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Home My WebLink About07-24-96 • ECONOMIC DEVELOPMENT COMMITTEE AGENDA Wednesday, July 24, 1996 8:00 a.m. Army Reserve Center 4655 North Lexington Avenue 1. Call to Order. 2. Approval of Minutes from June 19, 1996 meeting.`— 3. Marketing Brochure. 4. Council Comments. 5. Committee Comments. 6. Adj ournment. • If you are unable to attend this meeting, then please contact Julie at 633-5676. MINUTES CITY OF ARDEN HILLS,MINNESOTA ECONOMIC DEVELOPMENT COMMITTEE MEETING WEDNESDAY,JUNE 19, 1996 5:00 A.M. ARMY RESERVE CENTER 1. CALL TO ORDER The meeting was called to order at 8:00 a.m. 2. ROLL CALL Present were: Dan McCallum, Chair; Ray McGraw, Vice Chair; Jeanne Winiecki; Arnold Lindberg; Tom Andreasen; Steve Freimuth; Ted Brausen; Council Liaison, Beverly Aplikowski; Kevin Ringwald, Community Development Director& Brian Fritsinger, City Administrator. Others present were: Tom Steele, Finance Committee Liaison; and Julie Tostenson, Department Secretary. Absent were Terry Nagle & Tom Goblirsch. 3. APPROVAL OF MINUTES Minutes from the May 15, 1996 meeting were approved, with the following correction to the last page, last paragraph in section E, it should read; Jeanne Winiecki stated that it would be nice to meet with a City which has similar demographics to Arden Hills. A motion was made by Dan McCallum to approve the minutes, as amended and seconded by Ray McGraw. 4. MARKETING BROCHURE The Committee decided that there would be more graphic information to convey the information in the brochure. The Committee concluded that the brochure needs to be focused primarily on the business people, but also towards the residents. The cover of the marketing brochure was discussed at length. The Committee needs to try and decide what five (5)to six(6) things should be on the cover that would appeal to the business people. Some of the options that were considered were; pictures in a collage; such as Bethel College, Lake Johanna etc., a square map of the City with a few businesses in the background; such as Control Data, CPI, etc., The Committee decided to write letters to some of the bigger companies in Arden Hills asking them if they have any pictures of their company, that we could use for the marketing brochure. The Arden Hills Logo should go on the back of the folder. The size of the folder was also discussed, it should be able to fit in a drawer of a filing cabinet. It was considered that the outline that was drafted up in the memo should be the format to follow. The Committee decided for the next meeting to have some cost estimates for some of the ideas for the brochure. The Committee considered having a folder type for the brochure and insert loose pages into the folder. Jeanne Winiecki made a motion to approve of a colored folder having loose pages to insert in the folder for the Marketing Brochure, Dan McCallum seconded the motion. 5. COUNCIL REPORT Council Liaison, Beverly Aplikowski gave an update on some of the Council's agenda items. The Council is considering changing the name of County Road F to Farrell Drive. A decision will be made about the new City Hall by September 30, 1996. Final Street Assessments for 1996 are completed. The Quad Ice Arena is still an issue. The City Hall has new office hours from July 1 through September 2. The hours would be: Monday - Thursday 8:00 a.m. - 5:30 p.m. and on Friday 8:00 a.m. 12:00 p.m. The City is still continuing to work on the newsletter, the first issue is due to be out on August 1, 1996. 6. ADJOURNMENT Meeting adjourned at 9:10 a.m. CITY OF ARDEN HILLS MEMORANDUM DATE: July 24, 1996 TO: Economic Development Committee FROM: Kevin Ringwald, Community Development Director SUBJECT: Monthly Report 1. Gateway Business District. The Staff has been working with Welsh Companies on a development in the GBD. Welsh Companies has made a request for site plan approval with the City. The request is for an approximately 155,000 square foot light industrial building on the Binger parcel (Exhibit A). It is anticipated that the request will be heard by the Planning Commission at their Wednesday, August 7, 1996 regular meeting. The Staff is still working with Welsh Companies on developing Phase II of this project which consists of an additional 345,000 square feet of light industrial type uses. 2. Space for Lease. The June of 1996 Leasing Guide as published by the Minnesota Real Estate Journal contains several office building which have vacancies in Arden Hills . (Exhibit B). 3. Land O' Lakes. Land O' Lakes celebrated its 75th Anniversary on July 10th and 11th. Attached are two articles on the celebration, the first is from the July 11, 1996 Saint Paul Pioneer Press (Exhibit C) and the second is from the July 10, 1996 Bulletin (Exhibit D). 4. Population Notes. The June, 1996 edition of Population Notes as published by Minnesota Planning is attached (Exhibit E). The report discusses the vigorous growth of jobs in Minnesota from 1988 to 1994. 5. Business Incentives. The June of 1996 edition of Government Finance Review contained an article on when and when not to provide business incentives. The article is attached for your information(Exhibit F). 6. Minnesota's Tax Reform. The May-June of 1996 edition of Expansion Management contained an article on how adjustments to Minnesota's taxes may be attracting new businesses to the State (Exhibit G). )(HoT A I II !II III II I I I !!I h!I Mill I THIII I I II III H I IIIIII I I I 'z . I I I I Lu ---- w z z I Lu - 1 I , LQ e - --- —---- -- ----------- -------- - - IY 1 I T - I r , 1 — T — ,�II'tn�II I , I I � 14 rH sr�cr _- T'c PLAN N0" AML � s �- - - ..._................`.... .... .....................