NEWS BLOG
LovelandPolitics
Loveland's Independent News Source
Loveland - July 26, 2012

There is a quiet storm brewing within the economic development community of Northern Colorado over
limited resources as government employees and non-profit business development groups maneuver for
public funds.

The trouble began last January when the modestly funded
Loveland Center for Business Development (LCBD)
reported they created 125 new local jobs in 2011; more than the larger
Larimer Business Development
Center (SBDC) which also has responsibility for Loveland.  According to LCBD literature, their services were
responsible for 7% of the 1,900 new jobs reported by local economist Martin Shields for Northern Colorado in
2011.

Now the Loveland Center for Business Development (LCBD) has requested an increase of $80,000 in annual
city funding to accommodate a rapid growth in the number of clients.  The request would grow LCBD’s City of
Loveland funding from $130,000 annually to $210,000 in 2013.   LCBD is a non-profit 501(c)3 organization
that provides business advice, training and classes to Loveland entrepreneurs and businesses. The group is
operated by two paid staff members and 57 volunteers.

Loveland City Manager Bill Cahill sent a notice about LCBD’s request to Loveland’s City Council on July 19,
that has sparked debate regarding LCBD’s financial viability and effectiveness.  While Cahill’s
informational
memorandum didn’t address directly the ugly rumors regarding the group’s financial trouble or data
reliability circulating within city hall, Cahill did allude to both when writing to council when he stated,

“Two primary areas are being reviewed:  the need for funding (reviewed by looking at recent financial
history) and the benefits / impact of the funding (services provided and the economic impacts).  
Impact is
city lingo for the number of jobs created by the efforts and money spent.


What Does “Jobs Created” Really Mean?

Every government economic development office or group funded by taxpayers to perform such tasks seems to
use its own unique methodology for calculating “jobs created.”  Thus, the impact of their services as expressed
in jobs created cannot be easily compared because the numbers are not always comparable.  While others
dispute the veracity of LCBD’s jobs numbers, there are important differences in how each organization
calculates its success in “creating” local jobs.  

One important difference is the City of Loveland Economic Development Department headed by Betsey Hale
counts companies moving within the region, like Agrium, as new jobs.  Since most of those positions are
already filled with existing employees, a more accurate description might be “employees” moved into the city
limits.  

The City of Loveland, for example, has made claim to attracting 419 jobs to Loveland in 2011 using $2.2
million in incentives provided directly to those businesses.  However, 390 of those 419 jobs were Agrium and
Crop Services; two companies already moving into the area but subsidized to move into Loveland instead of
Johnstown.  Nonetheless, even counting all the Agrium related jobs the city spent over $5,000 per job in
incentives alone not considering the city’s combined economic development staff salaries (personnel
services) this year having grown 40% to now an annual city cost of $421,510.


Economic Development Versus Business Development  

Services provided by non-profits like the Larimer SBDC in Ft. Collins and Loveland’s LCBD are not necessarily
economic development” but instead “business development” sometimes also called “economic gardening.”  
While Economic Development normally involves policy issues like taxing, regulations and subsidies, business
development focuses more on coaching start-ups and smaller firms in obtaining financing and preparing
business plans.

Both the Ft. Collins based Larimer SBDC and Loveland based LCBD are non-profit centers receiving taxpayer
dollars and both provide counseling services to help struggling or newly forming companies to obtain capital
to grow or expand.  Both work closely with local banks and the SBA (Small Business Administration) in
teaching entrepreneurs in preparing spreadsheets, cash-flow projections and basic financial tools necessary
for obtaining commercial loans.   LCBD calls itself a “financials based program.  We start with the financials
and end with the financials.”  The primary difference between them is the Larimer SBDC in Ft. Collins is part
of a larger network of centers funded by federal and state grants while LCBD is a stand alone organization.

While the services LCBD provides to Loveland residents may be similar to what the Larimer SBDC offers in
Ft. Collins, how they measure their respective success or impact is not similar.

