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8.2 Economic Development Services Agr CITY OF SALINA REQUEST FOR CITY COMMISSION ACTION DATE 01/28/2008 TIME 4:00 P.M. AGENDA SECTION NO: 8 ORIGINATING DEPARTMENT: APPROVED FOR AGENDA: ITEM NO. Page 1 FINANCE AND ADMINISTRATION 2 BY: BY: Rod Franz ITEM: Resolution No. 08-6484 A resolution authorizing the Mayor to enter into an agreement for Economic Development Services with the Salina Area Chamber of Commerce. BACKGROUND: The Salina Area Chamber of Commerce has provided economic development services to the Salina area for many years. This included a provision for "industrial" development services as far back as 1955. "Commercial" development was added in 1987. Funding for this program has been provided by an annual budget authorization of $85,000 for the last 16 years. During 2006 - 2007, the Chamber developed a new multi-year Economic Development Strategic Plan. The Strategic Plan was presented to the Salina City Commission on June 25, 2007, and, as a result, budgetary provisions were made to support the plan for 2008. The amount allocated from General Fund resources is $206,000. The attached agreement formalizes the relationship, and provides for the City's intent to support the program over a five-year period, subject to annual appropriation. The amounts for future years are: 2009: $ 256,000 2010: $ 256,000 2011: $ 206,000 2012: $ 206,000 Distributions to the Chamber of Commerce are to be made quarterly. The agreement provides for performance reporting as requested by the City Commission. These provisions are a continuation of those within previous agreements. The Salina Economic Development Incentives Council has recommended a supplemental program to support and encourage Entrepreneurial Development, with a one-time contribution from the Economic Development Sales Tax of $45,000. This will be a four-year (2008-2011) program, administered by the Chamber. The distribution of $45,000 will be a one-time lump sum distribution to be made upon request from the Chamber of Commerce. FISCAL NOTE: $206,000 is budgeted out of City General Funds for the Economic Development Strategic Plan. $45,000 is available in the Sales Tax Economic Development fund. CONFORMANCE WITH THE STRATEGIC PLAN: "Salina will encourage and be supportive of industrial development, economic expansion, market-driven tax base growth, and home grown entrepreneurial ism." COMMISSION ACTION: Pass Resolution Number 08-6484, authorizing the Mayer to execute an agreement for economic development services with the Salina area Chamber of Commerce. The New Salina Economic Development Strategic Plan 2007-2012 Economic Development Strategic Plan · Tom Bell · Scott Bergkamp · Larry Britegam · Rita Deister . Larry Fief · Jason Gage · Charlie Grimwood · Alan Jilka · Dennis Lauver · Dana Morse . Daran Neuschafer · Pete Peterson · Tim Rogers · Julie Sager Miller . Kristin Seaton . Harry Smith · Craig Stephenson · Jeff Thompson · Betsy Wearing · Paula Wright The Nell' Salina Economic Development Strakgic Plan 1 Workforce Quantity & Quality The Nell' Salina Economic Development Stratllgic Plan 2,050 net new employees = approx. 5.5 percent increase 2007-2012 2 Industry Segment FUNIS Industry Cfus Used Direct Hourly Hoo", !l!..d lEarnings Total Employment Total Emplovement Rate I Mfvear Earnlnas Multiplier Eaml.... Mu/UoUe' emDloyme rot A~ation and 15. Mot'" vehicle. body. aefO$p;lce trailer. and parts manutlcturina manufacturing 425 23,17 2080 2(1,482.200 1.7763 36.382.674 2.675 1.137 18. Miscellaneous Manuf.llctunna manufacturing 681 15,55 2000 28.495.064 1.4546 41.44ll.92O 1.6900 1.490 loglstios. '#/larMousmg & <islribullon 36. Warehousing and storage 305 15.57 2080 9.ll77.008 1.3402 13.237.970 1.4694 44ll 11. Fabricated md.al product Metal fabrication manufacturing 151 16,93 2080 5.317,374 1.5966 8.489.720 1.7442 263 t a. MisccMlaneous Machine shops manufacturing 120 18.17 2000 4.535.232 1.4546 6,596.946 1.6wa 2(13 14. Electrical equipment and BIQ--teeh appianee manufacturing 168 19.5 2000 6.814,08(1 1.5699 10.697.424 1.9238 323 I I I ! !m.5ZU381 ' ' ! 3.0041 ;Totals 2050' 1$116.653.657' Potential Economic Benefit 2,050 new net jobs 2007-2012 $ XXX,XXX,XXX SOtlKi:: \Vichita State- University "'l .J Workforce Housing · Targets 90 to 130 percent of median income · $750,000 federal appropriation request · Non-profit developer · Multiple builders and multiple buyers · Cooperation with City of Salina & Saline County · Covenants restrict size & price of home to hit target The New Salina Economic Development Strategic Plan Performance Benchmarks V"'2,050 net new employees - 1,800 employees net new to Salina labor shed working @ existing employers - 250 employees net new to Salina labor shed working @ new employers TIle Nell' Salina Economic Development Strategic Plan 4 Support the Expansion & Retention of Existing Employers The Nell' Salina Economic Development Strategic Plan Performance Benchmarks -/60 to 