Minnesota Valley Business Magazine Feb. 2019 by Free Press Media

The Definitive Business Journal for the Greater Minnesota River Valley Februar y 2019

Mike Bresnahan, president of First National Bank Minnesota at their St. Peter branch. Photo by Pat Christman

Banking on Growth Hot regional economy a boon to banks, credit unions Also in this issue • APOTHACOFFEE ROASTERY • MANKATO CHINESE CULTURE INSTITUTE • CARLSON-TILLISCH EYE CLINIC

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For Better or Worse? Farm Divorce in 2019 By: Andrew M. Tatge

he news is being flooded with articles on farm bankruptcies and the looming crisis for farmers and their lenders due to various economic situations outside of each farmer’s control. Farm divorces are estimated to increase. For anyone who has been in or read about the agricultural industry for many years, you know that this part of the economic cycle is nothing new. Even farmers who have only been in the industry for a few years know about the troubles of the 1980’s and other periods since then. From that, we have learned a lot about how to prepare for the inevitable, but it still hits hard when the situation is actually present. Further complicating matters, a downturn in the farm economy, the added financial strain, the emotional and physical stress, and other family dynamics, can play a large role in causing strain to a farm marriage. Many farm couples begin to analyze the situation and determine what is most important to them. Sometimes, it galvanizes the relationship in a way that strengthens it.

In others, upon reflection, it becomes clear to one or both spouses that the marriage is over. When that happens, there are a number of additional stressors and factors coming into play, as you can imagine. When a divorce hits a farm family during lean times, it is important to understand and keep in perspective the farming unit and operation. Is it possible to give the non-farming spouse a “fair and equitable” division of the farm estate and still allow the farming operator to continue with some semblance of the former lifestyle? Should the farming spouse be able to purchase the farm at the then-current economic circumstances without regard for the past or the future? There are many different ways that a farm divorce can be handled and is important for each party to understand the various different ways a settlement can be reached. Many times, a farming spouse buys out the non-farming spouse with payments over time and secured by land or other assets. When that happens, it is important to understand what security is available, what makes sense, and to fashion an outcome that is not

overly burdensome to either party. This can be done through negotiation with the help of attorneys, and other professionals including accountants, bankers, and appraisers, who can assist in providing both parties with good information to make reasonable decisions under the circumstances. The last thing either party wants is a long, drawn out legal process that involves foreclosure, difficulties with refinancing and lender relations, etc. When land is sold or crops need to be sold before the normal time and the tax cycle, significant costs and expenses can be incurred which should then be borne by both parties in a way that allows people to move on with their lives. Being vindictive is the worst possible approach because “what is good for the goose is good for the gander.” Neither party has significant leverage and it is important to work together. But sometimes that can only be done appropriately when both parties have the right frame of mind.

MN Valley Business • FEBRUARY 2019 • 1

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F E A T U R E S Februar y 2019 • Volume 11, Issue 5

Banks and credit unions have had some good years as the local economy has boomed, construction has been strong and more banks are focusing on regional centers.

Phil Compart started ApothAcoffee Roastery to create small-batches of premium coffee that he sells at Renaissance festivals around the country and online.

Since 2007, Susan Chen, director of the Mankato Chinese Culture Institute, has been working to help people in the region learn Chinese and better understand their culture.

After spending 33 years at the same location, Carlson-Tillisch Eye Clinic has a new home in the former Meyer & Sons building in downtown Mankato.

MN Valley Business • FEBRUARY 2019 • 3

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FEBRUARY 2019 • VOLUME 11, ISSUE 5 PUBLISHER Steve Jameson EXECUTIVE EDITOR Joe Spear ASSOCIATE EDITOR Tim Krohn CONTRIBUTING Tim Krohn WRITERS Kent Thiesse Dean Swanson James Figy Dan Greenwood Dan Linehan PHOTOGRAPHERS Pat Christman Jackson Forderer COVER PHOTO Pat Christman PAGE DESIGNER Christina Sankey ADVERTISING Danny Creel Sales Joan Streit Jordan Greer-Friesz Josh Zimmerman Marianne Carlson Theresa Haefner ADVERTISING Barb Wass ASSISTANT ADVERTISING Sue Hammar DESIGNERS Christina Sankey CIRCULATION Justin Niles DIRECTOR For editorial inquiries, call Tim Krohn at 507-344-6383. For advertising, call 344-6364, or e-mail advertising@mankatofreepress.com. MN Valley Business is published by The Free Press Media monthly at 418 South 2nd Street Mankato MN 56001.

■ Local Business memos/ Company news.....................................5 ■ Business Commentary.........................7 ■ Business and Industry trends..........22 ■ Retail trends.....................................23 ■ Agriculture Outlook..........................24 ■ Agribusiness trends..........................25 ■ Construction, real estate trends.....26 ■ Gas trends........................................27 ■ Stocks...............................................27 ■ Minnesota Business updates............28 ■ Job trends.........................................29 ■ Schmidt Foundation.........................30 ■ Greater Mankato Growth..................32 ■ Greater Mankato Growth Member Activities ............................34

From the editor

By Joe Spear

Why so many banks?

his month’s issue can shed light on the question many may have asked while driving around Mankato: What’s the deal with all these new banks? A local banker once told me there were some 20 plus banks in the Mankato area. Many of them appear to be branches of banks headquartered elsewhere but locate a branch in Mankato to take advantage of the area’s booming economy. That the economy is driving new business is always a plus. That same economy is driving the need for housing both single family and apartments which in turn is giving Mankato banks more business. And the interest rate environment, even though it may seem negative as rates rise, actually can be good for banks. When loan rates rise, banks make money because the money they borrowed to make the loans was at a lower interest rate. Hence the “interest rate margin” is rising and so do bank profits. “It’s a great time to be in banking. The interest rate environment is still good — there’s a lot of talk we may be at the top of the interest rate cycle,” said Mike Bresnahan, president and CEO of First National Bank Minnesota, in our cover story this month. While it appears more banks are moving to Mankato, overall the number of banks is dwindling. According to the Federal Reserve, the number of U.S. commercial banks declined from 4,942 from 2017 to 4,746 in 2018, about a 4 percent decline. In 2016, there were 5,141 banks, making the two year drop of almost 10 percent. In Minnesota, the numbers went from 294 in 2017 to 282 in 2018. “In Mankato we’ve had an influx of banking offices, but in the universe of banking, there aren’t more banks. They’re

4 • FEBRUARY 2019 • MN Valley Business

branching out and taking over other banks so you see some new names locally,” Bresnahan said. But competition also will likely play a role in the banking business. You can’t help but notice the advertising from credit unions and others for what appear to be pretty low interest rates for cars and other big ticket consumer goods. While Mankato retail and manufacturing environments appear to be doing well, the agriculture economy appears to carry some risk. That’s not good news for bankers. A sur vey of bankers by Creighton University in Omaha -the Rural Mainstreet Index -shows banks will require more collateral for farm loans this year. Some 53 percent of bankers have raised collateral requirements due to lower farm income and farm prices, while 25 percent say they will not change their lending practices. While farm bankruptcies are up in Minnesota, from eight to 20 in the last four years, the total number is still relatively small. Prices have been low for a few years now and with Chinese tariffs on soybean imports, the demand has been cut dramatically and prices have declined. And eventually the farm economy starts to affect things like the pickup truck economy. Still bankers say while there will be more tough conversations with farmers about loans going for ward, they’re not worried about a repeat of the 1980s farm crisis that resulted in a wholesale restructuring of the farm economy from one of lots of small farms to one where bigger farms were needed for cash flow. The difference is equity, according to bankers. In the 1980s, farmers didn’t have equity built up to withstand the low crop prices. Now, farmers are in a better place.

“Farmers are in a much better position to withstand a several year downturn. Most will be able to weather it. Some — especially some of the young ones who just had the misfortune of getting into farming at the wrong time — will have problems,” Bresnahan said. All the new bank buildings come with the story of a little irony. A lot of bank customers don’t go to the physical bank anymore. One banker says they see new customers when they open a new account and maybe once a year after that. So much banking can be done online or on smartphones. But the convenience technology also comes with a cost of cybersecurity. It’s a cost banks didn’t have to worry too much about just 15 years ago. It seems new bank buildings will be more useful as visible reminders of their presence rather than a place to walk in and do business. Joe Spear is executive editor of Minnesota Valley Business. Contact him at jspear@mankatofreepress.com or 344-6382. Follow on Twitter @jfspear.

Local Business People/Company News ■

Tatge named partner

Gislason & H u n t e r announce that a t t o r n e y Andrew Tatge, a partner with the firm, has been named the firm’s Managing Partner. As the firm’s Managing Andrew Tatge Par tner, he leads the firm’s strategic efforts and managing the firm’s continued growth. He will also continue to serve as chair of the firm’s Family Law Practice Group. In his legal practice, Tatge represents business owners, farmers, professionals and individuals throughout southern Minnesota in a wide range of family law matters, including complex and high net worth divorces.