-••..................................... s i f U!ELSry!WIDLKE SERWCE .,44 ••�•,; �NEL E� '•�•. ni ROUND h FE DE ELO E r co LAKE �L\--_ ';•: q DEFINED PARCELS \ i 5448 ACRES DEVELOPED 60.34 ACRES UNDEVELOPED •�'•'.r'�i r~'!i`'�y 7 115.22 ACRES TOTAL j RE.tilq ~w�✓VY�. H.•RSLAD \Y� �8t , 32.28 ACRES POTENTNLACODUnON 92.64 ACRES POTENTIALLY AVALABIE "� RAEOELE f .rI D. L I CO U 5.fASR!wIOLKE SERWCE j • ___ III/ ♦ f-`s.� �� ! t!i L:«.•5:...:1 ,i jpE��'g�•E - �� 1�'�� j ,�TAX PARCELS LNES ` .o 5 = fr' �\.........w'•• •,! .......OWNERSFIP LNES i i 11 10� i �.,• �'j Ru.E.uFKE v�ucrvR �- _',�a � PARCELS VRfH M&ONG • RlEEGELE ° 1 .�.�....�..... __ ...— /// i �••.•yy��3� i 3 ••'•'•• PARCEL NO.RELATE TO TABLE 1 �''• uR LR'SFER co-l�i RIEDELE V U.5 ••• . PARCELS•OWNERSHIP • .................•'°• •••.... ......==:= NTRSTATE 6 _..... =,, _- - : ..........:::::::::::::::::4........ ............................. ................. . . . . . .. L NE 35W & 69 4 j ARDEN HILLS,MN 1 0 '200 400 00 800 1 1 9 i 2 3 4 5 6 Blaine a Forest Lake 3SE • , 61 Map 5 White Bear St-Paul North and Westl Lake North St.Paul Suburbs Arden Hills Shoreview 694 Vadnais Heights New ertghton 36 as Little Canada Stillwater Roseville Lake Elmo Maplewood Oakdale 51 694 280 StYaul 94 Map ID BUILDING NAME Total Space Large/Small Block Rate High/Low Type Agency Contact(s) • Yr Built Address SF Available Sf per Flr/4 Fls Total Ops/Taxes Phone Arden Hills 5/B-2 ARDEN PLAZA OFFICE BLDG 43,584 5,000/ 157 $10.00/$10.00 N United Properties Mike Ohmes 1975 3585 Lexington Ave.N. 11,613 $5.80/$1.36 612-893-8838 Tom Stella 5/6-2 ARDEN WOODS 64,665 5,328/ 1,000 $16.00/$16.00 G Towle Real Estate Co. Todd Mongrain 1974 4105 Lexington Ave.N. 24,000 21,500/3 $6.36/$1.96 612-221-1949 Jane Donnellan 5/C-1 NORTHPARK CORPORATE CENTRE 145,578 16,500/ 890 $11.00/$10.00 N Welsh Companies Bryan Beltrand 1984 6 Pine Tree Dr. 29,980 16,400/3 $7.43/ 612-373-2285 5/C-1 NORTHWOODS OFFICE CTR 73,521 0/0 $13.00/$13.00 N United Properties Mike Ohmes 1986 3900 Northwoods Dr. 0 24,000/3 $6.91/$2.58 612-893-8838 Tom Stella I Leasing Guide June 1996 41 M l HNE3��1 6Tirtti. �JJ/L MIL SAINT PAUL PIONEER PRESS i TH JULY 1996 THURSDAY B, T-q SECTION %J "I.NLESS S PAGES a THURSDAY DEMO • Butter's best friend. Julia Child, who could Heed saute the tentacles off an octopus, will help Land O'Lakes celebrate its 76th anniversary today at the cooperative's headquarters in Arden Hills. �$a She will milk a cow and take a lesson in old-fashioned butter churning, among other activities during her visit. Land O'Lakes was started by farmers in 1921 and made business r history a year later by marketing Land O'Lakes Sweet Cream Butter. It marked the first time a commodity product, such as butter, was successful- ly branded. The co-op is a financial supporter of a new cooking show Child has prepared for public television this fall. And speaking of butter, Land O'Lakes said Wednesday that its butter sales rose 3.3 percent in the first half of 1996, the second straight year of growth after several years of decline. The uptick was attributed partly to two new butter products, Land O'Lakes Honey Butter and Roasted Garlic Butter with Olive Oil. —LEE EGERSTROM r'K141&-7 D A LILLIE SUBURBAN NEWSPAPER L Ll ir i 1S Volume 21, Number 37 Wednesday, July 10, 1996 SVB es Diamond jubilee Land O'Lakes turns 75 Land O'Lakes Inc. in Arden Hills, the nation's 1<argest dairy marketing cooperative,will celebrate its diamond anniversary Thursday, July 11 besituiine at 8:30 am. World-renowned culinary master Julia Child will be the Ruest of honor at the company's birdi(Liy party. Land O'Lakes CEO Jack Gherty and • Chairperson of the Board Stan Zylstra are also scheduled to attend. Attendees can try their hand at making butter the old-fashioned way with a churn. Other activities include a children's farm safari, displays of vintage Land O'Lakes memorabilia and the 75th annivcrsvv quill Land O'Lakes in located at 4001 Lexington Ave.N in Arden I Iills. V'K14(017 * PC1_111JLAT �1iD NEk own ��l June 1996 OSD 96-79 Minnesota Jobs Highlights at a Glance... Grew Vigorously from ■The number of jobs has grown faster in Minnesota than in the United States. 1988 to 1994 ■Job growth in the Twin Cities region has been below the state average. Martha McMurry ■Almost half of the job growth was in the service Spurred by strong job growth outside the seven-county industry group. Twin Cities area, Minnesota employment rose at a rate ■ Manufacturing employment increased in Minnesota well above the national average between 1988 and 1994. while declining nationally. Full- and part-time employment went up 13.0 percent in n The number of jobs in Minnesota grew faster than • Minnesota, compared to 7.7 percent in the nation as a the total population and the number of employed whole, Bureau of Economic Analysis data shows. Em- people. ployment increased in every major industrial group with the exception of farming. More than half the state's job growth occurred outside the seven-county Twin Cities area, a sharp departure from previous trends. Job Growth in Five-State Area Is Robust Jobs Grow Faster in Minnesota Minnesota's robust job growth from 1988 to 1994 was paralleled in other Upper Midwest states.Among border- Job expansion in Minnesota from 1988 to 1994 exceeded ing states, South Dakota had the highest rate of employ- the national average in almost every major industry ex- ment growth, with 18.4 percent. North Dakota had the cept farming.Minnesota surpassed the nation most in job lowest at 10.7 percent but was still better than the na- gains in manufacturing and the finance, insurance, and tional average. All five Upper Midwest states had in- real estate industry groups. Manufacturing jobs fell 4.5 creases in manufacturing employment, with extremely percent in the United States but went up 6.8 percent in high growth recorded in South