28 Replies to “Economic development snippet”

  1. Great reference article… besides the quantifiable ROI to the community, albeit most heavily to library users, there is another factor to consider with specificity to our NF Public Library.

    For several past budget years, NOT just since the new ‘belt tightening’ era, our library has received only minimal if any yearly budget increases, and yet they continue to do more and more.

    Using my past library employment as a gauge, I would say this is due to the quality management by the Library Director, Lynn Young, and the encouragement she gives to her committed staff.

    The cuts in hours was a larger city-directed cut, and unfortunately has cut services to the most essential part of the community to which it should be provided… the weekend and evening users who have no other time to avail themselves of the library’s services because of their working hours.

    Still, the staff has written grants to supplement lost dollars, and continually works to upgrade the service in the available hours.

    Their is a tension between what are considered “essential” services, and the costs related to the Safety Center project and the projected Library expansion.
    For me, both are ‘essential’, and I see no flaws in my police and fire service, other than the need for correcting the working conditions, especially those of the firemen, for their own safety.

    The ROI of our library, and the efficient management of that city department, says to me that they need to have a piece of the pie; the question then becomes how we can scale back the Safety Center to an efficiently working building, without exterior ‘bells and whistles’, and leave some taxing capacity for the library expansion.

    1. I didn’t make the connection – research shows that libraries, schools, well-maintained infrastructure, and community events are important for economic development. Read the report I linked – don’t just take my word for it. I can provide links to much more research and case studies if you’re interested.

      1. Betsey,

        This study is disingenuous. It looks at the economic value by assessing two different measures – which don’t have a real world basis. First, it asks the librarians to put a value on what they provide. That is like asking public defenders to “value” their services to their indigent clients. The second method is to ask the patrons what they would be willing to pay for the services. That is akin to asking public defender clients what they would be willing to pay for those services. If the government had to pay public defenders what they think they are worth, or what their clients think they are worth, our system would cost many times more.

        Neither method has any basis in the reality of daily economics. Granted, the government might be spending substantially less on these public services than their market value. But increasing the spending does not create economic development. Spending more on libraries or hiring additional public defenders is not economic development. It costs what it costs. If it costs more, then it will cost more – with no real dollar return.

        Libraries and public defenders are necessary public services that our society provides to ensure a minimum level of assistance for the poor and the oppressed. Additional monies spent on these government programs are real dollars; the returns provided are real and important, but not economically valuable.

        In the end, if Northfield built bigger libraries and fire stations and police departments, the City will have a bigger budget to pay, but no more money to pay for these things.

  2. I’m glad to have some data from somewhere to back up my long held belief that the library gives us the most bang for the buck of any of the public services. I support raising taxes to increase funding for the library.

  3. David: I think you are expressing an antiquated view of what is economic development in today’s environment, and in this town.

    There is virtually nothing an EDA of NF’s size, with the funding they have, actually do to facilitate econ/dev except to provide the most receptive and encouraging environment possible. NF does not have large vacant buildings to use as business incubators; it does not have funds to buy and develop large parcels of land, it only has the capacity to run small loan and grant programs and create a biz-friendly environment.

    All broad based studies I have read emphasize today’s need to create a work/live environment for the fostering of settlement by the creative class both in their housing and business.

    Do you accept the fact that NF cannot compete for industrial development?
    If so, then NF must solicit a smaller more entrepreneurial type of econ/dev, one which relies heavily on ‘quality of life issues’.

    I would have to take issue with your last sentence in your comment above: you are correct that building amenities does not bring a city more revenues UNLESS those amenities define that city as one in which it is profitable , both dollarwise and aesthetically, to live and pay taxes, and establish your business.

    What are the actual actions that could be taken by this EDA in order to facilitate the type of economic development that you seem to prescribe?

  4. Kiffi,

    I think that we can toss out those “broad-based” studies that emphasize the need to create a work/live environment for the creative classes as being little but academic hogwash.

