Bank sues city of River Falls over hotel debt
A Tomah bank has filed a lawsuit against River Falls, claiming the city owes the bank $240,000.
Timberwood Bank, Tomah, filed a complaint in Pierce County Court last week, claiming the city wrote checks to Martinsen Investment and Land Company, and although a development agreement said the checks should be made payable to both Martinsen and Timberwood, they were not.
According to the lawsuit, Martinsen and the city were parties to a development agreement and addendum dated Feb. 25, 2008. The agreement involved the construction of a 68,000 sq. ft. "mixed use commercial facility" in downtown River Falls. The building is now called Riverview Hotel and Suites.
The city agreed to commit or spend money or provide land for the project through the tax income and financing process. When the agreement was signed, the city projected the TIF monies would be available for the project on Aug. 15, 2008.
Martinsen applied for a $600,000 line of credit for short-term financing from Timberwood, securing the loan with, among other things, an assignment of the development agreement with the city.
According to the terms of the agreement, signed by then-city administrator Bernie Van Osdale, any checks the city issued in connection with the project would be made payable to both Martinsen and Timberwood and were to be promptly endorsed by Martinsen and delivered to the bank until the full amount owed was paid.
According to the complaint, Martinsen has failed to make payments to the bank, and the city issued checks to Martinsen without making them jointly payable to Timberwood.
City Treasurer Julie Bergstrom referred a reporter to the city's attorney, Bill Thiel.
When reached by phone, Thiel said he couldn't provide any information about the lawsuit because he hadn't seen it. He said he wouldn't have time to review the complaint faxed to him Monday afternoon and would be out of the office Tuesday.