1,000 @ 2% = the sweet spot

I attended a great celebration today: At the corner of 38th St. and Nicollet Ave., a community of neighbors, small-business owners, business lenders, economic-development specialists and neighbors gathered to welcome a great new business to its new location — and to celebrate the help that got them there.

We met at the new home of the Blackbird Café, one of my favorite establishments, at the intersection of 38th and Nicollet. The Blackbird, along with several other great small businesses, was sadly destroyed in a fire last February at their old location at 50th and Bryant. Now, however, they’re within a few weeks of opening at this great new location with the help of a 2% loan from the City of Minneapolis. The coolest part was that the 2% loan to the Blackbird marked the 1,000th 2% loan that the City has made to small businesses in every corner of Minneapolis.

Small businesses mark the sweet spot in Minneapolis’ economy where help from the City, even in seemingly small amounts, can make a big difference — and multiplied 1,000 times, the 2% loans have made an enormous impact. Since the program first began in 1988, these 1,000 loans have:

  • invested a total of $28 million in small businesses in Minneapolis;
  • generated $87 million more in private investment;
  • created more than 2,000 jobs;
  • and retained more than 9,300 jobs.

And I want to make sure to mention that over 97% of these 2% loans have been paid back in full, with interest.

These loans are just the kind of investment that government should be making — and now more than ever, this is the right time to make it. I’m especially proud that through this tough recession, the City of Minneapolis has continued to lend to small businesses, helping them create jobs and revitalize our economy at a time when we need it the most.

Matt Perry, president of the Nicollet–East Harriet Business Association, nailed it on the head today. “Small businesses create the fabric of the city,” he said. “Small businesses in Minneapolis are likely to hire Minneapolis residents for jobs, so a small investment has big ripple effects.”

I remember so clearly the fire that destroyed the first home of the Blackbird back in February, because I was on site as soon as I heard about it. I spent a lot of time with co-owners Chris Stevens and Gail Mollner: first I consoled them, then I put in their hands a packet of information about ways that the City could help them stay and grow in Minneapolis. I encouraged them to call Bob Lind, the manager of the City’s Business Finance program, because Bob and his team of dedicated small-business specialists never give up until they find a way, or often several ways, to help a business start or expand.

Chris said, “There were a lot of good reasons not to reopen the café, but the outpouring of support from neighbors, customers and the restaurant community, plus the help from the City of Minneapolis, convinced us that we should.”

“We can’t measure how grateful we are for all the support,” Gail added.

Like I said, some great folks joined us at the event today. I was very excited that Robert Stephens, the founder of the Geek Squad, was there. Not just because he’s a funny, engaging guy, but because back when the Geek Squad was still a little-known start-up — and after they’d been turned down for financing by a bank — the City gave them financing to help them grow. “It was the one and only loan we ever took out, and we paid it back in full, faster than we had planned.” Robert said. “I know I paid it back faster than my student loan from the University of Minnesota!”

Dean Sanberg, the new owner of the small business WindRider International, was there, too. WindRider is a manufacturer of innovative sailboats that moved to Minneapolis from Pine City earlier this year. They’re a great business to have in the City of Lakes and we’ve helped them expand with a 2% loan, too.

If you’re a small-business owner or are thinking of starting your own small business, call us: we’d love to help. The 2% loan program is one of 15 different finance tools that the City of Minneapolis uses to support our diverse small-business community. For more information on the range of tools the City has at our disposal for small business, see http://www.ci.minneapolis.mn.us/cped/business_assistance.asp or call Bob Lind at (612) 673-5068.

From the Geek Squad to the Blackbird, we are standing shoulder-to-shoulder with entrepreneurs who are growing businesses and creating jobs. And the best is that there is more to come.

And the Blackbird makes 1,000

I’m very pleased that tomorrow, I’ll be standing with the founder of the Geek Squad, Robert Stephens, to welcome the Blackbird Café — one of my favorite spots — to their new home at 38th St. and Nicollet Ave. At that time, we’re going to celebrate the fact that the Blackbird is the 1,000th recipient of a 2% small-business loan from the City of Minneapolis.

Robert Stephens will join us to drive home the point that helping small business with creative public resources works. They are the proof: the City helped the Geek Squad back when they were just a start-up, and now their black-and-white Volkswagen Bugs are everywhere. (You see nearly as many of them on the road as you do of the electric-green Nice Ride bikes…)

We’ll also be with Blackbird owners Gail Mollner and Chris Stevens, as well as with Dean Sanberg, the owner of a business that has just relocated to Minneapolis with the help of another 2% loan — WindRider International, which makes sailboats. I can hardly think of a more fitting business for the City of Lakes.

