The Crookston Housing and Economic Development Authority (CHEDA) held a special board meeting Tuesday morning. The majority of the meeting was held in a closed session related to land sales and acquisition as allowed in MN Statutes 13D.05, Subd. 1 and 3. The open part of the meeting consisted of one agenda item, a proposal for a $1.25 million loan requested by Epitome Energy repayable within one year when the money, $6 million, the Minnesota State Legislature budgeted to the Soy Innovation Campus and Epitome Energy is appropriated in July 2020. The loan requested was at a zero percent interest rate but included a quarter million dollar share in the business for advancing the loan.
CHEDA’s Executive Director Craig Hoiseth said the loan would help jumpstart some of the required permitting and worksheets allowing the ground to be broken more quickly following the allocation of funds from the legislature. “Epitome had put in a proposal that we provide a $1.25 million loan with a one-year horizon,” said Hoiseth. “Essentially the legislature did approve several million dollars for this project, but it won’t be available until the next biennium. That would be of course July of 2020. What we’re going to do this year is consider giving them a loan for $1.25 million right now. That would allow us to jumpstart all the design, engineering, environmental, regulatory, air permitting work, EAW worksheets. A lot of that stuff has long lead times of nine or ten months. What this does is essentially jumpstart the project so were ready next year with air permits in hand when that appropriation becomes available.”
Several members of the board were curious as to the level of risk attached to the loan and whether the loan should have an interest rate. Hoiseth said he believes that once the city and CHEDA have completed their due diligence and the appropriate paperwork, the risk would be minimal especially since the crush facility has strong support in the state legislature with both agricultural committees and the Department of Ag behind it.
Craig Morgan also said he believed the risk was very low and that getting a quarter million dollar share was good. He added this is a big project that is farther along and backed by government funds saying he believed the loan should be extended for the share with no interest rate. Tom Vedbraaten also noted that when Erskine Manufacturing was talking with the city about moving to Crookston, they had asked for a $1 million gift, saying that they’d probably be thinking it was the best million dollars we’d spent if they had given them that money based on Erskine’s success in Fosston.
There are still several steps to follow before the loan, which would come out of the City of Crookston reserve funds including a public hearing and council approval say City of Crookston Finance Director Angel Weasner. “There are actually quite a few steps,” said Weasner. “We need to have a business subsidy agreement. We need to have public hearings, and we need the council to authorize all of that to occur. It will be a little bit of time before it is available and then we will take the funds out of our reserves.”
The next step in approving the loan would be going to the Ways & Means Committee with a business subsidy agreement. Hoiseth said that just as crucial as getting the permitting jumpstarted is the due diligence of the city in creating the legal documents to protect the taxpayer money used in the loan. “We’ve got some due diligence to do,” said Hoiseth. “Of course, we want to be able to secure this loan properly. We’ll be talking with Epitome in the next days and weeks to fill all the requirements that are necessary to make it a legal, binding document. We want to protect the taxpayer money, of course. What we’re after is to ultimately give Epitome a running head start rather than marking in time waiting for several months or even a year before we initiate this design and air permitting. It would be nice to have that all finished and ready to go so that when we’re ready to break ground, we don’t have any lingering issues.”