Grant application information

ECHO Advisory Committee

Volusia ECHO Advisory Board Meeting
February 11, 2004
County Council Chambers
DeLand, FL

I. Call To Order, Introductory Remarks, Roll Call:

Chair Matousek called the February 11, 2004, ECHO Advisory Committee meeting to order at 1:15 PM, welcomed the advisory committee members and the public. Chair Matousek asked staff to take roll.

Jack Wiles motioned to accept the minutes from January 14th.

Don Smith seconded the motion, and it passed unanimously.

Chair Matousek welcomed the public and explained that the purpose of the meeting was to give a brief overview of the ECHO program. He explained that voter intent has only been discussed as it pertains to the grading policy, but also noting that a discussion on voters’ intent should be held during the summer sessions.

II. Staff Report:

Margaret Hodge briefs the board on the current grant awards and their ongoing projects. Informs the Board that 5 of the 2003 grant recipients will be seeking and extension of encumbrance from the County Council.

Gary Libby asks if it makes sense for the board to bump up to the county council the question of a month extension? Would the county council expect a recommendation from this board? It seems to me that we are asking the county council to get involved in minutiae of the program all of a sudden.

Margaret Hodge replies that the county council has awarded the funds and there is no policy for the grant recipients to return here to the board. The policy states that they have to encumber the funds in 12 months. The only people who can really make that change are the County Council.

Gary Libby asks if this is an issue that the board should take up with the county council to see if it is a matter that they can decide upon here.

Margaret Hodge expresses her concern over making the process to obtain an extension too easy, and thus would not take it seriously enough. Certainly though, it is open for discussion.

Chair Matousek asks if it is an issue that goes to the County Council as a Council vote? That being the case, I think we would want to take that issue up this summer.

Margaret Hodge directs the attention of the Board to the 2002 and 2003 projects report and informs them of some changes that need to be made.

Frank Gummey addresses the board on the status of DBCC and BCC, explaining that Daytona Beach Community College has made application for the 50(c)(3)-determination letter. As he has not seen anything back from them yet, it is his assumption that they have not received an answer yet. The issue with BCC was their lender, sun trust bank, objecting to the restrictive covenant being in a superior lean position to the debt that they hold. My understanding is that it is a bond issue but it is secured by the mortgage on the college, including the performing arts center. The size of the debt exceeds the value of the performing arts center. One would presume that if there were a foreclosure that it would go to the entire property, and might leave us in an unsecured position. I engaged in discussions with the bank and council for the college and we reached an understanding, which will work in much the same fashion. That is we would be placed in a position as subordinate to the Sun Trust debt, however, the restrictive covenant would extend to the entire property of the college, so I think that that should proved the County with sufficient equity.

Gary Libby points out that Mr. Gummey’s response only addresses one of the two conditions for DBCC moving forward. The first being their 501(c)(3) status and the second being their status as a State agency. I know you have a court case that proves that they are not a state agency like the dept of children and families, but that is not the question. The question is, is DBCC the type of state agency that we discussed in the creation of this program that would be excluded from competing. I also have a question on the restrictive covenant, and are they going to be in the same position that BCC is in with their restrictive covenant. Now that would put us in a position where the land that DBCC is on is actually owned by the state of Florida whether or not the corporation is comprised of local trustees appointed by the governor. So there are a whole lot of unanswered questions concerning DBCC, also, the minutes accurately reflect Mr. Atkinson’s contention that the IRS is willing to backdate the 501 (c)(3) status 20 years. There are more unanswered questions today than there were when we met last. I do not know about my colleagues, but I am increasingly getting nervous about the DBCC grant application being moved forward in this funding session considering all of the problems that we will not even have answers to until the date of our meeting when we actually award the points. As a member of the wining side on the vote to move this forward, I am very seriously considering asking to revisit that vote and perhaps not move the DBCC grant forward into at least a position where we would read it. I would like to hear from my colleagues on this position. This has gotten worse rather than better.

Chair Matousek feels that we do need to proceed with the grading of the grant. There will certainly be an answer to the 501-(c)(3) status when we meet to rank the projects. The state agency issue is clearer I think now because of the legal ruling, but I think we would have some questions on that. I think that some of this would be moved out until we talk about intent.

Gary Libby asks if we are still in agreement that they are technically and currently ineligible.

Linda Hargreaves thinks that they are in agreement that the are technically ineligible currently, but that they went on public record giving DBCC until the 24th of February to clear their issues up, and that that deadline should be honored. I agree that there are other issues that are outstanding, and the court case and other information that we were given just opens up more concerns. I think that the 501-(c)(3) status is the benchmark of whether or not it gets recommended. At some point it has to be the legalese and the legal eagles that determine whether or not everything else falls into place. I am not skilled legally enough to know those answers.

