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Economic development group to disband

Emily Patrick
epatrick@citizen-times.com

One of the regions oldest economic development organizations, Smoky Mountain Development Corporation, is in the process of disbanding due to a revenue shortfall.

Founded in 1984, the corporation served Western North Carolina's 10 westernmost counties, excluding Buncombe.

The nonprofit corporation provided affordable space to small businesses through its 17,000-square-foot incubator building at 144 Industrial Park Drive in Waynesville and facilitated 504 loans through the U.S. Small Business Administration.

The incubator, which houses approximately eight tenants, will continue to operate. Smoky Mountain Development Corporation announced it will gift the facility to Haywood Community College last week. The college said in a statement it will honor current tenant leases, many of which extend into 2017.

A recent slowdown in lending shuttered the organization.

“The revenue stream has been a challenge to maintain over the last few years because of the slowdown in the 504 lending," said Alan Steinberg, executive director of the corporation. “Smoky Mountain Development Corportaion was always dependent upon the 504 revenue to be in business. The incubator facility was never the revenue source."

504 loans help small businesses make property purchases, and they start at $350,000. The corporation collected a fee for each loan it executed.

However, there simply weren't a lot of takers in Western North Carolina's rural counties, Steinberg explained.

“It’s not everyday that someone wants to borrow a million and a half dollars to build a hotel in Robbinsville," Steinberg said. “Potential borrowers in our service area were not utilizing the program, and there was a requirement to make a certain amount of loans over a certain amount of time.”

Steinberg said new lending programs from the SBA and other organizations and recent low interest rates mean borrowers have other options.

Western North Carolina residents still have access to 504 loans. In Buncombe County, Avista Business Development Corporation facilitates these loans, and Asheville's SCORE chapter can connect borrowers with other Small Business Administration resources.

Michael Ernandes with the Charlotte district office of the Small Business Administration said the 504 loan program is not in decline overall. He attributes Smoky Mountain Development Corporation's low numbers to the rural area it served.

“Our 504 loan program is up over this time last year," he said "We’re up in the number alone by 10 percent, and we’re up in dollar value by 67 percent.”

He said Highland Brewing is a well-known Asheville area 504 loan success story.

Steinberg said Smoky Mountain Development Corporation had talked about disbanding in the past because of similarly low 504 loan numbers.

In 2005, the Haywood County Board of Commissioners voted on whether or not to disband the nonprofit, in which it had invested $200,000 years earlier.

The controversial vote was one factor that led to the resignation of county manager Jack Horton, who did not recuse himself from the vote even though he was a member of the nonprofit.

Haywood Community College will continue to operate Smoky Mountain Development Corporation's small business incubator after the nonprofit disbands.