At the October 21 meeting, the Rushford Village council welcomed Community Economic Development Associates’ community and business development specialist Jayme Longmire. Along with City Attorney Joe O’Koren, they discussed options for using the Revolving Loan Fund to bolster business and housing needs. The fund currently sits at over $200,000 and is not being utilized by anyone.
The purpose of the revolving loan fund is for business establishment or growth, serving as gap financing for eligible projects. Longmire looked into Minnesota state statutes regarding the funds, which were initially given for flood recovery, to determine allowable uses. She also contacted the Minnesota Department of Employment and Economic Development, which provided the funds. In particular, Longmire looked into whether or not the funding can be used for housing development and infrastructure upgrades should the village decide to create a subsection of the Revolving Loan Fund for those types of projects.
Based on the original purpose of the relief funds, O’Koren noted one statute did present an issue. It requires the establishment of a business development corporation and with it, a board. After review, O’Koren didn’t believe it was a benefit to the village.
“I think it’s a great idea, in theory,” he added. “The bigger scope is that development is just expensive. Even if you do have these sorts of funds available for infrastructure, that’s only going to cover a certain portion of the project.”
In development projects, the financial security in the development agreement needs to be put up front. This calls for enough money at the forefront of any development. Other concerns include lots not selling and project guidelines of workforce housing. It is clear the funding is not intended for 2.5-acre lots in the village’s current subdivision guidelines.
“I think we ran into a dead end with the statutory framework they sent us,” concluded O’Koren.
Councilor Bob Hart laid out a potential scenario where the Revolving Loan Fund could help existing businesses continue. This would fall under the fund guidelines, functioning as a low-interest loan to remain functioning, providing both jobs and revenue. It was noted that fund loans to businesses are to LLCs and corporations. It’s unclear if a sole proprietorship business would qualify. Qualifying businesses could utilize the funding not just to continue in business, but for expansion as well.
As for opening up the funding for housing and growth, Longmire noted there are a few landowners possibly interested in development. “That’s where this would get tricky,” she noted. “Opening up the fund for those types of applicants is where we just can’t allow that.”
However, if an established developer wanted to create an area of workforce housing, the funds could be used as gap financing for infrastructure. Loan limitations are currently at $30,000, although some other municipalities provide upwards of $100,000 in funding to eligible applicants, including large companies showing a primary financing commitment elsewhere and where the amount provided is not more than 50% of the total project. Interest for these types of loans typically sits between 2-3.5% percent, depending on prime rates.
“I know there’s this huge talk of housing and how do we explore these options,” said Longmire. “We need to look at our capabilities and guidelines, talk to Joe, see what can we do to help incentivize.”
If the village developed a subset of the Revolving Loan Fund, it could include a fix-up type fund for signage or other needs, added into the current guidelines. The village could also develop a limited amount, micro-grant program. These could be forgivable if the business receiving it remains in business for a set number of years or meets some other criteria within the guidelines. .
In other news, the Personnel Committee recommended the hiring of Adam Johnson for the position of part-time Public Works/Maintenance employee. Johnson was interviewed by councilors Hart and Rick Ruberg, Public Works Supervisor Darrin Dessner, and City Clerk Mary Miner. Johnson will begin after October 30. He is well-qualified with the department equipment and already has a Class A CDL license.
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