Baird votes against, cites 1% interest rate, uncertainty 10 years down the road
The Crookston City Council Monday voted to approve an IRP loan for developer Jeff Evers for the Fournet Building project, but not until after, first, voting to remove it from the consent agenda so it could be further discussed. Council member Bobby Baird later voted against the loan that has 1 percent interest saying the council doesn’t know what could happen 10 years from now when Evers would be scheduled to begin repaying the loan.
“First, hats off to Evers for trying to get something going on Fournet, but I’m against the one percent interest,” Baird explained. “I know every scenario is different and this puts Craig (Hoiseth) in a tough situation, but if something happens 10 years from now who will get paid back first? The city?”
Council member Tom Vedbraaten added that Evers’ initial loan through the bank should be taken care of after 10 years and then he would be paying their loan back.
“This is about the best deal we can get to make something go over there,” stated Vedbraaten.
“There’s $800,000 of his money that goes in there and it’s not like it’s going to a vacant building” added Mayor Wayne Melbye. “There will be some renovation into it and, yes, you can’t tell what is going to happen in 10 years.”
Baird was the only one to vote against the loan.
In late January, the Crookston Housing & Economic Development Authority Board of Directors voted unanimously to approve a $50,000 loan to Evers. Evers then went to the City’s Development and Policy Review Committee to request $250,000 from the City’s Intermediary Relending Program (IRP) loan fund. In the end, Evers would have around $1.2 million for the first phase which includes second floor renovations, the installation of an elevator, and restoring the atrium/skylights. Later phases could involve a retail tenant on the first floor and renovating the third floor.
The terms of the $50,000 CHEDA loan would be Evers making only interest payments for the first 10 years, at 1 percent interest, while he pays off his $800,000 primary lender loan. Starting in the eleventh year, and continuing for five years, he’ll pay principle and interest on the $50,000 loan, with the interest rate not to exceed the prime rate at the time. CHEDA director Craig Hoiseth says that he anticipates the terms and interest rates requested by Evers on the $250,000 loan he sought from the IRP loan fund would be similar to the ones on the $50,000 CHEDA loan.
It was the spring of 2017 when Evers first approached CHEDA and the council with his multi-phase plan to redevelop the iconic building. Officials raised eyebrows at some of the major terms of his requests in previous proposals and continued to be hesitant as his requests for financing evolved.
The Fournet Building was purchased by Evers in early 2017 and he held public tours of the building in June for hundreds of people. Tri-Valley Opportunity Council, Inc., who have been looking at relocation options mostly because of deferred maintenance projects at their location across the street from the Fournet, made a deal with Evers to renovate the Fournet’s second floor for the agency to occupy the space. Even though the sixth-month window for the deal closed, they continue to pursue the project with Evers with a 10-year lease.