The town of Jonesborough has worked out an agreement with the International Storytelling Center and the USDA Office of Rural Development that will allow the town to purchase the storytelling building in its downtown historic district for $1 million and lease the majority of the building back to ISC for an amount that will cover the town’s annual debt service on the building.
The agreement was negotiated by Jonesborough Mayor Kelly Wolfe and will be presented to the town’s board of Mayor and Aldermen for discussion and possible approval on Monday.
Wolfe said Friday he has been working on the agreement with ISC and Rural Development since a couple of months before the ISC filed for bankruptcy in late 2010 and he believes there is enough “general support” for the plan among the board members for the agreement to be approved.
“I’ve been in the real estate business since about 1990 and looking at this deal strictly from a business perspective, I think it’s a huge win for all parties involved,” Wolfe said. “Not only does the town get a good deal on this very important building, but we’re able to accomplish many of our objectives in downtown with this space while at the same time having a tenant in place who can cover the cost of the purchase.”
Vice Mayor Terry Countermine also voiced support for the agreement. “Storytelling is important to the town. It’s not going to cost the taxpayer anything. I’m in favor of it,” Countermine said.
A recommendation for board to approve the agreement states that Rural Development has agreed to loan the town the $1 million to purchase the building from ISC and to accept the $1 million ISC receives in full satisfaction of the $1.3 million lien Rural Development holds on the building as a result of ISC’s default on its $2.6 million construction and its subsequent bankruptcy proceedings.
Rural Development has further agreed to add the $1 million debt the town will incur on the building to the town’s $2.3 million debt to Rural Development for construction of Jonesborough’s new Senior Center.
According to the proposal, ISC has agreed to rent the building from the town, with the exception of its gift shop, for $45,000 annually, or the same amount in annual debt service the town will owe Rural Development on the loan for building’s purchase.
The town will use the gift shop to establish a visitors’ center annex in Jonesborough’s downtown historic district as has been recommended in several consecutive tourism and development studies conducted for the town.
“We’re looking at ISC maintaining the structure with the exception of the roof and heat pump, and us using part of the building and them using the rest of it,” Wolfe said. “With ISC covering the debt service, it’s truly a win-win,”
When asked if ISC, which only recently emerged from bankruptcy, will be able to meet the cost of the annual lease, Wolfe said ISC’s existing budget includes $45,000 in annual payments to Rural Development that it had hoped would allow it to remain in the building.
“It is already a budgeted expense for them. Basically it’s how much they could afford to pay on the mortgage, but instead of a mortgage it’s going to be a lease payment,” Wolfe said.
“Understanding their recent financial difficulties and to make sure we’re being good stewards on behalf of taxpayers, we’re going to insist we keep two years’ worth of lease payments in escrow in case this (ISC) organization starts to have trouble again,” Wolfe said.
According to the mayor, ISC will pay the $90,000 in escrow reserves from existing “cash on hand.”
To implement the plan, the Board of Mayor and Aldermen must approve three separate resolutions to allow the town to enter the $1 million purchase agreement and the $45,000 annual lease with ISC and to add the $1 million cost of the building to its application for Rural Development funding for construction of the town’s new senior center.
“I can not speak for the board but it’s my sincere hope that we will be able to join together and make a good business decision to benefit all parties involved,” Wolfe said.