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County loans funds to business for expansion

Split vote comes following much discussion

POSTED July 16, 2012 9:49 p.m.

By a split vote Monday morning, the Barton County Commission voted to lend $43,300 of the county’s Community Development Block Grant funds to Custom Re-Bath of Great Bend for an expansion/remodeling project. The approval came amid concerns from some commissioners about the what they called the riskiness of the loan.
The 3-2 vote followed a public hearing prior to the commission’s regular meeting Monday at the courthouse and two executive sessions totalling over half an hour. Casting yea votes were Don Cates, Kenny Schremmer and Jennifer Schartz, with the nays coming from John Edmonds and Homer Kruckenberg.
Loan proceeds will be used for the purchase of land and buildings at 3810-3812 10th St. in Great Bend. These are the former site of Bell Rental and Equipment and Bumper to Bumper Auto Parts. The auto parts store will lease space at the location.
The total cost of the property is $355,000. In addition to the county money, which comes from the Economic Development Revolving Loan Fund, Custom Re-Bath is receiving a 15-year loan in the amount of $225,000 from Community Bank of the Midwest. It is also seeking $40,000-some loans from the City of Great Bend’s EDRLF and the Great Bend Chamber of Commerce’s E-Community program.
The loan is for 10 years at 6.5 percent interest, and was contingent on the Great Bend City Council’s approval of a similar loan from the city’s EDRLF when it met Monday night. The council unanimously OKed money from its fund.
Speaking on behalf of Custom Re-Bath was Patty Richardson, executive director of Dodge City-based Great Plains Development. “This meets all the requirements” of the CDGB initiative.
A project must create at least one job for every $35,000 loaned and 51 percent of those jobs must be of low to moderate income. This does both, Richardson said.
Custom Re-Bath will invest about $40,000 to remodel the facility so it will house both the company’s showroom and warehouse. Currently, the showroom is at 1702 Main and the storage site is on Third Street. It will also expand into kitchen remodeling.
“This is a good program,” Schremmer said of the loans. The county’s EDRLF dates back to 1987 when the county received $400,000 from the Kansas Department of Commerce which it, in turn, loaned to Dulaney Feedyard.
Dulaney paid the money back and it has stayed in the county, being loaned to other businesses.
Some have said this business would be competing against others in the community. However, Schremmer said it is slightly different.
Besides, “we do have free enterprise,” he said. “This is a good move.”
In supporting the loan, Schartz said the Custom Re-Bath dealership is an established business. It opened in 2005, offering an alternative to total bathroom modeling, covering Barton, Ellsworth, Pawnee, Rice, Rush, Russell and Stafford counties.
But, “I’m uncomfortable about us being the lender of last resort,” Edmonds said. Despite the back-to-back executive sessions, he said he still harbored concerns about the credit of the borrower and the collateral they were putting up for the loan.
The fund started out with $400,000. However, now there is $190,000 in it that is available to loan. Over the years, most borrowers have repaid the loans, but some have failed.
This risk is what concerned Edmonds and Kruckenberg, especially since the money ultimately comes from taxpayers.
As creditors go, the county falls in line second after Community Bank. Four rental properties owned by DS&J Holdings, LLC – Custom Baths LLC (Custom Re-Bath) would be put up against the loan.
But, “the collateral is thin,” Edmonds said, adding it barely covers the loan amount. The four rentals have a value of about $130,000, and the city and county have the first lien on them.
“I appreciate your concerns,” Cates said to Edmonds. But, this money is for economic development and that is what this project is about.
“These loans are risky in nature,” Cates said. “We have to believe they will do good business.”
After Schartz moved to vote on the loan, Edmonds made a counter motion to table the matter for a week. The counter motion failed and a vote was called on the original motion, which passed.
In other business, the commission:
• Approved a proclamation recognizing Probation, Parole, Community Supervision and Juvenile Service Officers’ Week, July 15 through 21. Central Kansas Community Corrections, the 20th Judicial District Court Services and Juvenile Services have provided the County with this Proclamation that supports and recognizes their officers. In part, it honored the staffs for their treatment of offenders, protection of the public and efforts to advocate for victims.

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