IEDC to Refi Existing Loans

IRONWOOD, MI - Wednesday, June 9, 2010 - The Ironwood Economic Development Corporation (IEDC) held their regular monthly meeting on Tuesday, June 8, 2010 in the Community Development Conference Room on the second floor of the Ironwood Memorial Building in Downtown Ironwood.

1. Call to Order. The meeting was called to order by IEDC Chairman Jim Huss at 10:00 AM.

2. Roll Call. Jane Bowman called roll. Members in attendance included: Dave Ramme; Jim Peterson; Jim Huss; Joe Cayer; Bob Schonberg; John Wyssling and Scott Erickson (Ex Officio). Tom Schneller and Mark Ruppe were absent. Jim Lorenson was excused. Also in attendance at the meeting were Lou Bonagura and Dr. Marsha M. Toohey.

3. Approval of the May 18, 2010 Meeting Minutes. After briefly reviewing the Minutes from the May 18th meeting, they were unanimously approved as presented by the Board.

4. Approval of the Docket. This item was overlooked and no action was taken to approve the docket. Obviously, there was no objection to the docket as it was presented.

5. Citizens wishing to address the Corporation on Agenda Items. (3 Minute Limit). There were none.

6. Discuss & Consider Action on Delinquent Revolving Loan Fund Account. Scott Erickson told the Board that arrangements and/or payments have been made on all delinquent revolving loan fund accounts. Erickson said he spoke with Paul Oliver (Top Notch) and he also received a letter from him explaining his current financial situation. He agreed to make $200 weekly payments on his account until it is brought back to current. Bob Schonberg asked if his regular payment would also be made during this agreement. Jane Bowman informed the Board that his regular payment is $439/month, and Scott Erickson indicated that he would only be making the $200/week payments (a total of $800/month) until he is caught up - and he would go back to making the regular payments thereafter. After a brief discussion considering the current downturn in the economy, the Board unanimously agreed to approve the payment schedule proposed.

Dave Ramme asked Erickson about the status of the D & J Enterprises (Sears) loan. Erickson indicated that all payments have been received and that their balance is current.

a. Discuss & Consider Action on Balloon Payment Request. Jane Bowman indicated that Dr. Marsha M. Toohey was present at the meeting and she also indicated that a letter of request from Toohey was included in the Board members' packets. According to Bowman, the current balance on Dr. Toohey's account is approximately $20,500. She said that the figure was an approximation due to the fact the Dr. Toohey pays more than the required payment each month. She told the Board that Toohey's payment history was impecible.

Several issues were discussed regarding the request. Jim Huss suggested that the loan would have to be rewritten considering the terms would change. Erickson confirmed that fact stating that the Michigan Economic Development Corporation (MEDC) would have to be notified and paperwork would need to be filed with them.

Jim Peterson asked if the interest Toohey was paying was standard. Huss told Peterson that interest rates were considerably higher when the loan was originally drafted than they are today. Toohey is currently paying 7.25%.

Jane Bowman told the Board that she recieved a verbal request from Black River Dental also requesting an adjustment in their interest rate. According to Bowman the interest rate on that loan is 7%. 

After a brief discussion regarding current commercial interest rates, the Board agreed to reduce the percentage on Dr. Toohey's loan to 5%. The Board also agreed to extend the balloon payment on her loan for two additional years. The concensus among the Board was that she had an exceptional payment history and that banks are simply not interested in commercial loans, considering the present economy. The Board agreed that the role of the IEDC was to promote business growth and to help businesses in any way they can.

7. Citizens wishing to address the Corporation on items not on the Agenda. (3 Minute Limit). This reporter told the IEDC that today's actions prove the need for a local Economic Development Corporation. I pointed out that the IEDC's default rate was exceptionally low, and that the role the IEDC plays in improving our local economy was vital to the community. I expressed concern that a regionalized EDC would not adequately serve the needs of Ironwood businesses.

8. Other Business. John Wyssling asked if action needed to be taken at this time regarding the Black River Dental request. Bowman indicated that the Board should wait until (1) a written request is recieved and (2) the MEDC takes action on the Toohey request. Bowman says the MEDC might not allow Toohey's request. Bowman told the Board that she will contact Black River Dental and ask for a written request after Scott Erickson contacts the MEDC. She indicated that another meeting can be called if necessary.

Scott Erickson presented the Board with an email he recieved regarding the regionalization of the EDC. According to the document, it appears that the MEDC may not be able to require a municipality to participate in a regionalized plan. The email indicates that the MEDC will continue to encourage participation in a regional plan, however.

Jim Huss said the MEDC apparently didn't realize the public and political uproar regionalization is causing. He said he was encouraged by the message the email presented. John Wyssling pointed out that local businesses should be the job of local EDC's. Huss echoed Wyssling's argument stating that the Western Upper Peninsula was particularly vulerable. He said no banks would be opening up to commercial ventures considering the current economic climate.

Bob Schonberg pointed out that the IEDC has no more funds. He said if the IEDC was to stay with the MEDC and the EDC was to regionalize, no money would be coming to Ironwood. Huss said that the merger would have to take place before regionalization could happen. He also stated that the Revolving Loan Fund in Ironwood has a good history. Repayments to the fund -- through good loans -- have traditionally replenished the fund.

Schonberg suggested that the Board rethink their positioning. He brought back the issue of creating a new "angel invested" entity that would continue to serve the needs of the Ironwood area. Huss pointed out that the County EDC fund was similarly strapped. He suggested that action be taken to create an independent investment organization that could serve not only the needs of Ironwood, but the entire county.

The Board briefly kicked around the idea of finding private investors that would be willing to help the area's economy grow -- much like Go, Inc. did in the 1970's and 80's. Huss suggested that Board members start picking potential investors' brains and once there is some interest, it may be possible to form a new organization. Schonberg suggested that a subcommittee to further discuss the issue and create marketing rules be formed. Dave Ramme told the Board that the issue should be further discussed at the next meeting. He pointed out that the Dental loan will need to be discussed within the next couple weeks and the issue could be re-examined at that time. The Board agreed. They briefly discussed some of the investments Go, Inc. was involved with in the past, and the impact they had on the area. And then they moved on to other business.

Dave Ramme asked the other members if he read what he thought he read in the Daily Globe. He said he read that Donna Scorse told the County EDC that she was not compensated for assistance she recently gave for processing IEDC loans. Ramme said he asked Jane Bowman if Ms. Scorse hadn't been paid for her services. Bowman indicated that she was only recently compensated. Scott Erickson told the Board that the City's Community Development Director used to do all loan processing, but after his resignation, Ms. Scorse processed two IEDC loans. Erickson explained that the City recently paid Ms. Scorse for her assistance. He said  that Scorse was given the $150 administrative fee that each of the two applicants paid on their loans. Erickson indicated that Scorse is currently working on a third loan for the IEDC and that she will be similarly compensated.

Jim Peterson asked Scott Erickson for an update on the hiring of a new Community Development Director. According to Erickson, he originally anticipated that the new Director would begin working for the City on June 7th. Erickson told the Board, however, that the candidate he had selected called him and told him that he would not be accepting the position. Erickson said he has a short list from the previous set of applications and that new director will be selected shortly.

9. Adjournment. At approximately 10:35 AM a motion was made to adjourn. The motion was seconded and unanimously approved by the Board.