City puts MAGIC dollars to work
Council approves loan fund, marketing project
A new business revolving loan fund will get an advance appropriation, while a selection committee will begin seeking marketing firms interested in branding Minot.
The Minot City Council voted Monday to spend MAGIC Fund dollars of up to $1.3 million on the two projects.
The council approved spending up to $300,000 on a professional marketing consultant to assist in creating a one-brand strategy for Visit Minot, the Minot Area Chamber of Commerce and Minot Area Development Corp.
Support for a marketing plan originated with local stakeholders working with an International Economic Development Council study.
To select a marketing firm, the city will request qualifications from applicants. The request for qualifications will go out for three weeks before a selection committee reviews the applications. The committee will bring a recommendation to the city.
The selection committee was set up to have two representatives from each Visit Minot, MADC and the chamber. It also is to include the city’s public information officer, Derek Hackett, and community development/economic development director, Brian Billingsley. Council member Josh Wolsky suggested having a council member and citizen representative on the committee to add trust to the process.
Wolsky brought up concerns in the community about the involvement of MADC board chair Brekka Kramer, who works for Odney, a potential applicant for the marketing project. He questioned how that conflict of interest is being handled.
MADC President Stephanie Hoffart said Kramer abstained from the vote to pursue a marketing firm and will not be on the selection committee. Hoffart added the selection decision will made by the three entities, not just MADC.
“We’re going to look at the qualifications of whoever submits,” she said. “We want to do what’s best for Minot and our community, and we want to be looking as one united front, which other communities have done over and over again, and we seem to miss the boat several times.”
The council approved Wolsky’s amendment to add to the membership of the selection committee before voting to give the project the go-ahead.
The council also approved $500,000 this year and $500,000 next year to finance a Business Accelerator Fund managed by Souris Basin Planning Council. The proposed revolving loan fund would provide loans up to $70,000 to match interest buydowns of Bank of North Dakota PACE and Flex PACE loans. A local 35 percent match is required, and the Business Accelerator Fund would provide that match for up to three years.
“We have calculated that at a minimum for every dollar that we lend out, we will get another $6 back into the community with private investment, Bank of North Dakota funds and any of our other lending partners that are involved in that,” said Lyndsay Ulrickson, SBPC executive director.
The interest rate would be between 1 and 5 percent, with maximum loan terms between five and 10 years. Businesses interested in assistance would need to originate loans with private lending institutions. The fund’s administrative costs would come from fees and interest and not MAGIC Fund dollars.
Eligible loan recipients could include individuals and public or private entities in Bottineau, Burke, McHenry, Mountrail, Pierce, Renville and Ward counties. Seventy percent of the fund would need to be loaned within the city of Minot. Eligible projects would include business start-ups and expansions, new or expanding, non-residential childcare projects and new affordable multi-family housing units.
“The needs are going to change in the future, but right now we see this as a need for real estate developers, people coming in, renovating old buildings. There’s a big resurgence of that with the Main Street Initiative,” Ulrickson said.
Council member Shannon Straight sought to amend the agreement to advance $250,000 of the $500,000 available in 2019, rather than hold the money in the MAGIC Fund until loans are ready to close.
“It sends a strong message to the Bank of North Dakota and to our partners that we trust our partner, and we’re going to get out of our own way and let them do the work,” Straight said. “The dollars that are going into this program, that the (MAGIC Fund) steering committee has approved, should go into the program and we should allow it to run. We shouldn’t have the extra layer from the city.”
Finance Director David Lakefield said typically the MAGIC Fund reimburses rather than advances money. The original contract with SBPC provided that SBPC would obtain the money once loans are approved and ready to go, he said. Lakefield added there is interest earnings lost to the MAGIC Fund when money is advanced.
Straight said the involvement by the city complicates the process.
“Nobody is looking to spend money erroneously or waste public dollars. But what I’ve tried to convey at various meetings is we can’t allow the mistakes of the past to force us to go so far rigid to the other extreme, where we are adding layers of bureaucracy, frustrating our partners,” he said. “We have to keep in mind it’s a revolving loan fund. They’re going to establish essentially a bank account. We’re not building anything here. We’re reinvesting the dollars back into this community.
“Let’s keep in mind what the end goal is and not allow these details- because of the unfortunate issues of the past – derail what is ultimately a fantastic opportunity for us,” he added.
“If I have a sales tax in place that gets dispersed into the MAGIC Fund, do I want it sitting there accumulating interest? Am I getting taxed just to gain interest? Or am I getting taxed so that my tax dollars can go to work?” he said. “That’s why we were elected is to make these decisions, to put these things out in the community. Yes, I understand it’s going to be work, whether it be on the front end or the back end. But under-capitalization for any business is a cardinal sin, so I support this amendment.”
The council voted 4-1 for the amendment to advance money before voting 5-0 in support of creating the revolving loan fund.