Dakota Resources Newsletter: Fall 2017

INSIDE THIS ISSUE

CAPITAL INVESTMENT FUND REACHES $20M GOAL –––––––––––––––––––––––––––

HOW TO PROTECT CDFI FUNDING –––––––––––––––––––––––––––

LAKE ANDES SCHOOL PROJECT –––––––––––––––––––––––––––

CIF FUNDING COVERS BASEC NEEDS –––––––––––––––––––––––––––

HURON BECOMES GREATER –––––––––––––––––––––––––––

CIF EXPANDS INTO MINNESOTA –––––––––––––––––––––––––––

CIF INVESTOR PROFILES: AVERA AND DACOTAH BANK WIN TER 2017 | 2017 N E WSLE T T E R

Years ago, Beth Davis, President of Dakota Resources, set a goal of growing the Dakota Resources Capital Investment Fund to $20 million before her retirement. Less than two months shy of Beth’s retirement date, Dakota Resources achieved this goal thanks to a $1 million loan approved by Northwest Area Foundation in early November.

CAPITAL INVESTMENT FUND REACHES MILESTONE GOAL OF $20M We thank the following Capital Investment Fund investors for providing Dakota Resources with the capital to help us empower people and enrich communities across rural South Dakota.

• 1st Financial Bank USA • Avera Health • Bank of the West • Black Hills Corporation • CDFI Fund (US Department of Treasury) • Citi Foundation • CorTrust Bank • Dacotah Bank • First Bank & Trust • First Dakota National Bank • First National Bank in Pierre • First National Bank in Sioux Falls • First National Bank of Omaha • First Interstate BancSystem • First Premier Bank • Governor’s Office of Economic Development • Great Western Bank • Midcontinent Media, Inc. • Northwest Area Foundation • Opportunity Finance Network • Sanford Health • SDN Communications • Sioux Falls Development Foundation • Target National Bank • US Bank • Wells Fargo CDC • Xcel Energy

“The loan brings us to $20,905,000,” says Beth. “I’m so proud of the board for embracing our vision for growth and the financial team for doing a great job of executing the plan.”

For many rural communities, flexible, unrestricted loan capital is vital to supporting businesses, economic development, housing and entrepreneurial opportunities. Capital Investment Fund loans have been utilized in dozens of rural communities to help generate new opportunities, jobs and a better quality of life.

In 2017, the Capital Investment Fund disbursed a total of $5,950,000 in loans with a net loan growth of $4,304,850. This is a 28% year-over-year increase.

THE FOLLOWING IS THE LIST OF 2017 BORROWERS:

Greater Huron Development Corporation: $1.5M Entrepreneur Fund: $2M Faulkton: $800K Aberdeen Development Corporation: $1M BASEC: $250K Lake Area Improvement Corp: $400K For a deeper look at our specific financial impacts across rural South Dakota, view our annual report here.

CDFI Fund Director Annie Donovan speaks with 40 rural development leaders from five states about rural economic and community development financing and the impact it has made for lowincome communities and people.

How Can We Help Protect CDFI Funding?

Over the last 30 years, federal community development spending has plummeted by almost 75 percent, measured as a share of the U.S. Gross Domestic Product (GDP). Fortunately, there are some programs with strong track records that have remained to provide necessary financing in capital-starved communities and to low-income people. The U.S. Treasury Department’s Community Development Financial Institutions Fund (CDFI) Programs, which was established in 1994, is one of these tools many communities have come to depend on for access to capital—especially rural and farming towns in the Midwest. Despite CDFI Fund Programs’ record of success and strong bipartisan support from Congress, this tool has come under threat, with the 2018 President’s budget calling for the elimination of funding.

Last July, 40 rural development leaders from five states came together to discuss rural economic and community development financing and the impact it has made for low-income communities and people. The gathering was initiated by Dakota Resources and Dakotas America and took place prior to RuralX17, a convergence of rural thinkers and doers. The meeting was attended by U.S. Treasury staff, including CDFI Fund Director Annie Donovan and Clint Hastings, CDFI Program and Native Initiatives Manager, who provided perspective on rural funding at the federal level.

