Maxfields have made 3 payments on $220,000 Edmore loan


By Elisabeth Waldon • Last Updated 9:45 am on Tuesday, August 13, 2013

EDMORE — The Maxfield siblings have made just three payments on a $220,000 loan from the Edmore Economic Development Fund since 2006.

Meanwhile, the Edmore Economic Development Loan Fund Committee hasn’t met in five years.

The Daily News requested the original loan paperwork from the village of Edmore via a Freedom Of Information Act (FOIA) request, as well as many other Edmore Economic Development Loan Fund documents and Village Council meeting minutes.

Anthony “Tony” Maxfield and his sister, Shari Maxfield, own Averyville Acres in Blanchard, named after the original name of the town of Wyman. The partnership owns Maxfield’s Restaurant in Blanchard, Maxfield’s Inn in Edmore and The Depot in Edmore. Tony Maxfield has a 51 percent share of ownership and Shari Maxfield has a 49 percent share.

The Village Council approved granting a $200,000 loan to the Maxfields in November 2000 to build a motel in Edmore. The loan was to be paid back in 15 years with regular monthly payments and a 3 percent interest rate.

In October 2002, the Maxfields requested and were granted a $20,000 loan to be paid back in five years at a 3 percent interest rate.

The Maxfields made regular monthly payments until August 2006, at which time they requested the loan be renewed.

“With the tough economic times in Michigan and especially in Montcalm County, along with higher fuel costs, which have slowed the amount of travelers, we have found it impossible to maintain these standards,” the Maxfields stated on their loan application. “We would like to maintain the current payment and interest schedules. The motel is in dire need of new carpets and other furnishings. It has been five years, which is a typical time frame for replacement.”

The council approved granting an amended $77,000 loan to the Maxfields in September 2006. The mortgage note stated the Maxfields must pay a minimum of $1,519.29 per month with a 3 percent interest rate starting Nov. 1, 2006, until the amount was paid in full.

According to village records, the Maxfields have made just three payments since that time — two payments on Dec. 27, 2006, and one payment on Oct. 1, 2007.

Tony Maxfield did not return repeated messages seeking comment for this story.

When the Maxfield loan was one year delinquent, village attorney Dennis Moore wrote a Feb. 8, 2008, letter to Tony Maxfield attempting to correct the situation. The letter stated: “On Feb. 1, 2008, your loan with the village of Edmore was one year in arrears. The village is committed to working with you on this matter, but the amount outstanding is significant. Please advise the village of your intentions regarding bringing this balance current.”

Moore later wrote a Jan. 15, 2009, letter to the Village Council, stating, “The village is in a subordinate position to that of Chemical Bank Montcalm. Consequently, Chemical Bank would have to be paid off in order for the village to be able to collect on its second mortgage. From a practical standpoint, with the economic situation the way that it is, this is totally impractical. My recommendation is to try to work in concert with the bank in terms of resolving some payment plan or restructure of the note if necessary.”

On Sept. 14, 2009, the Village Council voted to accept going into a forbearance agreement with the Maxfield loan. A forbearance is a unique payment agreement between a lender and a borrower to delay a foreclosure. In October 2009, the council voted to request no less than $500 per month from the Maxfields.

However, according to Karl Kluwe, who was village manager from April 2010 until May 2013, the forbearance agreement never happened during his time with the village.

On Aug. 31, 2011, John Sheets of the loan service department at Chemical Bank in Bay City, wrote a letter to the Village Council: “You have contracted with Chemical Bank to collect the above listed land contract (Averyville Acres). Our records indicate that this land contract has been inactive since Sept. 27, 2007. If it is your desire to keep this account open, please sign the enclosed confirmation and return it to Chemical Bank Loan Service Center. If we do not receive this confirmation within 30 days, we will close this account to further activity.”

On Sept. 7, 2011, Kluwe, who was then the village manager, wrote back: “We acknowledge that this land contract collection account has been inactive since Sept. 27, 2007. However, we do wish the account to remain open and active.”

On March 12, 2012, action on Maxfield loan was tabled by the Village Council so Kluwe could review and update the council.

On Jan. 14, 2013, the council unanimously voted to have Kluwe pursue legal advice about the Maxfield loan. There was also a motion made to have the loan committee set up a meeting between Maxfield and the village, but the motion failed 2-5. Councilmembers Arthur “Jamie” Ballard and Karen Deja voted “yes” while President Chet Guild and councilmembers Ed Adams, Bonnie Ashbaugh, Chuck Burr and Jerry Rasmussen voted “no.” Kluwe told The Daily News he contacted a law firm at the council’s request, but he does not know where the matter stands today, as he stepped down as village manger in May.

“I was operating under the attorney’s decision and the council’s decision,” Kluwe told The Daily News.

On March 11 of this year, the council voted 6-1 to have the village attorney send a letter to Maxfield. Ballard voted “no.”

Maxfield issued a statement saying he received a letter from the village attorney on March 14 and scheduled a meeting with two councilmembers on March 28 to discuss the loan. Maxfield said the two councilmembers had a “personal agenda” and “were not interested in discussing the matter at hand.”

Maxfield said he wrote an April 3 letter to the council, letting them know he would like to move forward in a positive manner. He said he was asked to come to the village office on April 16 to meet with the same two councilmembers he had met with earlier.

On May 13, councilmembers agreed to give Maxfield until the next council meeting to remedy the loan situation, per Guild’s recommendation. Maxfield said he received two messages from one council member on May 13 and he replied the following morning and was told he had 30 days to reply to the council.