Gary Libby states that we need to realize that if there is a flaw in the guidelines, that they were poorly drafted in their wording to exclude the agencies we wanted to exclude, and if that is the case, we need to correct it. If, on the other hand, just about everybody in this room, with a couple of exceptions were misinformed for the last two years and thought that Volusia ECHO is really geared for the community college or any other state agency who can finagle a 501(c)(3) status backdated for up to 20 years, then I think we have another set of problems. For me, it’s not just legalize, it’s the intent of the voter, as you well no there was never any desire to include the community college or UCF. Municipalities and the County are eligible, but there was specific discussion about the Community College, and its surprising to me that we find ourselves in this situation.

Chair Matousek brings up the point that a change in policy issue is not something that they can take up at this time. That is something we could take up after this current grant cycle.

Gary Libby asks what exactly is our policy?

Chair Matousek informs the Board that the policy does not say that a state agency with a 501(c)(3) status is ineligible. Nowhere does it say that. I think it goes back to the discussion of intent that we will be getting to shortly. Whether or not we want to change that is something we will take up after this grant cycle.

Jack Wiles says that it appears the board decided, according to the minutes of the last meeting, to give DBCC until the 24th of February to come up with the 501(c)(3). Also, Mr. Gummey brings up that the IRS does acknowledge DBCC as a state agency, and the program was not designed for state agencies. So, there are questions on that as well. I think we should give them until the 24th to come up with the 510(c)(3) and then vote on them at that time.

Gary Libby points out that the conditional movement was based on two parts. One, the 501(c)(3) status, and the sub part having that status for at least 2 years, and the B part is its relationship to the state, and whether or not the County Council intended for an agency like this to be eligible. I think, and I asked at the last meeting, and I thought it was part of our condition on moving forward, that the County Council share with us their feelings on whether or not Volusia ECHO is intended to include agencies like Daytona Beach Community College.

Margaret Hodge says that the minutes from the last meeting are fairly verbatim, and you do not see that in your motion to continue as a request. The only thing you have asked, whether it was left out or not, the only thing you have asked for is the 501(c)(3), it was contingent on them providing that. Where you go from there I don’t know, but that’s why we have minutes done verbatim in that section.

Jack Wiles asks, in terms of setting a precedent, is there any concern that we will set a precedent by allowing any of these? If we go back during the summer and say, no, this is not the intent of the voter, I am concerned that if we approve them, and decide over the summer that it is not the intent of the voter, will there be any fall out from that?

Chair Matousek agrees that certainly it is an issue, even though we have a fairly short history so far, I think it is clearly a concern, setting a precedent that we would have to retract in the future. We are fairly early on in the process.

Gary Libby interjects, stating that he has a correction, on page four of the minutes. I’m looking at the motion moved by Gary Libby that we accept DBCCC and give them until the February 24th to clear up not only their 501(c)(3) status, but also determine their eligibility under state designation as well. I don’t know how clearer that can be Margaret, and Lorna Jean Hagstrom seconded it, and it was passed.

Chair Matousek says that, from Mr. Gummey’s legal opinion provided to us is that, in fact, from a legal standpoint, the state agency is no longer an issue. There are two conditions on the motion, but the only one remaining is the 501(c)(3) status.

Frank Gummey replies that the criteria provided by the program says, “a corporation, incorporated in the state of Florida. With its principal office located in Volusia County. Classified as a 501 (c)(3) tax exempt under federal IRS regulations for a minimum of two years prior to the date that the application is due, and designated as in compliance in section 170 of the internal revenue code of 1954, and there is some additional amount about how it should serve to operate in the community. I think the case, the recent decision, indicates that its considered a political sub-division, not a state agency, and it is incorporated by the state, so, if they receive the 501(c)(3) status, I don’t see how it would be determined that they are ineligible, in that there is nothing in here even that prohibits a state agency, and nothing that permits a state agency, and we have not allowed state agencies to apply. With the case construing them as not a state agency.

Gary Libby also has problems with the two-year rule, and their 501(c)(3) status being backdated by the IRS as proffered by our colleagues at DBCC. I can’t assume that you would accept that given our guidelines. Obviously if they have just applied for a certificate, even if its backdated for 20 years, they can not apply for two years. Now, the backdated quality is yet to be determined, but even so, that doesn’t satisfy the 2-year eligibility rule to me, it’s the date of the application.

Frank Gummey says that the term in the application says classified as a 501(c)(3) for a minimum of two years prior to the date of the application. If it says they have been a 501(c)(3) since 1957 or whenever

Gary Libby points out that at this time, they are not a 501(c)(1), and it didn’t last month when we visited last month with Mr. Atkinson.

