Another thing the city has to be careful of when giving big breaks to industry is what is going to happen with the factories a few years down the road when the breaks they have given them are done. I think Spartanburg, SC is seeing major problems with this. They brought in a ton of industry, but a lot of it has left (including Waukesha Bearing).

In theory, the program is a great idea and I am sure it was created for the reasons you stated, but I feel it could be used in better ways. I would like to see the program used to back people of lesser means. I would like to see locals using it to help get a dream off the ground, not the biggest businesses in our community using it to save money. Like I said before, the people you yourself listed, have an existing profitable business and there is no reason they could not use conventional means to finance themselves.

Not to mention the fact, that regardless of what the return is, the city assumes all the risk on these loans. If the loan is defaulted on, the city still has to pay the money back. If the business closes, they are still responsible for the loan, but without the business how are they generating the payments?? (I think that’s what Vincent CG ment when he mentioned the scrapbook store and Edison club). A 1% return isn’t big enough to compensate the city should a loan not go as planned. For example, if the scrapbook store doesn’t honor it’s future payments, is the 1% on Duffek’s enough to make up for it? If you factor in all the loans the city has made, current and in default, is it worth it or is it costing us money?(I am not implying any of the people mentioned above are not making their payments, this is just an example!)

I just don’t think the city should be playing banker. There are plenty of other things the city should be focusing on.

My guess is that the hundreds that want to start a business have not even tried to get the assistance from the city. There are other businesses besides Duffek’s, Merit Gear and such that have been given loans to start a business or make improvements. The only person I know of off hand that has been denied is Stimac.

Once again, why so negative?

There are hundreds of people in this community who would like to expand their business or start a new one, but can’t get past the commercial lending phase (standard commercial terms are 20-30% down, while financing the rest at 10-20% over the term of 20yrs for buildings and property, 5, 7 or 10yrs on equipment.). Most of these people don’t have the resources Duffek’s have (meaning the reputation, recognition, or cash in hand from a recently bought out company), to make the first steps.

Maybe you should put your money where your mouth is and start using your hard earned dollars to finance business in the community with a 1% return. I guarentee you will run out of money long before you run out of people with good sound business plans seeking financing.

Debt financed through the tax levy totaled $8 million at year’s end, representing 44.27 percent of the city’s allowable level of borrowing.

“That is under the average for A rated credits,” Belongia said, suggesting many communities are at 50 or even 60 percent or higher of their allowable debt.
The Dec. 31 debt schedule lists two industrial projects backed by bond anticipation notes—$1.825 million loaned to Volm Bag Company and $1.79 million to a combination of Super Group, Fallon Neon and Wetterau Wood Products, all to assist with industrial expansions and improvements.

Since then, the Common Council has earmarked $1.525 million to Duffek Sand & Gravel to assist with that longtime industry’s relocation to the city’s northside industrial park.

Using the city’s bonding authority allows the industries to gain the funds at a lower interest rate than would be available privately. They are repaying the city at a rate 1 percent higher than the city is borrowing the money at, with the extra dollars funding community development activities.

To date, the program is working well, officials said.

“The city has taken a verypro-active role in assisting companies within the community,” Belongia said. “They have been able to provide a lower interest rate and the companies are paying the money back.”

In his experience as a municipal financial advisor, Belongia said he has seen many communities borrow dollars for similar projects, both at the utility level and to help industries.

“These are all very typical things a city would undertake to provide services to their communities,” he said. “They are creating assets.”

So, for the third time they are not financing a loan at 1%, it is 1% over what they are getting the money for. They are offering the loan at a lower rate than they could get at a bank. Whatever joke you think the profit is, I would rather have the city making $225,000 over 30 years (I really don’t even know if the loan is that long, I just used it as an example) than getting a loan from an out of town bank. I don’t know where the money went from the sale of their company, but I am sure some of it went towards existing debt. I don’t believe the program has anything to do with businesses that can not get any financing through traditional methods. I do believe they have easier qualifications.

Why so negative? The city is making a positive cash flow move to improve the value of the city and maintain jobs. If you don’t like Duffek’s, fine. I don’t know them, I don’t care. The city is doing what it feels is best fort the city in the long run. More jobs+increased land value+profit from a quality loan =good decision.