Entrepreneurs. Must possess strong desire to expand or launch a profitable light-industrial or hi-tech business in a low-crime, historic, cultural city. Many new financial-incentive programs available for serious, qualifying applicants. enjoy red-carpet treatment, not red tape.

If various agencies affiliated with St. Paul were to create a newspaper ad for their 1990s approach to strengthen the city's economy, it might look like the one above.

Some officials in St. Paul might also laconically comment about the city's economy--as Mark Twain once did about himself--that recent reports of its death have been greatly exaggerated.

It's true that St. Paul has struggled in recent years. Big-playing media stories, such as mega-employer West Publishing's move out of St. Paul to Eagan, have hurt. The city's downtown continues to struggle to find its share of the Twin Cities' entertainment dollars. In addition, the St. Paul Port Authority, responsible for providing many St. Paul businesses with financing through industrial development bond issues, has struggled with a double-B rating on its oldest bond portfolio

recently. (Under the Standard & Poor rating service, which the Port Authority uses, anything under a triple-B rating is considered a "junk bond," and seen as a high-risk issue. That has hampered the Port Authority's ability to deliver low-cost financing. According to communications director Mike Strand, the Port Authority could still go to the capital markets to find funding, but because of the poor rating on its portfolio, the money would cost too much to make it a first or second-choice for most business owners.)

St. Paul, like many U.S. cities, is now coming to terms with the Roaring Eighties, a period characterized by a commercial real-estate boom and fast bank loans. But those involved in city planning and fostering economic stability in the capital say they've seen the light, and realized that economic stability rests not in the hands of industrial giants, but in the hands of entrepreneurs.

Economic-development officials say whatever business owners interested in examining St. Paul want--whether it be one-on-one business advice, financing to by land, or just a "contact person" they can call for help in guiding them through the system--St. Paul is prepared to deliver.

"It used to be in vogue in the '70s and '80s to go shopping outside of the state--elephant hunting," for big business to bring home, explains Ken Johnson, president of the St. Paul Port Authority. "We don't do that at all anymore."

"Places that have begged for [something like a] Volkswegen plant and other large-ticket-item [plants] have found themselves putting up so much in subsidies to get them, it's years and years before there's a recovery and a genuine blacking on the top of the ledger," he notes.

Those involved in planning for St. Paul's financial health say with one voice that by giving local businesses incentives to more easily, quickly and cheaply expand, the city will realize a better yield than by putting a commensurate amount of effort in trying to hunt down that "one big elephant."

Take the Port Authority as one example of some of the new thinking officials are trying to institutionalize in St. Paul.

The Port Authority specializes in the acquisition, development and marketing of industrial land. Like most asset-based lenders, it has seen its share of painful defaults in projects. However, Johnson says those stemmed mainly from office and retail projects developed in the mid-1980s.

"That was the period in which all of the lenders were doing what we would call nonrecourse, developer-driven deals," Johnson says. Defaults on such projects have caused problems in some of the Port's bond portfolio, he acknowledges, and the agency will be approaching the rating agencies this spring and summer to make a case to upgrade the ranking of its bonds.

"We have some ideas about how to restructure the underlying financing of one of our principle lending vehicles, which is called the Common Bond Fund," Johnson says. "And if we do that, we believe we have a strong case to make to the rating agencies--that the credit rating of that fund should be upgraded." In general, the higher the credit rating, the easier the access to capital a lender has. Credit ratings also affect the cost of borrowing. "So for that reason too we want to increase our credit rating because it would be good for our borrowers," Johnson says.

Another thing that would be good, both for the city and for business owners considering St. Paul, would be for the two groups to find ways to use some of the city's vacant office space.

Lisa Clemens, director of St. Paul's Economic Development Department notes that because of the 1980s commercial real-estate boom,

a 10-year supply of office space exists in virtually every major U.S. city. "We're all learning from the 1980s, and we're putting a much greater emphasis on helping business grow. We are not emphasizing how many cranes we can get on the skyline," she says.

As evidence of the increasing determination in St. Paul to attract, retain and launch small and medium-sized businesses, four organizations there have pooled $100,000 to launch an innovative program. The organizations plan to hire a specific person who will network with business owners, provide them information on St. Paul buildings, answer phone calls from business owners interested in relocating to St. Paul and follow up on calls the city receives regarding its environment for business. Business owners who inquire would receive such statistical data on St. Paul buildings as amenities, square feet available and parking.

