Furniture is loan collateral
A collateral change on a revolving loan to Comforts of Home, brought the loan approval back to the city council in North Branch this week.
Comforts of Home, developers of an assisted living facility south of Perkins, asked for and got a $100,000 loan on April 9, using what was explained then as an expensive piece of equipment, as collateral for the loan.
As noted by city finance director Dave Stutelberg this week, at the time of the loan approval a list of actual equipment was not available for staff or council review.
Now that the list has been supplied, it is seen that the â€œequipmentâ€ is in fact $92,000 worth of furniture (chairs, tables, gliders, dining room sets, table lamps, serving carts, love seats, etc.) and an emergency call system worth $18,700.
Because this list was not available a month ago, Stutelberg felt the cityâ€™s EDA and council should be given another chance to consider the loan.
As noted, the loan allowed Comforts of Home to add three beds and some additional staff.
The council was encouraged to re-approve the loan with the list now available, and the inclusion of three conditions: that the city is named as an additional insured on Comforts of Homeâ€™s insurance policy, that the city be provided a paid receipt for the furniture and that the parent company or officer of the parent company guarantee the loan.
Brian Winges of Comforts of Home was at the meeting this week and faced difficult questions from councilor Theresa Furman. She reminded Winges that Comforts of Home came to the council originally saying they were not asking for any (financial) assistance.
She said their original bed count was 36, and sometime before the request for the $100,000 loan, the number dropped to 27.
Now you have added three, she said, and asked how that is adding three?
Winges said they go to a city and determine how many beds a property can handle, and then they go into the economics. The number can change, itâ€™s easier to go down than up, he replied.
When Furman asked if this was turning into financial assistance rather than a loan, city attorney Tom Miller quietly nodded yes as he sat at the staff table.
Winges said he wasnâ€™t told about infrastructure costs such as sidewalks. The loan, he said, allowed them to increase the size and scope of their business.
Furman noted that the new costs covered by the loan also included shipping and handling.
Winges said it was all part of doing business.
Stutelberg reaffirmed that the city was not going to depend on the collateral for repayment of the loan, it would be the parent company.
Miller concurred, saying it was indeed the parent company, not Winges personally.
The council agreed 4-1 to again go ahead with the loan with the new conditions. Furman was opposed.
Also this week, the council learned that Blackstone, a developer who had a letter of intent with the city for residential development at the ESSBY land, has decided they cannot make the project work financially, even with the city offering millions of dollars of land for free.
Yesterday, city staff was going to work on the formation of a letter to formally terminate the letter of intent. Interim city administrator Bridgitte Konrad told the councilors that she hopes to go out for requests for proposals for new developers by this fall. Stutelberg said when the city goes out for proposals, it will detail the project, the scope and ground rules and have developers come back with their proposals. He said the city did not plan to lay everything out on the table.
Information from: www.ecmpostreview.com