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Hypersonic takes back request for Rushford funding (11/10/2010)
By Cynthya Porter
In a letter to the Rushford Economic Development Authority, Hypersonic withdrew its request that the city of Rushford help fund an expansion project, a decision that came on the heels of contentious talks between the parties over the details of the agreement.

Hypersonic CEO Dan Fox started the nanotechnology company in Rushford in 2008 with the help of a $500,000 loan from the city’s EDA.

This fall that loan was among a handful that cast Rushford into the spotlight after state auditors ruled it was an inappropriate use of flood recovery money given to Rushford after the floods in 2007 because Hypersonic was not a flood damaged business.

Local officials who helped create the loan argued that though Hypersonic did not exist during the August 2007 floods, loaning it startup money would help rebuild the community economically, and as such the loan seemed appropriate.

The 25 to 50 jobs Fox promised were to help stimulate the town’s economy after a TRW plant closure and later devastating floods weakened the Rushford’s business base.

Three years and a largely turned over city council later, the relationship between Hypersonic and the city appeared to cool after representatives of each failed to reach an agreement about the terms of the business relationship between them.

Fox approached city officials early this year to ask that an additional $1.8 million be loaned to the company for an expansion project Fox said could add employees to the rolls.

But city officials hesitated, tabling the matter at a September meeting until formal documents could be drawn up that outlined a development agreement between Rushford and Hypersonic, city council minutes say.

The Rushford EDA endorsed approval of the additional funds, but some on the city council said they needed additional information from Hypersonic before they would advocate additional lending to the company.

Specifically, officials said they wanted updated business financial information including income and expense projections as well as employment, production and expansion time lines.

Talks degenerated after Fox and officials disagreed over whether that information had been provided or not and to what extent Fox had to disclose business information.

Through public comments at meetings and in newspaper articles, Fox questioned the city’s commitment to economic development, though a joint EDA and council subcommittee continued to express in writing its hope that the parties could arrive at an agreement.

A component of that agreement would have given Hypersonic loan forgiveness for each job created by the expansion, though how much each job was worth was one of the matters unsettled during negotiations.

The Fillmore County Journal reported that the police were summoned by a city worker during a city council meeting October 12 because an exchange between Fox and Mayor Chris Hallum became heated after Fox would not relinquish the floor during public comment.

At the October 25 council meeting, according to the minutes, council members reviewed a memo submitted to the EDA by Fox stating that he was withdrawing his request for financial assistance. Fox said during the failing talks that he will expand elsewhere if a suitable agreement isn’t reached with Rushford.

 

 

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