Reviving revolving loan fund a county priority

By DAN BENSON

Ozaukee Press staff

Ozaukee County officials are looking at  reviving its revolving loan fund to help launch new businesses and help existing ones expand.

The county Executive Committee last week directed Ozaukee Economic Development Executive Director Kathleen Cady Schilling to draft a proposal to fund the program, which was shut down after the federal government got out of the program in 2019.

“How big a deal would this be in your tool belt?” committee member Marty Wolf asked Schilling.

“This is one of our top priorities,” she said.

The old fund started in 1989 and was financed using money from the U.S. Department of Housing and Urban Development before discontinuing the program in 2019.

At that time, the state gave counties and municipalities the option of continuing the program on their own or also getting out.

The county chose to manage outstanding loans itself but to access the program’s cash on hand — totaling $845,452 — and purchase the outstanding loan balance of $276,332 from the state.

With the money, the county used more than $1 million to make improvements at the Lasata Senior Living Campus in Cedarburg and spent the balance at the HH Peters Youth Camp and Hawthorne Hills Golf Course clubhouse so they comply with the American Disabilities Act.

Some municipalities — the villages of Grafton and Saukville and the cities of Mequon and Port Washington — have continued to operate their own programs.

For instance, last year Port Washington made a $105,000 loan from its revolving fund loan for Port Family Pharmacy, an independent drugstore located in the former Pizza Hut building.

Port also has lent $150,000 from the fund to Inventors Brewpub for construction of a new building on the north end of the north slip. The city has a balance in its fund of more than $300,000, Schilling said.

Schilling reviews RLF loans for Port.

Those municipalities’ programs, however, can only assist businesses located in those communities, which means there is no such opportunity in the town and village of Belgium, Village of Thiensville, Town of Grafton and the town and village of Fredonia, a situation that would be remedied by a county RLF, officials said.

“Particularly in towns, where the county could be more impactful because they have fewer (economic development) tools,” County Administrator Jason Dzwinel said.

For instance, he noted, towns cannot create tax increment finance districts, which can redirect property tax revenue toward infrastructure improvements, like cities and villages can.

For instance, development of the Northern Gateway project in the Village of Saukville, currently under construction, is aided by a “pay-as-you-go” TIF district in which the developer pays for improvements such as roads and sewer and is reimbursed from the TIF.

The Village of Fredonia also is using a TIF district to develop its south-side business park.

Schilling suggested the program be funded with $300,000 to $500,000, similar to the amount originally used to create the fund, and which eventually grew to $1.2 million.

Dzwinel said the seed money for the new fund would likely come from county financial reserves, which have been bolstered by higher-than-expected sales tax receipts.

The larger the amount of seed money, the larger the loans could be made at the outset, Schilling said.

Schilling recommended one change be made in the program from past years. She suggested it be able to offer “micro loans” ranging from $1,500 to $10,000 for businesses to make smaller improvements to their operations.

Businesses that access the loan fund can borrow money with an interest rate of 2% up to half the prime interest rate, which is set by the U.S. Federal Reserve.

The fund charges no late fees and is usually further down the line of a company’s lenders who must be paid if they go out of business or go bankrupt.

Schilling said the fund doesn’t replace larger lenders, but helps attract new businesses to the county.

“Even if they don’t decide to go with us, it shows businesses we really want them,” she said.

Schilling said only two borrowers ever defaulted on their RLF loans under the previous program.

Businesses in the county that secured and paid off loans through the old RLF include Oldenburg Metal Tech in Saukville, Core Consulting in Thiensville, Custom Wire Technologies in Port Washington and the Fermatorium in Cedarburg.

Committee member Rob Holyoke said renewing the loan fund makes economic sense.

“We get a lot from sales taxes. We should help businesses out a little bit,” he said.

Schilling told supervisors on the committee, which is made up of the chairmen of the County Board’s five standing committees, that she will return with a detailed proposal.

Creation of the fund would require approval by the full County Board.