City of Evansville Loan Funds: Year to Year Differences, 2007 – 2008 – 2009

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CCO Examines State Board of Accounts Audits for 3 Consecutive Years

After posting the Loans Receivable from the 2009 Audit we received many inquiries about just what the purpose for these particular loans were for and what were the details involving the granting of such loans and the differences in their terms. The two groups of loans that attracted the most interest were the loans that were made to Citizens Bank, the Kunkel Group, and the Evansville Convention and Visitors Bureau.

Citizens Bank

With respect to the Citizens Bank loan in the amount of $2,300,000 in the 2009 summary the loan was reported to have been made on March 25, 2008 at an interest rate of 2% with a remaining balance of $1,367,419. The things that prompted some questions were the large discrepancy in the balance for such a new loan, the fact that there was no Citizens Bank in 2008, and the close proximity in time to the loan that was made by Fifth Third Bank to City Centre Properties for the McCurdy Hotel project.

An examination of the City of Evansville Audits for the years 2007 and 2008 does actually yield some new information that may explain some of the questions raised by our readers. In both audits the date of the loan is reported as March 25, 1982 and the purpose given for the loan is “business-construction”. The original loan amount and the interest rate are unchanged.

These discoveries lead one to believe that a favorable loan was made to Citizens Bank back in 1982 for a construction project and that the loan is continuing to be assumed by each successive company that has bought the former Citizens Bank of Evansville. As the interest rate is only 2% it is in the best interest of Fifth Third Bank to simply service this debt rather than to pay it off.

The real question is why would the City of Evansville extend a loan to a bank?

Kunkel Group

There have been three loans made to the Kunkel Group that are reported on the State Board of Accounts Annual Audits of the City of Evansville. All three loans are reported in each of the years of 2007, 2008, and 2009.

The earliest loan in the amount $221,250 that was made on December 15, 2005 and carried an initial interest rate of 0% for the Renaissance on Main project and had been paid down to a balance of $22,300 by the end of 2009. The interest rate reported on this loan in 2009 had been raised to 7.25% and has an annual payment of $4,072.

The second loan listed to the Kunkel Group is in the amount of $310,000 and originated on December 20, 2006. The 2007 and 2008 audits show an interest rate of 3% with an annual required payment of $62,000. On the 2009 audit this loan that was also for “Renovations – Downtown Apartments” had been altered to reflect an interest rate of 0% with no annual payment required. The balance as of December 31, 2009 was $310,000.

The final loan in the amount of $150,000 was made on June 20, 2007 and carries an interest rate of 6.25%. The balance at the end of 2009 was $105,420 and the annual payments were reported to be $26,512. The purpose for the loan is listed in the 2007 and 2008 audits as “Renovations – Downtown Apartments”.

Evansville Convention and Visitors Bureau

There are two loans made to the ECVB according to the 2007 and 2008 audits.

The first loan in the amount of $500,000 was made on February 25, 2005 at a 0% interest rate with and annual required payment of $125,000. The purpose for this loan was reported as “African American Museum”. The balance was reported to have been paid down to $2,000 by the end of 2009.

The second loan in the amount of $400,000 was made on June 20, 2005 at an interest rate of 0% and an annual required payment of $150,000. The purpose for the loan was reported as “LST Dock”. The loan does not appear at the end of 2009 but every indication is that it was paid off.

Remainder

There are numerous loans recorded at interest rates of between 3% and 5% with the bulk of the loans being for construction projects associated with real estate. There are three notable exceptions where the loans were made for the purpose of purchasing capital equipment.

The bulk of the loans were made in 2007 and earlier.

RELATED ARTICLESMORE FROM AUTHOR

18 COMMENTS

  1. “The real question is why would the City of Evansville extend a loan to a bank?”

    That is an excellent question… Mr. Friend… Mr. Friend…

    (I would ask Mr. Adams, but he’d just… Ahh, nevermind.)

    • I would ask Mr. Treasurer to look into it but seems like he has enough fires to put out at the moment. It’s a good thing he has the firemen on his side for the moment.

