To: BOARD OF SUPERVISORS
From: Executive Office
Meeting Date: June 3, 2025
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Department Contact: |
Darcie Antle |
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707-463-4441 |
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Department Contact: |
Kelly Hansen |
Phone: |
707-463-4441 |
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Item Type: Consent Agenda |
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Time Allocated for Item: N/A |
Agenda Title:
title
Adoption of Resolution Authorizing the Execution of Subordination Agreements and Other Acts Related to the Community Development Loan for Agwood Mill & Lumber Company
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Recommended Action/Motion:
recommendation
Adopt Resolution authorizing the execution of subordination Agreements and other acts related to the community development loan for Agwood Mill & Lumber Company; and authorize Chair to sign same.
End
Previous Board/Board Committee Actions:
On November 10, 2009, the Board of Supervisors adopted Resolution 09-260 approving an application for funding from the economic development allocation of the State Community Development Block Grant (CDBG) program and identifying the responsible party for grant administration. The application included a $2,000,000 business loan to Agwood Mill and Lumber Company.
On August 28, 2012, the Board of Supervisors authorized the Executive Office to transmit a letter to the Savings Bank of Mendocino County stating the County’s acknowledgement of and lack of opposition to a $500,000 loan the bank approved for Agwood Mill & Lumber Company.
Summary of Request:
In 2010, the County issued a $2 million loan to Agwood Mill & Lumber using economic development Community Development Block Grant (CDBG) grant funds. This assistance was prompted by the significant economic downturn caused by the national recession in 2008, which had a profound impact on the housing construction industry. The loan has a 2% interest rate and is scheduled to mature on September 1, 2030.
In 2012, the loan was subordinated to a loan from Savings Bank.
As of May 2025, the outstanding balance on the loan amounts to $613,708.46, reflecting that 70% of the total loan has been repaid over 15 years. The County's loan servicer, EDFC, confirms that Agwood is current on all payments and has no history of delinquency.
Agwood has formally requested the subordination of the existing loan with the County to facilitate the arrangement of two new loans from American AgCredit, which will provide critical funding for capital equipment and working capital. The proposed financial arrangements are as follows:
1. A $2 million loan with a 17-year term, secured by real property and requiring a first lien position.
2. A $4 million line of credit with a 2-year term, secured by inventory and receivables and requesting a second lien position on the real property.
Agwood Mill & Lumber was initially established in 1978 by the Huffman family and operated under local ownership for many years. In 2017, the business merged with Conrad Forest Products, resulting in significant expansion and an increase in employment to as many as 75 people at the mill. However, due to market challenges, Conrad began downsizing in 2024, ultimately laying off 45 full-time employees, and the mill faced the possibility of ceasing operations at the end of the year. In early 2025, the original owner, Randy Huffman, regained ownership of the mill, is continuing operations, and is working with American AgCredit to secure capital to invest in equipment and secure working capital, ensuring the long-term viability and success of the business. The 2025 financing will allow Agwood to make essential capital investments, support ongoing operations, and position the company for long-term success.
Alternative Action/Motion:
Do not approve resolution and provide alternative direction to staff.
Strategic Plan Priority Designation: A Thriving Economy
Supervisorial District: District 1 , DISTRICT 2, DISTRICT 5
Vote Requirement: Majority
Supplemental Information Available Online At:
Fiscal Details:
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source of funding: Subordination agreement does not change the repayment terms of the County's existing loan, it merely changes the County's priority in case of default. |
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current f/y cost: This action will not have additional fiscal cost to the County. EDFC currently handles loan servicing for Agwood’s 2009 loan with the County. EDFC’s service contract is $900 annually. |
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budget clarification: Agwood’s monthly loan repayments fall under the UD schedule 9 budget. |
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annual recurring cost: EDFC currently handles loan servicing for Agwood’s 2009 loan with the County. EDFC’s service contract is $900 annually. |
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budgeted in current f/y (if no, please describe): Yes - Agwood’s loan monthly repayments fall under the UD schedule 9 budget. |
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revenue agreement: No -subordination agreement does not change the repayment terms of the County's existing loan, it merely changes the County's priority in case of default. |
AGREEMENT/RESOLUTION/ORDINANCE APPROVED BY COUNTY COUNSEL: Yes
CEO Liaison: Executive Office
CEO Review: Yes
CEO Comments:
FOR COB USE ONLY
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Executed By: Atlas Pearson, Senior Deputy Clerk |
Final Status: Adopted |
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Date: June 3, 2025 |
Executed Item Type: Resolution |
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Number: 25-103 |
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