New Hampshire's Industrial Development Authority has undergone a metamorphosis that state officials hope will refocus the agency's powers on small business.
Gov. Judd Greg last week signed legislation that renames the authority the Business Finance Authority and provides for new business lending programs.
The agency has two months to ready an array of lending programs to ease the flow of capital to companies in the state still suffering from a severe credit pinch, according to Clarke R. Chandler, the authority's executive director.
The authority's staff will be expanded to include a chief financial officer, a chief lending officer, and a loan assistant. For years, Mr. Chandler said, the authority's staff has consisted only of an executive director and an assistant.
"This authority has only been a facility for expending tax-exempt capacity since 1986," Mr. Chandler said. "All we did was assign capacity and collect fees. We didn't need very many people to do that."
"There was no pooling capacity," Mr. Chandler said. In the 1980s, the authority shepherded over $1 billion of tax-exempt bonds to market on behalf of utilities that owned the nuclear facility at Seabrook, N.H.
The authority's new lending programs are designed to help business that have loans larger than those covered by federal guarantees from the Small Business Administration, which covers up to $750,000. The Business Finance Authority guarantee program could cover loan principal exceeding that amount, up to $1.5 million.
Under another program, designed for ski areas in the state, the authority could make loans of $2 million available to borrowers willing to pledge collateral. By January 1995, the authority will have $95 million available for loan guarantees, Mr. Chandler said. The authority also plans to purchase loans made by local development authorities in the state and to issue bonds for pools of small tax-exempt loans.
But the additional loans and loan guarantees will probably have little effect on businesses in the state, according to Brian Gottlub, vice president of the New Hampshire Business and industry Association.
"It'll help a few businesses, but it's not going to make an appreciable difference," Mr. Gottlub said. "There's just not enough money You've got people lining up to get the guarantees and loans."
Nevertheless, "several people in the state government, in the legislature, in particular, felt the authority ought to be doing more for state business and less for the nuclear power plant," Mr. Chandler said.
After he signed the legislation last week, Gov. Gregg trumpeted it as evidence of "our commitment to working with the private sector to get the economy moving," according to a press realease.
As the state's banking industry collasped over the last year, businesses had difficulty securing bank loans. The authority had funneled the bulk of the state's private-activity bond allocation to tax-exempts for owners of the Seabrook nuclear power plant.
Since 1980, the authority has sold $1.69 billion of bonds, according to Securities Data Co./Bond Buyer. Of that total, $1.47 billion, or more than 85%, raised money for utilities making investments in the $6.6 billion Seabrook nuclear power plant.
The authority was created in 1955 as the Industrial Park Authority. When its name was changed in the 1960s, it was charged with fostering Granite State industry. For years it did just that.
But the authority stopped selling bonds for businesses and instead concentrated mostly on Seabrook in the 1980s, when New England's economy took flight and the perceived need for government-sponsored economic development died, said Beth Siegel, an economic development consultant.
"When the economy strengthened, the focus shifted and they didn't put any emphasis on economic development," said Ms. Siegel, president of Mt. Auburn Associates, a Somerville, Mass., consulting firm that was hired by New Hampshire to examine the industrial development authority.
Prior to 1980, she said, the authority "had a history of more activity" on behalf of small business in the Granite State, including a loan guarantee program. It also financed a string of industrial parks across the state, she noted.
After about half a year examining the authority's role and its perception by industrialists in the state, Mt. Auburn came up with suggestions that the state officially shift the authority's focus away from the utility financings that have become the norm over the last decade and back to small business.
But the "last straw," according to anti-Seabrook activist Robert R. Cushing Jr., was a $21 million offering in December 1990 for Boston's EUA Power Corp. By early March, EUA Power, with a 12.1% stake in the Seabrook plant, had filed for protection from creditors under Chapter 11 of the federal Bankruptcy Code.
"The IDA either had to change or it was going to go out of business," Mr. Cushing said. Some state lawmakers spoke of eliminating the agency altogether, he said.
Mr. Cushing said state lawmakers eventually agreed "there's a need for an agency like" the Business Finance Authority.
He added, however, that he "didn't like it when the extent of [the authority's] activity was to finance out-of-state utilities using the state's private-activity bond limit."