by CHRIS ROGERS
Winona County is unlikely to recover the $150,000 it loaned St. Charles manufacturer Envirolastech, county officials said last week. The county and other lenders have taken Envirolastech and its founders to court in an effort to recover the combined $2 million they loaned company.
State leaders, local officials, and this newspaper heralded Envirolastech as a rising star in 2016 because its innovative manufacturing technique utilized hard-to-recycle plastics and glass to create durable decking material and other faux lumber. However, for whatever reason, the business failed, and the promising St. Charles factory closed in 2018. Winona County Planning and Environmental Services Director Kay Qualley said the company struggled to offer competitive prices for its decking material. The Post has been unable to reach company officials for comment.
As part of its revolving loan fund, which provides low-interest loans to help spur job creation and economic growth, the Winona County Economic Development Authority (EDA) loaned Envirolastech $150,000 in 2017. The city of St. Charles gave Envirolastech land worth nearly $270,000 for its factory and offered it $65,000 worth of tax-increment financing. St. Charles’ economic development authority, Community Economic Development Associates (CEDA), lent the company $60,000. The Southern Minnesota Initiative Foundation (SMIF) loaned Envirolastech $100,000 in 2017, and the manufacturer borrowed around $1.9 million from Wells Fargo back in 2016.
Now, Wells Fargo, SMIF, and the county all claim Envirolastech is in default and have asked the Winona County District Court for a judgment ordering Envirolastech and its founders to pay the debts. According to the county, Envirolastech owes the EDA $149,800. Wells Fargo maintained that its loans precede the others and asked the court to grant it payment before the other lenders.
The loans were secured by Envirolastech’s factory and equipment and personal guarantees from company leaders Paul Schmitt and Jeffery and Kristy Mintz. County staff reported that Schmitt has filed for bankruptcy.
The sale of the factory and the plant’s equipment may generate some cash to pay back lenders, but given how much Envirolastech owes Wells Fargo, Winona County should not expect too much, an attorney for the county advised the EDA last week. “We’ll probably be pretty far down the list on this,” Assistant County Attorney Paul Ellison said.
Given how much Envirolastech’s property is worth and the lenders with higher priority than the county, EDA member Jim Vrchota stated, “We don’t foresee being able to collect anything here.” Qualley confirmed Vrchota was correct: The county will likely be unable to get its money back.
Even though Envirolastech did not succeed, the EDA deserves credit for trying to support a business that had the potential to solve a seemingly intractable challenge: finding a profitable way to reuse difficult-to-recycle plastics, Qualley said.
Vrchota reflected on all the other, successful businesses the EDA has been able to help over the years. “The Envirolastech thing is not a happy situation, but there have been a lot of wins that we’ve also been involved with, as well,” he stated.
The county EDA has around $1.5 million in its revolving loan fund. Roughly two-thirds of that is currently loaned out; the EDA still has over $500,000 available to loan.