The Crookston Housing and Economic Development Authority (CHEDA) board met on Tuesday morning at Valley Technology Park. A busy meeting included the sale of two properties on Hoven Lane and the approval of two loans, one for housing rehab and the other a revolving fund loan for a new owner of Cofe`.
Much of Tuesday morning’s discussion focused on the future of Cofe`, which closed in September after first being listed for sale in 2017. The prospective lender and future owner of Cofe`is Jerry Snow, who owns Chickadee Coffee Roasters and is an operational partner of the Roasted Pub and Eatery in Detroit Lakes. “Obviously we’ve had a bit of a void with [Cofe`] being closed,” said CHEDA Executive Director Craig Hoiseth. “Arby’s closed operations, we had a fire at [El Jariepo] and with Cofe` we have had limited choices the last few months. Jerry is looking at reestablishing Cofe` with a different culture of coffee as communication and a business model with an exciting product.”
Snow brings a diverse background to the coffee industry with degrees in geology, astronomy, and education. He has taught science in high school and at Bemidji State University. A self-declared “coffee snob,” Snow believe that coffee “can be the vehicle to a discussion on many social and economic issues such as equitable pay for women, environmental change and sustainable organic farming. He said Crookston could serve as the staging ground for his business’ expansion into northwest Minnesota and northeast North Dakota, saying he believes Crookston “is on the cusp of opening up to the third wave culture.” The third wave is a term often used in coffee circles that refers to “a current movement to produce high-quality coffee and consider coffee as an artisanal foodstuff, like wine, rather than a commodity.”
The loan that was approved by a unanimous vote from the board will provide Snow with $85,000 payable over 10 years, with a fixed interest rate of 4.5 percent. The loan would put CHEDA in line as the primary lender, a position they normally avoid, as no local lender has currently agreed to take on the primary debt from the original business. “I don’t want us to be the bank, but if the banks don’t want to work with us, we have to keep businesses,” commented board member Steve Erickson. The funds for the new loan would be used to retire existing debt to CHEDA and the primary lender previously associated with the business and for start-up operations of bringing the business back online. “CHEDA’s role is preferably a gap lender, but if no primary lender steps forward wanting to finance an operation we’ll definitely consider that,” said Hoiseth. “The board did have a discussion about being the primary position, [which] is definitely not something we want to do but in a needful situation in order to get business up and going the board is willing to consider those hard decisions.”
Snow said he really wants to do well in the morning with amazing coffees, organic foods like eggs and potatoes for breakfast burritos and sandwiches as grab-and-go style options. During lunch, they would like to have artisanal wines, craft beers, soups and sandwiches as a specialty bistro also including cheese boards and wine pairings. Snow plans to source many of the foods and drinks, coffee excluded, from producers in the local area. When asked by board member when he’d like to open, Snow joked “I’ll open Monday.” There a still a few procedural items that will need to be included, but Hoiseth said Cofe` may be able to reopen by the end of the month.
The meeting opened with the approval of the minutes from the September meeting minutes, followed by an update from Nancy Vyskocil on the Northwest Minnesota Foundation explained Hoiseth, “The foundation has done some strategic visioning and realigning.” He added, “The foundation has been such a great partner for the City of Crookston in the past and we wanted to hear how we can be a good partner with them.” Vyskocil is the president of the Northwest Minnesota Foundation.
The board then approved the sale of two properties on Hoven Lane (1603/1615) to the Northwest Minnesota Housing Cooperative. The board also approved the final CHEDA budget for the upcoming year. “Last month at the board meeting we had the draft budget and we’ve been working all those numbers over the past month with various board members and stakeholders,” said Hoiseth. “We’ve incorporated all the changes and edits and today the board approved the budget for 2019.”
The final two topics on the agenda also dealt with loans, one discussing an increase in interest rate for delinquent loans through CHEDA and two loan approvals. Although most loans have been repaid to CHEDA within the timeframe set in the loan contract, there have been occasional instances where a loan recipient hasn’t paid off the loan in time. Board member Tom Vedbraaten said he believed that once the original term is up, the interest rate on the loan should go from the percentage set in the loan terms by CHEDA (which is often two percent), up to prime (the current rate being charged by banks) or even a little higher. Although the rest of the board seemed to agree with Vedbraaten, they decided to table the decision until their next meeting to allow time to review the change to the board’s lending policy.
The second loan approved during the meeting was a rehab housing loan to David and Melanie Lessard for the property at 1128 N. Broadway. Lessard purchased the home in 2015 and have been rehabbing the house over the past several years including a previous rehab loan in April 2017 for an addition and rehabbing the exterior of the house. The previous loan was paid off, with interest in the year time frame required by CHEDA for rehab loans. The new loan will be used to work on completing rehab work to the interior of the home with sheetrocking, wiring and trim. The appraised value of the house has increased by $53,900 since work began in 2017. “David and Melanie are going to finish their house and they’ve done a fantastic job there,” said Hoiseth. “Those loans are easy to initiate and have a 2% interest for one year.” The loan was approved and will be done one year from the date of the loan and will be grandfathered into the current program, as will other loans already approved, without the risk of the interest rate jumping to prime should the final payment date be missed.
