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EDA pledges $50,000 to business group for 2023

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NEW ULM — The Economic Development Authority (EDA) has agreed to provide $50,000 in funding for New Ulm Business Resource & Innovation Center for the next year, while the organization develops funding strategies for the future.

Last March, NUBRIC hired a new executive director, Paul Wessel. In the last year, NUBRIC has worked to rebrand the organization and develop a strategic plan. NUBRIC was formerly known as the New Ulm Economic Development Corporation.

In the months since rebranding, NUBRIC has initiated multiple economic initiatives. This includes bringing Project Lead the Way, a STEM curriculum, to New Ulm schools. Project Spark was created as a business incubation program. Project Spark recently received nonprofit status.

NUBRIC is also seeking out potential economic grants and partnerships with other organizations but requested an annual $50,000 payment from the EDA to help grow the initiative.

“All of these things need to be coordinated just to put in a grant application,” Wessel said. “I am going to need some administrative help.”

NUBRIC’s specific request was for $50,000 each year for the next three years, but the EDA board was more comfortable providing funding one year at a time.

Board member Andrea Boettger said it was unusual to make a three-year commitment, especially since there would be EDA board turnover next month. Three new members will be appointed in January, including a new mayor. The board was reluctant to lock new members into a multiple-year agreement.

The board was also seeking additional transparency with NUBRIC’s activities. EDA Chairman Daniel Braam was supportive of NUBRIC’s progress over the last year but wanted more transparency between the groups.

Boettger agreed NUBRIC was doing good work but wanted to see a plan for the organization before funding them for multiple years. She specifically asked how NUBRIC plans to sustain rent for facilities and salaries for staff.

Wessel said they are willing to allow the EDA to send a representative to monthly NUBRIC meetings.

Board member Les Schultz suggested a compromise. He made a motion to place an EDA representative on the NUBRIC board next month and give NUBRIC $50,000 for 2023. As part of the motion, city staff would work with NUBRIC to develop a strategic plan for 2024 and 2025.

Board member Tom Berg second the motion and passed unanimously.

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The Small Business Incentive Grant program will remain mostly unchanged going into 2023.

The small business incentive grant has been offered by the EDA since 2019. The grant is used to reimburse new businesses for eligible expenses up to $10,000. To receive grant money a business must be open for at least three months and provide receipts showing expenses of up to $10,000.

Typically, the EDA would provide $50,000 a year for this grant with the possibility of funding five new small businesses at $10,000 each. Since the start of the program, it has been extremely popular. Each year, more than five eligible small businesses have applied for the program, creating a waiting list.

In 2022, the EDA saw a significant increase in applications creating a long waiting list. It was recommended that additional funds be placed in the program to reduce some of the waiting lists. An additional $50,000 was given to the program for a total of $100,000.

EDA Coordinator Heather Bregel said even with the additional grant awards, the program still has nine businesses on the waiting list going into 2023.

Bregel suggested a few changes to the EDA board that could alleviate the waiting list problem.

The first suggestion was to require a business to be open before applying for the grant. Bregel said grants are not paid out until a business is open at least three months, but some businesses are applying before opening and going on the waiting list. She suggested taking a business off the waiting list until they officially open and allowing the businesses already in operation to take priority.

The second recommendation was to reduce the grant amount from $10,000 to $7,500. This would allow the board to award more grants from the annual $50,000 investment.

The board was reluctant to make any changes to the program. There was concern changing the program could hurt its popularity.

Board member Jessica Janni argued the program might be successful because it is $10,000.

Since 2019, over 20 businesses have received this grant and only two have closed meaning the program has a success rate of over 90%.

Bregel said of the nine businesses on the waiting list, five are businesses that have opened. Even with the recommended changes, all funding for 2023 would be spoken for if the EDA continues to fund at $50,000.

The board could also choose to increase the funding for the program

Schultz said there would be greater concern about changing the program if more businesses were lost, but most grant recipients were still in operation.

The board ultimately decided to leave any potential changes to the next EDA board which will be an appointment in January 2023.

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The board approved a lease agreement with B. Concessions to operate a food truck at 326 N. Broadway between May and October 2023 with a rental fee of $150.

Bregel said Ted Bergstrom of B. Concessions has rented the location since 2020. Two additional food trucks operated on the location last year, each paying $150 a month.

Bergstrom initially requested a two-year lease agreement, but the city preferred a one-year lease because utility prices could increase significantly in a year.

Bregel said the current month’s fee is covering the utility cost. With three trucks renting space in the lot, the EDA receives $450 a month with a minor utility fee.

There was some discussion of raising the rent as utility fees could increase in the next year, but Bregel did not want too high of rent to make it impossible for the businesses to run a food truck. The cost of food likely increased too.

Braam saw this rental agreement as a benefit to the community. A lot of people enjoyed having multiple food trucks at this location. The program was not a money maker, but the EDA is not losing money on it either.

“Leave it alone, it ain’t broke, don’t fix it,” Mayor Terry Sveine said.

The board voted to leave the monthly rental at $150 but only approved the lease for a single year.

Bregel said sticking to one year was ok because the future is unknown and long-term agreements could be problems.

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