Chair Matousek reminds Gary Libby that they agreed to give DBCC until the 24th to clear this matter up, and they need to honor that.

Frank Gummey asks what the point of the two-year rule is.

Gary Libby replies that they wanted to make sure that an applicant, who received a 501(c) (3) and had a certificate in their hand, operated for at least a two-year period.

Frank Gummey points out that they have operated for the past two years. By backdating the certificate they are establishing that they did operated in a manner eligible.

Gary Libby adds that we are assuming that they will receive the status.

Frank Gummey replies that he is correct. They have to submit back information to show that they operated in a manner to make them eligible. So, doesn’t that accomplish what we were looking for in the intent of that?

Gary Libby says yes, for every agency that is not a subdivision of the state.

Chair Matousek decides to move on with the meeting. There will be more discussion on this issue later.

III. Old Business:

No old business is discussed.

IV. New Business:

Chair Matousek opens new business explaining the purpose of the meeting, reminding the board to keep the question “Is this what the voters wanted?” in mind when scoring the applications.

Margaret Hodge provides the board with some historical background information on the ECHO Program, including any documents she found that were created during the development process of the ECHO Program. The board is directed to tab five of their books, and the goals of the program. This begins a discussion as to the purpose of the meeting, and why this needs to be discussed, including voter intent, scoring and funding of projects, not specific projects themselves. Some members of the Board question the need and purpose of the meeting, expressing the view that the differing sentiments of the Board members with respect to how they go about scoring each project is something that makes the process work, not something to go about changing.

Chair Matousek explains that now is the time if there are any questions or things that anyone wishes to bring up concerning scoring of the applicants. The meeting on the 25th is not the time to bring up questions. After more discussion on scoring and possible issues to visit over the summer sessions, Chair Matousek reminds the Board that if a project does not meet the intent of the ECHO project, they need to fail it. This leads to discussion on scoring, and how it seems difficult to give a failing score to a project.

Linda Hargreaves points out that, to the best of her recollection, the list of guidelines in tab 5 were placed in order of importance. This is how she scores the grants, looking for these things, and in that order. Scoring continues to be the subject of discussion. The board declines to review the video or PowerPoint presentation provided by staff.

V. Public Participation

Larry Sands of the Athens and Sands Theater takes the opportunity to express his feelings as a voter. He has a great concern that many of the applications that have been funded and are now applying are municipalities or the county government, all with the power to generate income from taxation. Most of their matching funds are based on funds accumulated by taxation, one way or another. When we had the original public participation meetings, I heard a lot of people talk about projects. I never heard that the county or municipalities would participate in this funding. It bothers me because the funds that you are allocating, or recommending are all based upon taxation. Every public agency that has the power of taxation essentially is participating in a slight subterfuge. When they have the power to say to their own taxpayers, “we would like to do this project and we are going to pay for it by your taxes, are you willing to support it with your taxes?” Instead of doing that they are sort of going through the back door and using the initial taxes from their local citizens to do the matching grant, and then taking an increasingly large chunk of the funds available through the ECHO program. That concerns me. I think that everyone of those programs that I am aware of, that have been funded have certainly met the criteria of the program, but I think it’s also obvious that the original resolution said absolutely nothing about funding county or municipal projects. The County of course has determined that County and Municipalities will be funded, but state projects will not. I certainly agree with that, but I think the principle cuts both ways. I think that the reason for not funding state projects is also, I won’t say that we shouldn’t fund the County and municipal projects, but I think it is rapidly getting out of hand. If you want to know the intent of the voters from a private sector at any rate, I think that is an increasing concern. I should probably be addressing this to the county council. I do not know if you have the power to change that one way or another. You certainly have the power to change your rating system based upon those criteria, and you have the power to make recommendations to the County Council. At least by this summer when you consider this particular issue and others in more depth, I would appreciate it if you would really consider that question of funding public projects that would otherwise be paid for by another form of taxation.

Linda Hargreaves asks my Sands how we might go about getting more non-municipalities to apply. We take everything we are given and try to look at them honestly in our own scoring way as we can. So, understanding your position, if 10 out of 15 for conversation sake are municipalities, how can we encourage, help, assist, or whatever, bring more to the table?

Larry Sands replies that, while Mrs. Hodge does a wonderful job assisting organizations in filling out their applications, but it seems that the requirements have become a little more difficult for smaller and private organizations over the years. It is easier for larger organizations, particularly public organizations, to meet those requirements. Having to wait for the application to be approved, even though you have funds sitting in the bank and are ready to start construction, but having to wait for your application to be approved to start using those funds seems to me to be a real discouragement to many small organizations, and many people who would go out and raise private money to supplement or help create these projects that are beneficial to the entire public. I know that didn’t answer your question, but that’s because I can’t answer it, I wish I could. But I think that there are ways, that through your regulations and requirements, to make it easier for smaller organizations to come forward and apply.

