Loading...
7.4. EDSR 04-20-2020 Request for Action To Item Number Economic Development Authority 7.4 Agenda Section Meeting Date Prepared by General Business April 20, 2020 Amanda Othoudt, ED Director Item Description Reviewed by Director Report Cal Portner, City Administrator Reviewed by Action Requested Information presented for discussion to keep the EDA updated on development activity. Background/Discussion BUSINESS VISITS We have postponed all BR&E visits at this time. We are reaching out to businesses via email and phone. MISCELLANEOUS Sherburne County Business Impact Survey The COVID-19 crisis has certainly impacted our business community, especially local restaurants, retail and service industries. Sherburne County initiated a county-wide survey to better understand the local economic impacts. The survey is a representation of 162 businesses impacted the county. Staff has followed up with all our local businesses that have responded to the survey. We provided them with financial resources and guidance on how to navigate the federal and state programs. Sherburne County EDA Meeting County will be modifying their RLF program, eliminating the $1,500 application fee through 2020, providing loans at zero percent interest, and offering deferment on all loan payments until October 2020. At their April 21, 2020, meeting, the Sherburne County Board will consider reducing the late fee penalty for property tax payments paid in June and July. Currently, penalties range from 4-9% depending on the property classification. The county is proposing to reduce the late fee penalty temporarily to 1% in June and 2% July. DEED Bi-weekly Conference Calls Staff participates in these bi-weekly calls facilitated by DEED Commissioner Steve Grove which keep economic development professionals up to date on changes to federal and state loan programs and resources available to local businesses. EDA Website We have updated our website to include relevant COVID-19 updates and will update as new information becomes available. The Elk River Vision A welcoming community with revolutionary and spirited resourcefulness, exceptional service, and community engagement that encourages and inspires prosperity Sherburne County Demographic Data Attached you will find the University of Minnesota Extension’s 2020 Sherburne County Demographics Update that was requested by Sherburne County EDA. The data included in this report is pre-COVID-19, but it provides us with a good baseline to compare to as we navigate through a changing economy. Chamber Survey Matrix Staff will present the EDA and Council action plan responses to the Chamber Business Survey matrix beginning in May. Information will be provided over four joint meetings with the EDA and council. They will be 60 minutes in length and occur prior to the council meetings on May 18, June 15, July 20, and August 17. At each meeting, staff will discuss department/division goals to keep things digestible for the group. May 18: Economic Development Tasks June 15: Building Department Tasks July 20: Planning Department Tasks August 17: Recap and next steps discussion Revolving Loan Fund Balance Reports At the request of the Commission, a copy of the Revolving Loan Fund report is attached. One loan is showing delinquent. Staff is working with the business to establish a modified payment schedule. Financial Impact N/A Attachments  Revolving Loan Fund Report  Sherburne County Business Impact Survey Results  Business Assistance Infographic  Sherburne County Demographic Data (Extension Office) ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY MICRO LOANS Current Current 4/16/20 Loan Loan Interest Term Monthly Principal Borrower Date Amount Rate (Months)Payment Outstanding Current Die Concepts 6/3/2016 $185,200 2.00%60 $936.90 $155,159.73 Y Heritage Millwork 12/22/2016 $100,000 3.00%60 $965.61 $70,798.75 Y Ralphies#1 9/10/2013 $74,999 3.00%120 $724.20 $28,376.13 N Ralphies#2 8/28/2018 $19,175 3.00%60 $343.65 $13,721.02 N TOTAL MICRO LOANS $268,055.63 Micro Loan Fund 240 Distinctive Iron 10/1/2019 $126,000 2.03%60 $1,050.07 186,440.15$ Y Scott Morrell LLC 8/6/2015 $200,000 2.00%60 $1,011.77 160,164.14 Y Orluck 7/17/2018 $200,000 3.00%84 $2,642.66 153,861.22 Y $500,465.51 DEED Jobs Incentive Loan Fund 242 Fund Cash Balances 04/16/20: Micro Loan Fund - 240 $884,004.18 State DEED Jobs Incentive - 242 $121,668.37 LOCAL RESOURCES County and city funds may be available DEED Small Business Emergency Loan Program (bridge loan) Apply here: https://mn.gov/deed/business/financing-business/deed-programs/peacetime/ SBA Economic Injury Disaster Loan Apply here: http://disasterloan.sba.gov/ela/ START WITH YOUR LENDER Visit with your own financial institution to seek flexibility within your current lines of credit. Dan Weber Assistant County Administrator 763.765.3007 dan.weber@Co.Sherburne.MN.us co.sherburne.mn.us Amanda M. Othoudt, EDFP Economic Development Director 763.635.1042 aothoudt@ElkRiverMN.gov ElkRiverMN.gov 1 SHERBURNE COUNTY Understanding the Economy Sherburne County Minnesota is a community of 96,000 people located in Central