By Tony Wittkowski | Business Reporter | The Herald-Palladium
ST. JOSEPH — The Federal Economic Development Administration is requesting a large reimbursement from Berrien County over money handed out 15 years ago.
In a letter dated June 30, the EDA demanded the county repay $610,000 – and the accumulated interest worth $173,182 – to the Department of Commerce within 30 days. The money stems from a $1 million forgivable loan Berrien County gave to Whirlpool Corp. in 2001.
EDA officials say the loan failed to comply with federal guidelines at the time it was issued 15 years ago.
County officials are calling the repayment “unacceptable” because it’s been 15 years since the venture was initiated and five years since the loan was “forgiven.”
In 2001, the county made a $1 million loan to Whirlpool to assist with relocating the home appliance maker’s Cooking Products Development Center from Vandalia, Ohio, to St. Joseph’s Edgewater district.
In order to accept the loan, Whirlpool agreed to increase its local employment levels to about 2,300 and maintain these levels for at least 10 years. Because Whirlpool complied with the terms, the loan was then forgiven by the county after those 10 years.
Out of the $1 million loaned to Whirlpool, $610,000 came from the County’s Revolving Loan Fund, which was created in 1981 using funds granted by the EDA – a division of the Department of Commerce. According to Herald-Palladium archives, the county agreed to pay the remaining $390,000 from its property tax-supported general fund.
15 years removed
Community Development Director Dan Fette said county officials are still confused about the EDA’s justification for demanding payment.
“They indicated to us the county failed to receive written authorization to disperse funds prior to us dispersing the funds to Whirlpool,” he said. “We find that confusing because that was consistent with the practices at the time when the county dispersed the loan in 2001.”
Fette said the EDA’s interest in the loan is troubling because the federal agency has allegedly been aware of the loan for 15 years.
Calls made by The Herald-Palladium to EDA officials at the Chicago and Washington, D.C., regional offices were not returned Wednesday.
CJ Epps, director of Public Affairs at the EDA, emailed a statement concerning the requested reimbursement.
“For the last two years, our regional office in Chicago has been working with Revolving Loan Fund grantees from Berrien County to resolve the recovery of EDA RLF funds used in unauthorized disbursements by Berrien County dating back to 2001,” Epps said in an email. “(The) EDA is seeking to recover its Federal Share of the unauthorized funds disbursements.”
As for why the EDA has taken interest in the 15-year-old loan, Fette said there was a change of staff at the government agency. He said when the new staff at the Chicago office arrived in 2014, they began auditing loans over the last two decades that were given in the region.
After Berrien’s loan audit, Fette said the county didn’t hear from the EDA for another 12-15 months. It wasn’t until later in 2015 the EDA contacted the county with concerns about the Whirlpool loan.
“The consensus is the administration is authorized to not satisfy any kind of demand until the EDA can furnish proof to us they have claim for this money,” Fette said. “It’s an unknown situation (on what comes next). We’re not in a position to write a check to the EDA without further proof. The onus is on the EDA.”
Fette said the county reported Whirlpool’s loan to the EDA as part of its required semi-annual Revolving Loan Fund account submissions throughout the loan’s shelf life.
During the 10 years the county allegedly reported the loan, Fette said the EDA didn’t raise objections to the terms. In addition, he said the EDA was quiet when the county claimed it notified the government agency that the loan was structured as a forgivable loan.
By June 2011, Whirlpool showed it was in compliance with the loan’s employment terms. Berrien County then forgave the loan.
Jeff Noel, vice president of Communication and Public Affairs for Whirlpool, released a statement supporting the county’s response to the EDA’s letter.
In the release, Noel said the county helped create jobs locally by making a forgivable loan to Whirlpool under the conditions that new employment was created.
“In addition to creating more than 180 new jobs, we were able to upgrade and invest in our call center to help retain significant employment in this community,” Noel said. “…Since then, we have also invested an additional $155 million in new facilities as part of our long-term commitment to the region.”