Occasionally I receive questions about the AEDC and LB840 and how it all works, so I wanted to take a moment to address this publicly because unless you are or have been a member of the AEDC or village board, you may not know the ins and outs and variables we work with on a daily basis. An example of this is recently we were asked to sponsor preschool lunches. We have sponsored preschool lunches for several years, but unfortunately at this time are unable to do so. The question of “WHY NOT, when we just voted and passed the LB840 plan and 1% sales tax again?” has been asked, and I have to admit, how it all works can be very confusing until it is explained.
One of the most common questions and misconceptions is the funding: AEDC funding, LB840 funding, how are they different, is it all the same, what is funded with LB840 or AEDC money, how is each funded, what can the funding be used for, etc.?
The AEDC is a stand-alone, nonprofit corporation. It is not an extension of the village office. The AEDC works closely with the village to administer the LB840 plan and funding. With that being said, the LB840 money is not the only money we manage. Let me explain further.
The AEDC manages the LB840 1% city sales tax money through the village. This money is used according to the economic development plan which was approved by the citizens of Arnold. We are held accountable for spending that money as per the plan by the Citizens Advisory Committee, which meets every six months to review the expenditures. Part of this money is used for loans.
There are two funds in which loans can be given through: the LB840 loan fund and the revolving loan fund. The LB840 loan fund is part of the LB840 city sales tax and managed by the AEDC. The funds in this account are used for loans, and loans accompanied by grants to qualifying businesses, and qualifying expenses. The funds in this account cannot be used to donate to any entity. (Refer to the Economic Development plan for an entire scope of what is considered qualifying).
The AEDC's revolving loan fund was created with a USDA grant, is owned and managed by the AEDC. These funds are used strictly for small loans to businesses.
The AEDC, being a nonprofit corporation, also has its own non loan related funds, just like any other business. These are our funds and they may be used however we need them. Because we are a nonprofit and do not have a steady stream of money coming in, we rely on tax-deductible donations to fund this account. We have expenses just like any other business, and while some of them are paid for through LB840, some are not. So we must keep close watch on these funds so we can remain in business and continue to work for the betterment of the community. When funding allows, we oftentimes give back to the community, such as by paying for preschool lunches, just as an example.
I hope that this clears up why we are sometimes able to donate to groups, organizations, and community projects, and other times we are not. When we are asked to donate or sponsor something and cannot, we have and will make every effort to either contact other groups or offer suggestions of who to contact and if applicable where grants can be applied for such needs.
For more details on LB840 you can read a copy of the LB840 economic development plan, which can be found on our website or requested through our office. I encourage everyone if you have a question like these, to stop in and ask, or check with a board member as well. We are happy to visit with you!
Posted on Fri, October 30, 2015
by Kristi Dvorak