- Associated Press - Friday, June 27, 2014

DES MOINES, Iowa (AP) - A architect and developer owes the city of Des Moines more than $1 million for loans he received for projects that officials have lauded for spurring development in the city’s East Village area.

Kirk Blunck is long overdue for repaying loans he received in the late 1990s on the Teachout and Hohberger buildings, according to The Des Moines Register (http://dmreg.co/1nPd1VO ).

The city gave Blunck a $300,000 loan for restoration of the Teachout Building and $400,000 for the Hohberger Building. The Teachout loan was due in 2008 and the Hohberger loan in 2009. With accrued interest, Blunck now owes about $1.03 million.

Blunck acknowledged he hadn’t repaid the loans in full - $17,500 on the Teachout one and nothing on the other - but noted his projects’ success in jump-starting other East Village development. The Teachout and Hohberger buildings are home to successful music and bar venues, but Blunck said they don’t produce enough revenue to repay the loans.

“It takes substantial risk in these (restoration) projects,” said Blunck, who also said he has worked as an architect and designer on about 20 projects in the neighborhood. “The idea that they are going to be financially profitable in the immediate future is not realistic.”

City officials agreed the building restorations were early successes that prompted more development, but they expressed frustration in dealing with Blunck. Of the 26 current real estate development loans issued by the city, Blunck’s are the only two in default.

“Really the project is successful, but unfortunately (he is) an uncooperative borrower who won’t make the payments,” assistant city manager Matt Anderson said.

Blunck wants the city to change the loans’ terms, but officials said they have already tried repeatedly to restructure his payment schedule. The city has few options because it’s a secondary lender, behind Blunck’s first mortgage holder, whom he’s paying off.

Blunck also has received attention recently because of an apartment building he owns in the Sherman Hill area that had multiple inspection violations. A court order issued June 4 required tenants to vacate the building by next week, though Blunck has said those problems were exaggerated.

City Council member Christine Hensley called the unpaid loans one in a series of questionable business moves.

“He is an excellent architect, but I have really serious reservations about his business management,” Hensley said.

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Information from: The Des Moines Register, http://www.desmoinesregister.com