Satisfying Barranda's concern is important because six of council's nine members must approve use of the fund created through the sale of the old City Light electric utility. It's also proper, because the differences between the two loan requests indicate a lack of consistency, vision and oversight that should be addressed sooner, not later.
When council voted 7-2 to approve the Legacy loan as part of the $32 million needed to convert The Landing into shops, offices and apartments, dissenting Councilman Paul Ensley, R-1st, called it the "sweetest of the sweetheart deals" in part because of its developer-friendly interest structure. Although the deal called for an interest rate of 2.5 percent, Cincinnati-based Model Group would be required to pay only 1.5 percent per year, with the remainder due after 15 years.
But when the Legacy Joint Funding Committee meets Thursday to review Even Keel Holdings' loan request for the Clyde, 1808 Bluffton Road, the application will not include any information about interest at all — and suggests the $1 million loan be repaid not by the for-profit developer but by taxes generated by the project.
Ensley, a member of the committee that screens requests and forwards them to council for final approval, generally supports the project but is legitimately troubled by the omission since it will require him to cast a less-than-informed vote. The Legacy Investment Committee may correct that deficiency before the application goes to council, but that only further illustrates the need for guidelines and accountability.
When council approved the Landing loan, it also passed an amendment requiring the deal to be reviewed and finalized by the Investment Committee. Ensley proposed an amendment that would have required that final agreement to win council's OK as well, but that attempt, unfortunately, failed — meaning the committee has the authority to change terms previously approved by a supermajority of elected council members. That's not good.
There's a certain logic behind the details of each loan. Lowering the initial interest rate on the landing deal would ease cash-flow concerns in the early years of the project. And Ensley, normally skeptical of government incentives, correctly points out that Even Keel is not seeking a tax abatement on the Clyde project and that the loan could allow the project to qualify for a $1 million state Regional Cities grant.
"I don't see a better way," he said.
Maybe not, but it doesn't hurt to look.
Should loans be included in the "corpus" of the Legacy fund council members say they want to protect? What sort of risk should Legacy loans be willing to accept? When should interest be charged, and at what rate? Failure to address such questions will expose use of the Legacy fund to charges of arbitrariness, favoritism — or worse.
"You're asking the right questions," Councilman Russ Jehl, R-2nd, said. "These deals aren't put together with the public in mind."
That may be a bit harsh. Public incentives can be justified if they help produce worthwhile projects that might not have otherwise happened. They can also pay for themselves over time by creating jobs, economic activity and taxes. But if highly subsidized projects like the Landing and Clyde produce profits for their owners, surely some of that profit should be used to repay the loans that made the project possible in the first place.
This column is the commentary of the writer and does not necessarily reflect the views or opinions of The News-Sentinel. Email Kevin Leininger at firstname.lastname@example.org or call him at 461-8355.