SMALL, MINORITY, AND WOMEN-OWNED BUSINESSES …

[Pages:69]SMALL, MINORITY, AND WOMEN-OWNED BUSINESSES INVESTMENT ACCOUNTVIDEO LOTTERY TERMINAL (VLT)

ANNUAL FINANCIAL STATUS REPORT STATE ECONOMIC DEVELOPMENT ARTICLE

SECTION 5 SUBTITLE 15-01

Submitted by: The Maryland Department of Commerce

As of June 30, 2018

SMALL, MINORITY, AND WOMEN-OWNED BUSINESSES INVESTMENT ACCOUNTVIDEO LOTTERY TERMINAL (VLT) TABLE OF CONTENTS

History & Program Description ........................................................................3 Fund Manager Activity as of June 30, 2018 ...........................................................4 Anne Arundel VOLT Fund Manager Activity (AAEDC).........................................11 MMG Maryland Casino Business Investment Fund Activity (MCBIF)........................14 Maryland Capital Enterprise VLT Fund Activity (MCE)........................................18 Baltimore Development Corporation (BDC)........................................................ 20 Baltimore County Department of Economic and Workforce Development (DEWD) .......23 Howard County Economic Development Authority (HCEDA)..................................25 Tri County Council of Western Maryland (TCCWMD).......................................... 28 FSC First.................................................................................................... 32 Fund Manager Disbursements FY18..................................................................37 Fund Manager Approval Activity...................................................................... 39 Fund Manager Settled Activity ........................................................................49 Certifications .............................................................................................. 62

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SMALL, MINORITY, AND WOMEN-OWNED BUSINESSES INVESTMENT ACCOUNTVIDEO LOTTERY TERMINAL (VLT)

History and Program Description

Article XIX of the Maryland Constitution authorizes video lottery terminals (VLTs) to fund education. This provision was enacted pursuant to Chapter 5, Acts of the 2007 Special Session and ratified by Maryland voters in the November 2008 General Election. As a result, Chapter 4, Acts of the 2007 Special Session also became effective and established the Small, Minority, and Women-Owned Businesses Account (the Account) under the Authority of the Board of Public Works (BPW). 1

State Government Article ?9-1A-27 requires that 1.5 percent of the proceeds from VLTs at each video lottery facility be paid into the Account. State Government Article ?9-1A-35 requires BPW to make grants to eligible fund managers to provide investment capital and loans to small, minority, and women-owned businesses in the State, of which at least 50 percent must be allocated to such businesses in the jurisdictions and communities surrounding a video lottery facility. BPW initially designated the Department of Commerce (Commerce), to manage the Account on their behalf, through a Memorandum of Understanding dated August 22, 2012. However, in May 2017 Governor Hogan approved Chapter 453, Acts of 2017, which transferred authority over the program from BPW to Commerce.

Licenses were awarded to operate VLT casinos in Cecil, Worcester, Anne Arundel, Allegany, and Prince George's Counties as well as Baltimore City. The casinos in Cecil, Worcester, and Anne Arundel Counties began VLT gaming operations on September 27, 2010, January 4, 2011, and June 6, 2012, respectively. VLT gaming operations opened in Allegany County at the Rocky Gap Resort in May of 2013. The Baltimore VLT facility opened in August of 2014. National Harbor in Prince George's County opened in December of 2016. The Account began receiving funds during fiscal year 2011 when the first VLT facility began gaming operations.

Awards are as follows:

Fund Manager

Anne Arundel Economic Development Baltimore County Economic Development

Baltimore Development Corporation FSC First

Howard County Economic Development Maryland Capital Enterprises Meridian Management Group

Tri County Council of Western MD Total Awarded

Secretary Item 15 Secretary Item 9 Secretary Item 10

(4/17/13)

(6/18/14)

(06/18/14)

$ Amounts MILLIONS

$3.36

$2.00

$1.50

$1.00

$1.50

$1.00

$3.50

$2.00

$1.10

$7.86

$4.00

$5.10

Secretary Item 4 (6/23/15)

$1.85 $1.60 $1.75

$1.75 $1.00 $2.15 $1.00 $11.10

Secretary Item 7 & 8 (6/22/16)

$4.00 $3.00 $3.00 $2.00 $3.00 $2.68 $4.00 $2.50 $24.18

1 See also State Government Article ?9-1A-35

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SMALL, MINORITY, AND WOMEN-OWNED BUSINESSES INVESTMENT ACCOUNTVIDEO LOTTERY TERMINAL (VLT)

A summary of Account activity through June 30, 2018 is presented below. Revenues into the Account were $31,777, with disbursements from the Account for Fund Managers including administrative expenses of $6,315,518. The remaining encumbrance of $12,300,371 represents prior and new Fund Manager encumbrances. The available balance at June 30, 2018 was $478,628. There is no appropriation for fiscal year 2019.

