Year’s worth of funds for NUEDC

NEW ULM — The Economic Development Authority (EDA) has agreed to fund the New Ulm Economic Development Corporation (NUEDC) $50,000 for a single year as the City transitions to a new assistant city manager position.

Last month, the EDA board was faced with a dilemma. The board learned both the NUEDC and the city were seeking funding for economic development positions.

In September, the City of New Ulm cut its annual payment of $50,000 to the NUEDC in favor of hiring a new assistant city manager.

Historically, the NUEDC has performed economic development outreach, but recently members of the City Council have felt these duties have shifted to the city, specifically in terms of the industrial land acquisition and development of land.

At the same time, the assistant city manager position has remained unfilled since 2011, and the duties were dispersed to other staff and department heads. The council decided to re-fill the assistant city manager position, with the understanding economic development would be the main responsibility of the position holder. The job description and title for this position were changed to reflect the focus on economic development. The position is now called economic development director/assistant city manager.

This left the NUEDC uncertain if it could continue to fund its coordinator, Brian Tohal.

Last month, the NUEDC decided to continue funding Tohal’s position through 2018. The PUC agreed to continue paying its $50,000 contribution for Tohal’s position, but additional funding sources were needed.

During November’s EDA meeting, Tohal intended to ask for funding from the board, but the board was unable to take any formal action, as the formal request had not appeared on the agenda in advance.

During the same meeting the City of New Ulm planned to make a similar request to the EDA to help fund the new economic development director/assistant city manager position.

The board made no decision at the November meeting to avoid favoring the City over NUEDC.

In December, the NUEDC was given a chance to formally request $50,000 in funding.

City councilor and EDA Chair Charlie Schmitz has led the charge to bring economic development in-house. Schmitz felt it was time to make the change following the city’s negotiations to acquire the next 44-acre parcel of industrial land. Schmitz viewed this as a shift toward the city managing economic development and supported a city economic development director.

Schmitz said all other counties belonging to Region 9 do in-house economic development rather than through a private organization.

Board member Michael Schwartz said the decision seemed already made. The new economic development director/assistant city manager position was being advertised and would be funded, no matter what decision the EDA made. In addition, since the PUC had already decided to back the NUEDC for another year, the city was looking at a duplication of function once the new hire was made. Schwartz felt this created a dysfunctional scenario

“As far as the EDA goes, we’re in a lose-lose situation as far as who we back or spend our dollars,” Schwartz said.

Schwartz ultimately decided to support the NUEDC for another year, since the economic development director position had not yet been filled and there was no concrete understanding of what the director’s position would entail.

Schmitz said economic development would be the primary function of the new position, a job common to most Minnesota cities.

“It’s proven to work, it will work, and we’re going to hire a person to make it work,” Schmitz said. “Spending money to support two people to do basically the same job is a waste of taxpayer money.”

Schmitz suggested the funding debate was about keeping Tohal’s job. Schmitz asked what NUEDC would do if Tohal applied for and was hired for the economic development director job. Would the NUEDC attempt to fill his vacant position or eliminate the position?

Board member Susan Fix felt the NUEDC commitment was needed for a least another year. Fix said during the transition into the a city economic development director, the NUEDC could be used in the interim.

City Manager Brian Gramentz argued there already was economic development staff working with the city that could provide transition assistance. Gramentz said both he and Community Development Director David Schnobrich have worked on economic development for years.

“The learning curve only applies if you say we as a city were doing nothing, and NUEDC was doing everything, and that is not the case,” Gramentz said.

Fix clarified that she was concerned about the learning curve of bringing in an outside employee unfamiliar with New Ulm.

NUEDC board member Dustin Cross said a lot of the backlash involving the decision to hire a city economic development director was a shift in operations that has served New Ulm for the last 20 years.

Cross wanted to maintain the status quo until the new job function and relationship between the city and NUEDC was defined. He said the NUEDC was more than Tohal’s position. There are 11 board members donating their time to assist Tohal. Cross admitted this arrangement was subject to change and the NUEDC board was not committed to keeping the coordinator position if the new city position worked out.

“What we’re asking is for is a one-year stay of execution where we are funded and we can have discussion,” Cross said.

Schwartz said much of the success of NUEDC was related to the board’s ability to work with Gramentz and Schnobrich. He believed it was a cooperative effort that was needed, and funding the NUEDC for another year would bridge any gaps of the transition.

Gramentz reminded the board that the NUEDC does have assets in reserve and suggested it could fund itself for another year without using tax money.

Tohal said the NUEDC has access to a $1 million in assets, but it is tied up in projects including potential building projects.

Fix said it was important to work as a team on economic development and made a motion to fund NUEDC in the amount of $50,000 for a one-year period. The motion was seconded by board member Jessica Janni.

Schwartz suggested the EDA require a board member be granted a seat on the NUEDC board as a stipulation of the funding. This amendment was made to the motion, which passed 3 to 1 with Schmitz voting against.

In other news, the board approved a $50,000 loan from the Commercial Property Loan Program to FN Properties for the new wine bar at 225 N. Minnesota St. The property was previously the location of the Pub & Patio. The business owners Paul Neyers and Mona Fraki wish to remodel the interior of the property including heating, ventilation, air conditioning and electrical improvements. These are eligible loan activities.

Midwest Bank has already proposed a loan of $240,000 in addition to the EDA Loan.

Tohal told the board that CRC Global has leased the former Palm Beach Marine craft building. CRC Global is a seed distribution and trucking business.

“That building is full of seeds right now,” Tohal said.

The NUEDC is working with a banker representing a client who is planning to open a chemical dependency and mental health clinic in downtown New Ulm. The client is seeking incentives from the City.