Minnesota. The county actively pursues economic and community development efforts. To be effective in these efforts, the Sherburne County Economic Development Authority (EDA) contracted with University of Minnesota Extension to assist in understanding the county’s economy. With sound knowledge of its economic assets, strengths, and weaknesses, the EDA is equipped to make informed decisions regarding resources and targeted economic development initiatives. The Sherburne County EDA and Extension engaged in a four-month, three-stage process to understand the economy. Steps included identifying relevant economic data, discussing the information with the EDA, and preparing this summary report, which will serve as a resource. There are multiple methods for measuring and describing an economy. This project, however, intentionally focused on Sherburne County’s competitive advantages. During the process, dozens of data sources and points were considered. The data included in this report provides a broad overview of Sherburne County’s economy with a specific focus on its strengths. A full list of the data sources used in this report is provided at the end of the report. In addition, links to each resource are provided. ECONOMIC CHANGES, TRENDS, AND COMPARISONS Sherburne County’s job growth has been solid and is outperforming most neighboring counties. Sherburne County, measured in jobs, has recovered from the Great Recession of 2008-2009. Overall employment continues to grow (Chart 1). Between 2001 and 2019, the number of jobs in Sherburne County increased by 28 percent. The only neighboring county with a higher growth rate was Wright County with a 44 percent increase. Most neighboring counties posted rates in the range of 10 to 20 percent. They include Stearns County (12 percent), Anoka County (14 percent), and Benton County (19 percent). Mille Lacs County’s growth rate was essentially zero. This data comes from the EMSI database. 2 Manufacturing and trade are industry strengths. Jobs are important measure of regional economic performance. In addition to the number of jobs, it is helpful to understand the industry mix. Industry mix affects a variety of factors including growth patterns, wages and salaries, and occupational skills needed. Sherburne County’s largest industry employer is professional services, followed by trade (retail and wholesale) and manufacturing (Chart 2). Source: EMSI, Inc. Source: IMPLAN 3 Total employment is one metric for measuring industry strength. Industry concentration is another. A location quotients shows the ratio of jobs in an industry in a county to the ratio of jobs in the nation. A higher location quotient indicates a higher percent (concentration) of jobs in an industry compared to national averages. Sherburne County, for example, has nearly 6 times as many utilities industry jobs as compared to the nation, making it a relative strength. An increase in location quotient from 2001 indicates the number of jobs and relative strength is growing. A decline indicates the opposite. Industries with high location quotients in the county include utilities, manufacturing, and construction (Table 1). Health care and manufacturing posted strong growth. It is also important to consider the way the number of jobs in different industries change. The job changes in an industry can be compared to industry and national trends. This type of comparison is called shift-share analysis and the results can help decision makers understand which industries were competitive. It can also provide insight into whether changes could be influenced by local policies. Industries with strong growth in Sherburne County in the past two decades include health care and manufacturing (Table 2). Both industries in Sherburne County grew at rates higher than predicted, given national trends. For example, industry trends would indicate that Sherbur ne County should have lost 1,066 manufacturing jobs. The industry in the county, however, gained 1,106 jobs in the time period. Source: EMSI, Inc. 4 Information and utilities were industries with job losses. However, both industries are facing changing supply and demand conditions. The information industry, for example, includes newspapers and wired telecommunications. As consumers increasingly move to electronic platforms and wireless devices, it is not surprising to see a decline in jobs in the information industry. Local decision makers likely will not be able to influence these changes. There are opportunities for continued growth in professional services, hospitality, tourism, and the arts. Hospitality and tourism, performing arts, marketing, design, and publishing are all industry clusters with growth between 1998 and 2016 (Chart 3). These industries may not be the biggest industries in the county, but have been growing in their share of total employment. They may be industries, with a little assistance, that could have an even larger role in the economy. Industry cluster analysis helps identify industries with potential growth opportunity. The chart below shows traded clusters for Sherburne