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Home My WebLink About2013-04-22 Work Session Minutes Minutes of Board of Commissioners’ Work Session Monday, April 22, 2013 Page 1 of 7 Deschutes County Board of Commissioners 1300 NW Wall St., Suite 200, Bend, OR 97701-1960 (541) 388-6570 - Fax (541) 385-3202 - www.deschutes.org MINUTES OF WORK SESSION DESCHUTES COUNTY BOARD OF COMMISSIONERS MONDAY, APRIL 22, 2013 ___________________________ Present were Commissioners Alan Unger, Tammy Baney and Anthony DeBone. Also present were Tom Anderson, County Administrator; Erik Kropp, Deputy County Administrator; Judith Ure, Administration; David Givans, Internal Auditor; and representatives of EDCO and REDI. No representatives of the media were in attendance. Chair Unger opened the meeting at 1:35 p.m. 1. Discussion with EDCO Business Development Manager regarding the Deschutes County Business Loan Fund. Nate LiaBraaten introduced Jon Stark of REDI; Bruce Barrett and Bill Kuhn who handle the Forgivable Loan Fund; and Erik Stroble and Roger Lee from EDCO. Mr. LiaBraaten did a PowerPoint presentation showing the funds distributed, the jobs committed and the jobs created to date. There were more jobs created that originally estimated. This covers generally a three-year period. Ten local companies are participating; and five are exceeding the employment requirements, and the rest are on track except one. Two have already paid the County back in full. He then went over the details by company. Jon Stark talked about the Redmond companies. Mr. Stark said they asked representatives of some of the companies if they wished to attend the meeting today, but they were unable because they are running successful businesses.  MEDISISS already met the employment requirement.  Central Oregon Trucking was to maintain employees and add others through a transfer. They have grown rapidly as well. Minutes of Board of Commissioners’ Work Session Monday, April 22, 2013 Page 2 of 7  Consumer Cellular’s reporting is not yet due, but he understands they are beyond the required number.  Mr. LiaBraaten said that Agere needed the fund to get momentum, and the loan helped with this. They were a new company and not very bankable at the time.  Dent Instruments has had modest growth, but hired more than required.  Energyneering, per Roger Lee, had a rough start due to some land use issues. They have created and sustained jobs, and these resources were needed and used.  Navis more than quadrupled the number of jobs required. They provide software solutions for resorts.  Geospatial Solutions has increased efficiency, but not necessarily added new positions. Mr. Stark stated that it is a highly competitive job market today, and companies get calls from other areas all the time, trying to get them to relocate. Roger Lee would like to see all of these companies again double. It has been a very positive program. Chair Unger wondered if this fund would be needed in the future. Commissioner Baney asked if the same success would have happened if the funds weren’t there. Mr. Lee said they realize that there are other things competing for County funding, but would appreciate the program remaining in place for some time. Mr. Anderson said that this has been discussed by the Board, but they did not add new money. With the idea that this may become an annual process based on a variety of factors, there may be the opportunity to replenish the fund annually. If the $180,000 is spent down to nothing, they may want to address other opportunities. Chair Unger asked about successful companies stepping up to add to this program in the future. Mr. Barrett, who has banking history, said it could be considered; the forgivable part of the loan is important. However, companies need to have positive cash flow before creating positions. Minutes of Board of Commissioners’ Work Session Monday, April 22, 2013 Page 3 of 7 Commissioner DeBone asked how many companies ask about this funding but are not eligible, or which ones are declined. He refers people asking about this kind of help to EDCO. Mr. Lee said they have the venture catalyst program for those companies that are more risky. About 80% are not eligible for this program because they are not traded sector. A lot more funds would be needed for that to happen. They could ask for a personal guarantee from the