March 2000

SPECIAL ISSUE: YEAR END REPORT

Editor's Note: This report was prepared and presented to the Butte-Silver Bow Council of Commissioners by Evan Barrett, Butte Local Development Corporation Executive Director on January 26, 2000.

CURRENT ECONOMIC CONDITIONS IN BUTTE

The economy in Butte-Silver Bow continues in the "slow growth" mode that has prevailed
in recent years, with the exception of the ASiMI "boomlet."

Businesses generally see the need for more economic growth and we, as a community, need to continue to be committed to making a difference in our economy. The recent job reductions announced at Golden
Sunlight Mine only make it more important than ever.

The current number of jobs in Butte-Silver Bow exceeds 17,000, the level we were at in 1979, prior to the impacts of the ARCO closures in Butte and Anaconda. However admirable that statistic is, the replacement jobs, by and large, are of significantly lower financial quality than the jobs we lost from 1979 to 1984.

Meanwhile, Montana's economy is declining compared to that of other states. In the last year the state went from 46th to 47th in per capita income and from 49th to 50th in average wages. It is clear that the state as well as Butte-Silver Bow County need to aggressively address economic development.

BLDC LOAN FUND ACTIVITY
The BLDC now administers six loan programs. These loan funds are the Anaconda/ARCO Loan Fund, USDA Rural Development Intermediary Relending Program Fund # 1 and #2, EDA Revolving Loan Fund, Community Development Block Grant Revolving Loan Fund, and the Butte-Silver Bow Revolving Loan Fund. The BLDC has processed seven economic development loans over the last year.

These seven loans totaling $733,000, have leveraged another $1,064,000 in investment,for a total investment of $1,797,000.

These seven projects have a job creation and/or retention potential of 154 jobs. The BLDC currently has about $500,000 available for lending to business creation, retention or expansion. Loan funds are being replenished by approximately $50,000 a month in repayments from previous loans.

In the last year the BLDC has submitted a new application to the USDA Rural Development for another $500,000 in IRP funds, money borrowed from the federal government and then reloaned for business and economic development projects.

The BLDC continues to monitor outstanding loans of $4,960,900. All are in good shape, with the exception of two or three that require special attention.

The famous Anheuser-Busch Clydesdales
were honored guests at the dedication
of Thompson Distributing's new statewide
Budweiser distribution warehouse, funded
in part with a loan from the BLDC as part of
an ongoing commitment to transportation-
related economic development.
 
SILICON MOUNTAIN PROJECT
Efforts by an international real estate firm to help locate businesses in the Silicon Mountain Technology Park have borne fruit.

Recently,the company identified a manufacturing company with the potential of adding 70 jobs to the local economy and an interest in locating in the Butte area. The BLDC is beginning to explore this lead.

If the opportunity is a good one, the relationship may well be brought before the Butte-Silver Bow Council of Commissioners after full review by the TIFID Board of Directors.

The economic development team working to attract new businesses to the Silicon Mountain Technology Park, which includes the Butte-Silver Bow government, the BLDC, Montana Power Co. and others, is actively pursuing several projects that range from "mega-projects" with very high capital investment and large numbers of jobs to mid-sized projects and even smaller projects involving a modest number of jobs.
 
TIFID REPORT
Work continues on land acqusition issues for TIFID #2.

Rody Holman, TIFID Administrator, continues to work on wrapping up the transfer of the remaining Rhone Poulenc land. Also, the BLDC has been working with Rody, Butte-Silver Bow and Ueland Ranches on approaching the state of Montana for some modification of the upcoming 10-year state land lease for the state section immediately to the east of ASiMI.

Something will have to be done this year if we are to have any flexibiliy regarding that land over the next 10 years - the term of the normal state land lease.

The Butte-Silver Bow application to the US EDA for a $712,000 infrastructure grant was not funded for this fiscal year. The application was for a grant to help pay for oversizing a waste water outfall line from ASiMI to Silver Bow Creek so it can serve future tenants of the Silicon Mountain Technology Park.

That potentially renders the concept moot,as ASiMI will need to construct the line this season if they are required to do so by the Montana Department of Environmental Quality. It is likely that any wastewater line to serve the Silicon Mountain Technology Park will have to be done as part of a future TIFID project. The Montana state reimbursement funds for TIFID #2 in HB 260 have been thrown out along with the rest of the bill by the recent Montana Supreme Court decision.

The speedy resolution of this situation may depend on the success or failure to call a special session of the Montana Legislature to resolve the issues surrounding funding for economic development. A statewide coalition - Coalition for Montana's Economic Future -- has been formed, including several Butte area people,to reestablish economic development plans after the setback caused by the Supreme Court decision.

The main goal is to ensure that a special session is called and that the session addresses the economic development needs of Butte-Silver Bow County, including making the state reimbursement commitment for TIFID a recurring investment,restoring certain bond language that was previously dropped, and possibly adjusting the level of reimbursement to reflect the amount needed to prevent default for TIFID bonds.
 
PROJECT UPDATES
Tele-Servicing Innovations (TSI) is just completing their job interviews in the area and based on these they will likely decide to locate in Butte. This move could bring at least 100 mid-level quality jobs including benefits like health insurance.

The BLDC is involved in locating a suitable building to house the new employees and,after investigating several options, that effort should be completed soon.

Two other other telemarketing firms have expressed an interest in locating in Butte although it is too soon to speak of any results as they are very sensitive to the job market.

Touch America is an area of concern. At some time, they will spin out from Montana Power. The community must do all that it can to insure that as much of their core operations as possible remain in Butte. Though they have no specific intentions about change, we cannot necessarily count on them being here automatically for the long haul.

As a community, we must develop a proactive package to help increase their investment in Uptown Butte. We must aggressively approach Touch America as a retention project - with the same vigor and creativity with which we approach a recruitment project.

The Butte Economic Development Coordinating Council has endorsed federal funding to establish an Underground Mining Training Center. It has also endorsed federal funding for some of the road paving needs associated with the Our Lady of the Rockies Tram Project.

With the help of the local government, the BLDC is hopeful that full funding will be available for a slide engineering study for the Union Pacific track near Clark Canyon Dam.

Finally, while there are many reasons to be optimistic, there is also one big reason for caution: it takes at least 20 potential projects to bring one project home.

Economic development is not for the faint-hearted or the impatient. However,with what we have to offer as a community, as long as we stay in the trenches, proactive, and creative, we will be successful in developing better jobs for Butte.