Home > Banking Information & Regulation > Public Meeting Transcripts > PMT - Agendas September 17, 1998
Public Meeting Transcripts
Public Meeting Regarding Norwest Corporation and Wells Fargo & Company
Thursday, September 17, 1998
Transcript of Panel Twelve
228 15 MR. JENSEN: Thank you. Thank you for 16 allowing me to be here today. I'm here to just 17 talk about our involvement with Norwest over the 18 past 13 years with the Anoka County Economic 19 Development Partnership and the Anoka Sherburne 20 County Capital Fund. I'm the director of the 21 partnership, the Anoka County Economic 22 Development Partnership, which is a 501C3 23 nonprofit corporation that does economic 24 development work in the 21-community Anoka 25 County area. And I'm also the President of the 229 1 Anoka Sherburne County Capital Fund, which is 2 a -- which is the State of Minnesota's first 3 multibank, multiinvestor community development 4 corporation that makes investments in emerging 5 technology-based companies. 6 First, a little bit about the partnership. 7 We were formed in 1985. And I've been Director 8 since we started. Norwest has been involved 9 with us from the beginning. Dave Raider of 10 Norwest Service and our Board of Directors 11 and -- and they have also not only committed 12 their time and their expertise, but also they 13 have contributed financially to the nonprofit, 14 which is -- I'm obviously greatful for. And 15 it's something that, of course, you need that 16 capital. 17 The partnership has focused a little -- 18 they've taken a different approach to economic 19 development. And we've focused primarily on 20 emerging technology-based businesses. We don't 21 chase existing companies around as a way of 22 doing economic development, but we look at 23 working with emerging technology-based 24 businesses because they are not just moving 25 companies around. They are new jobs and, 230 1 second, that they are -- also pay the best. And 2 I think that's important to the State. 3 So we decided that we were going to -- if 4 we were going to do that, we found out that 5 entrepreneurs in emerging companies need one 6 thing more than other things, and that was they 7 needed access to capital. Access to capital for 8 the emerging companies is difficult today. Even 9 though we have record stock market activity and 10 there is a lot of dollars and the economy is 11 good, the one area that -- that there is not a 12 lot of money for is emerging companies that are 13 looking for, like, 250,000 to a million 14 dollars. The venture capitalists have so much 15 money under management that they go for the five 16 million dollar and up deals. And so they're -- 17 that's a real void, which is a problem because 18 we're also setting records these days for new 19 company startups. So with that background set, 20 we decided that we were going to create our own 21 equity fund to address that need. And so we 22 started, like I said, the multibank, 23 multiinvesting Community Development 24 Corporation. So you can imagine me walking into 25 Norwest and saying, "Have I got a deal for you. 231 1 We're going to -- we're kind of a quasi public 2 sector" -- even though we're not public sector, 3 but we have money coming in from the public 4 sector -- "economic development group. And 5 we're going to invest in high-risk dried up 6 companies." But I guess the reason I was 7 interested in talking to you today is because we 8 had selected Norwest as a bank with a large 9 presence in our area. And even though they 10 didn't grasp this right away, they did think 11 about it. And after awhile, they decided this 12 was a unique way of approaching economic 13 development. So they became our lead investor 14 and took our -- our CDC through the offices that 15 control the currency, made the initial 16 investment. And today we now have 22 investors, 17 ten of which are banks. We have NSP, 18 Minnegasco, Minnesota Power. All the major 19 utility companies are involved. The State of 20 Minnesota has made an investment in our fund. 21 And we've made 22 -- 24 investments to date. A 22 lot of those are in the Urban Initiative Fund 23 target area with our business incubator in 24 Columbia Heights. We have created well over 100 25 very high-paying jobs in this area. We have -- 232 1 and with the pro -- you know, the prognosis of 2 many hundreds more as these companies grow and 3 mature. They have also -- Norwest is our 4 largest investor. They jut made a follow-up 5 investment of $50,000. Actually, they 6 approached us on the Banking Enterprise Zone. 7 We happen to be a certified Community 8 Development Financial Institution. Muffy Gabler 9 and -- one day and said, "Hey, we've -- we got a 10 way for us to participate even in a greater 11 extent." And so they've -- they've done that. 12 So I just wanted to be here today to talk 13 about the great experiences that we've had with 14 Norwest and share those with you. 15 Thank you. 16 CHAIRPERSON SMITH: Thank you. 17 Mr. McLean, you're next. 18 19 MR. McLEAN: Excuse me. My name is 20 Warren McLean, and I am the President and CEO of 21 the Metropolitan Economic Development 22 Association. 