Testing Loan Waters after Savage Mill

July 26, 1995

Sometimes the best intentions can go awry. That appears to be what happened this month with Howard County Executive Charles I. Ecker's pitch to make a $900,000 loan to a local firm. County Economic Development Director Richard W. Story, acting in Mr. Ecker's behalf, went to the County Council Monday seeking its early endorsement of a letter to begin securing the loan for Marble Source Unlimited, which manufactures natural stone products for home and office.

Mr. Story got the council's endorsement, although he'll need to return in the fall to win formal approval. Regrettably, Mr. Story was not entirely prepared to answer all of the council's questions. Worse, he made it appear that he was doing the council a favor by appearing at this time.

The issue of lending public funds to private ventures has a sorry history in Howard, as Mr. Story is painfully aware. The decision to lend $900,000 to the Savage Mill Limited Partnership five years ago left a bad taste in the mouths of local officials. That company filed for bankruptcy last year, and the result was a reorganization that placed the county third among creditors. The county may never receive a return on its investment.

However, despite similarities between the Savage loan and the one being offered Marble Source, there are notable differences. Should the company fail, the county will be first in line to get its money back. Also, unlike the Savage project, for which $300,000 came from the county's general fund and $600,000 from a state economic development fund, all of the loan to Marble Source will come from the state. The county is turning to the Maryland Industrial Land Act, which allows it to borrow funds from the state and re-lend at a slightly higher interest rate.

The act has been used frequently in other jurisdictions, but never in Howard. Part of that is due to the region's generally robust economy, but another factor is local skittishness after Savage Mill. Still the potential benefits from this project may make it worthwhile for officials to abandon their reticence.

The company now employs 16 people; with the county's assistance, plans are to increase the work force nearly fourfold. There's no such thing as a fail-safe investment, but this one seems sound. The council can't exhort small business to grow and then just sit on its hands.

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