But there’s something creepy about government, a magnet for megalomaniacs, stepping in and being the Sugar Daddy. The government of a free people, with its taxing power, should not mess up trade decisions freely made by viewing itself as the pump that redistributes wealth in uneconomic directions. It should only attack abuses, like fraud, usury, and other might-makes-right actions unjustly holding down the weak. Is it racist to say government should not confer businesses on people before they go through the school of hard knocks learning to make a better widget, pitching it, and negotiating a position in the market?
According to council’s Vision 2036 plan, “A variety of economic tools is critical in building the ladder of social and economic mobility and sustainability of our community. There is a perceived gap in the existing business and service provider network regarding access to capital for small and minority business. The city can support a strong public-private partnership to help diversify our business ownership by participating in this initiative.”
The idea is for the city to loan the Self-Help Credit Union $250,000. The amount, which will earn 0% interest and be forgivable if not already forgiven, will be used to collateralize lending to small businesses. The county is expected to vote on a similar $200,000 loan in the near future. Other collaborators include Mountain BizWorks and the Carolina Small Business Development Center. Trade Street Advisors, LLC, helped the partners navigate laws and design the administrative infrastructure.
Although members of council said, “minority, minority, minority;” a review of the organizational papers only found “small business” named as the intended recipient. In fact, the allocation of services and duties agreement only stipulates, “Participating lenders agree to use commercially-reasonably [sic.] efforts to attempt to lend under the program an amount up to $530,000 (the target funding amount) to businesses (borrowers) located in the Asheville and Buncombe County area as defined and approved by the city; provided, however, that this shall be a nonbinding target, and the actual amount lent by participating lenders to borrowers under the program may be more or less than the target funding amount. The actual amount of funds lent by participating lenders under the program may differ substantially from the target funding amount due to … and other conditions.”
In short, council just approved handing out $250,000 for whatever an as-yet unappointed steering committee feels like deeming. While government assistance is believed to help the city reach its vision for a “Thriving Local Economy,” the theme nicely ducktails with its vision for “A Financially-Resilient City” as well.
In Another Matter
Back in 2010, city council approved incentives for developers of affordable and workforce housing and found no takers. Eventually, some developers reached out to leadership to say no bank would finance a project bad enough to meet the standards. The plan has since undergone a few revisions. Presenting before council, “retired and not retired” Community Development Director Jeff Staudinger explained the city has approved six applications for Land Use Incentive Grants (LUIG) throughout the program’s life, but none of the projects has advanced to the payout stage, yet.
Updates to the program include, among other things, increasing the minimum period of rent controls from 15 to 20 years, providing greater incentives for 50-year rent controls, and changing the definition of locationally-efficient. Indirectly referencing a former application, Councilor Vijay Kapoor asked if any changes had been made to ensure awardees would be creating more affordable housing than they were destroying. Councilor Julie Mayfield asked that incentives for green energy be reinstated in the criteria. With approval, council agreed to allow amendments addressing those subjects to begin wending their way through normal vetting channels.