“Having the director of the CDFI Fund here was a big deal,” explains Lin Van Hofwegen, Managing Director at Dakotas America. “Annie Donovan’s visit to South Dakota shows her commitment to rural communities and the partnerships that make federal programs work well.”

It was an insightful morning, with Ms. Donovan informing a strategic discussion on the CDFI Fund’s priorities for reaching rural areas. Later, attendees participated in round table conversations and a large group collaborative thinking session that provided important take-aways they could use to continue to learn from each other.

Representatives from U.S. Senator Mike Rounds and USDA Rural Development also contributed to the conversation.

Attendees from Center for Rural Affairs, GROW South Dakota, the REED fund, statewide cooperatives, several development foundations, financial institutions, rural economic development corporations and hosts from Dakota Resources and Dakotas America all ended the conference with renewed energy and purpose. The meeting helped create five solution-based practices to represent the rural communities and people they serve well and protect funding needed to do that, including:

• Elevating rural advocacy • Identifying and sharing steps community leaders can take on a local, state and federal level • Being clear and specific on the “ask” to members of Congress • Understanding the potential and working together as an organized rural voice • Acknowledging value of partnerships and collaborations “The overriding theme of advocacy and collaboration on a local, state and federal level was pretty clear—we have to share our stories, raise awareness on the continued need for these important federal resources, particularly in rural

Lake Andes builds toward the future with multi-million dollar school project communities, and to do that, we need to increase collaboration” says Van Hofwegen.

“Proposals are on the table for funding cuts to rural CDFIs and other important loan programs. We know the good they do for rural America and how important CDFI and USDA funding is for our region.

Our rural economic development leaders are coming together as one collaborative voice to make sure their message is heard.”

The desire to continue these important conversations rolled into RuralX, where the topic of “rural finance policy agenda setting” was proposed by Brian Depew, Center for Rural Affairs, during the OpenX sessions. Fifteen participants took part in this topic and action items were suggested to help protect CDFI funding and protest USDA rural development funding decreases.

“It was good to hear and discuss with other organizations in South Dakota what they are doing and how we can promote rural at the national level,” said Lori Finnesand, Director of GROW South Dakota. “We have two organizations under our umbrella that are CDFI–certified, so it was important for us to be there.”

If you would like to get involved as an advocate for CDFI and rural development financing, contact Brian Depew at briand@cfra.org or Lin Van Hofwegen at lin@dakotasamerica.com.

This Fall, ground was broken and construction began on additions and renovations to Andes Central schools in Lake Andes, SD. The multi-million dollar project is being funded in part by Dakota Resources through the US Department of Agriculture (USDA) Community Facilities Re-lending program.

Dakota Resources is one of a handful of Community Development Fund Institutions (CDFIs) in the nation to be named a partner in the program, and received a $10 million award in 2016. The funds are designed to help spur economic development opportunities and reduce rural poverty in South Dakota communities under 20,000 by improving essential community facilities.

The school in Lake Andes is a great fit for the funding, and is the first project in South Dakota to benefit from Dakota Resources’ federal re-lending award.

The Lake Andes School District will complete the project utilizing funds from its own reserves, along with financing from Dakota Resources and the Rural Electric Economic Development (REED) Fund, another USDA Community Facilities Re-lender.

Plans for the completed project include adding 55,000 square feet of space to the high school, connecting the high school with the elementary school and renovating 24,000 square feet of space. New classrooms, restrooms, specialty rooms, administrative offices, a courtyard, two new gymnasiums and various other amenities are part of the building plans.

Currently, the project is scheduled for completion for the start of the 2018-19 school year.