EIDE LIKE

Gislason & Hunter has more than 40 attorneys with offices in Mankato, New Ulm, Minneapolis and Des Moines. ■■■

GMG hires talent liaison

E m m y Forsyth, a Mankato native who has spent eight years working in s o u t h e r n California, will return to serve as Greater Emmy Forsyth M a n k a t o Growth’s firstever talent resources liaison. In response to an ever-tighter labor pool, the GMG Board decided to fund the position to help attract talent to the region. Forsyth will work to connect employers with potential employees and work to “activate other distinct talent resources available across the region to support the full talent continuum from recruitment to retention and succession planning,” according to a GMG press release. Jonathan Zierdt, president and CEO of GMG, said Forsyth has broad experience in organizational leadership and development. ■■■

Two join True

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5 • FEBRUARY 2019 • MN Valley Business

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Jenny Schmidt

Amy Klammer and Jenny Schmidt have joined True Real Estate as real estate agents. Klammer specializes in both the buying and selling process. Schmidt has been in the real

estate industry since she was a little girl — her mom, Deb Atwood, began her career in 1989 when Jenny was only seven years old. When she was 19 she joined her mom and helped create the Deb Atwood Home Team. During her time at Century 21 Schmidt helped lead the team to number one in the state for many years and received one of the highest honors received given by Century 21.

Standards (CFP Board) to use the Certified Financial Planner certification. The CFP marks identify individuals who have met the experience and ethical requirements of the CFP Board, have successfully completed financial planning coursework and have passed the certification examination. Tilberg, 37, has been a professional in the financial services industry for 15 years. ■■■

Independent Originals add managers

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Svien joins Pioneer

Jennifer Svien has joined Pioneer Bank’s North Mankato location as a m o r t g a g e banker. Svien is a graduate of Minnesota State University with Jennifer Svien a degree in Marketing and minors in business administration and management. She has been in the mortgage industry for 12 years. She serves as co-chair for the YWCA Women of Distinction event in Mankato and volunteers with Greater Mankato Area United Way.

Nichole Roberts

Clark Paulson

Carissa Christenson

Nikki Hallman

Mankato Independent Originals has brought new management and coordinators to their local restaurants. MIO has hired a few new employees to join their team, while other employees have been promoted from within. The six new employees and their titles are: • Nichole Roberts – general manager at 3rd Street Tavern in St. Peter. • Maria McKinney– general manager at Dino’s Pizzeria in Mankato. • Clark Paulson– general manager at Flask in Mankato. • Andrea Krueger – assistantmanager at Number 4 in Mankato. • Carissa Christenson– marketing director at MIO. • Nikki Hallman – promotions coordinator at MIO. MIO is a locally owned and operated business.

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Weichert agents train

Two agents from Weichert Realtors Community Group in Mankato have completed training through the Weicher t Management Academy. Manager Denise Dose and Realtor/broker associate Stephanie Jacobson completed the five-day academy. The concentrated program emphasizes systems installation and business planning, recruiting, training and career development and includes a tour of the corporate campus in Morris Plains, N.J.

WHERE YOUR POLICY COMES WITH AN AGENT

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Tilberg earns CFP

Sara L. Tilberg, a financial advisor with Waddell & Reed, has been authorized by the Certified Financial Planner Board of

Get the coverage you know you need now — from people you know will be there when you need them most. Mankato | Amboy | Vernon Center | cimankato.com

6 • FEBRUARY 2019 • MN Valley Business

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Business Commentary

By Dean Swanson

The anatomy of an Effective E-Commerce Website

any SCORE clients plan on or already do depend on the internet for a major part of their sales contacts. As a result, we experience a lot of questions that relate to how to set up an “effective” E-Commerce website. In this column, I will try to pull together some important parts to the anatomy of an effective website for E-commerce. Setting up and managing an e-commerce website to sell your company’s products involves a lot of work and knowledge of what might boost or bust your bottom line. While specific features and functionality requirements may vary depending on your type of business, some considerations are universally important. A few of the must-have characteristics of an e-commerce website include:

Mobile friendly

According to some of the most recent data that I found, the share of mobile orders (phone and tablet) out of all e-commerce has increased dramatically. With more potential customers using mobile devices to buy products, it’s increasingly important to ensure your e-commerce site will deliver ease of use to desktop and mobile users alike.

Easy to navigate

The easier you can make it for your website visitors to find and buy the products they’re looking for, the more likely you’ll convert those product searches into sales. Structure your e-commerce website so potential buyers can easily find what they want in as few clicks as possible, and make sure the checkout process is simple and straightforward. Also

“Before buying, shoppers like to check out an image to get a visual sense of the product. And the image can make or break the sale.” make it easy for visitors to find your refunds and exchange policy.

Transparency about shipping charges

According to an e-commerce survey cited by Kissmetrics, 28 percent of shoppers abandon shopping carts when discovering unexpected shipping charges at checkout. Consider disclosing shipping options and costs earlier rather than waiting until near the end of the checkout process.

Search friendly

You should have search engineoptimized product descriptions that are also reader friendly. Brief, clear, well-written content with relevant key words will help visitors find your products quickly and learn what’s most important

about them. Keep in mind content that consists of more than a few sentences may seem to go on forever on a smartphone screen. Make sure you’ve included product descriptions that give enough detail without becoming redundant and boring.

Professional images

“A picture is worth a thousand words.” How often have you heard that? For an e-commerce website, a picture can mean thousands of dollars. According to the article on Kissmetrics, “When it comes to running an e-commerce store, images are not optional. Before buying, shoppers like to check out an image to get a visual sense of the product. And the image can make or break the sale.” You’ll want to share images that bring out the best of your products. Consider contracting the help of a professional photographer who has experience in taking photographs for e-commerce websites.

Get some help

If you’re looking to create an e-commerce website for your business, you can benefit from consultation with a website development and design professional who has experience with all that they entail. Also consider talking with a mentor at your local SCORE chapter. SCORE mentors have experience in all aspects of starting, managing, and marketing small businesses. MV Sorenson is a volunteer Certified SCORE Mentor and former Regional Vice President for the North West Region. seminnesota.score.org

MN Valley Business • FEBRUARY 2019 • 7

Bill Miller (left) and Bob Kruse purchased the St. Clair Bank from longtime owner Dale Stolt.

Good days for banking New names, building popping up locally By Tim Krohn | Photos by Pat Chirstman

ew bank buildings and new bank names have been a common sight in Mankato and North Mankato in the past few years. It’s a sign of the economic vitality and population growth of the area. “It’s a great time to be in banking.

The interest rate environment is still good — there’s a lot of talk we may be at the top of interest rate cycle,” said Mike Bresnahan, president and CEO of First National Bank Minnesota. While leaders of financial institutions say the booming

Cover Story

8 • FEBRUARY 2019 • MN Valley Business

The First National Bank branch in St. Peter. regional economy and population growth has been a boon to their businesses, the soft farm economy is a concern. Dale Stolt, who recently sold the St. Clair State Bank to Bob Kruse and Bill Miller, was in the banking business for 50 years and has seen many ups and downs, including in the ag economy. Stolt, who still stops in the office two or three times a week to have coffee and visit, said the current farm downturn is a concern but not like it was in the 1980s. “We had downturns before. It’s not very good now but I don’t think it’s in dire straits. We have some farmers struggling and we try to work with them, but we’re not doing foreclosures or anything.” At SouthPoint Financial Credit Union, Joel Heitner said they are experiencing an increase in membership. “We’re seeing growth, which makes us more sustainable for current members and provides more options for our current members.”

Tech revolution

Even with the rapid growth SouthPoint has seen, Heitner, who manages the St. Peter and North Mankato branches, said they see fewer people physically stop into branches anymore as technology has transformed how people bank. “Even with growth, the in-branch transactions have flattened out. You see people when they open an account and maybe once a year. There’s not a need to stop in.” Heitner said SouthPoint, which has six south-central Minnesota branches, is currently looking at adding video banking. “If someone on their mobile device or whatever they’re on wants to talk to someone face-to-face, they will be able to. We need to keep up with the technology offerings out there.” He said there are a lot of disrupters to the industry that keep banks and credit unions changing. One is person-to-person payments (P2P) where people use apps to transfer funds from their bank or credit card to another individual’s account. “We have to make sure our products work well with all those things,” Heitner said. Stolt said big or small banks have to keep pace with

“Mankato has seen an uptick in housing development, especially on the east side, so things have been pretty robust the last few years,” Bresnahan said.

