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As Kootenai County residents already know, North Idaho College wants to purchase approximately 17 acres of land adjoining its existing campus. The land is known as the DeArmond mill site. For those interested in better understanding this transaction, here are links to two documents obtained as a result of an Idaho Public Records Law request to NIC. |
- Letter of Intent & Terms Sheet between North Idaho College and the North Idaho College Foundation
- Explanation of transaction appearing in minutes of the NIC Board of Trustees meeting on January 21, 2009
The Letter of Intent & Terms Sheet mentions The Mill Sites, LLC. Here is a link to the Idaho Secretary of State’s webpage and the 2008 Annual Report for The Mill Sites, LLC. Here is a link to the 2008 Annual Report for RutRo, LLC. Here is a link to the 2008 Annual Report for the North Idaho College Foundation. These annual reports associate some names with this transaction.
The minutes of the January 21, 2009, meeting would have been corrected or approved at the February 25, 2009, meeting, however according to the NIC website, that meeting has been cancelled. Interested parties should contact NIC and find out the new date.
The purchase of this land has raised local concerns primarily for two reasons.
First, NIC hopes to use it to expand the NIC campus. Occupying this property would bring occupants much closer to the Coeur d’Alene Wastewater Treatment plant which stores and uses as much as 8,000 pounds of chlorine and 6,000 pounds of sulfur dioxide. Both are classified as Extremely Hazardous Substances by the Environmental Protection Agency (EPA).
Second, some citizens have questioned if NIC’s method of funding this purchase violates the Idaho Constitution, Article VIII, Section III.
OpenCdA.com will continue to follow this issue.
Bill, there are more than two reasons for concern. One additional reason is a lot of people are concerned that the $10,000,000.00 purchase price is way too high. Those concerns are fostered by a questionable appraisal focusing on how the appraiser was chosen, his own disclaimer that the appraisal did not evaluate the presence of the waste treatment plant, and the fact that the appraisal is out of date for lending purposes, especially since the economy has tanked since it was made.
Unfortunately, the documents procured under the Public Records Request, do not reveal the agreements between the NIC Foundation and the The Mill Sites,LLC, owners of the property. NIC trustees and administration would gain a lot of public trust if they were more forthcoming on the whole deal, instead of interested citizens having to drag it out of them.
Comment by Gary Ingram — February 12, 2009 @ 6:12 pm
Gary,
Thanks for the comments. You are correct on all the points you made.
Comment by Bill — February 12, 2009 @ 6:43 pm
this is but another chapter in the saga. the next chapter will probably be the 11th chapter or maYbe the 7th. have the current owners been heard from recently? did rutro complete the purchase of the atlas mill site? what has jfaC said about all of this?
Comment by TheWiz — February 12, 2009 @ 8:43 pm
Wiz,
Good questions all. I don’t know the answers.
Comment by Bill — February 13, 2009 @ 6:33 am
What a Kroc!
Christie Wood said that the value of the property would be bolstered by the “lender”. The “lender” is the NIC Foundation and the appraiser is a business partner to Steve Meyer a director for that group. The “lender” is no commercial bank familiar with the valuation of property. It is not subject to any lending quality control guidelines. Exactly where is the foundation getting the $6 million it will use to “finance” the purchase of the property? Is that to be borrowed money? Will any of the foundation members directly benefit from the commercial development slated for this project? Will any of the foundation members indirectly benefit from the commercial development slated for this project?
Comment by Wallypog — February 13, 2009 @ 9:36 am
Wallypog,
You’ve raised absolutely spectacular and well-reasoned questions. It would also be fair to ask if any of the NIC Board of trustees will benefit directly (e.g., pecuniary benefit) or indirectly. If NIC BoT and the NIC Foundation would answer them truthfully and completely, they would go a long way toward regaining the public’s trust and confidence.
I don’t think the NIC Foundation is the “lender” though. The Foundation will be the lessor. So we really don’t know where the Foundation will get the money to purchase the property.
Comment by Bill — February 13, 2009 @ 9:54 am
Well Wallypog, you ask good questions. On the last one let me observe the agreement says that the 6 million will be paid in 6 installments at 1.2 million each. That’s a 7.2 million payback, or 1.5 million to finance 6 million for three years.
