Tuesday night the Manhattan City Commission held a Work Session with the Manhattan Economic Development Opportunity Fund Advisory Board. Here is part of a report given at the meeting. Most of the companies also wrote remarks about their businesses and the MEDOFAB fund:
Fund Forward
On November 8, 1994, the voters of the City of Manhattan approved an additional one-half cent sales tax on retail sales within the City for a four (4) year period commencing January 1, 1995. This tax revenue was pledged for economic development initiatives which benefit the City.
Ultimately, the special sales tax generated revenues exceeding $10 million. The City Commission created the Manhattan Economic Development Opportunity Fund. An Advisory Board was also created to recommend actions to the City Commission regarding the funding of applications, policies and procedures, and accountability. The Board and Commission developed the following primary focus areas: Retention and Expansion of Existing Enterprises; Research and Kansas State University; the Mid-America Commercialization Corporation; Venture Capital; Recruitment and Relocation; and Retirement.
The primary goals are to use the proceeds from the Fund to create quality jobs, diversify the local tax base, lessen reliance on the government sector, maintain and build on the existing strengths of the community, leverage other public and private monies and create self-sustaining programs.
As of December 31, 2000, the Manhattan Economic Development Opportunity Fund provided $10,410,361 in Grants and Loans to seventeen (17) different companies, ten (10) of which were to local companies seeking to expand or diversify their existing operations and seven (7) who established new facilities in Manhattan.
Accountability and integrity of the Fund, along with annual review of the Fund recipients for compliance with established agreements, is a critical task of the Board, in conjunction with the City staff. This is the primary focus of the Manhattan Economic Development Opportunity Fund annual review and update.
Comments from the Chair
The Manhattan Economic Development Opportunity Fund Advisory Board (MEDOFAB) is dedicated to the growth and expansion of existing businesses or the development of new businesses in the Manhattan community that will provide quality jobs for the citizens of the region.
With each year’s accountability report, the benefits of the Economic Development Opportunity Funds become more and more clear. These benefits are measurable such as direct jobs (1,060) that have been created by companies receiving funding as of December 31, 2000. In addition, there are numerous spin-off benefits. In the spring of 2001, Mayor Karen McCulloh convened the Special Committee on Economic Development. The analysis undertaken by the Committee to look at the overall impact of the Economic Development Opportunity Funds (see Fund Financial Information) show that for every $1.00 of Economic Development Opportunity Funds spent the private sector has invested approximately $5.00 in additional monies. The estimated annual return on the City’s investment is 21%.
Unfortunately, there are misperceptions about the success of the Fund. For example, much of the publicity surrounding the Fund focuses on the failures of businesses receiving either grants or loans. The fact is that these failures only amount to 7% of the funds distributed to date. (See Fund Financial Information.) In contrast, it is important to note that the Small Business Administration (SBA) loan default rate in our region is 6.4%.
In addition, there is often a misperception that companies regularly receive tax abatements in addition to direct funding from MEDOFAB. In fact, only three of the 17 companies receiving funding also received a tax abatement from the City. These companies include Abbott Aluminum, Transportation Design and Manufacturing, and Manko Window Systems. (See Fund Financial Information for summary.) Only one of these tax abatements was a 100% abatement. The Special Committee on Economic Development’s report shows that $241,500 in property taxes was paid in 2000 from companies receiving Economic Development Opportunity Funds.
The Board appreciates the opportunity to share with the community the success of the Economic Development Opportunity Fund with this year’s accountability report. As of December 31, 2000, $10.4 million in Economic Development Opportunity Funds have been invested in 17 companies. This investment is still on track to create over 1,500 new direct jobs in our community. Over the next few years, the Board and City Administration will continue to monitor progress of these firms.
William M. Riley, Jr.
Chair, MEDOFAB
TDM
The Manhattan Economic Development Opportunity Fund has definitely helped Manhattan broaden its economic base. The Fund aided TDM’s decision to build a facility in town, and we have been able to utilize the excellent local workforce in our business of modifying vehicles for major car companies like General Motors. Given the cyclical nature of the auto industry, TDM Manhattan is hard at work adding new capabilities to our facility. These include electronic component design and manufacturing, and building EPA-certified, clean-burning stoves for home use.
