Table of Contents Introduction ................................................................................................................................. iv Structure & Budget ...................................................................................................................... vi By the Numbers ......................................................................................................................... vii Faces of Economic Development ................................................................................................. ix Administration Division ................................................................................................................. 1 Agriculture Products Development Division ................................................................................... 4 Business Development Division ................................................................................................... 10 Community Development Division ............................................................................................... 41 Trade Development Division ....................................................................................................... 57 Travel & Tourism Development Division ...................................................................................... 65 Kansas Department of Commerce iii 2004 Annual Report Introduction In Fiscal Year 2004 (FY04), the Kansas Department of Commerce continued its mission to empower businesses and communities through bold leadership using strategic resources to realize prosperity in Kansas. With new initiatives and support from the communities and citizens of Kansas, FY04 was a productive, successful year. Activities of the Agricultural Products Division involved wineries, the growing cotton industry, value-added loans, market research, buying missions, feedlot tours, export ventures, trade show assistance, and heritage breeds. The From the Land of Kansas program to promote Kansas products was updated. Along with the Travel & Tourism Development Division, Agricultural Products also launched an agritourism initiative to more fully develop agritourism in Kansas and create new revenue streams for family farmers and rural communities. Through a flexible portfolio of programs, the Business Development Division aided a long list of new and existing businesses in Kansas to create nearly 8,000 jobs. The Division's efforts ranged from bread and biosciences in the Kansas City area, to buses in Salina and bricks in Concordia. Film production dollars spent in the state during the fiscal year were estimated to be $6.95 million. The Community Development Division partnered with communities by providing financial, technical, and business assistance. In FY04, the Economic Development Initiatives Fund (EDIF) provided $206,574 to the Incentives Without Walls program for designated Kansas Main Street cities. Tax Credits totaling $4.13 million were given to hospitals and nonprofit organizations. Export assistance and outreach to Kansas companies are core objectives of the Trade Development Division. Efforts during the fiscal year were crowned by the opening of the State of Kansas Taiwan Office, recognizing a stronger commitment to ongoing Kansas-Taiwan trade and economic relations. Three internationally based companies announced plans to expand or establish new operations in the state. The Travel & Tourism Development Division launched a new tourism promotion called "The Kansas Mega Gigantic Get Away From It All Summer Blast-Off You Won't Believe It `Til You See It Giveaway" to promote state travel. An innovative approach to the Kansas Getaway Guide this year included editorial stories by Midwest Living magazine's travel writers, vibrant new photography, and increased advertising sales. The two sections of this annual report immediately following the "Structure & Budget" page highlight the Agency's successes in different ways. "By the Numbers" provides quantitative indicators of accomplishments, while "Faces of Economic Development" contains profiles of how the Agency's activities have made a difference in the lives of Kansans throughout the state. The remainder of the report is organized along the lines of the Agency's six divisions: Administration, Agriculture Products Development, Business Development, Community Development, Trade Development, and Travel & Tourism Development. The accomplishments described in this report are not the accomplishments of divisions acting alone, or of only the Kansas Department of Commerce. They are the result of coordinated efforts across division lines, and of partnerships between our Agency and other state agencies, local governments, non-profit organizations, and private businesses. Kansas Department of Commerce iv 2004 Annual Report Fiscal Year 2004 closes with a new Kansas Department of Commerce on the horizon. On July 1, 2004, the Employment and Training Division of Kansas Department of Human Resources merged with Commerce to form a workforce development system called Kansas 1st, directed at job seekers, employers, and educational institutions. This once-in-a-generation restructuring of the state's workforce development system is part of the Kansas Economic Growth Act, a bold set of strategies to strengthen and stimulate the state's economy. Kansas Department of Commerce v 2004 Annual Report Structure & Budget The Kansas Department of Commerce (Commerce) strives to empower businesses and communities through bold leadership using strategic resources to realize prosperity in Kansas. In FY04, the Agency utilized 107.5 FTE positions comprising six divisions: Administration, Agriculture Products Development, Business Development, Community Development, Trade Development, and Travel & Tourism Development. Economic Development Initiatives Fund (derived from Kansas Lottery proceeds), federal funds, and special revenue sources fund the Agency's operations. In FY04, Commerce channeled 48 percent of those funds to local communities and businesses throughout the state. Nine (9) percent ($5,243,976) of the budget was allocated for salaries and wages for employees, and eleven (11) percent ($6,804,306) was devoted to operating expenses. Expenditures by Division
