Basalt council was upset that Scanlon loan repayment wasn’t secured
Basalt Town Manager Mike Scanlon didn’t sign a promissory note or arrange terms for repayment prior to receiving a loan for $35,000 from the town government, making members of the Town Council nervous about the deal, The Aspen Times has learned.
Councilman Bernie Grauer, acting on behalf of the council, informed Scanlon the day after he was given a check from the town finance director that the council didn’t feel the payment was appropriate. Scanlon received the check Aug. 3. Grauer informed Scanlon on Aug. 4 that the council had learned about the loan for down-payment assistance on a residence but wasn’t comfortable with the arrangement. Stewart Title wrote a $35,000 check back to the town Aug. 5, records shows.
It appears from public records that Scanlon was given more leeway with arranging terms of repayment for his loan than the only other town government employee to use the program. Another employee received a loan April 25, 2014, for $16,810.56. The employee signed a promissory note that spelled out payments would be deducted from each paycheck.
The council approved the Reimbursable Employee Housing Trust Fund on the evening of April 22, 2014. The employee signed his promissory note three days later. It wasn’t clear when the prior employee received his check from the town.
Scanlon received $35,000 from the same program Aug. 3 for down payment on the purchase of a residence in Basalt. No promissory note was secured prior to the check being cut and no paycheck deduction was set up, according to public records acquired by The Aspen Times on Wednesday through a Colorado Open Records Act request.
Town Attorney Tom Smith wouldn’t answer questions about the promissory note or paycheck deductions, but he said the newspaper had the complete file on the Scanlon loan, including emails sent from council members to town staff about the transaction.
One email shows that Councilwoman Jennifer Riffle immediately requested more information about the $35,000 check written to Scanlon on Aug. 3 after the expenditure was included in a standard report by Finance Director Judi Tippetts about “large items” in accounts payable.
In exchanges between council members and staff, Tippetts said Scanlon was eligible for the loan. There was no indication in the exchange that the promissory note was forthcoming or that payroll deductions had been arranged prior to when the check was cut.
The town’s guidelines for the program that allow down-payment assistance say that a “subordinate lien priority on the subject real property” must be provided as collateral.
Scanlon terminated the real estate contract Aug. 10.
The Town Council held executive sessions on the matter, closed to the public, on Aug. 9 and Aug. 11, but has taken no action. Both Scanlon and the town have hired attorneys who specialize in employment and municipal law to negotiate a settlement.
Scanlon agreed to answer questions from The Aspen Times on the condition that they run verbatim in Q&A style.
The Aspen Times: Did you sign a promissory note prior to the loan?
Scanlon: No. I wasn’t asked to but it’s my understanding that I wasn’t required to.
AT: Did you arrange to make payroll deductions?
Scanlon: Not yet. I knew it was a requirement based on the program guidelines. Once we got to the closing and knew the total amount that would be deducted I would have signed a payroll deduction form or I would not have been able to close on the house.
AT: Grauer asked you and Tippetts “how and when” the collateral would be established. An answer wasn’t apparent in the information The Aspen Times received from the town.
Scanlon: That’s a question for our finance director, Judi Tippetts. I would assume it would have been handled just like it has in the past.
AT: Why did you decide to have Stewart Title write a check back to the town on Friday, Aug. 5 for the $35,000?
Scanlon: On Thursday morning 8/4 Council member Grauer said he thought it was improper. I said if you feel that way I will get the earnest money back.
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