Pope County Minnesota: 2nd Edition - Abby Huebsch
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Pope County Minnesota: 2nd Edition
County Infrastructure &
Opportunities for Economic Development
Abby Huebsch
Funded by:
The Klick Foundation, In Cooperation With
University of Minnesota Carlson School of Management
Pope County Minnesota Property Tax Analysis: County Infrastructure 1 Table of Contents Special Thanks .....................................................................................................................2 Executive Summary .............................................................................................................3 Analysis: Minnesota Counties .............................................................................................4 Minnesota Counties Trends .............................................................................................4 Issues and Opportunities in Pope County ............................................................................9 “Brain Drain,” Education, and a Declining Population. .................................................9 Infrastructure and Commerce ............................................................................................13 Pope County Transportation & Infrastructure. ..................................................................13 Pope County Highway Department. ..............................................................................14 City and Township Highways. .......................................................................................15 Township/City, & County Disconnect. ..........................................................................16 Differing Views. ............................................................................................................17 Speed and Convenience. ................................................................................................17 Transportation Funding. .................................................................................................18 Water and Sewer. ...........................................................................................................19 Capitalization of Value Added Resources .........................................................................20 Rejuvenation of Main Street. .........................................................................................20 Agriculture. ....................................................................................................................21 Service and Industry. .....................................................................................................23 Retail and Tourism. ........................................................................................................24 Business Directed Incentives .........................................................................................26 Closing ...............................................................................................................................28 University of Minnesota Carlson School of Management February 2012 Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure 2
Special Thanks
I was born and raised in Perham, Minnesota, a rural community similar in size to the
Minnewaska area. Growing up with a father who was on the Ottertail
Board of County Commissioners and a mother who was on the
School Board instilled a passion for politics in me at a young age and
gave me a solid understanding of how rural communities operate and
function. I was so excited to have the opportunity to expand my
knowledge of Minnesota government while researching rural
communities, economic development, and counties; all the while
learning more about things I’ve always been passionate about.
With the cooperation of University of Minnesota and the Klick Foundation, I was offered an
internship where the cost of my time for research and time spent drafting this paper was covered.
Keeping in mind my personal background and vision for the future, my professors agreed that I
was a good candidate for this internship as well. My experience interning in Pope County was
unparalleled and I know it will continue to serve me well in future endeavors. I am forever
thankful to my professors and the Klick Foundation for this awesome experience.
Throughout the course of the internship, I was fortunate enough to have the opportunity to meet
with many influential citizens and county officials with a wide array of opinions and ideas of
how to change the world, beginning in Pope County. I was able to gain firsthand knowledge in
how local government systems work.
This paper is coming to you via email from Washington D.C., where my current internship
brought me. I was chosen to intern for Senator Amy Klobuchar and to continue to research
business and economic development. My internship in Pope County has better prepared me for
this new endeavor, as well as set the stage for a future full of endless possibilities.
Forever Thankful,
Abby Huebsch
University of Minnesota Carlson School of Management
February 2012 Abby HuebschPope County Minnesota Property Tax Analysis: County Infrastructure 3 Executive Summary For this internship, I was asked by the Klick Foundation to further the research and findings of the report titled “Pope County, Minnesota Property Tax Analysis” by Kyle Canaday. Mr. Canaday, a University of Minnesota student, also did an internship for the Klick Foundation during 2009 and produced the first report of this series. The primary focus of Mr. Canaday’s report was an analysis of Pope County taxes, a declining population, budget deficits, and possible solutions to revitalize the economic sustainability of a deteriorating region. Mr. Canaday’s report also concluded that another contributing factor was a lack of funding for economic development. This paper will be the second of what will be an ongoing initiative for the Klick Foundation focusing on Pope County, Minnesota. More specifically, the work will further the research and independent