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B-197439 1 (1980-10-07)

handle is hein.gao/gaobabjeb0001 and id is 1 raw text is: /~ Ya.I \7'.,.)-V UNITED STATES GENERAL ACCOUNTING OFFICE .A t.;. ., .: WASHINGTON, D.C. 20548 IN PIrILY OFFICE OF GEEH.,ALCOUsEL ,MNTO; B-197439 Octobar 7, 1980 The Honorable Benjamit A. Gilman U.S, House of Representatives D e a r M r . G i lm a n : w' ,t , I *, ) 3 ,it nbla t, p b l fl. rr4tn .2 ThiLu is in reply to, your Inquiry of 4ugust 12, 1980, concerning the dissatisAtction of the Village of New Square with recent actiors 'reportedly taher by the Small usiness Administration( Apparently,\the Village of New Square is disturbed over the possibility t'hat SBA will not fulfill 'its promise to invest 'in Square Deal Venture Capitol Corporation, a minq rity enterprise small business investment company (iIESBIC)\ in which New Square is intor- ested. Presumably, SeA's puwported actions were based on a recent Comptroller General aeciion. On July 29, 1980, we islued our decision By197439 (copy enclosed), holding that 9 absent a specific, statittory provision to the contrary, SB labks authority.to leverage against Federal funds investe , ,in'tESBTCn, since Ithe statute generally applicable to leveraging investmentb in MESBICs l.imits the leverage to privat funds, that is, to'invest- zr.ents m.-ade by private, non-fedaral source., The decision points tO investments in ,4ESBIC pursuant to the C'nnunity Services Act as an example of a,'situiation Where a soecific statutory provision allows Federal notiey to be considoted private for leveraging purposes.X\. In the altuation ut issue in B-197439, however, the source,'of the Federal funds was the i'ederal Railroad Administration, and there was noxstatu- tory authority for the investment\to be considered private for matching'or leveraging purpose s. And the source of jthe Federal investment iln the Square Deal Venture Capitol,,Co'- poration of New Square, apparently, is a block grant a.Utho- rized under the Coiununity Dev ,lopment Act of 1974, a statute not considered in our decision. IWe understand that stV lis categorizing,the Federal ' investments in MESOICS: as w0ll as any existing:SBA leve'raging colrnitments, anq,'plans ,to request our assistance in detbrmin- ing how to treat existing levursaging coraitmnints. That wil, undoubtedly, include consideration of investments in MESOICs authorized under :the Hiousing and Conmunity Development Act i of 1974, and whethler SBA is authorized by statute to leverzwo lrjainnt th=em. Since tho i'uderal investmnent in ;qtmaz'c DeaI. ' I: ' I,

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