75 face-to-faceyisits annually to area employers -/10 visits annually to corporate offices -/ Quantity and dollar value of building pennits for existing employers The Ne1l' Salina Economic Development Strategic Plan 5 Enhance New Business Attraction Efforts The New Salina Economic Development Strategic Plan Performance Benchmarks '/Develop and maintain "short list" with minimum of 14 active prospects '/250 employees net new to Salina labor shed working @ new employers ,/ Quantity and dollar value of building permits for new employers The ,Vell' Salina Economic Development Strategic Plan 6 Stimulate Retail Development The New Salina Economic Development Strategic Plan Performance Benchmarks ./Salina trade market retail sales ./PuH/leak data ./Sq. feet of new construction/remodeling ./ Quantity and dollar value of commercial building permits The Ne1/' Salina Economic Development Strategic Plan 7 Examine & Address Regulatory Process & Building Services Concerns TIle New Salina Economic Development Strategic Plan Specific strategies 1. Policy & Code .. Stay current with national/international codes .. Input from all stakeholders to review codes The Nell' Salina Economic INvelopment Strategic Plan 8 Specific strategies 2. Procedures · Continue improvement of code interpretation with emphasis on Quick Problem Resolution process to resolve the inconsistencies in code interpretation by the stakeholders Work. to reducdeliminate "special conditions" that exist because of the qu.1lity and completeness of the information City will review/categorize the "special conditions" previously issued to identify recurring issues that can be addressed with a review of the process. Continue 'special conditions" where it allows work to proceed because the information can be submitted and approved later Staffwill make frequent phased completion site visits Standardize checking for plan review and inspections Develop online permit applications with reporting and project tracking D.::sign Review Te:un sWrwill meet with Oversight Council TIle l'-,!ew Salina Economic Development Strategic Plan Specific strategies 3. Personnel · Local government staff will develop and exhibit "Yes Somehow" attitude and focus on "Commitment to Service Quality" · Continued department restructuring and empowerment of key development personnel when in the best interest of service quality · Continue City of Salina efforts to recruit Director of Community & Development Services position TIll~ Nell' Salina Economic Development Strategic Plan 9 Define Industrial Expansion & Attraction Targets The New Salina Economic Development Strategic Plan Expansion & Attraction Targets 1. Focus community resources on the following target industry list: · Aviation & Aerospace · Manufacturing · Logistics, Warehousing and Distribution · Metal Fabrication · Machine Shops · Biotech 2. Complete feasibility and market study for each target The Nell' Salina Economic Development Strategic Plan 10 Maximize Current & Potential Incentives The New Salina Economic Development Strategic Plan Incentive Considerations 1. Continue to fund Salina. Economic Development Incentives Council - current source expires July 2010 A tool for incentives is needed for Salina to be competitive 2. Incentives for target industries: Wage must exceed average wage for the i.ndustry Benefit/cost analysis must be greater than 1.0 for City of Salina, Saline County, USD 305 and Salina Airport Authority Grants for human capital investment and capital investment should be leveraged for maximum leverage. All potential state/local incentives that are available should be used. The Nell' Salina Economic Development Strategic Plan 11 Prioritize a Defmed Plan for City/County Urban Service Area The New SlIlina Economic Development Strategic Plan City/County Urban Service Area Plan 1. City/County Urban Service inter-local government agreement amended by Dec. 31 2007. · Define accommodation of residential, commercial and industrial development 2. Define conlffion City/County urban developnlent areas The Nell' Salina Economic Development Strategic Plan 12 Organize to Obtain an Accurate 2010 Census TIle New Salina Economic Development Strategic Plan Plan & Construct the Infrastructure for Growth The Nell' Salina Economic Development Strategic Plan 13 Planning Considerations III II 1. Commercial air service at Salina Airport is a high priority 2. Develop inventory of "certified" market- ready property 3. Focus resources on "certified sites" 4. Infrastructure fmancing tools traditionally used for new projects should be expanded to include redevelopment projects in targeted locations The Nell' Salina Economic Development Strategic Plan Planning Considerations 5. Public should initiate construction of necessary off-site infrastructure for qualifying projects in targeted locations 6. Prevent "leap frog" development where possible to efficiently use public resources 7. Study burying utilities and aesthetic site/building design