Council

approves

loan to

MCG

By RON LARSEN

Journal Staff Writer

NEW ULM -- With approving the city's 2004 $12,392,525 budget a mere formality, the City Council took time to delve at length into Motion Control Group's (MCG) request for a $150,000 loan from the city's revolving loan fund Tuesday night.

With property taxes totaling $3,763,598, including special tax district levies totaling about $116,000, the 2004 budget will be remembered as the one where property taxes became the largest single revenue source (30.37 percent). Local Government Aid, which in 2004 amounts to $3,460,534, slides back to second place at 27.92 percent.

The 2004 budget also runs counter to continued increase over past years because it is 3.1 percent lower than the city's 2003 budget.

While acknowledging MCG, Inc., over the past 16 years has repaid on time each of the four loans it has gotten from the city, councilors quizzed MCG's owner and president, Brett D. Reese, about the $540,000 funding package he is trying to have put together before the end of the year to help grow MCG's business and create additional jobs in New Ulm.

Councilor Clark Tuttle wanted to know about the $650,000 loan that the company has coming due April 1, 2004, and how the business and job growth financing would impact Reese's ability to pay off the bigger loan.

While Reese admitted MCG had a couple lean years starting in 2001, "I'm happy to say that MCG turned a profit in the third quarter (this year) and is headed for a profitable fourth quarter, as well.

MCG's "growth" loan package would include a $100,000 loan from Spectrum, the firm's principal bank, $140,000 from Southern Minnesota Initiative Foundation, in partnership with the State of Minnesota's Challenge Grant Loan Program, $150,000 from Reese, as well as the loan from the city.

As councilors dug deeper, Council President Dan Beranek told Reese, "I find it highly commendable that you are putting your money into it."

Councilor Ruth Ann Webster asked Reese to explain what portion of the business is conducted in Eden Prairie where the company's corporate headquarters are located and what roll did China play in the firm's production operations.

"MCG's sales and marketing offices, as well as its corporate office, are located in Eden Prairie. Of the firm's 77 employees, eight are in Eden Prairie. In addition to the main plant here, we have a second plant in New Ulm," Reese explained.

"I would say about 60 percent (of MCG's motors and related items) is made in New Ulm. We have more products because of our affiliation in China. From China, we get some finished goods that we will test and value-add, as well as components (for products made in New Ulm)."

In seeking the loan, MSG agreed to create at least six additional full-time equivalent jobs.

New Ulm's industrial development coordinator, Brian Tohal, supported Reese's proposal, saying, "These are good jobs, paying from $12-to-$25 an hour. Over the years, they've always been willing to ratchet down on expenses to meet revenue."

With that, the council approved, with conditions, MCG's loan request.

Moving on to adjustments for full-time, non-unionized city employees, the council approved a general wage increase amounting to 3.2 percent. As the highest-paid city employee, City Manager Brian Gramentz gets a nearly $3,000 boost to $96,033.60.

At the other end of the wage spectrum, the range for a clerk-typist increases nearly $1,000 from $25,833.60-$31,449.60 to $26,832.00-$32,448.00.

While wages paid were increasing by 3.2 percent, Gramentz noted that because the city and its employees were each carrying a larger share of the deductible, the employees' benefits package was increasing by only 1.9 percent.

For the first time, the city will have a vending agreement with its pop venders. An eight-year vending agreement with Midwest Coca-Cola Bottling Company of Mankato and Pepsi Cola of Mankato, Inc., which was negotiated by the Park and Recreation Department, was ratified by the council.