SEED

Strategic Entrepreneurial Economic Development (SEED)

Frequently Asked Questions About SEED

What is the motivation behind the SEED initiatives?

Job creation and growth depends on the success of small businesses. From 2002 to 2004, companies with fewer than 100 employees added more than 58,900 jobs while firms larger than that lost 38,000 jobs.

The importance of small businesses is more pronounced in rural Minnesota. More than 98 percent of companies in Greater Minnesota have fewer than 100 employees. Investing in small business development will bring lasting value to the rural communities that most need economic growth. That means providing more tools to build new businesses and grow existing businesses. Stimulating rural venture capital sources, providing a larger network of information and technical services, establishing micro lending sources, providing funding to implement new technology and products, and providing public infrastructure that support community leadership and physical, capital investment are all elements of that tool kit.

Rural leaders need support for a community vision. No one can tell rural communities what their goals should be, but many small communities have no means for their leaders to grow and to build effective local plans. If they want to tap entrepreneurial opportunities, community leaders need skills and the support for formulating the best plans to meet their goals. Every rural community also operates within a regional framework – they are as connected to one another as are urban neighborhoods. Without a regional understanding of their relationships, no small community can develop a meaningful plan or expect to thrive.

Entrepreneurs in rural communities require physical infrastructure that is affordable and capable of supporting the demands made by their growing businesses. Creative new investments and strategies can realize this goal.

Does the Minnesota Department of Employment and Economic Development (DEED) currently have programs available in Greater Minnesota? Will SEED replace it or complement those programs?

Overall, DEED has provided $530 million in community and financial assistance to the 80 counties of Greater Minnesota since 2004, with about $268 million going to small towns of fewer than 2,500 residents.

The bulk of that total ($417 million) has been through the Public Facilities Authority, a nationally-recognized financial body, for community water and wastewater systems. Other major sources of assistance include the Minnesota Investment Fund ($17 million), redevelopment and contaminated site clean up ($18 million), and federal funds channeled to small cities for commercial and residential rehabilitation and public infrastructure ($78 million). Other programs including the Small Business Development Centers, partners with DEED, that offer technical support for entrepreneurs and planning assistance. Finally, the Job Opportunity Building Zones (JOBZ) program is available in hundreds of subzones throughout Greater Minnesota and has assisted more than 300 companies since 2004.

SEED does not replace these programs, but complements them with additional, strategic investments aimed especially at entrepreneurial development. SEED provides more funding for recognized, successful methods of supporting economic development; creates new tools to enable investment in infrastructure, financing of small, entrepreneurial businesses, and promotion of leadership development.

Where is the money coming from?

SEED is a set of proposals that the Pawlenty Administration will present to the 2008 Legislature in two forms:

As a supplemental budget request from the state’s General Fund,
As a capital budget request seeking bond allocations (borrowing).

None of these initiatives can be implemented without approval by the Minnesota Legislature and the Governor’s signature on those bills sent to him at the close of the 2008 session.

How does SEED relate to JOBZ, the Governor’s other signature rural economic development initiative?

JOBZ is a tax-exemption tool to spur new development. The JOBZ initiative will expire in December, 2015 without further legislative action. The SEED initiative includes proposals to extend JOBZ for 10 years for any business subsidy agreement signed by the end of 2015, and to extend it for 12 years in areas designated as “targeted rural opportunity communities.” These proposed extensions will continue what has been a successful program.

The foundation of the other SEED initiatives is the principal that additional focus is needed on support for entrepreneurs, for community leadership, and for physical infrastructure. In this context JOBZ becomes one of many important tools the state can offer to strengthen rural economic development and investment.

What are the “targeted rural opportunity communities?” How will they benefit compared to a city that does not receive this designation?

Some areas of the state, including within Greater Minnesota, are more economically disadvantaged than others. The concept of targeted rural opportunity communities incorporates measures of current and long-term economic distress and seeks to focus special attention on them. Long-term population decline is one such measure. Counties that experienced population decline from the 1980 to 2000 census are designated as targeted rural opportunity communities. Counties experiencing unemployment above the statewide average in 2006 are also designated as a targeted rural opportunity community. Either measure would be sufficient for a county, and all the cities within, receive the designation. Legislative enactment is required for these two measures to be enacted.

By these measures, there are 64 counties – all in Greater Minnesota – that qualify to be considered a targeted rural opportunity community. None are in the seven-county Twin Cities metropolitan area.

Three of the 22 SEED initiatives are intended exclusively for the targeted rural opportunity communities. They are:

Extension of JOBZ for a full 12 years
Main Street Minnesota Revitalization grants
Community Leadership and Planning

In addition, some of the other programs will not be exclusively for the targeted rural opportunity communities but DEED is recommending that emphasis be given to them wherever possible with the flexibility to make that decision. These include the Minnesota Investment Fund, new Job Skills Partnership funds, and the bond-funded business development infrastructure program, redevelopment grant program, and bioscience development infrastructure program.

Is SEED creating new programs, providing new funding for existing programs, changing old programs?

All of the above. Many programs have proven their success but funding has been stable for many years. An infusion of new funds will expand their services and breadth of impact. Others are new ideas, some of which have been suggested for several years or already implemented through private sector efforts. These are now being given public and statewide support. In some cases, existing program language is being amended to authorize new purposes.

Existing programs receiving new funding or additional authorization:

Small Business Development Centers
Assistance to Entrepreneurs – SBIR
Trade Office Export Education
Capital for the Initiative Foundations
Minnesota Investment Fund
Job Skills Partnership
Update JOBZ Program
Web-based Marketing System
Labor Market Information Enhancements
Business Development Infrastructure
Redevelopment Grant Program
Bioscience Development Infrastructure

New programs receiving legislative authorization and funding:

Rural Entrepreneurs Workforce Center Programs
Entrepreneurial Network
Seed Capital Tax Credit
Rural Enterprise Loan Fund
Small Business Product Development
Community Leadership and Planning
Streamline Infrastructure Financing
Marketing Rural Minnesota

SEED has been explained as a “rural economic development” program but it’s been said that some metropolitan and some larger cities in Greater Minnesota might benefit as well. How does that work?

Most of the programs are aimed squarely at the 80 counties in Greater Minnesota. Because of the nature of some programs, they are available statewide, including larger cities. These programs include:

The Small Business Development Centers, of which there are nine throughout Minnesota, one serving the Twin Cities at St. Thomas University in Minneapolis.

The Web-Based Marketing System that is an update of a 15-year-old marketing database containing information on all Minnesota cities rural and urban alike.

Assistance to Entrepreneurs-SBIR will give DEED additional resources to help companies across the state commercialize and bring to market their new inventions and technology.

Labor Market Information Enhancements are most efficiently implemented in the state’s labor market databases that encompass data from employers in all 87 counties

Redevelopment Grant Program is, by statute, currently allocated to a 50/50 split between the Twin Cities metro area and Greater Minnesota, unless changed by legislative action.

What are the FIRST planning grants and how do they relate to SEED?

The Framework for Integrated Regional Strategies (FIRST) planning grants will help each region develop an integrated strategy for workforce development, economic development, and education. The intent is not to create planning documents but to support an ongoing collaborative framework within each region, so that the region can set its own plans in the context of SEED and the region’s own resources. Requests for proposals for up to $50,000 will be distributed in October, 2007. Regions will be self-defined but DEED plans to award up to eight grants.