Administration Division Agriculture Products Development Division Business Development Division Community Development Division Trade Development Division Travel & Tourism Development Division TOTAL $2,781,137 $1,175,670 $22,343,329 $30,232,965 $1,311,421 $3,869,661 $61,714,183 (5%) (2%) (36%) (49%) (2%) (6%) (100%) Expenditures by Object
Salaries and Wages Operating Expenses Federal and State Aid to Local Units Other Assistance TOTAL $5,243,976 $6,804,306 $29,433,348 $20,232,553 $61,714,183 (9%) (11%) (48%) (32%) (100%) Revenue Sources
Economic Development Initiatives Fund Federal Funds Special Revenue Funds TOTAL $14,144,048 $40,952,954 $6,617,181 $61,714,183 (23%) (67%) (10%) (100%) Kansas Department of Commerce vi 2004 Annual Report By the Numbers
on 713 Kansas business executives during the year. Their efforts were factors in the creation or retention of jobs in 125 companies in FY04. These efforts helped create or retain 2,600 jobs in the state of Kansas. · During FY04, film production dollars spent in the state totaled an estimated $6.95 million. This figure includes dollars originating from out-of-state sources as well as from in-state sources. The Film Commission provided direct assistance to projects that included independent films (Firecracker), cable television shows (Make-over Story, The Best of..., and Married to the Kellys) and documentaries (The 4-Minute Mile). · The 2004 Business Appreciation Month awards program recognized 286 Kansas companies in regional ceremonies held across the state. Shelton Collision Repair, Inc. of Derby was selected as the winner of the Governor's Award of Excellence for its outstanding contribution to both the economy and the quality of life in the south central region of the state. · In FY04, there were 447 net new jobs created in downtown districts that participated in the Main Street program. Moreover, $14.6 million in local reinvestment was generated in these small- to medium-sized communities. · More than 94 Community Development Block Grant (CDBG) projects were completed in FY04 totaling nearly $30 million in federal investments and $39 million in local and private investments. · In FY04, CDBG projects benefited 161,081 Kansans, generated 364 jobs, installed 73.4 miles of water and sewer lines in small communities, and rehabilitated or demolished more than 346 blighted homes to strengthen neighborhoods. · The Agriculture Value Added Center invested a total of $514,700 in seven agricultural value-added business ventures. · Using value-added facilities at K-State funded by the Agriculture Products Development Division, clients saved nearly $802,906 in their research on labeling and nutritional analysis. · Agriculture Products Development Division clients realized more than $104 million in sales, patronage, and producer premiums for FY04. · For FY04, projects financed by the Agriculture Products Development Division processed 16,264,704 gallons of ethanol; 1,192 head of beef cattle; 254,668 bushels of soybeans; 3,788,125 bushels of corn; 15,024 bushels of wheat; 11,650 pounds of cheese; 1,502 head of hogs; 8,918 bottles of wine; 15,024 pounds of wheat; and 10,951,630 pounds of flour. · During FY04, the Business Development Division was directly involved in 30 successful locations/expansions/ retentions encompassing 5,082 jobs, $165.07 million in capital investment, and an average wage of $19.69. The largest job creation projects were Alorica in Manhattan, Cessna in Independence, AIG Insurance in Olathe, PRA International in Lenexa, T-Mobile in Lenexa, and Invista in Wichita. · Over 9,000 workers will receive training with FY04 funding assistance from Business Development workforce training programs. These training projects will assist employees in 99 Kansas companies, 73 percent of which either had never received funding or had not received funding in the last five years. · Existing Kansas companies benefited from the efforts of the Business Development Division field staff, who called Kansas Department of Commerce vii 2004 Annual Report · In 2003, the most recent full program year, Community Service Tax Credits generated $6.5 million in donations for 29 healthcare facilities and non-profit organizations in Kansas. · The Trade Development Division recruited $38.5 million in foreign direct investment, resulting in 186 new jobs. · Kansas foreign offices performed 49 market research reports and 28 agent/distributor searches on behalf of Kansas companies. · Forty-six Kansas International Trade Show Assistance Program (KITSAP) grants were provided to 35 companies. As of June 30, 2004, these KITSAP award recipients have reported export sales of $15.6 million. · Tourism publicity efforts resulted in more than $9.5 million in media exposure in travel publications, radio, and newspapers worldwide. · The three State-owned Travel Information Centers located in Belle Plaine, Goodland, and Kansas City greeted over 270,000 travelers in FY04. · Eleven Tourism Attraction Development Grant projects were funded, covering 26 counties across the state and leveraging an additional $1.3 million in non-State funds. Kansas Department of Commerce viii 2004 Annual Report Faces of Economic Development
