Jobs for Butte: The Newsletter of the Butte Local Development Corporation in Butte, Montana

September 2000


STREAMING SOLUTIONS, INC. TO RELOCATE IN BUTTE

At the Finlen Complex for presentation of Streaming Solutions are (l to r) Kim Murphy Kohn, Mainstreet Uptown Butte; Evan Barrett, BLDC; Robert Leigland, USDA Rural Development; Jim Erikson, Streaming Solutions; and Frank Taras, Finlen Complex. The check in front represents $150,000 of Rural Development funds, part of Streaming Solutions' financial package; the plaque held by Leigland represents BLDC's third Intermediary Relending Program infusion of $500,000.

Streaming Solutions, a high-tech firm from Cut Bank, Montana, has settled on Butte as the best place to expand their business. They provide full screen broadcast quality video services for use on the Internet. In September, 12 employees will set up shop temporarily in the Finlen Hotel while the company waits for a permanent location, expected in about a year (see story on YMCA Building). The initial employees will be joined by about as many new employees each month until the company employs nearly 110 employees in Butte. The decision to move to Butte is the result of active discussions with the BLDC for the last six months. Butte was attractive because of its existing telecommunications infrastructure, the active interest of the community in enhancing Butte for high tech companies, and the existence of BLDC loan funds which were part of a $300,000 low-interest loan package for the company's expansion. Streaming Solutions will bring quality jobs to Butte at the same time the company feels that they will benefit from the proximity to the central office operations of both Touch America and Qwest in Uptown Butte. "Whenever possible we are looking for jobs like these that average about $40,000 a year," said Evan Barrett, of the BLDC. "We want jobs that you can raise a family on and Streaming Solutions is a 'new economy' company which fits that bill."


BLDC LOAN FUNDS GROW WITH NEW USDA IRP LOAN


The BLDC's revolving loan programs just got bigger. BLDC has successfully secured another $500,000 to expand its USDA Rural Development Intermediary Relending Program (IRP) Funds. This is money borrowed from the federal government and then reloaned for business and economic development projects. It brings the total available for loans from the BLDC to close to $6 million dollars, most of which is already loaned and working at creating jobs. The BLDC was able to offer a low-interest loan to Streaming Solutions, Inc. to expand to Butte, thanks in part to the USDA Rural Development Program (see earlier story). That loan to Streaming Solutions is the seventeenth loan made from the BLDC's IRP funds. The first such IRP revolving loan fund was fueled with one million dollars. That was augmented by a second fund of $816,000 dollars and now this third loan expands BLDC loan capabilities by another $500,000, for a total of $2.3 million in IRP funds. Loans from these and other funds return around $40,000 to $50,000 each month to the BLDC. This money can then be loaned to other businesses. The IRP is a nationally competitive program. The BLDC credits its effectiveness in this program to its performance and a close working relationship with the USDA Rural Development and its state director Robert Leigland. "These monies and other grants and funds have allowed us to put about $6 million dollars on the streets in loans for retention and expansion as well as recruitment of new jobs for Butte," said Evan Barrett of the BLDC.
NEW GRANT KEY TO TURN YMCA INTO "FIBER HOTEL"



More good news has arrived. The BLDC has successfully secured a Rural Business Enterprise Grant from USDA Rural Development. The $20,300 grant is for technical assistance to assess the feasibility of converting Butte's old uptown YMCA building into a high-tech "smart building," including a "fiber hotel" within its walls. A fiber hotel is specially dedicated space within the building to serve tenants of the building and nearby buildings. It is where fiber providers and service suppliers (like Touch America and Qwest) meet the telecommunications needs of tenants of the buildings in the area. Generally, these are built to stringent standards with controlled temperature & humidity, dust control, high security, power redundancy and emergency backup systems. Butte-based HKM Engineering of Butte is supervising a complete review of the building's capacity to be renovated. The study includes a close look at the need to replace plumbing, electrical and HVAC, an analysis of the costs for running fiber optic cable throughout the building and constructing the "fiber hotel" portion, the ability to rearrange space to be suitable for high-tech users, and parking. The study should be completed by the end of September. The next step will be to secure adequate funding to pay for the renovation with a goal of having it occupied by new businesses within the next year. Several "target" companies have been located (see story on Streaming Solutions).
SPECIAL SESSION REPORT