Dakota(38.5 percent)and Minnesota. Minnesota had larger gains in jobs in both North Dakota(29.6 percent). nondurable goods manufacturing(14.0 percent versus a drop of 0.2 percent) and durable goods manufacturing (2.0 percent compared to a decline of 7.5 percent). The number of finance, insurance and real estate jobs also went down nationally(by 0.9 percent)while growing 8.6 percent in Minnesota. While jobs were increasing in every other major industry, however, farming employment declined 10.6 percent in Minnesota and 7.0 percent nationally. .iU'Ni Minnesota Sustains Greater Long-term If employment grows faster than the number of workers Job Growth over a long time, the result will be a tight labor market. This is already occurring in many parts of Minnesota. Many rural employers have had difficulty finding work- Over the last quarter-century,job growth in Minnesota ers for some positions. In the Twin Cities area,the tight has closely followed national trends. Both state and na- labor market has produced higher wages at the lower end tional developments have been strongly affected by busi- of the wage scale. ness cycles, with the rate of job growth falling during recessions and rising during periods of economic expan- The United States as a whole has experienced a similar sion.Minnesota's employment growth from 1969 to 1994 but less pronounced trend,with jobs growing faster than was 72.6 percent,compared to a national average of 58.9 population or employed people. Jobs in Minnesota grew percent.The greater long-term gain in Minnesota stems twice as fast as population from 1988 to 1994,compared from relatively strong performance in the 1970s and dur- to 1.3 times as fast in the nation as a whole.Apparently ing the most recent recession.In the recession of 1990 to Minnesota has been more affected by trends toward 1992,Minnesota continued to gain jobs,though at a mod- higher labor force participation. est rate, while the number of jobs dropped nationally. This contrasts with what happened in the early 1980s recession, when employment in Minnesota dipped at Service Industry Employment Registers about the same rate as the national average. Large Gain Jobs in Minnesota have been increasing_faster than the total population and the number of employed people.Be- Service industry groups accounted for almost half of the tween 1988 and 1994,population grew at an average an- net gain in Minnesota employment from 1988 to 1994, nual rate of 1.0 percent;the number of employed persons adding almost 162,000 jobs. Service employment also went up an average of 1.6 percent; and the number of registered the second highest rate of growth—24 per- jobs rose at a 2.1 percent rate. cent—among major industrial categories. Some of the service industries contributing to this gain were business The fact that the number of employed people has grown services,health services,amusement and recreation ser- faster than the population suggests rising rates of labor vices,and social services.Business services include tem- • force participation. The more rapid growth of employ- porary help and computer services,both industries that ment than of employed people possibly reflects more have been thriving since the early 1990s.The temporary people holding two or more jobs, as well as more people help industry has grown as employers have turned to commuting from Wisconsin and other border states to consultants and outside labor providers instead of hiring work in Minnesota. How the BEA measures self-employ- permanent workers.The health care industry has made ment may be a factor; many of the self-employment jobs a strong showing for many years,with recent growth oc- picked up by the BEA are probably part-time or casual in curring mainly in settings outside hospitals, such as nature. home care and clinics. The popularity of gambling casi- Employment in Most Industries Strong Employment Growth in Midwest Grew Faster in Minnesota Than in Nation Average Annual Percent Change— 1988 to 1994 Percent Change—1988 to 1994 Manufacturing 7% Minnesota 2.1% Retail ° 2. g% ° South Dakota ° 5.6% Services 24% 20% North Dakota 70 . 4.4% Farm 7 Finance,Insurance, 9% Wisconsin 1 2.1% &Real Estate -1 All Other 11% Iowa 1.9%0.6% TOTAL 13% United States ° 1.2 8% -0.8/0; i ■Minnesota 13 United States ■Total Employment Growth ®Manufacturing Growth Source:U.S.Bureau of Economic Analysis Source:U.S.Bureau of Economic Analysis 2 Minnesota Planning June 1996 nos is behind much of the large increase in amusement products(43 percent),and motor vehicles and equipment and recreation services employment.Gains in social ser- (36 percent). Growth in window manufacturing has • vices employment reflect in part the growth in the resi- boosted jobs in the lumber and wood products industry. dential care industry, spurred by more people with Motor vehicle jobs have gone up as activity in the snow- disabilities living in their communities instead of in insti- mobile,boat and truck industries has picked up. tutions. Not all manufacturing industries registered employment Manufacturing Jobs Increase Modestly gains.The biggest losers were machinery and computer g y equipment and fabricated metal products.The downturn in Minnesota's computer industry is reflected in the 10 Manufacturing's job growth in Minnesota — about percent decline in machinery and computer equipment 27,500 jobs—was slow relative to other industry groups, jobs.Fabricated metal jobs also declined substantially,by but still represented a gain. Most of this gain, about 8 percent, largely because of losses in defense-related 22,700 jobs, occurred in the nondurable goods group. weapons and ammunition manufacturing. Manufacturing is considered a basic or export-producing industry,one that brings in money from outside the area