Sunday, March 28, 2010

Fresno council member touts new loan policies

Disputing a key claim of two recent grand jury reports, Fresno City Council Member Lee Brand on Friday said city officials did not have sufficiently strong policies to compel the provision of more detailed information on two loan-guarantee requests that have cost taxpayers millions of dollars.

Brand said that problem has been resolved by the council's approval last year of his Better Business Act.

In a five-page written response to the grand jury released publicly Friday, Brand said the act "will substantially improve future evaluations of public-private ventures."

The grand jury issued two blistering reports this month, one on the disastrous Granite Park recreation-retail project in central Fresno and the other on the failed Fresno Metropolitan Museum in downtown.

The city guaranteed a $5.2 million bank loan to Granite Park Kids Foundation in 2004 and a $15 million bank loan to The Met in 2007. The cash-strapped city had to pay off both loans when they went into default.

Both grand jury reports criticize city staff, for failing to use common business sense in researching the loan-guarantee requests, and elected officials -- who had the only decision-making power that counted -- for failing to insist on more complete information.

But the reports also take City Hall to task for failing to follow its own policies designed to safeguard taxpayers when private ventures ask for city financial support.

The report on Granite Park, for example, discussed City Code Section 7-912, which requires applicants seeking city help to provide detailed financial information and undergo background investigations.

"All elected and appointed City officials interviewed by the grand jury appeared to be unaware" of the code's requirements, the report stated.

The report on The Met stated that the city's Economic Development Policy and Program requires a developer seeking city help to provide a detailed business plan.

"The Council may waive the requirement for the business plan," the report stated. "However, it was not done in this instance."

Emphasizing that he was speaking only for himself, Brand methodically reviewed each grand jury claim and explained why he believes the old policies were inadequate to the complex task of financial research.

For example, he said Section 7-912 "is only half a page long and provides minimal criteria for selecting and evaluating private sector proposals ..." He said the ordinance fails to require an appraisal of property used as collateral in a loan guarantee.

Brand said the most glaring shortcoming of the Economic Development Policy is that it permits the City Council to waive the business-plan requirement.

By contrast, he said, the Better Business Act, with its more stringent and detailed requirements, does a better job of protecting the public's interests while doing nothing to discourage well-designed private-sector proposals from coming to the city's attention.

Also, Brand said, "it is not the policy or mission of the City to be a lender of last resort for private sector business proposals."

http://www.fresnobee.com/2010/03/26/1874594/fresno-council-member-touts-new.html#ixzz0jUA5UWel

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