Island cities' frozen SBA accounts begin to melt
While no Island city is in dire straights and looking for a handout, officials from all three cities would like to know the future of the money each has on deposit with the Florida State Board of Administration.
On Nov. 30, Florida Gov. Charlie Crist temporarily froze withdrawals from those accounts after nearly $16.6 billion was withdrawn in less than two weeks. The run was prompted by a poor credit rating given to SBA investments in the volatile sub-prime mortgage market.
Crist and SBA officials met Dec. 5 to develop a plan to halt the rash of withdrawals and came up with a program that has Anna Maria Mayor Fran Barford “very concerned.”
Barford told city commissioners at their Dec. 6 meeting that under the Crist-SBA plan, the city could withdraw either 15 percent or $2 million, whichever is the greater amount, from Pool A of its SBA funds. For deposits in Pool B, the city can only withdraw a maximum of 14 percent of its deposit.
As the city has $455,342 on deposit in its Pool A account, it’s “probable” that the city could withdraw the entire amount, she said. However, Anna Maria has $52,178 in Pool B, and could only take out up to $7,305 under the Crist plan. The funds are the city’s reserve accounts.
While that may not be a lot of money for some large city/county governments, “That’s big money for us,” said the mayor.
Barford said she, along with city treasurer Diane Percycoe, will meet with officials of the various banks that handle city business to determine options for the best course of action. She’ll provide recommendations to the city commission at its Dec. 20 meeting.
“I won’t do anything without city commission approval,” Barford pledged, adding that, as yet, she had no official confirmation that the city could close out its $455,342 account.
Holmes Beach city treasurer Rick Ashley, however, was of the opinion that his city could withdraw all of the $1.863 million it has on deposit with the SBA because it’s under $2 million.
While access to cash has not yet become a “crisis” for either Anna Maria or Holmes Beach, Barford said there was some good news associated with the not-yet panic attack.
Both she and Percycoe breathed a collective sigh of relief when the Manatee County Property Appraiser’s Office assured them - and other taxing authorities in the county - that property taxes collected are not tied up in any SBA accounts. That means Anna Maria and the other Island cities will be getting their revenue checks as scheduled next year.
Although Barford expressed “concern,” Holmes Beach Mayor Rich Bohnenberger said the money his city has on deposit with the SBA is part of the city’s reserve funds and the city had no plans for any immediate use.
“I’m not too worried about the situation, but we are looking at it closely and considering all the available options,” he said. “Those accounts pay a good rate of return. I don’t want to make any rash decision until we get all the facts.”
Likewise, Anna Maria had no plans to use its reserve fund, unless a hurricane were to wash away the north end of the Island.
“It’s reserve money we hadn’t planned on spending,” she said, but she and the mayor would like to know something “official” so they can “look at all our options,”
Efforts to reach Bradenton Beach Mayor Michael Pierce were unsuccessful, but that city has about $2 million on deposit with the SBA.
Not all local governments will escape the SBA debacle.
According to Manatee County finance director Jim Seuffert, the county has $70 million deposited with the SBA and about 6 percent of that money is in investments that have defaulted. Seuffert said he expects the county to lose less than $1 million by the time all the investments are sorted and investigated.