MAGIC Fund grant accelerates small businesses
Minot’s MAGIC Fund supported only two projects in 2019, but one of those projects already is having a positive impact on the local economy.
The city approved $500,000 in 2019 and $500,000 in 2020 from the MAGIC Fund to Souris Basin Planning Council to create a Business Accelerator Fund. The revolving loan fund provides loans up to $70,000 to match Bank of North Dakota PACE and Flex PACE loans. Individuals and public or private entities in Bottineau, Burke, McHenry, Mountrail, Pierce, Renville and Ward counties are eligible, but 70% of the fund must be loaned within the city of Minot.
Since the fund launched in mid-June, five loans totaling $141,136 were issued, creating or retaining 71 jobs, according to SBPC. The new investment leveraged nearly $5.4 million in addition to the local fund dollars. The five businesses, all located in Minot, included two startups and three expansions.
The second MAGIC Fund application was for up to $300,000 to Visit Minot, MADC and the Chamber of Commerce for communitywide market research and a unified branding strategy. Last December, the One Brand Campaign released the results of a community perception survey.
Also last year, the Minot City Council agreed to divert sales tax dollars from the MAGIC Fund to hire an economic development specialist, with a salary range of $70,432 to $106,041. The city began advertising last April and now has a potential candidate under consideration.
The annual MAGIC Fund Screening Committee report submitted by the committee chairman Jason Zimmerman to the council this month showed overall sales tax collections into the fund were up from budget by $162,017 while actual collections were up $73,362 from 2018. Overall revenue for 2019 totaled $1.78 million, which was $235,292 more than budgeted.
The MAGIC Fund had an ending balance of $10.2 million at the end of 2019.
The reported stated, “The Minot economy has shown some improvement in ‘pockets’ but mixed commodity markets in our leading sectors of agriculture and oil and gas along with the recent announcements of various retail closings continue to have an impact on the overall health of our economy real and perceived.”
Brady Martz and Associates independently verified previous MAGIC Fund awards for compliance with criteria and issued reports on SkySkopes and Kalix.
Grand Forks-based SkySkopes announced its expansion into Minot in December 2016. In 2017, the city awarded a $375,100 forgivable loan if the company created 15 new, full-time jobs in three years.
SkySkopes’ development agreement with the city requires it to meet three employment benchmarks. It achieved the first and second benchmarks, having at least seven full-time positions by July 2019. The company was hiring in 2019 and has stated it is on target to meet the 15 positions.
The audit also found SkySkopes met its requirement to invest at least $300,000 by July 2019 in its Minot office.
The unmanned aviation systems company opened a downtown office in October 2018. The Minot office is primarily focused on the company’s oil and gas business.
The MAGIC Fund had awarded a $126,000 grant and $126,000 forgivable loan in 2014 to buy a baler for Kalix’s recycling operation. Minot Vocational Workshop, which operates Kalix, failed to meet the minimum employee hour commitment in its development agreement. The review calculated 21,393 hours, which was short of the 30,000 hours required.
Minot Vocational Workshop will remit back to the city the pro-rated portion of funds that did not meet the requirements of the development agreement, amounting to $3,615.
Kalix has a total loan remaining of $63,000, while SkySkopes has $125,033, which is forgivable. The city wants $750,000 from the developer of the downtown parking ramps, with whom it currently is in court. There also is a $1 million loan from 2015 on the parking ramps to be repaid to the MAGIC Fund by 2025.