10-21-2019 EDA Work Session CompleteE C O N O MIC D E V E L O P ME N T AU T H O R IT Y W O R K S E S SIO N
R IC H F IE L D MU N IC IPAL C EN TER, B AR T H O L O ME W R O O M
O C TO B E R 21, 2019
5:45 P M
C all to order
1.D iscussi on of B usiness D evelopment A cti vities and P rograms
A djournment
Auxiliary aids for individuals with disabilities are available upon request. R equests must be made at least 96
hours in advance to the C ity Clerk at 612-861-9738.
AGENDA SECTION:Work Session Items
AGENDA ITEM #1.
STAFF RE P ORT NO. 3
WORK SESSION
10/21/2019
RE P O RT P RE PA RE D B Y: J ohn S tark, E D A E xecutive D irector
D E PA RTM E NT D IRE C TOR RE V IE W: J ohn S tark, E D A E xecutive D irector
10/14/2019
O TH E R D E PA RTM E NT RE V IE W:
C ITY M A NA G E R RE V IE W:
I T E M F O R WO RK S E S S I O N:
Discussion of B usiness D evelopment Activities and Programs
E X E C UT IV E S UM M ARY:
The Ric hfield Ec onomic Development Authority (E D A) was founded in 2018, in part to provide programming
for business development. Before the formation of the E D A, there was no reliable funding sourc e for
programming to assist our loc al businesses. I n the past, the Ric hfield Housing and Redevelopment Authority
(HRA) did fund some area-spec ific projects in business districts and had a c ouple of minimally funded
business development activities. These currently include:
Open to B usiness: an emerging business c ounseling service available for businesses opening in
Richfield or for Ric hfield residents opening a business elsewhere. The HRA funded this program from
2013-17, and the ED A took over the budget in 2018. The c urrent cost for providing this service is
$12,500 per year, half of which is paid by Hennepin C ounty. The Open to B usiness program is
administered by the Minnesota Consortium of Community Developers (MC C D). Rob Smolund of
MC C D has been working in some economic development capacity with the community for 20 years.
The 2018 annual report and 2019 year-to-date summary for Open to Business are attached.
Bike Rack Cost Share Program: Since 2016, the HRA will pay half the cost of the installation of a new
bike rac k at a Ric hfield business. I n the first 3 years of the program, B lue Cross-Blue Shield
reimbursed the HRA for 50% of our costs. The cost to run this program is minimal. Typically, the HRA
funds two or three racks per y ear at an annual cost of less than $1,500.
Penn C entral Business D istrict: Since 2008, the HRA has funded several initiatives along Penn
Central from 62nd to 69th Streets (the Penn C entral Business District). The HRA received a cost-
sharing grant from Hennepin County to fund the Penn Avenue Façade Grant program. I n 2018 and
2019, $26,500 in HRA funds have been pledged to leverage $84,000 in County and private money to
make improvements to buildings in the c orridor. The HRA has also funded enhanc ed landsc aping in
the right-of-way fronting the water tower, fire station and liquor store, two rounds of banners (in 2015
and 2019) and paid for c osts associated with Open Streets at Penn.
Lyndale & 66th Street W ayfinding: The HRA has pledged a total of $80,000 in its 2019 and 2020
budget to fund enhanc ed signage and hardsc ape features to help coalesc e the various developments
and public spac e in the area.
From 2013 to 2015, the C ity employed an Ec onomic Development Specialist position to c oordinate
several programs and projec ts. The position was eliminated when a cost-benefit analysis conc luded
that the position did not produce sufficient results to justify the salary and benefits of the position.
W ith the formation of the E D A there is now a reliable sourc e of funding for more business development
ac tivities. I n the 2018 budget, the E D A decided to budget $75,000 for these uses but decided to let the funds
ac cumulate rather than expending them. Both the 2019 and the 2020 E D A budget c ontain $95,000 for
"Business Assistance/D evelopment."
