South Dakota Office of Tourism

1. South Dakota Office of Tourism

2. South Dakota Office of Tourism Budget Review • Tourism Budget History • State Level Budget Comparison • Tourism Impact on Economy

3. South Dakota Office of Tourism Budget History • 1995 - Gaming and Tourism Tax • 2005 - Million Dollar Co-op • 2007 - Million Dollar Challenge

4. South Dakota Office of Tourism Budget Review Source: TIA Survey of US State and Territory Tourism Office Budgets

5. South Dakota Office of Tourism Budget Review Source: TIA Survey of US State and Territory Tourism Office Budgets

6. South Dakota Office of Tourism Budget Review Source: TIA Survey of US State and Territory Tourism Office Budgets

7. South Dakota Office of Tourism Budget Review Source: TIA Survey of US State and Territory Tourism Office Budgets

8. South Dakota Office of Tourism Budget Review Source: TIA Survey of US State and Territory Tourism Office Budgets

9. South Dakota Office of Tourism Tourism Impact Source: 2007 Annual Report

10. South Dakota Office of Tourism Tourism Impact Source: 2007 Annual Report

11. South Dakota Office of Tourism Tourism Revenue Source: 2007 Annual Report

12. Governor’s Office of Economic Development

13. Governor’s Office of Economic Development • Board of Economic Development (BED) (REDI) • Economic Development Finance Authority (EDFA) • South Dakota Development Corporation (SDDC)

14. Board of Economic Development • Created under Statute 1-16G in 1987 • 13 member board appointed by Governor to four year terms • Administers the Revolving Economic Development and Initiative (REDI) Fund, the Value-Added Agriculture Sub Fund, and the Tourism Enhancement Program

15. Board of Economic Development

16. Revolving Economic Development & Initiative Fund • BED authorized to promulgate rules for economic development under Statute 1-16G-8 • Administrative Rules 68:02:01 were originally promulgated by BED in 1987 • Current version of Administrative Rules (68:02:01:33 to 68:02:01:55) adopted in 2007

17. Revolving Economic Development & Initiative Fund • Eligibility Criteria • Job Creation ($10.50/hr. minimum, benefits), exception for wages based on median county income • Financing for land, building, leasehold improvements, machinery and equipment • Finance up to 45% of total project costs, must have other sources identified • 10% equity contribution (of total project costs) • Interim financing required.

18. Revolving Economic Development & Initiative Fund • Loan Loss Ratio (Historical) • REDI: • = Net Charge-Offs/Total Funded Loans • = $2,624,739/$175,918,881 • = 1.49% • FDIC Insured Commercial Banks: NA

19. Revolving Economic Development & Initiative Fund • Loan Loss Ratio (FRB Defined) - as of 6/30/08 • Net charge-offs during quarter/Avg. level loans outstanding • REDI: • = $0/$42,251,904 • = 0.00% • FDIC Insured Commercial Banks: • = 1.24%

20. Revolving Economic Development & Initiative Fund

21. Value-Added Ag Sub Fund • Created under Statute 1-16G-25 in 1999 • Statute 1-16G-26 designated $3 million from the REDI Fund for purposes of the value added agriculture subfund • Statute 10-47B-154 provides $.03/gallon of claimed ag fuel tax refunds as an ongoing funding source for VASF • Statute 1-16G-27 directed BED to administer the value added agriculture subfund • Statute 1-16G-27 also directed the value added agriculture subfund (VASF) to be used to develop and promote value added agriculture in SD

22. Value-Added Ag Sub Fund • Administrative Rules 68:02:04 were originally promulgated by BED in 1999, repealed in 2007 • Current version of Administrative Rules (68:02:02:15 to 68:02:02:36) were promulgated and adopted in 2007

23. Value-Added Ag Sub Fund • Up to 45% of the total eligible costs • Minimum 10% equity required • Awarded as 0% interest loan • Repayment (if project proceeds) • Up to 20 yr amortization, 5 yr balloon • Forgiveness (if project does not proceed) • If granted, study becomes public information

24. Value-Added Ag Sub Fund • Statistics • Awarded ($) Since Inception: $3,662,951 • Awarded (#) Since Inception: 59 • Funded Since Inception: $3,008,867 • Amount Forgiven/Granted: $1,236,878

25. Tourism Enhancement Program • Formerly the value added tourism sub fund created under Statute 1-16G-29 in 2003 • Statute 1-16G-31 designated $3 million from the REDI Fund for purposes of the value added tourism subfund • Subfund repealed in 2007, program moved directly under REDI fund

26. Tourism Enhancement Program • BED promulgated Administrative Rules 68:02:04 in 2003, repealed in 2007 • Current version of Administrative Rules (68:02:03:23 to 68:02:03:44) were promulgated and adopted in 2007

