The Crookston City Council met on Monday night passing a resolution to release the mortgage attached to the Crookston Inn. The release of the mortgage will allow United Valley Bank to take ownership of the property without foreclosing on the previous owner and to enter into a lease agreement with an outside party to operate the Crookston Inn.
There was a special Ways & Means Committee meeting preceding the council meeting during which Interim City Administrator Angel Weasner explained to the members of the council that if the property would go through foreclosure the City of Crookston was unlikely to receive any compensation for the outstanding mortgage of $129,611.72. That was because the City of Crookston was a secondary lender. The bank is the primary lender and would only begin to recoup its loan if the primary lender is made whole through the foreclosure process. Weasner also said that $1.7 million dollars was owed to the bank before the city would have any chance to recoup the money through foreclosure. By releasing the mortgage, the City of Crookston can attempt to reclaim what they can to cover the loan it gave to the previous owner, Jacobson Hospitality Group, which the city is required to attempt to do through legal avenues.
Tom Vedbraaten said if this had been in the works for a couple of weeks, he wished the council would’ve known so they could get questions answered instead of being asked to forgive a loan the first time they heard about it. Interim City Administrator Angel Weasner corrected Vedbraaten that the council was not being asked to forgive the loan, but to release the building. “Councilmember, we are not forgiving the loan,” said Weasner. “That’s the thing, we are not forgiving this loan at this time. We are just releasing our part of the building. We will still be attempting to collect the debt of approximately $130,000.”
Councilman Bobby Baird also asked if there were other options besides the release or foreclosure. Weasner responded that she hadn’t explored any. Vedbraaten was the only member of the council to vote against the release, saying he thought it was another thing the council moved to fast on. “I don’t know how many times we’ve sat in this meeting and we say we move to fast on things,” said Vedbraaten. “This is another one of them deals that just come up real quick. I just feel we should’ve waited and given it a couple of weeks and get all the facts and figures and options that we’d have.”
Councilman Bobby Baird said that coming into the meeting he wasn’t in favor of the release but after hearing the facts from Weasner he supported the release. “When I came in, I wasn’t for it,” said Baird. “I wanted a legal opinion, I wanted it delayed. After some explanation by Angel and the President of the bank that its not forgiveness and the loan amount was different. I know there is $129,000 owed but if push came to shove it’s $29,000 (with the loan loss reserve and allowance for doubtful accounts funds). The second thing is with Laurie (Stahlecker) and her husband (Craig) coming up and saying they are going to open that business up instead of letting it sit idle for six to twelve months due to bankruptcy. They are ready to go on it, they’ve already have weddings scheduled. We’re going to get the dollar rolling here.”
The council also heard from a number of people during the open forum on the release. Mike Jacobson, no relation to Jacobson Hospitality, is one of the owners of AmericInn said it was predicted six to seven years ago that one of the hotels closing in Crookston would happen. He also said the occupancy at AmericInn is at about 54 percent or about 3 percent below what they need to break even. Jeff Berning, another owner of the AmericInn, and an employee, Alice Oseth, also spoke to the council against the release of the mortgage. As did Mark Hoffman, a resident of East Grand Forks, who asked the council to put the brakes on this and told them not to do it.
Barry Hanson, President and CEO of United Valley Bank, said he wanted to make clear the bank didn’t have a mortgage with the City of Crookston and that they were not asking for loan forgiveness. “Our bank did not borrow any money from the City of Crookston,” said Hanson. “We are not asking for debt forgiveness. Nothing could be farther from the truth. To ask for debt forgiveness would mean we borrowed money from you. We did not, so we’re not asking for any debt forgiveness. Secondly, as of today, we are the owners of the property commonly known as the Crookston Inn subject to our first mortgage for $1.7 million and your second mortgage.”
Hanson also said the bank paid the taxes, and utility bill without forgiveness. He added that the bank is working with a local couple, Laurie and Craig Stahlecker, to reopen the Crookston Inn through rent with an option to buy but that the release was needed to provide for a clear title. Laurie Stahlecker, who was the manager of the Crookston Inn, spoke about the reactions of brides when they were told the Crookston Inn was closing in December. “This is something that is needed in our community,” said Stahlecker. “If you could’ve seen the bride’s faces when I told them we were going to be closing. Where else are they going to go? The Eagles has done an amazing job helping get them, people, where they need to be. You are taking a bunch of business right out of Crookston. You have no other place here.”
The full remarks from each of the people who spoke before the council on the topic can be found below.
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