lot about doing something for small businesses,” Phillips said, adding that this would be a “shot in the arm” for the center.
“You’re hitting your stride as an organization,” Phillips told Funchess at the meeting.
Commissioner Justin Conrad also gave his reasons for forgiving the loan.
“This is a loan that’s been on our books for 16 years,” Conrad said.
“This is why it’s bad policy for the government to get in the banking business. This should never happen – ever. If you feel like you should give a grant, then give a grant; but money should not be loaned to a nonprofit.”
Conrad asked Guilford County Manager Marty Lawing if the county had any other outstanding loans to nonprofits or similar groups and Lawing said county staff was not aware of any.
Several commissioners agreed with Conrad’s point that, going forward, the county should not “act as a bank.”