Other Industries Gain Jobs and generates secondary job growth. Two industries, printing and publishing, and food and Retail trade ranked second behind service industries in kindred products, accounted for more than half the gain the number of jobs added,though the rate of growth was in Minnesota manufacturing employment. Printing and only average. The number of retail trade jobs increased publishing, long a mainstay of Minnesota manufactur- by more than 59,000 in six years, up 13.5 percent. The ing, grew by 17 percent from 1988 to 1994. Poultry pro- fastest growing retail industry group was the miscella- cessing was a major contributor to growth in food neous category, which gained 35 percent. The miscella- products manufacturing employment.Other manufactur- neous category includes drug stores,liquor stores,used ing industries with substantial job gains were rubber and merchandise stores,miscellaneous shopping goods stores miscellaneous plastic products(26 percent),lumber and such as gift shops and sporting goods stores,nonstore re- wood products (19 percent), apparel and other textile Minnesota Follows National Employment Trends Annual Percent Change 5.4% Minnf-- 3.0% .5% f United States --0-1. -1.7% 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 • Note:Change is percent change from previous calendar year average to the calendar year shown. Source:U.S.Bureau of Economic Analysis June 1996 Population Notes 3 Minnesota Employment by Type and Industry, 1988 and 1994 19$$ 1994 Percent Change . Total Employment 2,578,668 2,914,740 13.0 Wage and Salary 2,144,171 2,431,162 13.4 Proprietors 434,497 483,578 11.3 Farm Proprietors 96,096 88,555 -7.8 Nonfarm proprietors 338,401 395,023 16.7 Farm 122,459 109,438 -10.6 Nonfarm 2,456,209 2,805,302 14.2 Private 2,117,959 2,432,167 14.8 Agricultural Services,forestry,fisheries and other 19,382 25,510 31.6 Mining 8,928 9,345 4.7 Construction 116,016 125,956 8.6 Manufacturing 404,947 432,418 6.8 Nondurable goods 162,572 185,283 14.0 Food and kindred products 46,171 52,387 13.5 Paper and allied products 32,910 33,245 1.0 Printing and publishing 50,378 59,110 17.3 Chemicals and allied products 91677 11,022 13.9 Rubber and miscellaneous plastic products 14,308 18,005 25.8 • All other nondurable goods 9,128 11,514 26.1 Durable goods 242,375 247,135 2.0 Lumber and wood products 19,661 23,331 18.7 Fabricated metal products 34,721 32,110 -7.5 Machinery and computer equipment 86,452 78,255 -9.5 Electronic equipment,excluding computers 29,191 31,857 9.1 Instruments and related products 31,891 33,904 6.3 All other durable goods 40,459 47,678 17.8 Transportation and public utilities 118,942 134,832 13.4 Wholesale trade 133,549 150,034 12.3 Retail trade 440,846 500,147 13.5 Finance, insurance,and real estate 197,838 214,769 8.6 Services 677,511 839,156 23.9 Business 123,442 170,486 38.1 Amusement and recreation 34,787 57,395 65.0 Health 169,162 203,974 20.6 Educational 33,819 43,445 28.5 Social 45,781 65,082 42.2 All other 270,520 298,774 10.4 Government and government enterprises 338,250 373,135 10.3 Source:U.S.Bureau of Economic Analysis • 4 Minnesota Planning June 1996 tailers such as mail-order houses, and a few other types Construction employment rose a moderate 8.6 percent, of establishments. attributable mainly to growth in specialty trade contrac- tor jobs. • Among other retail groups,jobs in eating and drinking places continued to expand as Minnesotans consumed Finally, employment in the finance, insurance, and real more meals away from home. Mid-life baby boomer pur- estate industries also recorded an 8.6 percent increase. chases of move-up homes may account for the advance in Real estate and holding and investment companies were jobs in home furniture and furnishings stores, up by weak performers in this industry group, while jobs with about 3,800. insurance carriers grew substantially. Not all retail categories have been growing. Employment in building materials and garden equipment, general Jobs Grew Faster Outside Twin Cities merchandise and apparel stores increased only slightly or not at all. During much of the 1970s and 1980s, the seven-county Twin Cities area was the major generator of new jobs in Governments added about 35,000 jobs during the 1988 to Minnesota.This changed,however,in the late 1980s and 1994 period,with virtually all the increase coming at the early 1990s.The Twin Cities area accounted for less than state and local levels. Growth in public education was a half(48 percent)of the state's net job gain from 1988 to major factor in this change. Military employment de- 1993,compared to almost three-quarters(74 percent)of clined,and federal civilian employment stayed about the the net gain from 1977 to 1988.(County data is available same. only through 1993).The Twin Cities region continues to add large numbers of new jobs but ranked 10th among Although farm employment fell dramatically-11 per- the state's 13 development regions in rate of growth.De- cent in six years—jobs in agricultural services posted a spite the more moderate growth during the 1988 to 1993 32 percent gain, growing by about 6,100. Agricultural period,jobs gains in the Twin Cities region continued to services include lawn and garden services and the ser- outpace the national average of 4.4 percent. vices of veterinarians. Not all regions or counties within regions shared equally • Both wholesale trade and transportation and public utili- in the trend. County employment trends ranged from a ties added about 16,000 jobs and grew at an average rate, gain of 56 percent in Mahnomen County to a decline of 4 12.3 percent for wholesale trade and 13.4 percent for percent in Traverse County. Growth rates within the transportation and public utilities.Trucking and ware- Twin Cities region