Margot Gillette Executive Director of Beadle and Spink Enterprise Community (BASEC)

CIF funding helps cover BASEC needs In a rural community, a lack of available housing can be a deal breaker.

“When potential teachers, daycare providers or business owners turn down jobs because they can’t find a suitable place to live in town, you have a problem,” explains Margot Gillette, Executive Director of Beadle and Spink Enterprise Community (BASEC). “BASEC is working hard to ensure the communities we serve have quality housing options. Then the dominoes fall and those communities become instantly more desirable.”

Beadle and Spink Enterprise Community (BASEC) serves seven communities across rural Beadle and Spink counties—an area that spans 1,000 square miles.

The organization is dedicated to helping these rural communities help themselves through economic and community development efforts. Having access to flexible, unrestricted loan capital is vital to the success of these efforts, which is why BASEC utilizes the Dakota Resources Capital Investment Fund.

“Ten years ago, BASEC borrowed $500,000 from the Capital Investment Fund and used it for all kinds of projects,” explains Margot. “Last year we borrowed another $500,000 and drew our first $250,000 this spring.

The beauty of the Capital Investment Fund is that we can use it for virtually anything we want.”

Helping Greater Huron become even greater “I’ve been working with financial people for over 25 years and the staff at Dakota Resources is absolutely top notch,” explains Barry Cranston, Executive Vice President of the Greater Huron Development Corporation. “They’re extremely knowledgeable and easy to work with. They bend over backwards to make things happen.”

Dakota Resources works hard to make good things happen for our rural communities and it’s rewarding to be recognized. While we love a good compliment, we also love a good success story—and we’ve got several from the Greater Huron Development Corporation. The good folks in Huron have been with us almost from the beginning and we are proud to be a part of the positive progress happening in the area.

Over the years, Dakota Resources has provided Capital Investment Funds to assist the Huron community with a variety of projects, including:

SEE MORE OF THIS STORY ONLINE: An example of putting Capital Investment Fund dollars to good use can be found in Doland, where a lack of adequate housing was causing people to look elsewhere for places to live. View the video created by Dakota Resources on this showcase community here.

“We can always count on Dakota Resources to understand the needs of our rural community and to provide us with flexible options that make sense.”

– Barry Cranston

CIF INVESTOR PROFILE:

AVERA

• The development of a residential neighborhood on Broadland Creek Golf Course • The construction of a spec building in West Industrial Park that will soon open as the new Dakota Provisions turkey processing facility, employing over 200 people • The recent funding of the TIF used to install roads, utilities and infrastructure for Southtown Development

“Southtown Development is allowing Huron to grow south of town along Highway 37,” explains Barry. The area has already attracted a bank facility, a senior apartment complex, a new restaurant and a car dealership, among other things.”

In addition to Dakota Resources providing gap financing, its affiliate Dakotas America provided an eighteen million dollar allocation of New Market Tax Credits to help finance the Huron Central Park and Campus Center project, which provides community and educational space.

“We can always count on Dakota Resources to understand the needs of our rural community and to provide us with flexible options that make sense,” explains Barry. “We are very lucky to have them in South Dakota and I would recommend them to any economic development organization looking for project funds.”

INVESTMENT PARTNER SINCE 2007 TOTAL INVESTMENT TO DATE: $300,000 IN GRANTS $80,000 IN LOANS $54,000 IN SPONSORSHIPS Drive across our rural landscape in any direction and chances are you’ll find an Avera facility. Whether it’s a hospital, clinic or other health care service, Avera has a presence in 86 counties across the region. This rural commitment is part of the health care system’s longstanding mission of “providing access to health care and specialists in rural and underserved communities.”

“Dakota Resources and Avera have very similar values,” says Rachael Sherard, Senior Vice President of Avera Rural Health Services. “We invest in Dakota Resources because they invest in rural. Helping sustain and build strong rural communities is vital to a good health care system and a good health system is vital to a strong rural community.

All boats rise if we work together.”