MN Valley Business • FEBRUARY 2019 • 9

Joel Heitner of SouthPoint Financial Credit Union

10 • FEBRUARY 2019 • MN Valley Business

tech. “You have to keep up, it doesn’t matter what business you’re in. If you don’t, you won’t be viable.” While all the technology eases the experience for customers, it also opens them and financial institutions up to cyberattacks. “With cybersecurity, you have to keep up. If you don’t, you won’t be a bank anymore,” Stolt said. “A big part of (regulators’) reviews now is the technology and security of the bank.” Bresnahan said cybersecurity is their top concern. And he said they also spend more time trying to protect their customers from scams.

At SouthPoint Financial Credit Union, Joel Heitner said they are experiencing an increase in membership. “We’re seeing growth, which makes us more sustainable for current members and provides more options for our current members.” “We spend a lot of time trying to look out for the vulnerable people, including the elderly. If we see anything suspicious in a transaction, we can alert them.” Bresnahan said that can sometime be a delicate line to walk. If, for example, a customer comes in looking to wire money to someone unfamiliar or asking for a cashier’s check to someone the customer hasn’t dealt with

before, staff tries to probe a little more to see if it might be a potential scam. Sometimes, he said, they may even contact a family member if it’s apparent a customer is getting scammed. “We do as much as we can while still respecting their privacy.”

More banks

Bresnahan said that while Mankato residents have seen a lot of new bank names and buildings, there really aren’t many new banks cropping up anywhere. “The number of banks continues to decline substantially ever y year. But they are concentrating more in the regional and urban areas. “In Mankato we’ve had an influx of banking offices, but in the universe of banking, there aren’t more banks. They’re branching out and taking over other banks so you see some new names locally,” Bresnahan said.

Strong economy

The strong economy locally has been attractive for bank expansions. “Mankato has seen an uptick in housing development, especially on the east side, so things have been pretty robust the last few years,” Bresnahan said. There are, however, signs of economic slowdown nationally. “There’s some talk of recession, but I think it might be different than the last one,” Bresnahan said. “There doesn’t seem to be a big housing bubble or anything out there. It seems like more of just a cyclical thing, not a crash.” Heitner said that while interest rates rose last year, they’re still relatively low. “Consumers are used to seeing rates at historic lows, so when they tick up even a little, they notice.” Auto loans are about 3.5 percent and 30-year-home loan rates at about 4.6 percent. Heitner said that for those old enough to remember rates in the double digits, the current rates look pretty good. He said that while loan interest rates went up during a few Fed raises in the past year or so, deposit rates weren’t budging

until recently. “Usually when loan rates rise, the deposit rates would go up in six months. But loan rates went up and deposit rates didn’t for 18 months. Now they’re starting to tick up.”

Worrisome ag sector

Stolt has seen plenty of rough patches for farmers over his five decades. “Ag is a big part of what we do and we try to take a long-term perspective.” He said this downturn is different than the 1980s when farm foreclosures were widespread. “Back then they had low crop prices, too, but they didn’t have much equity built up. Now they’ve built up more equity. We’re concerned about it, but we do what we can to work with them.” Bresnahan said they too are seeing more struggles with some of their farm customers. “More than in the past there’s been some really tough conversations we have with some farmers about going forward and how they’re going to sustain things.” He said more are looking for off-farm supplemental income, whether it’s driving truck or some other job. “Farmers are in a much better position to withstand a several year downturn. Most will be able to weather it. Some — especially some of the young ones who just had the misfortune of getting into farming at the wrong time — will have problems.” The new Rural Mainstreet Index, a sur vey of business conditions conducted by Creighton University in Omaha, shows farmers will have a tougher time borrowing money this year. More than half of bankers, or 53 percent, have boosted collateral requirements for farm loans due to low agriculture income. Onefourth of bank CEOs have made no change in farm lending practices due to weak farm income, according to the report. MV

MN Valley Business • FEBRUARY 2019 • 11

Phil Compart does small batch coffee bean roasting at his ApothAcoffee Roastery business.

Craft coffee

Nicollet native Phil Compart starts roasting, selling line of coffee

By Dan Linehan

hil Compart’s coffee-roasting odyssey began about three years ago when he ordered two pounds of raw, or “green,” coffee beans and roasted them in a cast iron pan. It worked — the beans dried out, heated up and made their characteristic popcorn-like “crack” to mark their transition into a light roast. Still, a pan wasn’t the ideal instrument to deliver quantity or quality. “You can never stop stirring or you’ll burn them,”

says Compart, a Nicollet native who now spends about half the year away from home. But he fell in love with the process, the way roasting can change the bean’s flavor. A lighter roast preserves the taste of the original bean, including the soil from which it grew, while a darker roast replaces them with flavors from the roasting process itself. Compart went on to buy a commercial-grade coffee roaster with a drum, like a concrete mixer, so the

Cover Spotlight

12 • FEBRUARY 2019 • MN Valley Business

beans are heated at the same rate. It can roast about 50 pounds an hour. He started selling the coffee last fall at the Carolina Renaissance Festival under the name ApothAcof fee Roaster y, a reference to medicine-supplying medieval apothecaries. But it’s more than a play on words; there’s some truth to Compart that coffee is medicinal. “I do believe, for myself, if I didn’t have coffee I’d be grumpy all day,” he says. His coffee-selling experiment a success, Compart has decided to make more and sell it both in the Mankato region and at other renaissance fairs. In addition to his website, he sells in three spots in Mankato: The Mogwai Collaborative and Makerspace Mankato sell his beans while Midtown Tavern sells the coffee made from the beans. While he’d like to eventually buy a pricey new coffee roaster and travel the world to visit coffee growers, Compart doesn’t have the ambition of building a craftbrew empire. But selling even small amounts of his coffee requires him to persuade customers they’re paying more for something special.

Car ving a niche

Coffee has historically been described as a commodity, meaning it’s all the same, like corn or sugar. Compart is trying to change this. He talks about coffee the way that craft brewers talk about their beer, often describing its taste in terms of the soil type in which the beans grew. Coffee from the Congo can have a metallic taste, while South American beans are more earthy, a reflection of their lower-acidity soil. He thinks regular coffee drinkers could appreciate these subtle distinctions, too, if they tried small-batch coffee instead of major brands. “We all just drank Folgers because ever ybody said we should,” Compart said. One of the main problems with coffee purchased this way, he said, is that it sits on the shelf too long. After about three weeks, coffee beans lose much of their flavor

and distinctiveness. When he roasts coffee to sell at a renaissance festival, Compart typically finishes each batch only a few days before selling it. Yes, it’s more expensive. He sells most of his eight flavors for $15 for a 12-ounce bag, roughly double the cost of store brands. To Karen Egan, a longtime friend of Compart’s who started buying his product last year, the flavor of small-batch coffee is worth the extra cost. “I just think it’s a better cup of coffee,” says Egan, who lives in California but spends most of the year traveling. “In fact, it’ll spoil you, I’m ruined for Starbucks now.” Lately, she’s been hooked on one of his blends, The Deviant Witch, a medium-to-heavy roast that has the nutty, chocolatey notes she loves. Plus, the somewhat longer roast removes some of the beans’ caffeine, which can be a good thing. “It’s not so much caffeine that I can’t function and when you’re at the (renaissance fair) you drink a lot,” she says. Alan Mehltretter of Mankato, also a longtime friend of Compart’s, had his own coffee epiphany under Compar t’s instruction. “I didn’t realize how much better coffee could be,” he says. The details matter, like the temperature of the water or whether the coffee is made in a drip coffee machine or a French press. Mehltretter now roasts his own beans in a roaster of his own design he cobbled together with an old road sign and other scrap metal. He’s designing a smallbatch roaster for Compart so he can test out new ideas a pound at a time rather than commit to the larger batch.

Roasting on the road

For Compart, who still enjoys the renaissance festival life, roasting is a business he can travel with. For most Rennies, or festival workers, the lifestyle means working all weekend and spending the week how you choose, whether that means working a part-time job or enjoying a hobby.

Roasting coffee fits into his life. When he’s on the road at a festival, he’ll typically roast during the week and sell it the following weekend. The process itself doesn’t take too long — each batch takes less than 15 minutes to roast. “I’ve always been self-motivated to get up and go to work,” he says, but the idea of working a 9-to-5 office job creeps him out. When he’s selling, he often strikes up conversations about coffee and roasting. “We want that customer to leave having a better day because they’ve interacted with you,” he says. Developing those relationships with the coffee traders Compart buys from hasn’t been as easy. Coffee, after all, only grows in equatorial or subtropical regions, so he can hardly meet his sellers face-toface. After trial and error, he’s found a few reliable suppliers, though his dream is to someday visit and buy from the growers themselves. Though he likes the idea of opening his own coffee shop — his first coffee memories are soaking up the ambiance of Mankato coffee shops with his mother — in practice, he’s not so sure it’d work out. He’d have to find investors and loans to get started, which he’s not keen on, plus it’d tie him down. Meanwhile, Compart isn’t trying to compete on price with the big brands, but he does want to get his product on more Mankato-area shelves. That’s a matter of taking samples to potential sellers and persuading them that his product is worth stocking. His next stop, though, isn’t anywhere near Mankato; he’ll spend February and March at the Arizona Renaissance Festival. That’s partly because Compart shares his coffee’s preference for warm weather. “The Minnesota winter and I don’t get along.” MV For more information: To learn more about his coffee, or,

MN Valley Business • FEBRUARY 2019 • 13

Susan Chen, director of the Mankato Chinese Culture Institute.