From May 8 to 11 the Montana Legislature met in a Special Session called by the Governor to address the urgent need to fund economic development programs. One of the first items of business, House Bill 1 wasted no time in restoring $10 million dollars in funding for economic development. The bill solved the problem left by the regular session when it allocated funds from the Coal Tax Trust Fund and the Supreme Court ruled that the appropriation violated the state constitution. HB 1 secured the funding for economic development for the next five years through appropriations from the general fund -- for research and commercialization, agricultural development programs, and overall jobs and income appropriations, which included a number of economic development programs The session also resulted in $600,000 per year for 5 years to fund revenue shortfalls for Butte's TIFID #2 that resulted from the last regular session's tax changes that reduced revenues sharply. While the funding leaves the TIFID still short of revenues, we are much better off than we were before the special session. In addition, Senate Bill 4 revised a state aerospace bonding program which had been previously been designated solely for the Venture Star project and made other aerospace projects eligible for this funding. That means that $20 million in bonding can now be possibly used for high-tech aerospace ventures in Butte, particularly at the MSE site. Senate Bill 6 provided a new "value-adding" loan fund at the state Board of Investments. This new program set aside $50 million in potential loans for such businesses in Montana at very low rates that mature over 15 years, in 5 year increments -- beginning at 2 percent, then rising to 6 percent and then to the prime rate. BLDC is already working with potential businesses to use this fund. In Senate Bill 2, changes to the foreign capital depository law to encourage off-shore style banking in Montana have reduced the fees to encourage more applicants. One potential FCD is being recruited for Butte. Also important to Butte was Senate Bill 9 that altered the requirement for backfilling open pit mines (including Golden Sunlight and Montana Resources). The requirements of an original statute were clarified by this law and the result is that backfilling may be required, but is not automatic.


