EDA seeks reimbursement for Harbor Town grant

By Tony Wittkowski | Business Reporter | The Herald-Palladium

ST. JOSEPH — The Federal Economic Development Administration is seeking an additional $75,000 reimbursement from Berrien County that originally went toward the Harbor Town Redevelopment Project.

Community Development Director Dan Fette said the county got involved with the new residential housing project with the city of Benton Harbor, Cornerstone Alliance and the state in 2004.

Fette said the $75,000 in question was structured as a grant for infrastructure construction. The EDA is now objecting to the grant, stating it did not comply with the regulations regarding loans.

“We don’t consider this demand for repayment of the Harbor Town grant to be our principle dispute with the EDA right now,” Fette said. “I believe we would settle that Harbor Town demand, if we can find some resolution for the principle dispute.”

When it was announced the Harbor Town project was awarded a $675,000 federal grant to be used for site preparation in 2004, the county provided a match of $75,000 as a grant from its Revolving Loan Fund.

“As it worked out, the county government agreed to apply for various grant funds for the infrastructure of that project,” Fette said. “In addition, the county pledged to grant the $75,000 to fill a gap in the infrastructure financing.”

The principle dispute with the EDA is the $1 million forgivable loan the county gave to Whirlpool to assist with relocating the home appliance maker’s Cooking Products Development Center from Ohio to St. Joseph’s Edgewater district.

Out of the $1 million loaned to Whirlpool, $610,000 came from the county’s RFL, which was created in 1981 using funds granted by the EDA – a division of the Department of Commerce. The county had agreed to pay the remaining $390,000 of the loan with its property tax-supported general fund.

EDA officials said the loan failed to comply with federal guidelines at the time it was issued 15 years ago.

What happens next?

The EDA says it will continue to look for a resolution with the county as it pursues reimbursement for the $1 million loan.

The EDA demanded the county repay $610,000 – and the interest worth $173,182 – to the Department of Commerce through a letter mailed in late June.

CJ Epps, director of Public Affairs at the EDA, emailed the agency’s response to the county’s hesitancy to abide by the EDA’s request.

“(The) EDA intends to continue to pursue potential options for resolution while protecting the federal interest in grant funds, as required by law,” Epps wrote. “… (The) EDA remains willing and committed to working with the county to identify a repayment option, including timing, that resolves outstanding issues.”

Epps acknowledged that prior to making the loan, the county apparently contacted the EDA about using RFL funds as part of an incentive package to retain Whirlpool jobs in the community.

Epps said the EDA told the county it was not an allowable use of funds under EDA’s regulations. The county said it heard no such response in regard to the loan.

“… It does not appear that (the Chicago office) took action toward reclaiming the funds until 2014, when staff performed a site visit to Berrien County as part of the RLF site visit/review process and learned that what was being reported was not an actual loan and that no interest was being collected,” Epps said in the email. “Since then, staff gathered facts, confirmed information, and engaged with the recipient to find an amicable resolution.

“From everything we have learned, it appears the recipient relied on the advice of its own counsel and moved forward with a forgivable loan to Whirlpool.”

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.

Contact Tony Wittkowski at twittkowski@TheHP.com or (269) 932-0358. Follow him on Twitter: @tonywittkowski.

(Author’s Note: This article was originally published on Aug. 5, 2016)
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