By Tonya Sprague

Recently the Cleveland / Bradley Chamber of Commerce vice president of economic development Gary Farlow came before the County Commission and the City Council to request funding that is needed to secure a new capital investment and relocate equipment and jobs from other Whirlpool facilities to Cleveland. It is hoped the relocation of the equipment and jobs will result in additional tax revenue and payroll for Bradley County and the City of Cleveland, but the announcement comes with a cost.

Whirlpool recently announced the closure of their Oxford, Mississippi plant in order to consolidate North American production of built-in ovens and cook-tops. The cost factors of moving that operation and equipment to Cleveland is $3 million. Farlow said, "We're looking for a third, a third, and a third." $1 million each from the State, County and City. Part of the cost has been absorbed by the state of Tennessee who stepped up and went more than a third in terms of incentives leaving $2 million needed locally. Both the City Council and the Commission agreed to the funding and passed a resolution approving funding support to the Bradley / Cleveland Industrial Development Board (IDB) for assistance to Whirlpool Cleveland.

An appropriation of $1 million dollars each will be made to the IDB, who will in turn take that money and make a loan to Whirlpool in the amount of $2 million. One of the provisions is that the loan amount will be forgiven in the amount of 10% per year so long as Whirlpool maintains their manufacturing presence in Bradley County for a minimum of ten years. Farlow described this as a clawback provision, meaning they will give them a grant to do this, and if for some reason Whirlpool decides to shut this plant down within a ten year period they would have to pay back the balance of the loan.

Due to both the County and the City having just adopted their budgets for the next fiscal year, the reimbursement for the $2 million isn't required until July 2009, so there won't be an immediate impact on the budget this year.

It is hoped that additional tax revenue to pay for the loan will be generated from moving the $14 million dollars worth of equipment to Bradley County. According to Farlow, "We still have some time to figure out the best way to finance this."

Since cities and counties cannot lend credit or give money directly to a company, it must be done through the Industrial Development Board. The Bradley/Cleveland Industrial Development Board was created by elected officials on the City Council and County Commission and is made up of seven appointed members: Robert Carr Jr., Lee Stuart, Ken Rayburn, Scott Taylor, Davis Fair, Mike Sharp, and Dr. Robert Taylor.

The state passed legislation authorizing municipalities the right to set up boards in order to grant certain tax exempt financing. The board can acquire a project or construct a facility and lease it, or give it to a private company. If revenue bonds are needed to pay for the project they get a somewhat lower interest rate because they are exempt from income taxes. It only costs the taxpayers of Bradley County and Cleveland if extra tax collection doesn't exceed the gift. The gift can be county owned land, structures, tax breaks or money.

Government needs a vehicle such as the IDB in order to give funds to private entities. Once government has voted to give funds to the IDB, they cannot take it back and have very little control on how those funds are spent.

Last month a public hearing was held concerning the proposed issuance of tax exempt obligations in the maximum amount of $3,750,000 by the Health and Education Facilities Board whose members are the same as the IDB.

Regions Bank is providing yet another loan to Lee University. The proceeds for the loan will be used to refinance the debt that Lee University has already on its Jones Hall dining facility and Hicks Hall. The new money portion of the loan will go towards financing the new Brinsfield dorms and to refinance the acquisition of the old Mayfield school.

In this instance it has been said that the board is not liable in any way in connection with the debt. Its is a private placement loan between Regions and Lee University but it is not clear why the Health and Education Board / Industrial Development Board be involved in the process.

The IDB meeting was listed in the same legal notice as the Health and Education Facilities Board meeting legal notice. When asked why both were in the same notice, Thomas Tisdale, attorney for both boards said, "I asked the attorney for Lee Univ. to include it when he prepared the notice. Since we've got the same members and the same meeting date, I just kinda piggy backed to save some money for the IDB because they have no income."

If they have no income, and they do not cost anything to the local taxpayer - how do the Industrial Development Board operate?

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