Plans for $750,000 in forgivable loans to Crenlo Engineered Cabs were approved Monday.
The Rochester City Council unanimously approved using $300,000 from the city’s Economic Development Fund and $450,000 provided by the state's Minnesota Investment Fund to support work Crenlo has planned on local facilities.
“The key thing for me is the undertaking of the $4.25 million renovation, along with protecting the jobs, and there’s new jobs coming in,” council member Patrick Keane said, adding that such subsidies are not ideal.
The owners of the 69-year-old Rochester manufacturer told its employees and city staff last year that they were considering leaving Rochester and shifting production to facilities in Iowa and North Carolina.
On Monday, John Lenga, Crenlo’s chief financial officer, said the funds will be used to repair and upgrade facilities to allow the plant to continue local operations, which currently employ 400 people with an annual payroll exceeding $20 million.
In addition to the forgivable loans, Crenlo will receive $500,000 in utility rate incentives from Rochester Public Utilities, bringing the value of the package offered to Crenlo to $1.25 million.
In return for the financial support, the company agreed to maintain at least 336 jobs in Rochester for five years.
Council member Nick Campion said he estimates that put the cost at $173 per job each year. He called it a “good rate of return.”
Interim RAEDI President John Wade, who worked with the company and the city on the agreement, called the loans a measured response based on the company’s commitment.
“We believe it is strong, but not too strong,” he said.