Comment by Gary Ingram — February 13, 2009 @ 9:58 am
Gary,
Holy mackerel! Good catch!
Comment by Bill — February 13, 2009 @ 10:05 am
If NIC cannot commit to future lease payments how can they legally enter into a lease/purchase agreement? Would not a failure to approve future payments result in a default on this contract and the forfeiture of earnest money? The foundation is borrowing the money from a bank and putting that institution in 1st TD position. If the contract should go sideways that bank will be in position to foreclose on the property (unless the foundation services the loan). So which bank is this that is accepting a tainted, stale dated appraisal and are its depositors and investors aware of the deal? Is a 25% ROI over such a short time frame in the realm of usery law violations?
Comment by Wallypog — February 13, 2009 @ 11:48 am
Again, Wallypog, those are very good questions.
I’d also add to Gary’s observation that the agreement says “All of the Foundation expenses for this transaction will be reimbursed by the College.” Your understanding of financial transactions is far greater than mine, so exactly how far does “all of the Foundation expenses” go? What does it include?
Is there really any reason for all the secrecy that NIC, the Foundation, and the property owners are imposing now? Since this is a “done deal” according to Armon (I think), what is the harm in identifying all the players, all the funding sources and amounts, etc. Or is there someone else lurking in the shadows who may be putting up money but not want to be identified with this particular transaction?
I wonder why the February 25 meeting BoT meeting was cancelled? It must be something more than Bell’s absence during recuperation, because her stand-in could do whatever needed to be done, and if necessary, she could lawfully participate by telephone in a public meeting (yes, the Idaho Open Meeting law does explain how to do it lawfully).
Comment by Bill — February 13, 2009 @ 12:10 pm
It occurred to me that this might be construed as a fraudulent mortgage loan. The Foundation is being used to secure a bank loan for an unqualified borrower from a licensed bank. NIC is unqualified because it cannot show proof of income for the tenure of its lease purchase contract. The property itself does not qualify for lack of proper valuation. The Foundation is acting as a straw buyer securing a loan as a non tenant buyer for NIC who would not qualify standing alone. There is no other reason for the Foundation to be part of this construct. If NIC did qualify then it could secure the financing directly.
Comment by Wallypog — February 14, 2009 @ 2:55 am
The harder one looks at this the more it sounds like mortgage fraud. An inflated appraisal is being used to secure a loan. A straw buyer is being used to financially qualify for the loan. The loan is from a licensed bank and even if it is fully aware of these facts it must adhere to its charter and if it resells this loan to investor must disclosed the facts about it. This is the very reason that we have our current financial crisis. Risky lending and this loan is based on an absurdly false appraisal. At best this is a hard money loan with a very high interest rate that the public has not been informed is part of this ‘deal’.
Comment by Wallypog — February 14, 2009 @ 3:28 am
Wallypog,
Thank you for the very interesting analysis in comments 11 and 12.
Note the last sentence in the document reads, in part, “…,this terms sheet is not binding on the parties but indicates intent of both parties to proceed to a definitive lease option agreement which shall become the binding agreement.” Presumably the final lease option agreement will mirror the terms of this letter of intent/agreement.
The agreement also contained a condition, “Pro-forma ALTA title report showing fee simple ownership in The Mill Sites, LLC with exceptions satisfactory to the Foundation and the College.
What are your thoughts about what those exceptions might typically be?
Comment by Bill — February 14, 2009 @ 7:16 am
I am sure there is a SHORT list of developers ready “just in case” NIC cannot come up with the payment.
Comment by concerned citizen — February 14, 2009 @ 7:41 am
Bill, I do not know what exceptions would be expected. There already a lot of dancing around to make this happen who knows what else will be undertaken. They are clearly not shy about pressing the envelop. The Idaho Dept of Finance should be advised about this deal ASAP. We have state institutions entering into some screwy transactions using pubic tax dollars. These people are used to playing shell games to skirt the law but I believe that this one may not skirt it quite enough. When you consider the mess the country is in because of this sort of dealing it is the height of arrogance to propose repeating such lunacy with public funds.
Comment by Wallypog — February 14, 2009 @ 11:55 am