Businesses, individuals use local Chinese language classes By James Figy Photos by Pat Christman

he Chinese New Year holiday, which unfamiliar to many in the U.S. despite the falls on Feb. 5 this year, marks a strong business ties between the countries. weeklong celebration among family Susan Chen, director of the Mankato and friends, a time for Chinese Culture sharing food and Institute, has been gifting “lucky” money working to change this in small red envelopes since 2007. Chen to children. As the new hopes that the language MANKATO CHINESE lunar calendar begins, and culture classes that CULTURE INSTITUTE revelers greet each MCCI offers will help 14 Columbia Court, other in the most those who want to North Mankato widely spoken learn but don’t think 507-301-6224 language in the world they have access to — a language that’s MankatoChineseCultureInstitute.org instruction.

Feature

14 • FEBRUARY 2019 • MN Valley Business

Students take part in one of the Chinese camps held at the institute. “I think that it’s a good asset to learn a second language, particularly Chinese,” Chen said. “That will be great for everybody to open the door, if you have a business or want to host exchange students or have other things you want to do in China.” Roughly 1.4 billion people around the globe speak some dialect of Chinese, most often Mandarin, followed by Cantonese and other varieties. As the global economy grows, it’s increasingly important for businesses of all sizes to communicate effectively, she said, and MCCI has helped local employers, such as FUN. com, learn more about their vendors overseas. “They want to learn because they order some things from China, so they need to learn Chinese, and they send people over to China, too,” she said.

Founding the institute

Although MCCI has been able to ser ve members of the community with various motivations, Chen’s original inspirations for starting the

Local residents celebrate Chinese New Year. organization were more personal. “In May 2007, my father passed away. He was the one who first taught me how to write the Chinese characters. He was my first Chinese teacher,” she said. Chen and her husband, Dr. David Li, whose work for the Mayo Clinic brought them to Mankato, also wanted to be able to pass on their native tongue to their daughter Samantha.

“We moved from Chicago where we used to have a lot of Chinese schools where she could learn. But when we moved to Mankato in 2004, we found out here there was no single Chinese school or institute,” she said. The family met with 10 other Chinese-speaking families in the Mankato area. They discussed whether there was a need for a local language institute, and

MN Valley Business • FEBRUARY 2019 • 15

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host exchange students or have other things you want to do in China.” everyone was excited to start one. Originally, the children were the students, and the parents were the teachers. As it expanded, this became too much work for everyone involved, and MCCI recruited Minnesota State University students in the Teaching English as a Second Language program to teach at the institute. “They are originally from China or Taiwan, so their native language is Mandarin Chinese. We used their skills to teach the children, and the parents organized other things,” Chen said. The organization continued to grow, remaining a labor of love, and it moved from meeting spaces at a local church to a permanent North Mankato location. In 2011, MCCI became a registered nonprofit, offering tuition waivers to eligible people who are interested in studying Mandarin. At the highest point, MCCI had 40 students, and it provided free

16 • FEBRUARY 2019 • MN Valley Business

textbooks to each one and received grants to increase its instruction materials and capacity. The students included children, companies and church groups planning mission trips to Chinesespeaking areas.

We believe all people should live in a safe, sustainable, and

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Going online to reach more learners

MCCI moved all of its instruction online last year. Chen’s hope was to reach a broader range of students and to retain the best teachers, even after they have completed their degrees and may have moved across the globe. The classes are typically oneon-one with an instructor, and the instruction is tailored to the student’s interests. If a group of up to four students from a church, business or organization would like to learn together, they can split the cost and find a time that works for everyone to join the online session. “If you want to have it at a certain time, we can arrange that for everybody,” Chen said. “So I think that online instruction is probably a more acceptable and accessible way to offer classes.” The cost is $25 per hour, and more information is available at MankatoChineseCultureInstitute. org. MCCI continues to offer tuition waivers to anyone interested in learning, as long as they fill out a scholarship form to show their interest and financial need. Chen sees learning basic Mandarin as an important step toward connecting with others, especially Chinese speakers who are learning English. However, there are many professional opportunities for those who want to further their language skills. “I have one student who used to study Chinese just in preparation for missionary trips,” she said. “Eventually it turned out that she could teach the college students in China, and she got a good job over there.” MV

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Matt Downs is an optometrist at Carlson-Tillisch in Mankato.

Spreading out Carlson-Tillisch moves into roomier space

By Dan Greenwood | Photos by Pat Christman

fter spending 33 years at the same location, more patients in a given day. Carlson-Tillisch Eye Clinic has a new home. The At first the building didn’t seem like a practical exhaustive search that spanned several years choice. ended last year when the business “We spent how many years literally moved next door into the looking out our window at this old Meyer & Sons building in building saying ‘no way, we’re not downtown Mankato. moving there,’” said Matt Downs, At the center of the move was a an optometrist with Carlson-Tillisch CARLSON-TILLISCH need to accommodate a growing since 2004. EYE CLINIC base of customers, and clinic staff The spatial needs of an appliance 120 North Broad Street realized the building they were in sales and repair shop couldn’t be Mankato had limitations. The new space more different than an eye clinic, 507-345-5087 allowed them to acquire more exam and Downs was surprised when www.carlsontillisch.com rooms, and consequentially see developer Randy Westman gave

Profile

18 • FEBRUARY 2019 • MN Valley Business

The new home for Carlson-Tillisch is in the former Meyer & Sons building in downtown Mankato. him a tour of the building – at the time completely stripped to its bare bones. Downs said Westman opened their eyes to possibilities they hadn’t considered. “He was the one that kind of prodded us to actually make it happen,” Downs said. “So it’s kind of funny how things work out.” All the amenities and features they were looking for – the downtown location, plenty of parking and a big space with an open floor plan they could customize however they wanted – led them to realize the location would be ideal. “There’s not that many options that could satisfy those goals, so we did it,” Downs said. With the help of Oleson + Hobbie Architects, they were able to design the space in a way that could fit their specific needs. Carlson-Tillisch optometrist John Lach said the close proximity allowed them to come over and see the progress first hand as the former appliance store transformed into an eye clinic over the past year. “Once everything got finished we were pretty pleased with everything,” Lach said. “It was fun to walk in when the flooring was in, the walls were in, the paint

was up, displays were in and lighting.” Carlson-Tillisch moved into their new home in October, 2018. They still have some finishing touches – hanging up artwork on the walls, landscaping, window dressing and shading – that they plan to complete this summer. The first thing customers will notice upon entering the new 120 North Broad St. location is the large reception area and showroom, which are now merged, along with extra restrooms, new furniture,

equipment and nearly twice as many exam rooms. “With five exam rooms we could really only have two doctors working at a time,” said Lach. “With nine we can have three or possibly even four working at a time.” Over the past decade, the clinic expanded their operating rooms from three to five, and they tried moving things around to accommodate the greater demand and need for more efficient use of the space. In the end, Downs said the former location at 220 East

MN Valley Business • FEBRUARY 2019 • 19

Main Street, where they’d been housed since 1985, couldn’t accommodate the expanding customer base. “The summers always get busy but there was one time I think we were booked almost two months out,” Downs said. “Making people wait isn’t the kind of service we like to provide. We like to get them in in a timely manner; this will enable us to do that.” The new location of 8,000 square feet is significantly larger than the previous 5,800 square feet, opening up space for extra offices, rooms and walking space. Along with the expanding space, Carlson-Tillisch added a new optometrist to its ranks – Dr. Murphy Grotewold joined the team in 2018. Now with a staff of over 20, Downs said they plan to hire more technicians to coincide with the spatial growth of the clinic. “The growth over here has really been accompanied by the hiring of another optometrist,” Downs said. “Our goal is to hire the best technicians and clinicians that we can find. I would say at this point now that’s our limiting factor, not space; we checked that of the list. Now it’s getting the right staff in the right spot.” Founded in 1909, CarlsonTillisch is one of the oldest businesses in Mankato, with a satellite location in New Ulm. MV

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■

Business and Industry Trends

Economy Forbes: Minn. No. 1

Forbes has ranked Minnesota 10th best in the nation for business. No neighboring states were ranked higher. The median household income is at $67,841, job growth for last year was 1.3 percent, cost of doing business was 4.4 percent above the national average, college attainment is 36 percent and the state has a Moody’s bond rating of Aa1. Forbes ranked the state as 19th for regulatory environment, 20 in growth prospect, 11th in economic climate and 3rd in quality of life.

