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Partnership Sure Knows How To

Throw A Party

 

JOHN HAMMER

August 28, 2014

The Greensboro City Council learned a couple of things about the Greensboro Partnership at its Tuesday afternoon work session, August 26, in the Plaza Level Conference Room

 

One is that the Partnership believes the City Council should fund a entrepreneurship program it runs so that the Partnership can give assistance to the children of multimillionaire entrepreneurs who are starting new companies.

 

Another was that the Partnership has no interest in economic development in Greensboro.

 

And finally, one of the reasons nobody understands what the Partnership does is because the top leaders at the Partnership can’t explain what they do in a manner that anyone can understand.

 

The Partnership came in to Tuesday’s meeting with the City Council already doubting that the money the city puts into the Partnership is a good investment, and the Partnership left leaving no doubt in anyone’s mind that it is an organization of questionable value.

 

President of the Greensboro Partnership Chamber of Commerce Deborah Hooper, who has already been named as the new chief operating Officer of the Partnership, gave a presentation on Greensboro Partnership Entrepreneur Connection, for which Hooper has now asked the City Council on two occasions for $100,000.   The presentation on that program was so convoluted that even Mayor Nancy Vaughan said, “I don’t think there has been a good overview of what an accelerator is.  I’m frustrated with the presentation.  I think the accelerator really has a lot of potential to offer the community and I don’t think that has come out.”

 

The Partnership’s “State of the Community” luncheon was to be held the next day, Wednesday, August 27, so at the Tuesday meeting Vaughan added, “Maybe they will be able to verbalize it in the report to the community.”

 

After that statement by Vaughan, you might expect Hooper to step forward and explain what an accelerator is and why it would be helpful to the community, but you would be wrong.

 

However, Councilmember Zack Matheny did ask Dennis Stearns, of Stearns Financial Services Group, who has been involved in the project, to come forward and offer some explanation.  Matheny said that the term “lean startup,” which had been bandied about, didn’t mean anything to most people.

 

Stearns, if anything, made things worse.  He didn’t explain what was meant by “lean startup” and started talking about “gazelles,” but he didn’t explain what they were other than they weren’t the African antelope.

 

The example Stearns gave of a startup company that had really benefitted from the entrepreneurship center was Guerilla RF.  Its founder is Ryan Pratt, the son of Bill Pratt, one of the founders of RF Micro Devices.  Not only is Bill Pratt the father of Ryan Pratt, he is also an investor in Guerilla RF and an advisor.

 

Unlike some of the other folks offering advice, Pratt is a true entrepreneur.  He founded a company that went from being worth nothing to being a publicly traded company worth billions, with plants all over the world.  So this startup company is well funded and has an advisor who has successfully steered a company past all the potential disasters of a startup.  If there was one company in Greensboro that did not need public money to get started it is Guerilla RF, yet this was the only named company that Stearns and Hooper would talk about.

 

Stearns mentioned a company that went through the program that now had 100 employees, but when asked what the name of the company was or how much those employees were paid, he wouldn’t say.  He did say they were well paid.

 

Earlier when asked how much the Partnership was asking the council for, Hooper said, “We have respectfully revised our request for $100,000.”

 

Councilmember Sharon Hightower, referring to an earlier request at the July work session, said, “I thought that’s what you asked for.”

 

Councilmember Tony Wilkins said, “That is what you asked for.”

 

Vaughan attempted to explain the difference saying that the Partnership was asking for up to $100,000 in matching money, and they only had raised $50,000 so far.

 

Hightower replied, “It’s still the same $100,000 they asked for.”

 

Hooper tried to explain why they were still asking for $100,000 from the council by saying, “We have incurred expenses.”

 

Hightower noted that when they asked for $100,000 they had $98,000 in administrative costs.  So if they raised $100,000, including $50,000 from the city, that would mean that they had $2,000 for the program.

 

Hooper said, “We do have a $200,000 expense budget that we will continue to try to fund.”

 

Wilkins noted that it was a 12-week program and said, “That’s $8,000 a week for 12 weeks for administrative costs.”

 

Hooper said the administrative costs were for a year so the administrative costs were $8,000 a month for the year, and they had to have two 12-week programs a year.

 

Hooper was also caught by the council misrepresenting the costs of the program.  When she appeared before the council in July to ask for the same $100,000 she said that one cost the Partnership incurs is because of a change in federal law requiring interns to be paid; the Partnership couldn’t use unpaid interns.  However, this week the council was told that about half the interns are paid and the rest are unpaid.  Hooper didn’t offer any explanation for the discrepancy on what the council had been told a month ago.