The Ft. Collins group claims credit for jobs created both during and after their counseling services have ended
according to one source.  The claim is Larimer SBDC employees called a previous client they assisted (years
before) to see if the company added any additional employees ostensibly to include those figures in their
current year numbers.  The funding for Larimer SBDC comes primarily from three sources; Front Range
Community College, SBA and City of Ft. Collins.  Each of the three look closely for “impact” of jobs created to
measure the group’s success so the pressure is high to boost those numbers any way they can.

The Loveland based LCBD takes a more conservative approach than SBDC, according to its Executive Director,
by only counting the jobs retained or created in the year the services were provided.  Jobs added in
subsequent years by those companies are not included in the LCBD numbers.  LCBD argues their numbers
are solid and more accurately reflect the impact they have on the community.


Competition for Limited Resources

Donna Beaman, who operated the Larimer SBDC until May of this year, had nothing positive to say about the
Loveland funded organization (LCBD) which she worked with when it was previously  housed within
Loveland’s Chamber of Commerce.  According to Beaman, “I am sorry I don’t know what they do anymore.  I
just did the Pontius Pilate thing and walked away………when they moved.”

During a telephone interview, Beaman pointed out the Ft. Collins based group relies on funding from Front
Range Community College and SBA while approximately 50% of its funding comes from the City of Fort
Collins.  The primary management influence over the center is Front Range Community College which also
"harvests" SBDC clients for enrollment in community college classes.

LCBD in Loveland relies only on City of Loveland funding and operates with a different management
structure.  Loveland Councilman Phil Farley along with Loveland Assistant City Manager Rod Wensing both
serve on the LCBD Board of Directors.  Unlike other non-profits in town the city's board seat is not an ex-
officio board position but instead a full voting member – some see this as a conflict of interest.  Beaman
commented in a snarky tone that when she worked with Loveland's business center previously the group had
other sources of funding and was much closer to the Chambers of Commerce.


Service Overlap / Natural Tension

Larimer SBDC currently offers services throughout Larimer County including Loveland.  This overlap in
service areas was referred to as "repeat services" by economic development professionals who spoke with
LovelandPolitics off-record.  They complained that Loveland is funding an organization to provide services
already available to its citizens through the Larimer SBDC.  The current discord appears to have intensified
when Loveland's LCBD left the network of small business centers a year ago and leased office space in
downtown Loveland.  There appears to be a consensus among economic development professionals that
LCBD's financial struggles are the result of that change and trying to stand alone as an "island" instead of
collaborating with other agencies or leveraging available resources for their clients.  Those critical of
Loveland's support of LCBD say that is their main complaint and not any other motive.

LovelandPolitics was told the Larimer SBDC has taken the competition for funds one step further by engaging
Loveland's economic development department in a negotiation to cover LCBD's service contract with the City
of Loveland beginning in 2013 for a lesser cost.  The current director of Larimer SBDC,
Deborah Moeck,
denied this was the case and said no such meeting ever took place.  

While evidence of secret planning for a coup d'etat is hard to find, Larimer SBDC's Mission Statement on their
website states, “Our Vision is to be the number 1 business resource for entrepreneurs in Larimer County.”  

Some in Loveland’s City Hall appear to agree with switching the funding and are conducting a discreet
campaign to promote the concept but not necessarily in coordination with the Larimer SBDC.  Some
animosity has been created over LCBD’s refusal to share information with the city about their clients in the
past so advocates of a change appear to want to be pushing that issue while also advocating for a financial
audit of LCBD.  


Loveland Center for Business Development View

LCBD acknowledges that depending on the City of Loveland for more than 95% of its annual revenue is not an
ideal situation.  According to LCBD Executive Director Robin Shukle, “Our goal has been to create a
sustainable program.  However, these economic times that our partners and business owners are facing
create economic strains and challenges.  We look to be an example in the business community.”

