The city council and fiscal court both voted tonight to start drawing up the paperwork for $250,000 in
KACo MACED (Mountain Association for Community Economic Development) loans ($125k from each entity) that will be used by the private company Mine Shields to purchase equipment for their new Lancaster location.
The plan is for the city and county to take these loans out, and then for Mine Shields to pay the city and county back.
The plan was announced (though in less detail) at the April announcement of Mine Shields’ intention to locate in Garrard. It can be broken down into a simple risk vs. reward situation.
Risk: The city and county would both be placing themselves on the hook for $125,000. Don Rinthen told me the equipment being bought by Mine Shields can be used as collateral and repossessed and sold if Mine Shields defaults or goes under or something like that. But reselling the equipment will only reimburse the city and county some of the cost (used equipment sells for less than new), so there is some risk involved.
Reward: By negotiating this loan deal with Mine Shields in private, the city and county were able to lure the company to Garrard County. Assuming Mine Shields is successful and pays back the city and county (over the next five years), then the city and county won’t owe anything, but will have successfully brought at least 35 new jobs to the area.
Just a note for clarity’s sake: the city council and fiscal court haven’t actually taken out these loans yet, they just voted tonight to start drawing up the paperwork. Rinthen and John Wilson said there could be votes on the actual loan documents next month.
Update/clarification from Nathan Mick:
FYI on the Mine Shields loan. It’s actually coming from MACED (Mountain Association for Community and Economic Development in Berea) rather than KACO. Originally the plan was to use KACO but that changed once we did more research on best terms.