By Kaija Swisher – Black Hills Pioneer
SPEARFISH – A third new business is set to join Spearfish Brewing and the RedWater Kitchen on the first floor of the new building at the corner of Main Street and Jackson Boulevard in Spearfish: Dakota Seafood Spearfish, LLC, received approval for a $100,000 Spearfish Economic Revolving Fund (SERF) loan Monday.
Kory Menken, Executive director of Spearfish Economic Development Corporation (SEDC), Explained that the SEDC Finance/Loan Committee reviewed the SERF loan application on May 30 and recommended that the council approve the loan. In addition to the SERF loan, the business has also received a $202,000 South Dakota WORKS program loan through the South Dakota Governor’s Office of Economic Development.
A memo detailing the SERF loan to the mayor and city council from Menken, dated June 11, states, “It is SEDC’s recommendation that the loan application be approved in that the project satisfied the primary goal of SERF to complement funding sources from the private and public sectors, resulting in an enhanced and more fully developed economy in the Spearfish community.”
The purpose of the loan is to provide term financing for equipment purchases, Menken explained. The lender is the city of Spearfish, and the guarantor on the loan is David Neilsen. The loan would be extended at a fixed rate of 4 percent annually, requiring monthly payments based on a seven-year amortization schedule. The borrower, Dakota Seafood Spearfish, LLC, will pay the actual costs of all settlement charges and fees incurred by the city, and the loan is secured by a second position on all business assets, including but not limited to equipment, inventory, and fixtures, and the personal guarantee of the borrower. Menken explained that the state and a private lender have first position.
“The project will create a minimum of 10 new jobs over the next three years … ranging between $14 to $20 per hour, and also, based on their pro forma documents, we anticipate, at least in year one, starting with $12,000 in annual municipal sales tax, so it will be a nice sales tax generator for the community, as well,” Menken said, explaining that the business would do both retail and wholesale.
The council unanimously approved the loan.
“That’s a great example of us getting the SERF money back in the community,” Menken said, thanking the council for its support.
“Dakota Seafood will be an exciting new addition to Spearfish’s ever-growing business community,” Menken added Tuesday. “SEDC is pleased we were able to partner on this project. We are committed to putting SERF dollars to work for the betterment of our community.” The SERF program, a municipal financial resource created in 1992, provides short-term, low-interest loans to manufacturers/service exporters expanding or relocating to Spearfish. There are no minimum or maximum loan amounts. The council also approved an amendment to the SERF policy Monday to allow SEDC to continue to receive SERF funds for its operating expenses.
In 2015, the council adopted a resolution amending the SERF program to allow proceeds from a SERF loan to fun operating capital for SEDC for a minimum of three years, through 2018, provided as a grant. The SEDC had been amending its organizational structure to become more responsive to job creation and retention and asked the city to financially assist as the entity makes changes.
“We believe that in the three years that we have received the SERF funds, we’ve proven to be a wise investment,” Menken said, explaining that in its 2019 funding request, SEDC is asking for $55,000 in SERF funds, and this is the third straight year that it has requested less than the previous year, maintaining its goal.
“Our goal is to continue to request less as we increase with our membership investments and our leases at the Atlas building,” he said. “We want to continue to wean down, but in order for us to request those SERF funds, we do need a change in the policy.”
Menken said that at this time, SERF funds are crucial to performing SEDC’s operations.
Councilman John Lee made a motion to amend the policy to remove the 2018 expiration. He described that SEDC has been a good thing for Spearfish and has “done an outstanding job.”
Councilman Dan Hodgs echoed Lee, describing that he’s seen the funds utilized very well for economic growth in the community. He seconded the motion, which was unanimously approved.