KEDA Board hears about loan program

“Our business helps keep the community rolling, literally and figuratively,” Hall explained, noting the various truck-dependent operations that they serve. “This economic loan will reach further than our business,” she said, citing lower costs and less hassle for clients because their repair service is available.

The KEDA had previously agreed to loan $5,000 to a qualified business accepted into the second round of the Grow Minnesota program, in conjunction with the Minnesota Chamber of Commerce and the Pohlad Family Foundation.

Kooch County Diesel was awarded a total of $20,000 in a short-term, low-interest loan of which $5,000 came from the KEDA and $15,000 was matched by program funds. KEDA director Paul Nevanen explained that the authority’s portion of the loan would be repaid before the foundation match.

Jensen said that two local companies’ proposals were submitted to the program, and Kooch County Diesel’s was the only local company accepted. Several stipulations were placed on recipients, including a rejection from a bank for a similar loan.

Hall described the challenging situation that her company has overcome, saying that the struggling economy “knocks the wind out of you” at times. She explained through tears that two employees, who are also her brothers, were laid off this year due to the difficult economic situation. Having the funds to continue, and possibly rehire staff, is important, she said.

“Having this board and the Chamber of Commerce say, ‘We support you’ is just great,” Hall said, thanking the board for their involvement.

“It’s hard as entrepreneurs to keep things going,” board chair Wade Pavleck agreed. “Perseverance — that’s what it takes.”

The KEDA board voted unanimously to finalize the three-year, 3-percent loan for $5,000.

Litigation update

The board heard an update from its attorney, Joe Boyle, about the KEDA’s involvement in litigation surrounding the Koochiching Freshwater Fisheries project.

Boyle explained that the KEDA had provided a deed to the developer in July 2007, but had no money involved in the project. Boyle reports that four contractors involved in the project claim they are owed money. KEDA had backed out of the project when Boyle said that he noticed it was going to end “like the Titanic.”

Boyle recently was in court on behalf of the KEDA, and Nevanen gave a deposition on the authority’s involvement in the project. Boyle said he brought forward a motion for summary judgment that would clear a way to end KEDA’s involvement in the litigation.

“I’m very confident we’ll prevail,” Boyle told the KEDA board. “We just gotta go through this process ... The truth and facts are on our side.”

Sen. Tom Saxhaug

In other business, state Sen. Tom Saxhaug spoke to the group about his take on the local and statewide economic climate. Stability and positioning for the future were mentioned as important concepts in riding out the economic downturn.

He said he questioned that the state has not raised taxes in seven years, noting that many local governments have increased their local taxes to make up for shrinking state funding.

“Local school districts, cities and counties get to pick up the slack,” Saxhaug noted.

Board member Gail Rognerud agreed that increasing local taxes was a burden on the taxpayers, saying that it was a “horror to do that to citizens.”

When Saxhaug asked the board to let him know of anything he could bring to the Legislature, Rognerud joked, “Dear Dad, send money.” Saxhaug simply responded, “Dear Tim,” referring to Gov. Tim Pawlenty.

Saxhaug compared the current economic climate to a caution for a collision during the Indianapolis 500 car race, where many drivers take the opportunity to get new tires and fix their cars. He said he understands the city and county’s issues, but that, “You gotta proceed on.

“We want to be in good shape when the economy comes back,” he added.

In spite of funding concerns, Saxhaug said, “Things are coming along here, there’s no question about that.” He noted that Boise Inc. was a strong member of the community, that the Rainy Lake Medical Center hospital was low in debt, and that he felt good about the future of Rainy River Community College.

“This is not a good time to cut back on economic development,” he warned.

The next step is to get involved in reviewing business plans, he said, which would allow groups such as the KEDA to know which projects are ready to proceed and which are not good investments.

Budget issues

Nevanen provided the board with several options for a 2010 budget. Differences in the budgets centered around International Falls and Koochiching County funding and the status of the Small Business Development Center consultant position held by Jenny Dougherty.

Nevanen said expenses for professional fees, marketing and advertising, office expenses, and travel would remain fairly consistent with 2009 budget levels. Employee expenses would be increased in 2010 with a step increase for KEDA Administrative Assistant Dixie Kalstad and the potential, per budget approval, to increase Dougherty’s position to full time.

Alternate board member Soren Olesen asked for what estimated carry-over balances from the cold weather testing facility fund were earmarked. Much of the deficit in KEDA operating expenses would be covered by current CWT profits, but both of the potential budgets that Nevanen presented had the KEDA running in the red. Carry-over profits from CWT funds would need to be used to pay for the remainder.

Board member Mike Hanson said he wanted to express that he “cannot buy into scenario budget one because we (the county) don’t have enough money to give $50,000.” Neither the county or the city have formally told the KEDA how much money they will provide to the agency.

The first budget scenario had the county and city each contributing $50,000 to KEDA annually. Historically, KEDA had received that amount from each the city and county, but in 2008 that amount was reduced to $25,000 each; that funding level was continued in 2009. Second and third budget scenarios had each entity contributing $25,000 again, with the difference being the SBDC position hours.

The board agreed that a newly formed KEDA Budget and Policy Committee would review the budget options to make for an informed discussion at future KEDA Board meetings.

KEDA Board News Notes

• The Koochiching Economic Development Authority Board approved the creation of a Budget and Policy Committee to review the group’s current policies and oversee the creation of new policies. The creation of several new policies was recommended in the KEDA’s annual audit. The committee will also review the budget and make recommendations to the board. The committee will consist of board members Mike Fairchild, Allen Rasmussen and Penny Strongman.

One of the committee’s first tasks, along with reviewing the proposed 2010 budget options, is to consider if alternate members Penny Strongman and Soren Olesen could fill in as-needed for either of the at-large board members Mike Fairchild and Allen Rasmussen, since they are not elected officials.

• KEDA Director Paul Nevanen noted in his director’s report that he and Commissioner Mike Hanson will travel to Pittsburgh to tour the Westinghouse plasma gasification facility. They will be joined by members of Coronal, engineers from HDR Inc., and representatives from the Minnesota Pollution Control Agency. Coronal is partnering with the county to develop the Renewable Energy Clean Air Project facility.

Nevanen also noted that they have completed three more tasks in the feasibility study for the RECAP facility and expect a draft report to be completed in December.

• Dave Serrano, Arro of the North, and Koochiching Land Commissioner Dennis Hummitzsch are exploring a possible wetland-mitigation strategy for a foreign trade zone east of Ranier that would be more cost-effective, Nevanen explained. A meeting has been scheduled next week to discuss the strategy in more detail.

• As part of the treasurer’s report, Strongman noted that part of the budget was to continue with audit firm Walker, Giroux & Hahne. The board voted to retain the firm’s services next year with a budget not to exceed $4,300.