It’s a tricky question about business owners who fall behind in their financial obligations to the Erie County Industrial Development Agency: Should they be publicly identified, possibly to the detriment of their businesses, or should they be protected, even though they are failing in their pledge to the public?
Count Mark Poloncarz in the first camp. “We deserve – and the public deserves – to know,” said the Erie County executive, who serves on the development agency’s board of directors. In his view, companies that fall behind on a loan to a public entity are usually experiencing significant financial trouble.
Dottie Gallagher, also a board member as well as president of the Buffalo Niagara Partnership, argues for discretion.
“I would not be in favor of public shaming if it’s possible that this company could pay this back,” she said. “There should be some sensitivity around the company’s specific issue.”
Both, in fact, raise valid points. To Poloncarz’s point, these businesses are accepting public support, in the case of the ECIDA, from the federal government. If they start falling behind on payments they owe, the public surely has a right to know. But publicly identifying those businesses may further harm them and decrease the chance that they can catch up. And would it serve a purpose beyond notifying the public?
This may be one of those issues that defies an easy resolution. Nevertheless, it is surely crying out for attention.
The loans are made through the Regional Development Corp., an arm of the Erie County Industrial Development Agency. The RDC’s delinquency rate hit a disturbing 14% in September, nearly triple the previous month’s rate of 5.2%, said Gerald Manhard, chief lending officer of the RDC.
Four loans totaling $1.76 million are now delinquent, Manhard said. They are among $12.8 million in outstanding loans.
Like Gallagher, Manhard is hesitant to publicly list the delinquent loans along with the name of the borrower, as Poloncarz proposes. The possibility of harm is obvious, especially if, as he said, competitors use the information as a selling point against them. A critic might argue that such are the risks of leaning on public entities for financing.
The answer, as is frequently the case, must lie somewhere between immediately identifying such companies, to their possible detriment, and waiting until they are hopelessly behind, to the disregard of the public’s interest.
What is the magic number? Two payments behind? Four? Eight? That’s a matter of negotiation. The fact is that while no policy will be perfect, just about anything will be better than either extreme.