NEW ULM — The Economic Development Authority (EDA) has agreed to provide $50,000 in funding for the New Ulm Business Resource & Innovation Center next year while the organization develops its future funding strategy.
Last March, NUBRIC hired a new Executive Director, Paul Wessel. Last year, NUBRIC worked on rebranding the organization and developing a strategic plan. NUBRIC was formerly known as New Ulm Economic Development Corporation.
In the months following branding, NUBRIC has launched multiple economic initiatives. This includes the introduction of the STEM curriculum, Project Lead the Way, into New Ulm schools. Project Spark was created as a business incubation program. Project Spark recently gained non-profit status.
NUBRIC is also exploring potential financial grants and partnerships with other organizations, but has requested an annual payment of $50,000 from EDA to help grow the initiative.
“I have to coordinate all of this just to submit a grant application.” Wessel said. “We need government help.”
NUBRIC’s specific request was $50,000 annually for the next three years, and the EDA Board was comfortable with providing annual funding.
Board member Andrea Boettger said it was unusual to make a three-year commitment, especially since there will be a change in the EDA board next month. Three new members will be appointed in January, including a new mayor. The board has been reluctant to bind new members to multi-year contracts.
The board also wanted more transparency about NUBRIC’s activities. EDA Chairman Daniel Braam supported his NUBRIC progress last year but wanted more transparency between groups.
Boettger agreed that NUBRIC was doing a good job, but wanted to see the organization’s plans before committing to funding it for multiple years. She specifically asked how NUBRIC plans to maintain facility rents and staff salaries.
Wessel said the EDA would be happy to allow representatives to attend the monthly NUBRIC meetings.
Board member Les Schultz proposed a compromise. He will place EDA representatives on his NUBRIC board next month, and in 2023 he has submitted a motion to give NUBRIC $50,000. As part of the motion, city officials will work with NUBRIC to develop strategic plans for He 2024 and He 2025.
Director Tom Berg introduced the motion, which passed unanimously.
The Small Business Incentive Grant program will remain largely unchanged in 2023.
Small business incentive grants have been offered by the EDA since 2019. This grant will be used to reimburse up to $10,000 in eligible expenses to new businesses. To receive the grant, your business must have been open for at least three months and you must provide receipts showing expenses up to $10,000.
EDA typically provides $50,000 annually for this grant, potentially funding five new small businesses with $10,000 each. Since the program started, it has been extremely popular. Each year, at least five eligible small businesses apply to the program, creating a waiting list.
In 2022, EDA has seen a significant increase in applications creating long waiting lists. Additional funding was recommended for the program to reduce some of the waiting lists. An additional $50,000 was contributed to the program, bringing the total to $100,000.
EDA coordinator Heather Bregel says the program still has nine companies on its waiting list for 2023, even with additional grants awarded.
Bregel suggested some changes to the EDA board that could alleviate the waiting list problem.
The first suggestion was to require the business to be open before applying for the grant. Bregel said he won’t be paid a grant until at least three months after the project has started, but some projects have applied and been put on a waiting list before starting. She suggested taking businesses off the waiting list until they officially open, and prioritizing those that are already operational.
A second recommendation was to reduce the amount of the grant from $10,000 to $7,500. This will allow the board to award more grants from a $50,000 annual investment.
The board has been reluctant to make changes to the program. There was concern that changing the program might undermine its popularity.
Board member Jessica Janni argued that at $10,000, the program could be successful.
Since 2019, more than 20 companies have received this grant and only two have finished. In other words, the success rate of the program is over 90%.
Bregel said five of the nine companies on the waiting list have opened. Even with the recommended changes, if EDA continues to fund him at $50,000, he’ll need all the funding for 2023.
Board may choose to increase program funding
Schultz said there would be greater concerns about program changes if more companies were lost, but most grant recipients are still operating.
The Board ultimately decided to leave the possibility of change to the next EDA Board appointed in January 2023.
The Board approved a lease agreement with B. Concessions to operate a food truck at 326 Broadway from May through October 2023 at a rental rate of $150.
B. Concessions’ Ted Bergstrom has been renting the location since 2020, according to Bregel. Last year, two additional food trucks operated at the location, each paying $150 a month.
Bergstrom originally requested a two-year lease, but the city wanted a one-year lease because utility bills could rise significantly in one year.
Bregel said this month’s charges cover utility bills. On the premises, he rents space for three trucks, so EDA receives $450 a month along with a small utility bill.
There was some discussion of raising rents as utility bills could rise in the following year, but Bregel didn’t want rents to be so high that businesses could no longer operate food trucks. It seems so.
Braam believed the lease would benefit the community. A lot of people enjoyed the multiple food trucks at this location.
“Leave it alone, it’s not broken, so don’t fix it” Mayor Terry Svein said.
The board decided to keep the monthly rent at $150, but only approved a one-year lease.
Bregel said sticking to one year is fine because the future is uncertain and long-term contracts can be problematic.