backers also, for companies that are performing well. Mr. LiaBraaten added that many are not able to meet the five-job minimum, and it would be difficult for them to push this number unless it makes sense. Commissioner Baney appreciates them handling this since it takes the emotional part out of it. The Commissioners know many people who want help, but they cannot evaluate these businesses in a logical fashion and make good choices. Bruce said he is a member of SCORE, and the companies that come to SCORE are not ready for this program. They either don’t have a business plan or any funding in place. The company needs to be viable first. Chair Unger said he is proud the County has this program, and it makes a huge difference in the community and how economic development is perceived by others. ___________________________ In regard to Sisters and La Pine wanting funding through video lottery dollars, the Board would like $20,000 to go to each to hire an economic dev elopment person for each community. Chair Unger wants to be able to see how successful these dollars would be. Commissioner Baney wants the Board to commit to this so these cities will know it is coming. Commissioner DeBone appreciates this effort, but does not know how much feedback is needed. Founders Pad and Venture Box Catalyst were agreed upon; but Commissioner Baney wants to show clarity on the $20,000 for Sisters and La Pine and $10,000 for Redmond and Bend. Mr. Anderson said there was an agreement in place previously, but the Board needs to know if this is an agreement between the cities and County or the cities with EDCO. Mr. Lee said they already executed an MOU with Sisters and funds will flow through EDCO. He asked that a representative of the County be on the advisory board. Minutes of Board of Commissioners’ Work Session Monday, April 22, 2013 Page 4 of 7 Mr. Kropp said that representatives of the City of Sisters will be here on Wednesday (June 24) to talk about an expansion of the Redmond Enterprise Zone. Commissioner DeBone wants to make sure funding is in place for the City of La Pine person, as he is concerned that the City may at some point not be able to do their part for a variety of reasons. He wants to make sure this position is fully funded. Mr. Lee said that it helps if EDCO is part of the agreement so they will handle the process. Commissioner Baney stated they talked about the length of funding since they are not open to have this be a never-ending program; that by three or five years, the cities should have this figured out. The current Board can’t bind a future Board anyway. Commissioner DeBone said a sub-committee of the City of La Pine has been formed, and they have a position on the City of La Pine advisory group open for a Commissioner. Mr. Lee said it is not an official City committee. They don’t prescribe how communities do this, so it can vary. Commissioner DeBone will probably be on this committee, and Commissioner Baney said she would likely be on the City of Sisters committee at some point. 2. Discussion of a Proposed New Business Loan. Mr. LiaBraaten said Navis has had great success thus far. They owe money on the previous loan, but have added more than the required number of employees. They will begin hiring based on the date of approval. The group reviewed the application. The Due Diligence Committee is impressed with their balance sheet, internal financial controls and growth projections. The average salary of new hires would be $43,723. They have been able to acquire another company in Arizona, allowing for additional opportunities for their product. Commissioner Baney asked about showing the City of Bend and its logo on the application form, since this is not a City of Bend program. She was told that EDCO uses the same form for both programs, the County’s and the now- defunct City program. Minutes of Board of Commissioners’ Work Session Monday, April 22, 2013 Page 5 of 7 The Commissioners are supportive of the loan request in the amount of $50,000. Commissioner Baney does not feel they are out of the woods yet with the economy. She thinks the balance of $85,000 is low, but knows it can be replenished if something is worthwhile. DEBONE: Move approval to proceed with the loan. BANEY: Second. VOTE: DEBONE: Yes. BANEY: Yes. UNGER: Chair votes yes. 3. Other Items. The Board went into Executive