Todd board considers loan forgiveness

The Reichert Place has a rich history in Long Prairie. It hasn’t always been a pleasant history, but enough people have cared about the building on Central Avenue throughout its life that hundreds of thousands of dollars have been spent to keep it a viable part of the city.

At their Sept. 6 meeting, the Todd County Commissioners heard from Central Minnesota Housing Partnership Community Development Director Jason Krebsbach about their hope to refinance their first mortgage and  their desire to have Todd County forgive a $90,000 loan which was made to cover the costs of an environmental cleanup that was necessary when they rehabilitated the building in 2000.

Krebsbach said that the original investor is no longer involved and that the building is now owned 50-50 with the Long Prairie Housing and Redevelopment Authority.

He explained that the $90,000 was originally supposed to be a grant, but since grant funds could not go toward equity, it had to be a low interest loan.

He asked the board if they would consider forgiving the loan.

He noted that the refinancing they would be doing now would include some rehabilitation efforts including fixing the flat roof, some interior work like the flooring, the parking area and some external work, as needed.

Commissioner David Kircher asked if any part of the principle of the loan had been paid.

Krebsbach said nothing had been paid as it had been deferred.

Kircher asked how much the Long Prairie HRA had invested and was told they had no financial investment, but were partnered 50-50.

Kircher then asked if the county was listed as a co-owner

Krebsbach said they were not.

Kircher said that this whole thing about the $90,000 was new to him and that he couldn’t see that the county could just hand out $90,000.

County Attorney Charles Rasmussen said that in looking for information about the loan, all he could find was the mortgage and the promissory note.

Auditor/Treasurer Denise Gaida said that in the 2000 board notes there was mention of the loan, but no actual resolution or board action could be found on file.

The maturity date of the loan is Sept. 1, 2031.

Rinke-Noonan was the law firm involved at the time of the loan.

CMHP Executive Director Deanna Hemmesch, who was a program director for CMHP at the time, said that the county and the city wanted something done with the property. Trees were actually growing in the first floor and the building had no roof.

They needed a local contribution to get some of the funding sources they were applying for because asbestos and lead were found in the building so there needed to be an environmental cleanup.

Commissioner Rod Erickson asked if other governmental agencies had invested in the project.

Hemmesch said that to her recollection, there were six to eight other different governmental sources including various forms of federal funding.

Because they are a non-profit, 99.99 percent equity was donated to them for $1 by the tax investor.

“Well, I am dumbfounded to see this amount. I want to table it. Would that affect your immediate efforts?” asked Kircher.

It would slow the process of refinancing, Hemmesch said.

Chair Barb Becker said they would table it until their Sept. 20 meeting.

Hemmesch said she would get information from Rinke-Noonan to the commissioners for review before that meeting.

Krebsbach said they still owe $162,000 on the first mortgage.

The market value of the property, according to the Todd County Assessor’s Office, is $15,000 for the land and $402,700 for the building.

Gaida asked Hemmesch why they don’t refinance it for the amount they owe instead of asking the county for loan forgiveness like a person would have to do if they were refinancing their personal mortgage.

There was not enough equity to pay everything off, Hemmesch replied, and they did not have enough money in their reserve accounts that once they fixed the things needing fixing, there would not be enough money to pay off the $90,000.

Commissioner Randy Neumann asked what their operating income was.

Hemmesch said that she would have to find that information, but that they had 17 apartments in the building and that most rented for around $400 per month. 

In other business:

o Approved a one-year 3.2 malt liquor license for Eagle Mountain from Sept. 15, 2016-Sept. 15-2017.

o Approved hiring the following people pending background check, psychological and physical evaluations for work in the sheriff’s department as part-time deputies: Shane Carlberg, Brian Madison, Paul Amell, Brian Lashinski and Dan Lueth.

o Approved the application for a grant of $5,000 from the Initiative Foundation to the Hilltop Regional Kitchen.