The Lucas County commissioners are considering a $1.5 million loan to Maumee Authority Stamping to reopen the auto parts plant Ford shuttered last year.
The money would come from the county's cash reserves, and would be part of a short-term loan.
But if the project went belly-up, it's possible the loan would not be repaid.
"Is it a risk? You bet," said Commissioner Pete Gerken, an advocate for the project. "But if you don't take risk, there's no reward."
Keith Obey, a retired Ford worker, is the chief executive officer of Maumee Authority Stamping, an employee-owned company seeking to reopen the Maumee Stamping Plant, which
closed last fall.
Mr. Obey said the organization needs $3 million in operating capital to close the deal with a private investor who's willing to pay millions to buy the land and equipment and lease the property to Maumee Authority.
The company has raised $1.5 million from the "employee investors" who are to work in the plant. Many are former Ford workers, who have used funds from their severance packages or 401(k) programs to pay for the $16,000 investment.
Mr. Obey said the company has another $900,000 in an escrow account from such investors, and is on its way to raising another $1.5 million. But it cannot use the money until the investors go through a lengthy review process with the Securities and Exchange Commission, required for "nonaccredited" investors.
Because the deal must be finalized by Oct. 13, the company would not have time to use the funds currently in the escrow account.
That's where the county would step in.
Under the terms of the proposed loan agreement, the county would help the company raise the $3 million, but only after the deal closed and the investor puts down his money - and only if the escrow account has all of the $1.5 million to back up the county's investors.
The loan would be paid back at the end of the year, and would have a 7 percent interest rate, netting the county $105,000, Mr. Obey said.
But even after the deal closed, some investors could choose to retrieve their money from the escrow account, leaving the county unable to recover those funds.
Matt Sapara, the director of the Lucas County Improvement Corp., the county's economic development arm, admitted that such a county loan would be unprecedented, but said the terms of the loan have minimized the risk.
Commissioner Ben Konop questioned why the company needed county dollars to close the deal, and whether the county should take such a risk.
"I don't think a family would spend its savings this way in a similar financial situation," Mr. Konop said after the meeting.
Mr. Konop said he was still considering the proposal, but he had questions and concerns.
