RDA could see state funds freed for broader use

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A one-time change in Minnesota law could help Swift County free up restricted funds for a broad array of economic development uses currently blocked.

Over the years, the county has received Minnesota Investment Fund (MIF) grant funds to assist businesses projects at very low interest rates. When the funds have been paid back to the county, the state has allowed it to keep the money for future projects. Some of the funds come from loans made to businesses as far back as the 1990s.

However, the uses of the funds were tightly restricted, Swift County Rural Development Authority Executive Director Jennifer Frost told the Swift County Board of Commissioners at its meeting Aug. 1.

Now changes in law could broaden how the RDA uses funds for economic development, workforce housing, housing stock renovation, and marketing initiatives, she said.

Back in 2014, the state began taking a closer look at how revolving loan fund (RLF) dollars it had given counties were being used, or not used, for economic development. Because some of the state dollars were tied to federal programs, it also wanted an accounting on those federal dollar pools of money.

At that point, the county had about $1 million in its economic development loan portfolio with around $800,000 committed in loans and the remainder in cash reserves. Frost allocated those funds to the state and federal dollar sources with about $150,000 of loaned funds assigned to state money. Of the $1 million, some of the funds came from other sources as well.

State money is very difficult to use for economic development, Frost said, because it has wage requirements for jobs created, it can’t be used for businesses with retail merchandizing, and can’t be used for some service industries.

The best projects for state dollars are manufacturing or technology companies that pay wages of about $14 to $15 an hour. However, those companies aren’t looking for loans that come from the small amount of state funding the county has available, so it uses its federal fund pool of dollars for those loans, she said.

There are some communities that are sitting with $1 million in state funds that they can’t use for economic development because they don’t have the right business to qualify for state money, Frost explained.  
Instead of taking all of the money back from counties, the state has said that it is going to give them a chance to use it as they see fit  for economic activity through this one-time opportunity....
 

 

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