TDM’s numerous quality awards can be credited in large part to our dedicated workers; it is these same quality awards that allow our business to grow. The growth in turn allows TDM to put more money into the local economy by hiring new workers and buying more goods and services from Manhattan.
In addition, we have product designers and engineers from outside Manhattan who stay here while working on projects. They spend money at local hotels and restaurants, and all come away with a sense of the high quality of life enjoyed in the "Little Apple."
That’s a classic "win-win" situation, and a good investment for Manhattan’s future.
John Pagen
Business Planning Manager
TDM
Grain Industry Alliance
Initial financial support from MEDOFAB has been critical in helping establish the Grain Industry Alliance in Manhattan. Our programs have now included two very successful international wheat quality conferences here in Manhattan. The first, in 1997, was attended by over 300 international delegates for five days bringing several hundred thousand dollars of economic support to the Manhattan area. The second conference was held last May (2001) and again was attended by over 275 delegates .during the five days. These two conferences have provided a positive economic impact to all of Manhattan as well as reinforcing Manhattan’s positive image of being a focal point for research and technology development for wheat and other agricultural products.
The Grain Industry Alliance reinforces synergy between its four founding Manhattan institutions from whom expertise is drawn to complete a range of industry projects. The Grain Industry Alliance is grateful to the initial support of MEDOFAB to establish our
organization.
We expect to grow as we build on continuing successes and capabilities of the founding organizations.
Ronald L. Madl
President, Grain Industry Alliance
Manhattan Holdings
The last year marked another year of progress for the Kansas Entrepreneurial Center, Inc. (KEC) and Manhattan Holdings, LLC (MHL). It also provided the basis for a testimonial on the continuing community value of the investments made in these companies by the City of Manhattan via its Manhattan Economic Development Opportunity Fund.
The economic impact of the City’s investments in KEC and MHL is tracked in consolidated terms. That is, because of the interrelationships and synergies between the services provided by these two companies, the respective goals for each are added together and compared with the consolidated performance of the two entities taken together. This approach makes sense because most companies receiving support from one of the companies also receives benefits from the other company, and consolidated reporting avoids any possible double counting of a single result. Additionally, although operated as independent entities with separate Board structures, the same people, affiliated with the Mid-America Commercialization Corporation (MACC), provide the management for both companies. MACC itself serves as the corporate "flagship" for our affiliated group of support companies, which includes KEC and MHL.
We are pleased to report that, on a consolidated basis, KEC and MHL continue to track ahead of our performance goals in terms of high value, high paying job creation and other economic impact measures. KEC received the benefit of $300,000 from the fund in late 1996, when the City purchased the current building leased to KEC for use as a technology-based business incubator. Additionally, in late 2000, upon recommendation of MEDOFAB , the City provided a loan to KEC of $250,000 for capacity expansion and building upgrades. Repayment on that loan began in June 2001, with over $19,000 repaid on time along a monthly repayment schedule.
MHL received an investment of $600,000 from the City as a part of an investment fund matched by each the State of Kansas, via the Kansas Technology Enterprise Corporation, and the Kansas State University Foundation. In late October 2000, MHL presented the City with a check for $137,657.25, representing a return on MHL’s investment in FoodLabs, Inc. This effectively reduced the cost basis of the City’s investment in MHL to $462,342.75, with the prospect for much greater financial returns in the future from other investments.
Overall, the City’s investments in MACC affiliated companies are providing Manhattan with a competitive edge in economic development - particularly by creating and developing technology based new companies. Without these funds, the results being generated would not be occurring. It truly is the synergies from investment funds, incubation and management support that are enabling certain, high potential companies to be created and grow in Manhattan. Additionally, not only are the MEDOFAB investments creating the desired end results in terms of job creation and other economic benefits for the local economy, but they also are generating financial returns that promise to replenish the MEDOF, at least in part over the longer term.
Ron Sampsaon
President/CEO Mid-America Commercialization Corporation
KSU Physics Group
Manhattan’s investment in the KSU Physics High Bay Project continues to pay off in the form of high technology jobs for the community, state-of-the-art instrumentation for the university and quality products delivered to international research customers.