23 First of all, I want to say thank you for 24 giving me the opportunity to testify at this 25 public meeting about MEDAs relationship with 233 1 Norwest Corporation. For the benefit of the 2 committee, MEDA is a private nonprofit minority 3 business development organization. We provide 4 small business consulting, financing and sales 5 development services to nearly 600 minority 6 entrepreneurs each year. We have been in 7 operation for nearly 27 years. For the record, 8 MEDA's relationship with Norwest has been 9 outstanding. First, Norwest Corporation and its 10 CEO at the time, Phil Harris, was one of four 11 executives who helped start MEDA 27 years ago. 12 An original founder and funder, Norwest remains 13 a leading contributor to MEDA, having 14 contributed over $667,000 in operating funds 15 alone since 1971. In 1989 MEDA spun off a 16 minority venture capital fund called Milestone 17 Growth Fund. Norwest helped capitalize the fund 18 by providing $200,000 in capital. In addition, 19 I consulted regularly with Norwest Venture 20 Capital staff for help in designing, developing 21 and implementing the fund. Norwest Venture 22 Capital President, Dan Haggerty, was one of 23 Milestone Growth Fund's original board members. 24 Further, in 1995 MEDA established a MEDA 25 loan program. It's a 5.3 million dollar working 234 1 capital fund for minority-owned businesses. The 2 fund is a collaboration of six banks, the 3 McKnight Foundation and the State of Minnesota. 4 The banks comprise a consortium. And together 5 they agreed to provide 3.3 million dollars in 6 loanable funds. And Norwest Corporation was one 7 of two banks that agreed to provide one million 8 dollars of that loan fund. Moreover, Wally 9 Drogenmueller, who is Norwest's Vice President 10 and Deputy -- Deputy Senior Credit Officer, took 11 the lead in determining the mechanics of the 12 program. Wally developed the overall lending 13 criteria. He also reviewed and tested the 14 various lending scenarios. Wally crafted a 15 design that was acceptable to all six banks. 16 And for Wally's efforts, he was selected MEDA 17 volunteer of the year. 18 To Norwest Corporation's credit, they have 19 remained vigorous supporters of the program. 20 Either Tom Burke, Terri Banizuski or Lori Powell 21 have attended all the credit committee meetings 22 since the program's inception in 1995. And they 23 meet monthly. They also close and personally 24 administrate each Norwest consortium loan. 25 In 1996 MEDA launched a Vision 2000, which 235 1 is a major expansion of our services. To 2 achieve this expansion, we asked several of our 3 funders to double their financial support. And 4 Norwest Corporation was the first to literally 5 double its support, which they did that very 6 year. Norwest Corporation has also funded and 7 provided training to MEDA clients. Jeff Judy, 8 one of Norwest's top internal trainers, has 9 conducted training sessions for MEDA clients on 10 several occasions. Jerry Gray, who was our 11 Norwest Executive Vice President, continues a 12 long tradition of proactive board leadership on 13 the MEDA board. And he recently proposed a 10 14 million dollar expansion to the MEDA loan 15 program. 16 Finally, Norwest Chairman and CEO, Dick 17 Cobosovich, is a member of the MEDA Advisory 18 Board. And he was the keynote speaker at MEDA's 19 1997 annual meeting. And he's hosted a few MEDA 20 client lunches. 21 This concludes my remarks. And again, I 22 thank you for the opportunity to provide 23 testimony. 24 CHAIRPERSON SMITH: Thank you very 25 much. 236 1 Mr. Milburn? 2 3 4 MR. MILBURN: I have handouts, so you 5 can't hit that button yet because my speech is 6 exactly five minutes long. But if I could pass 7 these around for the group. Thank you. 8 Now, my name is Curt Milburn, and I'm the 9 Project Director of the Phalen Corridor 10 Initiative. I'm also the Executive Director of 11 the East Side Area Business Association in 12 St. Paul, Minnesota. 