Recent Capital Investment Fund investments in rural communities like De Smet, Aberdeen, Yankton and Pierre are all great reasons why Avera is committed to Dakota Resources.

“There is just so much overlap. Dakota Resources is all about creating strong leadership. Well, Avera also needs strong leaders to serve on our boards. We are looking for stellar health care recruits, and those recruits are looking for nice houses, good jobs for their spouses, strong school systems and community amenities. Dakota Resources is helping bring all those things to the rural places we serve.

It’s truly a win-win,” says Rachael.

And on a personal note?

“Dakota Resources has an awesome staff, no two ways about it,” says Rachael. “That staff makes the organization, and to my knowledge, no one else is doing what they’re doing. They are just phenomenal people that work hard to improve our rural communities.”

Clockwise, Left to Right: E Jake Mutchler and crew of Mutchler’s Forestry Service, Jay and Lucie Amundson of Locally Laid Eggs and Jay Strangis of American Waterfowler Magazine.

CIF expands into Minnesota with a new vision After nearly 20 years of serving rural South Dakota with

up being the perfect match for us. We had a very easy, straight

low-interest economic and community development

forward loan process and the funding is going to make all the

loans, the Dakota Resources Capital Investment Fund

difference.”

is taking its first step toward a national expansion.

Indeed. The Capital Investment Fund loan from Dakota Resources “There is a big need for rural capital in other markets,”

will help finance entrepreneurial projects designed to boost small

explains Beth Davis, President of Dakota Resources.

businesses in northeastern Minnesota and southwest Wisconsin,

“Very few organizations do what we do as far as

including an area often referred to as “the Iron Range.”

providing unrestricted, low interest loans to help rural economic development corporations improve their communities.”

The first Capital Investment Fund loan outside South Dakota was for $2 million to the Entrepreneur Fund based out of Duluth, Minnesota. The first $1 million was allocated in June and is being used to support small businesses and entrepreneurs across northeastern Minnesota and northwestern Wisconsin. The Entrepreneur Fund and Dakota Resources share a common goal of developing rural communities.

“Dakota Resources and the Entrepreneur Fund have a shared history of serving entrepreneurs in rural places,” explains Entrepreneur Fund CEO Shawn Wellnitz. “Beth Davis and I connected at a conference and I was telling her that we were having a hard time obtaining capital and had tapped out all our traditional investors. They understood our challenges and ended

“The Iron Range is full of mining communities, and with more and more mines shutting down and laying people off, people are afraid for the future,” explains Shawn. “We are working with those communities to help find new opportunities, support businesses and explore new directions.”

The rural areas served by the Entrepreneur Fund are ruggedly beautiful and full of proud, hard-working people. Many small business owners come in the door with unique business opportunities that fit the area’s culture and landscape.

“I love the diversity of businesses we help support. People are doing amazing things for this area, whether it’s transforming a blighted community into a thriving destination craft district in Duluth or the the emergence of small, technology-based businesses on the Iron Range” explains Shawn. “Every successful business creates new opportunities.”

CIF INVESTOR PROFILE:

DACOTAH BANK

INVESTMENT PARTNER SINCE: 2003 TOTAL INVESTMENT TO DATE: $1,050,000 LOANS $91,450 IN SPONSORSHIPS & GRANTS

Some examples of businesses funded by the Entrepreneur Fund in rural Minnesota include:

•

Providing startup and expansion funding to Jake Mutchler to help grow his dream for Mutch’s Forestry Service in timber-rich Grand Rapids, Minnesota. Today, Jake’s business is booming beyond his wildest dreams.

•

Issuing a flexible loan to Jason and Lucie Amundson so that their business, Locally Laid Eggs, could mitigate the hazards of owning a business prone to climate and predator threats, by purchasing a farm. Locally Laid placed second (out of 15,000 small businesses) in the Small Business Big Game contest sponsored by Intuit, maker of Quickbooks.

