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Hagerstown to loan Duvinage $100,000 for business expansion

March 20, 2013|By HOLLY SHOK | holly.shok@herald-mail.com
  • Duvinage is expanding its business and adding more employees. The expansion of Duvinage - a corporation manufacturing circular and spiral staircases - was necessitated following its October acquisition of Ohio staircase manufacturer Sharon Stairs, the production of which was shifted to Hagerstown.
Ric Dugan, Staff Photographer

A local company that a Hagerstown official said could create about 70 new jobs within the next five years will receive a $100,000 loan from the city if approved next week.

During a meeting Tuesday at City Hall, Economic Development Manager Jill Estavillo said the loan, which will come via the state and be administered through the city, will help fund Duvinage’s business expansion that has been underway since last year.

The expansion of Duvinage — a corporation manufacturing circular and spiral staircases — was necessitated following its October acquisition of Ohio staircase manufacturer Sharon Stairs, the production of which was shifted to Hagerstown.

Duvinage President Robert A. Maruszewski said in an email Wednesday that the company’s business plan outlines adding 50 employees over the next five years.

However, Estavillo told the mayor and Hagerstown City Council that Duvinage has provided information to the city indicating it could create “upwards of 71 jobs” in the five-year time frame.

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“Before the recession, Sharon Stairs had 175 employees in Akron, Ohio,” Maruszewski said when asked about Estavillo’s statement. “So growth beyond 50 new employees is certainly possible.”

According to Estavillo, if the city transfers $50,000 from its Upper Floors Redevelopment Fund into the Hagerstown Revolving Loan Fund, the state will contribute $100,000 to the HRLF fund, which will act as the “pass through vehicle” to provide a $100,000 loan to the company.

The state will allow Duvinage’s repayments of the loan to the city to “remain and revolve” in the HRLF to assist other Hagerstown businesses in the future, according to a March 15 memo from Estavillo to City Administrator Bruce Zimmerman.

The Upper Floors Redevelopment Fund currently sits at $300,000, the city’s Director of Economic Development John Lestitian said Tuesday.

According to the memo, Maruszewski approached the city about finding an alternative to a $100,000 Tri-County Council for Western Maryland loan with “stringent personal collateral requirements.”

Estavillo said the city contacted the Maryland Department of Business and Economic Development and learned of the alternative financial assistance option offered by the state.

“It’s a win-win program,” Estavillo said.

According to earlier reports from The Herald-Mail, Duvinage had completed the transfer of the Ohio company’s equipment and work orders in November.

Duvinage had 47 employees in 2007 but was outfitted with only 20 in 2011.

Maruszewski said Duvinage currently employees 22 part- and full-time employees, in addition to three staff members who came to Hagerstown from Sharon Stairs.

“The $100,000 loan will be used to make electrical improvements to our facility so we can support the new equipment, as well as the general cost of integrating and starting the Sharon Stairs operation, which has many requirements from training employees to changing the layout of our work cells to redirecting their telephone numbers and integrating the websites,” Maruszewski said.

The city in October approved a loan-to-grant award of $17,875 to Duvinage with contingencies including creation of 25 new jobs in two years. The incentive will continue separately, according to the memo. 

In December, the Washington County Board of Commissioners additionally approved a loan, which will become a grant if the company meets certain conditions for obtaining financing and hiring and retaining employees, totaling city and county funding at nearly $68,000 in 2012.

The county’s contingencies, according to memo on the county’s loan, included stipulations that Duvinage must retain the 22 employees it had as of earlier that year, in addition to producing 38 more jobs by the end of 2015. The company then must retain the 60 jobs through the end of 2017.

Maruszewski said the primary contingency for the city’s $100,000 loan is that the company pay it back.

“The jobs potential is certainly the primary driver for this loan, but as long as the loan is paid back, the terms of the loan will be satisfied,” Maruszewski said.

A motion to approve the loan process will be prepared for next week’s city council meeting, Estavillo said.

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