 

Last month the council asked for a list of how the $200,000, including $100,000 in Greensboro tax dollars, would be spent, if it were allocated.

 

Wilkins said, “When we got this list I thought it was way overboard.”  He noted that the list had $12,000 for website development and marketing and meals for $8,800, and said, “The kickoff event for $7,500 is just not something that you have to have in a program like this.”

 

It is incredible that having been asked to trim expenses the Chamber couldn’t find a way to have a program without a $7,500 launch party.  You can have quite a party for $7,500.

 

What the council learned is that in a month the Chamber had not cut one penny from its budget and the only difference was that the Chamber had applied for a federal Small Business Administration grant of $50,000 to help fund the program but had not heard whether or not they had received the grant.

 

The City Council was not impressed with the presentation or with the budget.  Even supporters of the program, like Matheny and Vaughan, had trouble defending it, particularly when it was pointed out that what they had been told about interns was not true.

 

Some councilmembers were also miffed when they were told that the young people who attended the last meeting and were presented as entrepreneurs who would benefit from the program were, in fact, interns who were being paid.  Getting young entrepreneurs to attend a City Council meeting is impressive.  Paying young people to attend a meeting, not so much.

 

The council also heard a request for funding for another Chamber initiative from Jerome Gray, the only employee of the Greensboro Economic Development Fund.  Gray explained that the Economic Development Fund made loans to small businesses that couldn’t qualify for a bank loan, and that most of the loans were in the $5,000 to $10,000 range.

 

Gray said that any money the city allocated to him would receive a federal match of 100 percent.  He then told the council that if they awarded him $300,000 he would receive $600,000 from the federal government.  Matheny noted that was a match of 200 percent, not 100 percent.  Gray and Matheny went back and forth on the match several times but eventually Matheny prevailed and Gray agreed that the match was 100 percent, so he would only receive $300,000 in federal money for an allocation of $300,000, and that the federal money included a 20 percent administration fee.

 

When he was asked what the program cost, he said the total administrative cost was $80,000 a year.  He had previously told the council that in the past two years he had made 11 loans totaling $143,000.

 

Hooper told the council that Gray was receiving free office space and administrative support from the chamber.

 

Some members of the council expressed concern that a program that cost $160,000 plus office space and administrative costs only resulted in $143,000 being loaned.

 

After the meeting, some councilmembers questioned a businesses need for $5,000 and whether or not that was enough money to make much difference to an operating business, or what kind of company in dire straights could turn its business around with a $5,000 loan at 11 percent interest.

 

Gray stood at the podium as if he was not going to leave until he got an answer on his $300,000 grant.  Vaughan repeatedly said that the council would consider his request and get back to him, and he finally left the podium.

 

So the Chamber came to the meeting asking for a total in $400,000 in economic development funding, but when Vaughan said the council was going to revise its agenda and discuss economic development next, Hooper, Gray and the other representatives of the Chamber all got up and left.  Hooper, as noted, has already been named the future chief operating officer of the Partnership.

 

Councilmember Mike Barber said, “We had economic development on the agenda and the Partnership left.

 

After the meeting Vaughan said about Hooper, “I can’t believe she just got up and left.”

 

It’s safe to say that the City Council, one of the funding sources for the Greensboro Partnership, was less than impressed at the August 19 presentation of how the Partnership plans to move forward with the retirement of both Chief Executive Office Pat Danahy and President of the Greensboro Partnership Economic Development Dan Lynch at the end of the year.  The council was even less impressed with the Partnership after Tuesday’s work session.  The Partnership clearly has no interest in how the council plans to move forward with the city’s economic development function.

 

The Partnership also seems to believe that it can come to a meeting right after the budget for the year has been approved, tell a story of questionable validity and walk out with hundreds of thousands of dollars.

 

Perhaps Gray was extremely nervous being in front of the council, but for someone trying to impress the council with his financial expertise to get confused about whether a match is 100 percent or 200 percent does not bode well for the program.

 

The council also got into a lengthy discussion about the wisdom of having a five-hour work session.  Several votes on whether to have one or two work sessions a month were taken but the results were inconclusive.  Vaughan was out of the room for most of the discussion.  But after the meeting she said that five-hour work sessions didn’t seem to be the way to go.

 

The council also decided to begin the process to have Heritage House declared “blighted,” which will allow the city to condemn it and acquire it by eminent domain.  The question councilmembers had was what to do with it after they buy it from the current 62 owners.  Matheny expressed support for tearing it down and building something in its place, but Hightower said there was a need for low-income housing.  Vaughan noted that the building itself was sturdy.

 

The council left the decision on what to do if they did buy the building for another day.

 

 

 

 

 

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