County. Industries in the lower right corner are those that, although they are a relatively small share of the economy, posted positive job growth between 1998 and 2016. Source: EMSI, Inc. 5 Chart 3: Industry Clusters, Sherburne County The location of jobs in Sherburne County varies by industry. Goods producing jobs (manufacturing, construction, and utilities) tend to be located in the southeast corner of the county. Professional services jobs tend to be located in the northwest. This is an interesting dynamic to consider. In general, employment tends to be concentrated along county borders. Map 1: Location of Jobs by Industry, Sherburne County Source: Harvard Cluster Mapping 6 WAGES By and large, wages in Sherburne County track along with wages in Minnesota. Between 2011 and 2015, wages in Minnesota (not adjusted for inflation) grew at a slightly higher rate than those in Sherburne County (Chart 4). With the tightening of the labor force in the last few years, the wage growth rate has increased in the county. In key industries, Sherburne County businesses pay higher wages than the regional average. Sherburne County’s average weekly wage varies by industry. Source: Quarterly Census of Employment and Wages Source: On the Map, US Census Source: Quarterly Census of Employment and Wages 7 In key industries, such as manufacturing and trade, transportation, and utilities, Sherburne County employers pay higher wages than the regional average (Chart 5). In other key industries, such as professional services, Sherburne County wages lag. COMMUTING PATTERNS Outcommuting is a significant factor in Sherburne County. Nearly 40,000 people commute out of Sherburne County to work. Only 15,500 commute in. Slightly more than 11,000 live and work in the county (Map 2). The arrows on this chart do not indicate the direction people travel. Where people live differs from where people work in Sherburne County. Residents of Sherburne County tend to be concentrated along the Highway 169 corridor. Jobs, however, tend to be more concentrated along the Highway 10 corridor (Map 3). Source: On the Map, US Census 8 Map 3: Location of Jobs and Residents, Sherburne County The where people live chart shows the place where people who live in Sherburne County have their place of residence. Of course, some of the workforce lives in other counties, which is not shown in this map. The where people work chart shows the location of peoples’ worksite, regardless if they live in Sherburne County or elsewhere. Outcommuters tend to have higher monthly earnings compared to those who work in Sherburne County. Sixty percent of those who live in Sherburne County, but commute out to work, make more than $3,333 per month (Chart 6). In comparison, only 40 percent of those who work in Sherburne County make that income. Source: On the Map, US Census Source: On the Map, US Census 9 Formal work at home arrangements are not overly prominent in Sherburne County. Only 5 percent of Sherburne County workers report working from home as their formal work arrangement. This is about the same as in Minnesota and the region. HIGH SCHOOL GRADUATES IN THE WORKFORCE A fair number of local high school graduates go directly into the labor force. Of the students who graduated from high schools in the count in 2017,, about 1/4 to 1/3 are in the labor force (Chart 7). In total, 395 2017 graduates are working and 1,070 are in college. Source: US Census Source: SLEDS 10 The same graduates appear to be underemployed. Of the 2017 graduates working, anywhere from 40 to 50 percent work 20 hours a week or less (Chart 8). There appears to be opportunity to move them into manufacturing and construction jobs. Most of the graduates are employed in leisure and hospitality and trade, transportation, and utilities (Chart 9). There may be opportunity to fill critical job openings in manufacturing and construction. Source: SLEDS Source: SLEDS 11 NORTHSTAR USAGE Northstar usage appears to be higher the closer one lives to the stations. Park and ride data indicates people living closer to the Northstar station tend to be more likely to use the train. MANUFACTURING SUPPLY CHAIN Sherburne County has several strong industry clusters. Furniture manufacturing and metalworking are two strong industry clusters in Sherburne County. However, Sherburne County has multiple clusters– including plastics manufacturing, construction, and recreational goods (Chart 10). Source: Met Council 12 Chart 10: Industry Clusters, Sherburne County Some clusters have strong linkages with other clusters in the county. The plastics manufacturing cluster has connections with multiple other clusters in Sherburne County, for example (Chart 11). Furniture, on the other hand, while larger in employment, has fewer linkages to other clusters/industries in the county. Chart 11: Industry Connections, Sherburne County Source: Harvard Cluster Mapping Plastics manufacturing is connected to all these other industries. Furniture manufacturing is only connected to wood. Source: Harvard Cluster Mapping 13 There may be opportunities to build the supply chain. On average, for