DeKalb County aims to create a nearly $1.9 million loan fund to help small businesses hit by the pandemic with help from Dunwoody, Brookhaven and other cities, according to a local official. The Dunwoody Development Authority has agreed to explore the possibility of joining.

Michael Starling, Dunwoody’s economic development director, revealed DeKalb’s concept at an April 28 virtual meeting of the DDA, which had been pondering its own loan program. He said DeKalb, working alongside a nonprofit called the Local Initiatives Support Corporation, would provide seed money and is seeking contributions from cities within the county. A document circulated to DDA members said $1.875 million is the goal.

“They are putting a million dollars into the fund [and] looking for other cities to join them,” Starling said of his discussions with DeKalb officials. “I have talked to Brookhaven and Doraville… They are very interested,” Starling added, saying that those cities haven’t formally agreed “but they are both leaning toward working with DeKalb on this.”

Brookhaven spokesperson Burke Brennan confirmed his city’s talks.

“We are aware of the program, and the Brookhaven Economic Development Office is gathering information from Decide DeKalb and other municipalities regarding the details of this potential partnership,” Brennan said in an email. “As such, it has not yet been submitted to the Brookhaven City Council for their review, so projections about outcomes and timetables are slightly premature.”

A DeKalb representative did not have immediate comment. Dale Royal, the executive director of LISC’s Atlanta office, referred questions to Decide DeKalb, the county’s development authority, which did not immediately respond to questions. New York-based LISC has partnered with such corporations as Sam’s Club and Verizon on similar pandemic loan programs.

Members of the Dunwoody Development Authority, joined by city Economic Development Director Michael Starling and attorney Dan McRea, discuss the loan program at their April 29 virtual meeting.

For the DDA, participation in a DeKalb program could resolve an internal dispute about offering loans itself. A loan program suggested by DDA member Robert Miller at the authority’s April 15 raised controversy about whether money should go to businesses that might fail anyway or be saved to buy property as leverage on redevelopment. The DDA has about $850,000 in the bank from fees on enabling tax breaks for major real estate or corporate projects, and more to come from pending deals.

Starling was tasked by the DDA after that meeting with exploring loan-program possibilities. He said he reached out to DeKalb officials and learned that “they had been working on a very similar project — an identical project.” He said that the DDA participating in a DeKalb program with other cities is a “much better way to go about it.”

In a straw poll, six of seven DDA members favored further discussions with DeKalb and review of a legal agreement. Susan Mitchell was the only member opposed. The concept still lacks details, Starling and DDA members said, but appears to involve 0% interest and an undetermined fee. Dan McRea, the authority’s attorney, said that joining in such a program could be legal if it were properly set up and the loans documented.

Most DDA members still had plenty of concerns, including how much of the authority’s money should be staked on such loans — some members suggested $100,000, while Miller called for $500,000 — and how sure they could be that the money would go to Dunwoody businesses.

Starling said that Decide DeKalb officials told him they could “guarantee” that an amount equaling the DDA’s contribution could be loaned to Dunwoody businesses. He said he would seek an agreement that would see even more money coming back to the city.

Miller said he proposed the half-million-dollar contribution on the premise that the structure and the good intent of borrowers would guarantee the return. He said that if the interest rate for the DDA account is low anyway, “then what difference does it make whether it’s sitting in the bank or out helping the people of our county?”

Starling and McRea said it might be possible for the city government to provide money as well, through the DDA, though Starling noted that that budgets are tight at the moment. He said he briefly raised the loan idea with Mayor Lynn Deutsch and City Manager Eric Linton, and “they did not give a very strong opinion either way.”

Some DDA members were skeptical that the authority would see its money again if businesses failed and defaulted. However, most were willing to hear more details.

“I’m not a huge fan of this, but if we think we can figure out a solution, I’ll support it,” said DDA chair Jonathan Sangster.

Starling said that DeKalb officials expected to have a draft legal agreement — a memorandum of understanding or an intergovernmental agreement — ready for review by the end of the week. A formal proposal for a DDA vote could be available in about two weeks, he said.

Update: This story has been updated with comment from the city of Brookhaven.