A stated goal of the newly funded program is to reduce the vacancy rate in St. Paul office buildings, which stood at 20.88 percent in the first quarter of 1992, according to Bill Buth, executive director of the St. Paul Association of Building Owners and Managers. The vacancy rates, which his organization compiles quarterly, are based on leasable space in Class A, B, and C office buildings of at least 20,000 square feet, and do not include governmental buildings. In addition to BOMA, the other organizations involved are Metro East Development Partnership; the Planning and Economic Development Department of St. Paul; and the St. Paul Port Authority.

"In order to fill the buildings, people have got to be creative, and that's what we're trying to do in St. Paul," Buth remarks. "We want to make sure that the potential tenant company that makes contact with the greater area of the city of St. Paul has been handled and courted-- rather than [taking] a quick drive through and then [choosing] a location other than the city of St. Paul."

This redirected emphasis in St. Paul--to retain, attract and launch smaller businesses--brings opportunities through various programs,

many of which are new, for both local and out-of-state entrepreneurs.

Metro East Development Partnership, for example, started several months ago to market its new Entrepreneurial Consulting Program, which provides guidance for start-up, developing and emerging businesses. Metro East has about 100 members, and is made up of accountants, attorneys, brokers, city officials, contractors, developers and manufacturers--in short, anyone with a stake in the future of the city and surrounding area. Under this new pilot consulting program, various Metro East members have volunteered a dedicated number of hours to consult with businesses. The St. Paul law firm of Doherty, Rumble & Butler, for instance, has donated a block of hours to the program, as has Marquette Bank and the accounting firm of Peat Marwick Main & Co.

For entrepreneurs who need to write a business plan or, say, take a company public, the program provides advice at virtually no cost. Areas of advice cover accounting, administration, business planning, design/engineering, environmental issues, financing, legal issues, labor and training, manufacturing/production, marketing, regulations, real estate and research.

In March, Metro East accepted its first client under the program, and plans call for working with four more businesses this year. At the end of 1992, Metro East members will review the program to determine if it should continue as is or expand.

Another commitment to nurturing growing businesses in the St. Paul area is seen in a program in place there since the mid-1980s. For the past few years, the EDD has operated a novel "incubator" program in which small and emerging businesses can lease space at below-market rates in a Midway St. Paul facility near Raymond and University Avenues. Most businesses that use this program leave the facility after two years, when their cash flow has stabilized.

Money is available through the EDD also. A new EDD program invests in small, profitable exporting businesses that have excellent growth potential. The $1 million Strategic Investment Fund supplies incentive financing to for-profit businesses that are not currently operating in St. Paul. Businesses are required to use the money for capital improvements or fixed assets.

The EDD has only made one loan so far under

the new program, but it has several offers out to other companies. The first loan, of $140,000, went to Computer Petroleum Corp., a company that had operated for 10 years in Woodbury, but moved to the World Trade Center in St. Paul in mid-March.

Computer Petroleum Corp. is an on-line data-base firm that supplies petroleum price information and news and analysis to the oil industry. The company, which went public

last May, has been growing at a rate of about 15 percent a year during the last five years, with the exceptions of 1991, which was a comparatively flat year in the oil industry. It has sales of about $3 million.

Computer Petroleum wanted to move into a Class A building. The stature of that type of

setting is something Comuter Petroleum's clients--including staff members of the top 50 oil companies--would expect of such a firm.

"The city, through the incentive package, was able to take rent here at the World Trade Center on a net basis down to a comparable level at other office facilities in the Twin Cities," says Computer Petroleum with a Bloomington location.

"They [Computer Petroleum] came back to us and said 'the cost is much greater in downtown for reasons of property taxes and the cost of parking.' So, we just sat down with them and said, 'how can we make this happen?'" says Brookfield Development's George Donovan, office leasing manager for the World Trade Center.

Brookfield supplied Computer Petroleum with a list of parking ramps in St. Paul, and pointed out that it would probably be able to cut a deal with a ramp because of the 40 cars that its employees would park daily. "And the ramps are very amicable to that type of set up, because they know that the buildings have to fill up," says Donovan. "If our buildings fill up, it's just that many more cars that are going to be parking in the ramps."

