By Sara Strong
With two offers to purchase the city apartments, and conflicting opinions on how to decide on a sale, the Luverne Economic Development Authority will start over and advertise for bids on the Mounds View and Evergreen Apartments.
The LEDA isn’t obligated to advertise for proposals, but to eliminate confusion and last-minute offers, it will set a bid opening date and put conditions on the sale.
Potential buyers Doug Eisma, Dan Vis, Paul Vis and Bill Vis made an offer to the LEDA about four months ago, and the board indicated it was in favor of selling to the group.
Then, Dec. 11, Steve Perkins made a $1.4 million offer — $110,000 more than the Eisma-Vis proposal.
Other than the price, both offers were similar. Neither wanted to change maintenance managers or raise rent to risk losing good tenants.
Eisma felt he had a deal with the city while Perkins says he would have liked the process to be more open, as it would be in the case of advertising for bids.
Perkins said, "It’s important as a public body to ask, how do you maximize returns for taxpayers? … The most important thing to the community is that it’s a fair and open process to allow the best proposal to come forward."
Eisma and Vises’ offer was made independently, and once that dollar amount was on the table, Perkins had the opportunity to top it.
"We felt that at the Nov. 18 meeting there was a commitment made to our group. The LEDA directed Dan Statema to get paperwork together. In reliance on the commitment, we did appraisals, lined up our financing, and were ready to close the deal. The higher offer was made on Dec. 11, which was simply too late," Eisma said.
The Eisma-Vis position is that the "11th hour" offer from Perkins shouldn’t have factored into a decision on the sale of the apartments.
The LEDA admitted that it probably would have accepted the Eisma-Vis offer at the earlier meeting it was discussed. However, the board delayed action in order to find the exact figure of outstanding debt on the apartments before finalizing a purchase agreement.
The new advertisement will specify selling guidelines buyers will have to follow, such as keeping the apartments rental property, maintenance standards and rent increases.
That way, all potential buyers will have similar offers and the LEDA can decide based on dollar amounts.
Board member Nate Golla said, "Our duty is to the taxpayers to get a good selling price and also to the tenants to keep them happy and the rents low."
LEDA member Karis Gust said, "I struggle with this because [Eisma and the Vises] have spent four months of going to meetings and working with tenants and doing all this leg work to have it come down to someone coming up with more money."
Eisma said, "Our position is, that Perkins wouldn’t be here if we hadn’t made the offer."
Tenants attending the public hearing said they liked the communication the Eisma-Vis group had with tenants and felt comfortable with them as landlords.
Keith Erickson said the city is in an unusual position, because it can sometimes be accused of spending too much money, but now has the chance to bring in more money.
In bringing in more money, though, the city could be breaking a gentleman’s agreement with the first offer and come under ethical question.
LEDA president Glen Gust said, "I think a gentlemen’s agreement or a handshake is worth a lot."
LEDA member Mike Engesser said, "My primary concern is that they stay apartments because there’s a need for that in the city."
The LEDA will have to meet in another public hearing before the apartments are sold to any buyer.