City gives go-ahead to Blue Valley Automation block grant application

Blue Valley Automation got the OK Monday night from city officials to move ahead on a Community Development Block Grant reuse loan application to the state, despite one councilman’s concern of a conflict of interest with financing.

The Beatrice City Council approved 5-1 - with councilmembers Phil Cook and Susan Witulski absent - the application to the Nebraska Department of Economic Development. The application is for a Community Development Block Grant of $305,000 - $255,335 from the state and $49,665 from the city - as a loan to Blue Valley Automation, Inc., to purchase more equipment and hire more employees to increase production. Councilman Ted Fairbanks voted in opposition, saying he believed there was a conflict of interest with the financing.

Blue Valley Automation, which markets a product used to streamline the process of packaging hardwood flooring material, is seeking $1.205 million in working capital to expand its production. Brent Payne, Blue Valley Automation plant manager, said the purpose is to allow them to purchase additional equipment and hire more employees to manufacture the product at a higher rate and meet the demand from the flooring industry.

Blue Valley Automation has $900,000 in private investments and is requesting $305,000 from the reuse fund, of which $255,335 will be from the Nebraska Department of Economic Development and $49,665 from the City of Beatrice reuse program, Terry Doyle, Beatrice CDBG Committee chair, told the council Monday night. The city will retain $5,000 of the loan for administrative purposes.

The first $150,000 loan, which includes the city’s CDBG reuse loan of $49,665, will bear a zero percent interest and will be paid back. The other $150,000 loan is forgivable as long as Blue Valley Automation retains its current 20 employees and hires another 20 employees, with 51 percent of those jobs made available to low- to moderate-income people, at the end of a six-year period, Doyle said.

The private investor money must also be accounted for prior to the CDBG loan being awarded.

Fairbanks questioned how Blue Valley decided to seek a CDBG fund and why didn’t they find the additional funding from investors.

When GCED is approached by a company with a project, LB840 funds, CDBG funds and financial packages are looked at, said Terri Dageford, GCED Director of Business and Industry. On this particular project, GCED worked with the Department of Economic Development to put together a financial package.

“If you have Community Development Block Grant funds to complement the investors and those that invest in a company that will remain in Beatrice ... I would not like to see a company that has a patent that is home grown leave our community,” Dageford said. “I think it is important that we work with the companies we have through CDBG reuse funds as they are available.”

It is the CDBG committee’s job to assist companies or industries, especially if they are going to supply 20 full-time jobs added to what they have now, Doyle said.

“The bottom line is that this is more of a start-up industry, this hasn’t been here for 50 years,” Doyle said. “If I was on that board and I could get a forgivable loan and a no-interest loan, I’d be looking at it.”

Fairbanks questioned who owns Blue Valley Automation and who the investors are.

“I don’t have any problem with the industry, the company,” he said. “I have a problem with the financing, I think there’s a conflict of interest.”

Until the issue of whether there is a conflict of interest concerning the financing, Fairbanks suggested the issue be tabled until the council has the time to get all the facts.

The city was reminded that this public hearing is only for the application submittal and the city would then have the option to approve or disapprove the CDBG loan if the state provides it, Stacen C. Gross CDBG administrator for Blue Valley Automation, said.

Councilman Rich Kerr stated he was comfortable with Doyle’s recommendation as he has many years of experience with working with CDBG funds and companies.

Councilman Dwight Parde didn’t think the make-up of the investors mattered, particularly since the contract as written up is better than previous contracts.

Mayor Dennis Schuster called a five-minute recess to allow for council members to speak with Payne about who the investors are. Upon return from the recess, Fairbanks stated that he contended there was a conflict of interest involving the financing.

Councilman Alan Fetty understood where Fairbanks was coming from.

“I think we are a small enough community that it’s pretty difficult or us, for anyone, to operate as a multi-million dollar corporation without there being conflict,” he said. “We don’t have a pool of investors that city’s 10 times our size, 20 times our size, have.

“I don’t feel that it’s a conflict that I want to kill a project on.”

In other business:

Golf tournament: Approved special designated liquor permit application from Gibbs Place on Friday, May 30, from 8 a.m.-12:45 a.m. at 1301 Oak St. for the Chamber of Commerce Golf Tournament and on Wednesday, June 4 to Saturday, June 7, each day from 8 a.m.-12:45 a.m. at 1301 Oak St. for the Beatrice Country Club Shotgun Blast golf tournament.

Risky’s: Approved special designated liquor permit application, Risky’s II Sports Bar on May 30 from noon-1 a.m. at 2317 N. Sixth St. parking lot for Rock Against Rape fundraiser/dance.

Miscellaneous concrete: Approved miscellaneous concrete street repairs 2008 to R. L. Tiemann Construction in the amount of $32,800 as recommended by the Board of Public Works.

Aerial Platform Truck: Approved plans, specifications and advertisement of bids for a new aerial platform truck for Beatrice Fire and Rescue.

Demolition: Approved demolition of dilapidated structures at 214 Abbott St. to be completed by Ideus Landscaping and Construction in the amount of $3,000.

DHHS agreement: Approved Interagency/Business Associate Agreement between Nebraska Department of Health and Human Services agencies and the City of Beatrice to comply with HIPAA requirements regarding ambulance service patient care.

Pedestrian crosswalk: Approved pedestrian crosswalk on Ashland Avenue between Park and Carlyle streets.

Annexation plan: Approved resolution setting a date on May 19 for a public hearing on the proposed annexation plan for property west of U.S. Highway 77 between Hoyt Street and Industrial Row. This would exclude Store Kraft Manufacturing. The city already currently provides services to the area.

Street closure: Approved resolution, agreement and ordinance to close a portion of the 1700 block of South Night Street. At anytime, the city would be allowed to take back the street.

Knowledge Marketing: Approved settlement agreement between City of Beatrice and Knowledge Marketing LLC for the payment of $125,000. This settlement was approved by the city council in April as a repayment for a portion of a contract that was not fulfilled by Knowledge Marketing.