The company, which also looked at locations in Bloomington and the outskirts of downtown Minneapolis, wanted to stay within 17 miles of its former Woodbury location so that the commute for its employees would be manageable. It now occupies 7,300 square feet of the World Trade Center. "We had all but made the decision for a suburban location," Leonard says, until the city provided incentives for the company to move to downtown St. Paul. "We can now put on our informational materials, '510 World Trade Center.' That has a lot of connotations of prestige and also of knowledge and access to the international environment," he says.

Under terms of the six-year loan from EDD, if Computer Petroleum maintains its current workforce of 35 employees, payment due at the end of each respective year will be forgiven. The company used the loan to build out its space in the World Trade Center.

For a company to qualify for the same kind of loan that Computer Petroleum received, it must meet certain criteria. An eligible business must be for-profit, currently located outside of St. Paul, have a track record of profitability during the past two years and either purchase or lease space for a minimum of five years in St. Paul.

In addition, the farther away a company is form St. Paul, the higher the level of assistance it would be qualified to receive. "So," Clemens explains, "this is not set up to raid our neighbors." Companies are also evaluated on their degree of local ownership, growth potential, exports and productivity.

"We've really never had a tool specifically for what I would call business-recruitment purposes," remarks Clemens, and so this special fund is a new development for the EDD. For years, EDD has been providing long-term, fixed-rate, second-mortgage financing on fixed assets for small businesses under SPEDCO, a certified development company overseen by a board of bankers, city-council members, small-business people and citizens. "But we are placing a much greater emphasis on it here in our department than we have in past years," Clemens says.

The EDD is now aggressively marketing this financing program.

"Our best leads are banks with respect to finding good businesses that need expantion capital," Clemens says. During the next three to six months, her department will have

contacted 99 banks. This program is especially attractive to entrepreneurs because banks today are even reticent to lend at a rate of 75 percent the value of, say, a company's machinery, equipment, accounts receivable or real estate. "But if [EDD is] coming in, and maybe doing 40 percent of the loan on a second-mortgage basis, all of a sudden, the bank is making that loan at 40 or 50 percent value," Clemens says. "And there is a lot more appetite in the conventional lending world if they can get that kind of collateral cushion."

The banking industry has undergone significant changes, especially in the last four years. So "providing 30-year fixed-rate mortgages for real estate is not a service that the bank is going to be in anymore," says Johnson of the Port Authority. "We are very much in that business." The Port Authority, a community-development bank and real-estate agency, is able to provide better terms than a private lender, primarily because the funding it offers is tax-exempt financing.

"Our role in lending is to make the difference between a deal going forward and a deal not going forward," Johnson says. "If the business is planning to expand and build a home for its business, we will finance that home and do it in a

way that the business is able to realize the maximum amount of building for the minimum amount of debt-service cost."

Case in point: Addco, a diversified manufacturing company that has been a St. Paul company since its founding in 1953. In 1987, Addco was on the verge of relocating and expanding on a six-acre parcel of land it owned in White Bear Lake. But the Port Authority approached Addco about an old railroad yard in the Empire Park that it was attempting to turn into taxable land. The financial incentives the Port Authority offered Addco triggered the company to stay in the capital.

"We were able to get a 30-year [mortgage], very-low-down, cash-up-front money to build our building," says Addco president Tim Nicholson. "We got a good interest rate instead of paying two or three percent higher than if we would have gone to the bank," he says. Addco is a family owned business, started by Nicholson's father. Now Tim and two brothers run it: Jeff is executive vice-president of sales and marketing, and John is executive vice-president of engineering. In 1986, the company had revenues of about $4 million; projections for 1992 are about $20 million.

The Port Authority loaned Addco about $850,000 to buy the land and construct its building. The only drawback to the deal was that the Port would only sell Addco the amount of land that it would immediately build upon,

according to Tim Nicholson. But the company, which has sprouted from 30 employees in 1987 to 85 today, can only expand about 30 percent more in its Empire Park site before it will need to expand in another location. Addco has grown between 30 and 40 percent each year, with the exception of 1991, when it experienced a growth rate of between 15 and 20 percent, according to Jeff Nicholson.

Addco is divided into several endeavors. The company started as a distributor of industrial diesel engines, and it maintains that division, selling engines, parts and services for four different engine lines. Another Addco division manufactures electronic controls that are used on

road-construction, marine and farm equipment to throttle engines, shift transmissions and hydraulic pumps. Addco also manufactures electronic message signs that are sold to state-highway departments. Those signs give motorists information on traffic conditions. In addition, Addco manufactures a device that picks up and sets down the orange traffic cones on highways used to veer traffic away from construction areas, offering highway workers increased safety. (Before its invention, highway workers rode on the back of a truck, dropping and picking up cones manually. Using this invention, the worker wears a seat belt and feeds the cones to the device or removes cones from it.)

