Six million dollar flop
It seemed like a dream come true.
An old food processing plant in Wells was purchased, remodeled and going to open with 53 employees at the start, going to 222 employees within a few short years.
It was welcome news in both Wells and all of Faribault County.
But, after three years and an estimated $6 million of funding much of it public money Singleteary Foods Solutions never opened its doors.
A Mankato bank has foreclosed on the property and taken over ownership of the non-operating plant.
And now, several officials are wondering if they are ever going to see any of the money they poured into the project.
“I plan on meeting this week with people from Pioneer Bank and from DEED (Department of Employment and Economic Development) and the USDA Rural Development office in Austin,” says Wells city administrator Robin Leslie. “I want to see if there is collateral for the city’s loan and if we will end up with anything.”
There is a considerable amount of money these entities have involved in the Singleteary project.
The Wells Economic Development Authority put in $150,000 and also was the loan sponsor of the $500,000 from the state’s DEED office.
The county EDA also gave the city of Wells $150,000 to put towards the project. Later it was questioned whether the county meant for the money to be in the form of a grant or a loan.
The USDA Rural Development office has over $4 million tied up in loan guarantees for the private lender loans. There was $1.65 million for working capital and $2.712 million to purchase equipment.
According to foreclosure notices which ran in the Faribault County Register last March, Pioneer Bank had two outstanding loans to Singleteary, one for $779,716 and another for $3.996 million.
It has also been reported in the past that the Small Business Administration had a $3.627 million SBA loan involved in the project.
Where did all the money go?
The Register has reported in the past that owner Steve Singleteary had said the cost of the building was $1 million, he spent $2 million on improvements to the building and another $3 million for new equipment. That totals $6 million in all.
Besides all the public loan money, Leslie says she has fielded many calls at her Wells office from contractors who are waiting to be paid for work they have done.
In past stories, the Register has reported mechanics liens being place on the property which total over $337,000, much of it local contractors.
Singleteary was given numerous chances to open the plant and given many extensions on starting his loan payments.
The plant was actually opened in March of 2010 with a dozen employees, but they were laid off within a few months.
In May of 2011 Singleteary told some local officials he would have the plant open with 50 employees by June or August of that year.
The first loan extension reported by the Register was in April of 2012, deferred to December of that year. After that it was extended again to March 15, 2013.
In January of 2013 Singleteary gave a tour of the plant to local officials and promised again to have it open soon.
However, in March of last year the bank started foreclosure proceedings. He was given an amount of time, until November, to begin payments.
Despite the foreclosure notices, government officials extended his loan payments once more, this time to April of 2014.
“Since the bank has it now, I guess we won’t expect we will receive payments from him,” Leslie says. “He is clearly in default.”
Singleteary Foods has also been removed from any tax credits in the JOB-Z program, which means property taxes on the factory for 2011 and 2012 are now past due.
“That is a total of $67,000,” says Leslie. “Plus, the city did street work in front of the building so you can add street assessments to that total as well.”
The city administrator is hoping to get some good news yet out of the deal when she talks to the other groups involved.
And who knows, she says, maybe the place can still be sold and will eventually open.