The East Grand Forks City Council on Tuesday moved closer to approving $8.5 million in bonds for an expansion of the American Crystal Sugar factory.

A public hearing concerning the approval of the bonds is scheduled for July 2. If the bonds are approved, American Crystal Sugar will begin the expansion of its factory later this summer. The money would go toward improving the company’s solid waste disposal mechanism.

David Murphy, city administrator for East Grand Forks, said American Crystal Sugar is pursuing bonds through the city because of a provision in Minnesota state statute that allows private companies — under certain circumstances — to use the city’s bonding authority to borrow money at a lower interest rate for expansion.

Murphy said approving the bonds is good for the city because it’s an investment in property value and that the expansion will create more general property tax for the city. He also said the project will lead to the creation of new jobs, given the work required to complete the expansion.

Murphy also pointed out even if American Crystal Sugar default on its loan, “the city is not liable for any of those bonds.”

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The council also approved a $150,000 loan to Harriston-Mayo LLC for an expansion project the company is planning. The state of Minnesota will also provide a $150,000 loan for the project as well. The company’s East Grand Forks factory — Mayo Manufacturing — manufactures agriculture equipment. Murphy said the company has been granted similar loans in the past and has never missed a payment.

“They’ve expanded several times in the past,” Murphy said. “They seem to keep growing.”

Murphy also said the company’s expansion will add five new jobs in the community.

The council also approved a city ordinance allowing utility task vehicles to be used on residential roads in East Grand Forks. Murphy said the ordinance allows “side-by-sides” and Gators but it does not allow scooters, golf carts or ATVs on residential roads.

Murphy said the vehicles are not allowed to use state or federal aid highways. He also said operators must obtain a sticker from the state stating the vehicle is street legal.