Nicholson says he is pleased that Addco remained in St. Paul, partly because the site is centrally located for employees. The Empire Builder Industrial Park is near two freeways, I-94 and I-35E, which makes commuting convenient. In addition, the park is 12 minutes from the Minneapolis St. Paul International Airport.

Financial incentives offered by the Port Authority appear to be attracting out-of-town companies as well.

Minnesota Wire & Cable Co, for example, moved from Minneapolis to St. Paul in 1990 after buying a repossessed building developed by the Port and after securing a $100,000 loan from the agency to finance some equipment. The company, founded in 1972, manufactures wire and cable products. About 80 percent of its products--such as cables for hearing aids, endoscopic procedures and diagnostic equipment--are sold to the medical industry. Its manufacturing plant is in Eau Claire, Wis., where 50 of its 150 employees work.

Fred Wagner, president of Minnesota Wire & Cable, says the company's long time Minneapolis home had grown too tight for the growing business. The company, which nets about $6 million in annual revenues, needed to construct a parking lot in order to stay in Minneapolis, but that was impossible because its building was in a residential neighborhood.

the company, which has experienced a 20-percent increase in revenues in each of the last four years (except for a "flat year" in 1991), conducted a meticulous site search in Minneapolis and even contacted architects about constructing a new building.

"We really did spend a lot of time picking out

a site," says Wagner, "and we wanted it to be the last one for about 25 years."

That meticulous search led the company to the 182-acre Energy Park on Energy Park Drive between Lexington and Snelling Avenues. Established in 1980, Energy Park

is one of the Port Authority's 11 industrial parks. Johnson of the Port authority says that all of the parks are full--except for one of the more recently developed ones, the 65-acre Empire Builder Industrial Park, which has only two parcels left.

The tight occupancy rates at the industrial parks have led to considerations for building new ones. The Port Authority is currently working with the St. Paul Planning and Economic Development Department to identify potential sites for industrial parks. So far, the two agencies have identified two high-priority sites

and about six secondary-priority sites. The city council will review those choices soon, Johnson says.

"When that is concluded, then we'll have two sites that we can put together financing and marketing plans for," Johnson says. He hopes that, barring unforeseen problems, financing plans for the two sites could be in place in five to six months. While the addresses of those sites are not public, one is in the West Seventh Street area, and the other is in the north end of St. Paul. One is 28 acres; and the other is 36.

The Port Authority's typical customers are small or medium-sized businesses that have existed in the metropolitan area, have done well and are ready to expand. "Typically they have been leasing and have grown to the point where they need homes of their own that they can design to fit their needs," Johnson says.

Few industrial businesses have defaulted on Port Authority loans. In fact, such companies thrive in St. Paul, Johnson says, partly because St. Paul has traditionally been an industrial and manufacturing town. "Our workforce is skilled in those areas, our residents have come to terms with nonresidential uses of the community; it's not

a new thing here," Johnson says. "So the environment here is very conducive to commercial and industrial development."

Of St. Paul's residents, 47 percent work in managerial, professional, technical, administrative or sales jobs, according to the 1991 Saint Paul/Minneapolis Scarborough Report. In addition, 70 percent of household incomes are $30,000 or more; 29 percent of the residents are college graduates; 56 percent are between the ages of 25 and 49; 67 percent of the residents own homes; and 29 percent

of the homes are valued at $100,000 or more.

Convenient transportation systems are also a plus for businesses considering relocating to St. Paul, agencies say. The Minneapolis/St. Paul International Airport is a 10-minute drive from downtown St. Paul, as is Holman Field, an

airport designed for corporate and private planes. Two freeways, I-94 and I-35E, both of which pass through downtown St. Paul, provide employees access to all directions in the metro area. "The rail links are excellent here as well," Johnson says.

Johnson and other agency heads are spreading the word about such amenities, as well as programs available for entrepreneurs in the city,

because they believe St. Paul's future is dependent upon them. Says Clemens: "Small businesses are the job generators of tomorrow, and as a city, we are trying to take on a new attitude and put it toward a force of helping business owners expand."