    Here are some steps the EDA could take:

    1. Remove some of the barriers of development put in place by well-meaning public officials. State officials have told us that Northfield has a reputation as a very difficult place to do business.
    2. Modify the Comp Plan and the Land Use Code to make it more friendly.
    3. Recommend repeal of the rental ordinance. (A friend in Pennsylvania said that she saw an article about Northfield’s draconian rental ordinance in her local paper. It was cited as one of the most restrictive in the nation – hardly a complement for a “liberal” town.)
    4. Recommend against building new public facilities if they are going to raise business taxes, or find another way to fund them.
    5. Develop a plan for retaining the existing businesses that are struggling.

    A more honest approach to the situation would be to make it clear that Northfield is NOT interested in economic development, but that community development is our Comp Plan. Libraries, bike trails, parks, and other amenities make for a nice town; but they are net revenue losers.

    Water doesn’t run uphill. Libraries aren’t economic development. It is that simple.

    1. David and Kiffi

      I agree with both of you – which may sound odd since David thinks he is disagreeing with Kiffi. Aside from part of your #2 David, I think you’re right. I stand behind the Comp Plan and am fully in favor of its smart growth approach. I don’t think the comp plan is in conflict with any of the other points you make, David.

      I certainly agree that government officials (at all levels of government) enact regulations without carefully considering the consequences (the rental code seems to be a very good example of this) or the cost of the regulations. As a result, I’m not as confident of the LDC – it was intended to streamline the development process and make it easier to do business with Northfield. I think it could be much better. In addition to the actual regulations, I have yet to hear a report that city staff have made it easy to develop a project in Northfield – though the recent Mayo oncology clinic may be an exception, but the only role the city had there was not to screw it up.

      It would be great if we could build new public facilities without raising taxes – for instance, if we had planned ahead well enough that we could integrate building and maintaining facilities into the CIP framework the way we do street reconstruction. Unfortunately, Northfield has deferred many of these investments, so now we’re faced with facilities which are failing and deferred maintenance costs. Here’s where local government gets caught in state government policy – any tax increase will hit business much harder and we don’t have a mechanism to change that at this time.

      Existing businesses should be a top priority – the businesses we have are the best asset and helping them thrive and grow is essential.

      Now for the part about libraries – a public library is a government service like maintaining infrastructure, providing transit, and public safety. It is not, itself, a business which makes a profit. No argument on this.

      But (you knew this was coming), libraries, good schools, parks, community gathering places, community events, the LINK center are all small pieces of an economic development program which has the long term goal of increasing the prosperity and economic health of a city. Part of what makes a town attractive to business is that oft-mentioned sense of place and distinctiveness. It is not enough, certainly, and no single item on that list is sufficient to create that sense of place. But as part of a comprehensive program to attract and retain businesses, they make a difference along with good transportation connections, housing supply, and good government. No one is claiming libraries will solve the problem, only that libraries (with the the access to information and government, support for literacy and education, assistance with job skill development and job searches, etc. they provide) are a small piece of the entire puzzle.

  5. Betsey,

    Thanks for the reply.

    Northfield is a very attractive place to live. That is why we don’t have a problem attracting people to come here. However, we do have a problem attracting businesses, both to come and to grow. Of course, there are exceptions, especially in the education and health care field.

    Libraries, schools, parks, bike paths, streetscape improvements etc. aren’t economic development in any sense of the words economic development. Economic development should focus on how to bring in more money for the City so that we can afford to do community development.

    I like to think about it this way: Look at how many people come to Northfield to work and live someplace else. The reasons that they live someplace else have little to do with the quality of life here. Now, look at the number of people who live here and work someplace else. Why do they live here and work someplace else? Because this is a nice place to live.

    Do we seriously believe that if we made Northfield even more attractive that businesses would grow and locate here? No. The Comp Plan and other restrictive documents make it even more attractive to live here and work someplace else.

