Town writes off bad loans

Springfield Select Board has forgiven about $155,000 in bad loans.
http://rutlandherald.com/article/20141119/NEWS02/711199981

http://rutlandherald.com/article/20141119/NEWS02/711199981 Published November 19, 2014 in the Rutland Herald Town writes off bad loans By SUSAN SMALLHEER Staff Writer SPRINGFIELD — The Springfield Select Board has written off about $155,000 in bad debt on loans from the town’s revolving loan fund. The board recently voted to accept the town auditor’s recommendation that the unsuccessful loans be removed from the ledger, said Town Comptroller Jeffrey Mobus. Even with the loan forgiveness, the town has about $630,000 in cash on hand in the fund, and $2.4 million in outstanding loans in its economic development fund as of June 2014. The biggest bad loan to be written off had been made to Kiosko, the North Springfield display case manufacturer that abruptly closed earlier this year. It owed the town $73,318. Mobus said the revolving loan funds come from federal and state money given out in grants, and businesses pay back a percentage to the town, which in turn gets to re-lend the money for economic development and housing projects. In the case of Kiosko, whose closing is pending in the courts, Springfield lent the company $180,573 in June 2003. The company made payments “inconsistently” since then, the last being in May 2012, Mobus said. The second largest bad loan that was forgiven had been given to Java Stars in July 2000, which was a downtown coffee shop in Springfield doing business as Morning Star Café, he said. The owner, Robert “Mac” McIntyre died, leaving a balance of $17,485. Other loans forgiven were to Precision Valley Development Corp., the former owner of the Fellows Gear Shaper building, which ran an industrial incubator in the building. It had received three separate loans and was overdue by about $45,000, Mobus said. The loans were for a roof, heating fuel and a new boiler. Two other loans that dated back to the 1970s, Mobus said, totaling $14,800, were also forgiven. Of the existing loans, Mobus said Vermont Machine Tool still owes the town $526,000, and is not current. He said the company had made “sporadic and partial” payments, and was eight years behind schedule. At one point, the Select Board adopted a moratorium on the Vermont Machine Tool loan. He said Vermont Machine Tool was supposed to be making $4,500 payments monthly, but would usually pay $2,000. The last payment of $2,000 was in May 2013. The loan is at 4 percent interest, he said. The original amount of the November 2003 loan was $612,000, he said. Mobus said the town believed that “forcing” the issue with Vermont Machine Tool could do more harm than good. “If we forced something, it might not be good for us either,” he said.