June 25 motion deemed project ‘no longer possible’

By Jennifer Jacob Brown / staff writer

The future of the Loblolly project remains unclear — and the October 2010 deadline looms for Lauderdale County officials to find a business to be up and running on the site.

If nothing is there by then, county officials have said they will have to raise taxes to pay for the $10 million they borrowed to develop the site.

Lauderdale County Supervisors, board attorney Rick Barry, and East Missississippi Business Development Corp. President Wade Jones met behind closed doors for more than an hour Monday to discuss the issue, officials said.

No action was taken. The last time supervisors met behind closed doors to discuss the project — June 25 — they emerged and in a mostly empty courthouse unanimously passed a motion declaring the project "no longer possible as advised by company officials," according to meeting minutes obtained by The Meridian Star.

The motion also stated that "the Board left open possible litigation dealing with this project that could be decided in the next few months."

When asked about the project as he exited the Monday closed meeting, Barry said "I don't have any comment on that. You'll have to ask Wade Jones about that."

As recently as August — and some two months after the motion that said otherwise — supervisors publicly said they believed the industrial project would be built. Since then, some, including District 5 Supervisor Ray Boswell, have said they believe the project is dead.

But after Monday's closed meeting, each supervisor referred questions about the project to Jones. Jones said, "I really don't want to comment about any of my projects because it could jeopardize the project. Our practice is not to comment on any project."

The county became involved in the Loblolly project in 2006, when the board of supervisors took out a $10 million loan — by issuing bonds — to assist in the development of the project, in which Shuqualak Lumber planned to build a processed wood product manufacturing plant at Lauderdale County's G.V. "Sonny" Montgomery Industrial Park.

The county's money was used to pay for improvements to the proposed site of the Loblolly plant. County Administrator Mike Sumrall said the loan was supposed to be paid back by Loblolly after the plant was built. But the company never signed a contract and the plant has not been built.

The plant, which was expected to create 300 direct and indirect jobs, was originally expected to be in full operation by 2008. To date, there has been no major construction on the site, and the county owes about $9 million on the loan.

If nothing is built on the site by the end of this fiscal year (October 2010), Sumrall said the county will have to levy taxes in order to pay back the loan.

To prevent a tax hike, the East Mississippi Business Development Corporation has been working to market the site to other companies, but so far has not announced any takers. EMBDC business development manager Skip Scaggs said in August that he felt "more than optimistic" that EMBDC will find a project for the site.

Right now, payments are being made with money leftover from the loan. Sumrall said the county is able to use the that money to make payments on the loan because of the June 25 motion, which declared the funds surplus and transferred them to an account designated for debt repayment.

To stay in compliance with state law, Sumrall said, "We had to declare that in order to move that (money) from the proceeds fund to the bond payment fund."

Sumrall said the county had several meetings with Loblolly officials, of which he attended a few. He said that, because he did not attend every meeting, he could not say if the Loblolly officials said outright that the project would not happen. He did say, however, that the meetings brought the county to the conclusion that the plant will not be built.

Sumrall said he believes Loblolly wants to build the plant, but that the housing market slump has kept them from doing so. "They've got a lot of money tied up in it, too," he said.

Hank Florey, president of the board of supervisors, has long-maintained that he feels there is a chance the Loblolly plant could be built.

However, Florey both voted for the motion declaring the project dead and signed the copy of the minutes in which the motion is recorded. But he and other county officials said the motion was necessary to make the payments on the loan.

Before Monday's closed meeting, Florey continued to maintain the project is still a possibility, saying, "It's just hanging and it could still happen."

The motion, which was passed during a recessed meeting for which nothing but a closed session was on the agenda, declared the $10 million in bonds issued for the project surplus and ordered that the balance of the bond proceeds be transferred to the bond and interest sinking fund

In the motion, the board did "declare and find the purpose for which the bonds were issued for the Loblolly Project...was no longer relevant." It said the project was "no longer possible" and "will not come to fruition".

To view the full text of the June 25 motion on the Web, visit www.lauderdalecounty.org and click on "meeting information."