You might remember that last February 18, the Blackbird’s previous home at W. 50th St. and Bryant Ave. S. was destroyed in a fire, which sadly took out several other great small businesses as well. I’m very happy that we were able to help the Blackbird relocate to the 38th and Nicollet intersection, which is undergoing a wonderful revitalization with some great small businesses and a variety of City assistance. The Blackbird will be back open for business a little later this fall.

The 2% Loan Program is one of the City’s best tools for helping small businesses start and expand in Minneapolis, and it’s been an incredible success. The 1,000 loans that the City has made to small businesses, for a total of $28 million, have generated $87 million in private investment. What’s more, those 1,000 loans have created 2,000 jobs and retained 9,000 more in Minneapolis. And the success rate of the 2% loans is … 97%.

I’m excited for tomorrow and will tell you more about it then.

State promises, cuts and consequences

When I presented my 2011 budget for the City on August 16, I said that I expected the State of Minnesota to deliver fully on their commitment of Local Government Aid (LGA) to Minneapolis next year. And I meant it: Minneapolis residents should hold the State accountable for the promise it has made to us in current law. (Not least because Minneapolis is net contributor to the State’s budget — we pay in far more than we get back.)

But at that time, I also recognized that because of the State’s $6 billion budget deficit — as well as the fact that for three years in a row, they have delivered less than they have promised — we need to be ready if the State breaks its commitment to us again in 2011.

Today, I released a sequenced series of cuts to City services, totaling $18 million, to take effect if that happens. I am proposing to make these cuts in the following order, depending on the magnitude of the cuts that the State might make to Minneapolis’ promised LGA next year:

1)     Cut $6.1 million by delaying payment on pension debt;

2)     Cut $4 million in preventive street maintenance, street resurfacing and alley resurfacing;

3)     Cut $0.72 million in innovative, cost-saving initiatives;

4)     Cut $1.4 million more by delaying payment on pension debt;

5)     Cut $5 million more in street and alley maintenance and resurfacing;

6)     Cut $0.7 million in the Fire Department.

Each one of these cuts has consequences.

  • Cuts to street maintenance will mean that extended over five years, 300 miles of City streets will not receive basic preventative maintenance, 66 miles of streets will not be resurfaced and eight miles of the worst alleys will not be resurfaced. (I outlined these consequences in more detail in a September 2 presentation.)
  • Delaying payment on pension debt will mean that in subsequent years, it will be harder for the City to keep police and firefighters on the job and will make property-tax increases more likely.
  • Cuts to the Fire Department will mean layoffs of eight firefighters.

I would strongly prefer not to have to make these cuts. Indeed, I wish I could propose only one budget a year, but because of ongoing uncertainty about the State’s budget, we need to adopt this two-tiered approach to budgeting now. We must hold the State accountable to following current law and following through on its commitment to Minneapolis, but we must also spell out ahead of time what cuts we will make if it does not.

In addition, should this sequence of cuts still not be enough to fill the gap created by State LGA cuts, I will consider an increase of one more percentage point in the property-tax levy. That increase would raise roughly $2.6 million.

I am asking the City Council to pass both the budget I proposed on August 16 and these “Plan B” cuts. If necessary, the cuts will be triggered based on the budget that the new governor proposes next February.

Making cuts to City services when the State doesn’t deliver on LGA isn’t new: we’ve done it for the last three years in a row, and this year, we’re just planning even further ahead. As we know from years of experience, the sooner we make them, the less difficult they are to absorb. And by planning even further ahead, we’re making it easier for our employees to plan their work and for residents to know what services they can expect.

I’m proud that every budget that I have delivered and the City Council has passed has been balanced five years out, not just one year at a time. I’m proud that even in the midst of the worst recession in decades, we have paid down $130 million in debt and carefully managed our costs. And I’m especially proud that through it all, public safety has remained our #1 priority.

We have done some hard work, but many challenges and uncertainties lie ahead. Your feedback throughout the budget process is essential, so please contact your Council Member or me with any concerns, questions or good ideas you may have. I look forward to hearing from you.

P.S. You may also access detailed information about the budget on the City of Minneapolis website at: http://www.ci.minneapolis.mn.us/city-budget/2011recc/index.asp.