Small, Minority, and Women-Owned Businesses Account

Starting FY18 Balance

$21,227,905

FY 2018 Funds Transferred

$31,777

Total Balance

$21,259,682

FY 2018 Disbursements

-$6,315,518

Ending FY18 Balance

$14,944,164

(less)Encumbrances as of 6/30/18

-$12,300,371

Pending Transfer to DHCD (Ellicott City)

-$1,977,665

Pending Transfer to Nonprofit Bridge Loan Program

-$187,500

Available funds

$478,628

Since Inception of the Fund to June 30, 2018, 474 transactions have been approved for $55.6 million, projected to create 2,850 new jobs and retain 4,061, leveraging $127.4 million in private sector capital. A total of 415 transactions have settled for $45.9 million expected to create 2,256 jobs and retain 3,526 leveraging $154.7 million in private sector capital.

Fund Manager

# Approved Amount Private Sector

At Risk/Retained

Since Inception

Approved

Dollars New Jobs Leveraged

Jobs

Anne Arundel County Economic Development 78 $ 12,268,000 $ 41,449,040 631

452

Baltimore County Economic Development

37 $ 4,385,800 $ 26,579,000 245

354

Baltimore Development Corporation

23 $ 4,028,000 $ 18,894,836 349

1035

FSC First

13 $ 2,317,000 $ 28,893,067 192

108

Howard County Economic Development

53 $ 8,001,650 $

- 434

564

Maryland Capital Enterprise

121 $ 4,908,763 $

- 205

289

Meridian Management Group

128 $ 15,862,367 $

- 605

1077

Tri County Council of Western MD

21 $ 3,879,173 $ 11,676,098 189

182

Since Inception

474 $ 55,650,753 $127,492,041 2,850

4,061

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SMALL, MINORITY, AND WOMEN-OWNED BUSINESSES INVESTMENT ACCOUNTVIDEO LOTTERY TERMINAL (VLT)

# Settled

Fund Manager

Since

Ince ption

Anne Arundel County Economic Development 65

Baltimore County Economic Development

36

Baltimore Development Corporation

22

FSC First

8

Howard County Economic Development

42

Maryland Capital Enterprise

119

Meridian Management Group

105

Tri County Council of Western MD

18

Since Inception

415

Amount Se ttle d

$9,602,000 $4,285,800 $3,991,500 $1,310,000 $6,256,650 $4,783,763 $12,647,201 $3,085,173 $45,962,087

Private Sector Dollars

Le ve rage d $35,161,981 $25,796,000 $18,990,836 $25,570,359 $31,094,110

$0 $7,292,050 $10,490,098 $154,395,434

New Jobs

466 243 349 129 364 201 381 123 2,256

At Risk/Retained Jobs

394 351 1043 77 441 281 816 123 3,526

Accounts with delinquencies greater than 90 days or in collections as of June 30, 2018 were $906,132. Total charge off accounts reported were $1,976,936 at June 30, 2018.

Fund Manager Anne Arundel Economic Development

> 90 Days De linque nt/Colle ctions

0 $0

Charge Off 0

$448,357

Baltimore Development Corporation

2

0

$8,478.59

$0

Howard County Economic Development

0

$0

3 $492,744

Maryland Capital Enterprise

3 $7,879

8 $152,131

Meridian Management Group

8 $680,036

8 $883,704

Tri County Council of Western MD

1

0

$196,918

$0

FSC First

1

0

$12,820.64

$0

Total

$906,132.23

$1,976,936

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SMALL, MINORITY, AND WOMEN-OWNED BUSINESSES INVESTMENT ACCOUNTVIDEO LOTTERY TERMINAL (VLT)

Fund Managers' income since inception was $3.8 million with reported expenses of $5 million. Fund Managers did not receive any reimbursement for expenses in FY18. Fund Manager operating expenses continue to outpace income for some fund managers. Total principal repayments were $10.9 million, which can be used to make additional loans.

