The Brainerd City Council Monday night decided to contribute one fund to the Brainerd Lakes Area Development Corp. unified fund.
The council approved a motion to designate BLAEDC as the city’s local development organization and to contribute the city’s federal Minnesota Investment Fund dollars to the unified fund. The revolving loan fund’s cash balance is $463,207.
A revolving loan fund offers gap financing for businesses. The business owners pay back those dollars to the fund, which can in turn be used to fund other businesses.
Two motions from council member Kelly Bevans to contribute 100 percent and then 50 percent of the city’s state MIF funds to the unified fund failed for lack of a second. Unlike the federal MIF funds, the state MIF funds can take advantage of a one-time exception passed by the state Legislature in the most recent legislative session. This exception allows cities to return 20 percent of the cash balance of a state MIF fund to the state, while retaining 80 percent of the balance for a use other than economic development.
Past council discussion has revealed a preference to use this exception to fund one-time capital repairs, possibly to the historic water tower, or to contribute funds to a local development effort, like the River to Rail initiative. A memo from Finance Director Connie Hillman noted the council has until May 2018 to discuss how to use these funds. Of the $158,053, the city would retain $126,442 in this scenario.
The council approved a motion to appoint council member Gabe Johnson as the city’s representative on the unified fund board. If the council decides to contribute state MIF funds to the unified fund as well, the city would gain another representative on the unified fund board.
A series of people spoke in favor of the city joining the unified fund during a public hearing on the issue. The hearing was about whether to designate the corporation as the city’s local development organization for purposes of administering the city’s existing revolving loan fund.
Jerry Sinner, president/chief financial officer at Stern Companies, told the council about Stern Companies’ growth over the years to a company with 60 employees at multiple locations in the area. It’s important for businesses to grow at their own pace, he said, and having a unified fund makes it easier to businesses to access funds and grow.
“You need to allow them to grow through their own path in their right facilities in that right location that works for them,” Sinner said.
Eric Charpentier, Cuyuna Range Economic Development Inc. director, said regionality is the key to the unified fund. Funds may be used outside of Brainerd, but the region will benefit as a whole by getting the funds at work in the community, he said.
“Our hope is that as this unified fund continues to grow, that every partner that comes to the table with the unified fund, is going to see that value,” Charpentier said.
Jeff Grunenwald, owner of GreenForest Recycling Resources, said his company was the first recipient of a loan from the unified fund. His company has been blessed with growth, he said, but the growth comes with capital challenges. The loan has helped him pay employees and bills while his company grows, he said.
“That just kept us going,” Grunenwald said. “And without that, it would have been a huge challenge to keep our growth.”
Mike Larson, chief operating officer of Essentia Health-St. Joseph’s Medical Center, said the value in the unified fund comes from getting the funds out working in the community. Paul Means, chairman and director of RiverWood Bank, said the money has been sitting idle and the unified fund gets the funds out in the community.
Kim Ellingson, president of Bremer Bank in Brainerd, said she sees the need for businesses to have streamlined access to capital. It’s a confusing process, she said, and the unified fund makes the process easier.
Tom Haglin, owner and president of Lindar Corp., said funds are tough for young entrepreneurs to access. Joining the unified fund puts public funds to better use, he said.
Unified fund background
About a dozen local municipalities have pools of money in local revolving loan funds. These funds can be a helpful aid for businesses looking for gap funding as they work with lenders for projects. Sheila Haverkamp, BLAEDC executive director, presented an idea to combine these funds into a unified fund. Instead of navigating multiple application processes for multiple funds, there would be a single streamlined application process.
Each fund in the unified fund would retain its specific restrictions, but an applicant won’t know what the restrictions are. Behind the scenes, BLAEDC staff will evaluate an application and determine for which funds each project qualifies.
Each organization that contributes a fund to the unified fund will get a seat on the unified fund board. Because Brainerd could contribute two revolving loan funds to the unified fund, the city could get two seats on the board. The board has the authority to approve loans, but loans of $300,000 or more would need approval from the unified fund board and the BLAEDC board.
There are only two ways for the city to leave the unified fund once it commits to the fund. If the fund isn’t doing its job, the fund participants can end the unified fund. If BLAEDC ceases to exist, so does the unified fund.
In other business, the council:
Accepted a bid for 2017-18 downtown snow removal from Tom’s Backhoe Service. Tom’s Backhoe was the only contractor to respond to the city’s request for bids. The base bid for 4 inches of snow is $5,977 and each additional inch of snow is $1,597. This represents an increase of about 5 percent over last year’s unit prices.
Called for applicants for one term on the Charter Commission, two terms on the Transportation Advisory Committee and one term on the Park Board.
Approved a lawful gambling application to conduct excluded bingo submitted by St. Andrew’s Catholic Church, 1108 Willow St., for bingo events Nov. 18.
Approved a temporary beer license submitted by Friends of the Library for an event Nov. 10 at the Brainerd Public Library, 416 South Fifth St. Approval is contingent upon a background investigation.
Approved a tobacco license, fill station license and off-sale beer license submitted by Casey’s General Store, 850 Lum Park Road. Approval is contingent upon a background check and fire inspection.
Approved a contractor payment to Tri-City Paving for a change order on the Jackson Street resurfacing project in the amount of $2,470. The change order covers the cost of a railing installed at Advantage PCA Services on Jackson Street. There is a large elevation difference between the newly installed sidewalk and an existing walkway at the business. The railing prevents people from falling from the higher sidewalk to the lower one.
Received a written report from Police Chief Corky McQuiston on the department’s activity for the month of September. The department fielded 1,617 calls during the month, compared to 1,395 calls during September 2016.
Accepted donations received from July 1 through Sept. 30. The Parks and Recreation Department received $2,500 in donations, the Legionville School Safety Patrol Training Center received a $275 donation, the Brainerd Fire Department received $5,665 in donations and the Brainerd Police Department received a $300 donation.
Approved a contractor payment to Bolton and Menk for a traffic study on Northwest Fourth Street in the amount of $2,730.
Approved an event/street closure application submitted by St. Francis of the Lakes Catholic School for the St. Francis school marathon, 9:30 a.m. to 12:30 p.m. Wednesday. The event includes closing portions of Juniper, North 10th, Kingwood and North Ninth streets near the school. Students will bike, walk and run in the marathon.