Kansas Wineries Harvest Growth The Agriculture Products Development Division has assisted the grape growing and wine making industry in several ways, including value-added loans, business enhancement grants, and providing marketing and advocacy expertise. Specifically, the Division was instrumental in designing and funding a Kansas winery brochure, showcasing all seven wineries as tourism destinations, and helping wineries navigate the liquor laws and the labyrinthine corridors of the State Capitol. In the 2004 legislative session, the Division provided assistance in helping legislators become more aware of this growing industry and changes in the farm winery law that would benefit the growth of this niche market. The Division will partner with grape and wine businesses again by sponsoring a "grape stomp" at the 2004 Kansas State Fair. Turkey Ranch Specializes in Heritage Breeds Good Shepherd Turkey Ranch and its owner, Frank Reese, represent the last outpost for rare breeds of turkeys such as Narragansett, Standard Bronze, and Bourbon Red. Increasingly, consumers are turning to long forgotten tastes that these turkey breeds help provide. The importance of rare breeds of animals, also known as "Heritage Breeds," has not been lost on a new organization in the United States, known as Slow Food USA. This organization, whose membership tops 65,000 in 45 countries, represents a marketing niche that rewards producers like Frank Reese for their dedication in preserving these rare breeds. The Agriculture Products Development Division and the Kansas Agriculture Innovation Center (AIC) at Kansas State University recognized the talent of Frank Reese and the market niche his operation can capture. With guidance from the Ag Innovation Center and a commercialization loan from the Agriculture Products Development Division, Frank Reese is repositioning himself to take full advantage of the growing demand for heritage turkeys. Kansas Department of Commerce ix The market niche, identified by Frank Reese and targeted by Slow Food USA, represents a highly defined and developed opportunity to capture substantial premiums for his products. With in-depth business analysis and a rapid expansion of his current operation in Lindsborg, the Kansas Ag Innovation Center has helped Frank strengthen his marketing channels and solidify his standing as the premier supplier of heritage turkeys for the North American market. Utilizing the loan funds from the Division, Frank will be able to tap larger markets, capitalize on greater demand, and occupy untapped niches to discourage potential future competition. SEK Grain Adapts to Change This private, producer-owned company in southeast Kansas is adapting to the changing marketplace presented by its customers. By building additional storage capacity at its branch facility in Liberty, Kansas, SEK Grain is better able to respond to its customers' needs and increase its long-term profitability in the process. Cropping patterns are changing in southeast Kansas. More corn and soybeans are being raised in an area that was traditionally dominated by grain sorghum and wheat. This has changed the timing of fall harvest and added additional time constraints to SEK's existing facilities. By expanding its Liberty location with the help of a valueadded loan from the Agriculture Products Development Division, the company now has new options to explore. The additional storage capacity will give it greater latitude to explore more marketing options for the grain, and the timing flexibility will allow it to arbitrage the marketplace to capture better prices and additional premiums for grain. Emerging Bioscience Industry The landmark Economic Growth Act, coinciding with and stemming from the Prosperity Summit and the Governor's Statewide Revitalization Plan, lifted up the emerging industry of the biosciences. For agriculture, this means biotechnology and ag-based fuels and products. 2004 Annual Report The Agriculture Product Development Division's Industrial Agriculture Program, transferred into Commerce in FY98, works diligently to track the growth and fund a host of emerging high-tech products from ethanol and biodiesel to anaerobic digestors and wind turbines. The Division invested money and time in a number of energy-related conferences and research in FY04, as the State sought to "step-up" its policy planning on energy policy and renewables. The Division expects the importance of agricultural alternatives to petroleum products to continue, and loans and services offered in the Agency will serve as a catalyst in that growth. Composite Technology Corporation Connects in Kingman Composite Technology Corp., a California-based manufacturer of composite towers and line for the energy industry, announced plans to establish a manufacturing facility in Kingman to produce the company's products. This facility will involve a $20 million investment and employ 100 people. The company also announced that it would contract with the City of Kingman to construct several miles of transmission line linking the community to the power grid. Kingman, which operates a municipal utility, had been negatively impacted by its isolation from the electric grid in times of high electrical generation costs. This will be the first large-scale use of this new technology and, if successful, could provide a breakthrough in transmission technology. Kansas Economic Opportunity Initiatives Fund (KEOIF) and training funds were part of the package offered to the company. Partnership Saves 350 Jobs in Great Bend A major victory for Great Bend and the surrounding community occurred when local officials working with the state and the investment community were able to package a proposal to transition ownership of CPI to local entities. CPI processes and advises on investments and insurance for pension plans and other groups. Its parent company, AG Edwards, was divesting itself of this business and preparing to actively market the facility. Local officials, concerned that if the operation was sold it would be closed and jobs would be lost, assembled partners to finance a local purchase of CPI. Contracts and agreements were finalized in March, making this dream a reality and saving 350 jobs. Kansas Department of Commerce x The package included loans from the City of Great Bend, Barton County, current employees, local and out-of-state investors, and the State of Kansas, along with some financing from AG Edwards. Business opportunities exist that indicate potential employment growth of an additional 200 employees could occur over the next three to five years. A forgivable KEOIF loan was combined with KEOIF term financing to help fill a gap in the financing proposal. Other help came in the form of Kansas Industrial Training (KIT) program funds and tax credits. Cessna Selects Independence for