ADMINISTRATION - Bryan K. Schafer, Planning and Community Development Director
Title
AUTHORIZING REIMBURSEMENT TO ANOKA COUNTY
FOR BADC LOAN
Background
The BADC (Blaine Area Development Company) authorized a loan to Eagle Golf in late 2004 to purchase and install golf simulators in their new golf store business. The business apparently experienced trouble from the very beginning as sales activity was far below their projections based on a number of factors with the downturn of the economy being foremost. In mid 2006 the business closed. The business did make initial payments on the BADC loan which was originally $50,000. BADC loans are typically third in line behind the primary bank financing and the SBA (Small Business Association). Because of the subordinate nature of the BADC financing and because of bankruptcy rules there was little or no recourse except to write the loan off which was done in September of 2006.
In 2013 the loan file was subject to a random audit by HUD. Because the business failed so early after launch they missed and were unable to document their employment goals which are required when using CDBG funds (the source of the BADC program). HUD has required Anoka County to repay the outstanding loan balance which they did earlier this year and to re-capture the funds from the City. This action would reimburse Anoka County the $47,601.78. The money would be drawn from available EDA cash.
Recommendation
By motion authorize the BADC loan reimbursement of $47,601.78 to Anoka County.