Developer overextended; city told to pay $260,000
A judge has ordered River Falls to pay $263,337 to a bank as a result of a mistake involving a developer who left behind a stack of unpaid bills while building Riverview Hotel and Suites.
Buffalo/Pepin County Judge James Duvall signed a judgment ordering the city to pay the money to Timberwood Bank, Tomah, because checks sent to Martinsen Investment & Land Company Inc., Ashland, should have been made jointly payable to Martinsen and the bank.
Martinsen eventually defaulted on its loan with the bank.
"The city attorney is handling the case and is reviewing the matter," said City Administrator Scot Simpson Monday. "He will advise the City Council on our options, which include an appeal."
Online court records show over 40 liens filed by various construction and building supply companies against the Martinsen project with over $1.75 million still owing on those.
In other Pierce County civil court action earlier this year, Duvall ordered Martinsen Investment and Henry Martinsen Jr. to pay $8.5 million to Central Bank, Hudson.
Also First American Bank, Hudson, foreclosed on and bought the complex's parking lot at 412 Spruce St.
In 2008 Martinsen proposed building a 67,722 sq. ft. mixed-use commercial facility with a minimum assessed value of $10,000,000.
Under a development agreement signed Feb. 25, 2008, River Falls gave the project site at South Main and Spring streets to Martinsen and agreed to pay the company $1.5 million to help cover costs related to the construction of a hotel-restaurant complex.
Most of those costs included bills for site excavation, grading, storm-water control, utilities and parking lot landscaping, said River Falls Finance Director Julie Bergstrom, who issued eight checks -- ranging in value from $50,000 to $250,000 -- from September 2008 through March 2009.
When Martinsen tried to open a short-term line of credit with Timberwood, the bank required that the checks from the city be made jointly payable to Timberwood and Martinsen.
For more about this case, please see the June 21 print edition of the River Falls Journal.