Working through the snags: DL council extends lease on Boys & Girls Club property to 50 years to secure loan for new facility
Though the Boys & Girls Club of Detroit Lakes has raised approximately $6.1 million of the $6.5 million needed to construct its new facility in Lyle Crovisier Park, some of that money has been raised in pledges, to be paid off over a period of several years.
In order to enable this to happen, the club is seeking a 7-year, $1.2 million forgivable loan through a New Market Tax Credit program administered by Bremer Bank. Certain provisions of the NMTC program require, however, that the Boys & Girls Club extend its lease on the city-owned property from 30 to 50 years.
At a special meeting held earlier this week, the Detroit Lakes City Council agreed to extend the lease from 30 to 50 years, as well as to modify the lease to name the BGCDL Holding Company as landlord on the property.
According to a letter submitted to the council by Boys & Girls Club Executive Director Patrick Petermann, the name chance is necessary to allow Bremer Bank to provide a lease hold mortgage on the property — another requirement of the NMTC program.
At its regular meeting held earlier this month, some council members had expressed concern that the lease modifications would allow the property to be leased to a for-profit entity if the Boys & Girls Club ceased to operate at some point in the next 50 years. To ensure that this did not happen, they had discussed the possibility of adding a condition to the lease that would require it to be renegotiated at the end of the 7-year term of the loan.
On Tuesday, however, City Attorney Charles Ramstad said that this would "kill the deal" for the NMTC loan.
He also noted that while the terms of the lease would not require the property to be sub-leased to another youth-oriented, 501(c)3 nonprofit if the Boys & Girls Club ceased to operate, it would at least have to be a non-profit entity.
"I would like it noted in the record that the intent of the council is to make sure that this land is continuously rented to a youth-oriented, nonprofit organization," said Alderman Bruce Imholte.
The resolution to amend the terms of the lease was approved by the council.
Also discussed at the meeting was an issue with the city's title to the land upon which the Boys & Girls Club facility now sits.
According to Ramstad, a small parcel of land north of the current building was tax-forfeited in 1971, and was set to be turned over to the city, but the certificate of forfeiture was never recorded — and this title issue needs to be resolved before construction on the new building can start.
Becker County commissioners agreed to work with the city to clean up those title issues at their regular meeting on Tuesday, which means that work on the project is likely to resume shortly, Ramstad said.
It is unknown at this point, however, what impact the delay will have on the projected completion of the project, which is currently slated for next summer.