City Councilors Consider Golf Club Debt Cancellation
Libby city councilors weighed in on March 31 by partially canceling a long-standing loan to Cabinet View Golf Club for the construction of the course’s back nine.
The loan dates back to 2004, when the club agreed to repay dollar money from building and selling a property nearby. In the years that followed, the organization struggled to organize the development or find a buyer. And an argument over the cost of extending the city’s water and sewer lines in the area marred relations at one point.
Speaking on behalf of the club, board member George Mercer surprised city councilors last month by announcing that the organization was approaching a potential sale of the property. If the deal were finalized, the club would be ready to repay $ 878,875 of the initial loan of around $ 1.54 million.
But that would force city councilors to agree to forgive $ 662,125 in debt nearly two decades after offering the loan. Club officials said the debt would have to be partially written off before the sale could begin, hence the special March 31 meeting of Libby City Council.
According to Mercer, who answered city council’s questions on behalf of the organization on March 31, the club would make a net profit of about $ 1.75 million from the sale of the land – the list price is $ 3 million. dollars – before repayment of any part of the loan. Some city councilors raised objections.
“What worries me about the total cancellation of this debt is that there has been no loss here,” said Councilor Hugh Taylor. “If the loan was repaid, the country club would walk away with over $ 200,000.”
Mercer confirmed the assessment.
“So the city would have to suffer a loss of $ 600,000 for the country club to make $ 800,000?” Taylor asked.
Mercer countered by saying that the money had never been to the city to begin with. The dollars came from an $ 8 million jar that Libby received from the federal government for local economic development. Some of the funds went in the form of grants to local groups while other organizations took out loans.
“At the end of the day, no one can say that these were municipal funds designed specifically, directly for the city. It was community funds, ”Mercer replied. “We can’t help but ask… can you accept forgiveness?”
The club’s arguments in favor of forgiveness are manifold. Mercer leaned heavily on the origins of money, but the group also presented city councilors with a package with other arguments. In it, the club’s leadership highlighted future tax revenues from development, water and sewer hook-up charges, monthly utility charges and a windfall of new housing.
The document also notes that the club is a non-profit organization and that the course is a boon to the city’s economy. The tournaments raise money for local organizations and scholarships, and tourists who visit the course spend money on other amenities within the city limits.
The document also notes that without forgiveness, the land transaction died on arrival.
“Regarding future economic development, I would like to say: haven’t we made provision for this for the whole community?” Mercer said.
City Councilor Rob Dufficy noted that the repaid debt could be used for other projects in Libby. He wondered if the golf club could agree to the city forgiving a reduced amount, like $ 300,000.
Mercer said he would not comment on behalf of the club’s board of directors. But he warned the city council against any adjustments to the agreement presented by his organization.
“I can only warn you to be very careful with a counter offer and its size or not,” he said.
Dufficy noted that city council has a fiduciary responsibility and should look after taxpayers. Mercer dismissed the concern outright.
“Yeah, we absolutely have to look for federal money,” Mercer replied.
Councilor Gary Beach stressed that if city council grants the pardon, he would expect the developer to hire locally for the construction.
But on the issue of forgiveness, Beach acknowledged the city’s mismanagement of the golf club loan as well as other loans and grants distributed out of the original $ 8 million. The money came from the federal government without any direction or conditions, he said. Most of the money loaned never returned to city coffers.
“The root cause of this was that the city had no experience as a lending agency and was essentially in competition with established lending agencies,” Beach said in a prepared statement.
If he would prefer to see the money refunded in full, that doesn’t seem like a likely outcome. A partial recovery of the original funds seemed to him to be the best solution.
“Choosing to forgive a partial amount could have the desired effect of the economic development sought years ago by everyone involved,” he said. “The additional housing and construction proposed could boost the local economy [and] entrepreneurs. “
City Councilor Kristin Smith said while she was happy with the news of a possible repayment, she was concerned about the precedent set by the debt cancellation. She expressed concern that a developer could take the project in a different direction. The land is zoned for commercial purposes, she said.
“… [In] in the spirit of the original agreement, I think it’s important that it’s in writing somewhere that we are assured – guaranteed – that the development is residential, ”said Smith. “We don’t want to see storage units up there, high-rise hotels or things like that.”
Mercer told city council that the potential buyer is focusing only on residential development. Like the city, the club wants to see houses erected on the land.
Although the club did not disclose the name of the potential buyer, Mercer again stressed that the individual would be familiar to city councilors and considered a local.
Mayor Brent Teske has indicated that city council will accept a partial pardon at its April 5 meeting. He urged members to discuss the proposal with their constituents.
City Councilor Brian Zimmerman suggested to his colleagues that they consider the loan as a grant. Most of the money from the original $ 8 million never returned to town hall, he said. If you took $ 1.54 million as a grant, it could be considered a success.
“I see it as economic development, because of what this money is going to do, where it goes and what it’s going to do for the community down the road,” Zimmerman said.