ECONOMIC DEVELOPMENT CONFERENCE SPONSORED BY SEN. MAX BAUCUS


BLDC Executive Director Evan Barrett with US Senator Max Baucus discussing the Economic Development Summit that was held in Great Falls on June 25-26. Leaders of MEDA (Montana Economic Developers Association) assisted Baucus in planning the Summit.
On June 25th and 26th, Senator Max Baucus convened a state-wide summit conference to focus on economic development in Montana. Held at the University of Great Falls, the conference was attended by over 1,000 Montana leaders and attendees from various segments of the Montana economy - folks interested in economic development in Montana. U.S. Senators Max Baucus and Conrad Burns provided opening remarks, and Senator Baucus, as sponsor, was active throughout the 2-day session. The keynote address was delivered by the Honorable Robert Rubin, former Secretary of the U.S. Treasury, considered by many to be one of the key architects of the nation's record economic expansion. Robert Krebs, Chairman and CEO of Burlington Northern/Santa Fe Railroad and Tom Gartner Co-Chairman of The Motley Fool made other keynote presentations. Many from Butte and Southwest Montana attended the summit. Those from the area who made formal presentations to the summit included Don Peoples CEO of MERDI/MSE; Evan Barrett, BLDC Executive Director; and Dr. Rick Donovan of Montana Tech. Roundtable sessions at the conference focused on high-tech issues, marketing, and business development. These presentations were followed by twenty-one separate breakout group sessions over the two days - sessions that concentrated on identifying and developing specific approaches to address obstacles to economic development in Montana. The high-tech Roundtable members included Senator Baucus; Jim Bacchus, Co-Founder/ Chief Strategy Officer, G-5 Technologies; John Connors (formerly from Miles City), Chief Financial Officer, Microsoft; Nancy Keenan, Montana Superintendent of Public Instruction; Chris McLean, Rural Utility Service, USDA; & Greg Rohde, Administrator, National Telecommunications and Information Administration, U.S. Department of Commerce. The Marketing Roundtable included Senator Baucus; Todd Bradley, Executive Vice President, Global Operations, Gateway; Bill Patrie, North Dakota Cooperative Center; Marjory Searing, Acting Director General, US Foreign and Commercial Service; Arnie Sherman, Montana World Trade Center; David Welsh, Northwest Environment Business Council; & Jim Wilfong, Assistant Secretary for International Affairs, U.S. Small Business Administration. The Business Development Roundtable included Senator Baucus; Charlie Grenier, Executive Vice President, Plum Creek Timber; Robert Krebs, Burlington Northern/Santa Fe Railroad; Miles Friedman, President, National Association of State Development Agencies; Tim McNulty, Deputy Executive Secretary, Department of Community and Economic Development (DCED), Commonwealth of Pennsylvania; Martin Briley, Northern Virginia, Economic Development; & Anthony DeLuca, United States Air Force. Breakout groups from each roundtable area focused on solutions to specific problems that prevent economic development in Montana. A recent direct result of this conference has been the establishment by Senator Baucus of a task force to develop recommendations to improve the economy, including some that may need to go before the Legislature next January or before other public bodies. Senator Baucus and First Interstate BancSystem Chief Executive Officer Tom Scott, who will head the task force, selected the panel of sixteen Montanans. Butte has one member on the 16-member panel -- Don Peoples, of MERDI/MSE. The goal of the conference and the task force that has resulted from the summit conference is to make recommendations about ways to bring new economic opportunities to Montana.

BLDC INVITED TO APPLY FOR US EDA GRANT FOR "CYBER VILLAGE" EFFORT

The BLDC, after submitting a Pre-application, has been asked by the Economic Development Administration of the U.S. Department of Commerce to submit a full application for planning monies to assist in the development of a "Cyber Village" in Uptown Butte. The strong presence of Touch America and Qwest along with significant available building infrastructure provides a strong platform for growth in "new economy" companies that focus on telecommunications, information technology and internet-related activity. Look for more on the progress of this grant request in the next issue of JOBS for Butte.

BUTTE AFTER THE SMOKE CLEARS: MPC AND MRI

In the short term, the view from Butte has been clouded by waves of smoke from forest fires throughout the West. In the long-term, however, the economic view has been hazy since the announcement earlier this year that Montana Power is liquidating its natural gas and electrical distribution systems and leaving the utility business. Montana Power is the largest employer in Butte with 930 employees in Butte before the announcement of the divestiture and the divestiture of the power generating assets last year. It is still not clear how many jobs will disappear, but 160 MPC employees in Butte recently took advantage of an early retirement option. Exactly how many others will be absorbed by whomever buys the utility, or hired by MPC's growing subsidiary, Touch America, remains to be seen. What is clear is that the economic status quo has changed in Butte. While Butte was still adjusting to these events, more bad news came in July. That's when Montana Resources suspended operations, idling 320 workers. The company had been forced to shut down due to the highly volatile and skyrocketing cost of electricity throughout the region. Exactly when MRI will reopen remains a question. Company officials are trying to secure a long-term, fixed rate power contract at $35 per megawatt. Critical to the people and the city is retaining the "can-do" spirit that has brought us through previous tough times. It has been said that the three most important things leading to successful economic development are "attitude, attitude, and attitude." As a community, we must understand that we can shape our own economic future. We must commit ourselves to taking the necessary actions to create new growth to replace the losses we have experienced. We remain optimistic at the BLDC because, at this time, our project pipeline is filled with more quality projects than at any time in the last 14 years.
We must pull together to bring home more projects like Streaming Solutions (see earlier story). And we must join in an effort to help retain existing Butte businesses and, hopefully, to see some of them expand.