According to a source in the City of Loveland, LCBD is running deficits currently and cannot make funding to
the end of this year.  The same source claimed an additional $20,000 will be requested as an emergency
appropriation.   A letter was recently sent by LCBD to area bankers who refer unprepared commercial loan
applicants to LCBD for help.  In the letter Shukle asks for assistance from the private sector by way of direct
donations.  

According to Shukle, her group has no plans to ask for additional revenue this year from the City of Loveland
despite rumors to the contrary.  While she acknowledges they will begin running an operating deficit
beginning in August, she also stated they have sufficient reserves to cover that deficit which she declined to
provide more details about.  

Shukle also indicated the deficit should not be a surprise to the City of Loveland since it was first discussed
with her board of directors at the end of 2011 while planning the 2012 budget.  LovelandPolitics investigated
her claims and indeed found documentation in meeting minutes indicating both Loveland Councilman Phil
Farley and Assistant City Manager Rod Wensing (both board members) participated in such budget
discussions as early as March of this year.

LCBD is now looking to increase some fees for services and asking for donations to help improve revenue.

Shukle points to the increasing number of clients they serve as the motivator for her increased funding
request for next year.  If LCBD receives the additional $80,000 in 2013, Shukle says that money will go
towards increasing utility bills, additional staff support and materials for the low-cost classes they provide
Loveland small businesses.  Currently, LCBD employs two full time staff positions (including Robin Shukle).  
In addition, they manage 57 volunteers who assist in various capacities including teaching courses for
business owners plus providing one-on-one counseling services.

In summary, Shukle's response to a myriad of questions surrounding the center within the city and
competition for funds from the larger group in Ft. Collins is,
"Our only concern is for small business in
Loveland.  Period.
"


All So Secret

In previous years LCBD has drawn ire from some on Loveland’s City Council for failing to provide details
about the clients they serve and their finances.  In fact, LCBD doesn’t even provide its board members with
the names of their clients.  Shukle explained this is necessary to protect the confidentiality of the clients.  She
explained many people starting small businesses are reluctant to share details about their net worth, salary
and debts to strangers and are especially worried about the information leaking out to potential competitors.  

Moeck at the Larimer SBDC in Ft. Collins confirmed they also keep client information confidential but said she
does share the names of companies to the SBA and other Colorado small business center directors.  A key
difference she explained is the SBA funded small business centers have auditing procedures that randomly
check client lists and reported results data for accuracy.  In the LCBD only its two paid staff members have
access to such data and apparently the detailed financial records as well.

LovelandPolitics has learned at least two on Loveland’s City Council are seeking an audit of LCBD before
considering their budget request for next year.  Councilman Farley, who sits on LCBD’s Board of Directors, is
reported as not supporting the request.  Loveland could insert some type of auditing requirement in the
LCBD's service agreement contract but those opposed on council say its a ridiculous waste of funds since the
audit could consume 1/3 of the organizations total annual budget.

LovelandPolitics posed three questions to Shukle regarding the group's finances and the responses can be
read verbatim in the column to the right.  Below Shukle's answers are references provided to
LovelandPolitics by LCBD from previous clients about the services they provided.
Turf Battles For City Funds In
Economic Development
Below are written answers by
LCBD Executive Director Robin
Shukle to an email inquiry sent by
LovelandPolitics on July 24.


1.  When were you first aware of
the budget shortfall.
  
The shortfall was known as of the
2012 budgeting process which began
in late 2011.

2.   What is the primary cause?

The primary cause of the shortfall is
program growth driven by client
demand for service.

In 2009, the LCBD was operated as a
satellite office of the Larimer SBDC,
under a three year pilot program.  
The program was located in one
office the Chamber of Commerce
and had one full time employee.   In
2009 the LCBD provided counseling
services to 126 clients.

In 2010, there was no request for
increased funding from the City.  The
program moved from its one room
office and relocated to a office
facility on 4th street.  This new
location provided additional
counseling rooms, a computer lab,
and a training room.  With the
additional space, the LCBD was able
to launch an in-house training and
education program, install a computer
lab, and grow a volunteer counselor
program so as to increase capacity
without increasing direct labor cost.

