Cleveland Mayor Tom Rowland and City Clerk William Wright signed the paperwork Thursday afternoon in the Municipal Building for a $6 million variable-rate loan from the Tennessee Municipal League.
The loan will be used to purchase land from Jones Lakeland L.L.C. The property is located east of Interstate 75, south of APD 40 between Lake Road and Spring Branch Road on the old Bob Zeige farm. The development board is purchasing 330.6 acres, of which 262 acres are developable.
The city of Cleveland, Bradley County and Cleveland Utilities will each pay $2 million of the purchase price plus interest. The life of the loan is not to exceed 15 years.
TMBF Bond Fund President and CEO Charles "Bones" Seivers said there are those who say variable-rate loans lead to bankruptcy because of skyrocketing interest rates. But to the contrary, he said the city of Cleveland has saved between $1 million and $2 million by participating in the bond fund. The city of Athens has saved more than $8 million.
“The fact is, the variable-rate product has been lower (than fixed rate) in the last 18 years. Four times, out of 958 weeks, has the fixed rate been lower than the variable rate,” he said.
He said the variable rate increased to 8 percent for about 10 days in 2008 before falling again. On Wednesday, the variable interest rate was 1.13 percent.
“The actual savings can be documented,” the TML Bond Fund manager said.
Seivers said TML works for its member cities and if any bank offers better loan terms, then “we will be the first to tell you.”