Last March, the Rushford City Council unanimously approved a recommendation by the Economic Development Authority (EDA) to enter into an agreement with GForce, Ink. The agreement was drawn up with the intent of addressing notes and lines of credit due to the city. Details of that agreement included payment on Revolving Loan Funds, including accrued interest, no later than July 1, 2017. In addition, the company was to pay off a $25,000 line of credit with Coulee Bank that was guaranteed by the Rushford EDA in 2016 and remain current on all utilities, fees, charges, and taxes due to the city.
When they failed to comply with the agreement, the city considered declaring default and pressing immediate cure of it. Rather than accrue considerable legal fees, City Attorney Terry Chiglo suggested the city enter into a confession of judgement agreement. This enabled the city a window to allow for repayment and should the company not comply with agreement terms, allowed for a head start on the litigation process. GForce, Ink representatives Geoffrey Heppding and his wife, Kimberly Murphy Heppding agreed to terms that will result in legal action.
The company has a history with the EDA stretching back to 2010. Forbearance was first granted in early 2011 and by July 2014, had been in forbearance for 40 months. At that time, the loan was in default for failing to comply with financial reporting and repayments. Additional forbearance was requested for a term of 12 months, but the EDA and council approved just six months in hope that sale progress and business projections would continue to climb. The settlement agreement with the company now ends June 30 and they are ineligible for additional forbearance.
The company has declared they are unable to meet the agreement terms, including paying off the line of credit or making payments on their loan as detailed in the confession of judgment agreement. Revision of the agreement terms was cleared by Attorney Chiglo, so long as it is prior to the confession of judgement effective date of July 1. Any changes beyond that point are not advised by legal counsel.
Revisions include payment on revolving loan funds no later than November 1. $5,912.08 will be paid on the first of each month. The first revolving loan fund amount due is $397,938.66, including recent accrued interest. Monthly payment on the loan will be $4,076.39. Payment of $61,020.27 on the second revolving loan fund will cost the company $1,835.69 additional per month. Payoff of the $25,750 line of credit is also included in the agreement terms in four payments; $7,000 in July and $6,250 each for August, September, and October. The company was also to remain current on all utilities, fees, charges, and taxes due.
“We’re basically boxed in again,” said Mayor Chris Hallum at the Monday, June 26 council meeting.
City Administrator Tony Chladek reiterated that the confession of judgement is coming July 1. “The EDA deliberated this probably more than any other item.”
City Clerk/Treasurer Kathy Zacher added more information regarding the payments, which will be withdrawn automatically through an automated clearing house. If the payments aren’t good and bounce, legal paperwork will be submitted automatically.
“We’re hoping it’s a step in the right direction,” noted City Councilor Terri Benson. “It’s a different approach.” Essentially, the EDA had to make the decision whether or not to get no money to try and reclaim something through modifications. The revisions were approved 3-0. Councilors Vern Bunke and Mark Honsey were absent.
In other news, the council has also approved a memorandum of understanding between the city and the City and Local union. City employee Louane Davidson will be participating in the Public Employee Retirement Phased Retirement Option beginning in October. It will allow Davidson to work half time and receive retirement benefits. “We’ve hammered at this from every angle,” said Administrator Chladek. “I don’t think there’s a better win-win-win than this.”
“It’s good for the city; it’s good for the employee,” added Mayor Hallum.
Two items of the consent agenda were of particular notice. The city has sent a letter to the cities of Rushford Village and Peterson regarding policing. In it, Rushford thanks the two municipalities for meeting with city representatives, Fillmore County Sheriff Tom Kaase, and Rushford Police Chief Adam Eide. It indicates Rushford Village and Peterson would prefer to operate under current arrangements, which are slated to terminate December 31 unless a new contemporary contract can be reached. As noted in a February 2017 letter, the City of Rushford does not wish to continuance the current arrangements.
“Unless a contemporary agreement can be worked out similar to the format used by the Fillmore County Sheriff’s Office for other communities, the City of Rushford will only respond to officer needs assistance calls in either Rushford Village or Peterson. The two municipalities will likely continue discussion of the issue at their upcoming council meetings.
The city has been denied funding for the Local Trail Connection Grant from the Minnesota Department of Natural Resources. The city had applied for funding following denial of award for Safe Routes to School grant funding. New rounds of funding for both programs will renew in 2018.
The next regularly scheduled council meeting is Monday, July 10, at 6:30 p.m., at city hall. The public is encouraged to attend.
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