Rushford Council’s Monday, March 27 meeting had a noticeably shorter agenda than is typical, but the council acted on two agenda items that could have big impacts down the road.
The council unanimously approved a recommendation by the Economic Development Authority (EDA) to enter into an agreement with GForce Ink. The purpose is to address the notes and lines of credit due to the city. The company is under previous EDA loan agreement and is in default of a forbearance agreement. The second agreement terminated on December 31, 2016, and the company is ineligible for further forbearance, according to policy. Default requires the company to immediately begin repayment on loan and loan guarantee agreements, as stated by a letter from the EDA.
In lieu of declaring default and pressing immediate cure of it, City Attorney Terry Chiglo suggested the city enter into a Confession of Judgement agreement. It essentially allows the city to allow a period for repayment rather than declare an immediate default. If the company does not comply with the terms of the agreement, it allows the city a jump start on the process of litigation, which can be a drain on city resources and funds.
“It can be a lengthy process and it can also have significant legal fees,” noted Chiglo. The process from filing a complaint, initial discovery, and court scheduling to alternative dispute resolution, trial, and judgement can last six months to a year, according to Chiglo.
GForce Ink representatives Geoff and Kim Heppding have already agreed to the agreement details, including payment on Revolving Loan Funds no later than July 1, 2017. The loans of $300,000 and $50,000 include accrued interest to June 30 with a total balance of $392,379 and $59,970. In addition, the company must pay off a line of credit guaranteed by the Rushford EDA and produce a release of the loan guarantee no later than July 1. The company must also remain current on all utilities, fees, charges, and taxes due to the city – which it has done to date. Breach of the terms will result in legal action including the filing of the Confession of Judgement.
“GForce, to some extent, agreed to this process,” added Chiglo. “It’s a precedent you’re setting, going forward,” he added, noting the same process might be used in other circumstances.
“It’s a tool; a solution,” added City Administrator Tony Chladek. “It seemed like an appropriate one to use.”
The second agenda item approved was an application to the Department of Natural Resources (DNR) Outdoor Recreation Grant Program. The purpose of the application is to seek additional funding in construction of a trail. Laid out in the application is .3 miles of paved surface for the Rush Creek Trail Connection. This would connect the Ben Niggle Athletic Complex, the new Rushford-Peterson School, Rushford Aquatic Center, downtown Rushford, and the Root River State Trail system.
The grant acknowledges non-state matching funds from equal contributions of $96,099 from the city and the school district. The total project cost is $342,199 and the city is seeking the maximum $150,000 in grant funding. If the project is funding and moved forward, it would provide a much-needed, multi-use trail connection.
How much the city and school actually contribute to the project will hinge on the amount of the grant. If a lesser amount is awarded, the plans and financial contributions can proportionally be scaled back. The grant is due March 31 and project readiness is specified as April 2019. While the funding would require the city wait until 2019 to draw down funds and construct, the city may move ahead with the project and be reimbursed by the DNR at the time funds are available.
Engineers for the project have a substantial amount of detail planning done. “We may decide, with the new school, this is something we really want to get in place,” said City Clerk/Treasurer Kathy Zacher.
Administrator Chladek indicated that the plans are the same as were presented in an application to Safe Routes to School that was denied last year. “We’re simultaneously, but separately, having conversations with Minnesota Department of Transportation for school zones regarding speeds,” said Chladek. “We may benefit from that. We’re pushing that as well.”
In other news, the city council received a proposal from Paul Peterson Aviation, LLC to assist with a community event sponsored by Root River Community Church. The event is an April 8 Easter Egg Hunt slated from 10 a.m. until noon. As part of the day’s festivities, Peterson Aviation requested permission to assist with dropping 200 candy-filled plastic eggs from his helicopter. The city ordinance dictates that nothing can be dropped. However, the altitude restrictions apply to aircraft, not a helicopter, which can fly at much lower altitudes. The council approved the request.
The next regularly scheduled council meeting is Monday, April 10, at 6:30 p.m., at city hall. The public is encouraged to attend.