27. Tourism Enhancement Program • Up to 45% of the total eligible costs • Minimum 10% equity required • Awarded as 0% interest loan • Repayment (if project proceeds) • Up to 20 yr amortization, 5 yr balloon • Forgiveness (if project does not proceed) • If granted, study becomes public information

28. Tourism Enhancement Program • Statistics • Awarded (#) Since Inception: 20 • Funded ($) Since Inception: $525,433 • Amount Forgiven/Granted: $256,474

29. Economic Development Finance Authority • Created under Statute 1-16B • 5 member board appointed by Governor to four year terms • Administers the EDFA pooled-loan bond program and the Agricultural Processing and Exporting (APEX) Fund

30. Economic Development Finance Authority

31. Pooled-Loan Bond Program • EDFA approves bond issuances to fund loans that are credit enhanced by the Capital Reserve Fund (CRF) • CRF and moral obligation backing of State enhance the credit rating of underlying borrowers to a Standard and Poor’s “A” rating • Current balance of CRF is $5mm, allowing bonding capacity of $40mm • EDFA pooled loan bond program comes under Administrative Rules 68:01:01:01 to 68:01:01:06

32. Pooled-Loan Bond Program • Eligibility Criteria • Must be for profit business, engaged in the operation of industrial processing or manufacturing • Maximum project size of $20MM (under tax exempt program) – taxable bond program does not limit the project size • Maximum bond issuance of $10MM: 80% LTV on real estate and 75% LTV on equipment

33. Pooled-Loan Bond Program

34. Agricultural Processing & Exporting Fund • EDFA approves and administers APEX loans that are funded via loans from the United State Department of Agriculture Rural Development • APEX program falls under Administrative Rules 68:01:02:01 to 68:01:02:20 • EDFA receives funding from Rural Development at 1% and lends currently at 5%, spread covers administrative costs and charge-offs

35. Agricultural Processing & Exporting Fund • Eligibility Criteria • APEX program can lend 75% of total projects up to $237,500, If: • Export a minimum of 75 percent of its product to entities outside the state of South Dakota or replace an import (1); • Provide employment opportunities for low-income persons or displaced farm families to the maximum extent practicable (2); • Use a South Dakota grown or produced agricultural product as at least 50 percent of the raw material (3); and • Locate in a municipality with a population less than 25,000, as listed according to the latest decennial census (4). • *An applicant may request a waiver of subdivision (1) or (3) by petitioning the authority. A two-thirds vote by the authority is necessary to approve a waiver.

36. Agricultural Processing & Exporting Fund • Loan Loss Ratio (Historical) • APEX: • = Net Charge-Offs/Total Funded Loans • = $117,436/$8,127,023 • = 1.45%

37. South Dakota Development Corporation • Created under Executive Order 83-12 • 25 member board appointed by Governor to three year terms, maximum of three terms. • Executive Board of 7, elected annually by full board • One year terms on Executive Board • Executive Board responsible for making credit decisions • Administers the SBA 504 loan program and the MicroLoan program

38. South Dakota Development Corporation

39. South Dakota Development Corporation

40. SBA 504 Loan • SDDC approves and administers federal loans for Small Business Administration. • SDDC is a Certified Development Corporation (required by SBA to participate in 504 program) • Program is funded by SBA issuing bonds, SBA backs the bonds • Bank lends 50% of total project, SBA/SDDC lends 30-40% and borrower injects equity of 10-20%

41. SBA 504 Loan • Eligibility Criteria • Fixed asset purchases only • For-profit businesses • Ag, Manufacturing and Service • 10-20% equity injection required • $1.5 million maximum, Public Policy $2.0 million maximum Manufacturing $4.0 million maximum

42. South Dakota MicroLOAN • Originally created in partnership with Citibank SD in 1999 • Originally Citibank provided the funding, SDDC/GOED administered program and loans • BED (via REDI loan) purchased assets (took out Citi) in 2004 to help lower interest rate provided to borrower… • REDI allocated $3mm in availability to fund SDDC approved MicroLoans • Current loans outstanding/receivables of approximately $725,000

43. South Dakota MicroLOAN • Eligibility Criteria • 50% must be provided by local bank; balance from MicroLOAN and equity as determined by local bank • Maximum loan amount of $50,000, minimum of $1,000 – total project costs not to exceed $200,000 • Net worth limitations - $500,000

44. South Dakota MicroLOAN • Loan Loss Ratio (Historical) • MicroLoan: • = Net Charge-Offs/Total Funded Loans • = $69,403/$3,335,345 • = 2.08%

46. Governor’s Office of Economic Development