Local banks provide financing for new spec building

Published 9:00 am Tuesday, September 15, 2009

The Albert Lea Economic Development Agency staff and board members last Wednesday joined a group of local bankers at the new ALEDA spec building, which is currently under construction.

According to a news release, the group announced the details of the financing package for the $2.2 million, 62,500-square foot building located in ALEDA Industrial Park at the corner of Margaretha and 14th Street in Albert Lea.

Recognizing the need for additional industrial or warehousing space in the Albert Lea area, the city of Albert Lea Port Authority board, at its April meeting, accepted bids for the construction of the building now under construction.  ALEDA is a partnership between the Port Authority and Greater Jobs Inc.

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Often, governmental agencies, like the Port Authority, sell bonds in the traditional bond market to finance building projects. This type of financing, while easy to use for the agency, is difficult for local banks to participate. Often these bonds are purchased by private investors and pension funds.

However, the Port Authority board made the decision to seek local bids for the financing of this $2.2 million project. While not required by state statute to seek bids, the board believes in the public bidding process, the release stated.

According to board Treasurer Mike Moore, “Bidding helps ensure that we are making the most efficient use of scarce economic development dollars.”

Ellen Kehr, board president, said, “We wanted to shop local but also seek bids to make sure we received competitive bids.” Requests for bids were sent out to every bank having an office in Freeborn County. 

ALEDA Executive Director Dan Dorman said, “We received bids from two banks and one from a consortium of local banks. The low bidder was the consortium of local banks.”

Farmers State Bank, with offices in Freeborn, Hartland and Albert Lea is the lead bank for the consortium. Daniel Otten, senior commercial lender at Farmers State Bank underwrote the loan and assembled the group of banks.

Otten said, “We were pleased that the ALEDA board wanted to give the smaller banks an opportunity to bid. When we have the opportunity we can compete with any bank.”

Other banks in the consortium include the State Bank of Clarks Grove (with offices in Clarks Grove and Albert Lea), Produce State Bank (with offices in Hollandale and Albert Lea), First State Bank of Kiester (with offices in Conger and Kiester), Commerce Bank of Geneva, and Commercial Bank of Minnesota in Heron Lake. 

Sue Loch, president of State Bank of Clarks Grove, said, “Because of banking regulations, none of these banks on their own would have been able to make this type and size of loan. Together we are able to participate and make this loan happen.”