Energy

Electricity prices generally higher

Wholesale electricity prices during 2018 at major trading hubs in the United States were generally higher than in 2017. Wholesale prices in 2018 ranged from 14 percent higher than in 2017 in the area served by the Midwest Independent System Operator to 60 percent higher in the ERCOT

22 • FEBRUARY 2019 • MN Valley Business

electricity market serving most of Texas. Monthly wholesale electricity prices were also more volatile in 2018 than in 2017, seeing spikes during the winter and summer months. Natural gas continues to fuel a growing share of the electricity generated in the United States. Although natural gas prices increased last year, the cost of generating electricity with natural gas remains relatively low. The sustained low natural gas prices encouraged the addition of significant new natural gas-fired capacity in 2018. In some areas of the country, ongoing coal plant retirement also contributed to a structural shift toward natural gas. For all of 2018, natural gas fueled an estimated 35 precent of total U.S. electricity generation, up from 32 percent in 2017. In contrast, the share of total generation from coal declined from 30 percent to 27 percent last year. Generation from wind and solar power plants grew from a combined share of 8 percent in 2017 to 9 percent in 2018. The share of U.S. hydroelectric generation last year was relatively similar to the 2017 level, contributing about 7 percent of total electricity generation.

2018 gas prices trended up

U.S. regular retail gasoline prices averaged $2.72 per gallon in 2018, 30 cents/gal (13 percent) higher than in 2017 and 57 cents/gal higher than in 2016.

However, a rapid price decline beginning in October led to U.S. average regular gasoline prices ending the year lower than they began for the first time since 2015. In 5 of the 10 cities for which EIA collects weekly retail price data, gasoline prices exceeded $3.00/gal at least once in 2018. Rising crude oil prices and high levels of gasoline demand contributed to rising gasoline prices from January through May. Gasoline prices subsequently remained relatively stable from June through October before falling oil prices, high inventories, and flattening U.S. gasoline demand helped bring the U.S. average price down by nearly $0.50 per gallon between October and December.

Retail/Consumer Spending Vehicle Sales Mankato — Number of vehicles sold - 2017 - 2018 1500

1,127

958

1200 900 600 300 0

Source: Sales tax figures, City of Mankato Includes restaurants, bars, telecommunications and general merchandise store sales. Excludes most clothing, grocery store sales.

Sales tax collections Mankato (In thousands) Source: U.S. Energy Information Administration, Gasoline and Diesel Fuel Update

The national price for gasoline declined for 12 weeks in a row at the end of 2018, which marked the longest consecutive weekly drop since the 17-week decline from October 2014 through January 2015. Although prices declined across the country, the extent of the decline varied greatly within the regions. Midwest (Chicago and Cleveland). The Midwest covers a large geographic area consisting of many semi-connected markets. Prices in Chicago were higher than prices in Cleveland and the Midwest regional average in every week during 2018. Of the cities for which EIA collects data, Cleveland’s gasoline prices were the second lowest in the country for 25 weeks and the lowest for 2 weeks.

Africa, Asia drive energy consumption

Energy consumption in Asia, the Middle East, and Africa continues to grow rapidly, with about 20 percent growth in each region between 2010 and 2016, according to newly available data from the Energy Information Administration. In particular, energy consumption has been increasing in the Middle East and Africa, driven by economic growth, increased access to energy markets, and quickly growing populations. Energy consumption in Asia grew even as energy consumption in China declined between 2015 and 2016. Although growth was rapid in Africa and the Middle East, Asia and Oceania consumed much more energy overall (42 percent of 2016 world energy consumption, compared with 6 percent in the Middle East and 3 percent in Africa. Slower long-term energy consumption trends continued in the mature economies of North America, where energy consumption grew by 1 percent between 2010 and 2016, and in Europe, where energy consumption actually fell 4 percent between those years.

- 2017 - 2018

600

$464

$454

500 400 300 200 100 0

Source: Sales tax figures, City of Mankato

Lodging tax collections Mankato/North Mankato

- 2017 - 2018 $60,726

$56,967

70000 52500 35000 17500 0

Source: City of Mankato

Mankato food and beverage tax - 2017 - 2018 175000 140000

$64,600 $64,700

105000 70000 35000 0

Source: City of Mankato

C. Sankey

MN Valley Business • FEBRUARY 2019 • 23

■

Agricultural Outlook

By Kent Thiesse

New Farm Bill goes well beyond farm programs T he U.S. House and Senate passed the new Farm Bill, titled the “Agriculture Improvement Act of 2018”, which has now been signed into law by President Trump. The new Farm Bill will govern USDA programs from 2019 to 2023 and will be very similar to the current legislation, outside of a few tweaks to the commodity and conservation titles. The commodity provisions of the new Farm Bill will be implemented for the 2019 crop production year. It will likely take a few weeks before USDA initiates implementation of the legislation and releases farm program details to producers through local Farm Service Agency (FSA) offices. The Farm Bill includes provisions for the twelve Titles that are included in the legislation, which go far beyond ag commodity and conservation programs. Following are a few insights on some of the provisions that are in various Titles of the new Farm Bill:

Title I — Commodities

Producers will again get to choose between the price-only “Price Loss Coverage” (PLC) and county yield revenue-based “Ag Risk Coverage” (ARC-CO) program choices for the 2019 and 2020 crop production years. Calculation formulas, etc. for the ARC-CO program will remain similar to the current farm program. Beginning with the 2021 crop year, producers will be able to make an annual election between the ARC-CO and PLC program choices. The new Farm Bill will make improvements to the Dairy Margin Protection Program (MPP), which will now be named “Dairy Margin Coverage” (DMC), which will especially for benefit small to medium sized dairy herds (under 250 cows).

Title II — Conser vation

The 2018 Farm Bill increases the maximum level of Conservation Reserve Program (CRP) acres from 24 million acres to a new maximum level of 27 million acres by 2023, with two million of the added CRP acres designated for the Grassland Reserve Program. The maximum CRP rental rates would be set at 90 percent (90%) of the average FSA “prevailing” rental rates in an area for the Continuous CRP program and at 85 percent (85%) for General CRP sign-ups. Currently, the maximum CRP rental rate is 100 percent (100%) of the FSA “prevailing” rental rate. The Conservation Stewardship Program (CSP), which involves implementing conservation practices on

24 • FEBRUARY 2019 • MN Valley Business

operating farms, will be continued under the 2018 Farm Bill. The Environmental Quality Incentives Program (EQIP), which provides funding to help offset the cost of implementing farm-level conservation measures, is receiving increased funding.

Title III — Trade

This Title reauthorizes funding for important agricultural trade promotion programs, such as the Market Access Program (MAP), the Foreign Market Development Program (FMDP), and the Emerging Markets Program (EMP). These trade related programs are very important for opening new markets and maintaining existing markets for U.S. ag exports.

Title IV — Nutrition

This Title was probably discussed and debated more than any other Title in the 2018 Farm Bill; however, in the final legislation that was passed by Congress, there were only minor changes from the previous Farm Bill. The Nutrition Title, which includes the SNAP program (food stamps), the Women, Infants and Children (WIC) nutrition program, and school lunch program, accounts for over 75 percent of annual federal spending allocated under the Farm Bill.

Title V — Credit

This Title sets parameters and provides funding for the FSA direct and guaranteed loan programs, which have become quite important to farm operators and ag lenders. The limit for loan guarantees was raised from $700,000 maximum to $1,750,000 maximum to bring it more in line with the size and scope of today’s typical farm operations. The maximum limit for direct FSA farm ownership loans was increased from $300,000 to $600,000, which is especially important to provide beginning farmers low interest loans to purchase farm land.

Title VI — Rural Development

This Title reauthorizes funding for rural development loans to communities and businesses, as well as programs and funding to assist state and local governments with ever ything from emergency services, to fire protection, to waste water treatment programs and more. Special emphasis in the 2018 Farm Bill was given to expanding broadband service and to combatting the opioid epidemic.

Title VII — Research, Extension & Related Matters

This Title provides USDA funding for ag research, extension programs, and other food research and education programs through the nation’s Land Grant University system. It also includes research and education funding for organic production and urban agriculture.

Title VIII — Forestr y

This Title reauthorizes and expands USDA collaborative efforts with states for battling forest fires, forestry research and development, insect and disease control, timber management, etc.

Title IX — Energy

This Title renews various USDA funding mechanisms for programs that support the development of biofuels and renewable energy.

Corn prices — southern Minnesota

This title renews USDA funding for promotion of farmers markets and other local foods programs, as well as for the national organic certification cost-share 8 program. However, the “headline grabber” from this Title of the Farm Bill was that it legalizes hemp as an 6 agricultural commodity, thus making hemp eligible for crop insurance and other USDA programs. This is 4 toward industrial hemp and does not affect targeted federal regulations for hemp varieties that are raised 2 for marijuana production.

