TRAVERSE CITY -- Grand Traverse County's Economic Development Corp. initiated foreclosure proceedings against Williamsburg Receiving and Storage over delinquent loan payments.
The EDC board directed its legal counsel to foreclose on two loans totaling $282,500 it made seven years ago to Cherry Blossom LLC, part of the WRS cherry plant operation north of M-72 in Whitewater Township.
The move is EDC's first such action in a loan program that's existed nearly 30 years.
The board took the step because of ongoing late payments that in part were spurred by numerous environmental problems at WRS that resulted in a state lawsuit against the company.
The outstanding balances on WRS loans total more than $151,000.
"It's the last route the EDC ever wants to do," said Jean Derenzy, the county's EDC administrator.
The EDC's revolving loan fund began in the late 1970s with a federal block grant to provide start-up and gap financing for local businesses for interest rates set at 80 percent of the prime lending rate. No general fund money is used, and the county presently has 16 active loans for a total of $2.4 million.
The county EDC in 2000 approved a $178,750 loan for equipment purchases at WRS, and a $103,750 loan to buy more property around the plant. The company inquired about settling the loan for a reduced amount, but federal rules don't allow it.
"We cannot accept anything less than what's due and owing on the principal," Derenzy said.
The county in 2005 suspended loan payments for a year, not including interest, to give the company time to comply with state regulators' orders to haul away waste water from an unauthorized storage lagoon. But payments remained sporadic after the grace period, Derenzy said, with the most-recent received in late September. Derenzy said the company is working on a re-financing plan and the county loan could still be repaid before the foreclosure is completed.
"It's disappointing," WRS attorney Joseph Quandt said of the county's action. "I know it's been a struggle over the past couple of years to confront the myriad of environmental issues that have been going on out there."
The state and WRS settled the lawsuit in January. Provisions included payments to neighbors totaling $350,000 for damages, and a $100,000 fine to the state for various environmental violations.
Those payments are up-to-date, according to state officials and an attorney for the neighbors.
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