Loan to retain, grow businesses
- Published: July 28, 2011
At the Village Council meeting Monday, July 18, the leaders of local business e-Health Data Solutions got the answer they had been waiting for. Council members unanimously agreed to loan Creative Memories up to $30,000 to alter its facility for the needs of eHDS and possibly other businesses in the future. EHDS and Creative Memories are expected to finalize the details of a lease agreement this week, according to eHDS co-owner Roi Qualls at the meeting.
EHDS has been looking for 5,000 square feet of professional office space to lease in Yellow Springs for several years. Creative Memories has one 20,000-square-foot space on Dayton Street, which was unusable for eHDS unless it was divided into smaller pieces. The Village loan allows Creative Memories to divide its office facility into portions usable by smaller businesses. The lease agreement between Creative Memories and eHDS had been contingent on Council’s approval of the loan.
Representatives from Creative Memories were not present during the Council meeting, and Creative Memories Vice President of Operations Mark Lerud did not return phone calls. But Village Economic Sustainability Coordinator Sarah Wildman, who has brokered the agreements over the past few weeks, stated at the meeting that she believed “Creative Memories has agreed to accept the loan.”
Qualls thanked Council at the meeting and gave some assurance that an agreement between the two businesses is pending.
“I talked to Mark Lerud this morning and he is happy with the terms,” Qualls said. “This is a real vote of confidence in the community and a way to keep businesses here — the community and Council really stepped up, and privately there were a lot of people involved to anchor this project.”
The terms of the loan (at a 3.5 percent interest rate) to Creative Memories includes several forgiveness features beginning with an opportunity for forgiveness of $10,000 of loan principal and related interest if Creative Memories leases 5,000 square feet of its space to eHDS by December 2012, 2013 or 2014. The second major feature includes forgiveness of another $1,000 of principal for every additional 1,000 square feet of space Creative Memories is able to lease to a business other than eHDS by December of 2012, 2013 or 2014.
The resolution Council members approved states that “public support for economic sustainability is a valid public purpose necessary for the growth of job opportunities in the Village and tax revenues for the Village.” However, Council members Karen Wintrow and Lori Askeland both stated during the meeting that while the business outcome of their decision was positive, the process itself was hasty, messy and not ideal.
“I hope this is a kick in the pants on the need to get moving to formalize an economic development policy,” Wintrow said during the meeting. “We don’t necessarily make easy or good policy when we’re working from a position of emergency.”
EHDS has needed to move from its space at MillWorks for several years, Qualls and eHDS co-owner John Sheridan have said in the past. The business employs a total of 20 people, 12 of whom work in Yellow Springs (including seven who also live in the village), and Sheridan expects the business to grow by at least 25 percent in the next two years, he said two weeks ago. Creative Memories office space is the only class A office space in the village currently, and it has remained mostly vacant since 2008, when the company began downsizing and moving some operations to St. Cloud, Minn.
While a loan for this purpose is not common practice for the Village of Yellow Springs, Wildman said after the meeting that it was a necessary step for several reasons. According to economic projections Wildman completed in early July, she estimated that the net present value of the retained and projected jobs at eHDS over the next three years could yield nearly $40,000 in Village income taxes.
“I performed an economic sensitivity analysis to estimate the internal rate of return on this loan to ensure that the Village would realize a net gain; we want to make sure we are doing our due diligence and being good stewards of the Village’s assets while positioning our business climate for the future,” Wildman said after the meeting.
In addition, according to Wildman, eHDS is a locally grown business whose employees live and work in the village.
“EHDS is the poster child for what we have here and what we want more of,” she said. And the Village wants to make certain that people understand its leaders are “strongly in support of business in Yellow Springs, and are willing to entertain a wide variety of approaches” to meeting their needs, Wildman said.