Is That The Coffee You Smell?

Amazing things continue do happen in the operation of the City of Banning ! With Measure L settled and more taxpayer money flowing to the City, the Banning Community Redevelopment Agency has found a new way of spending tax dollars. Imagine someone comes to you requesting a $30,000 loan to start a coffee house in downtown Banning.

Would you hand over the $ 30,000 without requiring them to have a business plan for the new business?

Would you make this loan without any contract being developed between you and the person requesting the loan?

Would you loan the money to someone who had never had experience running a coffee house or restaurant before, but had prior experience running an automotive body shop?

Would you give them the money without conducting a credit check on them?

Would you loan the money without requiring financial references or a financial statement?

Well, of November 10, 2009, the Banning Community Redevelopment Agency (CRA), composed of Bob Botts, Barbara Hanna, and Don Robinson did just that – only Debbie Franklin opposed the idea (with John Machisic absent )!

Here’s the story: The Haven Company, incorporated just two weeks before they received the loan, were granted their request for $30,000 to start a coffee house in the newly remodeled Oddfellows Building without submitting a business plan, with no experience running a food service business, without a contract between the city and Haven, without a credit check, and without financial references or financial statements .

Aside from the obvious lack of the above procedural steps in this process, it should also be noted that the CRA (remember, the same people serve on this agency as on the Banning City Council) agreed that the coffee housed be located in the Oddfellow’s Building that has already been granted $1,125,152.78 in redevelopment funds. Now, be aware that the official purpose of the Banning CRA funding is to remove blight, and blight has already been removed at that location by the spending of the taxpayer’s million dollars. If blight is now gone from the Oddfellow’s Building, what is the legal basis for the funding of this business? Additional tax revenues?   Without a business pro forma on projected sales, we have no idea how much the tax revenues will be, so that can’t be the reason!

In addition, there was no collateral offered for this “loan,” and while there was talk about a second on the business, this is meaningless since there was no financial information given as to the value of the “first”.

Finally, bear in mind that according to a typical Owner Participation Agreement that is commonly used in the City of Banning, under Sec 3.2.2.3  (view) states that the CRA loan will be eligible to be forgiven after five years, so this entire matter may not be about a questionable loan, but rather, a questionable gift of public funds.

You are free to draw your own conclusions about this strange matter.

Lyndon Taylor

CLICK HERE TO WATCH VIDEO OF THIS CRA SESSION  – START AT THE 5 MINUTE MARK