Niles Turning the Corner: The Gallery, A Twenty-First Century Partnership

Community: City of Niles
Population: 10,000+

sisA declining industrial manufacturing base over the past three decades has left Niles, MI struggling to find a new identity.  Among the new industries we are trying to attract are knowledge-based companies.  After researching mechanisms that would support the growth of the knowledge-based industry, we concluded that the availability of a true gigabit internet with fiber to the business/home would be a key attractor for the industry.  Niles invested in constructing a dark fiber system, in key areas of the city, which was then leased to a regional high-speed internet provider.  This in turn helped draw UltraCamp, a millennial software developer, to Niles.  Together the DDA/Niles Main Street and the City worked to help UltraCamp acquire, fund, and remodel a historically significant downtown building.  To date, UltraCamp has brought 15 new jobs to downtown and their $1.2 million investment has significantly impacted property values and interest in our downtown.


Replicability:

In recent years, fiber has become increasingly affordable to construct, especially for small communities.  However when we began discussing fiber options, we were faced with strong resistance from internet providers to construct new and/or upgrade existing infrastructure.  In the face of adversity, the City took a leap of faith, believing that if we built a robust fiber backbone, new internet providers would be interested in and seek out Niles to deliver their services. UltraCamp’s corporate facility needs exceeded currently comparable property values, therefore they could not find affordable financing for the project.  The DDA/Niles Main Street and the City of Niles worked with UltraCamp to think out of the box and to secure alternative financing for their project.  At the time, the City owned a downtown building large enough to meet UltraCamp’s needs and UltraCamp owned a large, vacant parcel in Niles that has the potential to garner new construction.  The City and UltraCamp traded properties; the City provided local Revolving Loan Funding, the DDA/Main Street helped UltraCamp secure State and Local grants as well as State Historic Tax Credits, and UltraCamp infused the project with corporate capital. Together, the entities all worked to secure the funding needed to allow UltraCamp to complete a $1.2 million revitalization of a key downtown building. The availability of the centralized fiber network has been encouraging to UltraCamp as they work to grow and relocate their corporate headquarters to downtown Niles, MI.

Creativity and Originality:

In addition to supporting private tech companies, like UltraCamp, the fiber project has allowed the City to connect all municipal buildings. This constant connection allows all City facilities to share VOIP phone services; server backups at multiple locations; employee access to the network which provides a robust continuity of information, and overall information system costs are reduced. The dark fiber that was part of this project is now leased to Midwest Connections (a consumer-owned internet provider and a subsidiary of Midwest Energy).  Midwest Connections provides fiber direct to the router in your home or business and supplies a variety of bandwidths - from a few megabits to a gigabit - with plans to exceed gigabit in the near future.   This fiber project, along with Midwest Connections’ bandwidth, has spurred renewed interest in our industrial park and knowledge-based businesses have been inquiring about available space in our downtown. The UltraCamp project has been a major turning point for downtown Niles.  After decades of disinvestment, stagnate property values, and the great recession; it became nearly impossible to obtain financing for the purchase of property and/or revitalization of commercial spaces in Niles.  UltraCamp saw the value of a key, historically significant, corner property in downtown Niles and were willing to work with and through the DDA/Niles Main Street and the City of Niles to identify alternative financing options.  Ultra-Camp was willing to risk their own capital with the belief that they could help Niles turn the corner in this new market. Because of UltraCamp’s investment, many new conversations about what is possible in the downtown have begun taking place.  There is renewed developer interest in acquiring property and UltraCamp’s investment is changing how banks view investment in our downtown.

Community Impact:

We believed that having powerful internet access and bandwidth readily available would help Niles attract new businesses.  For two years we made requests of national, regional, and local internet providers to upgrade their infrastructure, expand their coverage area, and increase their bandwidth.  Time after time, we were told that these firms were unwilling to make a capital investment in Niles.  This resistance to capital investment led the City of Niles to build a dark fiber network, through the city, even though we didn’t have a provider.  We believed that if the fiber was built and readily available then providers would seek out the community.  The City made a $100,000 investment in the engineering and construction of dark fiber and almost immediately we started receiving interest from internet providers wanting to lease the fiber.  The City reached an agreement to lease the dark fiber to Midwest Connections who is now responsible for the final fiber connection from the pole to the business/home. During this time, a historically significant corner property in downtown Niles became available at the county tax sale.  The City purchased this property for $21,000 and partnered with the DDA/Niles Main Street to hold the building until a quality development project came along.  The building had a substantial roofing issue and a local foundation granted the City $40,000 to repair the roof and secure the building from further damage.  When UltraCamp reached a financing impasse they were shown this property.  The owner saw a great deal of potential in the property and wanted it for their headquarters.  To help UltraCamp reach their financial goals the City agreed to switch properties with UltraCamp with no money changing hands.  The UltraCamp property was adjacent to a City park and would make a lovely enhancement to the park. In turn, the City’s property would give UltraCamp a solid starting point for their project.  While this was helpful with meeting UltraCamp’s needs, it was still not enough to meet the collateral needs of the banks. UltraCamp was still unable to garner financing for their project due to low property value comparisons and banks’ unwillingness to support the workspace concepts of a modern tech firm here in the Midwest. Unless we were able to find a creative financing solution, UltraCamp would not be able to locate in Niles. With limited experience and a common need to understand, this led the City of Niles, the DDA/Main Street, and UltraCamp to explore funding options.  The City of Niles provided UltraCamp with a $60,000 loan from the City’s Revolving Loan Fund, the DDA/Main Street provided a $59,000 façade grant, MEDC provided a Community Reinvestment Grant of $210,501, and the building qualified for Historic Tax Credits.  Through these creative funding lines, UltraCamp was now in a position to make a total investment of $1.2 million in downtown Niles. These turn of events and the availability of a fiber network, lead to UltraCamp’s selection of Niles for their corporate headquarters. UltraCamp’s President, Daniel Ashley, has worked to install a creative, work/play environment for the UltraCamp tech team. With office amenities that include treadmill desks, shared open office space, a rock climbing wall, ball pit and hammocks, staff are able to tap into the creativity necessary to grow UltraCamp’s business.

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Niles Turning the Corner MML application #4 Niles Turning the Corner MML application #2