considerations along major corridors and community entrances The Nell' Salina Economic Development Strategic Plan 14 Planning Considerations 8. Consider if the project is a high user of a natural resource that is in low supply 9. Establish a tool to deternline financial risk of applying public infrastructure funding tools to projects TIle N~yw Salina Economic Development Strategic Plan Performance Benchmarks 'nltJ New Salina Economic DevelopmtJllt Strategic Plan 15 Performance Benchmarks · Job growth - 2,050 new jobs .. $150M - Private sector capital investment .. More than 50,000 City of Salina Population .. Sales tax increase .. Property tax base increase .. Quantity and value of building permit values - Commercial - Residential - Industrial The New Salina Economic Development Strategic Plan Governance & Organizational Capacity The Ne1l' Salina Economic Development Strategic Plan 16 ~PtC_dll....(9<,t,t a:.lflu,Et....-kI'Noi""",.... T~ (la-~1 WwkIloI_ n"""",,,!,,_AivI.--rC'_dt" TIle New Salina Economic Ikvelopment Strategic Plan 2007 - 2012 Budget The New Salina Economic Ikvelopment Strategic Piau 17 Budget Summary by percent of total budget .. Workforce Development - 48.10 .. Existing Business Expansion - 20,94 .. New Business Attraction - 13.71 .. Retail Development - 3.04 .. Air Service - 8.79 .. Research & Planning - 2.38 .. Org. Capacity & Facility Development - 1.78 .. Census Outreach - 1.26 The New Salina Economic Development Strategic Plan 18 Salina Small Business Entrepreneur Development Proposal The Salina Small Business Entrepreneur Development Project establishes designated funding to support entrepreneurial development in Salina, with special emphasis on owner-operated businesses. The purpose of this project is to educate entrepreneurs in best business practices and help them establish or expand their businesses in Salina, Kansas. The project period is four years to commence March 1, 2008. A warded projects will be followed and surveyed annually for three years. Therefore, the full project duration may be seven years. The Salina Area Chamber of Commerce will administer this project as an expansion of their current Economic Development Agreement with the City of Salina. The Salina Small Business Entrepreneur Development Project (SSBEBP) includes Entrepreneur Training and Business Development Funds. Applicants must successfully complete Entrepreneur Training prior to applying for Business Development Funds. Applicants must reside in Saline County Kansas or own a small business in Salina Kansas. Entrepreneur Training Eligible Applicants 1. Applicants may be existing business owners in Saline County. 2. Applicants for Entrepreneur Training need NOT have started a business. Applicants must be developing a business concept they intend to locate in the Salina Kansas area. As a prerequisite to apply for Business Development Funds, the applicant must complete a business training program and write or update their Business Plan. This program will provide the tuition for the Small Business Development Center courses at no cost. Normally, the three seminars cost a lotal of $40. This program will also reimburse registration fees for approved alternate Entrepreneurial Training up to a maximum of $200. Applicants must complete one of the following business training programs: Option A This program is a series of three Small Business Development Center courses. The SBDC seminars will be held in Salina and are led by the Director of the regional Small Business Development Center. 1. Learning the Basics of Money, Marketing and Management - Essential information to assess the feasibility of your ideas to start or grow your business. Those completing this step will be ready to write a business plan and create cash flow projections. 2. The Right Start - Using A Business Plan - Details about developing the essential business plan arc learned. A highly interactive session that wi!] increase learning. 3. Cash Flow - Accurately calculate jit/ure sales and costs, determine working capital needs, and prepare for the ji/ture needs oj'new and existing businesses. Option B fastTrac~ is a comprehensive entrepreneurship-educational program that provides entrepreneurs with business insights, leadership skills and professional networking connections so they are prepared to create a new business or expand an existing enterprise. The program was developed and is funded by the Kaufmann Foundation. The FastTrac program includes practical, hands-on business development programs and workshops for existing entrepreneurs, aspiring entrepreneurs, as well as entrepreneurship curriculum. FastTrac is designed to help entrepreneurs hone the skills needed to create, manage and/or grow successful businesses. Participants work on their own business ideas or ventures throughout the program - moving their venture to reality or new levels of growth. Pm1icipants will be given a list of registered FastTrac instructors, class sites and course schedules. Special arrangements will be made for entrepreneurs needing instruction in a language other than English. 