Berrien County is at loggerheads with the Federal Economic Development Administration over government demands that the County's Revolving Loan Fund repay more than $610,000 from a loan made 15 years ago to Whirlpool Corporation. The County is calling that demand "unacceptable," and they are "not inclined to submit to the EDA's recent demands for repayment."
The dispute stems from a $1-million loan made by the county to Whirlpool Corporation to assist with relocating the company's Dayton Technology Center to Benton Charter Township and the City of St. Joseph. That loan was made in 2001 with the understanding that Whirlpool would increase its employment levels and maintain those levels for a period of not less than 10 years. If Whirlpool complied with those employment terms, the loan would be forgiven after ten years. Of the $1,000,000 loaned to Whirlpool, $610,000 came from the County's Revolving Loan Fund, which had been created in 1981 using funds granted by the Federal Economic Development Administration (EDA), a division of the U.S. Department of Commerce.
Berrien County consistently reported the loan to the EDA as part of its required semi-annual Revolving Loan Fund account submissions. Additionally, in 2007 Berrien County staff specifically informed the EDA, in writing, of the loan’s terms, conditions and performance. During the 10 years that Berrien County actively reported this loan, the EDA never raised any objections to its issuance or its terms and conditions, which included silence after the County’s 2007 notification that the loan was structured as a forgivable loan.
In June 2011, Whirlpool demonstrated it had complied with and even exceeded the employment terms of the loan. Therefore, under the agreed upon terms, Berrien County forgave the loan.
Despite having full disclosure of the loan’s terms and conditions while never raising any objections, EDA staff members have recently asserted that the loan failed to comply with federal guidelines at the time it was issued (15 years ago). Based on this assertion, in their letter dated June 30, 2016, the EDA has demanded that Berrien County repay the $610,000 principal and accumulated interest ($173,182) to the Department of Commerce.
Berrien County says it believes "it is unacceptable for EDA staff to demand repayment of these funds 15 years after this venture was initiated, nine years after the EDA was notified of the very loan structure to which it now objects, and 5 years after the terms of this loan were fully satisfied." County officials say that at the time it issued the loan, Berrien County understood that it had the authority and discretion to do so. The EDA never objected to that, even though it was fully informed and had ample opportunities to do so.
The County contends that, "Moreover, Whirlpool Corporation increased its local employment considerably during the term of this loan and now employs more than 4,000 people in our community. It retained and renovated its Global Headquarters in Benton Charter Township, made over $150,000,000 dollars of new capital investments in Berrien County including the construction of its new North American Headquarters in the City of Benton Harbor, and sponsored and funded multiple community-based events and activities throughout the region. For these reasons, Berrien County considers this venture to have been an economic development success for the people of the area. Therefore, Berrien County is not inclined to submit to the EDA’s recent demands for repayment of a loan that was structured and issued in accordance with the spirit and purpose of the 1981 Revolving Loan Fund.
Berrien County's response has been dispatched to federal authorities, and we'll have to stay tuned for the next move in this chess-like standoff.
