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EDA and DEED agree on Rushford relief package


Fri, Oct 26th, 2007
Posted in Government

RUSHFORD - The Rushford EDA quickly and unanimously approved taking a second-bite at the disaster recovery apple in a special afternoon meeting.

As outlined by consultant Chuck Pettipiece, a revised community application - pre-approved by DEED - would be submitted to the city council for approval in back-to-back meetings on Monday, October 22 before being submitted to DEED for final approval on Tuesday.

Highlights of

the Revised Plan

• Flood damaged businesses - referred to as Category-1 - would be eligible for loans up to 90-percent forgivable. The 10-percent portion repaid would be returned to a City economic development fund. Repayment interest rate would be set at 1-percent-plus-servicing for an estimated rate of around 2-percent.

• Category-2 businesses, those undamaged but financially disadvantaged by the flood, would be eligible for low-interest loans only.

• No funds would be repaid to the State revolving fund.

• No businesses would be eligible for pre-flood loan refinancing.

• The initial round of loans would be capped at $750,000 per business to ensure that $17-million in funding made available for Rushford businesses would service the entire business community. Funds remaining after round-one would be available to businesses with remaining needs.

• Loans would be available for businesses to change or expand their pre-flood condition. For example, businesses would be allowed to borrow under special terms to relocate within the City, to purchase real estate and/or build new facilities in another location.

• Recovery loans would be available until June 30, 2009.

• SBA loans would not be required.

• Personal data requirements would be minimized.

For the local business community as well as all of the elected, appointed and consulting officials who've worked since the flood to estimate damages and negotiate disaster recovery terms with State and Federal bureaucrats, the revised community application signaled a hard-fought shift in policy. Previous "deals" offered by DEED featured far greater forgivable-to-repayable shares. Low-interest-rates had previously been set at 4-percent. SBA loans - and the attendant reams of paperwork filled with personal data about ownership, partnership and family - were at one time prerequisites to State funding. That's been changed. And, up until the October 17 Senate hearing in St. Paul, half of the repayment would have revolved into a DEED-controlled fund for development projects not limited to the disaster area.

Discussion

EDA member Brad Woxland asked about the shape of the loan-making committee, to which Pettipiece replied, that because of the simplified eligibility and documentation requirements, the committee could be small. "Three from EDA and a technical person," Pettipiece said. "If you've been damaged, if you own the property or inventory, you qualify."

"Will we need to revisit this? Are there reporting requirements?" Woxland asked.

"Yes," replied Pettipiece. "We'll track this and file annual reports.

"Who is us?" inquired EDA member Roger Metz. "We want people to get the loans, but we also want to make sure this is done right."

"There are a couple of Us-es," said Pettipiece. "There's EDA, the city council, technical advisors, and the SBDC."

Woxland asked, "Will every business be serviced by this plan?"

"The numbers are just about right," answered Pettipiece. "FEMA is helping some of the businesses with big losses, like Tri-County Electric. Some of the other businesses, early estimates of say $500,000 have turned into $200,000. We're comfortable with $15-$17-million."

"What about rental property?" asked EDA and council member Nancy Benson.

"Rental housing and apartments are not here yet," explained Pettipiece. "But MHFA [State housing authority] is working on that. This plan is okay until we add rental property. A couple big apartment units and we come up short."

"I assume if the State is to approve this, not just anyone who walks in off the street can get a loan," said Metz.

Woxland added, "This is not a check you can go out and cash. Dollars will have to be followed by receipts."

"It's a high-risk loan," said Pettipiece. "Everybody must make their payments."

"Is flood insurance required?" asked Woxland.

"It's a local decision," responded Pettipiece. "When Paul Moe [DEED deputy commissioner] looked at the 90-percent forgivable loan, he said we were basically underwriting flood insurance."

After EDA members voted to approve the revised plan, City Administrator Windy Block reminded the panel, "What we have here is a framework. Tomorrow we'll have to take up drafting the policy."

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