      • However, it remains to be proven just how long Mr. Treasurer can keep his leaky ship from sinking after falsely and cruely accusing Council-Lady Robinson of running for reelection only to get health insurance. Connie is a cancer survivor, thank the good Lord, and a very good person who represents her 4th Ward with dignity. The fact of the matter is that her husband carries health insurance for the both of them, so Connie does not need to run for City Council just to get benefits. She is running because she is a dedicated public servant. What cold, cruel motives would bring the Davis to make such callous, false statements about a fine lady like Connie Robinson who works hard and tirelessly for her constituents? It’s really alarming.

        • What’s alarming is people that claim any of our city leaders are “working hard” for us…

          • “What cold, cruel motives would bring the Davis to make such callous, false statements…”

            Party affiliation possibly?

      • That is hilarious…

        I’m sure he’d tell you exactly what you wanted to hear, too…

  2. “The second loan listed to the Kunkel Group is in the amount of $310,000 and originated on December 20, 2006. The 2007 and 2008 audits show an interest rate of 3% with an annual required payment of $62,000. On the 2009 audit this loan that was also for “Renovations – Downtown Apartments” had been altered to reflect an interest rate of 0% with no annual payment required. The balance as of December 31, 2009 was $310,000”.
    ==========
    Does this imply there was a default in the annual payments due to the City in 2007 and 2008? Was the loan renegotiated? If so, by who? What is currently owed to the City? It is very troubling the City’s 2009 audit documents show it was owed $310,000 for over 3 years on a 0% “loan” by a current contractor/bidder for the hockey arena hotel project. When will the 2010 audit docs be available?

  3. “On the 2009 audit this loan that was also for “Renovations – Downtown Apartments” had been altered to reflect an interest rate of 0% with no annual payment required.” (CCO)

    * * * * * * * * * * * * * * * * * * * * * * *

    What earthly good are the SBOA audits if discoveries of this nature are never acted upon?

    This is the sort of stuff that causes citizens to lose faith in the current crop of office holders. Someone in State Government should have initiated an action after viewing those audit findings.

    The employees of the SBOA audit teams must surely have a lot of stories to tell that raise the hair on the back of your neck, not to mention your blood pressure.

    __

  4. any Evansville history buffs on here ? Was the (now) Fifth Third tower downtown built in 1982 by Citizens ? I have heard that building referred to as “The Giant Kitty Litter Box” by the nice historic preservation lady named Joan, RIP. Second, is it true that the Vendome Hotel was demolished to make way for this piece-o-crap claptrap ?

    • I believe that was built in 1982. I have no idea what was knocked down to make way for it.

      • So the City of Evansville made a loan for the construction of the Citizens HQ ? Bet that wasn’t publicized at the time ! Wonder if Herb Marynell of the C&P got beaten down for wanting to break that story ?

        BTW, the historic preservation lady I referred to was one Joan Marchand, a real sweetheart of a lady. She would take groups on walking tours of the Downtown. She had a passion for historic buildings. A rare gem, she is missed !

        Editor: please dispatch a mole to unearth the truth about what was bulldozed in order for us to be treated to the sight of that urban blight which is the current Fifth Third building.

      • Groundbreaking took place on April 23, 1980. They knocked down the old Vendome Hotel to make way for the new Citizens Bank. The box design did not warm the hearts of local citizens at the time.

        • Press, and it still doesn’t warm any hearts. The Grand Theater (built 1889) torn down in 1962 for parking at the adjoining Vendome (Sycamore and Third). Then the Vendome (built 1914) torn down for a lousy bank building. Disgraceful urban planning, which falls far short to this day.

          • Disgraceful urban planning?

            How about the [BLEEP BLEEP] financing? We’re seriously still HOLDING THE LOAN?

  5. Eville Taxpayer on August 9, 2011 at 7:06 PM: there is no Reply button on your post. Disgraceful urban planning AND a disgraceful loan combined. Look at the bright side: we’ve only had it on the books for 29 years ! I believe in 1982 the prime was around 18 % and Citizens got a 2 % Loan ? They probably borrowed more than they needed on the building at 2 % and then turned around and loaned it out at 18 % +. Super Susie would frown at these revelations. Thankfully, the taxpayers are A-OK with it !

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