Linda Hargreaves asks if he sees smaller organization being a financial number as far as asset based, or as a numbers of memberships. How would you define smaller organization?

Larry Sands thinks that smaller organizations are fairly evident. The organization may be small based on members, or it may be small based on number of people it serves, or based on its budget. I think all of those things can make an organization small, but none of them make it unimportant.

Linda Hargreaves agrees and is just trying to get a sense of categorization, in terms of addressing the issue.

Gary Libby asks what the possibility would be to hold county and municipalities to the 501(c)(3) status, limiting them to applying through a “friends of Rendon Park” etceteras, type of organization, eliminating the direct municipalities.

Frank Gummey refers the Board to section 10 of the original resolution (2000-156) which says the county council may fund projects by direct county expenditures or county government projects, or by grant in aid awards. It is the intent of the County Council to distribute the funds throughout the county providing broad geographical distribution proportioned appropriately through environmental, cultural, historical, and outdoor recreation projects. Grants in aid will be awarded on a matching basis by the County Council, on the recommendation from an oversight committee to Volusia county municipalities and non-profit organizations, subject to standards procedure, and criteria established by the council. Such criteria shall include that the grantee must provide at least a 50 percent match, and then it has a list of other matters. Municipalities were specifically provided for in the original resolution placing the issue before the voters provided in this resolution.

Larry Sands points out that what was actually before the voters did not contain that language. It said nothing about the counties or municipalities participating in the program, it just says that these types of projects should be funded by the money that is raised through the bond issue. Of course obviously, some of those types of projects are projects of the county and municipal government. My point is whether or not they should be funded at all, or on the same basis as private organizations when you consider that their matching funds are essentially all gained through taxation. I would suggest that you could fund them on a 2 to 1 basis, changing the match in recognition of the fact that these are not private funds they a re using. Basically, create a situation where they should at least be required to use more of their local funds, in the case of a municipality, for their match.

Chair Matousek thanks Mr. Sands for his input, saying clearly the committee through his three years here has been very aware of the issue of fairness and sensitivity to the 501(c)(3)’s because they know there are some built in disadvantages to those groups compared to Volusia county who has taxing authority. So, we are very attune to this issue of fairness, and we will discuss this issue during our process in April.

Suzanne Kuehn brings up the point that ECHO tourism helps the economical development of the county as well. The funds provided by ECHO help bring in state funds as well. In the case of the Main Street pier, it’s a 3.07 million dollar check that would not have been able to have been received without the help of the various grants that you are providing to us. It is through this mechanism that you are providing us a way to bring in those state dollars that would almost always go to another county.

Chair Matousek states that one of the intents of this program was to provide leverage to bring in other funds from sources such as the state. Some discussion is begun on limiting the number of applications by municipalities.

Monso Tatum adds to Larry Sands discussion saying that this is the most difficult application they have ever tried to execute. This includes people who write applications as a full time occupation. Smaller organizations don’t have the manpower to work through this application. It took him almost 6 weeks to complete, and a week to prepare two state grant proposals. If this is to leverage money from somewhere else, it should be the easiest hurdle for someone to get over. I know of organizations that have not filed for an ECHO grant because they where overwhelmed by the application. I think this needs to be looked at.

Michael Brothers brings up the point that there is a difference between an organization that is truly a 501(c)(3) and an organization that has citizen support groups. The support groups are not actually budgetary entities, they exist as a vehicle to provide funds, and funnel money through them toward another agency. There is the potential to have a whole range of 501(c)(3)’s.

Teri Ford Cobean agrees, saying that they have to look at whom the project is owned by, and it is pointed out that re-granting is not an option.

Dave Borland states that the cash match, and strictly brick and mortar being considered is what was a hindrance to the museum. This begins a discussion in which it is explained that they could apply for granting funds for materials used to display their exhibits, but not funds for the exhibits themselves.

VI. Committee Comments

Chair Matousek reminds the Board that they will meet on February 25th beginning at 8am.

Gary Libby remarks that the improving on the process during the summer months is one of the great things about this program. At the same time, it is important to not look at any comments made today, like limiting grants by municipalities, as a campaign. I think it behooves us to look at all these ideas over the summer, trying to move the boat in the right direction. It has become an oil tanker, and it is very hard to move because, what many applicants don’t realize, is that anything that is done for one organization has great implications with respect to other organizations. The questions with DBCC are not with the merits of the program, it is a great program, and the question is eligibility of the organization itself.

Chair Matousek also reminds everyone that often, even though the board has made recommendations that the County Council has the final say, and they do not always follow our recommendations.

VII. Adjournment

Meeting was adjourned at 2:50 p.m.