Mustang Manufacturing Kansas has long been recognized as a center for aviation manufacturing. That well-deserved reputation received an additional boost with the decision by Cessna to produce a new corporate jet model, the Mustang, in its Independence facility. Up to 500 jobs at wages approaching $14 per hour could be generated when production gears up to meet market demand for the new aircraft. This decision means that there will be jet aircraft manufacturing activity in combination with non-jet production at the Independence facility originally built for the manufacture of prop-driven models. JRH Biosciences Breaks Ground in Lenexa JRH Biosciences Inc. held a groundbreaking for their new continuous milling facility in February. The $13.5 million expansion project is scheduled to be completed in June 2005 and will add approximately 60 technical employees to the Lenexa staff. JRH Biosciences Inc. manufactures biopharmaceutical products, using high-quality animal serums. The 52,000square-foot expansion will enable the company to manufacture dry powder cell culture media. In addition to receiving industrial revenue bonds from the City of Lenexa, the Kansas Department of Commerce offered the company an incentive package that included KEIEP, training assistance, and tax credits from the State of Kansas. Kansas Film Commission at Sundance The Kansas Film Commission hosted a series of receptions during the Sundance Film Festival in Park City, Utah, in January in conjunction with the screening of CSA: The Confederate States of America. The feature length 2004 Annual Report documentary, directed by University of Kansas professor Kevin Willmott, explored an alternate history of America as if the South had won the Civil War. The film, shot within the state of Kansas, is the cumulative effort of Kansasbased talent and crew. shut-off valve, fixing the leak left the entire town without running water until the repair was finished. The estimate for replacing the water lines was $498,170. After careful consideration of the alternatives, the City of Corning chose to pursue the Community Development Division's Kansas Small Town Environment Program (KAN STEP). In December 2003, the City was awarded $258,135 in CDBG funds from this self-help, volunteer program. Bids were opened in May 2004, and one month later the townspeople began the process of laying their new water line. By August, the entire project was virtually complete. These receptions served as a celebration of the local Kansas film industry and as a marketing effort for the Kansas Film Commission. Several KU film students and local Kansas film crewmembers that had worked on the movie made the journey to Utah to help support and promote the project. Spike Lee, director of such films as Do The Right Thing and Malcom X, signed on as an executive producer of the film. Kevin Willmott sold CSA at Sundance to IFC Films, which will distribute the film The citizens of Corning have provided tremendous support theatrically sometime in 2005. to this project. Generally, two crews worked during the week, day and evening, and a third crew donated their IWW Funds Help Sterling Retain Major Company time on the weekend. Feeding the volunteers was a big In May of 2004, the Community Development Division part of the pipeline project, with residents taking turns awarded Main Street Sterling a critically needed Incentives both noon and evening preparing meals. The benefits of Without Walls (IWW) grant for the replacement of a badly the project include better water service, as well as an leaking roof on an historic downtown property. Duckwall's, enrichment of community spirit through residents' own located in the center of the core business district, is Sterling's volunteer efforts. anchor business that all other retail in downtown depends on to generate customer traffic. The roof had been a longCommerce Assists with New Manufacturing standing issue for the property owner, but the owner hasn't Facility in Caney been able to feasibly incur the expense of replacing it. Spears Caney, Inc., a manufacturer of thermoplastic valves, fittings, and piping systems components, Main Street Sterling found out that Duckwall's, motivated constructed a new manufacturing facility on the south side by a recent inventory loss due to a bad storm, was of Caney. The company made a capital investment of $4.6 considering closing the store. The Sterling Main Street million in plant and equipment and created 75 new jobs in office contacted the building owner and explained the the community. It continues to operate its old plant east of seriousness of the problem and what a terrible loss it Caney with 390 employees. would be for Sterling to lose Duckwall's and also expressed concern for the long-term stability of this very In order to make this investment feasible for the company, important building. The owner acknowledged the concern Montgomery County provided an access road from the and explained the problem with the expense of the roof. plant site to Highway 75. The Community Development The IWW grant opportunity from the State was a Division provided $300,000 for the road project through tremendous motivator, and the owner agreed to replace the Small Cities Community Development Block Grant the roof. The IWW grant has saved Sterling from losing (CDBG) program. this very important business and six jobs. "Through the cooperative efforts of many people, we New Water Lines for the City of Corning were able to secure funding and construct the road in a In 2003, 40 years after the City of Corning replaced its quick time frame, demonstrating the advantages of doing original worn-out water distribution system, the only business in Kansas," said Dennis Pruitt, Executive Director known and accessible shut-off valve was located at the of the Montgomery County Action Council. base of the water tower. In addition, the city was averaging two pipe breaks a month, and with only one Kansas Department of Commerce xi 2004 Annual Report Great Bend Opens Door to Improvements Great Bend has completed construction of its new "Front Door" Community