•

Offering flexible microloans to help Jay Strangis start and expand American Waterfowler magazine. After new funding, the magazine grew more than 100 percent the first year. Today, American Waterfowler has a paid circulation of over 23,000.

Working together is always better than working alone.

This fact is especially true for rural communities who often need to pool their people and resources together to make things happen. Dacotah Bank was one of the first partners to invest in the Dakota Resources Capital Investment Fund, and that longstanding relationship is a testament to the importance of bringing strong rural advocates together.

“When we take a look at our missions, we certainly align with Dakota Resources,” says Brad Moore, Dacotah Bank Regional President. “When we invest in them, that investment comes right back to us. All of the projects being funded through the Capital Investment Fund have added to the economic well-being of our rural communities.”

Because Brad is also a Dakota Resources board member, he provides a unique perspective when it comes to the importance of investing in the Capital Investment Fund.

“Sitting on the board, I have the advantage of knowing where Dakota Resources has deployed capital. I’ve seen the amazing Faulkton story unfold. I’ve been a part of some of the great things happening in Aberdeen, Webster and Brookings — all places where we have a banking presence,” he explains.

“If we weren’t here and organizations like Dakota Resources weren’t able to provide capital, many of these start-ups would not happen. We work with a lot of people who are turned down by banks for traditional financing, or people who just can’t meet those strict bank restrictions,” says Shawn.

“Thanks to the Capital Investment Fund from Dakota Resources, we are opening all kinds of new doors.”

In addition to helping “enrich people and empower communities” in rural South Dakota, there are also practical reasons why Dacotah Bank invests in Dakota Resources.

“Investing in Dakota Resources allows them to invest in local development corporations, which frees up our time and creates efficiencies. At the end of the day, we’re all working together. We get a lot more done than if we tried to do it all ourselves,” he says.

NON PROFIT ORG US POSTAGE

PAID PERMIT #7922 SIOUX FALLS, SD

25795 475th Avenue, Suite 1 Renner, SD 57055

BETH DAVIS RETIRES It’s been a great journey, Beth. Twenty years ago you committed yourself to building an organization that felt like family. One that understands the value of making mistakes, embraces a creative spirit and encourages people to invest deeply in one another.

You accomplished these goals and so much more. Thank you for being a great leader and a true friend. You are the original change maker.

We asked Dakota Resources staff and friends what they have appreciated most about Beth. Here’s what they had to say:

Her leadership skills.

Beth leads in a manner that makes people WANT to follow!

– MISTY CORDELL

––––– Her passion for the work that she does and the people that surround her.

– JAY HEADLEY

––––– Her ability to take risk!

– DICK WERNER

––––– Her ability to see the talents in others and use them in the right place.

– LIN VAN HOFWEGEN

––––– Her sincere, genuine and honest faith in others.

––––– Her ability to bring the right people to the team and her visioning.

– PAULA JENSEN

––––– Her deep compassion and desire to help others.

– MIKE KNUTSON

––––– Her boldness and honesty, confidence and curiousity, empowerment and mentoring.

––––– Her ability to take her passion and creativity to create a very successful nationally known business.

––––– Her spirit for innovation and her dedication to the ‘team.’

– RACHAEL SHERARD

– KRISTI WAGNER

–––––

W H EN :

Thursday, January 4, 2018 T I M E:

5 pm until 8 pm W H ER E:

Icon Event Hall 402 North Main Avenue Sioux Falls, SD

– CHERYL LEASURE

– JOHN BERANEK

Her tenacity to believe in people and ideas before they believe in themselves.

– HEIDI ZELLER-CRAWFORD ––––– Her grasp of the unique opportunities a rural state has to offer.

– RUTH CHRISTOPHERSON ––––– Her celebration of successes, large and small.

Please join us in celebrating Beth Davis as she retires from Dakota Resources.

– JOE BARTMANN

–––––

RSVP:

cheryl@dakotaresources.org or 605-937-8256

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