More News
Home Page
 
Where's The Beef?

Ironwood - February 9, 2010

Commission Approves Payback!
The City Commission took up the issue of the Josephson Nursing Home Loan that has been in default for more than two years.
After receiving comments from the audience,  the Mayor requested City Attorney Dennis Cossi to explain what happened and what he has done to secure the return of the $100,000 loan.  The city has received a signed promissory note from the Josephson principals. The note is secured by a second mortgage on property adjoining the nursing home. Cossi said that the property probably has little value, however, the bank holding the Mortgage on the Nursing Home itself refused to allow a second mortgage on the property.  The term of the payback is a ten years. The note requires 5% interest. The Terms of the agreement will put the City back into the position it would have been if the expansion of project had been completed.  However that’s not quite correct. The city loaned out the money for a project that was to produce 40 jobs for the city.
What happened and where did the money go? WHERE'S THE BEEF?

 
 
When the loan was approved by the city commission, then Community Development Director Pat Merrill sent the $100,000 check to the Brownfield Authority. Merrill was on the Brownfield Authority, as at that time Ironwood shared their Director with the County, a practice that has since been dissolved. From the Brownfield Authority the check went on to Josephson’s to be used on their expansion project.
Just one thing wrong, no one, yes no one had the Josephson owners sign anything. Nada! When the construction project failed to materialize the city began to press for the return of it money. This has been going on for approximately two years.
 
Cossi said that it went towards preliminary project costs such as engineering, and surveys. Although it should be known that the city did not do an in depth audit or investigation to verify what they were being told.
 
Commissioner Lamb once again showed how out of touch she is with the city’s business. At one point she stated that the Ironwood Revolving Loan Fund was being merged with the Gogebic RLF. Someone pointed out to her that the merger would be a regional one. Later she stated that the borrowed money would be going back into the fund regardless, when in fact the State of Michigan would hold the individual funds responsible for the money when it was loaned out without due diligence. If that were to happen it would mean that Ironwood would have to use its taxpayer’s money to pay the state back the $100,000.  Ironwood would be without an expanded nursing facility, without the 40 jobs that used for the basis of the loan.