DATE: August 22, 2019
TO: Members of the Economic Development Authority
FROM: Nate Carlson, Economic Development Coordinator
Title
Northfield Enterprise Center Presentation - Introduction of Contract Negotiations
Body
SUMMARY AND ACTION REQUESTED:
The EDA will be hearing a presentation from Chris Whillock, Director of the NEC, on the current efforts of the Northfield Enterprise Center (NEC) with respect to the existing contract for services between the EDA and NEC. No action will be taken at this time. The Board may provide direction to staff following the presentation. The EDA is scheduled to review a revised contract at the September EDA meeting.
BACKGROUND:
The Northfield Enterprise Center (NEC) was established by the EDA in 2001 to strengthen existing and start-up businesses in Northfield with business planning, financial modeling, and personalized business counseling services. Over the past 15 years, the NEC has continued to provide assistance to local businesses utilizing a combination of paid staff and volunteer support.
Key services the NEC provides includes one-on-one counseling services for local businesses, advising and educating clients on business plans for starting a business, turning a business around, acquiring or selling a business, and/or growing the a business. In addition, the NEC provides information on financing and connects businesses to financing sources. There are several other professional organizations that can also provide these services at no cost to the EDA such as the Service Corps of Retired Executives (SCORE) and the Small Business Development Corporation (SBDC).
The Faribault Chamber of Commerce serves as the Rice County Small Business Development Center (SBDC). The SBDC provides approximately 250 hours of business counseling per year to local businesses. The only requirements to qualify for SBDC assistance is that the business owner live or own a business located in Rice County. The local SBDC counselor can assist with business plan development, analysis of financing and preparation of an SBA loan application. If additional assistance is needed, a representative from the SBDC office in Rochester is consulted.
While these services have always been available to Northfield business owners, they do not have offices in Northfield. The NEC was established to provide local businesses with a local office presence for these counseling services. The EDA provided the NEC with its initial start-up funding of $170,000 in 2001 for the first three years of operation. In subsequent years, the NEC received $45,000-$50,000 in annual funding from the EDA until 2012 when the contract was increased to $60,000 to assist with administration of additional EDA loan programs. With the hiring of a full-time EDA Coordinator in 2016, the annual funding for the NEC was reduced to $50,000.
In addition to direct operational funding to the NEC for counseling services, the EDA has also provided approximately $25,000 per year for the Clement Scherer Micro-Grant Program. The Micro-Grant program is designed to strengthen emerging businesses in Northfield and position them for future growth by helping them develop their technical, management, or marketing capabilities. The NEC has traditionally assisted with the coordination of the Micro-Grant program for the EDA as part of their Scope of Services.
History of EDA funding the Northfield Enterprise Center
|
YEAR |
APPROVED FUNDING |
|
2019 |
$50,000 |
|
2018 |
$50,000 |
|
2017 |
$50,000 |
|
2016 |
$60,000 |
|
2015 |
$60,000 |
|
2014 |
$60,000 |
|
2013 |
$60,000 |
|
2012 |
$60,000 |
|
2011 |
$50,000 |
|
2010 |
$50,000 |
|
2009 |
$53,800 |
|
2008 |
$53,800 |
|
2007 |
$50,000 |
|
2006 |
$45,000 |
|
2005 |
$45,000 |
|
2004 |
$170,000 as seed money, split over 3 years |
|
2003 |
|
|
2002 |
|
The Northfield EDA has continued to have a strong focus on local entrepreneurial development and these programs make up over 30% of the EDA’s annual expenditure budget. Over the past 15 years, the EDA has frequently encouraged the NEC to find additional funding sources to become self-sustaining. While the NEC has been successful at obtaining some grant funding, there has been limited success in establishing ongoing alternative funding sources.
The EDA entered into a two-year contract with the NEC for $50,000 for 2018 and 2019. Over the past two years, Economic Development Coordinator Nate Carlson has helped to bridge the communication between organizations. As a result, stronger lines of communication have been established. With this continued progress, staff believes a three-year contract may benefit both parties. The NEC Board of Directors has also requested at least a two-year contract to enable the NEC to provide consistency in planning for future goals.
A copy of the 2018-2019 contract is included in the packet for your review. The NEC contract is the largest single line item in the EDA budget outside of personnel services. The preliminary EDA budget for 2020 includes $50,000 for the NEC. Staff is recommending that funding remain at the $50,000 level for 2020, 2021 and 2022. The EDA is asked to discuss this issue and provide further direction so staff can return with an amended NEC services contract for approval at the September EDA meeting.
ANALYSIS:
N/A
OPTIONS:
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RECOMMENDATION:
N/A