The Cook County – Grand Marais Economic Development Authority (EDA) has facilitated improvements and energy efficiency upgrades to 14 homes, with eight more in the works, as well as upgrades to Superior National at Lutsen golf course, but it continues to face crippling legal expenses and debt related to Cedar Grove Business Park. EDA Director Matt Geretschlaeger met with the county board Tuesday, September 15, 2009 to ask for help.
On September 2, EDA accountant Karen Blackburn projected the EDA would run out of cash by mid October. By the end of the year, the deficit is expected to be $30,702.
Legal fees associated with defending against Minnesota Pollution Control Agency (MPCA) fines during this calendar year are expected to total about $31,000, even though the infractions were allegedly committed by the developer while Cedar Grove was under construction. In addition, the EDA owes the City of Grand Marais $1.6 million for Cedar Grove infrastructure, but only three of the 37 lots have sold.
“It’s extremely difficult for me to come here today,” said Geretschlaeger. “…Over the past four years we have made significant progress,” he said, but attorney fees “have eaten us alive.” Geretschlaeger said he believes he has followed his directive to build a business park and develop a housing program.
EDA Board Chair Mike Littfin pointed out that the deficit is almost exactly the amount of this year’s attorney fees, which “are killing us and have put us in the position we are today,” he said.
The business park represents a “perfect storm,” Commissioner Jim Johnson said, between storm water fines and a downturn in the economy.
One of the EDA’s problems is that its short-term bonds for the business park will be up by the end of the year, and without a “precise, positive plan” to maintain the infrastructure and pay back the debt, Geretschlaeger said, new bonds might be impossible to obtain. He is working with Iron Range Resources (IRR) on the possibility of a low-to-zero-interest loan.
Every year, you keep coming to the board asking for a levy increase to pay for legal fees, Commissioner Jan Hall said to Geretschlaeger. He responded by saying that the actions they have taken have reduced financial liability to taxpayers.
Even if all the business park lots sold at estimated market prices totaling $1.3- 1.4 million, Geretschlaeger said, the EDA would still come up short since it owes $1.6 million to the city.
Geretschlaeger asked commissioners to increase the levy to $179,566, $31,000 over
” its initial request of $148,566. Last year, the EDA levy was $140,000.
Commissioner Bob Fenwick pointed out that the EDA expects its attorney fees to be reimbursed by the developer. Why not loan the money to the EDA instead of increasing the levy? he asked. “The taxpayers have a right to be paid back,” he said.
Geretschlaeger agreed that a loan would be better than a levy increase. The board voted to loan the EDA $31,000 at low interest. It also voted to advance the November levy amount to October 1 to cover the bills that will be due that month. Both votes were unanimous.
“We’re far from out of the woods,” Geretschlaeger said.
“Someday the ship may have its sails full of wind,” Commissioner Fritz Sobanja added.
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