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Rushford Council considers flood loan for business start-up

Fri, Dec 28th, 2007
Posted in Government

RUSHFORD - The process for distributing state flood recovery loans to Rushford businesses, a bumpy ride initially, is becoming more smooth: a flood-damaged business fills out a mountain of paperwork which then goes to the EDA and a special loan committee for approval. After approval at that level, the loan is presented to the city council for final approval before the loan is "closed" at the office of city attorney, Terry Chiglo.

The council did its part in approving sixteen more loans at its regular meeting, rescheduled for December 27 because of the holiday, with nary a bump. Before approving, the council asked consultant Chuck Pettitpiece for assurance that the "bucket of money" wasn't going to run out. For his part, Pettitpiece is reluctant to make promises.

"After 26 projects (loans granted), we look like we're in pretty good shape," he said.

When pushed further, Pettitpiece would only say, "We should have enough...but until we see them all, it's hard to say."

Approximately 30-40 more loan applications are still expected. At this meeting, the council gave the final stamp on loans to the following: Rushford Foods, Rushford Foods, Inc. dba Mill Street Mall, State Farm Insurance, LA's Hair, Evavold and Rutgers Law Office, Chiglo Law Office, Chiglo Properties, Mill Street Fitness, Junction (Darr) Plaza, D & D Car Wash, Rutgers Real Estate, E & L Properties (Evavold), McGeorge's Building, Dennis Overland Insurance Agency, Norsland Lefse, Valley Veterinary, and Becker Mini Storage.

Then came the wrinkle-in the form of a loan application from a business called Rushford Hypersonic with which council members seemed unfamiliar.

There were a number of furrowed brows as both city administrator Windy Block and mayor Les Ladewig explained that Rushford Hypersonic was not yet a business at the time of the flood.

Dan Fox spoke for Rushford Hypersonic, asserting that it fit with the Category 2 loans available to businesses only indirectly affected by the flood. Both Fox and Block reminded the group that Category 2 loans are for the purpose of boosting the economy and bringing jobs to the area.

Deering questioned the idea of using money intended for existing businesses directly affected by the flood to help a 'start-up' business, at which point Kevin Klungdvedt spoke from the audience, explaining that Rushford Hypersonic was connected to RINTek, (Rushford Institute of Nanotechnology) which has been part of the community for six years.

RINTek has encountered funding troubles after being granted a $600,000 "authorization" in a bonding bill approved by the governor, that requires matching funds. Klungdvedt maintains that the matching funds are much more difficult to obtain now that the local economy has been devastated by the flood.

Rushford Hypersonic already has a patent from the University of Minnesota for "the hardest carbide known to man," according to Fox, and will produce cutting tools (drill bits, etc.). Fox maintains that the company would provide 20 jobs initially, then eventually 40, and even 50.

EDA approved a Category 2 loan for Rushford Hypersonic contingent on a number of things, including matching funding from the private sector and meeting all the state criteria for a Category 2 loan, none of which would be "forgivable".

Council passed a cautious motion "encouraging" Rushford Hypersonic to pursue the matching funding with a promise that a loan would be approved if all criteria from both the state and the city are met.


Earlier in the meeting the council was visited by members of the Fillmore County Soil & Water Conservation District Board, led by Water Plan Coordinator, Donna Rasmussen.

Rasmussen began by explaining how the board had secured funding for the sealing of private wells in the aftermath of the flood to prevent future contamination. The SWCD board shared the city's surprise at finding approximately 300 wells where only 30-40 were expected.

Sealing wells is "new" to the board, according to Rasmussen, as well as expensive. The "Cost-Share Assistance Contract" that the city entered into with the board will eventually assist with the sealing of 275 shallow sand point wells at $300 each, as well as 24 deeper bedrock wells at $800 each.

Inspections are required, as part of the funding, every first, fifth and ninth year. If the sealed wells aren't properly maintained, the city would be responsible for paying back the funds at 150%.

Which led to the real reason for the group's visit.

The board has had extensive discussion, according to Rasmussen over the issue of "what assurance do we have that our efforts (well sealing) won't be jeopardized by new wells being allowed on the same sites?"

Rasmussen assured the council that the SWCD would continue to seek funding and assist with the well sealing, but felt that in return there should be "a strengthening of city ordinances preventing sand point wells."

SWCD board member Pam Mensink put an even finer point on the issue. "I'm very concerned that Rushford is still allowing sand point wells to exist. How can you prevent that contamination from happening again, even if you just have a basement flood?"

Mayor Ladewig first thanked the group for their efforts on behalf of the town, then offered two assertions: first, he said, in his opinion, a well with a pump on top "is sealed," as compared to a well with an open head bigger than the pipe that runs down it.

As a second point, Ladewig said, "The jury hasn't completely come back on where the contamination came from. I understand your concern with sand point wells, but it hasn't been proven that's where the contamination came from. I'm more concerned with those 7-8 inch wells that are 500 feet deep," for example, the old city well found under Rushford State Bank.

Before taking action, the council asked for more time to continue with the current sealing of wells-to date only 54 of the 300 have been sealed-before meeting again with the SWCD.

City staff member Jeff Copely informed the group that there were 15 wells to which the city had been refused access by the property owners. Copely says the ordinances can already be found that would not allow these wells to exist, for example, any wells allowed by the city must meet the setback requirement of 50 feet from a sewer line, None of these 15 wells would meet that criteria, according to Copely, suggesting that it's really a matter of the city enforcing ordinances already in place.

Before leaving, the SWCD members conceded that the sand point well problem was not unique to Rushford, and that the flood brought to light a widespread problem the board is gearing up to deal with.

Although it was a tragic situation, the flood "did provide a teachable moment for raising these issues and concerns," according to Rasmussen.

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