views of University of Minnesota interns as they relate to the issues raised by Mr. Canaday. Issues which portray a very serious disconnect between the County, its residents, businesses, and cities. Pope County is interesting in its history, make-up, and in controversies that have taken place over the years. My research and subsequent conversations with county officials and residents finds many of the same views of those portrayed by Mr. Canaday. More interestingly, however, I found not only a disconnect between the County and those that make-up the various County entities, but also between Pope County and other Minnesota counties. University of Minnesota Carlson School of Management February 2012 Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure 4 Analysis: Minnesota Counties To begin, let’s take a look at Minnesota County statistics and trends for comparison purposes. Information for this analysis was obtained from various annual reports titled, “Minnesota County Finances Report” conducted by the Minnesota Office of the State Auditor as well as information from the Minnesota Department of Treasury. Minnesota County Trends. In 2009, Minnesota county revenues totaled slightly under $5.7B. During 2009, the Minnesota population was reported to be 5,300,942 while Pope County’s population was reported to be 10,922. 1 Figure 1 below shows a comparison of county revenues (per capita) for the State of Minnesota and Pope County. As you can see, Pope County revenue figures are approximately 25% higher than the average for other Minnesota counties. 2 Figure 1: Minnesota Counties & Pope County Revenue Comparison (Per Capita) 1 2009 Minnesota County Finances Report (Uncompressed Excel File), Minnesota Office of the State Auditor, http://www.auditor.state.mn.us/default.aspx?page=20110419.001. 2 2009 Minnesota County Finances Report (Uncompressed Excel File), Minnesota Office of the State Auditor, http://www.auditor.state.mn.us/default.aspx?page=20110419.001. University of Minnesota Carlson School of Management February 2012 Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure 5 Since 2002, the share of revenues derived from taxes has increased by 9% (from 35.7% up to 44.7%), at the same time that the share of revenues derived from state grants has decreased by 9.4% (down from 34.8% to 25.4%). This results in an overall shift of 18%. Taxes and state grants are the most significant sources of county revenues, at 70.1% (Minnesota) to 76.9% (Pope County) of the total revenues during 2000-2009 (Figure 2). The next two largest sources of revenues for counties are charges for services and federal grants, making up an additional 21.7% (Minnesota) to 17.1% (Pope County). The remaining 6% (Pope County) to 8.2% (Minnesota) of revenue was comprised of local unit grants, interest earnings, special assessments, licenses/permits, fines/forfeits, and all other sources of revenues that were not specifically broken down and included in the revenue analysis. Figure 2: Sources of County Revenues From 2000-2009, Minnesota Counties saw expenditures and outstanding long term debt increase dramatically (Figure 3). In actual dollars, expenditures and outstanding longterm debt increases totaled nearly five times the amount counties saw in revenue increases. In constant dollars (with inflation factored in using 2000 as the base year), counties actually saw a decrease in revenues at the same time expenditures and outstanding long term debt increased by 80%. University of Minnesota Carlson School of Management February 2012 Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure 6 Figure 3: Minnesota County Trends (Actual vs. Constant Dollars from 2000-2009) When comparing figures during 2008-2009, all areas of the Minnesota County budgets saw an actual increase (Figure 4). As noted earlier, in 2009, Minnesota Counties reported nearly $5.7B in revenue, with expenditures at $5.8B, showing a budget shortfall. How are Minnesota Counties balancing their budgets when their expenses are rising in larger amounts than their revenues? Figure 4: Minnesota County Trends (Changes from 2008-2009) Significant decreases in revenue categories such as interest earnings and local unit grants minimized the overall growth in county revenues. At the same time, outstanding long term debt increased by nearly 30% ($3.4B) in 2009 compared to that of 2008. University of Minnesota Carlson School of Management February 2012 Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure 7
It would appear that:
Overall Revenues
-(less) Expenses
=County Budget Shortfalls
County Budget Shortfalls
-(less) Capital Outlay (Amortized Projects)
=Increased Long Term Debt
Budgets can be balanced in a variety of ways. The typical household or business relies on
revenue to cover their expenses and strives to show a net gain or profit. When the revenue falls
short of covering the expenses, credit and extended payment terms are used. If the household or
business is relying on credit or extended payment terms too heavily, eventually it will catch up
with them. It is times such as these that proper financial planning is necessarily for survival.
In theory, it appears as though Minnesota counties are borrowing money to cover large portions
of their budget gaps. Does this justify the increases in long-term debt? If this theory is true, at
some point, the counties will be accountable for the payment of the debt, causing a ripple effect
for future generations. This also impedes future growth, development, and infrastructure
projects.
What is the end result of the long-term debt? Does the county show signs of substantial
improvements in infrastructure, economic development, housing rehabilitation, transportation,
and maintenance? Or does this simply imply that they are borrowing money because they are not
investing wisely, or are slowly going broke? Short of borrowing more money, how best does the
county balance the budget? Raising taxes? Spending less? Raising standards? How do all of
these decisions affect the long term stability of attracting and keeping businesses and residents?
