By Sara Quam
The Luverne City Council will vote at its Tuesday meeting whether to use money from the hospital sale for economic development.
Selling Luverne's hospital to Sioux Valley Hospitals and Health System last year netted the city about $4.5 million. The council at that time decided to set aside $3 million in a fund from the sale proceeds.
Councilman Keith Erickson said that at the time, the sale seemed solid, but the council didn't want to be without money if Sioux Valley tried to resell the hospital or close it. It was a very conservative move, he said, because of the community's feelings of vulnerability.
The hospital fund is just sitting in the cityÕs accounts earning about $180,000 interest annually.
The fund came into discussions Monday, when the council met as the Committee of the Whole, because the Luverne Economic Development Authority wants to give a sizable loan to the company Netbriefings.
The LEDA can always come to the council for special requests, but the council discussed setting aside money for the LEDA to use for grants or loans as it sees fit.
It already researches companies on its own and in 17 years of helping businesses, only three have defaulted. City Administrator Matt Hylen said, "Over the years, theyÕve really done their homework. It's very impressive."
The issue the council wanted to address was whether the money from the hospital fund should sit or be invested back into the community.
Councilman Jim Kirchhofer, who was also on the previous council, said, "If we can essentially preserve that fund - giving the EDA a half million or so, in three years' worth of interest, you'd have the original amount back."
Barb Berghorst, financial manager, said, "If preservation of the principal $3 million is the goal, it would be mathematically simple to put the interest earnings into a revolving loan fund."
Erickson said, "How long do you sit on the money? We were trying to be conservative and patient to set it aside, but let's start turning that money over to do something for the betterment of the community."
The fund for the LEDA would involve the council giving it a set amount of money and the LEDA could loan that out is it wanted, earning interest on what was paid back.
The original $3 million in the hospital sale fund would then be regenerated through annual interest earnings on that account. City staff is putting together different options for the council to vote on.