Arapahoe County's 'stimulus' plan brings banks, small business together

09 June 2010

BY BRANDON JOHANSSON
The Aurora Sentinel

AURORA | In the year since Arapahoe County Treasurer Doug Milliken launched a program aimed at pumping county dollars into the local economy, area banks have doled out more than $18 million in loans to area businesses.

And, Milliken said, he hopes to put about $22 million more into area banks before the end of the year.

“It’s going very well,” Milliken said of the program, which he dubbed the “Arapahoe County Stimulus Project.”

Under the program, Milliken purchased certificates of deposit in a half dozen local banks with the expectation that the banks will provide loans to small and medium-sized businesses in Arapahoe County. Each CD purchase is protected by the Public Deposit Protection Act and fully collateralized to 102 percent, as well as secured by U.S. Treasury bonds placed in the ownership of the county, according Milliken.

Initially, the plan was to cap loans at $500,000. But Milliken said because of higher demand than originally expected, some of the loans have been for more, including at least one for about $700,000.

The money has gone to help a variety of local businesses make purchases that they otherwise wouldn’t have been able to make, Milliken said.

Milliken said the program is different from the roughly $200 million in annual investments he typically makes. He usually looks for the safest and highest-yielding investments in a variety of markets.

To qualify for the program, banks must be locally controlled and the businesses they loan to must be locally based — no chains that just have a location in Arapahoe County, he said.

Milliken said he started the program because in the down economy, banks had tightened their lending to a point that area small businesses couldn’t get the financing they rely on to make improvements and grow their businesses.

“There were a lot of banks that just didn’t have money to loan,” he said.

The cash infusion from the Treasurer’s Office means those banks now have extra money that they can pump into the local economy, he said, something that has lasting and far-reaching impacts on the county.

“All of these things, the county benefits not just financially, but there are people employed, the economy moves,” Milliken said.

The banks involved use the same criteria normally used to determine if a business is credit-worthy to obtain a loan. Darrell Schulte, president of Colorado Business Bank in Littleton, said his bank is still being very conservative when it comes to lending, but the money from the treasurer’s office has helped.

“It’s still tight, but its another source of funds that we can use to make loans with,” he said. “We’d love to push a lot more money out the door, but we’re still using fairly conservative underwriting criteria.”

Because of the loan terms each bank uses, which state that the names of loan recipients will remain private, Milliken’s office declined to release the names of the businesses involved.

But according to Milliken’s office, some of the businesses helped include: An Aurora day care that took out a $10,000 loan to purchase equipment, an Englewood aviation company that took out a $191,000 loan to purchase a hangar and a Littleton medical company that received a $378,000 loan for working capital.

Milliken said he didn’t know of any other county treasurers in the state or around the country who have similar programs.

Aurora City Councilwoman Sue Sandstrom, who is running against Milliken this fall, said she supports the program in general, but would make a few changes to it if elected.

She said the program can be helpful, but there needs to be more transparency from the treasurer’s office about where the money is being spent. A page about the program on the treasurer’s website, for example, hasn’t been updated since the program started with information about where the money is being allocated.

“This is taxpayer money, the taxpayers deserve to know where it is and where you are investing that money,” she said.

Sandstrom said she would update the website at least monthly.

And, Sandstrom said, she doesn’t think Milliken’s program is particularly unique.

“It’s not necessarily a bad thing, but it’s absolutely nothing new,” she said.

Sandstrom said every county treasurer and even the city of Aurora has CDs in various local banks.

Milliken said his program differs from others because he not only deposits the money, but does so with the requirement that the banks turn around and lend that money to local businesses.