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Local

Revolving loan fund could be option for Lawrence site

Greater Sterling Development Corp. wants to set up new local loan program

After again failing to get a federal grant to jump-start environmental work at the Lawrence Brothers building, the city is discussing a different funding option: Setting up a local revolving loan fund with money from a similar fund that was set up with federal Community Development Assistance Program grant funds in 1986.
After again failing to get a federal grant to jump-start environmental work at the Lawrence Brothers building, the city is discussing a different funding option: Setting up a local revolving loan fund with money from a similar fund that was set up with federal Community Development Assistance Program grant funds in 1986.

STERLING – After again failing to get a federal grant to jump-start environmental work at the Lawrence Brothers building, the city is discussing a different funding option.

The city has applied for an assessment grant from the U.S. Environmental Protection Agency’s Brownfields program every year since 2011. The city was not among the handful of Illinois grant winners announced May 31 by the EPA.

The Greater Sterling Development Corp. board has discussed setting up a local revolving loan fund with money from a similar fund that was set up with federal Community Development Assistance Program grant funds. That money is administered through the state Department of Commerce and Community Affairs.

The city received its grant in 1986, but the state notified Sterling last year that because so much time had passed, the revolving loan fund would be released to the city and it would no longer have to report to the state. Sterling has about $500,000 in the revolving loan account.

The grant money is used to set up revolving loan programs for economic development purposes. Money borrowed is repaid to the communities with interest, and some communities eventually use the money to set up their own revolving loan programs. Local loan programs don’t have the restrictions that come with federal and state funds.

Heather Sotelo, executive director at Greater Sterling Development Corp., proposed her board’s recommendations for use of the money to the city’s Industrial Development Commission on Friday. The board unanimously approved a plan for channeling the money in three directions. The plan includes using $125,000 to get the process started at the Lawrence Brothers building.

“The city is constantly waiting for grants, and we’re not sure how much money is going to be available through the EPA going forward,” Sotelo said. “Unless the city comes up with the money, we need to find another way to get this going.”

The plan also proposes that $75,000 be used to create an events fund. Sterling isn’t the beneficiary of hotel-motel tax revenue, making it difficult for Sterling Main Street and other organizations to market and organize special events.

Sotelo used Main Street’s Music Fest as an example of how a little money could make a big difference.

“We could take a couple thousand dollars for events like this that we want to keep, but that don’t quite break even,” she said.

The remaining $300,000 would stay in the new local revolving loan fund. About 40 loans have been made from the original fund. The money has primarily gone to existing small businesses and startups. The largest loan for $250,000 went to Sterling Today in 1991.

The fund would be built up again with interest received on the account and interest accrued on future loans. The money technically would belong to the Industrial Development Commission, but it would be managed by GSDC.

The commission was receptive to the plan at Friday’s meeting, but wanted to consult with its city attorney before proceeding. The revolving loan issue was on the agenda for discussion only.

“I’m not sure if the IDC even needs to OK this,” Mayor Skip Lee said. “We might not even have to have another meeting for it.”

The mayor said the Greater Sterling Development Corp. recommendations would be good use of the money.

“I think that all three suggestions are consistent with the city’s strategic plan,” Lee said. “Using this as seed money for the Lawrence building makes sense.”

City Manager Scott Shumard, however, still wasn’t convinced that it wouldn’t be wise to hold out for grant funding at the Lawrence site.

“My concern has always been using local money on something that could be funded by federal grants,” Shumard said.

The federal brownfields grant program is very competitive – Dixon and Danville were the only Illinois cities to receive an assessment grant this year. This city plans to keep shooting for an EPA award.

The city owns the Lawrence building, but until the environmental assessment is completed, a decision can’t even be made as to whether the building should be saved or demolished.

THE PLAN

How the $500,000 in the former revolving loan fund would be used in the new local revolving loan plan:

• Preliminary work at Lawrence Brothers building - $125,000

• Creation of events fund - $75,000

• Retained for new revolving loans – $300,000

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