The Florida promoter who convinced local economic development officials he would bring manufacturing jobs from China to Bettendorf hasn't made a payment in nearly two years on the $107,000 loan he received from the Bi-State Revolving Loan Fund, the economic development arm of the Bi-State Regional Commission.
LEDs America made payments totaling $31,000 on the job development loan, but its last check was in September 2013, leaving an unpaid balance of $76,000, according to Bi-State officials.
The firm also received a 10-year Tax Increment Financing (TIF) deal from the city of Bettendorf in August 2012 for construction of a $1.5-million manufacturing facility along Interstate 74, but has yet to begin any work on the promised 13,000-square-foot facility. The assembly plant for light-emitting diode (LED) bulbs was to be operational by March 2013 and result in 120 production workers, seven supervisory positions, four managers and a plant manager job.
Joel Westermarck, president of LEDs America, also shopped the bulb assembly plant project to economic development officials in Kingston, New York and suburban Washington, D.C., but Bettendorf was the only one to offer financial incentives for the deal.
Although the assembly plant has not materialized, a 4,800-square-foot office building has been constructed on one of the adjacent lots in the I-74 Technology Park, a commercial development owned by Plantation Development, Ltd. and the proposed location for the LED assembly facility. The building developers are to receive tax rebates of $65,000 for 10 years under the TIF deal with the city. The developers also agreed to a minimum assessment of $650,000 on the property until 2033.
One of the requirements for obtaining TIF rebates for the technology park was that it create "primary" jobs, defined as those not provided by other local businesses.The occupants of the office building are primarily financial service positions and defense industry consultants.
Initially, LEDs America set up an assembly facility in a former lawn equipment distribution warehouse at 6125 Valley Dr., Bettendorf. The company's web site now lists 434 S. Devils Glen Road, Bettendorf, as its assembly location, however, the location was locked with unclaimed letters in its outside mailbox Thursday (7/2). The sign on the door referred visitors to the company web site, Westermarck's business address in Jupiter, FL and the office building in the I-74 Technology Park at 872 Tanglefoot Lane, Bettendorf.
The company also was awarded $130,000 in job training funds by Eastern Iowa Community College. The company was reimbursed for approximately $30,000 in job training costs in late 2013 and early 2014, but the college has since suspended reimbursements after lack of progress in setting up the LED assembly work. The three-year award for job training expired at the end of June.
Werstermarck personally guaranteed the Bi-State loan, but Bi-State officials aren't sure when or if they will seek repayment of the outstanding loan amount. According to Bi-State Executive Director Denise Bulat, the agency is the last in line for repayment in the event of default.
Northwest Bank provided a loan of $190,000 at 5.4 percent interest for the project. Bi-State's $107,000 loan carried a 4 percent interest rate. A total of $33,000 in company equity was included to bring the total project cost to $330,000. It is not known how much of the Northwest Bank loan has been repaid.
The Bi-State revolving loan program, which is funded by the Economic Development Administration of the U.S. Dept. of Commerce, is to encourage expansion and development of "viable busioness/industrial activity in Rock Island and Scott Counties."
"The Revolving Loan Fund (RLF) will be targeted to those businesses and industries that cannot obtain economically feasible financing because of conventional interest rates and lending/exposure limits applied by local lending institutions," according to the Bi-State program description. "The RLF program is intended to provide the funds that make the project viable by filling the financing gap created by these conditions."
"Other financial commitments must be in place at the time of application. No loan shall be made form the program where there is reasonable doubt as to the ability of the borrower to repay the loan," the program description says.
