Mess could have been worse

It’s hard to feel good about being stiffed for more than $288,000.
So focus on the $150,000 the county was able to claw back.
Several years ago, the county — through Jay County Development Corporation — made a number of loans to Omnicity, a start-up company with big plans for bringing wireless Internet services to rural Indiana.
It was an appealing vision, though the business plan appears to have been flawed from the beginning. There simply were not enough interested customers per mile in rural Indiana to provide an adequate return on the extensive investment required.
But it took awhile for reality to set in.
JCDC and the county commissioners signed off on something like $500,000 in loans from Economic Development Income Tax funds.
Those dollars more frequently are tapped to help with infrastructure development that attracts or helps to keep local jobs. Loans are riskier, and in this case they were essentially providing venture capital to a new company.
The first loan agreement, dated Oct. 18, 2004 was for a total of $380,000. Omnicity received those funds in three installments, one of $50,000 on Nov. 1, 2004, a second of $100,000 on Dec. 7, 2004, and a third of $230,000 on Feb. 4, 2005. Separate promissory notes were provided for each installment, specifying the interest rate. The second loan agreement, dated June 26, 2006, was for an additional $114,500 and was for the deployment of “Phase III” wireless high-speed Internet and broadband service to the county.
In late 2007, the truth about Omnicity’s financial weakness and difficulty attracting customers started to come out. By then, the county was on the hook for nearly half a million dollars, and the collateral for the loans was equipment that was probably obsolete.
To their credit, JCDC and the commissioners responded aggressively. Bill Bradley, who as JCDC executive director had inherited the problem, negotiated with Omnicity and managed to get $150,000 in cash and a long-term installment deal.
Omnicity’s bankruptcy filing brings that deal to an end, and the $288,000 or so is long gone.
But the hard fact is, it could have been a lot worse.
Just ask the others on Omnicity’s long list of major creditors. — J.R.[[In-content Ad]]