The Crookston Housing and Economic Development Authority (CHEDA) board met on Tuesday morning and voted to liquidate the assets from Cofé Bistro to cover a portion of the $115,000 debt the business owes.  CHEDA Executive Director Craig Hoiseth said there are several pieces of specialized equipment that should be quite valuable. “I had some discussion with Jerry Snow the proprietor of Chickadee Roasted Coffee (Cofé) and we did decide today as a board we’d move forward with the liquidation of those assets,” said Hoiseth.  “There are some pieces of equipment there that are very valuable and other décor and things like that.  We are going to put those up for sale.  How we move forward on that liquidation process we haven’t decided fully yet, but the board did give the authorization to proceed.”

Hoiseth said he has also been contacted by employees that are still waiting for payroll.  Additionally, Cofé has appeared on the Minnesota Department of Revenues tax delinquency list for liquor, beer and wine sales since May. The $115,000 outstanding loan from CHEDA is the joint debt to Cofé and Cycle of Threads that was taken on when the business changed hands.  Hoiseth says he believes there is about $45,000-50,000 in assets from Cofé.  “The Cofé loan was about $85,000 and the Cycle of Threads right in that $30,000 number,” said Hoiseth.  “Those were jointly put together when the Bjorgo’s sold to [Snow].  We have something on the north side of $100,000 there.  We see the assets coming in at $45,000-50,000 so, there will certainly be a shortfall there.  We did discuss other business opportunities, but we thought the best thing to do was to liquidate those assets, put that in an escrow account and come back to the CHEDA board as to what we want to do after that.”

Another issue that has arisen is the timeline for the APG Development south of Casey’s General Store on N Broadway.  Originally, intended to be started this fall, the City of Crookston had several issues on their end pop up and have in turn delayed the development which has frustrated investors.  Hoiseth said he hopes it will move forward in the spring but imagines the developers will be looking at other investment opportunities as well could mean Crookston loses the development.  “I haven’t confirmed that with them, but certainly the timeline has slipped a bit because it got to be too late in the year for concrete pours,” said Hoiseth.  “We’re not moving forward with that development this fall so I imagine that they are looking at their other investment opportunities as well.  But certainly, we hope to move that forward in the spring.”

The delays came about as the City of Crookston became aware of certain additional steps they must take for buying and selling property because they have a comprehensive plan.  Hoiseth said, unfortunately, APG Development was the first that had to experience this as the new steps came to light.  “I think we have to be honest about it that we found out some things that if you have a comprehensive plan you have to have more public hearings,” said Hoiseth.  “When you have business subsidies in play it requires more timelines and all that needs to be built-in.  Unfortunately, they were the first ones that had to experience this.  We thought when we got through the planning commission and approval on selling land, we would be good, but there were other layers to go through.  It’s nobodies’ fault, it’s just different responsibilities and something we have to be aware of if we’re going to buy and sell property down the road.”

On the Epitome Energy front, the Department of Agriculture is still providing $1 million in matching funds towards the Epitome air permitting and environmental assessment, but they have decided that rather than providing that money quickly through a one-to-one match, they want to provide that over a four-to-one match.   Hoiseth said that CHEDA sees it as reducing its leverage amount and that reduction will be considered by the advisory committee next week.  “Essentially, the City of Crookston and CHEDA board have agreed to provide a loan to Epitome Energy for $250,000,” said Hoiseth.  “The Department of Ag has stated they will provide the $1 million of matching funds.  We thought the matching funds were going to be at one-to-one, but it has been revealed that the Department of Ag wants to see every dollar they invest matched with $4 that are invested from either the private sector or from us.  We see that as reducing our leverage so we’re going to slow it down a little bit and talk about at the advisory committee if that is palatable.  And then at what speed we disburse that $250,000 towards the air permitting and environmental assessment worksheet.”

Last month the CHEDA board put $50,000 in leverage down hoping that would leverage the remaining $450,000 from Minnesota Housing for the Oak Court apartment project after bids came in significantly higher than expected.  CHEDA was notified last week that Minnesota Housing did agree to fund the remaining shortfall according to Hoiseth.  “We had a shortfall from $1.5 million to $2 million in the project,” said Hoiseth.  “We reduced our leverage amount to 10 percent, so $50,000 of that $500,000.   Minnesota Housing then stepped up to the plate and announced last week that they were going to supply us that other $500,000.  That allows the entire project to move forward and will probably take until the end of 2020 before we see completion.”

Hoiseth also informed the board that after getting permission to start the project early, they discovered asbestos during the demolition of the first units.  “We do have a pending loan closing for $1.7-some million dollars,” said Hoiseth.  “So, we will be going indebted onto that loan in the next four to six weeks with an anticipated closing before December.  We have been given the green light for an early start by Minnesota Housing.  We found some asbestos in the bathrooms under the second layer of linoleum so, we’re looking at mitigating that asbestos the best we can.  That will take a little dip into our contingency funds on the program but overall the project was initiated.  And we’re excited that our local supply chain will see $750,000 of local dollars that will continue to circulate in Crookston.”

The board also approved the rate for public housing at Oak Court, which CHEDA sets at 80 percent of the U.S. Department of Housing and Urban Development (HUD) suggested market rate.  The rates, $408 for an efficiency apartment, $496 for a one-bedroom, and $632 for a two-bedroom, are down slightly for last year.  Hoiseth noted to the board that if that trend were to continue going forward CHEDA may want to consider increasing their percentage of the market rate to not adversely affect the local market.  “At the public housing at Oak Court we don’t want to be in direct competition with the other people that have apartments for rent in town,” said Hoiseth.  “We recognize there is a sliding scale and HUD comes out every year with a flat rate recommendation.  For our region this year it lowered a little bit which has not been a typical movement.  We did talk that if it reduced any further that we may want to bump up that percent so we’re not providing extra support or subsidy needed for our apartment building.”

Also approved was an increase in the HUD Capital Funds Grant of $400, the authorization of the public housing Civil Rights Certificate, and yearly renewal of the public housing agency plan.  The board also received the tour schedule for Manufacturing Week, which will be October 28-October 30. 

Manufacturing Week Tours:

October 28 at 2:00 p.m. – Eickhof
October 29 at 9:00 a.m. – New Flyer
October 29 at 10:15 a.m.  – American Crystal Sugar Company
October 30 at 9:00 a.m. – SunOpta
October 30 at 10:15 a.m. – Dee Inc.