Center, built with a $2.1 million Comprehensive Development grant from the Community Development Division. City officials envision the center becoming a hub for city services and a catalyst for revitalizing the southeast corner of town. The new center will assist citizens in a low- to moderateincome neighborhood of Great Bend in numerous ways. The "Front Door" will serve as a welcome portal for new citizens to the community, giving them assistance in connecting all necessary utilities. It will also aid citizens by offering assistance in various translation services to a largely Hispanic neighborhood, providing information about various public and social service programs available for low- to moderate-income families in need of assistance, serving as an additional childcare facility which is greatly lacking in the community, creating opportunities for public access computing and extended opportunities for learning, and providing additional meeting space for community groups. The Comprehensive Development grant also paid for 28 blocks of new sidewalks, the razing of dilapidating buildings, and other renewal efforts in the area. FTI, Inc. Expands Business in Japan Sales in the Japanese market have steadily grown for the Lawrence company, For Trade International, Inc. (FTI), since it entered the Japanese market more than ten years ago. Its success may be attributed to its policy of "adopting a style of service that the Japanese expect and understand," according to Kathleen Hodge, FTI's Vice President. Hodge credited quality service, automation, focused marketing strategy, customer referrals, good employees, and hard work for FTI's success. FTI's sales have increased more than 48 percent since 1999. FTI is a trading company that procures avionics, electronics, and integrated circuits for export to overseas aviation companies. The company matches aviation components to the specialized replacement needs of its primarily Japanese and European foreign customers. FTI also acts as a manufacturer's representative for aircraft cabin interior products. A focused marketing strategy is critical to controlling costs for a small business that has to maximize its limited Kansas Department of Commerce resources. FTI has focused on Japan as its primary market. At least once a year, Hodge travels to Japan to visit existing customers and make new contacts. Her last trip generated four new viable Japanese customers. "Kansas companies have a valuable resource in Japan," Hodge said. "His name is Ted Sato (of the Trade Development Division's Kansas Japan Office)." The two work together to identify companies that would benefit from FTI's services. Once they identify prospective clients, Sato sets up the initial appointments and accompanies Hodge to make the introductions, after which Hodge proceeds independently. Biomune's International Business Increasing Headquartered in Lenexa, Biomune Company is a leading U.S. manufacturer of vaccines and bacterins for the animal health industry. Since its inception in 1988, the company's rapid growth has been marked by technology breakthroughs and new product introductions such as Layermune® SE, the world's first licensed Salmonella enteritis vaccine for poultry that is considered the world's standard. International marketing is a prominent strategy for Biomune. Since 1970, the Latin American Poultry Congress has brought together producers and industry representatives from many Latin American countries. The Latin American market is a growing one and very important to Biomune's future. Dr. Fernando Lozano, Biomune's Director of International Business, led the company's participation in the 2003 show in Bolivia. Dr. José Quesada Fox and Dr. Rolando Rodas, Biomune's regional representatives in Mexico and Guatemala, supported the company's exhibition. By using a grant from the Trade Development Division's Kansas International Trade Show Assistance Program (KITSAP) to exhibit, the Lenexa company obtained immediate sales and commitments for a large amount in future sales. The company produces over 50 USDA-licensed products and serves customers in 37 countries. Biomune offers extensive product distribution to meet the requirements of animal health professionals across the country and internationally. xii 2004 Annual Report J & J Converting Machinery Penetrates New Markets J & J Converting Machinery, headquartered in Lenexa, is an excellent example of how Commerce resources can lead to new international sales. The Kansas International Trade Show Assistance Program (KITSAP) helped the company display at the Convergence 2004 trade show in Miami, Florida. "Our expectations were exceeded as we closed two deals at the show and two more quickly in the following weeks," said Sales Manager John Dignam. This trade show helped J & J Converting to make an immediate impact in their niche market. The company specializes in remanufacturing and reselling used converting machines that produce tags and labels for the packaging industry. "We are still in negotiations for five more deals," Dignam said. "Given our success at this trade show, we plan to attend annually." The company's trade show attendance confirmed there was demand for its products in the Latin American market. It also allowed J & J to emphasize this market and provide more support to its Latin American sales representative. Northern Ireland Company Sets up Manufacturing Facility in Kansas UPU Industries Ltd, based in Dromore, Northern Ireland, will invest $14.7 million to build its North American manufacturing plant in Junction City. The new facility will produce high performance, round bale netting and employ more than 76 people. The company looked at a number of Midwestern locations, with Kansas being among the finalists. Junction City was chosen because it fulfilled all of the major site selection criteria. Kansas Industrial Training (KIT) funds, the Kansas Economic Opportunities Initiatives Fund (KEOIF), and income tax credits were among the Stateprovided incentives that were important factors in the ultimate location decision. Founded in 1977 as "Steve