Date: Thursday, October 27, 2016
To: EDA Board of Commissioners
From: Northfield Economic Development Authority
Subject:
TITLE
NEC Quarterly Report and Consideration of 2017 Contract
BODY
Action Requested:
The EDA is asked to provide direction to staff regarding the 2017 NEC Contract.
Summary Report:
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.
One of the key services the NEC provides are 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, or growing the 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 has been providing local businesses with a link to counseling services for the past 6 years and refers businesses to the appropriate resource based on where a business is in their process. The Faribault Chamber of Commerce serves as the fiscal agent for SCORE and also serves as a link to the Rochester SBDC office. The South Central Minnesota chapter of SCORE provides business mentoring services throughout Rice County and has worked with several Northfield businesses. SCORE uses various experienced business advisors, including the former President of the Faribault Woolen Mills.
The Faribault Chamber of Commerce also 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 that is 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 per year.
History of EDA funding the Northfield Enterprise Center
|
|
|
|
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 |
|
In addition to 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.
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. With the hiring of a full-time Economic Development Coordinator, the balance of EDA funding towards entrepreneurial activities must be considered. Throughout 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 $60,000 per year for 2015-2016. A copy of the contract is included in the packet for your review. Other than personnel services, this is the largest single line item in the EDA budget. The preliminary 2017 budget includes $60,000 for the NEC. Staff is requesting the EDA provide further direction so staff may return in November with an amended contract and appropriate resolution. The final budget will be presented for EDA approval at the November 17th EDA meeting.
Alternative Options:
1. The EDA could fund the NEC at a reduced level for 2017. A reduction of 20-25% would provide $12,000-$15,000 for other projects and provide approximately $20,000 for projects.
2. The EDA could eliminate funding for the NEC for 2017. This would provide approximately $67,000 for other projects and initiatives. Staff will utilize
3. The EDA could fund the NEC at the current level of $60,000. With the hiring of a full-time EDA Coordinator position and other existing EDA funding commitments, this will leave approximately $7,000 for other projects or initiatives in 2017.
If funding is recommended by the EDA, staff will be proposing amendments to the existing contract including independent customer service reviews conducted by the EDA along with greater transparency of businesses that are consultant in an effort to build performance measurements into the contract. Additionally, staff will be working to establish more close working relationships with SBDC and SCORE.