I.C. Muggs, Adams Heating & Cooling awarded B3 grants

Mike Christopherson
Crookston Times

    With a program bottom line boosted by a $50,000 allocation from the City of Crookston, CHEDA Board of Directors has approved two more Building Better Business (B3) grants to local businesses, but some board members made a point to note that if tweaks to the program put in place this week were in effect when one of the grant applications was submitted, they probably would have denied it.

    Mike Paul, owner of I.C. Muggs, Mugoo’s and Best Buy Liquor, was awarded $4,000 that will go toward the estimated $12,500 cost of putting new carpeting in the bar and restaurant area. Dean and Kaz Adams were awarded $5,000 to go toward improvements of the building at 511 Strander Avenue they recently purchased for their Adams Heating & Cooling business. They are projecting to spend $18,200 on an overhead door, new metal siding and insulation, and LED lighting and a sign.

    The normal B3 maximum grant is $3,000, but it can be boosted by up to $2,000 more if applicants are graduates of Crookston High School and the University of Minnesota Crookston or Northland Community and Technical College.

Changes discussed, approved

    After a slow start around two years ago, the B3 grant program has become consistently popular. Launched initially by City dollars allocated to CHEDA, in late 2020 the program budget was down to $4,500. Citing its successes and positive impact on local businesses, the city council approved a $50,000 allocation to keep the program going.

    But as part of that funding approval, changes to the program were going to be considered. A committee led by CHEDA Executive Director Craig Hoiseth and City Administrator Amy Finch sat down earlier this month and discussed several potential changes that had been floated by council members and CHEDA Board members previously.

    Some of the tweaks stuck and from this point forward are now in effect, while other possible changes were discussed but not advanced:

    • Instead of coming to the City if/when the B3 budget is once again depleted, Finch recommended that the B3 budget be incorporated into annual City of Crookston budget discussions. That doesn’t mean the program will need or receive an additional influx of City money each year, but Finch wants to have a better idea of where the program’s budget stands when she and City staff and council members start budget talks for the coming year.

    • Previously, if a grant recipient’s business closed within two years of receiving a grant, or the recipient relocated their business from Crookston in that time frame, they had to pay back half of their grant. Now, if their business ceases to operate in Crookston within two years of receiving a grant, the full amount will have to be paid back.

    • Instead of Hoiseth being the primary person to consider grant requests and then bring his recommendations to his board, from this point forward, he will be joined in considering grant applications by Finch and two council members who don’t sit on the CHEDA Board. A scoring system will also be formed to guide their discussions. Also as part of this change, grant applicants will need to make their case in person before the small group.

    “It takes what has been a real informal process and adds a layer of formality,” Hoiseth said. “If you’re going to seek public funds, you’re going to have to be a little more open with your business model.”

    • One possible change that was discussed but abandoned was to let smaller, more contractor-based Crookston businesses seek B3 grants even though they don’t have a “brick and mortar” building as their business headquarters. The thinking was that entrepreneurs like plumbers or electricians who work out of their home and have a work van could benefit from B3 grants, too.

    Hoiseth said it came back to the B3 original mission to help local businesses create jobs and expand Crookston’s tax base.

    “If someone has a van or trailer…it was a great discussion, but we felt it was best if we focused on businesses with an actual place that they’re paying taxes on.” He added that renting a space at Valley Technology Park would meet that threshold. “They could have an office right here (VTP, where CHEDA is located and is the landlord) and it would give them a physical location,” Hoiseth said.

    The committee’s discussion was dominated by debate over B3 grants being awarded for “routine maintenance” items, like a new furnace purchased by a previous B3 grant recipient when the business’ furnace broke down suddenly. The thinking is that funding those types of purchases with B3 grants doesn’t fit the program’s original mission or parameters.

    After a lengthy discussion, Hoiseth said the committee decided to not completely abandon the practice because if a local business has an operational emergency, the B3 program might be their best or only option to get some financial assistance with making an unanticipated purchase.

    “In the end, we couldn’t say we’re not going to allow it,” Hoiseth said. “We don’t want to allow it, and (grant applications seeking funding assistance for routine maintenance/daily operations) will be vetted pretty hard. But if it’s an emergency, it will be considered.”

    Paul’s application came in a couple days before the CHEDA Board’s December meeting and Hoiseth said he wasn’t able to consider it and get it on the board’s agenda. But with Paul wanting to get the new carpet in during the latest state shutdown of restaurants and bars, he moved ahead with the project. Grant language indicates that projects won’t be undertaken until a B3 grant is approved, and that CHEDA will receive invoices for the work and pay them up to the grant amount.

    But Hoiseth said that for Paul and the new carpet, several things added up to throw off the timing. “There wasn’t time to get it on the agenda; if the board had approved it (in December), the timing aspect would have been better,” he explained. “They were shut down and wanted to get going on the project.”

    Hoiseth was joined by several board members in saying new carpet might not cut it in the updated B3 grant language, but Paul’s application was submitted prior to the changes and is therefore subject to consideration under the previous program language.

    “This would probably not make it to the board from the subcommittee, but other the old parameters, it works,” Hoiseth said.

    “I personally think we have to (approve Paul’s grant request), based on the guidelines we had, but going forward, I wouldn’t,” said board member Craig Buness.