Faced with the threat of foreclosure, several businesses near Palmview City Hall spent the past week scrambling to comply with federal loan regulations — or avoid them altogether by paying what they owed.
Palmview warned three business owners to provide proof of insurance and other documents or risk foreclosure. When the businesses didn’t respond, the City Council hired McAllen-based law firm Walker & Twenhafel to collect.
During a meeting on Monday afternoon, the City Council finally set a deadline: If the businesses didn’t provide the documents or pay off the loans by Friday afternoon, Palmview would start foreclosure proceedings.
“We’re trying to find a way to avoid foreclosure,” said City Manager Leo Olivares. “I hope we can. But I’m not sure we will.”
The Palmview Economic Development Corp. started making small business loans with seed money provided by the U.S. Department of Agriculture.
Roberto Jackson, the former La Joya city attorney, borrowed $187,500 to build a law firm. Nereyda Cantu and her husband — Ismael “Smiley” Cantu, the brother of La Joya school board Trustee Alex Cantu — borrowed $200,000 for a daycare. And businessman Miguel Cortez borrowed $23,000.
They were supposed to repay the money with interest, allowing Palmview to make new loans.
When the Palmview Economic Development Corp. went under, the city started managing the loan portfolio.
Olivares and city Finance Director Rachel Chapa said they discovered many businesses had simply stopped making loan payments. They also became concerned the businesses hadn’t provided Palmview with proof of insurance and other documents required by the loan agreements.
“We’re trying to do right by the program regulations,” Olivares said.
Palmview sent the businesses warning letters in April, requesting proof of standard property insurance, which covers fires and storm damage; life insurance on the business owner, which is payable to the city; and workers compensation records.
They didn’t respond. During interviews, Jackson and Ismael Cantu said they didn’t recall the letters. Cortez couldn’t be reached for comment.
The Cantus borrowed $200,000 for a daycare called Imagination Express Learning Center in 2011, according to city records. When the city approved a modified loan agreement in 2016, they still owed nearly $195,000.
Olivares said he heard from an insurance agent who represents Ismael Cantu. They may be able to reach an agreement, avoiding foreclosure.
Palmview couldn’t determine whether or not Cortez, who borrowed $23,000, had actually started a business. He couldn’t be reached for comment.
Jackson, the former La Joya city attorney, borrowed $187,500 in 2007. When Palmview approved a modified loan agreement during 2016, nearly $53,000 remained.
To avoid the hassle and paperwork, Jackson sent the city a check for about $9,900.
“So I’m paid out,” Jackson said. “I’m out of the program.”
With low interest rates, the loan program benefits Palmview and small businesses, Jackson said, adding that he made regular payments to avoid any problems.
“It’s a win-win situation,” Jackson said. “As long as everybody follows the rules.”