City forgives $100,000 of Wausau loan

Brainerd will forgive $100,000 of a loan made to Wausau Paper in 2004 as part of a financial incentive for the company to invest $27 million in capital improvements at the Brainerd mill.

The Brainerd City Council on Monday unanimously approved a recommendation from City Administrator Dan Vogt and the Brainerd Economic Development Authority to forgive $100,000 of the $127,300 due the city by Wausau from a $400,000 loan made when Wausau purchased the mill from Missota in 2004. Wausau has repaid the city $322,640 of the loan.

"We are grateful for that involvement and that faith in our community," council member Mary Koep said.

Council President Kevin Goedker said forgiving $100,000 of the loan was the city's way of saying thanks to Wausau for its investment in Brainerd.

Council member Bob Olson was absent, but sent a memo to Vogt indicating he was in favor of forgiving $100,000 of the loan.

Wausau announced Feb. 16 its intention to make a $27 million capital investment at its Brainerd paper mill.

The investment is expected to open up markets in the paint, medical and automotive industries, among others, as the mill will produce a wide range of unsaturated tape-backing paper that is used to produce masking tape. The improvement is scheduled for completion at the end of the first quarter of 2011.

The mill will retain its ability to produce premium printing and writing products. Wausau's capital investment is not expected to add jobs at the Brainerd mill, other than providing construction work in the community, but it will improve the security of existing jobs, a Wausau spokesman said. Wausau's Brainerd mill employs about 180 people.

In December, Wausau had contacted the Brainerd Lakes Area Development Corp. about the proposed capital investment at its Brainerd mill and inquired about possible financial assistance for the project. Wausau requested all discussion regarding the $27 million investment and its request for financial assistance remain confidential in order to protect its national and international paper markets.

In a memo to the council, Vogt wrote that because Wausau's capital investment didn't include job creation funding options from the city were limited.

Vogt wrote that he and Sheila Haverkamp, Brainerd Lakes Area Development Corp. executive director, met with Wausau and Minnesota Department of Employment and Economic Development officials to determine what assistance the city could offer the company.

Vogt said Wausau wanted the talks to be confidential and that any leak of the information could jeopardize Wausau's $27 million investment at the Brainerd mill.

The end result, which Wausau agreed with, was forgiving $100,000 of a loan from the city.

In 2004 Wausau received a $500,000 loan from federal funds through the state of Minnesota and awarded to the city. Terms of the loan included forgiveness of $100,000 with the remaining $400,000 plus interest to be paid back to the city.

Vogt noted that the Wausau revolving loan fund has a balance of $322,640, with $127,330 in principal still owed.

At the Personnel and Finance Committee meeting preceding Monday's council meeting and during the council meeting, resident Jeff Czeczok said he appreciated Wausau's investment but objected to the fact that staff, BLADC, Wausau and the state met confidentially to discuss the project.

Czeczok also questioned whether Wausau needed the $100,000 or if they were seeking assistance simply because they knew they could get it. He said the council's hands were tied to approving it.

Patrick Medvecz, Wausau Paper corporate vice president, told the Personnel and Finance Committee that the financial assistance was sought as an incentive for its board of directors, that confidentiality was sought to protect its interests and that with or without the loan forgiveness Wausau would make the capital investment at the Brainerd mill.

Resident Steve Wolff said he understood Wausau's need for confidentiality and also how it looked to the public. He suggested the council not act on forgiving the loan Monday but take time to explain to the community why it was a good thing.

Haverkamp said she averages 500 inquiries a year from individuals and companies exploring possibilities in the Brainerd area. She said it's common for companies to explore possibilities in confidentiality.

MATT ERICKSON may be reached at matt.erickson@brainerddispatch.com or 855-5857.