also varied widely, from a high of 49 housing, transportation services(including travel agen- percent in Carver County to a low of 2 percent in Ramsey cies and some delivery services)and other transportation County. all experienced substantial growth. Railroad employ- ment,however,continued to decline. Service Industry Shows Large Growth Changes in Number and Percent of Jobs by Industry—1988 to 1994 Actual Change Percent Change Services 161,645 Services ®23.9% Retail Trade 59,301 Retail Trade -13.5% Government 34,885 Government _10.3 Manufacturing 27,471 Manufacturing -6.8 Finance,Insurance, 16 931 Finance,Insurance, _8.6% &Real Estate &Real Estate Wholesale Trade 16,485 Wholesale Trade 12.3 Transportation&Utilities 15,890 Transportation&Utilities -13.4% Construction 9,940 Construction S 8.6% Agricultural Services 6,128 Agricultural Services 31.6% Mining 417 Mining 04.7% Farm -13,021 Farm -10.6%_ •Source:U.S.Bureau of Economic Analysis June 1996 Population Notes 5 Full-Time and Part-Time Employment for Minnesota Development Regions- 1988 and 1993 Percent Percent • Total Total Change Total Total Change 1988 1993 1988-1993 1988 1993 1988-1993 Minnesota 2,578,668 2,823,002 9.5 Region 7E:East Central 45,629 54,015 18.4 Chisago 12,102 13,464 11.3 Region 1:Northwest 46,630 50,059 7.4 Isanti 10,167 11,842 16.5 Kittson 2,966 3,057 3.1 Kanabec 5,729 6,101 6.5 Marshall 5,094 5,126 0.6 Mille Lacs 9,484 12,055 27.1 Norman 3,744 3,873 3.4 Pine 8,147 10,553 29.5 Pennington 7,729 8,762 13.4 Polk 15,864 16,997 7.1 Region 7W:Central 124,446 145,186 16.7 Red Lake 2,011 2,056 2.2 Benton 13,551 14,621 7.9 Roseau 9,222 10,188 10.5 Sherburne 13,004 16,875 29.8 Stearns 72,093 83,704 16.1 Region 2:Headwaters 29,299 34,507 17.8 Wright 25,798 29,986 16.2 Beltrami 16,275 18,530 13.9 Clearwater 3,454 3,891 12.7 Region 8:Southwest 66,979 74,114 10.7 Hubbard 5,689 6,655 17.0 Cottonwood 6,925 7,540 8.9 Lake of the Woods 1,785 2,167 21.4 Jackson 5,661 6,145 8.5 Mahnomen 2,096 3,264 55.7 Lincoln 3,150 3,273 3.9 Lyon 14,698 17,520 19.2 Region 3:Arrowhead 143,113 159,833 11.7 Murray 4,599 4,889 6.3 Aitkin 4,663 5,357 14.9 Nobles 12,331 13,875 12.5 Carlton 12,833 14,913 16.2 Pipestone 5,766 6,017 4.4 Cook 2,281 3,071 34.6 Redwood 8,852 9,614 8.6 Itasca 16,473 18,597 12.9 Rock 4,997 5,241 4.9 Koochiching 6,614 7,425 12.3 Lake 4,095 5,303 29.5 Region 9:South Central 116,414 125,882 8.1 St.Louis 96,154 105,167 9.4 Blue Earth 33,351 37,339 12.0 Brawn 15,808 17,367 9.9 • Region 4:West Central 94,843 102,458 8.0 Faribault 8,896 9,015 1.3 Becker 13,717 14,118 2.9 Le Sueur 10,368 11,091 7.0 Clay 21,380 22,675 6.1 Martin 12,389 12,872 3.9 Douglas 15,358 17,292 12.6 Nicollet 13,669 15,382 12.5 Grant 3,147 3,554 12.9 Sibley 5,982 6,149 2.8 Otter Tail 24,845 27,396 10.3 Waseca 9,683 9,822 1.4 Pope 4,996 5,497 10.0 Watonwan 6,268 6,845 9.2 Stevens 5,662 6,102 7.8 Traverse 2,317 2,232 -3.7 Region 10:Southeast 232,533 258,267 11.1 Wilkin 3,421 3,592 5.0 Dodge 5,852 6,491 10.9 Fillmore 10,397 10,958 5.4 Region 5:North Central 60,468 70,269 16.2 Freeborn 17,861 17,884 0.1 Cass 8,889 11,630 30.8 Goodhue 21,890 26,395 20.6 Crow Wing 21,514 25,731 19.6 Houston 6,779 7,610 12.3 Morrison 13,177 14,805 12.4 Mower 16,850 19,207 14.0 Todd 10,148 10,898 7.4 Olmsted 73,323 83,127 13.4 Wadena 6,740 7,205 6.9 Rice 25,216 27,199 7.9 Steele 18,533 20,510 10.7 Region 6E:Mid-Minnesota 60,189 65,529 8.9 Wabasha 8,947 9,624 7.6 Kandiyohi 20,840 23,647 13.5 Winona 26,885 29,262 8.8 McLeod 20,528 22,192 8.1 Meeker 9,757 9,650 -1.1 Region 11:Metro 1,532,233 1,655,272 8.0 Renville 9,064 10,040 10.8 Anoka 96,406 113,576 17.8 Carver 20,219 30,121 49.0 Region 6W: Dakota 119,950 146,560 22.2 Upper Minnesota Valley 25,892 27,611 6.6 Hennepin 867,651 914,921 5.4 Big Stone 3,110 3,055 -1.8 Ramsey 351,106 358,856 2.2 Chippewa 6,992 7,549 8.0 Scott 24,366 30,938 27.0 Lac Qui Parle 4,448 4,429 -0.4 Washington 52,535 60,300 14.8 Swift 5,250 5,660 7.8 Yellow Medicine 6,092 6,918 13.6 Source:U.S.Bureau of Economic Analysis data 6 Minnesota Planning June 1996 r Only four counties lost jobs between 1988 and 1993. Be- these counties also experienced gains in manufacturing sides Traverse County,these included Big Stone,Meeker employment. • and Lac Qui Parle counties. In contrast, from 1977 to 1988,22 counties experienced a decline in employment. In general,Minnesota had two main areas of strong em- ployment growth in the late 1980s and early 1990s.The No single reason explains why job growth since 1988 has first was an arc of counties extending from southeastern been greater outside the Twin Cities region.Rural areas Minnesota, including Olmsted County (Rochester), up are attractive to some employers because of lower land through the Twin Cities suburbs and on to the St. Cloud and labor costs, but the great variation in growth from area.The second extends north of the Twin Cities up to county to county suggests that idiosyncratic factors are Lake of the Woods County on the Canadian border. often at work. For example, American Indian casinos Among development regions, the highest rates of job have been an important factor in job growth in several growth were found in regions 7E, 2,and 7W. counties, including Mille Lacs (27 percent), Carlton(16 percent), Cook(35 percent)and Pine(30 percent)as well In contrast,low employment growth occurred in western as Mahnomen. border counties, in Hennepin and Ramsey counties and in a few other scattered areas.Among development re- In other counties, such as Pennington, Beltrami, Grant, gions,the slowest growth occurred in Regions 6W, 1,and Kandiyohi, Lake; Mower and Lyon, manufacturing has 4,all in western Minnesota. generated economic expansion and jobs.The expanding industries range from meat and poultry processing to Manufacturing growth was concentrated