Title0 IXJ —F Crop Insurance M A M J J A

The new Farm Bill will make very few changes to the crop insurance program, so overall crop insurance provisions for 2019 and beyond should remain very similar to the current crop insurance program. Producers will now be allowed to establish enterprise 8 units with farms in different counties (previously all 100 farms 6needed to be in the same county). The USDA Risk 85 Management Agency (RMA) has the ability to make other year-to-year adjustments in crop insurance 4 70 options, within the parameters of the Farm program Bill legislation. 2 55

Title400XII — Miscellaneous

J producers F M A were M J quite J pleased A S OwithN this D Livestock Title 25 of the new Farm Bill, as it establishes USDA J F M A M J J A S O N D funding for a foot-and-mouth disease (FMD) vaccine bank, provides funding for the National Animal Health Laboratory Network (NAHLN), and allocates funding for state efforts to prepare for any foreign animal 100 outbreak in the U.S. disease A Farm Bill is one of the most comprehensive pieces 85 of legislation that is passed by Congress. It is often said that a Farm Bill authorizes programs and funding 70 that affect all 50 States and all of the Congressional 55 districts. 40

8 6

$3.31

2 0

$3.11

Soybean prices — southern Minnesota

Kent Thiesse is farm management analyst and senior vice president, MinnStar Bank, Lake Crystal. 507-381-7960); kent.thiesse@minnstarbank.com

(dollars per bushel)

— 2018 — 2019 8 20 100 16 6 85 $9.05 12 470 8 255 $7.94 4 40 0 0 J F M A M J J A S O N D 25 J F M A M J J A S O N D J F M A M J J A S O N D Source: USDA

Iowa-Minnesota hog prices 20 100 $72.39 25 16 85 22 12 70 19 8 55 16 4 40 $45.84 13 0 J F M 25 10 J F M J F M Source: USDA

25 22 19 16 13

A M J A M J A M J

Milk prices

J J J

A S O N D A S O N D A S O N D

Minimum prices, class 1 milk Dollars per hundredweight

— 2018 — 2019 25 22

$15.63

19 16

$14.44 J

20 25 16 22 12 19 8 16 4 13 0 J 10

185 pound carcass, negotiated price, weighted average

— 2018 — 2019

(dollars per bushel)

— 2018 — 2019

Source: USDA

Title X — Horticulture

Agriculture/ Agribusiness

Source: USDA. Based on federal milk orders. Corn and soybean prices are for rail delivery points in Southern Minnesota. Milk prices are for Upper Midwest points.

C. Sankey

MN Valley Business • FEBRUARY 2019 • 25

Construction/Real Estate Residential building permits Mankato

Commercial building permits Mankato

- 2017 - 2018 (in thousands)

$17,366

$8,812

30000

18000

25000

13500

20000 15000

9000

$703

5000

Source: City of Mankato

Source: City of Mankato Information based on Multiple Listing Service and may not reflect all sales

Existing home sales: Mankato region - 2017 - 2018 (in thousands)

Median home sale price: Mankato region - 2017 - 2018 (in thousands)

250

300

167

168

240

$169,000 $164,900

200 150

180

100

120

0 J

Source: Realtors Association of Southern Minnesota

Includes single family homes attached and detached, and town homes and condos

Housing starts: Mankato/North Mankato

— 2018 — 2019

- 2017 - 2018

5.5

4.5%

5.0

Source: Realtor Association of Southern Minnesota

Interest Rates: 30-year fixed-rate mortgage

4.5

4.0

3.5 3.0

$2,510

10000

4500

- 2017 - 2018 (in thousands)

3.9% J

10 M

Source: Freddie Mac

Source: Cities of Mankato/North Mankato

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26 • FEBRUARY 2019 • MN Valley Business

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Gas Prices 5

Gas prices-Mankato

— 2018 — 2019

54 43 $2.29

32 21 10 0

J J

$1.94

Jan. 7

Percent change

Archer Daniels

$45.61

$42.31

-7.2%

Ameriprise

$121.43

$111.24

-8.4%

Best Buy

$62.26

$56.75

-8.8%

Brookfield Property

$17.41

$17.42

-0.1%

Crown Cork & Seal

$50.05

$45.46

-9.1%

Consolidated Comm. $12.19

$11.37

-6.7%

Fastenal

$57.27

$53.07

-7.3%

General Mills

$40.27

$41.00

+1.8%

Itron

$52.30

$49.38

-5.6%

Johnson Outdoors

$70.66

$65.34

-7.5%

$202.20

$193.73

-4.2%

Target

$69.31

$70.31

+1.4%

U.S. Bancorp

$52.60

$46.95

-12.4%

Winland

$1.10

0.0%

Xcel

$52.83

$48.30

-8.6%

— 2018 — 2019

$2.40 $2.21

21 J

Dec. 5

Stocks of local interest

CORY ABELS

Gas prices-Minnesota

MIKE KUNKEL

0Source: GasBuddy.com J F M A

C. Sankey

MN Valley Business • FEBRUARY 2019 • 27

Minnesota Business Updates

■

■ Consumer tech falling There is growing evidence that consumer technology sales are a big weak area. Bank of America Merrill Lynch analyst Curtis Nagle recently downgraded Best Buy stock, citing deteriorating credit-card spending trends for the retailer’s end markets, according to Barrons. The analyst estimated that televisions accounted for about 25 percent of the retailer sales, and Apple products represented about 10 percent of revenue. Nagle said both product categories will likely detract from Best Buy’s results. Mastercard SpendingPulse reported that U.S. retail sales surged this holiday season (Nov. 1 through Dec. 24), rising 5.1 percent from last year’s level — the strongest growth rate in six years. But electronics and appliances sales underperformed, declining 0.7 percent year-over-year. In similar fashion, KeyBanc Capital Markets said its internal retail credit and debit card trends data showed spending at Best Buy dropped more than 12 percent year-over-year for the month of December.

exterior look and interiors refreshed with all-new seats and features, the Star Tribune reported. Chief Executive Jude Bricker has charted a new course for Minnesota’s hometown airline aimed at improving its financial performance so it can ultimately grow. “The financial history of Sun Country is not wonderful,” Bricker told reporters. “Over the last 15 years, Sun Country has pretty dramatically underperformed the rest of the industry. We were the smallest, worst financially performing mainline … carrier in the country. It’s a very dangerous place to be.” Owning an airplane is usually half as expensive as leasing one, Bricker said. It will take about eight years to transition to a fleet that the company owns. The airline currently operates about 30 aircraft.

■ Sun Country buying planes Sun Country Airlines is moving to buy its own planes rather than lease them, with the goal of one day owning all its aircraft. The first planes it bought sported a new

Employment/Unemployment Initial unemployment claims Nine-county Mankato region Major November Industry 2017 2018 Construction Manufacturing Retail Services Total*

655 228 54 204 1,141

Local non-farm jobs Percent change ‘17-’18

767 186 50 194 1,197

Construction 126000 126000 Manufacturing Retail 113000 Services 113000 Total*

12,356 2,534 1,239 16,129 32,258

12,774 2,426 1,160 16,360 32,720

126000

2100 1400

113000

700 100000

Minnesota Local non-farm jobs

28 • FEBRUARY 2019 • MN Valley Business

150000 100000

2000 1400 1400

50000

700 0

200000

4000 2100 2100

700 N

3,009 2,986

8000 3500 3500 6000 2800 2800

+3.4% -4.3% +6.4% +1.4% +1.4%

- 2017 - 2018

(in thousands)

Percent change ‘17-’18

Services consist of administration, educational, health care and social 100000 assistance, food andJ otherF miscellaneous services. M A M J J A S O 100000 J don’t F equal M total A because M Jsome Jcategories A not S listed. O N *Categories

3500 2800

+17.1% -18.4% -7.4% -4.9% +4.9%

Minnesota initial unemployment claims November 2017 2018

131,687 131,308

139000

Services consist of administration, educational, health care and social assistance, food and other miscellaneous services. *Categories don’t equal total because some categories not listed.

Major Industry 139000 139000

- 2017 - 2018

Nine-county Mankato region

F M

M A A M

M J

J J

J A

A S

S O

O N

N D

■ Gift card fraud targeted Walmart, Target and Best Buy have made changes to their gift card programs to reduce the risk of fraud. The changes include reducing purchase limits on store-branded gift cards in a single transaction, limiting how much can be loaded onto the cards, and prohibiting the redemption of store-branded gift cards for other gift cards. The stores also bolstered training to help employees spot scams. Losses through September of 2018 from gift and 139000 cards totaled $53 million, up from $40 million ‘reload’ for all of 2017.

