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It was standing room only in the City Council chambers Wednesday as citizens expressed concern to council members about the future of Lakeview Homes.

For nearly a year, the City Council has considered selling Lakeview Homes (Lakeview Home, Heritage House and Oak Terrace) which has been struggling financially. The City eventually began to receive proposals to purchase Lakeview Homes.

A negotiation committee was established to review the proposals. This committee narrowed the proposals from five to three (Augustana, Blums, and Montag/Hood) but could not come to a consensus on a top prospect.

Last month, it was the City Council opting to negotiate exclusively with Mankato developers Mick Montag and Dennis Hood.

This decision followed an evaluation of the three proposals by Pathway Health Services, Inc. That report indicated that all of the proposals were strong and worthy of consideration.

It was recommended by Pathway Health Services that the City proceed in the following order:

• negotiate with Augustana to bring the price up as high as possible (at least $1 million);

• negotiate with Blums to maximize the price and eliminate the lease term with a closing within 120 days;

• negotiate with Montag/Hood to eliminate the proposed loan as well as the demolition and get the City out of the business;

Citizens questioned why the City didn’t follow the recommendation of the Pathway Health Services report and negotiate first with Augustana.

Dick Hebeisen, who served on the negotiation committee, agreed with the Pathways report and believed the City should have continued negotiating with Augustana. He told council members there would be “less disruption” with Augustana’s proposal.

Others were concerned that the Montag/Hood proposal currently involves a $1 million loan from the City.

Former Gaylord Mayor John Schwartz, citing the Pathway report, said the Montag/Hood proposal was the riskiest of the three. With a loan, the City remains tied to the nursing home. Therefore, it would not be getting out of the health care business as hoped, Schwartz explained.

Council member Sue Jacobson considers a loan to Montag/Hood as an investment in the City. “If we’re not willing to put money into Gaylord, why should someone else,” she said.

Jacobson is impressed by Montag and Hood’s health care facility in North Mankato. “I saw how [Mick Montag] interacted with the residents,” she said. “People are happy there.”

Council member Carl Wetzel believes the Council did heed the Pathway report. He noted that the Montag/Hood proposal recieved the highest rating for – ongoing financial benefit to the City and long term benefit to the community. “Financially, the City is going to do well with Montag and Hood,” Wetzel said.

Negotiations with Montag, Hood, City Administrator Lonny Johnson and City Attorney Doug Nesvig are in the preliminary stages.

A meeting with the City’s financial advisor was held Tuesday to determine tax increment financing (TIF) availability and options, according to Johnson. Following that meeting, the negotiation process with Montag/Hood will continue in an effort to bring a recommendation to the City Council, Johnson said.