Akron City Council Monday night gave the Mayor the green light to put the city on the line for $623,000 to save the Soap Box Derby.
Council passed an ordinance which authorizes the Mayor to enter into a newly negotiated loan guarantee agreement between the International Soap Box Derby Inc. and FirstMerit Bank.
The bank has agreed to restructure the Derby's $623,000 debt owed in light of its recent cash flow shortfall. In recent years, the annual race has had no national sponsor.
The terms of the 15-year loan include a low fixed rate and lenient payment terms, all under the condition that the city guarantees the full amount of the loan should the Derby default.
Under the terms of the new agreement, the Derby will make monthly interest-only payments to FirstMerit through September. Beginning in October, the organization will make principle payments of approximately $42,000 every October.
The deal was reached with the help of the city, the Derby, FirstMerit and the Greater Akron Chamber, who has offered to lead more effective fundraising efforts, including a major campaign to support this year's race.
Budget and Finance Committee member Mike Freeman said Council typically authorizes $60,000 in city support for the Derby every year, but this guarantee to support the renegotiated loan will ensure the historic organization's long-term sustainability and vitality in Akron.
"None of us wants to lose the Soap Box Derby," said Freeman (W-9), who introduced the legislation for the committee. "We see this all as positive news and a positive direction for the Soap Box Derby."