in the north- wood products and snowmobile manufacturing. Growth west, west central, and southwestern parts of the state. in Lake County has occurred in part because of partial Manufacturing gained in all development regions except recovery of the taconite industry. the Twin Cities, where it declined slightly. Region 8 in southwestern Minnesota had the largest increase,37 per- Continued popularity of the lakes region of north central cent, followed by Region 5, the North Central region, Minnesota among retirees and others seeking recre- with 27 percent. ational amenities was probably a factor in job growth in • Aitkin, Cass, Cook and Crow Wing counties. Some of Region 7E just north of the Twin Cities led all other re- gions in growth rates for transportation and public utili- ties; services, finance, insurance and real estate; and Employment Growth Is Widespread agricultural services. Percent Change 1988 to 1993 Region 7W led all other regions in gains in wholesale trade and government employment.Region 2,the Head- waters Region,had the highest gains in construction em- ployment and in total wage and salary employment, while Region 5 registered the greatest gains in retail trade. Technical Notes The data in this report comes from the U.S. Commerce Department's Bureau of Economic Analysis. Because of differences in scope and methodology, BEA employment data does not necessarily agree with employment data ❑-3.7%to 7.6% from other sources such as the Minnesota Department of ®7.6%to 12.9% Economic Security. 12.9%to 55.7% The most familiar employment statistics are those used by Economic Security to calculate monthly and annual ' unemployment rates. In these figures, employment is equated with the number of employed persons. In con- trast, the BEA data estimates the number of jobs. If a •Source:U.S.Bureau of Economic Analysis woman has three part-time jobs,the BEA counts each job June 1996 Population Notes 7 separately, but in the DES unemployment data, she would be counted only once, as an employed worker. Population Notes is published quarterly by the State Similarly, if one of her three jobs was eliminated, the Demographer's Office in Minnesota Planning. For BEA data would show a decline in employment, but as information or additional copies of Population Notes, long as she kept one of her other jobs, she would still be contact the Census Help Line at(612)296-2557. counted as employed by DES.Another difference is that Upon request,Population Notes will be made available in the BEA data is based on place of work, while the data an alternate format,such as Braille, large print or audio used to calculate the unemployment rate is based on tape.For TDD,contact Minnesota Relay Service at(612) place of residence. 297-5353 or(800)627-3529 and ask for Minnesota Planning. The BEA uses a variety of sources,principally from ad- Printed on recycled paper with at least 10 percent post- mmistrative records,to make the employment estimates. consumer waste. These sources include employer payroll records, tax records,and the annual County Business Patterns publi- cations. The documentation found in BEA publications like the BEA it does not attempt to measure self-employ- and CD-ROMs provides more details. ment.A third DES employment series,used in projections of future employment, incorporates an estimate of self- Employment Data from the Minnesota employment,but measures it in a different way than the Department of Economic Security BEA does. For more information call the DES at (612) 296-6545. The Minnesota Department of Economic Security main- tains several employment data series,including the regu- larly updated county unemployment statistics. In Acknowledgments addition to the count of employed and unemployed people, the DES also maintains two other series of em- Thanks to Don Hilber, Minnesota Department of Eco- ployment data that differ from the BEA's. One is a series nomic Security, and Pat Meagher, Minnesota Depart- of wage and salary employment.Like the BEA data,this ment of Finance, for their comments on earlier drafts of is based on jobs rather than employed persons, but un- this report. • Bulk Rate U.S. Postage PAID Permit No.171 St-Paul,MN 658 Cedar Street St. Paul, MN 55155 Kevin Kingwala City of Arden Hills 1450 W. Hwy. 96 Arden Hills MN 55112 POPULATION • "CP7WM!S When and When Not to Use Incentives to Attract Business or to Retain Existing Business These guidelines for recognizing an effective incentive from an undesirable one are designed to assist public finance officers as they walk the fine line between offering a reasonable incentive to a new or relocating business and facing public outcry or even litigation. By Kurt Hahn ncreasingly, municipal governments 4) Loan of public funds to business for mance-based deferrals designed to are being asked to join states and public purposes. Too often ignored is provide the developer time to build up utilities to provide incentives to attract the provision of loans to finance a the business are legal. business or to retain existing business. development's required infrastructure 8) Provision of services at public expense The incentive may take a variety of or fees. This technique, when not (e.g., architectural planning or expedit- forms, bur among the most common adversely affecting the municipality's ing). A new incentive that frequently is forms of incentive are the following. cash flow, can frequently be realized also a win-win for developer and the Expedited or preferential process- with an interest rate exceeding both city is to provide the developer, at the ing. Commonly known as fast-track investment earnings and bond financ- city's expense, an outside expeditor processing, this technique typically ing. This can provide a win-win situa- who knows the