E D A staff has researched how our peer communities provide programming to help their loc al businesses, has
met with economic development consultants, and have garnered feedback from E D A Commissioners at past
disc ussions. S taff is reluctant to propose programs that would necessitate the hiring of additional personnel,
as a full-time position would c onsume the entire annual business development budget.
Staff is recommending that the E D A c onsider the implementation of the following programs:
Low-I nterest Loans for Small Businesses;
Displac ed Businesses Grant, and;
Subsidize P artic ipation in Energy and Environment Loan Program.
A summary of these programs is as follows:
Revolving Low-I nterest Loan
2% E D A Loan
Requires matching private lending
Loan term amortizes at the same rate as private lending
E D A funds "last in"
$50,000 maximum ED A loan as staff approval (up to $74,500 with E D A approval)
$5,000 minimum ED A loan
Administered & Underwritten by the Minnesota Consortium of Community D evelopers (MC C D): costs
included in "Open to Business" contrac t
Displaced Business Fund
Businesses displaced by HRA/E D A funded redevelopment
Must relocate in Richfield
I nitial $1,750 payment for lease rate differential at the signing of the lease
Additional $1,750 reimbursement for ac tual moving, fixtures and signage c osts
Center for Energy and Environment Loan Program
Low-interest loan to businesses for making energy -wise improvements
Serve in a referral mode only or pay to buy down interest rates
Administered by the Center for Energy and the Environment (C E E)
Lee Hall (Chief Operating Offic er) and Rob S molund (Senior Business Advisor) for the Minnesota
Consortium of C ommunity D evelopers will be in attendance at the meeting to discuss their administration of
Open to Business in Richfield since 2013 as well as other services that they provide for ec onomic
development to other cities and agenc ies throughout the region.
D IRE C T I O N NE E D E D :
Discuss past activities and potential future Business Development programming and direct staff to
pursue specific pr ograms or projects.
B AC K G RO UND INF O RM AT IO N:
A.H IS TOR IC AL C ON TEXT
The Richfield Housing and Redevelopment Authority and City of Richfield have both taken on Business
Development programming in the past, inc luding:
"Enterprise Fac ilitation" business c ounseling and financing during the approximate time frame of
1998 - 2003.
Economic D evelopment Specialist position from 2013 - 2015.
B.P OL IC IE S (resolutions, ordinances, regulations, statutes, etc):
Ec onomic D evelopment Authorities are given levying power in Minnesota and permissible use of the
resulting funds are Business Development and Assistanc e.
C.C R IT IC AL T IMIN G ISSU E S:
n/a
D.F IN AN C IAL IMPAC T:
The E D A budgeted $75,000 in 2018 and $95,000 in both 2019 and 2020 for "B usiness
Development/Assistanc e."
E.L E GAL C ON S ID E R AT ION :
Ec onomic D evelopment Authorities are given levying power in Minnesota and permissible use of the
resulting funds are Business Development and Assistanc e.
ALT E R N AT IV E (S ):
n/a
P R IN C IPAL PAR TIE S EXP E C T E D AT ME E T IN G:
Lee Hall (Chief Operating Officer) and Rob Smolund (Senior Business Advisor) for the Minnesota
Consortium of Community Developers (MC C D)
AT TAC H ME N TS :
D escripti on Type
Open to B usi ness 2018 S ummary B ackup Materi al
Open to B usi ness 2018 Results B ackup Materi al
Open to B usi ness 2019 year to date B ackup Materi al
2018 Richfield Year end report
As of 2019-01-16 13:51:55 • Generated by Rob Smolund
Number
of Clients
Low-
Income
Owned
Minority
Owned
Woman
Owned
Business
Description Industry Business Stage
Business
Source
City
Impacted -
Business
City
Impacted -
Resident Summary Comments All assistance Provided
Total
TA
Hours
Q1 TA
Hours
Q2 TA
Hours
Q3 TA
Hours
Q4 TA
Hours Equity
Approved
MCCD
Financing
Amount
Approved
Outside
Financing
Amount
Jobs
Created
Jobs
Retained
1
Soul Food - Pop
Up Food Start-up Municipality Minneapolis Richfield Start-up soul food pop -up Operation/logistics;Initial Consultation 2 0 0 0 2
1
Retail and
Speciality
Stationary Retail
Existing -
Challenged Bank Referral Excelsior Richfield
Client is seeking OTB's help to purchase an existing
stationary business specialising in high-end,
custom stationary and invitations. OTB approved
financing in late 2018- to close in early 2019.