Session, under ORS 192.660(2)(h), pending or threatened litigation at 2:45, which ended at 3:15 p.m.. ___________________________ Mr. Kropp said there has been a discretionary grant request from Dennis Luke, on behalf of the Oregon Youth Challenge for their reception, requesting $350 for the May 9 event. BANEY: Move this be granted, with the amount split three ways. DEBONE: Second. VOTE: BANEY: Yes. DEBONE: Yes. UNGER: Chair votes yes. ___________________________ Mr. Anderson stated that earlier this week was Environmental Health Specialists Day, but no one prepared a proclamation. He asked that the Board acknowledge this day at the next Board business meeting. County staff involved in this work try to teach and work with people and businesses rather than being a rigid organization. BANEY: Move that the Board acknowledge this. DEBONE: Second. VOTE: BANEY: Yes. DEBONE: Yes. UNGER: Chair votes yes. ___________________________ Minutes of Board of Commissioners’ Work Session Monday, April 22, 2013 Page 6 of 7 Chair Unger talked about large lot industrial development. Redmond is now starting to engage in this process. The County does not want to be confined regarding its properties. There are challenges with this, including allowing for commercial uses. Commissioner Baney sees so much finagling by the Department of State Lands to get what they want in Redmond. The Fair & Expo board needs to be involved. Mr. Kropp said that work needs to be done regarding the options , and then brought to the Commissioners. The State is talking about some acreage being given to the military so that part of the Bend armory property can go towards OSU Cascades. Commissioner Baney asked if any events at the armory are in direct competition with the Fair & Expo. Chair Unger said this could happen, but it would probably be limited. He was not happy that he heard this information from others and not directly from the DSL. Commissioner DeBone said that this all should be leveraged to put 19th Street through to connect the communities. Mr. Anderson said the Fair & Expo board is interested in acquiring portion of DSL land south of the Fairgrounds. Different deals have been offered by DSL over the years. There was a proposal discussed last year regarding a transaction with DSL for an exchange of a small strip of land they own. This did not occur. The Fair & Expo board prefers a different size property. However, this is where the armory might go eventually. This issue is separate from the large lot industrial process. DSL is in this to make money, and they wanted land from the County that is much more valuable. Commissioner Baney does not want to walk into a wall. The DSL did not care what was important to the County. It is more important and more involved than having just a small buffer for the Fairgrounds. Commissioner DeBone that they also have to look farther than what the Fair & Expo board wants. Being no further items addressed, the work session ended at 3:45 p.m. off, . DATED this J1 --Day of----"'~""-----==-0 ____~2013 for the Deschutes County Board of Commissio~ OL~ Alan Unger, Chair () Tammy Baney, Vice Chair ATTEST: Anthony DeBone, Commissioner I~~ Recording Secretary Minutes of Board of Commissioners' Work Session Monday, April 22,2013 Page 7 of7 Deschutes County Board of Commission s 1300 NW Wall St., Suite 200, Bend, OR 97701-19 0 (541) 388-6570 -Fax (541) 385-3202 -www.deschutes. r WORK SESSION AGENDA DESCHUTES COUNTY BOARD OF COMMISSIONERS 1:30 P.M., MONDAY, APRIL 22, 2013 1. Discussion with EDCO Business Development Manager regarding the Deschutes County Business Loan Fund -Nate LiaBraaten, EDCO 2. Discussion on a New Business Loan -Nate LiaBraaten, EDCO 3. Other Items Executive Sesson, under ORS 192.660(2)(h), pending or threatened litigation Mark Pilliod PLEASE NOTE: At any time during this meeting, an executive session could be called to address issues relating to ORS 192.660(2) (e), property negotiations; ORS 192.660(2) (h), litigation; ORS 192.660(2)( d), labor negotiations; or ORS 192.660(2) (b), personnel issues. Meeting dates, times and discussion items are subject to change. All meetings are conducted in the Board o/Commissioners' meeting rooms 1300 NW Wall St.. Bend. unless otherwise indicated. Ifyou have questions regarding a meeting, please call 388-6572. Deschutes County meeting locations are wheelchair accessible. Deschutes County provides reasonable accommodations for persons with disabilities. For deaf, hearing impaired or speech disabled, dial 7-1-1 to access the state transfer relay service for lTV. Please call (541) 388-6571 regarding alternative formats or for further information. I Work Session I Mon., April 22, 2013 ---r---- (Please Print) t-------------- -- Name Agency Mailing Address City _ Zip __ Phone # l 'e-mail address _-- _~~~'-J....'