every dollar spent by furniture manufacturers, $0.60 goes to inputs and $0.40 to pay for labor (Table 3). The highest input expenditures are for plastics and rubber manufacturing, wood products, and wholesale trade. Some of the supplies into the furniture manufacturing sector have relatively low local purchase ratios. The local purchase ratio indicates how much of the demand for the input is satisfied by local supply. In the example of plastics and rubber manufacturing, for example, the model indicates that plastics and rubber companies in Sherburne County only provide 1.3 percent of total demand from furniture manufacturers. There may be opportunities to expand local purchases. INDUSTRY CHANGES AND IMPACTS This section of the report looks at trends in selected industries. The Sherburne County EDA selected industries that were of the most interest. Extension guided this selection process and encourage a diverse mix of industries for this analysis. For each industry we report the trends in terms of jobs, the relative employment of the industries being considered, estimates of the indirect and induced effects a 100 job change, and the top industries likely to be impacted by a 100 job change. The 100 job change is used for illustrative purposes and provides the ability to compare and contrast impacts. In other words, the charts show the relative impact of an industry and which industries would benefit most from an expansion or contraction. Source: IMPLAN 14 In the analysis that follows, the direct impact is the addition of 100 jobs in the selected industry (Figure 1). Adding 100 new jobs in any industry indicates the industry is expanding in the region. As an industry expands, it creates new demand from its suppliers and its workers create new demand as they make purchases. Indirect impacts are created when the industry makes purchases of goods and services from other business. Purchases might include raw goods, electricity, accounting services, and transportation. Induced impacts are created when workers in the industry spend their paychecks. Their purchases might include health care, housing, and groceries. As these expenditures are made, they help create and support additional jobs in the county. For example, Chart 14 shows the impact of the creation of 100 retail trade jobs in Sherburne County. In total, the economic impact of the addition is 123 jobs. This includes the 100 jobs at retailers, 11 indirect jobs at suppliers to the retailers, and 12 induced jobs at businesses that supply workers. 15 Retail trade has seen minor job growth in Sherburne County. Source: EMSI and QCEW Source: EMSI 16 Source: IMPLAN Source: IMPLAN 17 The arts, entertainment, and recreation industry has also seen minor job growth. Economic impact appears relatively lower, but it does not include tourist spending in the county. Source: EMSI and QCEW Source: EMSI 18 Source: IMPLAN Source: IMPLAN 19 Utilities play a significant role in Sherburne County’s economy. Source: EMSI and QCEW Source: IMPLAN 20 The health care industry is a growth area for Sherburne County. Source: EMSI and QCEW Source: IMPLAN 21 Source: IMPLAN Source: EMSI 22 Certain manufacturing industries have shown growth, despite a national trend toward a loss in manufacturing jobs. Source: EMSI and QCEW Source: IMPLAN 23 Source: IMPLAN Source: IMPLAN 24 Other manufacturing sectors have lost jobs, but continue to show resilience. Source: EMSI and QCEW Source: IMPLAN 25 The construction industry has also been an area of growth for Sherburne County. Source: EMSI and QCEW Source: IMPLAN 26 Source: IMPLAN Source: EMSI 27 The transportation industry has also seen moderate growth. Source: EMSI and QCEW Source: IMPLAN 28 Source: IMPLAN Source: EMSI 29 The information technology sector has been a relatively small slice of Sherburne County’s economy, but has been growing quickly. Source: EMSI and QCEW Source: IMPLAN 30 Source: IMPLAN Source: IMPLAN 31 The beverage manufacturing industry, including breweries, has been growing in recent years. While these charts show the impact of production, the role a brewery can play in tourism and quality of life is not included. Source: IMPLAN Source: EMSI and QCEW 32 SOURCES EMSI, Economic Modeling Systems, Inc. https://www.economicmodeling.com/ Harvard Cluster Mapping. https://www.clustermapping.us/ IMPLAN. https://www.implan.com/ On the Map, US Census. https://onthemap.ces.census.gov/ Quarterly Census of Employment and Wages. https://apps.deed.state.mn.us/lmi/qcew/AreaSel.aspx SLEDS, Statewide Longitudinal Educational Data System. http://sleds.mn.gov/ PREPARED BY Brigid Tuck, 507-389-6979, tuckb@umn.edu Neil Linscheid, 320-203-6109, lins0041@umn.edu March 2020 © 2020 Regents of the University of Minnesota. All rights reserved. University of Minnesota Extension is an equal opportunity educator and employer. In accordance with the Americans with Disabilities Act, this material is available in alternative formats upon request. Direct requests to 612-625-8233. Printed on recycled and recyclable paper with at least 10 percent postconsumer waste material. Source: IMPLAN