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PRCDC loan request tied to Armory Square sparks discussion at city council meeting

A request by Park Rapids Community Development Corporation (PRCDC) for short-term financial help  generated extended discussion during Tuesday’s city council meeting.  Cynthia Jones, speaking on behalf of the PRCDC, asked the council to pay attorney fees associated with the Armory Square project, based on a good-faith loan in which the organization would pay the city back. The amount requested is roughly $11,000.  

The PRCDC initially received a $30,000 grant from the Blandin Foundation to cover costs of an appraisal of the Armory and legal fees the city would incur with its involvement in the project.  “We have money for the appraisal and we have money for a portion of the legal fees that have been incurred to this point. We don’t have it all,” Jones said in requesting the loan.  City administrator John McKinney explained the city hired the law firm Kutak Rock because of special tax issues associated with the grant for the project involved proceeds from a tax exempt bond issue from the state, which requires the city to comply with state regulations on how the money can be spent.  

“We needed to get special counsel to do that,” McKinney said. “The PRCDC and city did not know at the time the city would need those kinds of services. Fees have been building up since last summer.”  Since the attorney’s contract for services is with the city, the council voted in favor of paying the $11,000 owed in legal fees on the condition the PRCDC pays back the amount.  

The city, up to this point in the Armory Square redevelopment project, has tried to stay out of financial involvement. But, in order for the project to receive the $2.5 million state grant the city will need to purchase the building. The appraisal is part of the grant process. The city would own the building and the PRCDC would operate the arts and events facility.  

Council member Erika Randall said at the meeting she feels the city needs to revisit it’s involvement in the project, indicating the city will have to spend some money at times to make this deal work.  “I think the approach of sitting back and saying we want nothing to do with it is clearly not working at all,” she said. “This thing is real close to being done and not happening. I’d like us to revisit it to see if it’s something we want to continue working on.”  

Mayor Pat Mikesh expressed his disappointment in the PRCDC having to ask for money from the city.  “It really bugs me. We’re not a bank,” he said. “I don’t think the city taxpayers really want to pay for this. We don’t want a part of it but we’re getting drug more and more into it, I think.”  Mikesh reiterated the city needs to pay the attorney bill because the contract is with the city.  “We have to pay it but if you can’t make this, how are you going to make this thing work? That’s my problem. You’re not even into it a whole year and you’re already asking for money,” Mikesh said in directing his comments to the PRCDC.  

Council member Rod Nordberg commented in defense of the project.  “I think it’s worth remembering that it (Armory Square) would be a community asset, like a park. We pay for parks, we paid for the hockey arena.”  

Randall again suggested the council revisit its position and involvement.  “It was the general consensus of the council that while it might be an asset we were not going to fund it, at all,” she said. “That’s why I feel it’s important to revisit this and see if our position has changed. We need a shift in the city’s position or this is not going to work.”  

Randall went on to state in taking on this building the city will incur costs that can’t be passed off to the PRCDC. That growing reality, along with the city’s initial position of no financial involvement, are going to come to a head, she said.  Jones reminded the council the PRCDC went into this project with the purpose of economic development, but said they did not receive support from county economic development in recent months.  

“We went on the proposition that support would help us attain some financing up front,” Jones said. “We didn’t get that and that’s okay, but we have to put together a plan now and figure out how to raise the money ourselves. That’s why we’re in the bind we’re in.”  

Randall stated the council has to be willing and able to look at the taxpayers and say they all agree the city is going to spend money on the project because it’s worth it. “That was not the last consensus and that’s why I think it’s important we revisit, so we agree the city is going to spend money on it because it’s a worthwhile project.”