--.J~ »£:U&TI ~-3 1:L\,t \ I ~~...:l~~~c. --S'il:::J,.,D~1'S! . ~~'" N O-KLIQ6~ f ,;;~ &~ 171-020 1 )3 '3"6 .?2-~ f--~~eJ.4' Iy'l&, ~ _ _jQ ~S-fo..lf.. i ~DcoIK_~QT '(qi~Q.,_1 (q77$"(, ~'I/J9J I-S do >,.j 8 \J-@ &:Ie () ~ ...,.(, .c 0 --1-------~ -------- f)(I1Ge ~V«(i-£{)CO VeA1t! I f(17d/ ~I i{{o,1f!f bba vvc:H-e kJh rl~~ Zr(S~ fiKD la!~;+U ~ q~1 4(0 -8'030 ene, S'-mfa,le~bs;~q,c~ t /la~?F.-E: :PlJc.o ~tD l--~;;z(/-?(36 -5?30 rog~t/'@ adeo i V/.fo,~~ - I --" -I I I ------. -. I --- -------- I " - 1 --f- f I - I--I - I I ---" ---____ 0 I -1 '1- =--rt--r--_._-1---1-- Page # of Pages I Forgivable Loan Fund Update to Deschutes County April 22, 2013 Forgivable Loan Fund Snapshot Funds Dispersed $354,000 Jobs Committed 378 Jobs Created 449 Forgivable Loan Fund Snapshot Program snapshot through April 2013: Companies Participating: 10 Locations: Bend-6, Redmond-3, Sisters-1 5 exceeded employment requirements 1 not tracking with employment requirements 2 new additions, no compliance report yet 2 paid the County back in full Forgivable Loan Fund Tracking Company Jobs Committed Jobs Created Deadline for Hiring Deadline for Retention C.O. Trucking 35 NA* 4/11/2014 4/11/2015 Consumer Cellular 200 220* 3/1/2013 3/1/2015 Agere 7 17 3/31/2013 9/17/2013 Dent Instruments 6 8 11/11/2012 11/11/2013 Energyneering 17 23 12/31/2012 6/30/2014 MEDISISS 24 36 7/18/2013 7/18/2014 Navis 27 114 11/16/2012 11/16/2013 Geospatial Solutions 10 5 7/22/2013 7/22/2014 GL Solutions 39 26 11/9/2012 11/9/2013 GT Solutions 13 0 3/31/2013 3/31/2014 Totals 378 449 New Additions Tracking Not Tracking Paid Back in Full *Company’s compliance reports not due yet; Consumer Cellular count not from W-3. Questions? April 22, 2013 Navis Forgivable Loan Application April 22, 2013 Navis DCFL Application #2 Highlights from Due Diligence Committee Strong balance sheet and internal financial controls Growth projections, strategic acquisition, and international expansion plans validate staffing projections Average salary of projected new hires: $43,723 Navis DCFL Application #2 Second time applying to DCFL fund First Application: Committed to 27 new jobs, hired 114 Due Diligence Committee recommends approval for $50,000 in connection with 26 new jobs Questions? April 22, 2013 Navis Due Diligence Meeting Notes Recommendation: Approval April 4, 2013 On April 4, 2013, the Deschutes County Forgivable Loan (DCFL) Due Diligence Committee met with K te O'Connell and Ben Coker of Navis to discuss their application to the DCFL program. Attendees representing the program included Bruce Barrett, Bill Kuhn, Eric Strobel, and Nate liaBraaten. Belo are the key thoughts that went into the committee's decision to approve this application. Bruce Barrett: • Navis is projecting strong sales/revenue growth over the next two years due to industry demand and new product opportunities created through line extension and acquisition. Indications are that their marketing efforts have been well received by new and existing customers and the. i company must respond through increase in staff at all levels. These facts validate the compa staffing projections as presented to the committee. • The company plans to expand internationally, specifically in Canada and Mexico in the next t 0 years. This will provide additional opportunity for growth and supports the requirement of a long term commitment to employees as required by the DCFL fund program. • Navis has strong internal financial controls. Financial reports examined by the committee and past successes in paying down short and long-term obligations mitigate risk to the DCFL fund. In addition, the company has met its obligations to the fund under a prior request. • The company's product line seems well positioned in the industry to help resorts thrive in difficult economic conditions. This value proposition should remain viable during the DCFL obligation period. These are the factors that weighted my deciSion in favor of approving Navis's DCFL fund req est.