Orr Ltd.," the company started distributing premium blade crop packaging under the "FARMER'S" brand name in the British Isles. UPU Industries began manufacturing in 1996 and currently exports 50 percent of its production to more than 23 countries. Kansas Department of Commerce "This year has seen an unprecedented demand for our products in the U.S.A. Our Kansas manufacturing facility will enhance service to our North American customers," said Philip Orr, Group Managing Director. Commerce Develops Agritourism Initiative In FY04, the Travel & Tourism Development Division and the Agriculture Products Development Division collaborated to develop the Commerce Agritourism Initiative. Commerce contracted with Eckert AgriMarketing to help strategically plan, develop, and coordinate the Agritourism Initiative. Jane Eckert is a farmer's daughter who pursued a successful career in corporate marketing, eventually returning to her family's fruit orchard to help develop it into a leading tourist destination attracting 500,000 visitors each year. Today, as a speaker and consultant, she helps farmers, ranchers, and tourism professionals across North America reap the benefits of agritourism. Commerce is preparing for the first statewide agritourism conference to be held in fall of 2004 and featuring topics such as how to start an agritourism business from scratch, marketing to attract visitors and increase sales, enhancing an existing operation, understanding new liability laws, tapping into the tourism network, developing a great web site, and networking with Kansas agritourism operators. Each attendee will receive the first Kansas-specific "how to" agritourism manual and resource guide. After the conference, the manual will be available at a nominal cost. Travel & Tourism Public Relations Markets Kansas The Travel & Tourism Development Division coordinated and hosted an 11-person press trip for the Lewis and Clark in Kansas destinations in September 2003. The Division developed the list of potential writers eligible to join the hosted tour and remains the liaison to these writers. The writers visited the eastern Kansas communities of Kansas City, Leavenworth, Atchison, Highland, and White Cloud for story research on the Kansas Lewis and Clark experience. The Division's Public Relations representatives were also extensively involved in the publicity of the Kansas Lewis and Clark events and worked closely with the Kansas Lewis and Clark Bicentennial Commission's marketing committee on the project. xiii 2004 Annual Report In June 2004, the Division participated in a first-ever New York media luncheon hosted in New York City, after researching the New York City travel media and developing an invitation list for the event. Over 40 writers attended the luncheon to learn more about Kansas as a travel destination. Guest speakers at the luncheon included the Prairie Rose Wranglers musical group, broadcaster Bill Kurtis, artist Stan Herd, and filmmaker Kevin Willmott, along with the division director. In addition, other individual media appointments held while in New York City produced three new leads for Kansas stories. Rolling Hills Wildlife Museum The Rolling Hills Wildlife Museum received $71,465 in grant funding from the Travel & Tourism Development Division to support the completion of a multi-media exhibit within the museum. Grant funds will be used to assist with the purchase of a Minolta Mediaglobe. The Mediaglobe will project a full color, all digital presentation on a curved dome, giving the viewer a perception of being surrounded by images and sounds. The Mediaglobe computerized programs can be designed locally, allowing museum staff to use exhibit areas within the museum to create content for viewing. The Rolling Hills Zoo currently houses and cares for over 85 species of wildlife. The creation of a wildlife museum takes the attraction from a warm weather tourism destination to a year round attraction, increasing the number of annual visitors. The wildlife museum has acquired one of the largest collections of full-mount animals in the world. Interactive dioramas will display animals in their natural habitat. As part of the final exhibit experienced by the visitor, a 3D projection of the earth, using the Mediaglobe, will project a story of human cultures, animals, and nature existing together. The grant project is estimated at $254,027. The cost to create the museum has been estimated at $5 million. Watersports LLC Watersports LLC received $26,334 in grant funding from the Travel & Tourism Development Division to complete a cable water sports park. Grant funds will be used to construct an equipment rental and storage building, improve the access road to the sports park, and purchase water to fill the lake. The facility will feature a German built, cable-driven, ski system above a manmade, eight- acre lake that is eight feet deep. The cable water sport system will pull riders around a lake, allowing them to enjoy water sports without the costs associated with owning a boat. The sports park will offer a variety of equipment to allow patrons the ability to participate in new water sports, such as knee boarding or wake boarding. Watersports LLC is a privately owned corporation. The water park is located 20 minutes from Kansas City, adjacent to Hillsdale Lake in northern Miami County. The park is the fifth cable water sports park in the United States and the first in the Midwest. National competitive events will be held annually. Total grant project cost is estimated at $102,655. Kansas Department of Commerce xiv 2004 Annual Report Administration Division Kansas Department of Commerce FY04 Annual Report Kansas Department of Commerce 1 2004 Annual Report Administration Division The mission of the Administration Division of the Kansas Department of Commerce is to provide quality support services for internal and external customers. In fulfilling that mission, the Division performs a broad range of activities in the areas of Building and Office Services, Fiscal, Human Resources, Information Technology, Marketing, Public Information, and