Staples EDA okays loan to Stern Manufacturing

The Staples Economic Development Authority last week okayed a $50,000 loan to Stern Manufacturing and also agreed to terms for a new tenant in the Staples Industrial Building.

The SEDA loan is part of a 'gap financing' package being put together by four agencies to complement a bank loan for the majority of a $3.3 million package, EDA executive director Jerel Nelsen told the SEDA board members at their June 23 meeting in the conference room at the Staples Police Department.

Stern Manufacturing is a new corporation being formed with the restructuring of a previous corporation, Stern Companies, which was a partnership between Terel Stern and Shawn Hunstad. Stern will be the sole owner of Stern Manufacturing, with Hunstad taking over a new group called Stern Industries. Stern attended the meeting and said he would be returning to head up the Stern Manufacturing operations from the Staples plant in the Airport Industrial Park.

He explained that the current economic downturn has cut their revenue in half and resulted in the loss of several major accounts. Employment at Stern Rubber in Staples is down to a barebones staff, meaning people who have worked for the company for 20 years or more have been let go. "I want to bring these people back to work," Stern said, explaining why he needed the loan package. He said the loan will save roughly 55 jobs in Staples.

The loan is a working capital loan for $50,000 from the city, for 15 years with a five year balloon. He is also receiving $50,000 each from North Central Economic Development Authority (Region 5), the Initiative Foundation and Todd Wadena Electric. All four share a subordinate position to Stern's Twin City bank, which is loaning the bulk of the $3.3 million total project. The interest rate is 6 percent.

Stan Carlson noted he felt this is the core area the SEDA needs to be involved in, manufacturing and job creation. He would be voting for it, he said, were it not for a distant relationship between himself and Stern. He abstained and the remaining five EDA members voted unanimously to approve the loan to Stern Manufacturing.

The EDA has had previous loans and a stock option plan with Stern, with the earlier debts all paid off.

The EDA also agreed to a lease arrangement for Unit C in the Staples Industrial Building with Bill Paulson Jr., who formerly was involved with Stern and Hunstad in Harvest Components. Nelsen explained that Paulson has started PCM Products, selling rubber molding products for attaching to various farm implements, similar to Harvest Components. He has been running the business out of his home since Harvest Components ceased operating and now needs more space. He will be paying $600 a month rent for a portion of Unit C for the last six months of 2009.

In other business, the Staples EDA :

o Studied the year-end 2008 EDA balance sheet, noting the EDA has around $200,000 available for loans.

o HEARD updates from Nelsen on the Awning and Facade loan program (three loan requests are being processed, he has two on Sixth Street and another on Fourth Street north of the stoplights; on the North-South Corridor (overpass) project, (Environmental Assessment is all but complete, right of way acquisition can only begin now after the EA is done) and the Highway 10 turnback and Fourth Street project.