Authority: Kak's loan deliquent

Meg Alexander — Staff Writer

FAIRMONT - There was no public notice of Kak's closure, only the snow building up in front of the restaurant.

Fairmont Economic Development Authority, the business' first mortgage holder, hopes to capture at least a portion of the $59,200 it loaned restaurant owner Walt Kakeldy. Its options are limited.

"We can negotiate repayment through foreclosure," said Mike Humpal, assistant city administrator, "or we can have them voluntarily come in and start paying again."

Considering Kakeldy has not contacted or made a payment to FEDA since December, foreclosure is the more likely of the two options.

"We hope to work with all of our small businesses we make loans to," Humpal said. "In the past, especially the past couple years, we've had to do different things that allowed companies to work through these rocky times. But fortunately in those cases, they came to us to ask for a plan to work things out."

This week, the board gave City Attorney Elizabeth Bloomquist its power of attorney in the pending foreclosure proceedings.

Kak's wouldn't be the first business to foreclose on a FEDA loan. Wendy's restaurant and Essence Salon and Spa also failed to make payments.

Others have struggled too but worked with FEDA to amend their payment agreements.

"We have two that we've worked out situations, where they'll pay interest only, and we negotiated a timeframe for them to do that so their businesses can get up on their feet," Humpal said. "But in both those cases the company came to the FEDA board before they were in violation of their loan agreement and we worked out an amendment."

FEDA has made 48 loans since 1995, when Humpal began working for the city. The total for those loans is $2.2 million, which has leveraged an additional $16.1 million in equity and conventional financing. More than 400 jobs were created, with $12.6 million in new payroll and an average hourly wage of $14.95.

Kakeldy was unavailable for comment.

In other business, Humpal informed the FEDA board he was approached by individuals seeking information on FEDA loans as they look into developing a stripmall north of Wal-Mart.