The city of Vandalia has filed suit asking that a local company that received city loans as part of an incentive package to repay those loans in full due to their failure to comply with the terms of the loan agreements.
The city filed suit against Letters and Logos Inc. in Fayette County Circuit Court last Thursday, seeking a judgment of just under $90,000.
As part of an incentive package offered to Letters in Logos in March 2006, the city issued two $75,000 loans to the company. The company, which moved to Vandalia from Georgia, pledged to employ at least 35 people within two years.
In the suit, the city claims that as of Jan. 1 of last year, Letters and Logos made all monthly payments on those loans, adding that all payments were not made on due dates.
The city also claims that it has not received a payment on the loans since Aug. 31 of last year. Under the loan agreement, the interest on monthly payments rises from 3 percent to 12 percent when not paid by the due date
In its suit, the city is seeking the total owed on two loans, $89,423.08.
The city notes in the suit that JoAnn Givens, the city’s director of economic development, sent to company owner Jess Buehler on Nov. 16 of last year a letter reminding Buehler of the penalty for late payments.
Five months before Givens sent that letter to Buehler, City Attorney Jack Johnston sent him a letter informing him that he had failed to comply with the terms of the loans agreements.
The city, in that letter, claimed that Buehler:
• Failed to provide audited financial data about his company.
• Failed to hire 35 full-time employees by May 1, 2008.
• Was “consistently behind, by 60 days or more,” on loan payments.
In that letter, Johnston gave Buehler 30 days to remedy all of the loan default conditions.
Letters and Logos had five employees when it announced its move to Vandalia, and Buehler told the city council at that time that it planned to increase the number of employees “five or 10 at a time until it grows to 35.”
City officials have said their records indicate that Letters and Logos has been operating with less than five employees.
The company has operated in the former Crane Packing home east of Ruemmelin Park, which is owned by Walt Barenfanger, since moving to Vandalia.
Claims made in filing a lawsuit represent one side of an issue. The defendants have an opportunity to respond to allegations made in the suit, and The Leader-Union will report any responses after they are filed.