The money was granted to the defunct peanut processor, which filed for bankruptcy in October, from the city’s Local Economic Development Act fund so that Sunland could make a return to the nut butter market after its products were linked to a nationwide salmonella outbreak in September 2012.
LEDA funds are a portion of the city’s gross receipts used to pay for economic development projects.
When city officials found out they awarded Sunland the money about a month after the company’s board of directors adopted resolutions in April to start bankruptcy proceedings, they considered making an attempt to retrieving those tax dollars.
Tuesday night, the council voted unanimously to do so.
City Attorney Steve Doerr provided councilors with a copy of the New Mexico Economic Development Act, with a highlighted piece that said municipalities should enforce the terms of a participation agreement made when giving a business LEDA funds if that business did not meet the terms of its contract.
In this case, the money was lent to Sunland to purchase equipment for its factory to aid its return to the market.
“We need to file the proof of claim and that provides the city an option to move forward with collection,” Doerr said.
While Doerr didn’t guarantee any outcomes, he said attempting to recoup the city’s funds is a good investment.
“I’m not convinced there are no assets,” Doerr said of Sunland.
He added he wouldn’t make the suggestion if he didn’t think Portales could retrieve its funds.
“We want the funds back, that’s what the ordinance says we should do,” said City Manager Doug Redmond about the state’s Economic Development Act.