• Bill Kuhn: • Navis appears to be on track to achieve required employment growth and retention and has exceeded the original target on its original DCFL loan. The retention period expires in Nov of this year. ! • Current request for additional support from the Deschutes County Forgivable Loan Fund and a maximum award of $50K is supported by historical performance and forecasted revenue grdwth over the next several years. • This is a company that is on a high-growth curve due to the recent acquisition of LMG and internal growth opportunities through client acquisition. Forecast calls for annual growth 0 er the next several years of 25-30% year over year. • Typical concerns about how this company will fund this growth appear to be mitigated by th. business model which insures short A/R turndays between billings and electronic receipt of ! proceeds, and good liquidity (low seven-figure) and access to a LOC with low-seven figure availability. Company has an established relationship with a technology-focused bank that provided funding for the leverage buy-out plus operating line. Bank monitors operating performance with review of financial results and loan covenant compliance. I would expect hat there are financial covenants that will require that Navis maintain an appropriate level of ~. financial flexibility and balance. • Navis appears to be both a technology and service-related company which impacts operatin margins, but they have shown improved margins over the past several years (FYE May 2013) • From a balance sheet standpoint, Navis was able to retire the shareholder buyout debt (low • seven-figures) that was present several years ago. Currently, existing term debt is related to ithe LMG acquisition and some term debt related to capital purchases. • Navis currently operates two remote locations, the former LMG site in Arizona (11 emplyees and the recent development of a data switching center in Portland (increases capacity and provides for contingency planning). • Issues facing the company in 2014 are related to growth (managing and funding) and health • care-related issues with their employee base (payor play model). They are also trying to bol~ter middle-management ranks to provide more operational control, allowing senior mana geme t to focus on more strategic issues. • In my two meetings with the company, I have been impressed with both Kyle Buehner and K te O'Conner as both appear to be very capable senior managers. 1 In conclusion, I would recommend approval for this $50K request to the Deschutes County .• Forgivable Loan Fund. I , Eric Strobel: } • Long time Bend company with proven leadership. • Will likely achieve success with first round of funding. In first round, Navis was pro-active with communication providing solid data for quarterly reports and followed through on all levels.1 • Navis' plans to expand internationally, starting with Canada and Mexico, shows aggressive market reach combined with a common sense approach. • Navis is receiving interest from top quality resorts throughout the nation that are looking to outsourcing as a key strategic value -others in the industry will follow. • Good combination of outward focus for new sales/marketing and internal focus on developing employees, adding a director level to the org chart and knowing what they need to work on las a company. I i I I I \, City of Bend Business Opportunity Loan Fund -APPLICATION The Bend Opportunity Fund disburses City of Bend moneys for the purpose of increasing employment and capital investment in the county. The Fund has been established to offset the costs of business relocation/expansion to and within the City of Bend, including moving of equipment, purchase or construction of facilities, employee training, equipment purchase and site improvements such as the extension of public services and utilities. EDCO has been designated by the City of Bend as the administrator of this fund. The magnitude of funding is dependent on job creation (typically $1000-$2000 per job). Key Requirements Are: • Grantees must create at least 5 new primary, permanent family wage jobs and shall have retained those jobs for at least one year . • Optional: Grantees must document the investment of at least $5 of new, taxable investments for each $1 allocated from the Business Opportunity Loan Fund. Section I -General Information Company Name: Buehner Fry, Inc. dba NAVIS Location (City/County): Bend/Deschutes Business Type: Software as a Service (SAAS) Industry Type: Technology No. of Employees: 150 HQ Address: 389 SW Scalehouse Court, STE 100, Bend, OR 97702 State & Federal Ta..'