MINOT, N.D. (KXNET) — In 1990, the voters in Minot approved a portion of the 1% city sales tax for use in economic and industrial development.

The funds accumulated for this purpose are called the Minot Area Growth by Investment and Cooperation, or as many know it now: the Magic Fund. Through the years, the Magic Fund has helped grow the city of Minot.

But recently, there has been controversy about how and to who the money is allocated. The primary purpose of the Magic Fund is to create new jobs, save existing jobs, expand the local tax base, increase capital investment, and generally expand the primary sector financial base of the area.

“It’s a tool. We compete across the board with communities not only in North Dakota but across the United States. And we need these economic development tools. And ultimately, if we do our jobs, we’re increasing the tax base which also helps with property tax relief and some of the things that really matter,” said Brekka Kramer, the president and CEO of Minot Area Chamber EDC.

The approval process starts with board members of the Minot Chamber EDC. If the board decides the application does not meet Magic Fund requirements, the request stops there. If the board does approve the application, it then is passed to the Magic Fund Screening Committee, which is appointed by the mayor and confirmed by the City Council. If the Committee recommends approval of the application, it then moves to City Council for a final say.

“So there’s really kind of three steps in the process to move forward. And it really is ensuring that everyone is being fiscally responsible. That we are doing our due diligence to ensure that it’s meeting the intent of what the guidelines are set out to do,” said Kramer.

But recently, that intent has been deemed controversial with taxpayers, stating funding has gone to businesses that have a conflict of interest with the Magic Fund. Which sparked a revision of the Magic Fund Guidelines.

“What we tried to do is organize it so it’s really clear to any applicant that uses of the Magic Fund must support one or more of the following goals: create new jobs, save existing jobs, expand the local tax base, increase capital investment, improve the entrepreneurial climate of the region, and enhance workforce solutions,” Kramer explained.

The guidelines are split into three different tiers. The primary sector is the heavy-hitting businesses that would need millions of dollars allocated to them. The next tier down is the state of North Dakota programs whose funding maxes out at $260,000 per application. The third tier is for small businesses, which ties into the flex pay program and serves as a loan, not a grant.

Another revision is any person that sits on a magic fund committee or board and has a tie or relationship with a business applying for magic fund money, will not receive a vote in the three-step approval process, to avoid any sort of conflict of interest.

Kramer said, “We carefully and through the updates that we’ve made, were very clear in full transparency if there is any tie. But one of the things we updated here is the language around how we all disclose any connections to any business. And I think that’s the other part too is, Minot still is a small town and so we want to follow our conflict-of-interest guidelines and are fully transparent even if there isn’t a direct connection, making sure that we follow our guidelines and our policies and are very clear there.”

These revisions are set to ensure a clear understanding for applicants and for taxpayers who contribute to the fund.

“The biggest takeaway from it, is I hope that all people take time to understand what the tools are. And if you look back at the history of the magic fund. It really was established in the 90s to support economic development and still today, that’s what its intent is,” said Kramer.

All entities hope that this fund not only helps our city grow but also secures the economy for our local businesses.