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Los Alamos County officials announced today that the county has successfully concluded negotiations with IMTEC on the payment of the principal and interest owed to the county for a small business loan, keeping approximately $2.1 million in economic development loan funds.
“I am pleased with the outcome of the negotiations,” said County Administrator Anthony Mortillaro. “These loan funds are a critical part of our business development plans, and we worked in good faith for the last three years to support IMTEC in their venture because it would have brought jobs to Los Alamos.
While it is unfortunate that 3M decided to pull operations out of Los Alamos, which resulted in a default condition with the loan, our economic development assistance programs will not be impacted as a result of their actions.
The termination clause in the agreement was very clear about default and re-payment of the loan, with interest.”
The county loaned Hytec, Inc $2.4 million in March 2007 under the county’s Small Business Financial Assistance Program.
The county had disbursed nearly that entire loan amount — over $2 million — for the construction of a 20,000 square foot manufacturing building just west of DeColores Restaurant on NM 502.
The building was completed this summer. Subsequent to the loan, Hytec transferred its assets and liabilities to IMTEC Corporation of Ardmore, Okla.; however, IMTEC was bound to uphold the original agreements. Likewise, in May 2008, IMTEC was acquired by 3M Corporation and in July of that year changed its name to 3M IMTEC Corporation.
The county moved to introduce an ordinance to end the agreement with IMTEC in March of this year after 3M Corporation announced the closure of all 3M related business operations in Los Alamos and the elimination of all jobs.
Their action placed IMTEC Real Estate LLC, 3M IMTEC Corporation, and the HYTEC companies all in default of the project participation agreement, loan agreement and secured promissory note.
Those documents required, among other things, that all jobs remain in the county and that a total of 74 new jobs be created over a 10 year period.
Discussions between May and July and an attempt to address the situation to avoid foreclosure came after a request from the council, but were not successful.
“The agreement provided a legal framework for alternatives,” said Mortillaro, noting that there were options available to cure the default.
3M IMTEC could have relocated jobs to Los Alamos County or repaid the disbursed loan amount to the county in full, he said.
Instead, 3M IMTEC countered during foreclosure negotiations last month that they would only pay the principal and 50 percent of the interest owed. They alleged that IMTEC incurred additional development costs for the new building, based on delays in construction that were caused by the county.
The county had issued a stop work order last year after building inspections by the Community Development Department revealed several deficiencies that were eventually corrected by the contractor. County Attorney Randy Autio said that IMTEC’s claim was baseless and irrelevant.
“Clearly, the county was never at fault in citing the company with building construction issues,” he said. “Our building inspector did a thorough job of documenting his meetings with the contractor and many attempts were made to address deficiencies that were legitimate code, safety and constructability concerns.
Regardless, IMTEC’s claims to adjust the loan agreement for monetary compensation due to delays were irrelevant. They had an obligation to pay the principal and interest back on the loan that was clearly stated in the agreement if they defaulted on its conditions.”
Autio said IMTEC’s legal counsel notified the county at the end of September that they would pay the full amount.
In exchange for payment, the county will release IMTEC from any further obligations or claims. The settlement was finalized in the last week and a check from IMTEC in the amount of $2,188,781.76 was hand delivered to the Office of Management and Budget.
The manufacturing building on N.M. 502 near DeColores Restaurant is currently for sale by 3M IMTEC.