At the January 22 meeting, the Rushford City Council held a public meeting regarding a business subsidy to three entities related to one business. The revolving loan subsidy request from Brilliance Web Design, Inc., NL Acquisition CO LLC, and DWEL Properties LLC relates to the purchase of the Johnson & James Properties: Norsland Lefse LLC and Norsland Bakery & Café LLC.
The request from Brilliance last month was contingent on the appraisal of the building, which was incomplete at the time of the request. Rushford Economic Development Authority (EDA) required additional information from the company before consideration of approval. The company provided all requested information to the EDA.
The new loan request is for $270,000 with no payment during the first year, at 2.5% interest for 20 years. The loan also features $5,000 forgiveness per year in years six through 10 if the business is still operating in good standing order with the EDA loan terms. The current amortization will be $1,466 due to the city per month.
On the collateral side, the city will have first place on the Universal Commercial Code (UCC) filing. The bank financing most of the loan for Brilliance offered the first position on the filing. While there is no inventory related to this first position, it is the business and intellectual property. It is not fully collateralized due to the dollar amount and funding from the bank. Still, legal review indicates the UCC filing is a good thing.
“This is an ongoing homegrown business. It has great value in town and there is growth potential for it,” said City Clerk Kathy Zacher. “With personal guarantees and UCC filings, there are methods to go after and collect if need be.”
“It’s also a tangible product to be sold,” noted Mayor Terri Benson, referencing previous EDA lending. “The potential was not being met only because they were trying to retire, for lack of a better word. A new entity coming in bodes well if they can take and run with it.”
“I’ve been asked why would we do this,” added Councilor Jim O’Donnell. “This is a physical property. It’s not an idea or a venture capitalist loan.”
Councilor and EDA member Leigh Volkman referenced the business’s financial plans and the EDA’s green light for the loan. “It’s realistic based on current business.”
Brilliance will put $153,000 of its funds into the business during the first year. The company provided a case study of their previous work with other businesses to support their skill set. The loan will help fund the property and business acquisition. The business will focus on expanding its digital marketing. The bakery and café will remain open. The council approved the EDA recommendation unanimously.
In other news, Rushford Fire Department Chief Chad Rassmussen provided an annual report to the council. Of note are two, potentially three, openings in the department. While there are no retirements, some firemen are stepping down due to work schedules. The city will advertise the positions, and department officers will conduct formal interviews with applicants. Those chosen will then go out with training officers Nick Smith, Paul Corcoran, Logan Brand and Paul Smith. Candidates will take a physical test to ensure they are fit for duty. Rasmussen will then recommend to the council to bring the candidates on board.
Thanks to several donations and grants, the department saw upgrades to the building and equipment last year. However, there are remaining repair and replacement costs coming up. The department is holding Public Safety Funds from 2023 for future equipment or emergency needs. The most significant upcoming cost is the replacement of all turnout gear (pants and coat). Occupational Safety and Health Administration requires replacement every five years. Rasmussen anticipates the cost to be $3,500 per set, and the department needs 30 sets.
“The cost was $50,000 in 2017. We all know things are going down in price,” Rasmussen quipped. “We’ll do whatever we can do for the cost savings part of it.”
The council approved a Quit Claim Deed to the Hoiland estate for land the city was allowed to use as a ski hill years ago. It will allow ingress/egress for land at the end of Winona Street, next to the Oak Grove Cemetery.
The council also considered but has yet to decide on a flower basket review from Roger Colbenson. The city purchased 54 baskets, plus fertilizer, for $2,610 last year. This year, the city would be looking at just 50 baskets due to construction at the depot. The estimated cost is $50 per basket, plus fertilizer, for $3,021. The council will wait to ensure the Lions Club can continue to assist with watering before making any decisions.
The next regularly scheduled meeting is Monday, February 12, at 6:30 p.m. at city hall. The public is encouraged to attend.
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