  6. David: Thanks for you good reply; I also disagree with you only on your basic concern that parses the difference between “economic” development and “community” development… I think it is very difficult to tease those two terms apart in a town like Northfield.
    NF is, after all, very much defined by its size, and geographical location., and for its retail, definitely by the small volume of shoppers it can draw. (might that be a reason to make it be as pleasant to be here as possible ? )

    That said, I would agree with you that NF’s reputation for facilitating development is not good , by many reports. I have heard that since I bought commercial property here in 1994.
    If we believe those reports are correct, who is to be ‘taken to task’ for that critical evaluation?

    It is the Council/ policy setters, and the City Staff/policy implementers, who actually control the regulatory structure of development . The Council is in control of the policy they want, and SHOULD be in control of the staff they hire, through their direct second-in-command, the City Administrator.

    OOPs! do you see the ‘sticky wicket’ approaching?

    It is considered somewhat ‘bad form’ in Northfield to ‘make waves’, and for some reason I will never understand, for the Council to hold the Staff to the Council’s preferred ‘climate’.

    So there are long pontifications about “improved community communications” , and “improved development procedures”, and “business friendly operations”…

    I would ask you: as a past Pres. of the Chamber of Commerce, and a current member of that business group, can you list the improvements you have seen?

  7. Kiffi,

    I’m not sure to what you refer.

    From my perch, the City would be better off disbanding the EDA than trying to use it as an vehicle to promote community development projects.

    Perhaps it is time to admit that Northfield’s future is as a bedroom community, both for the colleges and for the Twin Cities. Let’s forget about trying to justify a $12 million dollar safety center, an $8 million dollar library, or $1 million for a bike trail, parking lot and some trees. If you can’t afford it – leave, if you can -stay.

    It is almost not worth the energy and loss of goodwill for the Chamber to communicate with the Council on economic development. If the Council were listening we wouldn’t have the Comp Plan or the 300 page land use regulations.

    Maybe it is time to pronounce – … government of the bobos, by the bobos, and for bobos.

  8. sorry if I wasn’t clear enough, David… I asked if you had seen any improvement in the ‘business friendly’ aspect of the city’s regulatory process or in the staff’s implementation of the regulatory processes.

    I guess the answer is either “no” or you do not wish to put the Chamber in a possibly embarrassing position by speaking as a Chamber representative.
    I understand your position about the Comp Plan and the LDC, but do not think it is correct to place blame on inanimate objects, they were created by people, and therefor that is where your dissatisfaction should lie.

    But… if you don’t ‘make waves’ you’ll be doomed to what you think is the land of “bobos” forever, unless of course you decide to move.

  9. Kiffi,

    Actually, I think I have seen a substantial change in the attitudes being displayed amongst decision-makers. For example, this post attempts to frame the library in economic development terms. That is a start. The fact that the annexation was approved speaks volumes about the willingness to at least consider development as an opportunity rather than just a threat to “our” way of life.

    The very fact that we spent $250,000 on the annexation is a good sign, even if it was wrongly spent. I think of it this way – Northfield has now “invested” as much money in looking at 2.3 million square feet of development land as it invested in 2.3 thousand square feet of bike path, and one-half as much as it invested in a revamped Water Street park lot.

    I think it is fair to blame inanimate objects like the Comp Plan and the LDC. They are being used as animate objects to justify decisions – i.e. we have to follow our Comp Plan. It embodies a spirit that can only be changed by challenging it, and seeing what its defenders say.

    I have always considered the staff to be receptive to the business community’s concerns. I spent hours with Northfield staff going over the Comp Plan and concerns of the Chamber. They managed to get some things changed for us. But, they were also caught between the Chamber and the anti-Target, anti-Mayflower Hill, anti-trailer park sentiment of the bobos at the public hearings.

    Those attitudes embody the antithesis of “liberal” (otherwise known as “freedom-loving”). There is no more powerful example of how strong this influence is then the rental code. We have an entire town feeling the effects of an ordinance specifically designed to serve cater to a relatively small area surrounding the two colleges. That code isn’t liberal – its fascist.

