Marietta is playing Santa Claus. It has $198,200 of federal money to give away. To receive the taxpayer’s gift, a company must be located in a “revitalization area,” and hire one full-time employee for every $25,000 received.
City administrators need a civics class. Initially they wanted to include local tax dollars in the giveaway. In Georgia, government spending must promote the general welfare. It can’t be spent for the short-term benefit of individuals or private businesses.
This case of hometown socialism started when Marietta decided small start-up businesses needed a “public sector loan fund to provide gap financing.” Called “The Marietta Growth Fund,” it was intended to work in partnership with local banks, supplementing traditional commercial loans.
The city Web site said this revolving loan program was a mechanism to “close the deal” when traditional bank loans provided insufficient capitalization.
Program funding came from the U.S. Department of Housing and Urban Development with the city contributing $50,000. The federal greenbacks arrived in Marietta in October 2005, but no businesses applied for the loan funds, so in 2009 the city manager proposed changing the growth fund from a loan program to a grant program.
The initial request included the $50,000 of local tax dollars, but this had to be cut when it was pointed out state law prevented Georgia municipal governments from giving away money. The City Council also wanted assurance that HUD officials approved of the program change.
In July 2009, the HUD director of the Congressional Grants Division approved. It is unclear if Marietta staff told HUD it was illegal for a Georgia city to give away tax dollars and that they had pulled their $50,000.
At the City Council meeting Sept. 9, 2009, a motion was approved accepting the revised Marietta Growth Fund grant guidelines pertaining to “U.S. HUD grants funds only,” and on Oct. 14, 2009, a citizens committee was established to screen grant applicants and pick winners. Nine businesses applied for a grant and on Nov. 10, 2009, the committee selected one to receive $75,000.
The lucky winner has 35 employees and produces a line of formula-based products. According to the company’s application it is either going to expand its existing facility or relocate out of Marietta.
The only reason the winner was presented to the City Council for approval was because the grant amount was over $50,000. Marietta staff said the grant would “solidify” the company’s decision to remain in Marietta and they would use the money “to redesign production lines, and increase warehouse space.”
The business estimated its cost of expansion at $450,000 and agreed to use local contractors for the work, finance the balance of their project costs with a local community bank, and hire three new employees.
The irony is that the business promises to use the $75,000 grant to supplement a traditional bank loan, which was the original intent of the Growth Fund. The city closed out that fund because they could not find applicants.
Larry Wills, a retired environmental designer, lives in Marietta.