The Crookston Housing and Economic Development Authority (CHEDA) Board approved five Building Better Business (B3) program grants, four of them pending the program’s continued funding by the Crookston City Council on Monday night. The grants were awarded to Heroes Rise Coffee Company ($5,000) with the remaining funds from the original program fund, KROX Radio ($4,000), Golf Terrace Motel ($5,000), Hermreck Construction ($5,000), and Thrivent Financial ($3,000).
Heroes Rise Coffee became the first program recipient to take advantage of the $1,000 for relocating to Crookston. In addition to the Coffee Shop, they will be incorporating their roasting line into the former Cycle of Threads location. Owner Matt VanGrinsven is also a graduate of the University of Minnesota Crookston, which made the business eligible for another $1,000.
As part of the consideration of additional funding, the Ways & Means Committee discussed the B3 program guidelines on December 14 (here), including wanting to see more advertisement of the program, should maintenance items like furniture, carpet, windows be considered, and perhaps including startups that don’t have a brick-and-mortar location yet established. CHEDA Executive Director Craig Hoiseth said a focus group of CHEDA Board and City Council members would meet in early January to review the guidelines and make recommendations. “We had five applications that had been on my desk prior to last week,” said Hoiseth. “This week, we had another application that is still on my desk. But we have seen a significant uptick in the B3 program. The board did agree today to have a focus group in early January. Go through those guidelines with a fine-tooth comb, take into account what the City Council had to say and recommend. Hopefully, we’ll emerge at the January meeting with a better, more refined program. But, certainly, the B3 program has been a winner for Crookston. Have seen a lot of good usage, and a lot of community vitality in helping our customers be more competitive.”
If finalized Monday, the B3 program funding will bring the 2021 budgeted City of Crookston contribution to CHEDA to $205,000. The budget, which was also approved Tuesday, is mostly funded by public housing programs, explained Hoiseth. “It’s just under a $2 million budget,” said Hoiseth. “The board has been massaging this with me for the last three months. The addition of $50,000 more for the B3 program was added on here kind of at the last minute but largely, what we’ve been showing as a draft for the last couple of months is intact. The lion’s share is going toward housing. That’s federal dollars that come into CHEDA.”
LOANS
The board also received an update on CHEDA’s revolving loans. Hoiseth updated the board that three accounts were past due. “We had a couple of past-due loans,” said Hoiseth. “With the start of Heroes Rise, we’re going try and absorb that debt from the previous proprietors there. The Crookston Inn, we still have the UCC (Uniform Commercial Code) there (against former owner Todd Jacobson). And the final one was A+ Brakes. A+ Brakes essentially has left town, so we’ve been doing some work to try to recover some of the security and collateral associated with that loan. We’ve been going through the proper legal channels to try to get ahold of that security. We’ve been able to bring some of it back home here to us, and there are still some other outstanding items we’re going to try to get our hands on.”
The A+ Mobile Brakes loan was issued to Paul Kezar in 2016. Hoiseth said a Harley Davidson had been secured as a portion of the collateral. Kezar also had a pickup and trailer as collateral that they were unable to secure. Hoiseth said that because that equipment wasn’t received, Kezar is scheduled to appear in Crow Wing County Court in January.
The board also moved to extend the terms of a loan to the Prairie Skyline Foundation through March 31, 2021. The loan is being repaid by a grant the foundation received. However, some work has been delayed until 2021, so the grant payments are delayed until work is completed. The remaining balance on the $75,000 loan issued in July is a little more than $18,000.
They also approved a new loan to developer Jeff Evers, who has made changes to the Fournet Building renovation, including new first-floor storefronts, a third-floor event center, and a skylight (here), which will require additional funds. Hoiseth said the new loan is more conventional than previous loans to Evers. “He’s been doing some other renovations in the Fournet Building,” said Hoiseth. “He found some interesting stuff, made some decisions to make it even more spectacular. That totaled just under $500,000. He was looking for us to fill in the gap. The primary lender will do 80 percent, with CHEDA doing 20 percent. He asked for a $100,000 loan. That isn’t with really great terms in his favor. We gave him more of a conventional, so we gave him a 15-year straight interest loan. But the interest will be accruing. He has to pay principal and interest on that, unlike what we got going when we did the TIF (Tax Increment Financing) District.”
COLBORN DEVELOPMENT/PROPERTY PURCHASE
Hoiseth notified the CHEDA Board that included in the state bonding bill passed earlier this month was funding for infrastructure to build a road on the Colborn Property to connect to the Ag Innovation Campus. “We were able to receive $895,000 through the Capital Investment Program, which is the bonding bill,” said Hoiseth. “That will be enough to largely pay for a road that goes in on the east side of Ag Innovation Campus. We might have to come up with some dollars to design that road. But other than that, we plan to put that forward this spring in conjunction with the Ag Innovation Campus being built.”
Hoiseth said they are also looking at applying for a Business Development Public Infrastructure (BDPI) grant from the State of Minnesota for developing the infrastructure on the remaining acres of the Colborn Property as part of the plan to locate Vertical Malt, Epitome Energy, and other future business development on that site. “When you consider Ag Innovation Campus and Epitome Energy all together and trying to bring that full 100 acres into play, there is a lot of infrastructure needed all around the perimeter of that,” said Hoiseth. “We’re going to be looking at how we can apply for some BDPI funds to see how we can assist those companies down on the south end of town.”
The CHEDA Board also authorized two land purchases in their recent closed session. The purchase of a lot in the Nature View Estates for the Construction Trades (CT) class at Crookston High School, and the other the purchase of an additional 60 acres east of Nature View Estates for future housing development. “The board had approved purchasing a lot, and now CHEDA is the owner of a lot on the east side of Eickhof Blvd,” said Hoiseth. “That’s a good target spot for the CT house to be built on that end of town. Easy for the students to access and things like that. Furthermore, last week the CHEDA Board had a closed-door meeting and had a consensus to try to purchase the 60 aces east of Eickhof Blvd. That’s Bob Herkenhoff’s land, and Bob is really looking to get out of the development business. This was an opportunity for us to establish some future housing district for many years to come. So, the board was doing that in the closed session, and then, today in the open meeting, I wanted to make sure to announce that to the community that we were moving forward with that acquisition.”
