The JDA, at its June 1 meeting, approved a funding request that would allow it to apply for a federal grant to begin work on a proposed $1.2 million Tech Hub. The grant, administered by The U.S Department of Commerce’s Economic Development Administration, would supply $600,000 in funds to complete the three-year project, should the city and local entities raise the same amount.
The city will provide $300,000 over three years to the program. That money is split between the Growth Fund, which will contribute $65,000 annually, with the remainder coming from the city itself, by diverting money from its intern and training budget. UND has committed $100,000, and the remaining $200,000 needs to come from local businesses. According to a Growth Fund staff report, $180,000 of that amount has already been secured by six companies as of May 28.
“I think the community is really excited about and hungry to support this type of activity, and the growth of technology companies in our region,” Keith Lund, president and CEO of the Grand Forks Region Economic Development Corporation, told JDA members in the online meeting.
A location has not yet been determined.
In other JDA news, the committee approved three loans totaling nearly $900,000 for businesses in the region, with the largest loan of $500,000 going to start-up drone software company Airtonomy. This loan, as well as one for $375,000 given to another start-up -- online brand connecting platform Tailorie, Inc. -- have unique properties built into them, enabling JDA to convert them to equity through Simple Agreement For Equity plans.
The “SAFE” plans, should the JDA exercise them, could see a financial return much larger than that of low-interest loans. City Attorney Howard Swanson had previously expressed reservations about using such a mechanism. In a May 13 memorandum to City Administrator Todd Feland, Swanson listed several caveats, including that SAFE agreements are not governed by state law, writing: “SAFEs are not safe or secure.”
Swanson told the JDA the situation had evolved from when he was first consulted about the SAFE plans, when the initial proposal was for an equity agreement and not a gap loan proposal. That led to his writing the memorandum to Feland.
“It's up for the JDA to determine whether that's an appropriate vehicle for potential equity investment,” Swanson said.
The JDA also approved a more conventional $22,000 loan for Associated Potato Growers in Grand Forks, to help the company buy down interest on a commercial equipment loan. Associated Potato Growers intends to purchase a new packaging machine to help its operations become more updated and efficient.
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