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City, state offer Crenlo $750,000 in forgivable loans to remain in Rochester

The City of Rochester, working with Rochester Economic Development Inc., has proposed providing Crenlo Engineered Cabs with a $300,000 forgivable loan from the city’s Economic Development Fund. The city also applied for a $450,000 forgivable loan from the state's Minnesota Investment Fund. The subsidy is to keep the company from closing its Rochester operations and cutting about 400 local jobs.

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The Crenlo plant at 2501 Valleyhigh Drive NW, Monday, Oct. 26, 2020. (Ken Klotzbach / kklotzbach@postbulletin.com)

In an effort to keep 336 jobs here and create 12 new ones, the City of Rochester and the State of Minnesota have proposed to award $750,000 in forgivable loans to Crenlo Engineered Cabs.

The owners of the 69-year-old Med City manufacturer told its employees and city staff in 2020 that they were considering leaving Rochester and shifting production to facilities in Iowa and North Carolina.

In response, the city, working with Rochester Economic Development Inc. , proposed providing Crenlo with a $300,000 forgivable loan from the city’s Economic Development Fund. The city also applied for a $450,000 forgivable loan from the state's Minnesota Investment Fund.

RELATED: Crenlo to stay in Rochester with support from state and city

Rochester Public Utilities also agreed to provide $500,000 in utility rate incentives, bringing the value of the package offered to Crenlo to $1.25 million.

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The $300,000 and the formal application for the $450,000 still need to be approved by the Rochester City Council, according to Assistant City Administrator Terry Spaeth. A public hearing about the business subsidy is on the agenda for the council’s April 19 meeting.

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The Crenlo plant at 2501 Valleyhigh Drive NW, Monday, Oct. 26, 2020. (Ken Klotzbach / kklotzbach@postbulletin.com)

However, Crenlo has already sent a letter to its employees stating that it has reached a financial agreement with the city and state as well as RPU to keep its operations active in Rochester. Angeles Equity, a California-based private equity firm, became the majority owner of Crenlo in December 2019.

Spaeth and Senior Administrative Analyst Brent Svenby explained that in return for the financial support, the company agreed to maintain at least 336 jobs in Rochester for five years. The company currently has more than 400 employees, but staffing fluctuates cyclically.

Crenlo also agreed to create 12 new jobs within the next two years with wages $21 an hour, not including benefits.

If the company does not meet the promised goals, all or some of the money can be recovered by the city and the state.

“In the agreement, there are 'claw back' provisions,” said Spaeth.

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Svenby added that Crenlo is planning to make a $4.2 million investment in Rochester. That includes the $750,000 from the city and state.

That investment is expected to be used to expand its plant at 2501 Valleyhigh Drive NW to accommodate a new paint line. That will counter the closure of its 1600 Fourth Ave. NW facility, probably by the end of the year. Operations will also continue at space that Crenlo leases on the Rochester Technology Campus, formerly the IBM campus.

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