13 It makes good -- good sense -- good 14 business sense and common sense to help rebuild 15 the inner city. And Norwest Bank, through its 16 house and lending programs, continues to 17 contribute to the urban revitalization of 18 St. Paul. But I think that's a story best told 19 by some of these gentlemen, some other folks. I 20 feel compelled today to give you some background 21 about the community where I work and Norwest 22 Bank's participation with that community. 23 The East Side of St. Paul, once a 24 manufacturing powerhouse, has lost 2,500 jobs in 25 the last 30 years. There are areas of the East 237 1 Side with as high as 17 percent unemployment. 2 Since the 1970's companies like Whirlpool closed 3 plants, throwing hundreds of people out of 4 work. Just last year, Stroh Brewery and Can & 5 Conveyor closed their -- closed their doors with 6 a loss of 500 additional jobs. 7 There has been a number of dreams to 8 redevelop this community, but it wasn't until 9 the City Parks Department brought together 10 business and community members to give input on 11 a proposed bike path that a spark took hold. 12 The community responded with envisioning much 13 more than a bikeway. Craig Johnson, the Branch 14 Manager of two Norwest Banks on the East Side, 15 volunteered to chair a comprehensive initiative, 16 the likes of which -- which had never been tried 17 in the City of St. Paul. 18 I turn your attention to the first article 19 inside the sleeve, which is about Craig Johnson 20 from the "East Side Review." Craig was raised 21 on the East Side and remembered it as a place of 22 opportunity, not a place of despair. The Phalen 23 Corridor Initiative is about reclaiming polluted 24 lands called brown fields to attract 25 manufacturing companies. It's about workforce 238 1 development striving to get East Siders in the 2 jobs we attract. It's about green space. It 3 has the nation's first project that's taking an 4 abandoned shopping center and turning it back 5 into the wetland that it once was. It's also 6 about building a road to get access to these 7 community assets. 8 And I turn your attention to the "City 9 Business" article as well as the sleeve, which 10 is the "PCI Today," that gives you some general 11 background about our project. 12 On his own time, Craig led the initiative, 13 even flying to Washington to secure funding from 14 the federal government to begin construction of 15 this road. But Norwest is not just one banker. 16 The East Side is changing, and our initiative 17 reflects those changes. When Craig was promoted 18 to a new position, Norwest had the foresight to 19 replace him with the first Hmong banker in the 20 country. 21 And I turn your attention to an article in 22 there as well on Kou Vang. 23 Kou Vang is the first Hmong branch manager 24 and bank vice president in the United States. 25 The cash machine at his bank reads in English 239 1 and in Hmong, probably the only one in the 2 country. A visit to that bank is like visiting 3 the world. African Americans, Latino, Hmong and 4 Whites are not only customers, but they are 5 employees as well. I'm proud to report that Kou 6 has been recently made the Vice Chair of the 7 Phalen Corridor Initiative, a position that 8 leads directly to the position of chair of the 9 project. 10 It's not just on the neighborhood level 11 that Norwest has integrated itself with the 12 community, either. Norwest has backed us with 13 this commitment with joining nine other 14 community funders to support the initiative. 15 Also, Larry Hague, a media relations expert with 16 the bank, has provided three separate media 17 trainings for us. 18 Now, you folks should remember the Phalen 19 Corridor Initiative is about community members, 20 local business people, residents, local 21 officials, not slick PR professionals. Most of 22 us had rarely talked to a news person, 23 nonetheless been confronted with the lens of a 24 television camera. Larry helped us communicate 25 our vision. And that's a vision that has 240 1 captured the imagination of national and local 2 leaders. 3 Joan Germinski, President and District 4 Manager of Norwest, sits on what we call our 5 advisory committee. Along with our Mayor, 6 Congressmen and others, Joan helps chart our 7 course, strongly stressing the use of Norwest 8 programs for inner city residents. 9 Another community leader is Pat Donovan. 10 Mr. Donovan is the Norwest Regional President. 11 And he acted as co-chair of the Citywide 12 Community Development Agenda. Pat helped devise 13 the blueprint of how a city can compassionately 14 build its members and its institutions. 