2, Complete a Business Plan 2 Business Development Funds Eligible Applicants Eligible applicants must have completed Entrepreneur Training, which includes an approved training program and completing or updating a business plan, prior to applying for Business Development runds. Applicants must own an existing business or be developing a business concept they intend to locate in Saline County. Project Objectives The Business Development funds are intended to accomplish two objectives, per the Salina Economic Development Strategic Plan, adopted by the City of Salina and the Salina Area Chamber of Commerce: I) Increase the ability of the firm to attract customers that are currently not in the Salina market. This will increase the amount of trade and commerce occurring in Salina via new business activity. 2) Increase the ability of the firm to retain customers that are currently leaving the Salina market to purchase the product or servicc. This will increase the amount of trade and commerce occurring in Salina via better retention of business activity that should occur in Salina but doesn't. Eligible Use of funds: Small Business Development Funds may be used to assist owner-operated businesses with objectives identified in their business plan. Some of those objectives may include: I) Continuing Education: This is tuition reimbursement for post secondary business courses offered through an accredited associate or degrced business program. This is not a scholarship or grant to assist individuals seeking post secondary business degrees. Transcript with a minimum 2.0 GP A and/or a certificate of course completion will be required before reim bursement. 2) Professional Services: May include services of professionals identified within the business plan developed or updated as part of Entrepreneurial Training. Professional unit service rates will be subject to review and approval of the Entrepreneurial Development Committee. These professionals may include but are not limited to: . Accountants . Architects . Legal Counsel . Marketing Professionals . Design Professionals 3 3) Brick and MOliar Improvements: Projects may include but are not limited to: 411 Building expansion 411 Vacant building redevelopment 411 Facade renovation and restoration (em phasis on removal of fa((ade modi fications which have not reached historical significance on building aged 50 years or older) . For Lee District applicants ONLY - Work complying with Lee District Design Guidelines and contingent on Design Review Board approval. Lee District businesses may include up to 50% funds received from the Small Business Development Program as a source of matching funds for Salina Downtown, Inc. Development Incentive Program (formerly Exterior Improvement Program). 4) Marketing: Projects may include but are not limited to: . Marketing Research . Marketing/advertising costs identified in the business plan. For existing businesses, these must be ncw eosts above thc previous annual marketing costs. . Design " Printing . Signage 5) Additional product lines or major product line expansion as projected in the business plan. 6) Additional or significantly expanded services as projected in the business plan, Additional Entrepreneur Development Resources There is a State of Kansas program that can be accessed for additional financial support on a project-by-project basis. The mission of StartUp Kansas is to partner with local or regional business support providers in providing or obtaining seed capital funding for Kansas entrepreneurs for for-profit business startups and expansions in rural and distressed communities. StartUp Kansas is a service of the Kansas Center for Entrepreneurship, through its Kansas Community Entrepreneurship Fund, all of which were established by the Kansas Legislature in 2004 through the Kansas Economic Growth Act. These programs are administered by the Kansas Department of Commerce, which provides oversight and management under guidelines approved by the Secretary of Commerce. The Salina Area Chamber of Commerce and Salina Downtown Inc. arc both registered as a "business support partner" with SlatiUp Kansas. Entrepreneurs and existing small businesses may only access StartUp Kansas funding by working with local or regional non-profit business support providers like the chamber or Salina Downtown Inc. StartUp Kansas' support is on a dollar to dollar basis and is awarded on a competitive basis. The maximum that StartUp Kansas can provide to an individual project as a match is $45,000. 