Steven Berley

My Voice

About the author

Steven Berley is a CPA and owner of Berley CPA. He is an avid outdoorsman. And, publisher of many business articles and books on financial and strategic risk management.

The Market Place Family Foods $500,000 loan is likely a pivot-point in how the Urban Renewal Agency (URA) approaches and manages loan and grant risk going forward.

It was the largest loan, exponentially, as I understand it, approved to date. In a multitude of ways, it appears the loan has generous terms and conditions. Because it was a grocery store (which in my own shopping experiences there, had what I perceived and validated were overpriced and redundant goods), my thoughts were that the loan default risk here was already higher than average. The wider vision though was not just the grocery store, but is/was a combination of other businesses to support and leverage the downtown economic ecosystem.

To grow La Grande, to grow rural America, calculated risks have to be taken. Mistakes will be made, tuition will be paid and learnings will follow.

It is easy to take shots at the community leaders who are trying desperately to move a rural America community into positive growth. Respect is due these folks.

The intent of the $500,000 Market Place loan was good. The outcome, so far, is not. Confidence is now low, as would be expected, and now the loan default risk is clearly higher.

On Feb. 9, several people stopped by my office. I heard that the Family Foods “anchor tenant” has closed its doors, that the “anchor tenant” will file bankruptcy.

If all true, I am wondering throughout this day why the financial deterioration has now just become public. Said another way, in my experiences, the borrower is required to provide monthly, worst case quarterly, financial statements for the business and its key underlying financial drivers.

Either this perpetual financial reporting clause was not prudently put forth in the loan agreement, or the deterioration was allowed to continue without loan default and/or renegotiation.

I arrived home that evening, Feb. 9, and I read in The Observer, “Everything is status quo,” and that the borrower has 90 days. My curiosity increases.

Since Feb. 9, I have been visiting with local professionals, reading prior year Observer articles and reading prior year URA minutes. It was suggested in an August 2014 URA meeting that the City of La Grande/URA likely has now moved into a commercial lending role, and I have to agree.

Having corporate finance experience, having published audit and finance articles, along with books on corporate finance and risk management strategies, along with plenty of gray hair, I would like to use those experiences to provide some humble input.

Immediately, and without fail, the “status quo” should transition into a proactive and decisive action by the City of La Grande/URA to put the taxpayer in the driver seat by executing the loan’s default clause.


At this point, I don’t know a commercial banker/lender who wouldn’t also have materially reduced confidence in the borrower’s ability to perform. Providing the borrower what appears to be a no-cost 90-day pass is even more curious.

Any prudent lender would also at this point request a meeting with the borrower. Ask the borrower to bring forth additional collateral, and/or an additional cash infusion, and/or renegotiate many facets of the loan agreement.

For clarity, I am not suggesting a process toward foreclosure. We all hope this business, and all local businesses, will succeed. Risk is risk. Risk doesn’t need to be managed, it must be managed.

There is certainly plenty of community passion about the grocery store and the development project in general. There are many questions and likely material changes are required for who, what and how the URA assesses and approves loans and grants.

Today, the focus and the opportunity for the URA and the City of La Grande is to file the default and provide immediate transparency. The loan agreement(s) and the supporting documents, both financial and legal, from inception through today need to be made easily accessible to the general public.

Transparency calls for capable professionals local and state-wide who are experienced in URA endeavors to support the community in navigating through the current situation, and to bring success stories and best practices for the community to implement going forward.

Overall, it is clear the hearts in La Grande weigh heavy. The developer too has said repeatedly, and for years, that his “heart” is in the community. He has certainly put forth untold hours and a lot of energy into this economic endeavor – he deserves respect and kudos for such passion.

To begin healing the community hearts, and to regain the trust some have lost in this community project, I would suggest to the developer(s) that he/they write a check today for the outstanding principal and interest.