New director breathes life into EDD

Posted: Tuesday, January 30, 2001

The Kenai Peninsula Borough Economic Development District has been putting its house in order since Betsy Arbelovsky became director in July.

Arbelovsky said she has fixed problems with the EDD's Business Incubation Center and attracted four incubator tenants. She has hired a loan officer to revive the EDD's revolving loan fund. She also is involving peninsula communities in writing the borough strategic economic development plan -- a document many agencies use in judging applications for funding projects such as bridges and docks.

"We've been able to go from a totally dysfunctional organization to one with clear leadership," said Randy Daly, EDD president. "We've identified new directions we're going to go after. We've got players in place that can make that happen."

Before Arbelovsky's arrival, several potential incubator clients chose to rent EDD space outside the incubator. She said one reason apparently was that the EDD charged 75 cents per square foot for space -- 10 cents per square foot more than the cost of other EDD rental space.

"One of our board members was paying 75 cents per square foot for property in town," she said. "Here we were charging businesses struggling to get started 75 cents. That wasn't appropriate."

The EDD has lowered the incubator rate to 65 cents per square foot.

"I recognized, and the board recognized, that we can't charge a premium price for a start-up business," she said.

In September, Arbelovsky said, three qualified businesses that had been renting other space at the EDD became incubator tenants:

n Professional Services and Safety Instruments, owned by Crystal Nygard, which leases, sells and maintains gas detection equipment;

n Northern Art, owned by Amanda Brail, who teaches oil painting and sells art supplies; and

n Zigga Enterprises, owned by Don Zigga, who is doing legal research and planning to publish a legal dictionary.

In October, the incubator attracted Mainland Co., owned by Kathleen Graves, who does natural resources consulting. Now, the EDD is opening a Mini Business Incubation Center, a complete office for rent in segments of four or eight hours per week.

Arbelovsky said the EDD rents space outside the incubator, too, but not to clients who are vacating commercial space. The EDD should not compete with the private sector, she said.

The EDD, a nonprofit corporation separate from the borough, receives federal, state and borough funding under contracts that require it to prepare a Comprehen-sive Economic Development Strategy -- a document agencies often use to judge funding requests for projects such as docks and public buildings.

"We're totally committed to improving the CEDS, getting more community input and having it be community driven," Arbelovsky said.

She began by organizing the Kenai Peninsula 2000 Economic Outlook Forum last month in Soldotna, bringing 176 peninsula business and community leaders to brainstorm goals and strategies.

Now, she is encouraging community meetings to plot local strategies. Meetings are scheduled for Saturday in Kenai, March 5 and 7 in Soldotna and March 10 in Nikiski, she said. Seward and Homer are planning meetings, she said, and Anchor Point is interested. Seldovia, Nanwalek and Port Graham are planning a joint meeting. Arbelovsky will roll community goals and strategies into the borough plan.

Meanwhile, she convinced her board to pay more for an officer to manage the EDD's revolving loan fund, started in 1995 with a $210,000 grant from the Economic Development Administration. The EDD had been paying far less than the going rate for a loan officer, she said. Turnover crippled the loan program.

"The EDD had four loan officers in two years and went for long periods with no one," Arbelovsky said. "We needed someone who could set the program up properly, market it properly, and if needed, expand it."

She hired James S. Carter, a National Bank of Alaska loan officer with 17 years experience, to be EDD finance and loan officer. "Since Jim came on, he has revamped the revolving loan fund," Arbelovsky said.

The EDD makes loans in only partnership with commercial banks. It can loan $1 from the fund for every $2 the client borrows from a private source. For example, Arbelovsky said, a business may need $150,000 but have only enough collateral for a $100,000 loan from the bank. The EDD can loan the other $50,000.

"We take loans that are impossible and make them possible," she said.

The fund now has $205,000 in active loans and $167,000 available to be loaned, he said.

The next step is to market the program. Carter recently addressed a Rotary Club, met with local bankers and spoke at a Small Business Development Center seminar on financing a business. He is working on a $50,000 loan for a Seward business that suffered a casualty but was not properly insured. Eight jobs are at stake, he said.

"There is definitely demand. We're getting more calls each day," he said.

Carter also is looking into whether the Economic Development Administration would replenish the revolving loan fund if the EDD loans all of its capital. He is exploring whether the EDD would qualify for a U.S. Department of Agriculture grant to set up a separate revolving loan fund with different lending criteria.

Carter also is exploring whether the EDD could qualify as an originator for a Small Business Administration program that offers loans of up to $35,000 each.

"One thing I relied on at the bank was having a lot of products, because not everyone fits as a round peg in a square hole," he said.

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