■ General Mills eyes pet food

3500 2800

General Mills, known for Cheerios and Yoplait, is 126000 2100 hoping pet food will help it fight lagging cereal and ■ 3M buys tech firm snack sales. 1400 3M has struck a deal to buy 113000 The company said it plans to double distribution of the technology business of a 700 Blue Buffalo pet food items in the food, drug and mass privately held, early-stage market channel, which includes grocery, drug stores healthcare documentation 100000 0 J F M A M J J A S O N D J and big box retailers like Target, CNN reported. company called M*Modal for an The company expects to double digit growth for Blue enterprise value of $1 billion. The deal is expected to Buffalo for the year. close in the first half of this year. In addition to increasing distribution, General Mills 3M said the unit earns around $200 million in wants to develop more Blue Buffalo wet food and pet annual revenue. 3500 treats. 139000 “I think it’s a huge opportunity for us,” said 3M’s five-year plan released recently, the company’s 200000 8000 139000 3500 In Harmening. healthcare segment had the best range for estimated 2800 2800 organic 6000 local-currency annual sales growth among the 150000 126000 2100 126000 company’s current five business units, at 4 percent to 6 2100 percent from 2019 to 2023. 4000 100000 1400 113000

113000

1400

700 2000

700

100000

100000 J F

J M

Employment/Unemployment

F M A A M J

M J

J A

J S

A O

Local number of unemployed

4000 2100 1400 2000

S N

O D

8000 6000

J F M A M M A M J J M A M J J

J A A

J S S

A S O N O N D O N D

150000

67,695 80,545

100000 50000 0

M MJ

J JA

J JS

A AO

S N S

O D O

N N

D D

(includes all of Blue Earth and Nicollet Counties) 200000 150000

November

100000

0 F

J M

F M A A M J

M J

J A

2017

2018

1.9% 60,344 1,173

1.6% 61,969 1,034

J S

A O

S N

O D

Unemployment rates Counties, state, nation County/area

- 2017 - 2018

200000

F M A M AJ FA M

Unemployment rate Number of non-farm jobs 50000 50000 Number of unemployed

100000

2000 0 F F

0 0 J F JM

Mankato/North Mankato Metropolitan statistical area

150000

3,242 2,829

4000

700 0 J 0 J

D 0

200000

Minnesota number of unemployed

- 2017 - 2018

Nine-county Mankato region 8000 3500 6000 2800

50000

Blue Earth Brown Faribault Le Sueur Martin Nicollet Sibley Waseca Watonwan Minneapolis/St. Paul Minnesota U.S.

November 2017

November 2018

2.0% 2.1% 2.6% 3.6% 2.7% 1.7% 2.3% 3.0% 3.2% 2.4% 2.8% 3.9%

1.7% 2.3% 2.6% 2.7% 2.4% 1.6% 2.4% 2.5% 2.7% 2.0% 2.2% 3.5%

Source: Minnesota Department of Employment and Economic Development C. Sankey

initial•unemployment MN Minnesota Valley Business FEBRUARY 2019 claims • 29

Sponsored by the Carl & Verna Schmidt Foundation

Do’s and don’ts of helping loved ones pay medical bills

By Matthew Perrone | Associated Press

elief from medical debt doesn’t top the typical gift list. But help with unexpected medical bills could be a welcome gift for millions of Americans. Four in 10 U.S. adults received a surprisingly high medical invoice within the last year, according to a September survey from the nonprofit Kaiser Family Foundation. And medical bills topped the list of financial commitments that Americans are afraid they won’t be able to afford, ahead of prescription drugs, rent or gas, according to the results. Here are some tips for helping a loved one with their medical expenses – and potentially lowering your own tax bill along the way.

WHO GETS THE MONEY?

When helping someone shoulder medical bills, financial experts say the most important step is to make sure you pay the money directly to the hospital, physician or medical provider. Those payments are exempt from federal reporting and tax requirements, but only if they go to the business or person that provided the service. “You can’t give the money to your neighbor and then have them pay their own expenses,” explained Melissa Labant, an executive with the American Institute of Certified Public Accountants. Payments to friends or family members exceeding $15,000 per year must be reported as a gift to federal tax officials, who track them as part of lifetime gift limits. The vast majority of Americans will never have to worry about reaching the threshold: You can give up to $11.4 million to an heir or loved one before having to pay any federal taxes, under 2019 tax rules.

CAN YOU DEDUCT THE PAYMENTS FROM YOUR OWN TAXES?

Only for certain medical expenses and only for dependents. They must be a family member or part of your household, which can include grandparents, cousins, in-laws and adopted children. You must also show that you provide at least 50 percent of their financial support, which can include the value of housing. If the person meets those requirements, you can deduct medical expenses exceeding 10 percent of your annual gross income from your tax return. So an individual earning $100,000 in 2019 could deduct medical expenses over $10,000. Those sky-high expenses usually only occur in the last year or two of life, according to Labant.

30 • FEBRUARY 2019 • MN Valley Business

“That’s when the numbers get big enough and make enough of a difference that the accountants hear about it,” she said.

WHAT EXPENSES QUALIFY?

When it comes to medical expenses, tax law is very broad, encompassing just about anything used to treat, diagnose or prevent a medical condition: surgery, rehabilitation, prescription drugs, eye glasses, weight loss programs and even quit-smoking aids are included. Cosmetic procedures and over-the-counter medications generally do not qualify.

SPENDING AND SAVINGS ACCOUNTS

Employer-sponsored accounts can be another way to pay for medical expenses, though there are important limitations. Many companies offer health savings accounts or flexible spending accounts, both of which allow employees to set aside tax-free money for medical expenses. Health savings accounts are considered superior, allowing a family to contribute up to $7,000 in 2019, collect interest and roll over any leftover money to the following year. Flexible savings accounts are similar but cap contributions at $2,700 next year. Generally, the money is “use it or lose it,” with any leftover funds forfeited at the end of the year. However employers can permit workers to carry over up to $500 to the next year. Health savings accounts are “much better, hands down, because you get the same pretax contribution, but it rolls over every year,” says Chris Schiffer, an accountant and financial planner with AEPG Wealth Strategies. Plans vary, but generally money from either type of account can only be used for yourself, your spouse or a dependent. MV

Sponsored by the Carl & Verna Schmidt Foundation

Renovation mortgages can ease entr y into the home market

By Holden Lewis | NerdWallet

t’s the lament of first-time homebuyers in just about every housing market: There aren’t enough entrylevel homes available that are move-in ready. One solution is to broaden the search to fixeruppers. With a renovation mortgage, you can get one home loan that combines the purchase price with the cost of improvements.

NOT ENOUGH AFFORDABLE HOMES

Entry-level homes are scarce, whether new or used. Most gains in housing inventory have been in upscale homes, according to Realtor.com. The decline in entry-level new construction is stark: 36 percent of homes built in 2000 had under 1,800 square feet; in 2017, 22 percent did, according to the Harvard Joint Center for Housing Studies. As for existing homes, resales of homes costing $100,000 to $250,000 were down 1.9 percent in October, compared with a year earlier, according to the National Association of Realtors. The demand is there: Even with the decline, homes in that price range accounted for 40.2 percent of sales. Faced with a shortage of affordable homes, it makes sense to consider buying and fixing up dwellings that are outdated or in need of repair. The two major types of renovation loans are the FHA 203(k) loan, insured by the Federal Housing Administration, and the HomeStyle loan, guaranteed by Fannie Mae. Both cover most home improvements, whether major or minor. “Basically, every kind of repair that can be done to a property, we do it,” says Brad McMullen, vice president of renovation lending for PrimeLending, a national mortgage lender that emphasizes renovation loans.

RENOVATION LOANS EXPAND OPTIONS

Both FHA 203(k) and HomeStyle can be used for structural and cosmetic renovations. With both loan types, renovation work may begin immediately after closing. FHA’s 203(k) loan is for primary residence s only. It requires a minimum credit score of 500 with a down payment of at least 10 percent; a credit score of 580 or higher allows a down payment of 3.5 percent. These loans can’t be used for work that the FHA deems a luxury, such as installing a swimming pool. There are two types of 203(k) loans: limited and

standard. The limited is for renovations costing $35,000 or less that don’t require major structural work. The standard is for projects upwards of $35,000 or involving major structural work. A 203(k) standard loan requires a HUD consultant, who helps the homeowner solicit and analyze bids and oversees inspections of the work. Consultants are often contractors, architects or inspectors, McMullen says. HUD has a tool to search for consultants. Fannie Mae’s HomeStyle loan may be used to buy and fix up a primary residence, second home or investment property. It requires a minimum credit score of 620. Minimum down payment is 3 percent or 5 percent, depending on whether the home is owneroccupied and the borrower is a first-time homebuyer or has a low to moderate income. HomeStyle loans have few restrictions onimprovements, other than that they “should be permanently affixed to the real property (either dwelling or land),” according to Fannie Mae guidelines. That means HomeStyle may pay for adding a swimming pool.