15 Mr. Donovan continues to honor us and the 16 employees of Norwest who works with -- who work 17 with us by citing the Phalen Corridor as 18 St. Paul's best example of comprehensive 19 community development. Without the commitment 20 of Norwest Bank and its employees, we would not 21 have the success we have today. Our wetland 22 project is underway. It's actually being 23 built. Our first industrial park has three 24 confirmed tenants, bringing hundreds of jobs to 25 the East Side. And the first funding for our 241 1 roadway is in place. Without the contribution 2 of Norwest Bank in the future, I fear we may not 3 realize our vision of rebuilding the East Side. 4 We have been assured that their commitment will 5 continue. And we've never been misled by this 6 institution or its dedicated employees. 7 I thank you for this opportunity to talk 8 about one of our community partners. And I'm 9 free to answer any questions you might have. 10 Thank you. 11 CHAIRPERSON SMITH: Thank you 12 Mr. Shreffler? 13 14 MR. SHREFFLER: Very good. Thanks. 15 I, too, appreciate the opportunity to speak with 16 you. I also appreciate that there's this 17 process that allows for community input. As -- 18 as a member -- or as a part of Northeast 19 Minnesota and living in the Duluth area, I 20 really want to stress that the community 21 involvement really depends on leadership of 22 large agencies and organizations like Norwest 23 Bank to make that community happen. My 24 experience with Norwest is why I'm here. I want 25 to share that with you briefly. The LSS Loan 242 1 Fund is a loan fund that was created eight years 2 ago. We loan money to low-income families to 3 purchase vehicles or repair vehicles so they can 4 go to work, continue work and kind of maintain 5 that family stability, really, is the essence of 6 it. Self-sufficiency, family stability is what 7 we're about. We partnered with Norwest Bank 8 eight years ago. It was a unique partnership. 9 No one else that we knew of in the country was 10 doing anything like that. They joined with us 11 to loan money to low-income families to get them 12 to work. In eight years, we've loaned 1.4 13 million dollars to a little -- a little over 800 14 families in the northeast region of Minnesota. 15 Norwest was instrumental in creating the process 16 that we're able to use to loan money to people. 17 The -- five years ago, the loan fund went 18 statewide. The McKnight Foundation supported 19 the loan funds and expanded the concept of the 20 loan funds to a statewide program. The Twin 21 Cities had programs that did not use banks. 22 Northeast Minnesota was the first to use a bank 23 involvement -- Norwest's involvement. And then 24 when they went statewide, McKnight said, "We 25 want the bank process to be a part of that 243 1 initiative. So five years ago three other 2 Norwest Banks in the state, southeast, southwest 3 and then west central, got involved in the loan 4 fund, as well, and are -- are currently joining 5 or partnering, as we do with -- as Norwest does 6 in northeast Minnesota, they also do throughout 7 those other three areas of the state. So almost 8 half the state is covered by Norwest's 9 involvement in these loan funds. 10 The other thing that happened about three 11 years ago is that the Family Service America and 12 the McKnight Foundation went nationwide with the 13 loan fund program. One of the things that they 14 stressed was the involvement of the bank in that 15 partnership process so that the banks can do 16 what they do best and that social service 17 agencies can do what they do best. And, really, 18 that's loaning money to people to get them back 19 to work. That program has gone nationwide. 20 It's in ten cities now. It will be in 20 cities 21 as soon as those programs are up and running. 22 What I'm -- my intent and what I'm 23 stressing, really, is that the -- what was 24 created in northeast Minnesota eight years ago 25 has become a model for what banks can do in 244 1 relationship to social service and low-income 2 needs. And Norwest in northeast Minnesota took 3 the initiative, got involved. And now it's 4 expanded as a model that's been spread out 5 throughout the nation. 6 So I do expect that with the merger with 7 Wells Fargo, it will help us to move that 8 mission forward and will not hinder us. It will 9 open doors for us. It won't close them. And I 10 certainly expect our relationship in northeast 11 Minnesota to continue to be as strong as it's 12 been. 13 So thank you.
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