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Jean Spaulding
Jean Spaulding

Tools of the trade: Economic development options continue to grow

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news Willmar, 56201

Willmar Minnesota 2208 Trott Ave. SW / P.O. Box 839 56201

Access to good streets, utilities and a skilled workforce have always been vital components for the launch of a successful business, but as competition for a strong commercial base has grown, communities have upped the ante to entice businesses to locate in their backyards.

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“The economic development industry has indeed changed, even in Kandiyohi County in the last 15-20 years,” said Jean Spaulding, assistant director of the Kandiyohi County and City of Willmar Economic Development Commission. “The expectations from industry have grown.”

Tools like JOBZ, tax increment financing, tax abatement, loans, grants and business planning assistance have helped level the playing field that has helped rural communities compete with the metro area.

Kandiyohi County businesses have benefited from many of those programs, including JOBZ, which is a tax forgiveness program tied to specific goals of job creation.

Steve Renquist, director of the Kandiyohi County and City of Willmar EDC, said JOBZ was used as part of the package to help MinnWest Technology Campus, Bushmills Ethanol and Buhler Industries locate in Kandiyohi County.

JOBZ  was “very successful locally and did exactly what the state wanted,” said Renquist.

It’s expected that when JOBZ sunsets in 2015 it’ll be replaced with another economic development tool called the Minnesota Job Creation Fund proposed by Gov. Mark Dayton.

This plan would fix some of the problems with JOBZ and provide a more transparent, accountable and reliable system of assisting businesses, according to information from Dayton’s office.

 It’s proposed to be funded with $25 million in state money that would be leveraged with $450 million in additional private investments. The initiative would require participating businesses to invest a minimum of $500,000 and create at least 10 full-time equivalent jobs.

“The program will create thousands of jobs in two years,” according to Dayton’s office.

Dayton is also proposing a $30 million increase to the Minnesota Investment Fund, which Spaulding said has been “one of the most productive tools the state has had in economic development.”

Since 2005 the revolving loan fund utilized its $7 million budget to help 53 businesses statewide, with 80 percent of the projects located in Greater Minnesota, said Spaulding.

The loans are typically paid back in two years and lent out again.

The tool has been used multiple times in Kandiyohi County, including Willmar Manufacturing, which received a $400,000 grant that helped the business create 30 jobs, said Spaulding.

 “It’s one program that has a proven record of job creation and doing good work in economic development,” said Spaulding, but a lack of new capital has limited the grants.

Networking

Renquist said economic development isn’t just about courting new businesses but helping existing businesses expand.

“Taking care of the businesses you have right now is the number one objective,” said Renquist. “If you don’t take care of the base you’re going to have trouble bringing new businesses in.”

By far the best tool for any economic development organization is networking, said Spaulding.

“What we do best is connecting people with resources,” she said. “That is one of the things that hasn’t changed in what we do. It’s who we know and how we can put people together that’s critical to what we do.”

Small communities, like Atwater and New London, don’t have paid staff to help direct economic development activities but depend on volunteer committee members that rely heavily on contacts with local bankers, community investors and people who own vacant buildings in town to make vital connections with potential businesses.

Renquist compares the role of EDC professionals to a fishing guide on Lake of the Woods.

“Many times we can’t catch the fish for you but we can take you to where the fish are biting,” he said.

Economic development organizations can help businesses see strengths and weaknesses in their business plan and help them find buildings and identify funding sources to fill gaps left by banks.

But even if every business person has the same tools at their fingertips there will be winners and losers that might come down to a magic golden touch.

“There’s a certain knack,” said Renquist. “There’s a spark to being a business person.”

Being an entrepreneur with a start-up business has never been easy but the recession made it more challenging, said Spaulding.

She said the lending industry has been unfairly blamed for not approving business loans in recent years. Those same banks would be “criticized just as much if they had made bad loans,” said Spaulding.

Sometimes funds from bank loans and a business person’s capital aren’t enough to launch a business. Renquist said there are options for “gap” financing that can make a difference between a business sailing or not.

“As a rule if you have a good, well thought out project, we’ll find financing,” said Renquist.

Sometimes it’s best if a business doesn’t get off the ground.

“Starting a business is challenging and rewarding for those that have the passion for it, but it’s very difficult,” said Spaulding, who said a key part of her job is to make sure entrepreneurs know what they’re getting into and, in many cases, discourage them from taking the leap if she spots deficiencies in their business plan.

“I feel my first job is to scare them enough so they really know what they’re getting into,” she said. “We do them no service by not making them fully understand the ups and downs, the challenges that a start-up can bring.”

Sometimes economic development directors serve as match-makers between new and existing businesses looking for a new location, product or market.

And sometimes enticing a business can come back to the basics of water, sewer, streets and other utilities.

There’s anticipation in Willmar that when the western sanitary sewer interceptor is installed that the old airport, which is being developed into an expansion of the industrial park, will be ripe for new manufacturing businesses.

“It’ll have shovel-ready status,” said Spaulding, which will qualify projects there for a wide range of financial programs.

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