city's processes as well involves prioritizing a desired job tion for the developer and municipality. as the developer's needs. and/or revenue-producing project's 5) Grant of public funds to business for 9) Special utility rates. In an atmosphere review ahead of others, as well as public purposes. Many redevelopment of increasing utility deregulation, new coordinating regulatory approvals agencies or municipalities will provide businesses will seek or be offered between departments or agencies so grants for required infrastructure when special rates based on incremental as to speed the processing. a project achieves a positive utility added cost to the utility or through 2) Loan of public assets such as land, outcome or positive municipal revenue discounting the rates for an initial two- building or equipment to business impact. or three-year period. for private purposes. Sometimes an 6) Lease or sale of public land at below- industrial development authority, market rates. A typical redevelopment redevelopment agency, or even a strategy is to acquire and/or assemble municipal electric utility will pro- land using tax increment financing and Legal Constraints vide bridge financing to attract a then sell or lease it at a price that will The Internal Revenue Code regulates job- or revenue-producing project. allow the desired development to be the use of tax-exempt bond proceeds for More common, however, is the successful. private purposes, while federal statutes provision of conduit private activity 7) Legally permissible waiver or deferral govern the use of federal funds or the bond or industrial development of fees. This technique is always reuse of Urban Development Action Grant bond financing to the enterprise. fraught with political problems. Many (UDAG) or Community Development 3) Grant of public funds to business developers planning a project which Block Grant (CDBG) monies. Many states for private purposes. Direct gift of they know the city wants will ask for impose a variety of legal constraints on taxpayer funds is prohibited in most the waiver or deferral of city fees. incentives, the most typical of which are states; however, provision of tax Some cities have adopted policies to "gift of public funds" statutes which rebates and advance payment of provide partial or whole city-fee preclude fee waivers or cash gifts to a some leases for parking facilities or waivers or deferral, if a development private business under a variety of circum- grants for historic preservation or meets specific criteria, and then substi- stances. Additionally, many states in their aesthetic improvements, such as tute redevelopment agency or utility redevelopment laws limit public acquisi- building facades or landscaping, money in the city's treasury to offset tion of real estate and subsequent price often are permitted. the waiver. In many states, perfor- write-downs in resale. Many state devel- • JUNE 1996•GOVERNMENT FINANCE REVIEW 31 �2 opment fee statutes have equity provisions gives to the city a downstream share of a option to use tax-exempt private activity between business and residential develop- project income flow and recovers the city's bonds as a tool for economic develop- ment which indirectly limit fee waivers in investment in the site. Others are those in ment, it will be because of abuses, typi- either area unless fully funded from a which the city or redevelopment agency tally involving assistance to develop- third source, such as an industrial devel- recovers in new revenues the cost of the ments that would have happened without opment authority, a redevelopment incentive plus a significant net gain for the the incentive. Not only the federal gov- agency, or the state. community in jobs and revenues. ernment but many state legislatures as Locally adopted investment policies or There is nothing wrong with a city well are reacting negatively and in some state statutes adopted since the Orange making a good investment. The challenge cases punitively in response to the per- County bankruptcy may further limit the often is to have the courage to ask for ception that many incentive transactions use of public funds for incentives. Finance something in return for an incentive. Most are a waste of tax resources and do not directors and city attorneys need to be entrepreneurs do not react unkindly to an achieve a public purpose. The role of involved in incentive negotiations to entrepreneurial approach by the city. finance officials is to make sure every assure their legality. incentive can be defended. What Is an Undesirable Incentive? What Is a Desirable Incentive? First, undesirable incentives are those Conclusion In the broadest possible terms, a desir- that look bad to the public. They can create The pressures associated with eco- able incentive is one that is financially the appearance of unequal treatment of nomic development are substantial. profitable to the city and its redevelop- similar businesses under similar circum- Frequently the elected official is invited ment or industrial development agency stances. Secondly, they also can be activities to the negotiating table before the finance and produces jobs. Profit can be defined in that cause or offer the potential for litiga- director is. Jobs sometimes can take this case as net revenues from the project tion, such as a developer fee rebate or sales priority over balancing the city budget. exceeding the cost of incentives plus tax exemption. Thirdly, an incentive is The challenge to the finance director is to recurring costs of providing municipal unwarranted when the recipient would pre-educate the city council, then ensure services. Another criterion for a desirable have come to the community regardless of that he/she is at the table. This calls