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City to boost B3 bottom line by $50K

Mike Christopherson
Crookston Times

    With a balance down to $4,500 and currently four applications for grants to be considered, the Crookston Housing & Economic Development Authority’s (CHEDA) Building Better Business (B3) initiative needs an influx of cash in order to continue.

    After much discussion, the Crookston City Council this week, citing the program’s benefit to the local business community since its inception in early 2019, agreed to take $50,000 from general fund undesignated reserve dollars to replenish the B3 budget.

    Money from the City helped launch the B3 program, and it was pretty slow-going at first, but as word spread about the program’s benefits, more local businesses have been requesting grants over the past year or so. In all, a dozen businesses have been granted funds for projects large and small, all of which require an investment of their own money as well. B3 dollars have helped fund projects relating to new and improved signage, new equipment, a new parking lot and even a new furnace.

    Council members had some mild concerns and suggestions for possibly enhancing the B3 program and maximizing its impact on the local business community and economy, such as:

    • Making it known to plumbers and other contractor-type businesses that maybe don’t operate out of an actual business location that pays property taxes that they, too, are eligible for a B3 grant designed at boosting their business

    “We focus on the brick-and-mortar people,” At Large Council Member Tom Vedbraaten said. “I don’t think we should exclude people just because they don’t have a building they’re paying taxes on.”

    • While helping existing businesses is obviously beneficial, make an increased effort to reach out to young entrepreneurs that might be graduating from CHS, UMN Crookston or NCTC who want to stay in Crookston and open a business here.

    • Instead of relying largely on word of mouth and local media coverage of the program, try to further increase interest from local businesses by spending some money to advertise/market B3

Other thoughts

    Most council members seemed to agree with City Administrator Amy Finch’s suggestion that potential future replenishments of the B3 program be possibly built into annual City budget discussions, which, she said, is a more strategic spending strategy than waiting until the B3 budget is low on dollars and taking money out of City reserves to build its balance back up.

    Council members also liked the recent change to the program that, instead of simply giving an awarded business a check from the B3 program, now grantees submit invoices for work involved in their projects and CHEDA pays for them with B3 grant dollars. CHEDA Executive Director Craig Hoiseth said the change has helped give CHEDA “more control” when it comes to making sure that B3 project dollars are spent locally. Only in the event that a Crookston business absolutely cannot provide something needed for a B3 project, like, for example, specialty signage, would an out-of-town vendor be allowed, he added.

    Building Better Business is the first grant-based program CHEDA has ever been involved in, Hoiseth said; until now, programs have all been loan-based. Over the life of the program, businesses can apply for and be awarded twice.

    The maximum amount of each grant is $3,000. If an applicant is a CHS graduate, they can ask for and be awarded $1,000 more, and if they’re a UMN Crookston or NCTC graduate, they can get an additional $1,000, for a maximum of $5,000 on their first grant. There is no local-graduate enhancement on a second grant, which maxes out at $3,000.

    Asked by Mayor Dale Stainbrook if that creates an “uneven playing field” for Crookston business owners who didn’t graduate from CHS, UMN Crookston or NCTC, Hoiseth stressed that they can still get $3,000 per grant.

    Ward 2 Council Member Steve Erickson said he liked that component of B3.

    “We want people to stay in Crookston or come back to Crookston,” he said. “Look at what businesses have used it for and look at the money businesses have to invest to get a grant. That’s an important part of the program, too, people putting in their money and using local people and keeping the money in Crookston. It’s a good program and the people who have used it have been very appreciative.” Erickson mentioned one of the latest B3 grantees, Crookston Building Center, which received $5,000 to go toward their new parking lot project, which in total will cost almost $70,000. “It’s a small grant, but every little bit helps,”  he added.

    “It’s a really small incentive in the grand scheme, but it’s another tool in our tool box,” Ward 1 Council Member Jake Fee added.

    The grant for a new furnace was awarded to Biermaier Chiropractic Clinic when their old furnace died. While some council members expressed a preference for B3 dollars going toward more aesthetic-related things that enhance local businesses, others realized that for a small business, when the furnace goes out unexpectedly and repairing it isn’t feasible, sometimes a grant to help buy a new one is as good or maybe better than a new sign or enhanced storefront.

    Still, funding purchases in the vein of a new furnace have come up in previous CHEDA Board discussions. But, Hoiseth said, when the local media reported on those discussions, the overwhelming feedback he received was that B3 guidelines should continue to allow for the purchase of things like a new furnace.

    “The feedback came back that we need that money that has a sense of urgency because there’s no other place to get it,” Hoiseth said. “I don’t think it’s unworthy not to talk about it again, but the feedback was overwhelming that we need to keep those high-cost, urgent needs in the program language.”

Looking ahead

    Council members weren’t ready to put a $50,000 annual allocation for B3 in the City budget, but they realized B3 funding needs to be a part of annual budget discussions, even if it’s just checking in to see how much money is in the program at City budget-discussion time. With a finite number of businesses in Crookston and a two-grant maximum in the program, Erickson said at some point the level of activity in the program will naturally wane.

    There was a suggestion to put the $50,000 in the B3 budget and take the $4,500 in the budget now and spend it on marketing and advertising the program to further increase interest. But Hoiseth said he preferred that all of the money be earmarked toward actual grants to businesses, and that if the council wants it to be advertised more, he said the costs would be minimal and could probably be covered by dollars elsewhere in the CHEDA budget.