At the June 10 council meeting, an unnamed item was removed from the agenda and the matter was not discussed. Maxfield issued a statement saying village officials told him he would be placed on the agenda of the June 10 meeting, but he was removed from the agenda at the start of the meeting with no explanation or notice.

The Edmore loan fund committee, which makes loan recommendations to the village council, is currently comprised of Guild, Village Treasurer Elaine Leak, Chemical Bank representative Karen Nesbitt and village attorney Moore. A fifth open position needs a councilperson appointed to it after Ballard resigned from the village council in April.

According to the loan committee rules, a councilmember shall serve as the chair of the loan committee and preside over all meetings, with the village treasurer serving as vice chair and the village manager serving as secretary.

The Edmore loan fund committee has not met in five years — since Aug. 4, 2008.

“It’s been quite inactive,” Leak summarized.

Regarding the Maxfield loan, Leak said she believes there is an overall feeling of concern in the village about the loan being so delinquent.

“It has been brought up at council and they are working on it trying to see if they can get the issue resolved,” she said.

Guild declined to comment for this article. He previously stated at a village council meeting that the Maxfields currently owe the village $238,000.

Nesbitt did not return repeated messages seeking comment for this article. Moore could not be reached for comment.

 

A history of Edmore Economic Development Fund loans

• June 1994: Nancee Foster was granted a $71,071.63 loan for Nancee’s Stained Glass. She later filed for bankruptcy and the loan was not paid.

• August 1996: Mark Dobbrastine on behalf of Dobbco was granted a $50,000 loan to construct a new facility. In October 1997, Wayne Wilbur purchased the business and loan from Dobbrastine. In June 2002, Wilbur offered the village $30,000 to pay off the remaining loan and the village accepted.

• November 1996: James and Linda Romps were granted a $50,000 loan to improve The Phenix Bar & Restaurant. The loan was paid in full.

• March 1997: Lakeland Mills was granted a $200,000 loan, which later went into a forbearance agreement.

• March 1997: Nicholas and Judy Miller were granted a $10,000 loan for Miller’s Cove, which was paid in full.

• March 1998: Daniel and Judy Hubler were granted a $40,000 loan to restore the Hub Oil property. The loan was paid in full.

• April 1998: Angela and Dave Haddix were granted a $2,500 loan for a tanning business. The business had closed down by December 2000 and the loan was paid in full.

• May 1998: Lee Scheiern on behalf of Mid Michigan Customs was granted a $50,000 loan for moving and expanding a motorcycle business. The loan was paid in full.

• May 1998: Dr. Ashok Sonnad was granted a $22,100 loan for improvements on an office building and parking lot. The loan was only partially paid before Sonnad declared bankruptcy.

• November 1998: Millard Realty was granted a $5,000 loan, which was paid in full.

• October 2000: Novus I LLC was granted a $12,500 loan, which was paid in full.

• November 2000: Diamond Construction was granted a $50,000 loan, which was paid in full.

• December 2001: Averyville Acres (Tony and Shari Maxfield) was granted a $200,000 loan. Maxfield’s Holding LLC was granted another $20,000 loan in October 2002. The original loan was renewed in October 2006 and is currently delinquent.

• October 2002: Kevin Nemetz on behalf of KRAM Inc. was granted a $27,000 loan for Body Conditioning, which was paid in full.

• June 2003: Mary Smigelski on behalf of Smiles was granted a $35,000 loan, which was paid in full.

• December 2004: Kathleen Crosby was granted a $4,500 loan for The Mercantile. The business had closed down by June 2005 and the loan was paid in full.

• August 2008: The Phenix was granted a $25,000 loan, which is current.

• November 2008: Ricoro LLC (Lakeland Mills) was granted a $150,000 loan, which is currently in a forbearance agreement.

 

Edmore Economic Development Loan Fund rules

The general purpose of the Edmore Economic Development Loan Fund is to use revenues gained from the former Urban Development Action Grant program as a tool to attract firms to the Village Industrial Park and to provide necessary and appropriate assistance to private business ventures elsewhere within the village. The program is currently funded through investment income earned on the original payback funds, revenues from sales of loans, loan repayments from qualified businesses and interest earned on loan accounts.

Financing policies state the length of term of loans shall be no more than 15 years for land, buildings and improvements; seven to 10 years or the useful life of assets (whichever is less) for machinery and equipment; five years for working capital; and five years for facade improvements and landscaping. The payment schedule can be tailored to the needs of the project, but must include provisions for repayment of the loan in installments over the life of the loan. A single lump sum payment at the end of the term of the loan is not allowed.

The loan fund stipulates, “The committee may recommend that incentives for actually creating the predicted jobs are built into a loan agreement. Incentives might include (forgiving) a complete or partial interest forgivance plan.”

The loan fund also stipulates, “The village will work with the other lender and the applicant in the event that a chronic lean payment delinquency should develop. The village will consider modify(ing) or restructuring the terms of the loan if necessary to achieve the objectives of the loan fund. Loan defaults will be investigated by the village in consultation with the committee and the other lender.

“Every attempt will be made to accommodate the applicant if the result of the investigation is favorable. If the investigation is not favorable and no equitable solution can be reached, defaults will be handled in the traditional manner by the other lender and the village. In accordance with the loan agreement, the loan will be accelerated. The loan application fee shall pay for the cost of the loan service.”

The loan fund also stipulates, “The village will require quarterly progress reports for the duration of the project from the applicant, which shall be reviewed for compliance by the village manager. The village manager shall also make periodic on-site visits to monitor the applicants’ progress in completing the project and fulfilling any special requirements that the village may impose in the loan agreement.”

The current balance of the Edmore Economic Development Loan Fund is $443,094.95 as of July 16.

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