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City backs JDA

The Cairo City Council on Monday night voted unanimously to assist the Grady County Joint Development Authority financially through December.
JDA officials, including Chairman Charles M. Stafford, authority member Chuck Thomas and Executive Director Brian Marlowe, appeared before the mayor and council Monday night seeking financial assistance to meet the debt service on the former Higdon Furniture Company manufacturing facility on Wight Road.
Councilmen Bobby Gwaltney and James H. (Jimmy) Douglas were absent from the meeting.
However, in an email to his fellow councilmen, Councilman Douglas raised issues with the authority’s request for financial assistance.
Douglas contends the authority and the local banks should take legal action to enforce the personal guaranty given as collateral by Joe Higdon to secure the loan made by the five local banks to finance construction of the facility before approaching the city and county for assistance.
However, Douglas indicated he was not opposed to loaning the authority city funds equal to half the amount the county commission appropriates for the JDA until the time a decision can be reached on the Higdon matter, or the building can be leased or sold to a new tenant.
Executive Director Marlowe emphasized that it has been the authority’s intention all along to repay money advanced to the authority by the city and county. The authority is doing everything possible to prevent the local banks from having to foreclose on the property.
“We thank you for your partnership in promoting economic development in our community. Partnerships are very important, and we can’t do this alone. There are times as partners we need to step up and, with the economy like it is and local circumstances that have occurred, we have felt the effects of the down economy. We have a vacant building, and if we don’t take appropriate action we could lose this asset and jeopardize economic development in Grady County,” Marlowe told the city council this week.
Marlowe says if the former Higdon facility were to be foreclosed on, it would likely end the chance of future state financial participation in economic development projects locally.
Since 2001, the JDA has been successful in obtaining $4.3 million in grant funds for economic development in Grady County. In addition to that, another $1.3 million in state funds have been invested in the local revolving loan fund. This fund provides low interest financing for new and existing businesses that create jobs in the community and, as the loans are repaid, the money is reinvested in the revolving loan fund to be available for future projects.
Marlowe also noted that the JDA is one of the leaders in the state in the small business startup program. “Your authority has been very active in supporting economic development across all gametes. This is a very competitive field and we have to be aggressive,” he told the city council.
The authority currently owes approximately $1.5 million on the former Higdon facility. The loan was made in the name of the authority for several reasons including being eligible for state assistance and low interest financing, according to authority officials.
Mayor Richard VanLandingham asked Marlowe what the value of the facility is, and the JDA director said it is valued between $3 and $4 million.
“So we are in an equity position,” the mayor noted.
Marlowe is confident the Higdons will meet their self-imposed deadline of Friday, July 31, to respond to the authority’s demand for payment.
Chairman Stafford emphasized the point that the authority is seeking a loan and not a “bail out.”
“When we either sell or lease the facility, we will return these funds to you,” Chairman Stafford said.
Authority member Chuck Thomas stated, “It has always been a goal of mine for the authority to be able to operate without any funding from the city and county, but right now we need your help. In my opinion, bankruptcy or allowing foreclosure should be a last resort. If we allow the banks to foreclose on this building, you might as well dissolve the authority.”
Mayor VanLandingham said the council is not in favor of letting the building go into foreclosure, but that lines of communication between the authority, city and county could be improved.
“We need to meet with the authority on at least an annual basis to know the goals and plan so we are not surprised when things like this happen. Personally, I’m in favor of approving your request, and I recommend we do it for the balance of the year and then either adjust in some other way, perhaps down the road,” the mayor said.
Mayor Pro Tem Ernest Cloud offered a motion to assist the authority through December and noted it is only through the end of the year since there is the possibility a new council will be seated in January of 2010.
Councilman Lannis Thornton seconded and commented, “I understand what you have said and realize we are all in this together.”
Councilman Kermit Gilliard said the authority officials had addressed his concerns and supported the financial assistance.
Mayor VanLandingham also commented Monday night, “There is no doubt the city has benefited from the work of the JDA.” He added, “If we had not purchased the additional Hall property, PFG (Performance Food Group) would not have come to Cairo and, as Rod (Prince, utility director) will tell you, that certainly has been a boost for the city. Sometimes, you have to spend money ahead of time to make things happen. This is one of those cases.”
The JDA has requested $3,700 per month from both the city and county in the hope of reducing the monthly debt service on the former Higdon facility from the current payment of approximately $12,000. Officials are hopeful the local banks will modify the existing loan to a monthly payment of $7,400 until a new tenant can be identified or the property sold.
Chairman Stafford said now that the authority has the commitment from the city and county, they can enter into negotiations with the banks to restructure the debt.

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