{payer ID: 00697494-6 & 88-0302186 respectively Company Contact: Kyle Buehner or Kate O'Connor Title: President or VP Finance Phone: 541-385-5255 Email: ksbuehner@thenavisway.com or kaoconnor@thenavisway.com Parent Company: NA Website: http://marketing.navistechnologies.com Section II -Company Profile 1. Please provide a brief overview of your business. The Company provides enhanced services and telecommunications to the vacation rental and resort markets. The enhanced services include a reservation capture solution enabling vacation rental managers and independent resorts to optimize business returns with increased caller data, targeted marketing and visibility into the effectiveness of overall performance. The company also offers a web-based housekeeping solution, a voice messaging system, and a call center for reservation fulfillment. Section III -Project Activities 1. Please outline the proposed activities for these funds. How will access to the Bend Opportunity Fund support your strategic objectives, while increasing your employment and investment in the Central Oregon region? NAVIS, as a company, is proposing to grow in the resort and vacation rental market by 50% over the next two and half years. We are on track to exceed budgeted revenue by 9% in the current fiscal year. In order to attain this goal, the company will continue to expand its infrastructure with additional personnel and computer networking capacity. At present time, it costs the company approximately $4,000 per person for workstations and user licenses at hire. We continue to occupy two buildings in Bend to accommodate the growth of the company which has required additional investments in infrastructure (i.e. cubicles, wiring, and upgraded internet capacity). Section IV -Grant Terms and Conditions 1. Total Employment Grantees must create at least 5 new primary, family wage jobs (at $35,090 per year) and shall have retained those jobs for at least one year. Please provide a quarterly projection of expected job creation, including titles and!or descriptions. Also indicate expected wages. Please see attached 2. Optional: Capital Investment Grantees must document the investment of at least $5 of new, tlL'I{able investments for each $1 allocated from the Business Development Forgivable Loan Fund. Please provi.de a quarterly capital investment projection. Please see attached 3. Primru;y Employer Test Grantees must be private fIrms in manufacturing, high-technology, or technology-based businesses which have more than 75% of customers outside Deschutes County. Wbat percentage of your customer base exists outside Deschutes County? 95% of our customers reside outside of Oregon NAVIS Fiscal Years Ended 5/31 2013 2014 Total Ql Q2 2013 Q3 Q4 Total C Ql Q2 2014 Q3 Q4 Total Accounting Specialist Reception! Admin Executive Admin Internal Trainer Business Analyst Project Manager Developer #1 Developer #2 Infrastructure Engineer Tech support #1 Tech support #2 Client Advocate #1 Client Advocate #2 System Consultant lead Gen!BizDvlpmnt Marketing Asst. Supervisors(RZF) Vacation Planners 1 1 1 1 1 1 1 1 1 1 4 1 1 1 1 1 1 1 5 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 9 40,000 35,500 50,000 80,000 48,000 40,000 45,000 65,000 55,000 120,000 40,000 35,500 50,000 80,000 65,000 55,000 45,000 120,000 80,000 85,000 (180,000) 70,000 33,300 52,000 45,000 210,000 33,300 43,000 120,000 45,000 70,000 80,000 85,000 33,300 33,300 52,000 43,000 150,000 Total 14 12 26 338,500 240,000 490,500 (15,000) 155,300 255,000 196,300 591,600 ------ NAVIS Fiscal Years Ended 5/31 r 2013 2014 Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total Expansion w/Tenant Improvements 150,000.00 150,000.00 120,000.00 420,000.00 Cubicles 42,000.00 44,200.00 86,200.00 Total Spend 150,000.00 150,000.00 162,000.00 44,200.00 506,200.00 ~'t".;I'li, ,__"*'\44 4, i eun"",. +,)@Il_~ ~,W'i_\ ;:::,''*4ri~,' ~ !II!"" i!I!~( 1i!-_, ?<JV i._ (J(fJtSip;..z ,.. )$&il¢iii+!I'!I!!!.liiiJ.)i.U IWJ;>HiI.Q$¥ .;C:elL"~~'\lit\1HHI ... !t(9'~~ ,44,. '*&~