Other Loan Related;Loan Committee;Cash
Flow Analysis & Projections;Loan
packaging;General business issues/guidance 23 0 0 0 23 $60,000 2
1
convenience
store Food
Existing -
Challenged Municipality Richfield Edina
Assisted client with a strategy on how to deal with
a questionable lawsuit against his convenience
store
Regulatory assistance;Strategic
planning;General business issues/guidance 4 0 0 0 4
2 Coffee Shop Food
Existing -
Opportunity Municipality Minneapolis Richfield
Advising Long Time Client with
management/operational issues as they adjust to
newly expanded facilities.
TA for Existing Clients;General business
issues/guidance;Cash Flow Analysis &
Projections 7 5 0 0 2 $10,000
1 hair salon Retail
Existing -
Challenged Municipality Richfield Minneapolis
Helped long term hair stylist truly understand
what her main goal is as she ages and desires to
stay in the industry but not behind a chair.
Marketing;Strategic planning;Financial
Management Assistance 4 0 0 4 0
2
Dog day care,
boarding & more Service
Existing -
Opportunity Municipality Richfield Richfield
Helped existing business evaluate growth
strategies that fit their personal goals for their
doggy day care business. Business has grown and
has added 10 new employess over the last year. Real estate analysis;Strategic planning 3 0 0 3 0 10
1 Plumbing HVAC
Construction
/ Real Estate
Existing -
Challenged Web Crystal Richfield
Assisted plumbing contractor with planning cash
flow for over a $1M in major contracts
Cash Flow Analysis & Projections;General
business issues/guidance;Strategic planning 7 7 0 0 0
1 Food Food
Existing -
Opportunity Other Minneapolis Richfield Assisted long term client with real estate analysis Real estate analysis 2 0 0 2 0
1 Auto Body Shop Service
Existing -
Opportunity Bank Referral Richfield Minneapolis
Cash Flow, Possible pro-bono legal help with
tenant
Lease review/negotiation;Other Loan
Related;Cash Flow Analysis &
Projections;Financial Management Assistance 3 0 3 0 0
1 Fitness, trainging
Health/Fitnes
s
Existing -
Opportunity Web Minneapolis Richfield general business issues Initial Consultation 2 2 0 0 0
1
State farm
branded
insurance agency
Professional /
Consulting
Existing -
Opportunity Municipality Richfield Minneapolis
Developed a full real estate analysis for different
scenarios for the purchase of 2500 s.f. building in
Richfield by a Minneapolis insurance agency.
Cash Flow Analysis & Projections;Real estate
analysis;Strategic planning 6 0 6 0 0
2
Music
School/Coffee
Shop Service
Pre-start
planning Municipality Richfield Richfield
Assisted couple with the beginning stages of
business planning for a music school and coffee
shop Business Plan Development 3 0 3 0 0
1 retail shop Retail
Existing -
Challenged Municipality Richfield Richfield
Assisted client with varying options on how to
reduce her monthly occupancy cost for her brick
and mortar retail store
Close;Cash Flow Analysis &
Projections;Strategic planning 3 0 3 0 0
1 Grocery Store Food
Existing -
Challenged Municipality Chaska Richfield
Client came to OTB because the city is purchasing
the building they are in and they will have to
relocate. They need help with possible building
purchase and contractor referrals and help during
this process.