Research. These activities share a common objective of allowing other divisions to focus their efforts on meeting the primary goals and objectives of the Agency. The Division's assistance includes budget preparation, legislative liaison, staff recruitment and training, web site development, publications, event planning, preparation of news releases, research and analysis, and facilities functions. In addition to serving internal customers, the Division also takes a proactive approach in communicating the initiatives, programs, and services of the Agency to the general public and to specific external target audiences. Not only does the Division disseminate news releases throughout the state, it also works with divisions to develop e-newsletters to reach members of the travel industry, consultants who identify sites for new business locations, and companies with interest in exporting, as well as other business groups. Developing Kansas, a quarterly newsletter published by the Department of Commerce and mailed to thousands of readers throughout the state, contains informative articles on how communities and businesses are partnering with Commerce to create economic development opportunities in their communities. The Administration Division works hard to make sure that the Agency web site, www.kansascommerce.com, is a useful tool for individuals and companies seeking easy-toaccess information about the Agency's programs and services, contact information, forms, community profiles, case studies, news releases, the Kansas Data Book, annual reports, businesses indices, and much more. In addition, the official online Kansas travel planner, www.travelKS.com, is continuously updated to better attract tourism dollars to the state; and the Kansas Film Commission's web site, www.filmkansas.com, is a valuable resource in drawing film projects and expenditures to Kansas. FY04 was an exceptionally busy year for the Administration Division, as the Agency coordinated the first-ever statewide Prosperity Summit to develop strategies for revitalizing the Kansas economy. The Division played an integral role in helping make the regional and statewide Summits a reality. In addition, the last months of FY04 saw considerable activity in all areas of the Division, as the Agency prepared to welcome the Employment and Training Division of the Kansas Department of Human Resources to Commerce, as a result of Governor Sebelius' Executive Reorganization Order 31. The Administration Division closed FY04 with a name change. Now known as the Operations Division, its associates continue to play a vital role in the success of the Kansas Department of Commerce in its mission to empower businesses and communities through bold leadership using strategic resources to realize prosperity in Kansas. Kansas Department of Commerce 2 2004 Annual Report Agriculture Products Development Division Kansas Department of Commerce FY04 Annual Report Kansas Department of Commerce 3 2004 Annual Report Agriculture Products Development Division
Introduction Agriculture's place in the center of the Kansas economy remains vital, while it continues to diversify and improve to meet societal needs. Now in its eighth year in Commerce, the Agriculture Products Development Division evolved to meet the requirements of a transitioning Agency in FY04. The Division's mission is "to enhance the value of agriculture products through new and existing markets and uses to provide a greater return to Kansas producers, processors, and rural communities." The Division furthers this mission by providing a host of assistance to producers and communities in Kansas through three major work areas: Business Development Consulting and Finance, Advocacy and Marketing Communication, and Industry Research and Development. The Division began discussions to change its "look," evolving to suit a changing Kansas agriculture industry to increase consumer demand and aid in the stabilization and diversity of the rural Kansas economy. The demand for all types of assistance has increased steadily. In concert with this increased demand, the level of sophistication and economic viability of the proposed projects has increased by necessity. Therefore, the Division has increased the level and volume of due diligence for each project, and the evaluations of those projects is necessarily more rigorous--and better. However, the resulting economic impact and return to producers and communities is also greater. As this trend continues, we will continue to evaluate and improve our procedures and reviews to capitalize on the higher quality of applications. Kansas Agritourism Initiative Along with the Travel & Tourism Development Division, the State launched the first portion of a three-phase Agritourism Initiative to more fully develop the agritourism Kansas Department of Commerce 4 industry in Kansas and create new revenue streams for family farmers and rural communities. The first phase, funded from existing resources in Commerce, created an Agritourism Council and focused on education of the producer and tourism professionals regarding the potential for agritourism development in Kansas. Educational workshops were conducted and the groundwork was laid for a statewide agritourism conference in fall of 2004. Phases two and three will focus on direct consultation with producers to help them develop viable and sustainable agritourism operations and implement statewide marketing of agritourism destinations. Agriculture Innovation Center Through the leadership and vision of Division staff and partners, Kansas received a $1 million grant from USDA for the establishment of an Agriculture Innovation Center. The center's mandate is to work closely with producerentrepreneurs in their search and execution of innovative solutions to their competitive challenges and opportunities. The focus is on innovation in processes, products, and relationships that extend the value that producerentrepreneurs extract from the marketplace. The center has the overarching objective of enhancing the value of agricultural products through technology and