To the uninitiated, Santa Rosa’s SAFE-BIDCO can seem a bit of a mystery — an apparent arm of state government and yet a separate nonprofit agency that exists to help small businesses get loans.
In contrast, recent criticism of the organization seems straightforward enough. The state auditor’s office this spring contended that the nonprofit stands at risk of going insolvent as early as next June and its leaders have made “questionable” spending decisions. Late last week, a state agency sent the nonprofit a letter ordering its leaders to develop a “self-liquidation plan.”
All of which leaves a question mark hanging over the future of a 36-year-old organization based in an office park off Sebastopol Road.
SAFE-BIDCO, or the State Assistance Fund for Enterprise, Business and Industrial Development Corporation, is listed as a “state entity” in the government’s online California Directory, its name nestled between those of the Board of State and Community Corrections and the State Bar of California. Nonetheless, the organization’s half-dozen employees aren’t eligible to join CalPERS, the state’s retirement system.
Because of its preponderance of state-appointed board members, the nonprofit isn’t permitted to offer certain federal loan programs as a designated community development financial institution. And the Internal Revenue Service has concluded that SAFE-BIDCO doesn’t need to file an annual return Form 990, a common requirement for nonprofits.
“We’re the only thing like us out there,” said President/CEO Mary Jo Dutra. “And that makes it very confusing.”
Since the Legislature created the nonprofit in 1981, it has made more than $200 million in loans and created or saved more than 13,000 jobs around the state, according to details in an April state audit report.
The nonprofit, located in an office on Corporate Center Parkway, helps startups and other small companies that often can’t get loans anywhere else, its leaders said.
Glen Stanley, the chairman of the board, said that without SAFE-BIDCO, “businesses will fall between the cracks.”
“They don’t get formed, and that is a negative impact to the California economy,” said Stanley, who first became involved with the nonprofit as a bank vice president. He was appointed to the board in 1999.
One state legislator sees a need for organizations like SAFE-BIDCO because the state’s small towns and rural communities lack enough lenders to help small businesses create jobs and boost economic growth.
“Rural California needs help,” said state Sen. Mike McGuire, D-Healdsburg.
The nonprofit is located within his legislative district.
While McGuire had offered to work with SAFE-BIDCO officials to get the nonprofit put under the direct oversight of a state agency, state regulators ultimately stepped in with their own plans to deal with the nonprofit.
Officials from that department told him that regulators intend to review whatever self-liquidation plan the nonprofit submits, after which “a formal time line will be developed for liquidation.”
“The future of SAFE-BIDCO is now in the hands of the Department of Business Oversight,” McGuire said.
SAFE-BIDCO came to Santa Rosa from Sacramento in the mid-1990s, said Dutra, who has been its CEO since 2000. Past officials have told her the move happened because the organization took over part of a state loan guarantee program with a focus on the North Coast. As such, it was required to relocate to the region.