The Crookston Development Policy & Review Committee met on Friday and passed a recommendation to the Crookston Ways & Means Committee to release the mortgage of the Crookston Inn. The bank, which was not named at this time and who will own the Crookston Inn, requested that the mortgage be released to the clear the title for an operating agreement to be put in place to reopen the Crookston Inn.
The committee discussed the loan release because the City of Crookston is a secondary lender. The City of Crookston is behind the bank for reclaiming assets if the building is foreclosed upon, meaning the likelihood of recovering the outstanding mortgage of $129,611.72 was unlikely. That was because the assets available would be valued less than the mortgage owed to the bank. But by releasing the mortgage, the foreclosure on the property which could take several months doesn’t need to be completed. That allows the Crookston Inn to be opened quickly through the operating lease providing what the committee felt was a vital banquet and event venue for the community. “We did look at it from that aspect,” said Interim City Administrator Angel Weasner. “We believe the City of Crookston does need a banquet facility. We do not have any other options for those types of venues on a large scale like that. So, we are looking at it from that aspect, and we feel at this point, it’s a good recommendation to bring forward to the council for the bank to have an operating lease with another entity. And they will be operating that hotel, and it needs a clear title for that to occur.”
By releasing the mortgage for the bank, the City of Crookston will attempt to collect on the mortgage debt from Jacobson Hospitality Group. The city will also have some reserve funds that they are required to hold, to offset the loss. “In this instance, we will try to collect the debt in a different remedy,” said Weasner. “We will have a discussion with the Jacobson Hospitality Group, the former owners of the hotel, and attempt to collect some of the money that way. We are required by this program to have some loan loss reserves because the federal government who provides IRP funds are aware that this is gap financing. We are secondary in almost everything, and there is always the possibility in every instance that money could be lost. So, we are required to have some reserves set aside just for this type of situation.”
The City of Crookston has $60,000 in loan loss reserves and another $45,000 in the allowance for doubtful accounts that can be used to offset the final loss. Another part of clearing the title for the operating lease is paying off property taxes and outstanding utility charges, which the bank has done. “The bank that currently owns that facility, to help the operating lease, had some property taxes and an outstanding utility bill that needed to be taken care of with the city,” said Weasner. “The county gets the property taxes.”
The recommendation will be discussed in a Special Ways & Means Committee meeting on Monday, January 27, at 6:30 p.m., and if the committee chooses to forward it the mortgage release, it will be placed on the City Council agenda for their 7:00 p.m. meeting. Weasner said that if the recommendation is approved by the council the understanding is Crookston Inn would reopen with several events scheduled in early February. “From what I’ve been told, they will be opening soon in early February,” said Weasner. “They do have events in February that are currently waiting for this to occur.”
Crookston Housing and Economic Development Authority Director Craig Hoiseth said CHEDA also has an additional loan of about $29,000 issued to the Crookston Inn. Hoiseth added that if the council approves releasing the city’s mortgage, the CHEDA Board would consider the same action when they meet on Tuesday, January 28, at 7:00 a.m.
The committee also received an update on all other IRP loans through the city. Only one loan, T & N Sports (Tyson Siegle), is behind, but Weasner said she was recently informed payments on that loan would be getting made again. “Most people are aware that Siegle Sports closed their doors on Main Street,” said Weasner. “But he still doing some operations. I’m not sure exactly how, that is his choice. But he contacted me and will be continuing paying down his loan.”
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