    So, while I think attitudes have changed about economic development, I think there is a long way to go. We have to learn to trust that people will make the right decisions for themselves. Who cares if people build McMansions and KFC’s? At least it is generating tax revenues to pay for schools and libraries.

  10. I certainly do agree with you about the rental code; it started as a request for enforcement of on the books regulations, and quickly grew into a monster… but David, you must remember how that happened… citizens can ask for all kinds of things, some of which might be very principled, and some very self interested… but in the end it was the Councilperson, Jim Pokorney , and the staff on the committee, who put that thing together; then ultimately the Council who voted to put it in place.

    Hmmm… could you remind me what your term “bobo” stands for?

  11. Kiffi,

    Bourgeoisie bohemian – the upper middle class who are more interested in a bohemian lifestyle than the McMansion lifestyle.

    The genesis of the rental ordinance and the Comp Plan are not dissimilar. Both grew out of a desire to see a particular lifestyle preserved. That lifestyle is the one that attracted me to Northfield, and the one that I still like.

    I just don’t think that we bobos should be forcing that lifestyle upon others who can’t afford it or don’t want it. People like their McMansions and their Targets. I like my Victorian house and my downtown. Live and let live.

  12. So, David, when you say “live and let live” and “trust that people will make the right decision for themselves” (in a previous comment) does that mean that you think a LGU (local government unit) should NOT make any rules regulating/controlling growth, development, etc., but just let the community grow, ‘willy-nilly’?

  13. No, let it grow more organically. It only appears “willy-nilly” to those who aren’t involved in the process. As you know from business, most decisions are driven by the economics. It is developing because it makes economic sense.

    Developers build McMansions because people buy them, and they can make money. That will probably change in this new economy. People don’t build Victorian-type houses any more because … it costs too much. They can’t sell them. Developers don’t build mixed-use developments. Why? Because people won’t buy into them.

    Obviously, the government has a huge stake in the process if it is providing sewer, water, roads etc. But, the government’s economic stake is a completely different principle from the personal preferences of the people.

    If we limit development based upon the personal preferences of some, we are denying others the opportunities of the marketplace.

    1. I spend less than 24 hours in Duluth with the nordic ski team and you both have been busy. David, I disagree that the Comp Plan is about “lifestyle” although it certainly is about endorsing one development pattern over another. For me, encouraging development on existing infrastructure (working hard on developing vacant land on south highway 3 and redeveloping vacant buildings in the same vicinity, for example) is not about style, but about money and natural resources. The development pattern which grows horizontally is expensive (the cost of building and maintaining the infrastructure) and land/natural resources (because we consume more of them and damage to rivers, lakes, soils is much more expensive to clean up than to prevent damage). I think you are spot on, David, when you identify gov’t’s huge stake in the infrastructure piece – this is just where I think the discussion should be taking place with the business park and our other development choices because both the initial cost and the maintenance costs are so high. The goal of getting development to pay for itself is increasingly being shown to require denser development.

      I would say staff and council are responsible for the development unfriendly situation – council for failing to agree on policy and clearly directing staff to encouraging (appropriate) development. Staff, as the point of contact for developers, have much control over the development which happens in terms of customer service, asking for additional information, documentation, review, interpretation of ordinances, etc. If we had staff who understood the whole process from policy down to application forms, they could help the Council formulate policy be identifying the costs of Council choices and the gaps in Council thinking.

  14. Betsey,

    I don’t recall seeing any language in the Comp Plan or the LDC about costs of development; it is all about preferred styles of development. Walkability, mixed-use housing, multi-modal transportation, bike paths, etc. are all about a lifestyle – and in many cases, a lifestyle that is more expensive to build and maintain than the suburban style development.

    Reducing government expenditures on infrastructure development is a worthy (and necessary) goal. However, the way to reduce the government’s costs is to require the developer to pay for the costs in the development, not to tell him or her that there has to be a certain amount of business, single occupancy, and multi-occupancy housing, which in well-conceived cost-sharing environment is revenue-neutral.

