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Ishpeming stops work on Mather renovation

October 8, 2009
By JOHANNA BOYLE Journal Ishpeming Bureau

ISHPEMING - The city of Ishpeming is putting the brakes on the Mather Inn renovation project.

The Ishpeming City Council Wednesday ordered a stop to all city-related work on a Michigan State Housing Development Authority grant and a separate loan from the city's revolving loan fund for the project until the company that owns the property furnishes documents and funding requested by the city.

The council took the action in two separate motions at Wednesday's meeting.

Article Photos

The city of Ishpeming has halted city participation in the renovation of the Mather Inn, shown above in July 2008. The city council voted Wednesday evening to stop putting city staff time into the project until more information about financing the work is provided to the city by the developer. (Journal file photos by Andy Nelson-Zaleski)

"I feel bad we have to put this on hold, but we have to look out for the taxpayers' money," said Councilman Pat Scanlon, who made both the motions. "I realize there's a lot of hoops to jump through to try to get the grant and it's an awful confusing situation. Nobody wants to see this project go through more than I do, but we've got to do this. We have to protect the public funds."

The city's complaint is that city staff has been spending time working on the project without proof of financing or other documentation from Mather Inn Enterprises LLC.

"I think the city's certainly been accommodating in terms of trying to do what we can to make this project happen," Mayor Gary Nelson said. "The problem seems to be that we're at a point where we need something from the owners to say, has your project been approved for financing and where are we at? Before we continue to expend the significant amount of staff time basically spinning wheels, we need to know where does the project stand from the owners' perspective."

As vice president of the Peninsula Bank, one of the Mather Inn's lending agencies, Nelson abstained from both votes.

For the MSHDA facade grant, which covers half of the $212,000 project, the city has ordered a stop to all staff work until Mather Inn Enterprises deposits its share of $106,633 into an escrow account controlled by the city to pay for the work that is to be done. As stated in the motion made by Scanlon, if for some reason a construction agreement was not signed between Mather Inn Enterprises and Menze Construction Inc., the construction company working on the project, the funds would be refunded to the Mather Inn.

In a second motion, the council also voted to stop staff work on a $100,000 loan from the city's revolving loan fund that was approved in May.

"We have a policy for making loans out of the revolving loan fund, and one of the elements of that policy is that the applicant for the loan has to provide the city with copies of all the loan application documents to the bank that's going to take the first mortgage," City Attorney David Savu said.

In this case, the Peninsula Bank would be the institution lending the bulk of the money, he said.

Although the loan application file was requested in August, Savu said the city still has not received the requested documents.

Scanlon moved that the city not move forward with work on the loan until both the application file and letters of commitment from the Peninsula Bank are received.

Both motions were approved unanimously.

Some city council members expressed frustration over what they felt was a lack of communication from Mather Inn Enterprises owner Robin Peterson.

"I think the council has really worked hard with everybody on this to try to come to a very good agreement and what upsets me and really frustrates me is when our manager and our attorney send memos and emails and telephone calls and we don't get responses," Councilman John Stone said. "I find that very frustrating and it just irritates me."

Peterson was not present at the meeting, having returned to her home in Florida for a few weeks. Her father George "Ted" Baird was in attendance, but deferred all comment to Peterson, who could not be reached for comment this morning.



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