BENTON, Tenn. – The Polk County Commission is trying to save federal funding for the Benton Boys & Girls Club’s planned Ocoee Youth Center.
USDA Rural Development officials advised the Benton Boys & Girls Club in June that a combined loan and grant package of $350,000 could not be funded because of a reversionary clause attached to the county’s land donation of 3.76 acres for the future youth center. The clause allows the county to take possession of the donated land and any improvements made on it if the center fails financially.
Rural Development officials have presented two options for securing the funding package: the county can remove the reversionary clause from the land donation agreement or it must assume the loan debt if it retains the reversionary clause.
Polk County has offered a compromise as a third alternative.
County commissioners voted 8-0 on Thursday night to approve a resolution that gives them “the option, but not the obligation” to assume the Ocoee Youth Center’s debt should it fail, according to County Attorney Ginger Wilson Buchanan.
The county’s debt would be limited to the $300,000 loan agreement between the Ocoee Youth Center and USDA Rural Development, Buchanan said. The remaining $50,000 will not have to be repaid as it is grant money, she said. She told the commission that the county has the option to make payments on the debt or pay it in full.
The 38-year loan has an interest rate of 4.25 percent, amounting to $16,000 in payments annually, according to a letter to the commission from Cindy Hooker, unit director for the Benton Boys & Girls Club.
Any possible assumption of large, long-term debt likely would require approval from the state comptroller, County Executive Hoyt Firestone said during the Thursday meeting.
The county also stands to receive funding up to the fair market value – estimated at $40,000 by the commission – of the donated property in case a foreclosure sale resulted in funds exceeding the debt to USDA Rural Development, according to Buchanan.
The most the county stands to lose under the proposal is 3.76 acres, commission Chairman John Pippenger said.
“I don’t know of any way to protect the county any more than has been done,” he said.
Buchanan said that a recent discussion of the terms with Clay Copeland, area specialist for USDA Rural Development, seemed positive but that the agency’s legal staff would have to approve the proposal.
Paul Leach is based in Cleveland, Tenn. Email him at paul.leach.press@gmail.com.