Transportation officials came up short for a controversial welcome center near Ashland and tapped the city of Medford for a $1.5 million loan.

Transportation officials came up short for a controversial welcome center near Ashland and tapped the city of Medford for a $1.5 million loan.

"It's a creative way of getting financing," said Art Anderson, area manager for the Oregon Department of Transportation.

Medford City Council members agreed to lend ODOT the money because they said the center will promote tourism in the city and the region.

The welcome center, which will include a rest stop with bathrooms and landscaping, will be built at milepost 12.5, just south of Crowson Road and before northbound motorists reach exit 14, the south Ashland interchange.

Since the new welcome center was proposed almost 18 years ago, it has been opposed by neighbors in the area.

Anderson said ODOT had most of the money needed for the $12 million project, but Travel Oregon was finding it difficult to come up with its $3 million share specifically for the welcome center building. Travel Oregon is a semi-independent state agency funded by a 1 percent transient lodging tax.

ODOT discovered it could legally spend only up to 50 percent of gas tax money on the welcome center building, he said.

ODOT came up with the idea of borrowing the remaining $1.5 million from the city of Medford, which will be repaid over a three-year period.

"Frankly, the jurisdiction that has the most money to do that is Medford," Anderson said. He said Ashland wasn't approached with the idea because its budget isn't as big as Medford's. Jackson County was approached but state law prevents counties from doing those kinds of exchanges, ODOT discovered.

Under the arrangement, Medford will take $500,000 each year for the next three years out of its street utility fund and lend it to ODOT.

ODOT will repay Medford $500,000 each year over the three-year period in gas tax revenues. The money will be used by Medford for its own road projects.

While the arrangement sounds like gas tax revenues still are helping finance the entire welcome center, Anderson said the loan idea was cleared with the Oregon Department of Justice.

He said ODOT often shifts money back and forth between federal, state and local funds, so the idea isn't completely out of the box.

Since the welcome center is supposed to be funded by Travel Oregon, the $1.5 million contributed by ODOT will be considered a loan that is paid back over a certain period of time, Anderson said.

City Manager Eric Swanson said Medford has contributed money to ODOT projects over the years, including on the south Medford interchange project.

Swanson said the welcome center will help tourists find attractions in Medford.

"It's a great opportunity for Medford and for the entire state," he said.

Swanson said no other cities in the area are lending money toward the project.

ODOT officials anticipate land-use issues surrounding the project could be cleared up by summer, with some initial construction starting on the welcome center and rest stop by the end of the year.

Ashland offered to let ODOT access city water on the condition it cannot be used for irrigation or for any purposes other than for drinking or for restrooms. ODOT estimates the water usage would be equivalent to 3.7 homes, or 1,400 gallons a day.

As a result, ODOT plans to tap into the Talent Irrigation District for landscaping.

A rest area south of Ashland has been in the pipeline since the Oregon Department of Transportation closed a welcome center near the Siskiyou Summit over traffic safety concerns in 1996.

Trucks will not be allowed to use the center. Truckers have access to restrooms at the Port of Entry to the north on the freeway.

Reach reporter Damian Mann at 541-776-4476 or Follow on Twitter at @reporterdm.