technical processes, the development of new businesses, business models, and marketing models, as well as supply chain innovations and processes. Therefore, the Kansas Agriculture Innovation Center aims to work closely with producer-entrepreneurs to aid them in the configuration of their business initiatives to create consumer value to enhance the financial and economic well being of producer-investors and other shareholders. The collaborative effort involves the Division, Kansas State University's College of Agriculture, Advanced Manufacturing Institute, Kansas Polymer Research Center, and 21st Century Producers. Each of these partners brings 2004 Annual Report a well-defined set of knowledge and resources to the center to help it achieve its mandate. The center also received grant funding from the United States Department of Agriculture ­ Rural Development. The Center is governed by an independent board of directors drawn from agricultural commodity organizations and government. Trends in Kansas Agriculture There are a number of trends that are emerging in valueadded agriculture within the state of Kansas; in some cases stretching our present definition of "value added." The Division has responded to the changes, both by allocation of loan funds and by the scope and type of assistance given to clients. Major trends are as follows: Biosciences & Industrial Agriculture The Kansas Department of Commerce, along with other key state agencies, partnered in a major economic development approach to the Legislature in FY04. The effort, culminating in the Economic Growth Act, featured the emerging field of the biosciences front row center. The biosciences develop uses of biochemistry, molecular biology, genetics, biotechnology, bioengineering, and life sciences to promote and enhance health care, veterinary medicine, agriculture, forestry, energy, pharmacy, environment, and other industries in the state of Kansas. The Industrial Agriculture Program within the Division plays a key role in the biotechnology arena as it unfolds. With increasing interest and feasibility of bio-based renewables, products like neutraceutical and pharmaceutical crops, biotech, ag-based plastics and fuels, wind energy, and bio-refineries continue to change the look of the Agriculture Value Added Center's portfolio of loans and services. Ethanol remains the major success story, as the program has funded a number of ethanol projects in the past and recognizes the potential for more plants in Kansas. But the growth of the "carbohydrate economy" holds great promise for agriculture as consumers seek alternatives to petroleum. Kansas Wineries A bright spot on the Kansas horizon is the increasing interest and successful ventures in the wine industry. Currently, the state has approximately 100 acres of grapes under cultivation at seven wineries. This compares to over 5,000 acres in the early 1900s. Many Kansans are surprised to find that the grape growing and wine making industry of this state has roots as far back as its founding. Prior to Prohibition the state had more than 1,000 acres of grapes and combined with Missouri to produce 86 percent of America's wine. Today, there are 28 full-time employees and 73 part-time employees within the Kansas industry. In 2003, these wineries produced more than 100 different wines, for a combined total of 49,000 gallons of wine. The Division has funded several projects and is presently assisting the industry in developing a statewide marketing effort to draw attention to its products. The Division developed a wine brochure that lists each winery in Kansas, its products, and additional information. This entire effort was undertaken with the assistance of the Arthur Capper Cooperative Center at Kansas State University and the United States Department of Agriculture. The brochure is available at Travel Information Centers throughout the state and through headquarters in Topeka. Cotton In addition to providing a new source of dependable income for Kansas farmers, the growth of the durable cotton industry has also provided a shot in the arm for local economies. This increasingly attractive alternative, high return crop has aided the economy of Moscow, Kansas, by adding an average of 35 seasonal and full-time jobs at a cotton gin there. This flourishing industry is not just confined to the southwest corner of the state. In 2003, three cotton gins in Kansas (including Moscow), Ok-Kan in Anthony, and Southern Kansas Cotton Growers in Winfield, processed nearly 43 million pounds of cotton. Dirt work for the newest addition to the cotton infrastructure in Kansas, the High Plains Cotton Gin, began near Cullison in April 2004. Kansas Department of Commerce 5 2004 Annual Report The USDA has estimated that 130,000 acres of cotton will be planted in Kansas in 2004. This would be a 44 percent increase from the 90,000 acres that were planted in 2003. "Cotton has provided a rare opportunity for farmers in Kansas to do more with less," said Gabe Schlickau, the Division's Western Kansas Field Representative. "Our Division has and will continue to assist cotton growers expand capacity in Kansas." producers. The variety and scope of the projects funded show that both small and large projects can benefit from the efforts of the Division. By leveraging limited State funds, the Division has been able to maximize the economic impact of the funding and enable rural communities and producers to capture additional revenue for their efforts. For FY04, the Agriculture Value Added Center (AVAC) loaned a total of $514,700 to value-added projects. That funding leveraged $5,729,320 in matching funding by clients, other government agencies, and commercial lenders. One of the primary advantages to growing cotton in Kansas is its drought tolerance. According to Stewart Duncan, K-State Research and Extension Crops and Soils Specialist, FY04 Agriculture Value Added Center (AVAC) a profitable cotton crop can be Funded Projects grown on 9-12 inches of water in a Amount year. That compares favorably to the Company Funded Product/Project 17-20 inches of water that