The city of Coon Rapids’ efforts to enhance the business climate in the city are moving forward on two fronts, but have stalled on a third.
The Coon Rapids City Council, at a work session Feb. 5, gave the green light for staff to negotiate a contract for council approval with the Metropolitan Consortium of Community Developers (MCCD) to implement its Open to Business program, which will offer technical assistance and financial resources to business owners in the city.
And at a retreat Tuesday, Feb. 19, 2 to 5 p.m., at Anoka-Ramsey Community College, to which councilmembers have been invited, the results will be presented on the city’s business retention and expansion project survey.
At the retreat, the overall results of the survey as well as strategies for addressing the issues raised, will be presented.
Last fall, local volunteers visited 27 industrial firms in Coon Rapids to gather information about specific opportunities, challenges and issues facing the business community in the city.
But plans to establish a business incubator in Coon Rapids will not now be actively pursued, according to Marc Nevinski, city community development director.
“We remain open to the concept in the future,” Nevinski said.
The reason is the lack of available venture capital that would be needed to make an incubator project viable, he said.
Using a business incubator, early stage companies can establish themselves through access to affordable space, infrastructure, investors, technical assistance, advising and academic resources, Nevinski said.
Last year, the Coon Rapids Economic Development Authority (EDA), which comprises the seven members of the city council, executed a professional services agreement with Genesis Business Centers Ltd. to do a feasibility study and then begin the implementation process for an incubator.
But while the initial feasibility study found an environment existed in Coon Rapids to support an incubator project, by the end of last year, it became clear that there were not the financial resources in the business community to make it happen, according to Nevinski.
Specifically, there is little interest among existing and potential investors in reviving the dormant Anoka/Sherburne County Capital Fund, Nevinski said.
Original investors in the capital fund, who included local banks, utilities and private individuals, provided seed money for new and emerging businesses, he said.
And large companies, like Medtronic, are doing less of their own research and development, but rather buying small companies who have developed and proven marketability with a new technology, Nevinski said.
“Unfortunately, this does not lead to job growth or long-term investment,” he said.
As a result, the city has ended its relationship with Genesis, Nevinski said.
But it is about to forge a partnership with the Metropolitan Consortium of Community Developers (MCCD) through its Open to Business program, which was first presented to the council at a September 2012 work session.
At that time, the council expressed interest, but wanted more information before considering a contract with MCCD.
At the work session Feb. 5, Rob Smolund, MCCD’s enterprise facilitator, made a presentation and a short video was shown featuring a business owner’s experience with the program in Brooklyn Park.
In addition, following the council’s September work session, city staff met with some 10 local bankers to present an outline of the program.
“They agreed that the program would benefit Coon Rapids businesses and would assist in promoting it,” Matt Brown, city community development specialist, told the council.
The Open to Business program provides prospective and existing entrepreneurs with free one-on-one counseling with a business adviser, according to Brown.
This is an opportunity to help business owners with planning and organizing their business ideas, financial management, marketing, regulatory compliance and leasing or purchasing property, Brown wrote in a memo to the council.
The business adviser from MCCD would schedule “office hours” at the Coon Rapids City Center once a month for walk-in appointments, he said.
Interested business owners could also set up appointments at other times by contacting MCCD, Brown wrote.
But the MCCD program goes beyond mere technical assistance.
Businesses in the city taking part in the Open to Business program would also be able to access MCCD’s small business loan program, which provides capital to start or grow a business, according to Brown.
“MCCD’s loan fund is generally geared toward businesses that have a legitimate business plan, but have difficulty securing traditional bank financing,” Brown wrote.
A contract with MCCD would cost the city $15,000 a year, which would come from the Housing and Redevelopment Authority (HRA) account, according to Brown.
“The city’s existing economic development resources are largely oriented toward manufacturing businesses and redevelopment projects, rather than small, local businesses,” Brown wrote in a memo to the council for its work session Feb. 5.
“Because a large proportion of new jobs created in the city will likely stem from expansion of existing businesses, it is important to provide resources to facilitate growth of smaller businesses, which may be more likely to locate in redevelopment projects, such as along Coon Rapids Boulevard.”
According to Nevinski, the future of Coon Rapids Boulevard is small, start-up businesses not national chains like Target and that’s where the Open to Business program can help.
In his presentation, Smolund said the goal of the MCCD program is to become a trusted adviser to the business and help it get financing to expand.
“We are with them the whole way, really involved with the client,” he said.
“We can provide the third-party objectivity that aspiring entrepreneurs need.”
According to Smolund, MCCD worked with more than 250 business owners in Hennepin County in 2012, generating $100 million in financing to leverage more than $3 million in capital and retain or create 97 jobs.
MCCD is a 501c3 nonprofit agency and the $15,000 the city would pay as an annual fee would go to operational support, Smolund said.
If approved by the council, this would be the first MCCD open to business program in Anoka County, according to Nevinski.
“It could be the tip of the iceberg for the program in Anoka County,” Nevinski said.
While Hennepin County communities have been part of the Open to Business program since 2010, it expanded to Dakota County Jan. 1 this year to involve several cities.
A negotiated contract will be brought to a future council meeting for approval.
But at the work session, councilmembers also directed staff to put together a marketing plan for the program that would be considered at the same time as the contract.
“I am really excited about the concept, but I am concerned we don’t have the capability to market it,” said Councilmember Jerry Koch.
Mayor Tim Howe was “definitely interested” in the program and wanted staff to come up with a marketing plan “sooner rather than later,” he said.
There is no deadline that the city must meet to sign up for the Open to Business program, Nevinski said.
According to Nevinski, an analysis of the business retention and expansion study is being completed by the University of Minnesota Extension Service, with whom the city has partnered in the project, and will be part of the presentation by the project’s leadership team and task force at the Feb. 19 retreat.
According to Nevinski, the University of Minnesota’s program is nationally recognized and formal, guiding the city through the process of meeting with key businesses, gathering and analyzing data and developing specific strategies to enhance a community’s business climate.
“The focus of the program is to ensure existing businesses remain strong and expand within the community,” Nevinski said.
The city has managed the logistics of the program, but business and non-profit leaders have implemented key pieces of the program, he told the council.
Peter Bodley is at [email protected]