Cedar Development LLC has received approval for a two-year payment deferral on its loan with the city of Two Harbors.
Cedar Development is also known as Spokengear GBC, which owns Spokengear Cyclery and Outdoor, Cedaero Manufacturing and Cedar Coffee Company. All three businesses are housed in the building off County Road 26, 1130 11th St.
The corporation was founded by Dan and Kirsten Cruikshank in 2015. The coffee shop and bike shop opened in May 2016. Dan gave an update on the businesses to the council Nov. 13 before requesting the deferral.
Among the three businesses, the companies now employ a dozen part-time and eight full-time staff members. The total sales in 2017 were $662,000 and the business is projecting $850,000 for 2018.
"We've created new jobs and we're a reason people stop in town now," Dan said. Spokengear is a bicycle sales, service and rental shop.
Cedaero (the name is a blend of "cedar" and "aerodynamic") manufactures bike packs for 20 dealers in the U.S. and one in Japan.
Cedar Coffee is a coffee shop that focuses on locally sourced ingredients.
"In retrospect, starting three businesses at once - the coffee shop, bike shop and manufacturing company - was a lot to bite off," Dan said. "My startup expenses were a lot more than what I had planned on. The good news is that we're on track to break even and show a profit in short order, within the next year. But I'm asking for deferment on our loan repayment for the next couple of years to get on my feet and continue to make these businesses into a great asset for the community."
Spokengear was developed on land previously considered undeveloped. The Kruikshanks agreed to purchase the property at full price from the city and sponsored a grant, along with the city, with the Iron Range Resources and Rehabilitation Board (IRRRB) to extend the utilities to the land.
However, when an appraisal for the building came back greater than expected, the Cruikshanks reached out for help. After the Two Harbors Development Fund declined to participate in a loan with the Cruikshanks, the city decided to move forward with the project.
"The city wanted to move forward because it liked this project and so it came forward with a notion that it would borrow the money from the THDF and the city would agree to pay the THDF back," city attorney Steve Overom said. Overom said the project is "one of my favorite projects."
City finance director Miranda Pietila and Overom met with the Cruikshanks to review their financials and recommended the city grant the request.
"We believe the business is a contribution to the community and don't see any issue in granting the request," Pietila said.
The council approved the request unanimously; councilor Cathy Erickson was absent.