Initial Consultation;General business
issues/guidance;Relocation Assistance;Loan
Facilitation 8 0 3 0 5
1 Dog Training Service
Existing -
Challenged Municipality Richfield Eagan
Advised long standing dog training business on
relocation. Suggested that consider subleasing or
contacting businesses that have underutilized
space to lease in the evenings.Real estate analysis;Relocation Assistance 3 0 0 3 0
1 Salon Suites
Construction
/ Real Estate
Pre-start
planning Municipality Richfield Richfield
Assisted Richfield resident and entrepreneur with
evaluation feasibility of a salon suite business and
real estate investment
Business Plan Development;Real estate
analysis 4 0 0 4 0
2
Tibetan
dumplings Food
Pre-start
planning Municipality Richfield Edina
Assisted Farmers Market operator with strategic
planning for expansion of his Tibetan food
business
Business Plan Development;Tax Advice &
Assistance;Licensing Assistance 5 0 0 0 5
1 Cooking school Food
Existing -
Challenged Municipality Richfield Burnsville
Advised client on leased location for his cooking
school Real estate analysis 3 0 0 0 3
1
Doggie Day care
and Boarding Service Start-up Bank Referral Minneapolis Richfield Loan Underwriting
Loan packaging;Other Loan Related;Loan
Committee 10 0 0 0 10 $71,574 $35,000 $442,292 3 12
Individuals 23 13 9 12 Total Direct TA Hours 99 13 18 16 53 0 0
Businesses 19 68%47%63%
Office Hours, Program Administration, Public
Events/Meetings 18 6 4 4 4
Totals 117 19 22 20 57 $71,574 $105,000 $442,292 13.00 14.00
# of direct
capital
access 2
Total
Outside
Capital
Leverage $513,866
City/County:
Time Frame:
Clients Served:
Client inquiries 2
New Entrepreneur/Start-up 5
Existing Business 14
Total 21
How did client hear about OTB:
Bank
Referral 3
Municipality 13
Other 1
Web 2
Direct & Facilitated Financing approved:
# of loans 4
Amount $105,480
Capital Leveraged: $513,866
Jobs retained or created from MCCD
closed loan clients: 27
Program related hours TA/Admin: 117
Types of Services Provided:
Business plan
development
Real Estate
Analysis
Tax advice and
assistance
Licensing Cash Flow
analysis and
projections
Strategic
planning
Relocation
Assistance
Loan
Facilitation
Lease review/
Negotiation
Financial
Management
Assistance
Operation/
logistical help
Loan Packaging
Regulatory
Assistance
Richfield
1/1/18-12/31/18
Industry Segment:
Construction / Real
Estate 2
Food 7
Health/Fitness 1
Professional / Consulting 1
Retail 3
Service 5
Client Demographics
Demographic # of Clients TA Hours
Women
Entrepreneurs
12 60
Minority
Entrepreneurs
9 38
Low Income
Entrepreneurs
13 72
Types of Businesses:
Auto Body
Shop
Coffee Shop Convenience
Store
Cooking
School
Dog Day Care Dog Day care
and boarding
Dog training Fitness
training
Grocery store
Hair Salon Music
School/Coffee
Shop
Plumbing/
HVAC
contractor
Speciality
Stationery
store
Salon Suites Soul Food
Pop Up
State Farm
Agency
Tibetan
Dumplings
Updates
Richfield Loan Client Highlights
Sisters Coffee Inc. dba Sister Sludge
Founded by triplets Judy Morris-Meyer, a Richfield resident, Maggie Morris-Gronlund and
Katie Morris-Buch, Sister Sludge had been a defining feature in the Northrop neighborhood
of south Minneapolis for twenty years. In March 2017, their lease was terminated by a new
landlord and the neighborhood was in a panic that they might have to close. With help from
MCCD, they relocated a mile from their original location to the up and coming area of 38th
Street and 23rd Avenue South. The larger space will allow the sisters to add a wine bar and
a small plates menu. This additional loan in first quarter 2018 was for working capital.
