Officials plan vote on loan package
The Fayette County commissioners are slated to take action this week to authorize 84 Lumber Co. to seek a $20 million loan request through a state program. Although the county would not incur any liability for the loan, because the money is coming from the state Community Development Block Grant (CDBG) funds, the lumber company needs a sponsor, and the county would be the sponsor.
The company, which was founded by Joseph A. Hardy III, a former county commissioner, is seeking to refinance a private loan.
At a public hearing earlier this month, some people objected to the company obtaining state money, adding that Hardy is wealthy and shouldn’t be given state money. Although some voicing opposition called it a “bailout,” the money would be a loan and not a grant.
During the public hearing, 84 Lumber Co. officials said the company used to employ 10,000 and there are now 3,700 employees.
The application calls for 84 Lumber Co. to create 365 jobs for low- to moderate-income workers over three years.
At Tuesday’s agenda meeting, the commissioners voted to place on Thursday’s agenda the adoption of a resolution approving and authorizing the submission of an application for Section 108 loan guarantee funds. The resolution also approves a cooperation agreement by and between the state, acting by and through the Department of Community and Economic Development, Fayette County and the Fayette County Redevelopment Authority.
Andrew French, executive director of the redevelopment authority, said representatives of 84 Lumber Co. and the state would be available on Thursday to answer questions about the loan.
French previously explained at the public hearing that the loan process falls under the U.S. Department of Housing and Urban Development Section 108 program that funds the CDBG program.
84 Lumber Co. is applying for a $15 million loan through Fayette County and a $5 million through Washington County through the Section 108 program. Fayette County only has to approve the application and has no fiscal responsibility for the loan.
84 Lumber Co. is using $30 million worth of real estate for collateral for the $15 million it is seeking through Fayette County.
The company will pay only interest in the first two years and then pay off the balance of the loan over the next 15 years. The company is seeking the loan to pay off another loan, at 18 percent interest, from Cerberus Capital Management that it took out several years ago.
That loan, in the amount of $195 million, since has been paid down to about $55 million, a spokesman for 84 Lumber Co. said.
However, one of the stipulations of the Cerberus loan is that any proceeds from the sale of 84 Lumber Co. assets has to be applied to the loan balance.
84 Lumber Co. also will borrow $20 million from private sources, including Wells Fargo Bank, and company President Maggie Hardy Magerko will use $5 million of her equity in the company to round out the financing package.
Also on Tuesday, Lori Groover-Smith, director of the Fayette Area Coordinated Transportation, told the commissioners that the new bus transfer center being constructed at the Fayette County Business Park in South Union Township is completed and slated to open Sept. 1. Groover-Smith said the only outstanding matter is getting electrical service to the building.
The center, which cost more than $1 million, was mostly funded using federal economic stimulus money.
The one-story building is includes two offices, a mechanical room, restrooms and a waiting/vending area for bus patrons.
The commissioners also voted to place a motion on Thursday’s agenda to approve the contract with the Service Employees International Union Local 668 for nearly 200 county employees in various county offices.
The contract, already approved by the union, is from Jan. 1, 2010, to Dec. 31, 2013, and includes 3 percent wage increases each year.
Dominick Carnicella, human resource director for Felice Associates of Greensburg, said starting in 2012, employees will have to pay $10 more for health insurance co-payments.
The commissioners announced there will be a “hard-to-recycle” event from 9 a.m. to 2 p.m. Saturday, Sept. 18, at the Wharton Township building.