00-0326R

RESOLUTION SUPPORTING APPLICATION OF HARFEL, LLC, FOR STATE CHALLENGE GRANT.

BY PRESIDENT GILBERT:

WHEREAS, pursuant to the Rural Development Act, local governing units are required to issue a sponsoring resolution on behalf of the business requesting financing through the Northland Foundation; and

WHEREAS, the city of Duluth has received a request to issue a resolution on behalf of Harfel, LLC; and

WHEREAS, it is consistent with the purpose of this governing unit to encourage employment and increase the tax base.

NOW, THEREFORE, BE IT RESOLVED, that the city of Duluth supports this application for funding on behalf of Harfel, LLC.


STATEMENT OF PURPOSE:  The purpose of this resolution is to support the application of Harfel, LLC for a State Challenge Grant through the Northland Foundation in the amount of $200,000.

Harfel, LLC is a single-purpose limited liability corporation that was formed to build and own a 54,480 sq.ft. building that will be built in the Airpark Industrial Park and leased exclusively for use by Westburne Supply Inc.'s Duluth branch.

Westburne Supply Inc. is the U.S. subsidiary (headquartered in Plymouth, MN) of the North American company, Westburne Inc. It is an integrated distributor of industrial, construction-related, and maintenance, repair and operation supplies and equipment. Its Duluth branch is a business that was originally started and owned by Crane/Ordway in the 1800s; Westburne Supply Inc. has owned it since the 1970s.

The Duluth branch has 25 full-time employees and anticipates that at least 10 additional jobs in the next two years will be created as the result of this expansion. These new jobs will include warehouse, truck driving and customer service, with hourly wages ranging from $8 - $19.23 (plus health and retirement benefits).

This resolution will allow the Northland Foundation to extend a $200,000 subordinated loan to Harfel in a total financing package of $2,625,000 (in addition to an equity injection of $397,500). Other financing partners include MN Power, the 1200 Fund and M & I Bank. Altogether, this financing package ensures that this company's expansion will remain within Duluth.