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County approves terms for JDA loan

The Grady County Board of Commissioners Tuesday morning finalized its terms to loan the Grady County Joint Development Authority $588,276.18 to pay down on the debt on the former Higdon Furniture Company facility on Wight Road.
According to the contract and terms approved in final form this week, the county will loan the money from its cash reserves for up to 12 months at an interest rate of only one percent.
The JDA will now have until March 16 to review the documents and authorize the authority’s chairman, Charles M. Stafford, to sign or to notify the county of their decision so that the county can make plans to reallocate the money for other purposes.
JDA Executive Director Brian Marlowe, following Tuesday morning’s commission meeting, predicted the authority would accept the county’s terms at the authority’s regular monthly meeting on March 16.
“This is a positive step. The Higdon facility is a community asset and we can use it in our marketing efforts. The county, the city and the JDA have the same mean in mind and that is job creation and investment in our community. What was decided today is good for all concerned,” Marlowe said.
The county commission first voted to offer a loan last month and a draft of the loan documents prepared by County Attorney Kevin S. Cauley was presented to JDA attorney Thomas L. Lehman for his review last week.  Lehman then produced an intergovernmental agreement between the county, JDA and the City of Cairo, who is also a partner with JDA in paying down the debt on the now vacant facility. Rather than a single pay promissory note as the county offered, Lehman recommended to the authority last Thursday night, during a called meeting, the intergovernmental agreement which permits governing bodies to enter into agreements for up to 50 years.
The JDA attorney’s terms called for a demand note, which would allow the county to call the note due and payable within 30 days notice, which was not part of the county’s proposed terms.
According to Cauley, concerns were raised by the authority as to how the debt owed the county would be serviced if a tenant were located in the building or a deal with a future occupant did not generate enough upfront cash to pay the county off in a year’s time.
The county attorney told commissioners Tuesday he understood the concerns of the JDA, but pointed out that the terms as proposed by Lehman included a “great deal of ambiguity” that could likely lead to conflict in the future.
According to Cauley, without terms and a specific occupant to consider, it would be impossible for the county, at this time, to commit to what the board would do in the future beyond the one year period.
The commissioners requested Cauley to set the terms of the agreement with the obligation for the authority to report to the county for repayment at a given date rather than putting the obligation on the county to make demand for payment sometime in the future.
After reviewing the documents Lehman proposed, County Attorney Cauley revised his draft to include the 30-day demand note as proposed by Lehman but left blank the due date for repayment.
During the meeting Tuesday, Cauley pointed out that with his intergovernmental agreement the county could extend the due date past a year and with the added demand note could call the note due within 30 days notice.
However, the commissioners were not open to extending the due date.
“Our agreement was to assist the JDA on an interim basis. Interim to me is a year. Anything shorter is not agreeable and I don’t see the necessity of going longer than a year. At the end of a year and we have no occupant it would not take much to draft a new note,” District 5 Commissioner Bobby Burns commented.
Chairman Ball said he agreed with Burns and said the county had always expressed to the JDA the board’s willingness to sit down and renegotiate if necessary.
Cauley agreed and noted that the March 16, 2011 date was the time when the authority would have to come to the board to negotiate terms or pay off the debt.
“Without giving out secrets do you feel good about finding an occupant?” District 1 Commissioner Elwyn Childs asked Marlowe. The JDA executive director indicated he had received much interest in the facility and had shown it to one interested party and their associates on four different occasions.
“We will get it leased or sold. It’s just a matter of when. The ceiling height and property that goes along with it is ideal,” Marlowe commented.
Under Lehman’s proposed language an agreement between the county and JDA would have also obligated the city. Cauley noted that the Cairo city council has not requested or authorized an agreement that would obligate them on the Higdon facility debt. In light of that, Cauley saw no reason to involve the city in the agreement between the county and JDA.
“The commissioners are making this offer for assistance regardless of the city’s input,” Cauley said, and he disregarded Lehman’s proposed intergovernmental agreement.
City officials have said they have other priorities and would prefer to continue making $3,700 monthly payments to aid the JDA with the debt service on the facility rather than putting up a large up-front payment like the county.
Marlowe told commissioners Tuesday morning, “We are not looking for you to fund us forever. These are unique times and we appreciate your support and partnership. The JDA is the county’s sales and marketing arm. We are a team and partners.”
Commissioner Burns said in his discussions with JDA Chairman Stafford, the JDA authority chair had told him the JDA was not interested in long-term assistance.
Marlowe said that was correct and stated, “When we get someone to lease or buy the facility we will come back to you all with the deal we have. We want you to be part of the decision whether to lease it or sell it.”
Vice Chairman Charles Renaud told Marlowe that once the economy improves and a new occupant is identified then the county should be repaid.
“No one saw this economic situation coming and I am glad the county is stepping up to help, but when things do pick up the first thing that should be done is to go back to the banks and recoup the people’s money and as soon as possible. We shouldn’t have to take the place of banks in this thing. Economic development is something we really have to chase after and while we’re in the bottom right now we can help out and we should,” Vice Chairman Renaud said.
The board voted unanimously to offer the JDA the loan under the provisions of the terms drafted by Cauley.
Should the JDA accept the county’s offer and borrow the money it would allow the authority to make the first principal payment on the note that has been made in some time. After Higdon and a subsequent tenant moved out the JDA requested the local banks modify the loan to allow for interest only payments for the interim.
According to Cauley, the federal and state bank regulators and bank boards of directors frown upon interest only payments. “This will be a big help to the local banks and put them in a position to remain as generous as they have been,” Cauley said.

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