State plans to Liquidate Santa Rosa based Lender SAFE-BIDCO after Seizure
Last month, state regulators seized troubled Santa Rosa-based State Assistance Fund for Enterprise, Business and Industrial Development Corporation (SAFE-BIDCO) and announced plans to liquidate the state-chartered nonprofit. The 36-year-old organization, which is devoted to helping small businesses obtain loans, had been under scrutiny after a scathing state audit in April found that it risked going insolvent by next June due to questionable spending decisions. The state Department of Business Oversight in July ordered the agency to develop a self-liquidation plan, which SAFE-BIDCO failed to comply with. The state will eventually establish a claims procedure for the agency’s customers and creditors. Department of Business Oversight Commissioner Jan Lynn Owen found that SAFE-BIDCO had years of operating losses that left it in an “unsafe and unsound condition.” Owen felt the nonprofit lacked a viable plan to beef up its capital portfolio and protect its creditors.
The two years that the agency actually posted a surplus over the last decade were the result of one-time allocations from the federal government. In 2008, the U.S. Department of Energy forgave $2.75 million in loans from the agency, which saved SAFE-BIDCO from posting a $381,000 loss. SAFE-BIDCO took over a $1.2 million loan portfolio and $1 million in loan funds this year under a U.S. Department of Agriculture rural development program, and without such funding, the agency was on track to lose $120,000 for the year. In 2008, its capital base was more than $5 million, but by 2017 it had shrunk to $1.8 million. The audit had questioned some of the agency’s spending, including 17 out-of-state trips by Mary Jo Dutra, SAFE-BIDCO president and chief executive officer, from 2011 to 2016. It is not known if another state-chartered nonprofit will be created to replace SAFE-BIDCO.