for incentive is that it does not immediately the incentive. Lastly, an incentive is not a horse sense and close consultation with create a charge of unequal treatment of positive one if it is likely to cause a future the city attorney. The approach to incAft businesses in similar circumstances. Lastly, budget or cash-flow problem for the city. tives should be entrepreneurial: the ci a desirable incentive should be one that No finance director should be bashful seeking to make money. While portraying causes an investment or relocation that when it comes to preparing a confidential a pro-business attitude, dollars on the would not have otherwise happened. report for the city manager or legislative table for the city is by far the most In determining whether an incentive is a body 1) indemnifying specific cases or important approach to successful incen- positive one or not, a finance director prospective cases where there could be the tive negotiations. ❑ should be prepared to produce a dis- charge that unequal treatment was pro- counted proforma indicating the public vided, 2) analyzing the financial ramifica- KURT H.AHN,nne»nber of GFOA's Committee on investments and tax or utility revenues tions if similar incentives were provided Retirement and Benefits Administration,has been the financial and economic services director of the City of generated to determine the payback period generally, and 3) pointing out potentials for Healdsburg,California,since 1977,serving as finance and compare current values of each. The litigation based on gifts of public funds. If, director and redevelopment director.A past president public investments should include not only in the view of the finance officer, a business of the California Society of Municipal Finance incentives but recurring costs to provide will come to the city absent incentives or if Officers and six-year nnennber of the board of directors of the California Association for Local services including, if applicable, utility future budgets will be adversely affected, Econo»nic Development,be chairs the Economic services. the finance officer should so advise the city Development Policy Subcommittee of the League of Sound incentives can be secured loans manager loudly and clearly. California Cities and was the principal author of The to developers in which the city is assured Undesirable incentives take many forms, Economic Development Handbook published by the of full repayment with interest equal to or but the most typical is one in which virtu- California League of Cities. above the rate of the city's investment ally all new revenues generated by a project pool. Many cities will finance utility- are returned to the developer, which has related infrastructure or developer/capac- been the case in a variety of "big box" ity fees and add loan payments to utility transactions. Another case is the use of bills. Another example is a grant/loan that incentives in bidding wars to relocate an positions the city as an equity partner in existing business, in some cases from a the development and provides for loan nearby municipality. Still other examples repayment with interest and/or participa- are a grant or loan to business which tion in the income flow of the develop- would have come to the town without an ment. Typically used in many UDAG incentive, a retroactive incentive, or a tax projects, this approach is increasingly rebate incentive to every business in town employed when local incentives are sought just to create the image of a business- by the developer. Similarly, a positive friendly locality. • incentive can be a land sale or lease that If cities should eventually be denied the 32 JUNE 1996•GOVERNMENT FINANCE REVIEW ill lit-1A Minnesota 's Tax Reform Attracts New Business � M Workers compensation rates have fallen nearly 30 percent S ?, since 1993, unemployment insurance rates are also decreas- ing, and new manufacturers are exempt from sales tax on RQQ capital equipment. I innesota's commitment to attract- ing and retaining business is j more than just a promise. In the early 1990s,the state legislature temporarily froze workers'compensation premium levels,helping the premium rates fall nearly 30 percent since 1993. The legislature also recently reduced the sales tax on replacement capital equip- ment for manufacturers.The rate will decrease each year until it hits 2 percent in mid-1998. i New and expanding manufacturers are granted a sales tax exemption on capital { equipment.Also,the state's unemploy- ment insurance rates have declined in l recent years. u I Minnesota businesses indeed prosper in the state.Last year,Business 6i eek maga- zine included four linnesota companies on its list of"Hot Growth Companies," and Formes magazine's recent list of"The 200 Best Small Companies in America" included 13 Minnesota companies. New York-based Foodland Industry decided to build its new 21,000 square foot rice cake manufacturing facility in Aitken,largely because of its proximity to the rice fields that supply its main prod- uct.But Minnesota also offered the com- pany a host of other benefits. "Transportation is excellent and the infrastructure is there,"said actor Schlesinger,chief engineer at Foodland. "We ship all over the countn-and Min- nesota is in the middle,so it's[within 36 hours]of every destination in the country-." Proving its capabilities in the high tech arena,Minnesota has more than four times the national share of employment in the computer industry.More than 1,800 I technology-intensive firms representing 23 technological disciplines do business in Minnesota. Indicate information number 92 —Ann K Morris 94/May-June 1996/Expansion Management For free information from advertisers call 800-539-7263 or see us on-line at http://www.expandman.com