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HomeMy WebLinkAboutResolutions - 2012.03.27 - 20098MISCELLANEOUS RESOLU1.L.ON68/ p4a-ftAtk_ BY; Commissioner IN RE: BOARD OF COMMISSIONERS — RESOLUTION TO SUPPORT THE BIPARTISAN CROWDFUND ACT (S. 2190) To the Oakland County Board of Commissioners Chairperson, Ladies and Gentlemen: WHEREAS according to the Small Business and Entrepreneurship Council, small businesses represent over 99% of the employer firms in the U.S., and employ half of the private sector employees. Between 1993 and 2009, small businesses accounted for 65 percent of the 15 million net new jobs created. Bureau of Statistics data shows that since the 1970s small businesses hire two out of every three job seekers and the Ewing Kauffman Foundation has noted that in the last 30 years, all net job creation in the U.S. took place in firms less than five years old; and WHEREAS according to the Department of Labor, prior to the financial meltdown, 76% of small businesses received traditional funding (i.e.: bank loans, credit card advances, finance companies, etc). Any entrepreneur will tell you that cash is king. Without it you cannot grow or hire employees. Part of this comes from working capital (cash on hand) and the other part from financing (traditional funding just mentioned). With the financial meltdown, our economy stalled, over 8 millions jobs were lost and unemployment rose to its highest level in recent history; and WHEREAS economists and politicians are in agreement -- jobs create prosperity. With the launch of Startup America in February 2011, the White House stated that, "Startups bring a wealth of transformative innovations to market, and they also play a critical role in job creation in the United States. Those entrepreneurs who are intent on growing their businesses create the lion's share of these new jobs." Jobs create taxable wages and spending which stimulate the economy and replenish the government coffers; and WHEREAS the following outlines the CURRENT ENVIRONMENT: • Since the financial meltdown traditional financing has virtually disappeared. Banks are holding on to their cash, credit card companies are charging exorbitant interest rates and according to the private financing group Angelsoft, only 2.3% of startups receive private (VC, PE or Angel) financing. • Since money isn't available to the other 97.7% of startups today, they need to find other avenues to raise capital; namely their friends, family and community. However, if that startup offers any kind of financial return, it just might be breaking the law. That is, unless they hire a lawyer, spend tens of thousands of dollars and countless hours completing forms. • According to the Sustainable Economies of Law Center [1], "the current registration requirements under Section 5 of the Securities Act of 1933, as well as existing exemptions from registration, impose considerable hurdles on small businesses." The securities laws were written to address the abuses of large corporations. However today, these laws, written before telephones were widely available, require a small start- up raising $50,000, to follow the same filing requirements as a large corporation seeking to raise millions of dollars. • Even if a startup were to complete these filings, the current regulations also include: 1. Limits on startups in seeking capital outside of their immediate state; 2. Requirements of additional costly and burdensome state filings; 3. Restrictions on the amount of "unsophisticated" investors to 35 individuals; and/or 4. Requirements for complete audited financials and state filings. • In 1933 when these laws were written, 4% of Americans invested in the markets. Today that number is over 50%, clearly showing that the majority of individuals understand the basics of investing; and WHEREAS CROWDFUND investing, where groups of people invest in startups and provide the capital where it otherwise isn't available, is one such solution. Over the past 5 years, users of websites like Kiva & Kickstarter have "donated" over $300M to crowd fund projects including art, films, software development and books. "The success of these crowd funding sites demonstrates the desire of the public to support projects that they believe in. Enabling the additional motivation of possible financial return would only reinforce this economically healthy impulse," says the Sustainable Economies of Law Center; and WHEREAS on March 12, 2012 U.S. Senators Scott Brown (R-MA), Jeff Merkley (D-OR), and Michael Bennet (D-CO), introduced the bipartisan CEROWDFUND Act (S. 2190); and WHEREAS this legislation will boost job growth in Michigan and Oakland County by empowering new small business and aspiring entrepreneurs to raise capital from a wide range of small dollar investors; and Whereas the CROWDFUND Act will: • Allow entrepreneurs to raise up to $1 million per year through an SEC-registered CROWDFUNDING portal. • Free people to invest a percentage of their income. For investors with an income of less than $100,000, investments will be capped at the greater of $2,000 or 5% of income. For investors within an income of more than $100,000, investments will be capped at 10% up to $100,000. • Require CROVVDFUNDING portals to provide investor protection, including investor education materials on the risks associated with small issuers and illiquidity; and WHEREAS CROWDFUND investing is a zero-cost solution to the jobs crisis. It doesn't require government spending but easing of regulations that were written over 80 years ago; and WHEREAS since small businesses are our nation's net job creators, we need to do everything in our power to get them the capital they need so that they can innovate and hire. NOW THEREFORE BE IT RESOLVED that the Oakland County Board of Commissioners supports the CROWDFUND Act and urge its adoption. BE IT FURTHER RESOLVED that the Oakland County Clerk/Register of Deeds is requested to forward a copy of this legislation to the Michigan Congressional Delegation, U.S. Senators Carl Levin and Debbie Stabenow, Governor Rick Snyder, and the Oakland County delegation of the Michigan House of Representatives and State Senate, and Oakland County's legislative lobbyists. / (1, A -plc., Col,nmiSsioner District # vi Commissioner David Woodwgd District #18 Commissioner Dist-lot # District #...3 ph-a\rperson, we mov he adoptiri of the foregoing resolution. I - ' Commissioner District # Commissioner District # Commissioner District # Commissioner District # Commissioner District # Commissioner District # BE IT FURTHER RESOLVED that the Oakland County Clerk/Register of Deeds is requested to forward a copy of this resolution to the Michigan Association of Counties and the National Association of County Officials, with strong encouragement that their respective member counties also adopt similar resolutions. Commissioner District # Commissioner District # Commissioner Commissioner District # District # Commissioner Commissioner District # District # Resolution #12082 March 27, 2012 The Chairperson referred the resolution to the General Government Committee. There were no objections.