Bond attorney Mark Mamantov advises East Ridge City Council on Bass Pro Shop project
The East Ridge City Council, at an unusual Sunday afternoon session, voted to take $1 million from its reserves to finish paying off the developer of the Bass Pro Shop site at Exit 1.
That caused the council to have to pass a resolution dropping the requirement on the number of months needed for adequate reserves to be on hand from three months to two.
The vote was approved despite concern about what the action means for an upcoming bond issue.
Bond counsel Mark Mamantov said, "If you pull out another million, it's pretty scary when you are about to send out for bonds. That would be very noteworthy to bond holders."
City Attorney Hal North said, "I think it certainly jeopardizes the city bond rating."
Mayor Brent Lambert said at three months the city was "far above" the level of savings recommended by the Municipal Technical Assistance Services Agency (MTAS) and is still okay at two months.
The move drops the city's rainy day fund from $3.6 million to $2.6 million.
There was discussion about the meeting on whether Bass Pro Shop is going to proceed with the project in East Ridge. Councilman Marc Gravitt asked developer John Healy if there had been any indication that Bass Pro would pull out. "Absolutely not," he replied.
Mr. Healy said Bass Pro Shop "has a trailer on the site and on their website the next location listed is East Ridge." He said, "We have a signed letter from the CEO of Bass Pro Shop that they are coming to East Ridge, Tennessee."
Mr. Healy said Bass Pro Shop officials are due in town June 10 and 11 for a pre-submittal meeting.
The council was told that the pad for the major development has been certified as complete.
A title problem relating to the fire hall site at the edge of the property is still unresolved, but Councilman Gravitt (who is also a state representative) said the state excess land committee has agreed to meet soon on the issue.
The city is facing $603,000 in unexpected expense relating to that property. A fire hall at the site was taken down to make way for Bass Pro. The city earlier got the property from the state at a discount because of its use for a fire hall. The city is now having to pay its value as computed in connection with the new development.
Councilman Gravitt said he would prefer the city's IDB getting a "bridge loan" to pay the last $1 million to the developer rather than dipping into reserves. Mr. Healy said city staff had told him the check was ready for the final $1 million. He said such a loan would not be in the city's best interest because of the high interest rate of 7.25 percent.
Councilman Gravitt twice told staff he wished the council had been informed earlier about the possibility of the bridge loan.
Former Vice Mayor Jim Bethune asked when the city staff found out about the state demand for the full amount on the fire hall site. City Manager Andrew Hyatt said it was last July. Councilman Gravitt said he just learned of it in a call from the mayor three weeks ago.
Officials said, if necessary, they may move into reserves the $516,000 obtained from selling the pool property.
The deal required the city to pay a total of $4 million for the development of the pad at Exit 1.The city earlier supplied $3 million.
At an earlier meeting, council members were told the final $1 million would not have to be paid until Bass Pro Shop had opened.
The Sunday meeting was not mentioned at a special session on Saturday morning. The notice was posted on the city's website and listed in a sign on the front door of city hall.
Developer John Healy