Update on EDIT loan delivered (11/05/07)

A company providing wireless Internet service to rural Indiana communities that received loans from a county tax fund designed to spur economic growth may be in danger of failing to repay.

Omnicity Inc. was granted a series of loans totaling $494,500 from the Jay County Economic Development Income Tax fund to complete a project to bring high-speed Internet access to Jay County. The first of four loans was made in October 2004, and the company still owes $450,099, according to information provided by Jay County Development Corporation at this morning's Jay County commissioners meeting.

"Unfortunately, Omnicity is now in default on those loans," JCDC Executive Director Bill Bradley told commissioners, reading from a news release prepared for the meeting.

Commissioners unanimously voted, 3-0, to extend the repayment schedule for an additional six months as long as "token payments" on interest are made each month.

"As long as they ... make payments, we'll review (the situation) after six months," Commissioner Faron Parr said.

Former JCDC president and current board member Ramon Loucks said Omnicity has suffered financial hardship, due in large part to inefficient internal operations and mismanagement of money. The business, however, has hired a new CEO and taken other steps such as cutting personnel to save money.

"I don't know how much longer they're going to be in business," Loucks said of Omnicity.

Documents provided to commissioners show that so far in 2007 $12,199.14 has been paid on the interest of the loans.

At an Oct. 8 meeting of the county's EDIT Advisory Committee, committee members were told that Jay County Development Corporation had recently received a payment from Omnicity for $543.65. Committee members agreed to use the money to pay interest on the loans.

The best result of this ordeal, Loucks said, would be for Omnicity to be bought out by a more financially sound company and continue providing service in Jay County.

The county could garnish equipment, which is outlined as collateral in the loan documents, Loucks said in an interview after JCDC's meeting with commissioners.

JCDC has refused to provide original loan documents to The Commercial Review, despite several requests over the last two weeks. At the meeting this morning, representatives from JCDC said they were reviewing whether or not the documents are public information and are subject to public-access laws.

The money loaned to Omnicity was generated through the county's economic development income tax (EDIT). The loan was made by Jay County, not JCDC, and was approved by commissioners.

Overall, Omnicity provides Internet access to about 280 customers in Jay County, Loucks said. But user fees generated from these customers are nowhere near the amount necessary to even pay interest on the loans.

No one from JCDC was able to comment on the quality of service from Omnicity. But Nancy Culy, Jay County deputy auditor, said access and service was unreliable.

"I had Omnicity and I got rid of them," she said.

Despite fiscal concerns surrounding Omnicity, commissioners and the development corporation said all is not lost in this situation. Joe Johnston, president of JCDC's board of directors, said Omnicity showed the need for high-speed wireless Internet access in Jay County, bringing in other companies to offer service.

"The Omnicity presence has generated a lot of competition," Johnston said.[[In-content Ad]]