06/27/2012 Special Meeting
FRIEND CITY COUNCIL
MINUTES-SPECIAL MEETING
JUNE 27, 2012
Mayor Vossler called the special meeting of the City Council to order at 5:00 p.m. at the City Hall. Advanced notice of the meeting was given by posting in prominent places throughout the community. All proceedings shown were taken while the meeting was open to the attendance of the public.
Mayor James Vossler presided and City Clerk Debbie Gilmer recorded the proceedings. The following Councilmembers were present: Stanley Krause, Phyllis Ryan, Dan Drake, and Harlan Schrock. Attorney Mullally was present. A quorum being present and the meeting duly convened, the following proceedings were had and done.
As required by the Nebraska Open Meetings Act, Mayor Vossler announced that a copy of the Nebraska Open Meetings Act has been posted on the south door of the City Hall meeting room for all in attendance to review.
Mayor Vossler announced that public comments would be received at this time. None offered.
Jim Ryan attended the meeting on behalf of the Friend Industrial Development Corporation. The first item of business addressed by Mr. Ryan, was a recommendation from the Friend Industrial Development Corporation for the City Council to approve a Community Development Block Grant of $175,000 as applied for by Tom Clouse, dba International Bait Manufacturing, Inc.
Harlan Schrock voiced concerns of approving this loan, after receiving a letter from the State of Nebraska Department of Economic Development requesting all unallocated program income and future payments on loans issued from the Community Development Block Grant program and reuse funds be returned to the DED.
In response to Schrock’s concern, Mr. Ryan referred to correspondence of FAQs that he had received relating to the CDBG Program Income Revolving Loan Fund and the Department of Economic Development. Mr. Ryan referenced Q7 and A7 from this correspondence which states:
Q7: What should a community that decides to no longer operate a local CDBG RLF do about active loans?
A7: The community, as the lender, can either assign the loan(s) to DED (and subsequent payments), or the community could restructure the loan to a deferred, forgivable loan thus suspending payments for the business.
City Attorney, Mike Mullally, expressed to the Mayor and Council that he felt it was highly improper for the Council to approve a loan for $175,000 to someone who will never have to repay it. Mr. Ryan explained that during direct discussions with Lara Huskey, Director of Community and Rural Development Division & Operations with the Nebraska Department of Economic Development, it was his understanding that the loan to International Bait Manufacturing, Inc. would be allowable, providing it be made prior to the City adopting a resolution authorizing Mayor Vossler to modify, or restructure, loans to be deferred and/or forgiven.
Mr. Ryan asked if further discussion of this could be held in executive session. Harlan Schrock said he feels that anything pertaining to this issue should be open and privy to the Council. Mike Mullally advised that discussion of this did not justify entering into executive session. Mr. Ryan informed the Council that to forgive or defer the loans is his, as well the Friend Industrial Development Corporation’s, recommendation to the Council for their CDBG RLF program funds. Mr. Ryan said that the DED letter of May 4, threatened the City over the use of these funds and he does not want the loan holders to be subject to this sort of intimidation. These loans were made with local people that have worked with the Friend Industrial Development Corporation in good faith and trust. If action is not taken now, the money goes to the state and the City may never get it back. Each of the loan recipients have signed a document agreeing to this possible action by the Council. Ryan continued by saying if this is not something Council wants to consider he would no longer be involved as he’s been working on this for two months and this is his final proposal. Mayor Vossler stated that Jim Ryan has spent a great deal of time and effort on this issue and it is his thoughts that if the Council follows Ryan’s advice a successful, workable solution is in the future.
Regarding the recommendation of Mr. Ryan and the Friend Industrial Development Corporation, Ryan said that to some extent the City Council needs to trust that the people within the Friend Industrial Development Corporation group have worked hard on this and feel this is the best resolution for the City. Ryan continued by saying that the Council needs to act on this to protect themselves by forgiving/deferring all active loans and discontinuing participation in the CDBG revolving loan fund program. Councilman Schrock asked if they vote to give Mayor Vossler authority to sign these modifications for these loans will the City be relieved of any future responsibility relating to this issue. Mr. Ryan said anything that may result from this the Friend Industrial Development Corporation will accept full responsibility for.
Jim Ryan expressed that he feels that DED and HUD (Housing and Urban Development) have no prerogative to pursue dollars. Any monitoring of the loans would not focus on dollars, but rather compliance with the Davis Bacon Act, whether or not jobs were retained/created, was an environmental permit in place at the time of construction, etc.
Harlan Schrock asked if any of the loans were going to be repaid. Mr. Ryan replied that whatever might occur outside of the City Council in regard to these loans by any other organization in the community has nothing to do with the City. Mullally clarified with Jim Ryan that Ryan’s suggestion to the Mayor and Council was that the loans be deferred or forgiven. In other words the City will not seek collection.
Harlan Schrock made a motion to recess for 10 minutes, which motion was seconded by Dan Drake. On roll call voting aye, Ryan, Krause, Schrock , Drake. Nays, none. Motion carried. Meeting recessed at 5:40 p.m.
Motion to reconvene the meeting was made by Schrock, seconded by Krause. On roll call voting aye, Drake, Ryan, Krause, Schrock. Nays none. Motion carried. Meeting reconvened at 5:50 p.m.
Motion was made by Dan Drake, seconded by Phyllis Ryan, to accept the recommendation of the Friend Industrial Development Corporation and approve a CDBG loan of $175,000 as applied for by Tom Clouse, dba International Bait Manufacturing, Inc. On roll call voting aye, Krause, Ryan, Drake. Nays, Schrock. Motion carried.
Mr. Ryan proposed the following resolution.
Whereas the City has previously made loans/grants pursuant to the Community Development Block Grant Program; and
Whereas such loans/grants are now subject to certain changes in the rules/regulations of the program that permit loans to be modified including loan deferrals and loan forgiveness; and
Whereas the City Council wishes to approve modification of the existing loans described on the list of loans attached hereto;
Now, therefore the City Council of Friend hereby resolves and does adopt the loan modification agreement in the form attached hereto and authorizes the execution of the loan modification agreement for each loan identified in the attached list of loans by the Mayor on behalf of the City of Friend.
Mr. Ryan stated that the Friend Industrial Development Corporation unanimously recommends that the City Council approve the motion to give authority to the Mayor to deal with the outstanding CDBG RLF funds to remove them from the DED books by approving the preceding resolution. This would forgive the loans on paper, and get them off of the state and city books. Dan Drake moved for the adoption of the preceding resolution proposed by Jim Ryan relating to CDBG RLF modifications. Motion was seconded by Ryan. On roll call voting aye, Schrock, Krause, Drake, Ryan. Nays none. Motion carried.
(See e-mails between Jim and Lara dated 06/11/2012 through 06/13/2012.)
Motion to adjourn the meeting was made by Schrock, which motion was seconded by Drake. On roll call voting aye, Ryan, Krause, Drake, Schrock. Nays none. Motion carried. Meeting adjourned at 6:05 p.m.