In 2010 the LCBD provided services
to 224 clients and provided 95
training events attended by 607
individuals.  In number of clients
alone, the LCBD growth was 78%.

In 2011, there was no request for
increased funding from the City.  
With the challenges in the economy
continuing, and demand for services
rising, the LCBD continued to
develop and implement new tools and
programs.  In July of 2011, the
program ceased being a satellite
office of the SBDC and returned to a
standalone organization, per a
decision by the LCBD Board of
Directors.

In 2011 the LCBD provided services
to 365 clients and provided 85
training events attended by 496
individuals.  The LCBD launched its
network event to help teach
networking skills and to initiate B2B
business.  In number of clients alone,
the LCBD growth was 63% over the
previous year (2010) and 190% over
2009.

In 2012, there was no request for
increased funding from the City.  A
program cashflow deficit was
projected during annual strategic
planning.  To address the negative
cashflow position, the LCBD
increased program fees and created a
board fundraising subcommittee.

The LCBD has seen a positive
cashflow impact from the fee
increase and is raising capital through
its fundraising efforts.

It was the goal of the LCBD to seek
additional funding for the program in
2013 – based on a value add to the
community substantiated by actual
economic impact data collected from
our clients.


3.   What are your plans if
supplemental monies from the city
are not approved?

We are using cashflow analysis to
identify and define different operating
scenarios.  With demand for service
remaining high, we are prioritizing
scenarios which can maintain current
levels of direct client service and
education.  

To do this we are working with our
partners on a proposal for the use of
subsidized space and overhead
operating expenses.  We will continue
to grow program operating capital
through additional programming,
increased fees and fundraising.
Conference room and computer lab at the LCBD in Loveland on 4th Street.   
The organization leased new space last year to accommodate a growing
volunteer network and client demand but now appears to be struggling to
meet the extra costs associated with the move.
Some of the Many
References Provided By
LCBD About Their Services


“Without the counseling
services and support from the
Loveland LCBD, I would not
have been able to secure a
loan to finish building up my
business (studio).  My children
and I have been able to stay
and live in this wonderful
community, while I 'commute' to
work by connecting via Ethernet
with clients all over the world
from my voice recording studio
here in town.”

Linda Joy Lemke – Owner
Linda Joy Voice Overs


“Whether we are researching
new markets, trying to figure out
how to finance new endeavors,
or just needing outside advice,
Robin and her team are always
available to help and their input
is priceless. They are constantly
introducing us to public and
private resources that we would
have otherwise never known
about, their inexhaustible
energy has provided us with
critical insight into our own
business, their experience has
helped us navigate the
complexities of being an
employer, and their knowledge
of what is happening in the local
business community has
connected us with what have
become critical partners. The
LCBDC makes us a better
business, and I would like to
think that we, in turn, contribute
to making Loveland a better
place.”
                                                                                 
 
Christopher McLaughlin – Principle
The Ten Fold Collective


"I was an experienced business
person, but when I decided to
go out on my own I contacted
the LCBD. The best thing Robin
and her team did for me was
give me a practical, simple
financial projection tool. I was
able to see how growing too fast
could bankrupt the company!
We're in our third year now,
growing like crazy and our cash
flow is great.”    
                                                                                                   
 Pete Gazlay, President
Total Facility Care LLC


“When I first moved my
business and myself to
Loveland I went to visit Robin in
the LCBD office to ask for help
navigating the financial
complexities in the community.
We established a great
relationship on many levels.
With the advent of my new food
truck, which Robin was
immediately supportive and
helped to get the right operating
information from the
bureaucracy of the City of
Loveland. I am able to operate
with the knowledge that I am
being supported by the LCBD. I
am grateful for her commitment
to helping small businesses get
established and thrive.”

Anastasia Alexander –
Founder & Owner
The Giggling Greek