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CEDC faces sustainability issues in down economy

July 15, 2009
LANCASTER — Sustainability, in one form or another, dominated the conversation at Thursday evening's two-plus-hour meeting of the board of the Cos Economic Development Corporation (CEDC), chaired by Peter Powell of Lancaster.

CEDC is the state-recognized Regional Economic Corporation, one of 10 covering the state, he and executive director Peter Riviere explained. CEDC is the conduit for all Community Development Block Grants/loans (CDBGs) made through municipalities and the county. When organized, CDBGs were seen as a way to capitalize revolving loan funds. It was expected to be a kind of financial recycling, in which the proceeds from loan repayments would be used to assist other businesses, he said.

The CEDC has handled all eight CDBGs in the county since its inception in 1997, 12 years ago. Losses have been experienced in the $3.5 million that has been loaned, however, and additional losses can be anticipated, given the current sharp economic downturn, Mr. Riviere said.

"What remains is a nearly $1.4 million revolving loan fund, which produces an income of about $65,000 in interest payments," he said, pointing out that this clearly is insufficient to sustain the operations of CEDC. "Our balance of available funds for lending is about $210,000, with three requests totaling about $180,000 to help businesses in Lancaster and Berlin."

Adding further to the scarcity of dollars available is that these funds are held in a 50-50 partnership with the Northern Community Investment Corporation (NCIC), headquartered in St. Johnsbury, which handles most of the lending functions for a per-loan fee under a Professional Services Agreement (PSA).

This means that the lending part is well cared for, however, even if substantially under-capitalized, Mr. Riviere said.

A standard rule-of-thumb is that a small lending operation, such as the lightly staffed CEDC, should be capitalized at slightly over $3 million. Because of the 50-50 PSA with NCIC, however, the dollars needed should be closer to $7.5 million.

But lending is only a small part of what CEDC does, Mr. Riviere pointed out. "As of today we are working with a business to fulfill its potential as one of the county's Grand Adventures," Mr. Riviere said. "We are working with Wireless LINC to expand the wireless broadband network to unserved areas of Cos; we are working — patiently — on a reuse plan for the now-shuttered Wausau-Groveton Paper Board plant; and we have recently engaged with other organizations to address future reuse and re-employment of those upper Cos workers who soon will be laid off from Ethan Allen in Beecher Falls. It's a full plate for which we need collaboration, cooperation, and dialogue about best steps going forward."

Another two proposed CDBGs are in the data-collecting stage — one for the proposed Assisted Living facility that would repurpose the former Notre Dame School in Berlin, the other a proposed black powder manufacturing facility in the Colebrook Industrial Park, Mr. Riviere noted.

Eight board members voted "yes" and two abstained from voting to support Mr. Powell's proposal to spend $10,000 of the $160,000 available in cash or cash equivalents set aside in a budget line item reserved for "administration." This will be used as a contribution toward NCIC hiring a technical assistant who would focus on family-owned and other small businesses in Cos, Grafton, and Carroll Counties by providing timely suggestions for adopting improved cash management practices.

Board members agreed that as a result of the shrinking economy, many area businesses would likely find themselves "asset rich and cash poor" in the coming months at a time when assets cannot easily be converted to cash.

The expert hired will have to be able quickly to gain the trust of those who need help the most, because getting people to open up their financial books to new eyes is always a challenge, but even more so in hard times when red ink is likely to be part of the picture.

Speaking from his background as a retailer and not as a state employee for the state Department of Resources and Economic Development, Beno Lamontagne of Colebrook said that businesses in the northern reaches of the county were going to need a lot of technical help.

"It's a real tough situation up there for the retail stores in Colebrook," Mr. Lamontagne said.

The CEDC has been at the table with many others, including the Canaan, Vt., selectmen, brainstorming about how the Ethan Allen plant could be re-used, Mr. Riviere said, noting that about 60 percent of E. A. employees live in New Hampshire.

County commissioner Tom Brady of Jefferson, who attended much of the meeting with Commissioner Burnham "Bing" Judd of Pittsburg, urged Mr. Riviere not to hide the efforts of CEDC under a proverbial bushel but to let others know of his efforts.

"People are angry," Commissioner Brady said. "If you're holding meetings, let us know."

From now on the commissioners will be notified about meetings at which their presence could be helpful, Mr. Powell pledged. He also reminded the board that the CEDC has the capacity to act as a convener of meetings, bringing disparate people and organizations together.

Mr. Brady said he believes that the commissioners and CEDC have to reach a deeper level of cooperation than in the past.

The meeting closed with the board unanimously authorizing chairman Powell to work with other partners and organizations to identify sources of money to hire a "real expert" who can help local leaders and those working on regional economic development issues to understand some of the implications of the various proposed energy, electricity, and biomass projects, such as the massive proposed Hydro-Quebec Direct Current transmission line that would pass over Cos County and upgrading the so-called Cos Loop transmission line, as well as the effect of both existing and pending energy-related state and federal policies and legislation.

"We need to see how these kinds of proposals would affect us here in Cos," Chairman Powell said.

Varney Smith
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