The Grand Forks Growth Fund is looking to bolster loan programs for businesses, including a loan that carries more risk for the city, in an effort to further drive the local economy.
The push comes as the city undergoes a paradigm shift that moves it away from being a landlord – and generating revenue from lease and rent payments – to fostering the growth of new businesses, in particular, technology businesses. Toward that end, the city is anticipating the sale of its two downtown Corporate Centers, which could happen later this year.
Funds from the sale of those buildings would then be added to the city’s pot for economic development and the Jobs Development Authority. The sale could generate between $9 and $10 million for the city, of which two-thirds would go toward economic development. The remainder is required to be returned to the city’s Community Development Block Grant program, which initially provided funds for the Corporate Centers.
City Administrator Todd Feland told Growth Fund members this week the sale most likely would happen in the first half of the year, when Russel Crary, a newly-appointed member to the Growth Fund, wondered how sure city leaders felt the sale would actually happen.
“We are confident it's going to get sold this year, but again, let's not go too far, too fast until that happens,” Feland said at the Growth Fund’s regular meeting this week.
The JDA has focused on low-risk loans for businesses, largely on loans that help buy down interest rates for a company that wants to take out other loans through the Bank of North Dakota, a commercial bank, or both. Those loans are considered to be less risky as companies asking for them are well-capitalized.
But the city is looking to be more assertive in offering more risky loans to businesses, including through its Start Up Grand Forks loan program. The program is designed to provide “pre-bankable” businesses with funding to get off the ground. The pilot program started in 2017, and was made permanent in September 2020.
In other Growth Fund news:
- Keith Lund, president and CEO of the Grand Forks Region Economic Development Corporation, told Growth Fund members this week the EDC is working to develop a program tentatively called “Accelerate Grand Forks.” The program is modeled after the state’s Innovation Technology Loan Fund, for the purpose of diversifying the economy beyond oil and agriculture. The program would focus on attracting and retaining tech companies, and developing the workforce for those jobs. Details and potential funding for the program have yet to coalesce, and Lund said he will again present the idea to the Growth Fund in March.
- According to Meredith Richards, director of community development, the city has been invited by the U.S Economic Development Administration to “de-federalize” its EDA revolving loan fund, along with over 400 communities across the country. Doing so would free the city from cumbersome reporting requirements, and potentially provide more flexibility on how those funds could be spent. The loan fund was started after the flood of 1997, to help businesses recover. It has been in operation ever since, and is capitalized in part by interest earned from loans made to businesses.
- The city is looking for ways to make its COVID revolving loan fund, called C-RUN, more attractive to small businesses. The program was started in September in response to the pandemic, as a way to get needed funding to business owners. The program has faced competition from various state grant programs, including Economic Resiliency Grants. City staff are enquiring with the U.S. EDA on the possibility of lowering the 1% interest rate for the loans, or extending the deferral period beyond six months. C-RUN was capitalized by $1.3 million in CARES Act funding; 22% of those funds have been issued as loans.