The Ottawa County Commissioners would forgive the balance of an outstanding loan to the county agricultural society - the organization that conducts the annual county fair - if the fair’s board of directors implements stronger fiscal management and oversight practices.
But the commissioners say in a June 14 letter to the agricultural society that they are limited by state law in how they can let the fairgrounds be used as loan collateral, which the fair board had requested at an earlier meeting with the commissioners.
According to the letter, the agricultural society had asked the commissioners to pledge the fair grounds on State Route 163 as collateral for a new $120,000 bank note.
Fair board members intended to use the funds to pay $67,234 in current accounts payable; $5,000 for state audits; $4,000 to purchase event insurance, and then apply the balance to paying down a current $50,000 line of credit and costs associated with a new loan.
The proposal would leave the line of credit with about $40,000 for up-front costs for the 2012 fair in July.
The commissioners’ letter says they can’t meet the request because the Ohio Revised Code limits encumbering the fairgrounds to cover the cost of necessary repairs and improvements that don’t exceed half of the value of the fairgrounds.
“Your request is to encumber the fairgrounds for what would be general operating costs which are not permitted by the ORC,” the letter says.
Commissioner Mark Stahl said Tuesday the board of commissioners received opinions from the county prosecutor and state auditor on the request before responding.
“In our hearts we want to help but a lot of people don’t understand with the revised code, if it’s not in there you can’t do it,” he said.
The letter also says state law sets limits on the debt that agricultural societies can assume to no more than 25 percent of annual revenues.
“Your request certainly exceeds the amount as shown on your tax return for FY 2011, which shows revenues of $291,165, which would put your maximum debt allowed by the ORC at $72,791 and using FY 2010 revenues of $375,740 your total maximum debt allowed would be $93,935,” the letter says, adding state law does grant authority to commissioners to use county general fund revenues for capital improvements, fixed assets, and land acquisition.
In September 2000, the commissioners – Karl Koebel, Steve Arndt, and John Papcun were then on the board – approved a loan of $100,000 to the ag society for the construction of a building to house offices for the junior and senior fair boards.
The loan was to be repaid in no more than 10 years.
According to the 2008-09 state audit of the society, the commissioners forgave the principal due in 2001 and 2002 and the society made no payments on the principal in fiscal 2009 or 2008.
The commissioners would agree to forgive the balance of the loan - $42,400 – if the fair board submits a written plan for improving the management of the fair’s finances, Stahl said.
During the commissioners’ June 12 meeting, representatives of the fair board floated several other proposals for discussion in addition to using the fairgrounds as collateral, including increasing the fees for 2012 fair passes and gate and camper fees and to establish an advisory committee to monitor expenses.
Ron Frank, president of the fair board, said Thursday in an email message the board has voted to increase revenue by raising fees. The board is also forming a financial review committee of non-board members to oversee the fair’s finances and develop a plan to submit to the commissioners.
“We have had a community member step forward and with their help and the help of the bank we will be moving forward with the fair,” he said. “These funds are going to help us get to the fair but we can always use the help and support of other community members.”
In the past, the board has paid for needed capital improvements on a cash basis but is reviewing other options to finance improvements.
Frank said the board may adopt a program called SOAR (Strength and Assets, Opportunities, Aspirations and Visions, Results you can measure) used by other fairs and educational systems to help them stay focused on their goals.