— The Detroit Lakes Development Authority agreed to change the interest rate on business loans they offer from 4% to the market rate of what primary lenders offer.
During the Development Authorities’ monthly meeting on Tuesday, May 7, Community Development Development Director Larry Remmen said the current market rate is 6.75%. He explained that bringing the interest rate to market value pulls the governmental entity out of competing with banks. However, the 20-year term limit may help keep the loan affordable for small business owners.
The average loan amount taken out from the Development Authority was noted to land between $100,000 and $250,000. The Development Authority has three loan pools it draws from for loan programs. Remmen stated the combined funds totaled $1.5 million.
The Development Authority unanimously agreed to change the loan interest rates to market value.
Development Authority offers facade grants
The Development Authority’s Facade Improvement Grant Program provides funding for maintenance, upkeep and remodeling of business building exteriors in the downtown corridor. Remmen explained they currently offer a 10% grant, with a max amount of $2,500. Essentially, if someone spent $25,000 or more on facade improvements, they would receive $2,500 in grant funding to offset the cost.
“Last time, when we talked about it, there was some discussion about possibly increasing that,” Remmen recalled, adding the increase could be in the total amount offered or the percentage. He said if the percentage of covering a project is increased, it would favor smaller businesses, whereas increasing the maximum amount would favor larger businesses.
“So we’ve got to think about who needs the help most and who are we trying to help most,” he said.
Barbie Porter / Detroit Lakes Tribune
In an email, Remmen reported the following businesses have received funds from the grant aimed at improving facades:
- Becker Pet and Garden
- Mark Hagen, 817 Washington Ave.
- Norby Flats
- Washington Partners/Bucks Mill Brewing
- Mainstream Boutique
- Steve Zima, 908 Washington Ave.
- The Nines
- Beautiful Junque
- Real Pro Cormadd, LLC, 923 Washington Ave.
- Nature’s Embrace Soap Company.
Alderman Ron Zeman, who is also on the Development Authority, said he felt the funds should be steered toward small businesses.
Development Authority member Jon Riewer suggested offering more for the total grant reimbursement and asked, “Why wouldn’t we sweeten the pot?”
Developmental Authority member Nate Hunter added there are many people and groups that take pride in the downtown area. That willingness to improve and maintain the corridor could provide opportunities to raise additional funds for those seeking help from a grant program, he suggested.
Discussions about offering funds to locations that are not downtown were also had.
The group discussed the usage of the funds and seemed to favor utilizing the funds for buildings, as opposed to signage. Their discussion noted that if a business owner received a grant, and later closed its doors, the funds received would still be beneficial to downtown if spent on things such as new windows, tucked brick and so forth.
When discussing the amount the grant could offer, Riewer stated: “I don’t know that it matters to me. I know that it matters to drive downtown Detroit Lakes and see every building looking mint.”
With consideration toward keeping the buildings looking aesthetically pleasing, Remmen suggested hiring an architect to create several renderings of downtown buildings. He explained that should a shop owner want to spruce up the building, the drawings could provide options. Incentives to utilize the renderings could also be provided through grant funding amounts.
Remmen said the cost for the architectural renderings was up to $18,000 and would include five or six renovated facades.
Riewer liked the idea but asked if the cost of the architect could be offset through a partnership with another group, be it nonprofit or other.
“If you want to start drawing pictures, I would involve local charity,” Riewer said.
The Development Authority agreed to dig into the details of the grant amount at a future meeting, and discuss the idea of creating professional renderings of downtown building improvement concepts with other groups in the city.