The Silver Bay City Council tabled a discussion for rent abatement of roughly $71,000 for an organic food company based in the Mary MacDonald Business Center at the regular council meeting on Tuesday, Feb. 18.
The council will decide whether to accept or reject a new agreement with the business soon to be formerly known as Wildly Organic in a special meeting at 2 p.m. on Monday, Feb. 24.
"It really gets to a matter of survival and the viability of the business," said Wildly Organic owner Chris Toal. "We’re trying to give the business every chance we can to reinvigorate itself and try to sustain itself and keep the jobs here. The investors want to do that. There are a lot of reasons why we want to grow here. But there’s a lot of work to do to get to that point."
Wildly Organic was formed in 2000, but Toal purchased the business in 2015. The business employs 15 full- and part-time employees in its organic processing and shipping center in the former Mary MacDonald Elementary, Toal said.
The business has found itself in a difficult situation financially. Toal said he has a tentative agreement with his bank to accept a discounted settlement provided that the assets of the company are sold to another party. A group of investors are interested in the business.
However, the deal with the investors comes with a caveat: the new business would need a new short-term lease agreement with the City of Silver Bay and an abatement in rent until January 2021. The business takes up approximately 42% of the leaseable space in the Mary MacDonald building. Its rent averages to roughly $6,450 per month, according to information presented to the council.
This is not the first time the city has entered into a rent abatement agreement with Wildly Organic. In 2018, the City Council agreed to a rental plan to extend payment time and alleviate front end costs. The abatement started out at $31,000 and the city collected about $12,000 of the balance, with a little over $19,000 still outstanding. Toal was quick to state that the payments in the former abatement plan were made on time, which City Administrator Lana Fralich verified.
With the new agreement, the city would also technically forgive the outstanding $19,000.
"The issue with the existing lease and outstanding amount is that Wilderness Products will no longer exist and will not be in a position to be able to pay that," Toal said. "It’s an obligation or agreement that Wilderness products do not have the assets or money to pay for, which is indicative of why this change is occurring."
Councilors were frustrated with the tight timeline presented by Toal. The bank agreement with investors is scheduled for Friday, Feb. 21. Toal's investors asked for an answer to the proposed abatement and lease agreement before then, but the council requested more time for their decision.
"I know that you know the position, the quandary that we're in," councilor Richard DeRosier said. "Lana just received this letter five business days ago, so not a lot of time to get together and discuss our options. No one likes to be put in that position and feel the squeeze."
DeRosier also said it was "a tough ask to allow this new group to come in rent free until December," and expressed concern with setting a precedent.
Mayor Scott Johnson maintained that the city was "not obligated to find a middle ground."
"A business is not our responsibility," Johnson said. "I'm glad to have it here, but we're also looking at a huge hit, and we haven't seen anything except a letter from Chris. I'd like to see more before we make this kind of commitment."
Johnson asked for a business plan and more information from the investors before proceeding.
DeRosier asked if the group of investors could agree to pay for the utility portion of the rent as a compromise. Monthly utilities range from $1,500 to $2,000 per month. Toal said he'd have to consult with the investors before making that agreement.
The discussion concluded with the council voting unanimously to table the motion. The council will hold a special meeting at 2 p.m. on Monday, Feb. 24 to resume the discussion. There will also be a special meeting of the Mary MacDonald Committee at 8 a.m. on Friday, Feb. 21.