State loan terms are atypical for big Schwan’s project
PIERRE, S.D. (KELO) — Two loans totaling $25 million that a state government panel recently approved for a global food-company's new production and distribution center in Sioux Falls are not only the largest amount in the history of South Dakota's Revolving Economic Development Initiative program. They carry some unusual conditions, too.
Steinberg's Furniture owners retiring after 20 years
The loans to SFC Global Supply Chain Inc., a subsidiary of Marshall, Minnesota-based Schwan's Company , feature a repayment schedule longer than normal, maturing at 10 years rather than five. And one of the loans is at a blended 2.5% rate of interest, an effective rate of 2.65% that is less than the standard 3% that the state Board of Economic Development put in place last November.
Jeff Erickson of Sioux Falls chairs the Schwan board of directors. He also chairs the state board that approved the loans, although he didn't participate in the September 11 meeting when the board considered them in closed-door session. Erickson, a banker, chairs the state Banking Commission , too.
In August, the state Board of Economic Development approved a reinvestment payment that will reimburse SFC for 100% of the state sales and use tax on the $750 million project. Erickson chaired the meeting but recused himself from the discussion and vote.
Briana Vande Pol recently began as communications coordinator for the Governor's Office of Economic Development , which oversees REDI loans and other incentive programs for businesses. She responded to questions from KELOLAND News about the two loans.
According to Vande Pol, the Board of Economic Development has the authority to establish a longer maturity period if approved by a two-thirds vote of present and voting members.
"Many REDI loans have or carry special conditions as part of applying economic development financing principles while also securing the loan principal," she said. "In this case, the 10-year term to maturity and other requested terms were presented to the board for consideration at the applicant's request. This approach allows for flexibility in structuring loans to meet specific project needs while maintaining appropriate oversight.
"These special conditions are evaluated on a case-by-case basis, taking into account the unique aspects of each project and the overall goals of the REDI Fund program," she continued. "The board carefully considers these requests to ensure they align with the program's objectives of supporting economic development while managing risk appropriately."
Governor Kristi Noem spoke about the project three years ago in her State of the State speech opening the 2021 session of the South Dakota Legislature. She said it would be the largest project in the history of the Governor's Office of Economic Development and would bring 600 full-time jobs to Sioux Falls.
"CJ Foods and Schwan's are building a world-class facility, the most high-tech facility of its kind in the world. That's a great start to 2021 for our state," Noem told lawmakers.
On May 31 of this year, the governor announced that Schwan's planned to add a regional office in downtown Sioux Falls that would bring an additional 50 jobs to start and could grow to 100. The production plant would reportedly be the largest Asian food facility in North America.
