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Council approves plant loan

| June 9, 2004 12:00 AM

By Brent Shrum, Western News Reporter

The Libby City Council voted 4-1 Thursday to approve participation in an $800,000 financing package for the buyers of Kootenai Paving.

Based on a Small Business Administration loan program, the package includes $400,000 from First National Bank and $320,000 from the city¹s economic development fund along with $80,000 from the buyers, George and Sheryl Niemi. The bank will administer the loan and provide the city with a monthly payment for seven years at 4-percent interest. In the event the Niemis default on the loan, the bank will be in the first position to recover assets.

The council had voted down a motion to approve the loan last Monday. Thursday¹s meeting was scheduled to allow them to reconsider after receiving input from a state Department of Commerce economic development specialist who had reviewed the loan at the request of Kootenai River Development Corp. director Paul Rumelhart.

Councilman Gary Huntsberger said at Monday¹s meeting that he had no problem making the loan based on the review. Other council members expressed a preference to wait until they had a chance to talk with the Commerce Department¹s Eric Hanson or Cliff Bennett, director of the Small Business Development Center for Northwest Montana, who had worked with Rumelhart on the proposal. Bennett traveled to Libby from his Kalispell office on Thursday and met with the council in a working committee session prior to the special meeting.

Councilman Walt McElmurry said the Niemis¹ plans to expand Kootenai Paving will result in competition with existing businesses, which is against a provision in Libby Area Development Co.¹s bylaws. The LADC oversees the city¹s economic development fund and made a recommendation to the council to fund the project.

³That¹s what their policy says they cannot do,² McElmurry said.

Councilman Lee Bothman said Kootenai Paving owner Don Brown is ready to retire, and if another buyer purchases the business it could move out of town.

³We have to look at it as job retention,² he said.

During a public comment period preceding the council¹s vote, local contractor D.C. Orr said the expanded Kootenai Paving will compete with his and other businesses.

³This won¹t create jobs,² he said. ³This will steal jobs.²

Orr also expressed concerns that the LADC made its decision without having access to enough information about the loan. LADC chairman Robb MacDonald said the board did not see all of the loan documents because of confidentiality agreements but relied on Rumelhart to review the proposal in detail.

³He gave us the numbers,² MacDonald said. ³Basically the numbers added up, and that¹s what our decision was based on.²

Attorney Scott Spencer advised the council that whether or not the LADC did everything right was irrelevant as long as the council made an independent decision based on its own review of the available information.

³Let¹s get on with the decision,² he said. ³Accept it or reject it or send it back for review.²

Huntsberger, Bothman, Doug Roll and Stu Crismore voted for the proposal while McElmurry voted no. Charlene Leckrone did not vote because she was presiding over the meeting in the absence of Mayor Tony Berget.