Baxter City Council: Agrees to join Unified Fund
BAXTER—Businesses and entrepreneurs will have greater access to about $436,500 in revolving loan dollars as Baxter City Council voted to participate in an area unified fund.
After tabling a vote in October and raising additional questions about putting the revolving loan fund into a general pot and not earmarked for Baxter, the council hosted a public hearing Tuesday.
At issue was a Baxter revolving loan fund created from a 2002 federal community development block grant. The money went to Team Industries in Baxter for a low-interest loan. The money was awarded from the Minnesota Department of Employment and Economic Development through the Minnesota Investment Fund. The city retained the loan payments with the idea of the revolving fund to help other businesses but that rarely happened. Additional requirements with the loan for job creation, wages paid to construction workers and overall interest rates left the money to stagnate, city staff noted in a report to the council.
Revolving loan funds can be an important link for businesses looking for gap funding as they work with lenders for projects.
In the 15 years since the Minnesota Investment Fund dollars were first used, the city made one additional loan. That loan, in 2010, was repaid in full three years later. In recent months, Sheila Haverkamp, Brainerd Lakes Area Economic Development executive director, has been working with a number of municipalities in the area to tap those stagnant funds to create a nearly $4 million unified fund. The idea was to get the money out of fund balances and into community investment.
Janelle Riley, co-owner of Syvantis Technologies in Baxter, said a year ago when they moved into a new building they had an unexpected $200,000 shortfall. The new building, constructed next to another one with the same design and structure, was appraised at a lower amount by $40 per square foot. It all came a day before a loan closing. Riley said she considered the Baxter revolving loan but went to the Initiative Foundation. Riley, who is active in the business community, wondered if other business owners may have known all the options available to them.
"If they know there's that huge pool of money they can try and tap into, I think it's a big positive for smaller businesses the area," Riley said.
Paul Means, RiverWood Bank chairman and Unified Fund Board member, said he hoped Baxter council members had all their questions answered with BLAEDC's due diligence and research to put the process together.
"So hopefully through that we're in a fortunate position of starting to make loans to people who need the money," Means said.
He said BLAEDC came up with a way to make this easier for businesses to get the money working for reinvestment in the community. Means told the council the money should also help the community be more competitive in terms of economic development.
With the vote, the council entered into an agreement for a local development organization with BLAEDC. Administration of the $436,500 will move to BLAEDC and the Unified Fund. The city noted DEED set up the transfer option because a significant amount of the Minnesota Investment Fund dollars were underused. And the additional requirements attached to the original loan are removed after each subsequent loan is repaid.
At Tuesday's meeting, Haverkamp, who noted she is also a Baxter resident, thanked the council for taking the time to learn about the fund and she hoped the city would be a partner. Haverkamp said she looked forward to many great projects in the future.
In previous discussions, council members stated a concern criteria in making loan decisions, public transparency in the process, and a reluctance to lose control of funding dedicated for Baxter.
Tuesday, the council adopted the resolution without additional discussion. Council member Mark Cross was absent. In addition, City Administrator Brad Chapulis was appointed as the city's representative on the Unified Fund Board.