Just about everybody expects area local governments to support economic development. But they also expect local officials to be good stewards of any public dollars used to assist such development.

Back in the 1980’s, Two Rivers applied to the State’s Community Development Block Grant (CDBG) Program, for funds to assist Eggers Industries in expanding to the former Mirro plant on 13th Street (now the Eggers West Plant) and to assist a management buyout of Paragon Electric that helped (for a while) to retain that business in Two Rivers.

In the ensuing years, numerous RLF loans have been issued and repaid (with interest), and cash balances held by the City have been invested and earned interest. The City’s RLF has more than doubled, to the point where it has total assets of about $2.8 million.

As of June 2008, the fund has $800,000 cash on hand, and about $2.0 million in outstanding loans. The State allows the City to retain and re-use this grant money for the express purpose of offering loans to assist with job creation and retention here in Two Rivers. These funds must be maintained in a separate fund, and cannot be used for other municipal purposes like capital projects or supporting City operations.

Understand, too, that the City never “goes it alone” in providing financing assistance to a project. The loan program requires at least $1 in private funds for every $1 in City loan funds for projects in the downtown area, and $2 private funds for every $1 of City loan elsewhere. The City does its due diligence just like the bank, requiring submittal of a business plan and personal financials from all loan applicants. We require personal guarantees, we place second mortgages on personal residences, we file liens on personal property. We do our best to be good stewards of these public funds.

So: What’s the City doing in the lending business? We’re in that business to make use, here in Two Rivers, of a longstanding Federal/State funding commitment to local economic development, through CDBG-funded RLF’s. We’re in that business because such loans are yet another tool available to assist local economic development projects. We’re in that business because we have been pretty successful at it over the years, assisting private investment and helping create new jobs and tax base here in Two Rivers.

1987 - June 2008

83 Loans Issued
53 Businesses
$84,500 Average Loan
$7.02 Million Loaned

Loan amounts have ranged from $5,000 for a pizza oven to $500,000 for a major project at Formrite Tube in 1995.

The total investment from private sources related to these loans totals $16.9 million dollars. That is $2.40 in private funds for every dollar of City loans.

Bad loans - In 21 years, only 5.7% of the total loan funds have been written off or are at risk of being written off. That is only $399,453 of the $7.02 million dollars loaned.

Ten existing businesses have totally repaid their loans: Ironwood Plastics, Screen Printing and Garments, Seal Fab, K&K Auto Parts, Riverside Foods, Wisteria Haus, Formrite Tube, Lakeshore Express, The Medicine Shoppe, and TR Buses.

There are about 30 active loans in good standing with nearly $2 million in principal.

The CDBG Program is a longstanding Federal program, around since the 1960’s. Program management was turned over to the states as part of the Reagan Administration’s “New Federalism” in the early 1980’s, making CDBG a Federal “passthrough” program, administered from Madison rather than from Washington, D.C. (Cities of more than 50,000 population are so-called “entitlement cities,” and receive an annual allocation of CDBG funds via a funding formula. Communities of less than 50,000 must compete for CDBG grants awarded by the State, in our case through the Wisconsin Department of Commerce.)