PITFALLS TO WATCH FOR

The most common problem is failing to get detailed cost estimates, McMullen says. To prevent cost overruns, make sure estimates are specific about materials, and include costs for inspections, permits and consultant fees (if applicable). Another pitfall: over-improving the home. If every house on the block has one story and three bedrooms, it might be a bad idea to add a second story with two bedrooms. The home will no longer fit in with the neighborhood, and it will be difficult to get an accurate estimate of the home’s post-renovation value because of a lack of nearby comparable houses.

GETTING STARTED

After finding the house you want, choose a lender, decide on a loan type and hire a HUD consultant. Then, with the consultant’s guidance, get estimates from contractors. Your lender will need copies of the estimates. The renovation work may begin immediately after you close the loan. When the improvements are complete, you’ll have your home the way you want it — sooner than you might have thought possible MV

MN Valley Business • FEBRUARY 2019 • 31

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NETWORKING TW WORKING ORKING NETWORKING TW WORKING It’s not just st WHO WORKING HO you ou know, it’sjust who kHO you It’s not st WHO Wknows ou YOU. Networking k IS know, it’s who knows Powerful. YOU. Networking IS Powerful.

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LEARNING REFERRALS Gain access cces to Member Exclusive Content to help We only refer member REFERRALSgrow your business. businesses. Word of mouth Wedirect only referrals refer member and come businesses. Word of mouth from being a valued and direct referrals come member of GMG. from being a valued member of GMG.

SHAPE YOUR CREDIBILITY Raise your reputation by COMMUNITY SHAPE YOUR belonging. CREDIBILITY Research shows Your investment helps us that businesses who belong Raise your reputation by continue to build the best COMMUNITY tobelonging. a chamberResearch of commerce shows

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To become a Greater Mankato Growth member or to learn more please contact us at 507.385.6640 or info@greatermankato.com.

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2019

2019 SPONSOR:

5 - 7 PM

JAN 8

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WHY JOIN FEB 5

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MAR 5

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1501 Adams Street, Mankato

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APR 2

U.S. Bank

AmericInn Hotel & Conference Center

OCT 1

120 North Broad Street, Mankato

EXPOSURE

115 East Hickory Street, Suite 200, Mankato

Pantheon Computers

GREATER MANKATO GROWTH? 1 Civic Center Plaza, Mankato

Mankato Clinic - North Mankato Family Medicine 1575 Lookout Drive, North Mankato

Hilton Garden Inn

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Mayo Clinic Health System Courtyard by Marriott Hotel & Event Center NOV 5 1025 Marsh Street, Mankato 901 Raintree Road, Mankato Build your Brand; Dotson Iron Castings Exclusively Diamonds grow your business. DEC 3 JUN 4 200 West Rock Street, Mankato 1601 Adams Street, Mankato Stand out and get It’s not just st WHO WHO you ou noticed! know, it’s who knows k YOU. Networking IS NOTE: Calendar magnets are available at the check in table at each Business After Hours event Powerful. MAY 7

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ityArt, a joint program of the City Center Partnership and SHAPE YOUR Twin Rivers Council for the Arts, is excited to announce a CREDIBILITY long awaited public art project that will have a dramatic Raise your by COMMUNITY belonging. reputation impact on our City Center. In partnership with Ardent Mills, Research shows Your investment helps us CityArt is contracting with Australian artist, Guido van Helten that businesses who belong continue to build the best to paint the Ardent Mills silos in Old Town Mankato. We are to a chamber of commerce environment for your fortunate to have been chosen by the artist to be included in a business and its employees. are more successful. larger body of work he is creating in Midwestern communities around telling the story of how these communities were built by the agricultural industry and how that informs our American identity. The design concept for Mankato will be developed over the course of several community engagement sessions and installation of all eight silos, on both sides, will take place in the Fall of 2019. To date, we have raised more than $175,000 or our $250,000 goal, including a $50,000 challenge grant. To learn about how you or your business can support this public art initiative that will continue the transformation of the City Center, visit cityartmankato.com or contact Megan Flanagan at 507.388.1062 or mflanagan@citycentermankato.com.

Photo by Guido van Helten Fortsmith, USA 2016

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Minnesota State University, Mankato College of Business

Minnesota State University, Mankato College of Business students donate over $15,000 to local charities students donate over $15,000 to local charities The United Prairie Bank Integrated start-up company. Each student

Business (IBE) has become The UnitedExperience Prairie Bank Integrated a signature program in the College Business Experience (IBE) has become of Business while implementing the a signature program in the College strategic mission of the College. The of Business while implementing the mission involves a focus on real-world strategic mission of the College. The learning experiences. mission involves a focus on real-world learning experiences. The United Prairie Bank IBE program is designed for students to gain

The United Prairie Bank IBE proreal-world understanding of business gram is designed for students to gain finance, management, marketing and real-world understanding of business applying those skills by developing finance, management, marketing and and operating a business. The faculty applying those by developing team that leadsskills the program are Dr. Kristin Scott,aIBE Chair and and operating business. Themarketfaculty ing that instructor, Reising, team leads Dr. the Joe program arefinance Dr. instructor andIBE Dr. Chair Shaneand Bowyer, Kristin Scott, marketmanagement The goal of ing instructor, instructor. Dr. Joe Reising, finance the United Prairie Bank IBE program instructor and Dr. Shane Bowyer, is for students to better understand management instructor. The goal ofthe interdependence of the content areas the United Prairie Bank IBE program studies as they apply to actual business is for students to better understand the experiences. interdependence of the content areas studies as they applyallows to actual business The IBE practicum students to experiences. develop, launch, manage and close a business with a cohort of students in

The practicum allows writes students theIBE course. Each business andto develop, manageplan andtoclose a presentslaunch, their business United business with atocohort of students in Prairie Bank seek finance for their the course. Each business writes and presents their business plan to United Prairie Bank to seek finance for their

company then markets andstudent sells their start-up company. Each product to pay back the loan. company then markets and Profits sells their made from business donated product totheir pay back the are loan. Profits to a charity choice. made fromoftheir business are donated

to a charity of choice.

This fall’s cohort donated the most amount of money in the United This fall’s donated With the most Prairie Bankcohort IBE existence. amount of money in the United over $15,000 going to local chairities Prairie Bank IBE Area existence. including Mankato UnitedWith Way, over Door $15,000 going to local Open Health Center and chairities Partners including Mankato Area United Way, for Affordable Housing.

Open Door Health Center and Partners

for Affordable Housing. Luke Howk, Director of Internship with the College of Business says of the IBEHowk, program, “Current and former Luke Director of Internship IBE consistently reportsays of withstudents the College of Business being ableprogram, to leverage their variety the IBE “Current and former of real-world IBE experiences as a IBE students consistently report competitive advantage in interviews being able to leverage their variety for careers. of internships real-world and IBEfull-time experiences as a Additionally, my office receives recompetitive advantage in interviews soundingly positive feedback on IBE for internships and full-time careers. alumni who interview and intern with Additionally, my office receives reregional employers including Microsoundingly positive feedback on IBE soft, Taylor Corporation, UnitedHealth alumni who interview and intern with Group, and many others.”

SnoProblem Products: windshield cover, ice scraper with discounts SnoProblem Loan Amount: $1880.00 Products: windshield cover, ice Gross Sales: $8820.85 regional employers including Micro- Donation scraperAmount: with discounts $6940.85 soft, Taylor Corporation, UnitedHealth Charity: LoanUnited Amount: $1880.00 Way Group, and many others.” Gross Sales: $8820.85 Total Service Hours: 295 hours

Donation Amount: $6940.85

M!ND Charity: United Way Products: long-sleeved t-shirts, Total Service Hours: 295 hours stickers Loan Amount: $3,080.00 M!ND Gross Sales: $7,041.42 Products: long-sleeved t-shirts, Donation Amount: $3,961.42 stickers Charity: Door$3,080.00 Health Center LoanOpen Amount: of Mankato Gross Sales: $7,041.42 Total Service Hours: 326 hours

Donation Amount: $3,961.42 MNCharity: ComfortOpen Door Health Center of Mankato Products: handmade coaster packs Total and 20 ozService tumblersHours: 326 hours

To learn more about Minnesota State Mankato College of Business, visit cob.mnsu.edu, “like” us at Facebook.com/COBMankato, or follow us on Twitter @COBMankato

To learn more about Minnesota State Mankato College of Business, visit cob.mnsu.edu,

Loan Amount: $4,303.00 MNSales: Comfort Gross $7,810.99 Products: handmade coaster packs Donation Amount: $4567.23 and 20 oz tumblers Charity: Partners for Affordable Housing Loan Amount: $4,303.00 Total Service 1,343 hours Gross Sales:Hours: $7,810.99

Donation Amount: $4567.23 MN Valley Business • FEBRUARY 2019 • 37 Charity: Partners for Affordable Housing

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Call 507-594-4700 to schedule an appointment. mayoclinichealthsystem.org MN Valley Business • FEBRUARY 2019 • 38