Clean Paws LLC dba City Paws is a start-up pet boarding and day care facility that is owned
by a Richfield married couple. The business will also offer pet grooming and self and full
service bathing. They just opened on the first floor in the Mill City Quarters building at 3rd
Avenue and South 2nd Street just outside of downtown Minneapolis. The business is targeting
affluent pet owners who travel, primarily those that work or live in or near downtown. Recent
years have shown a significant growth in the number of upscale residential units in and around
downtown Minneapolis. Many of these occupants are dog owners. Open to Business provided
a working capital loan after the business experience some unexpected delays in the buildout
Epitome Papers LLC
Epitome Papers was founded more than 40 years ago, and for approximately 10 years
beginning in 2005 it operated out of the Galleria Mall in Edina. The business sells retail
stationary and gift items, but generates the largest portion of its revenue from custom stationary
and invitations for weddings and other special events. In 2016 the business was purchased and
relocated to Excelsior. The current owners are selling the business now to the store manager, a
Richfield resident, and Open to Business approved a loan for her to purchase the business.
Non Loan Client Highlights:
• Advised client on leased location for his cooking school
• Advised long standing dog training business on relocation. Suggested that consider
subleasing or contacting businesses that have underutilized space to lease in the
evenings.
• Advising Long Time Client with management/operational issues as they adjust to newly
expanded facilities.
• Assisted client with a strategy on how to deal with a questionable lawsuit against his
convenience store
• Assisted client with varying options on how to reduce her monthly occupancy cost for her
brick and mortar retail store
• Assisted Farmers Market operator with strategic planning for expansion of his Tibetan
food business
• Assisted plumbing contractor with planning cash flow for over a $1M in major contracts
• Assisted Richfield resident and entrepreneur with evaluation feasibility of a salon suite
business and real estate investment
• Developed a full real estate analysis for different scenarios for the purchase of 2500 s.f.
building in Richfield by a Minneapolis insurance agency.
• Helped long term client evaluate growth strategies that fit their personal goals for their
doggy day care business. Business has grown and has added 10 new employees over
the last year.
PROPERTIES, LLC
Credit Builder Loans:
In 2018, MCCD provided two credit builder loans to a Richfield residents. MCCD works in
partnership with several nonprofit organizations to offer the credit building program. Our
partners provide financial counseling in conjunction with small personal loans from MCCD. This
combination of counseling with loans is helping program participants improve their credit scores,
thus allowing for better interest rates for various types of lending.
Client Testimonials from 2018:
“Rob is definitely someone you want in your corner. He takes a holistic approach to understanding
your business objectives and provides the appropriate strategy/ solution(s). Rob possess the unique
expertise to understand both the legal and financial side as it relates to revenue/ ROI. He has been
an amazing resource and huge asset to the team.”
“I say this in all seriousness, I have NO idea how I could’ve done it without you. If there is
anywhere that I can tout you or Open To Business’s help let me know I will stand on a rooftop and
tout away!”
Richfield Open to Business Activity thru 9/30/19
As of 2019-10-08 15:26:57 • Generated by Rob Smolund
Number
of Clients
Low-
Income
Owned
Minority
Owned
Woman
Owned
Business
Description Industry
Business
Stage
Business
Source
City Impacted
- Business
City Impacted
- Resident Summary Comments All assistance Provided
Total
TA
Hours
Q1 TA
Hours
Q2 TA
Hours
Q3 TA
Hours Equity
Approved MCCD
Financing
Amount
Approved
Outside
Financing
Amount
Jobs
Created
Jobs
Retained Outcomes
1 TRUE TRUE TRUE
Soul Food - Pop
Up Food Start-up Municipality Minneapolis Richfield
Looking for kitchen and pop up
spaces General business issues/guidance 1 0.25 0.75 0
1 TRUE FALSE TRUE
Retail and
Speciality
Stationary Retail
Existing -
Challenged Bank_Referral Excelsior Richfield
Assisted loan client with cash flow
management and provided general
business guidance
Other Loan Related;General
business issues/guidance;Financial
Management Assistance 12.75 11.75 1 0
1 TRUE FALSE TRUE
Community
coffee shop and
bakery Food
Pre-start
planning Municipality Richfield Richfield
Assisted client with formulating a
structure to test business feasibility
for a neighborhood bakery/coffee
shop.