Fund Manager Income & Expenses Since Inception

Anne Arundel Economic Development Baltimore County Economic Development Baltimore Development Corporation FSC First Howard County Economic Development Maryland Capital Enterprise Meridian Management Group Tri County Council of Western MD

Total

Income $634,208 $238,784 $306,403 $74,536 $493,018 $496,465 $1,235,937 $382,793 $3,862,144

Expe ns e s $1,348,295

$73,721 $170,000 $97,340 $500,188 $227,214 $2,340,673 $286,631 $5,044,062

Principal Re payme nts $2,571,059

$739,890 $1,260,532

$20,776 $2,635,081 $1,154,730 $2,149,252 $378,529 $10,909,849

Bank Accounts: Fund Managers are required to have a State interest bearing checking account to manage VLT fund activity. The eight State VLT checking accounts below had $5.4 million at June 30, 2018 to be used for VLT loans and investments.

Anne Arundel Economic Development Baltimore County Economic Development Baltimore Development Corporation FSC First Howard County Economic Development Maryland Capital Enterprise Meridian Management Group Tri County Council of Western MD Total Funds in State Checking Accounts

$1,380,856.42 $137,611.97 $599,677.82 $66,620.52 $1,074,811.54 $288,654.27 $1,691,284.73 $224,958.44 $5,464,475.71

Fund Managers expenses since inception were $5 million, which includes the 8% start-up fee. Out of the $5 million in expenses claimed by the Fund Managers, Commerce has reimbursed $1.6 million to the Fund Managers including the original 8% stand-up fee and excess expenses. There were no reimbursements of expenses in FY18.

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SMALL, MINORITY, AND WOMEN-OWNED BUSINESSES INVESTMENT ACCOUNTVIDEO LOTTERY TERMINAL (VLT)

Fund Manager

Awarded Actual Expenses Reimbursed Expenses

Anne Arundel Economic Development $11,210,000.00 $1,348,295

$556,296

Baltimore County Economic Development$6,100,000.00 $73,721

$34,518

Baltimore Development Corporation $5,750,000.00 $170,000

$80,000

FSC First

$2,000,000.00 $97,340

$37,136

Howard County Economic Development $6,250,000.00 $500,188

$206,948

Maryland Capital Enterprise

$4,680,000.00 $227,214

$80,000

Meridian Management Group

$11,650,000.00 $2,340,673

$542,296

Tri County Council of Western MD $4,600,000.00 $286,631

$113,144

Total

$52,240,000.00 $5,044,062

$1,650,338

DHCD Reduction

-$2,500,000.00

Total Award

$49,740,000.00

Exp/Award 5% 1% 1% 2% 3% 2% 5% 2% 3%

More than 50% of funds were deployed to targeted areas as required by statute since inception of the program.

TARGETED AREAS

Since Inception

Targe te d

Anne Arundel County Economic Development $6,137,750

Baltimore County Economic Development $3,380,500

Baltimore Development Corporation

$3,545,500

FSC First

$990,000

Howard County Economic Development

$5,921,650

Maryland Capital Enterprise

$3,254,568

Meridian Management Group

$8,796,211

Tri County Council of Western MD

$2,372,000

$34,398,179

Non-Targe te d $3,464,250 $905,300 $446,000 $320,000 $335,000 $1,529,195 $3,850,990 $713,173

$11,563,908

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SMALL, MINORITY, AND WOMEN-OWNED BUSINESSES INVESTMENT ACCOUNTVIDEO LOTTERY TERMINAL (VLT)

SMALL, MINORITY, WOMEN, AND VETERAN OWNED

Since Inception, $45.9 million were deployed to small, minority, and women-owned businesses broken down as follows: $16.4 million to minority owned businesses, $13.6 million to womenowned businesses, and $2.6 million to veteran owned businesses and $13.3 million to non-minority small businesses2.

For Fiscal Year 2018, 97 transactions have been approved for $11.9 million, projected to create 615 jobs and retain 791 jobs, leveraging $37.3 million of private sector capital. A total of 83 transactions have settled for $9.6 million, expected to create 483 jobs and retain 919 jobs, leveraging $19.7 million in private sector capital.

Fund Manager

Anne Arundel Economic Development Baltimore County Economic Development Baltimore Development Corporation FSC First Howard County Economic Development Maryland Capital Enterprise Meridian Management Group Tri County Council of Western MD

FY 18 Total

# Approved FY 18

16 4 5 7 14 23 22 6 97

Amount Approve d

$2,903,000 $515,000 $606,000 $930,000 $2,116,650 $1,279,000 $2,374,575 $1,196,000 $11,920,225

Private Sector Dollars

Le ve rage d $7,373,850 $4,779,000 $494,836 $2,941,708 $21,130,000

$0 $0 $652,750 $37,372,144

New Jobs

184 9 20 52 99 55 137 59 615

At Risk/Retained Jobs

55 28 79 66 183 54 300 26 791

2 Minority status is self-reported by the borrower. Multiple categories of minority status are not captured.

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