ELY – This community’s first client for a new Commercial Development Corridor Assistance Loan Program, and new economic development potential in light of a longtime tenant vacating a city-owned property, highlighted a recent meeting of the Ely Economic Development Authority (EEDA).
Ely city council members, acting as the economic development authority, met with economic developer and consultant John Fedo late last month. He submitted the first applicant, Northern Toboggan Co., for approval in the new commercial loan program.
“We are hoping that this program will literally add new employees, as well as a (business) expansion aspect,” he said.
The EEDA Development Corridor Program provides a loan and forgivable loan/grant for an up to a $75,000 project to qualified applicants to be used for substantial physical improvements to Ely businesses to expand employment and increase the local tax base.
“The improvements must provide for expansion of an existing or new business to provide additional employment,” Fedo said. Improvements could include heating, electrical, insulation, exterior ADA access, or other improvements. “The improvements must be necessary to expand the business and provide for additional employment,” he said.
One third of the total project is funded through an EEDA commercial loan.
Another third is funded through a forgivable loan/grant from the Department of Iron Range Resources and Rehabilitation. In order to be eligible for loan forgiveness, the business must hire at least one full-time employee at a minimum of $15 per hour for a period of at least two years. If those conditions are not met, the business will have up to six years to pay off the loan at a rate of two-percent interest.
One third of the loan program will include private funding, equity or bank loan.
“Funding for this Commercial Development Corridor program takes into account unspent COVID funds for economic development to the Minnesota Department of Employment and Economic Development (DEED) that were not used in the metro area,” Fedo said.
Northern Toboggan Co. is the second tier of the Wintergreen Northern Wear business recently acquired by the Jackson Herron family, doing business as Northern Goods Co LLC, based in Warroad.
“I introduced this program to him right around Christmas time and it took a while to get all the pieces in place,” Fedo said. “This is a $20,000 project. They are looking at expanding their activity. They have manufacturing and distribution of a variety of goods online. They want to incorporate that into a retail center. They look to open that up in the log cabin building next to Wintergreen. There is some renovation to the building, marketing, and traditional elements that go into a retail setting. The cabin has some aesthetic appeal but it has some immediate needs. They also have a rental program with their Northern Toboggan products that they want run through this facility.”
“The aspect that we like a lot is, obviously, their reinvestment in this community of an existing business and also a new business, but they are also adding two new employees,” Fedo added.
Ely Clerk-Treasurer Harold Langowski added, “The intent of this program is for those businesses that are making capital investments and improvements to their facility to add additional employees. This is in line with the Business Energy Retrofit (BER), and helping businesses that are trying to expand. It is not a big amount of money, but a $25,000 grant on a $75,000 project is significant.”
EEDA members unanimously approved the loan application.
“Two additional applications have been received,” Fedo added, “that more than qualify for this program which occurs within our commercial corridor downtown.” He did not identify the two other applicants. “We are hoping to hear within the next couple of weeks if those loan packages are approved by DEED, and if we qualify to administer those loans.”
Upcoming vacancy
City officials were notified last month that Carlson Wagonlit Travel, a tenant in the Ely business park for more than 20 years, will terminate its lease this fall.
“It didn’t come as a surprise to us, Langowski said. “It has been a trend in the work-from-home environment, especially since COVID, but it is concerning.”
CWT, also known as Sato Travel, at one time had more than 100 employees at its location on Miners Drive.
The building has two other tenants, the Veterans Affairs health clinic, which recently completed a major expansion project and renewed a 10-year lease, and the Minnesota Department of Revenue, which has also fluctuated in employee numbers as more staffers work from home, but is looking to renew a long-term lease.
“We operated at a very small margin,” Langowski said, “and we tried to keep the lease as reasonable as possible to keep those jobs in Ely.”
The lease space has been remodeled several times to accommodate the business’s shrinking staff base, he added.
Mayor Roger Skraba voiced his enthusiasm for new economic development in losing the business park tenant.
“My bells are ringing, that is, this is marketable,” he said. “I can see for some of the people moving to Ely, there is fiber running to the premises. I am optimistic about this.”
North Woods Kids Fishing Derby
Ely Chamber of Commerce executive director Eva Sebesta updated the authority on the new North Woods Kids Fishing Derby coming to the Ely community in June.
First developed in 2019 by the chamber’s Events Coordinator Bureau, city of Ely, Merchant Committee, Incredible Ely, and Ely Area Tourism Bureau, the event will get off the ground on Saturday, June 11 at Veterans on the Lake Resort.
“We are going to have as many as 40 kids, aged 6-14, participating in four different categories, including fishing, a skills component, water education, and art, all on Fall Lake, “said Sebesta.
“It is completely barrier-free out there, so anyone with potential physical limitations will be able to get around just great,” she said. “We will have four different skills areas, including casting, knot-tying and things like that.”
“We are working with the Minnesota Department of Natural Resources to participate in the water education part. We are also involved with the DNR’s Fishing in the Neighborhood program, and we have donated 40 fishing rods and reels so each participant will go home with a new rod and reel, a T-shirt, and a bag full of all sorts of fishing bling things.”
She asked for volunteers to help with the activities. “We are hoping area veterans will join us for the day,” Sebesta said. There is still snow on the ground but it will soon be open-water season.” Registration will open May 1.