Original projections for job creation have been routinely exceeded. Perhaps more significantly, work run through the High Bay has resulted in the permanent addition of two highly skilled electronics engineers to the City’s workforce. Both of these engineers have been able to return to Manhattan from jobs they were forced to take elsewhere due to the lack of local "high tech" opportunities. Pairing these key people with the High Bay facilities has in turn allowed K-State to compete successfully for value-added research and development projects from some of the world’s finest research laboratories.
Dean Zollman
University Distinguished Professor and Head of Department of Physics
Kansas State University
Manko
The funds provided by the Manhattan Economic Development Opportunity Fund through the economic sales tax provided the opportunity for Manko Window Systems to build a new modern office building and production facility in Manhattan.
The additional production capacity offered in the new facility helped Manko Windows to continue to expand its operations, which in turn has led to a new addition to the current facility. The new addition nearly doubles the square footage of the production area.
Without the assistance of MEDOFAB, Manko would not be at its current production, sales and employment levels it has today.
Production and sales activity levels are at all-time highs. Employment levels at the end of 2000 were 150 FTEs and the company expects to add 15 to 30 jobs over the next five year period because of product expansion.
MEDOFAB funds have given Manko an opportunity to be a leading employer and manufacturer within the City of Manhattan.
Gary Jones
President, Manko Window Systems
ASHA
Funding available through MEDOFAB helped Manhattan Properties move forward in constructing a multi-tenant facility in the Eastside Industrial Park. We purchased ground and built our new facility at 809 Levee Drive in Manhattan. We were able to use local contractors during the construction phase which also helped the local economy.
After the building was completed, ASHA Distributing, as well as other tenants, were able to move and expand their operations into larger, more adequate facilities. In turn, these companies have been able to grow their businesses and generate revenues for Manhattan.
The Manhattan Economic Development Fund Advisory Board and the City of Manhattan have been very good to work with and were instrumental in the success of this project.
We appreciate all the help and continued support. ASHA Distributing continues to look forward to a successful relationship in Manhattan and the region.
Trace Smith
President, ASHA Distributing, Inc.
KanGolf
One of the true pleasures of being a business owner is having customers compliment me on the "FUN" they have at the Wildcat Creek Sports Center. These compliments are shared with the Manhattan Economic Development Opportunity Board. Our family’s commitment to build a family fun center in Manhattan would not have been possible without the help from MEDOFAB in securing an SBA loan.
Although the MEDOFAB portion of the Sports Center’s overall cost was small compared to private and SBA funding, the endorsement from this community board was HUGE!
I would like to thank MEDOFAB again, on behalf of the Sports Center and our customers, for believing in our business idea and in the community.
Kevin Fateley
President
KanGolf, Inc.
Farrar
When we first started working with the City of Manhattan during our search for a site to expand our business, I was mainly impressed with two things: 1) the positive and welcoming attitude of the community and 2) the Manhattan Economic Development Opportunity Fund. Manhattan is blessed with forward thinking people who treasure the quality of life here and realize that economic diversity is critical for future growth and prosperity. MEDOFAB has been and hopefully will continue to be an important part of the future economic development for Manhattan and the surrounding region.
MEDOFAB is another one of the things that sets Manhattan apart from other communities in Kansas.
Joe Farrar
President, Farrar Corporation
Sykes
Thanks to MEDOFAB, Sykes Enterprises opened a Customer Support Center in Manhattan August 3, 1998. As we enter our third year, we are pleased with the labor pool and the support we have received from the community.
We are proud to return this support through our contribution of resources to the United Way, Boys and Girls Club, Adopt-a-Highway and Mercy Health System. In addition, Sykes purchases well over $250,000 a year in goods and services from local business. Our support is not simply financial.
During the summer of 2000, we formed a partnership with a local project called School to Careers. The goal of this partnership was to introduce students to careers through the creation of a
Self-Sufficient Technical Help Desk for local school employees. Once completed, this Help Desk would be staffed by students and provide technical assistance to teachers, administrators and staff.
During their summer break, several high school students attended training classes at Sykes. Sykes provided the facilities, curriculum and a trainer. This was a great success. Not only did the Help Desk begin successfully during the fall of 2000, but several of the students became employees at Sykes. This entrepreneurial spirit is visible to our corporate offices as well.
