Mayor Doug Roll won’t call it a conflict, more of a “misunderstanding,” but issues have arisen between the city of Libby and the Cabinet View Golf Club in regard to a $1.5 million loan and sewer system built to connect a new housing development.
In November 2004, the Cabinet View Golf Club, then known as the Cabinet View Country Club, applied for and received a $1.5 million loan from a federal economic development grant fund managed by the city of Libby. The loan was meant to extend the golf course by nine holes and develop housing around that expansion. The loan, signed Nov. 18, 2004, was to be repaid with proceeds from the sales of each subdivision lot. Payments, according to the loan agreement, were to commence no later than Jan. 1, 2010 or due no later than the closing of a sale on any lot in the development.
Now, the city says it is time to pay back the no-interest loan, along with $581,085 to cover a city sewer extension to the Cabinet View development. But Dann Rohrer, chairman of the board of directors for the golf club, said that loan payments aren’t due until lots have been sold and that there was never a deal covering the sewer extension.
“Needless to say if I expected $700,000 from someone, I’d get it in writing,” Rohrer said, adding that up until this year the club didn’t know it was expected to foot the bill for the sewer extension. “We never heard of that, because it never happened.”
Roll said paying for the sewer extension was a condition of the subdivision plat added later by the city council and the golf club should have been informed, but the county planner’s office “dropped the ball” in getting that information out. Regardless, Roll said the city expects to be compensated for part of the cost.
“We don’t want to saddle the taxpayer with paying for that extension,” Roll said.
In the original loan agreement, supplied to the Beacon by Rohrer, the golf club acknowledged that “it will be responsible for the cost of connecting to the sewer trunk line and for the cost of connecting each home in the subdivision to the sewer line.” According to Rohrer, that only means the golf club or subdivision developer is responsible for connecting the sewer system within the development, not bringing it to the development.
Roll said the decision to have the golf club or the developer pay for the sewer extension was made in 2007, and a letter was sent to the Lincoln County Planning Department requesting it be added to the subdivision terms. Roll referenced city council minutes from Sept. 10, 2007, that noted a discussion about the developer paying a minimum of $500,000 and a maximum of $750,000 for the sewer.
Kristin Smith, planning director for Lincoln County, said Libby often works with the county when it comes to development and, in this case, the county reviewed the subdivision and the planning staff recommended it for approval. Smith, who wasn’t with the county at the time, said that the city did contact the planning department in 2007 about the cost of the sewer being part of the deal, but “there was some lapse in documentation” about the plan.
“There are folks who recollect one thing and others who remember it differently,” Smith said.
Smith added that it is common for a developer to be asked to help pay for extensions to sewer, water and roads.
Rohrer said his board first found out about having to pay for the sewer costs earlier this year when it was applying for an extension of the subdivision plat. According to a Nov. 3 memo from the planning department to the Libby City Council, “a verbal agreement or understanding” was made between the city and “then-representatives of the club.” Rohrer said his board has no recollection of this and there are no documents confirming this.
“We never agreed to that and we can’t afford that,” Rohrer said. “We don’t have $600,000 to pay.”
Rohrer said his board does understand that it still must pay the original loan back, but cites the wording of the 2004 agreement, which he said states the golf club does not have to begin payments until a lot has been sold. He also said the loan agreement does not include a payment schedule. Rohrer said a check for $100 was sent to the city in December 2010 to comply with the part of the agreement that said payments had to begin no later than Jan. 1, 2010. Rohrer said that check was returned.
Roll said the city still expects the loan to be paid back in full, along with the money for the sewer system. He added that if the golf club was not notified that it “wasn’t the fault of the city.” He also said he was concerned that the golf course doesn’t believe it has to start payments until after a lot has been sold. Because of a delay in the subdivision extension plat, Rohrer said lots cannot be developed or sold at this time.
Both the city and the golf club said legal action was a possibility, but they hoped to avoid it.
“We’re looking at what direction we can go and how to do it,” Roll said, adding that he was talking with the city attorney. “(Legal action) is a last resort. It’s something we’d rather not do. We’d rather sit down like gentlemen and figure this out.”
Rohrer said if legal action is taken, the golf club has enough evidence to make its case.
“We can’t make decisions for them,” he said. “We just hope they look at the documents and realize that there was no agreement for this.”