JASPER, Tenn. - When Jasper leaders started a project to extend the sewer line along U.S. Highway 41 to the Shellmound Business Park near Interstate 24, they didn't have to look any farther than Marion County to get the money for it.
County commissioners decided more than a year ago to help fund the project, and now they and the Jasper Board of Mayor and Aldermen have agreed unanimously on a contract for the city to pay the money back.
County Attorney Billy Gouger said the county's contribution was capped at $375,000 borrowed through a capital outlay note in December 2012.
"That was all done subject to an agreement with Jasper that they would actually pay that money back," he said. "That's what this agreement does."
The contract requires Jasper to make a lump-sum payment on or before March 15 each year according to a 10-year repayment schedule, officials said.
Jasper Mayor Paul Evans said the first payment will be $44,000 in 2015, which is the largest amount on the schedule. The county can use that money to make its own loan payment, Gouger said.
"Based on projections done by the [Southeast Tennessee] Development District, [Jasper] should be able to pay this back out of the sales tax revenue only," he said. "But, in order to protect the county, I put language in there that says even if the sales tax money is not sufficient, they still have to pay the money back."
Gouger said he didn't want Jasper to depend solely on sales tax revenue from the Love's Travel Stop & Country Store under construction at the site.
"I did not think that would be in the county's best interest," he said.
One of the most attractive features of borrowing the money from the county was the 1.9 percent interest rate, City Attorney Mark Raines said.
"They could borrow it a whole lot cheaper than we could," he said.
Both sides discussed several options to repay the money, Raines said, including having both entities share a percentage of the tax revenue from the new business.
"Under this term, the town keeps all the tax money that comes in," he said. "If for some reason, the tax money came in more than expected, the town could pay more on [the loan] if they sought to."
Officials said the county made the first payment in March -- an interest-only payment of just over $2,000.
That money will be rolled into Jasper's repayment schedule, Gouger said.
"This [contract] will allow us to set aside the depreciation that we have to do on this project and still have additional revenue," Evans said. "I think it's a fair payment, and I do appreciate the county working with Jasper and doing this for us."
Ryan Lewis is based in Marion County. Contact him at firstname.lastname@example.org.