The Manhattan Center has become a focal point for our corporate operations as evidenced by the addition of 6 regional management positions (average salary of $45,000), serving as host for many sales presentations to potential clients and housing many of our corporate servers and computer applications.
We are very pleased with the community and its work ethic. The Manhattan Economic Development funds, the community and our staff enable us to be the premier call center in the area.
We look forward to many more productive years!
Glenn Mathews
Director of Client Services
Sykes Enterprises, Inc.
CORE
January 5, 1999, the City Commission approved a MEDOFAB grant of $128,000 to assist the Community Online Resource Exchange (CORE) in the completion of space in the Manhattan Public Library to develop and operate a Telecommunity Center. The Center began operation on a limited basis in September of 1999. Construction was a part of the Library expansion project. Without the MEDOFAB grant, the Telecommunity Center could not have been completed in its final form.
The CORE Board transferred the operation of the Technology Center to the Manhattan Public Library in December of 1999. Since that time, activity in the Center has increased steadily. About 130 people use the public access area computers on a daily basis; a caseload of 19 clients use the Assistive Technology Lab; and in collaboration with the Manhattan Area technical College, several formal classes are taught each semester in the state-of-the-art classroom. In addition, a number of businesses and governmental organizations use the classroom for training. CORE is currently developing a program to serve the needs of small businesses for adapting information technology to the workplace.
CORE did not expect to create new jobs by the opening of the Center, but since December of 1999, the Library and CORE have established 4.87 FTEs in the Center. The CORE Board believes that the Center has had an indirect impact on employment in the area.
The MEDOFAB grant made the Telecommunity Center possible. Manhattan has a resource which will contribute to economic development into the indefinite future.
C. Clyde Jones
President, Community Online Resource Exchange
National Gas Machinery Laboratory
As director of the National Gas Machinery Laboratory (NGML) at Kansas State University, I thank the City of Manhattan for itspartnership, the land in the Industrial Park and the $100,000 grant to relocate our facility to Manhattan.
During the two years ending December 2000, the NGML received more than $1.5 million in testing revenues and research projects. According to the U.S. Department of Commerce, 40 jobs are created for every $1 million in research dollars. This measurement illustrates the significant impact of the City’s investment to stimulate the Manhattan economy.
Similarly, during the same time period, the NGML spent more than $1.2 million in salaries and expenses in the Manhattan area. About one-half of that has been spent with local vendors and the other half has been spent on salaries. The Lab employs three full-time professionals, the equivalent of two full-time graduate students and the equivalent of more than five full-time undergraduate students. All staff members live in Manhattan.
Overall, I think that you would agree; the NGML has generated a tremendous return for the City’s $100,000 investment. Thank you for making this opportunity a reality.
Kirby S. Chapman, Ph.D.
Associate Professor and Director, NGML
Western Wireless
It has been our sincere pleasure to work with the City of Manhattan and the Manhattan Economic Development Opportunity Fund Advisory Board (MEDOFAB) as we’ve opened and grown our Manhattan Call Center.
A significant number of investments fundamental to WWC’s ongoing success have been made including the addition of the Manhattan Call Center in 1999. Proud as we are of each individual accomplishment, we are most excited by the critical mass we’ve achieved that provides us with a powerful business platform on which we’ve grown our business. Surrounded by opportunities, we are committed to exceeding the expectations of our customers and the communities of which we are a part. It is this commitment that brought us where we are today, in Manhattan, Kansas.
We are confident that the sustained growth our Manhattan Center experiences is a direct result of the continued availability of a quality Manhattan workforce as well as the investment by the City of Manhattan with its MEDOFAB funding. This growth has allowed Western Wireless to return the City’s investment as we hire more employees that live in and spend money in the community and as we continue to work with local vendors who provide the many goods and services it takes to run our facility.
WWC is dedicated to the realization of the community’s economic development goals including enhancing the private sector employment opportunities for the area’s workforce; diversification of the tax base and the recruitment, retention and growth of businesses that are committed to sustaining the economic, social and environmental welfare of Manhattan through investment in the community.
We are pleased to do business in the Manhattan community and are confident that it is the ideal environment for growing our Customer Service Division.
Brad McCune
Director, Customer Services-Kansas
Western Wireless