    All of this begs the original question. Is an expanded library “economic development”? If it is, then we might as well not have an economic plan, because economic development is so poorly defined that anything and everything can be counted as economic development.

    There is nothing wrong with being a councilperson who supports substantial government expenditures on community projects like libraries, parks, bike paths etc. But, these expenditures have adverse economic consequences which tend to fall disproportionally on those of us who own businesses, especially downtown businesses whose tax valuations are much higher than our business valuations, and who for the most part, receive significantly less community value from these developments than the residential property tax person.

    1. David,

      1. You will need to show me some evidence that the “style” of the Comp Plan is more expensive than suburban development.

      2. Business vs. residential – because of the state-mandated tax structure, you are absolutely correct about business paying a greater share. We need to renew our discussions with our new state legislators to work on this disparity.

      3. Are libraries economic development? Narrowly, no. Spending money on a library will not directly lead to retaining businesses nor attracting new ones. Broadly, yes. Libraries’ contributions to literacy, an educated workforce, life-long education, job search and training, and connecting people with information have been shown to have significant economic impact.

      4. The question I think you are skirting is not whether libraries are part of an economic development plan, but how government should invest its money. Direct subsidies of a few businesses are not a good investment for the community – this is what the business park will amount to and the economic research is increasingly showing this is a race to the bottom. Long term investments in infrastructure, social capital, and essential services coupled with investments designed to leverage private dollars for building on Northfield’s strengths (arts, education, healthcare, downtown) are where I’ll be voting.

  15. Betsey,

    1. I meant that the “old-Northfield style of development is more expensive for the consumer.
    2. We also need to renew our discussions locally. The local government controls the amount of tax; the state controls the proportion. I think that we can also look for ways to lessen the tax impact. For example, there was a thought of raising revenue by a street lighting fee. If the fee were based upon the amount of street lighting used, it would be a fair tax. Unfortunately, as structured the fee was based upon square footage of land owned.
    3. Are libraries economic development? No. Broadly, they may have some economic impact. But, they are a little like bike trails. The government will never get back the money spent, nor will the businesses or the people ever see the kind of return on monies necessary to pay it back.
    4. Yes, I am skirting around how the government should spend (not “invest”) its money. But, the specific question here revolved around the library. The whole idea of the government “investing” money is disingenuous. It spends money.

  16. David: I believe it was you who took the question of economic development away from the initial “is the library…”, in your Jan 20 comment which was basically a reply to me…

    However, I think this has been a good discussion which has raised a bunch of valid perspectives.

    Now in reply to your #2. in the preceding comment: we who own commercial properties all understand the state tax ratios and how they disadvantage the business properties. Agreed?

    But I would posit that ther is something that can be done locally, and that is for the City Council to send a letter to the County Tax assessor, questioning the market values he continues to assess to these buildings; I asked the Council to consider that a few weeks ago… I got the ‘great stone faces’ reply.

    Here’s an example I am excruciatingly familiar with: the market value on our building at 306 Division went up $ 130,000 in this coming year’s assessment! WTF, if you’ll excuse me saying so?
    The percentage of increase listed on the bottom of the notice was 30%!
    This in a year when both commercial and residential tenants are having a hard time paying rent, which of course translates into building owners having a hard time with cash flow.

    I wonder if other communities in Rice County are having the same problem with these market evaluations, or is Northfield bearing the brunt of the need for tax revenues?

    This is the second year that residential values have gone down, but commercial values continue to rise ALTHOUGH the required number of sales to raise those values (by Comps, according to the state finance dept) do NOT exist.

    Our Council could complain, in strong language , to the Rice County tax Assessor, based on the unfairness of this practice.
    Maybe the Chamber of Commerce should ask the Council to do so?

  17. Kiffi,

    Any action by the City Council in this area would be largely symbolic as the Assessor controls the process.