4 Ineligible Use of Funds Primary industrial projects are NOT eligible to apply for these funds. Primary industrial projects are encouraged to apply directly to the Salina Economic Development Incentive Council for funding consideration. Project Effectiveness & Key Performance Indicators As the administer, the Salina Area Chamber of Commerce will provide quarterly updates to the SEDIC and annual financial and performance audit to funding sources. The annual report will include but may not be limited to: . number of participants in the Entrepreneur Training . number of business start-ups from the Entrepreneur Training participants . number of jobs created . customer demographics and reslllting changes . longevity of the business over a minimum of three years . total volume of sales for new businesses . increase in sales for existing businesses . private investment generated as a result ofthis incentive program . an annual survey of the project participants . additional data necessary to appropriatcly evaluate project cCfcctiveness based on the award criteria to individual businesses. Entrepreneur Development Committee Thc entrepreneur development committce will oversee this initiative. The primary task for the committee will be to review applications for entrepreneur training and business development funds, The committee will have the authority to award business development funds. The committee will include representatives from funding, educational and economic development resources serving the Salina area. The committee will establish the criteria for selection and have the authority to make cash awards to eligible applicants. Applications will be reviewed within 30 days of the application deadline. A wards will then be made established criteria. The suggested committee members are: . Board of Director Member, Salina Area Chamber of Commerce . SEDIC member or designee . President/CEO, Salina Area Chamber of Commerce . Board of Director Member, Salina Downtown Inc. . Executive Director, Salina Downtown Inc. . City Manager, City of Salina or his designee . Executive Director, North Central Regional Planning Council . Dr. John DeLeon, Kansas State University - Salina 5 Funding Sources There is an anonymous source that we believe will match, on a dollar-for-dollar basis, all local dollars generated to support entrepreneur development in Salina. This program proposes using Salina Economic Development Incentives Council financial support as one of several local matches that will be doubled by this anonymous source. We recommend using a portion of the local option sales tax income that IS designated for economic development to the Salina City Commission. addition, other private sources will be solicited for financial support to maximize local funding that can be doubled by the anonymous financial supporter. Tax-deductible donations will be received at the Salina Area Chamber of Commerce Foundation, a 501 (c)3 entity. Project Budget TOTAL FOUR-YEAR BUDGET Salina Economic Development Incentives Council * Additional Local Income Sources Matched Income (Anonymous supporter) Total Resources $ 45,000 $ 50,000 $ 95,000 $ 190,000 Entrepreneur Training Business Development Funds Total Expenses $ 50,000 $ 140.000 $ 190,000 ANNUAL EXPENSES Entrepreneur Training (including translation) Business Development Funds Total Expenses $ 9,500 $ 38,000 $ 47,500 * SEDIC funds will be used exclusivelyfor Business Development Funds. This is (/ one I ime request for a 4 year budget. The total available funds will be equally distributed over the four-year award period ($47,500/year). Each year 20% of the total budget will be reserved for Entrepreneur Training ($9,500) and 80% for Business Development Funds ($38,000). Any unexpended Entrepreneur Training funds for a specific year will be transferred to the Business Development Fund increasing the maximum available for the following project year. Project awards must meet a minimum 1:1 cash match. Awards will be a minimum of $2,500 and a maximum of $5,000 per approved application. These are (HIe-time awards. Successful applicants may not re-apply. 6 The examples below show the power of leveraging and compounding. SED1C funding and other local support can exponentially enhance the ability to support those that are seeking to retain dollars that are leaving Salina and attract new trade and commerce to Salina. The examples assume the applicants complete training, submit a successful application for business development funds and are successful in receiving StartUp Kansas funds. Example # I - Business Located Anywhere in Salina, including Dovvntown Entrepreneur Training Business Development Funds for approved project Matching Support Provided by Entrepreneur Project Subtotal StartUp Kansas matching support Total Project Support to Assist the Entrepreneur $ 60.00 $ 4,350.00 $ 4,350.00 $ 8,760.00 U.700.00 $ 17,460.00 Example #2 - Business J"ocated in Downtown S'alina with a Fa (fa de Improvement Project Entrepreneur Training Business Development Funds for approved project Fac;ade Improvement Funds - SDl Matching Support Provided by Entrepreneur Project Subtotal StartUp Kansas matching support Total Project Support to Assist the Entrepreneur 7 $ 60,00 $ 4,350.00 $ 2,175.00 $ 4,3,~.00 $ 10,935,00 $ 10,935.00 $ 21,870.00