Business Plan Development;Real
estate analysis;Regulatory
assistance;General business
issues/guidance 2.5 2.5 0 0
1 TRUE FALSE FALSE
Indoor/Outdoor
Dog park with
beer, wine and
food Food
Pre-start
planning Bank_Referral Minneapolis Richfield
Assisted Richfield resident with cash
flow analysis, loan packaging,
regulatory issues and lease review
for his new concept incorporating a
dog park with a brewery and eatery.
Other Loan Related;Cash Flow
Analysis & Projections;Loan
packaging;Lease
review/negotiation;Regulatory
assistance;Loan
Committee;Licensing
Assistance;Networking/referrals;Gen
eral business issues/guidance 44.5 0 17.5 23 $198,000 $50,000 $665,000 11 MCCD direct financing
1 TRUE FALSE FALSE
Snow plowing
and Gig worker
app Technology Start-up Web Richfield Richfield
Assisted resident with fleshing out a
few entrepreneurial ideas to
enhance his gig activity.
Business Plan
Development;Marketing;Networking
/referrals;Operation/logistics 13.5 0 11.5 2 Established business
1 TRUE TRUE TRUE
Body Sculpting
and contouring Health / Fitness
Pre-start
planning Other Richfield Bloomington
Assisted entrepreneur with business
plan development and financing
options for her body contouring
business
Business Plan Development;Cash
Flow Analysis & Projections;Loan
packaging;Regulatory assistance 4 0 4 0
1 FALSE TRUE TRUE
cosmetics/clothi
ng with
Carribean Flair Retail
Pre-start
planning Web Richfield Richfield
Assisted client with a framework to
develop a business plan and evaluate
feasibility for a Caribbean Inspired
cosmetic line
Business Plan Development;Cash
Flow Analysis & Projections;Personal
Financial planning;Marketing 2.5 0 2.5 0
1 FALSE FALSE TRUE
Beauty Eyelash
Studio Service
Existing -
Challenged Entrepreneur Richfield Bloomington
Client was seeking QuickBooks setup
and training for an existing business
Record keeping/bookkeeping;Initial
Consultation 19.75 0 6.25 13.5
1 TRUE FALSE TRUE Beauty Spa Service Start-up Entrepreneur Richfield Bloomington
Client was seeking QuickBooks setup
and training for an existing business
Record keeping/bookkeeping;Initial
Consultation 5.5 0 2.5 3
1 TRUE TRUE TRUE Tbd Retail
Pre-start
planning Municipality Richfield Richfield
Assisted resident with developing a
plan to start a cottage food business
selling baklava at farmers markets.
Business Plan
Development;Regulatory
assistance;General business
issues/guidance 2 2 0 0
2 TRUE FALSE TRUE
Dog day care,
boarding & more Service
Existing -
Opportunity Municipality Richfield Richfield
Assisted client on ways of dealing
with a regulatory issue Regulatory assistance 2 0 2 0
1 FALSE FALSE FALSE Auto Body Shop Service
Existing -
Opportunity Bank_Referral Richfield Minneapolis Other Loan Related 2 2 0 0
1 FALSE TRUE TRUE
Cannabis
Dispensary when
it becomes legal Retail
Pre-start
planning
MCCD
Community
Partner/Mem
ber Org Richfield Richfield
Assisted with a business plan format
to evaluate a cannabis dispensary
business when it becomes legal in
MN
Business Plan
Development;Regulatory assistance 3 0 0 3
1 TRUE TRUE TRUE Comestology Service
Existing -
Opportunity
MCCD
Community
Partner/Mem
ber Org Richfield
Brooklyn
Center Microgrant inquiry, new client Initial Consultation;Marketing 1.25 0 0 1.25
Total Individuals 15 10 6 11 116.25 18.5 48 45.75 $ 198,000.00 $ 50,000.00 $ 665,000.00 11 0
Businesses 14 71%43%79%
Low-
Income
Owned
Minority
Owned
Woman
Owned