    That said, it might be good for the Chamber and NDDC to put together an informational statement so that the City Council can see the problem in more graphic terms.

    Mayor Rossing is probably the only Council member who sees the problem first-hand. (She is also the one asking for more jobs and taxes.) Most of the other Council members have deep connections with non-tax paying entities which have little or no financial stake in the costs of larger libraries, fire stations, bike paths, etc. Of course the colleges and those connected with it want better community amenities – they don’t pay anything for it.

    If I ran a business that didn’t pay taxes, I would feel differently too.

  18. Ye Gods, David! I thought the old days of “town/gown” enmities were over…
    I thought everyone realized…. from the employees numbers, if no other standard… that the colleges ARE our ‘smokestack’ industries.

    By your last sentence, you once again seem to be stating that everything is bottom-line with you; what core values should a community pursue? and what could you support, other than what you term “organic” growth, and I term “willy-nilly” growth?

  19. Kiffi,

    Education is definitely Northfield’s largest industry. But, it doesn’t pay for a library. We have to figure out another way to pay for it because it won’t be with this industry’s property taxes.

    I am just saying that the Council members’ ties are far stronger to the colleges than is representative for the population. The natural human tendency would be to favor those who butter your bread.

    We don’t have a crisis with a library. We do have a mini-crisis with the downtown, taxes, and business. And, it only looks to get worse. $7.0 million for property tax relief will go a lot further to furthering Northfield’s “core values” than $7.0 million to expand our current cramped, but serviceable, library.

    1. David,

      It is true that a majority of the Council have some time to the Colleges. However, if you’d look beyond your preconceptions of college-related individuals, you’d see I have tried to ask how we will pay for the Safety Center and how we will keep our financial picture sustainable because businesses pay a larger share. I’ve suggested that the city reduce assessments for street improvements for business owners since it could be a tool to reduce the burden on businesses and it would help offset the effect of the reconstruction on their businesses. So despite my belief in smart growth (which is not college related), I have the same goals you do.

      That being said, consider how colleges do help build libraries, streets, and safety centers

      1. by being a very stable employer paying good wages and benefits 2. by bringing in a new group of students every year to spend money in Northfield who will go on to be alumni which we’d like to bring back (this should be a crucial part of our economic development effort – it’s in the ec dev. Plan, too) 3. by attracting residents, especially seniors, who spend money and pay property taxes here 4. by attracting small businesses which want to take advantage of the educated work force. 5. paying street assessments, property taxes on some of their property (at least Carleton does – on property for faculty housing) and other city fees 6. by their own local purchasing power

      But I’m signing off on this comment thread, since I know that I won’t change your assumptions and I’ve said all I feel I need to say on this subject right now.

  20. Betsey,

    Thanks for your time and comments.

    It is not really an issue of having the same goals, but how to achieve them. I am not necessarily opposed to a bigger library, or safety center. But, I do think that it needs to be faced honestly – as a major expenditure that will not return tax dollars. It may make the community a better place to live. However, that has to be balanced against its costs not against some nebulous concept of “place”.

    Regarding how the colleges build libraries etc. – those are all of the same things businesses do, only without much of the same taxes – local, state, and national. I don’t know that I would recommend that City services fall more proportionately on residential users as opposed to non-property tax paying entities; but, it certainly seems more fair – especially when one considers how “rich” the colleges are. To the extent possible, City services and costs should fall upon the users. Such a system works wonderfully with water, sewage, and garbage – all critical services. I don’t know why it wouldn’t or couldn’t work with less crucial services – like the library.

  21. Betsey: Even though it seems what you provided here was a venue for only David and I to both agree and disagree, I know there are more people who read your blog, than comment.

    So… I think that even though this conversation seemed limited to two stubborn individuals (David and I), with you trying to insert reason and rationale, it was somewhat clarifying.
    If nothing else, it informs each ‘side’ as to what arguments they must counter.

    Thanks.

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