Those are philosophical questions which bring out many strong opinions of debate. Ultimately,
refinancing long term debt only delays the inevitable.
How did Pope County compare to the rest of Minnesota during 2009? As you can see, Pope
County shows lower than average expenditures in the following departments: Human Services,
Public Safety, Conservation of Natural Resources, Culture & Recreation, Sanitation, Economic
Development, and Debt Service (Figure 5). Pope County, however, shows higher than average
University of Minnesota Carlson School of Management
February 2012 Abby HuebschPope County Minnesota Property Tax Analysis: County Infrastructure 8 expenditures in the following three departments: General Government, Streets & Highways, and Miscellaneous Current Expenditures. The streets and highways in portions of Pope County are significantly higher than the average county during 2009. How much of this is related to only County Highways versus leveraging state and federal resources on behalf of the cities and townships in the area? How would these numbers be different if the highway department contracted work out to private industry? Later in this paper, some of these questions will be answered. Figure 5: Minnesota vs. Pope County Expenditures According to the budget numbers received from the Pope County Auditor/Treasurer’s office, Pope County revenue increased by $4.2M, while the county recognized deficits totaling $4.7M during the 2000-2009 timeframe. During this same time period, debt service rose by $3M and capital outlay another $1.5M. Since Pope County is currently in the process of granting the County HRA the authority to levy funds for economic development, it will be interesting to see how this affects the region in the future since the County shows zero dollars for economic development and is already in a tremendous amount of debt. University of Minnesota Carlson School of Management February 2012 Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure 9 Issues and Opportunities in Pope County After a thorough analysis, the Minnewaska area proves to be a place with endless opportunities. We need the right people in the right places and motivated to see a better Minnewaska. They need to create a vision for the future and then break down that vision into actionable steps that are realistic and achievable. Throughout the following sections, I will outline some recommendations that I, as an outsider to the community, see as potentials for growth and development. The recommendations and opportunities that are offered in this paper are very similar to those made by my predecessor, Mr. Canaday. While it seems that new recommendations would be more appropriate to address, I purposely chose to stick with similar thoughts because, to me, they are the most important factors to consider for Pope County. In order to better understand the recommendations, we need to first understand the issues facing the community and why they appear to be present. The Brain Drain, Education, and a Declining Population. Like many other rural areas in the country, the Minnewaska area seems to be experiencing a phenomenon commonly referred to as the “brain drain” which simply refers to the migration of people with technical skills or knowledge in search of better opportunities. Many students who graduate from Minnewaska Area High School leave Pope County to pursue degrees and higher education. Few return to the area after completing their studies because the opportunities in large cities for jobs and career development are seemingly much higher than in the rural areas. Research shows that most students in the top half of a rural graduating class leave the area and settle into an urban setting. The remaining students tend to stay in the rural area and settle into jobs that require less skill, take on jobs within family owned and operated businesses, or continue with jobs that they held while in high school simply because they can and they are comfortable with it. This makes me wonder who the leaders of Pope County are. Are the leaders leaving with the top half of the graduating class? Or are they the people who stay in the community? Is higher education necessary to lead a community to achieving growth? University of Minnesota Carlson School of Management February 2012 Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure 10 Not only does the brain drain affect individuals; it also affects businesses and organizations. Over the past couple of decades, Pope County seems to have maintained the economic sustainability of some local area businesses. Too often, however, businesses are pulling up roots and moving to other areas or simply going broke. Why does this happen? It appears that some local authorities in the area are not as proactive as they could be to address the needs of the business community properly. It’s logical to think that local area businesses should ask for assistance when they need it, but it’s also logical to think that by having more programs to offer, being proactive and widely recognized in the community, and through regular communications, the local economic development authorities can have a greater impact. Many times you hear the saying, “You can lead a horse to water, but you can’t make it drink.” But in our case we need to ask the question of who should be leading – the economic development authorities or the local area businesses? One would think that if the economic development authorities were helping to lead the way, the businesses would better appreciate and utilize the resources that could be available. This, however, isn’t always true. Economic development authorities need to be scrutinized and reevaluated to determine whether or not they’re an effective use of city and county resources. Additionally, Pope County also seems to lack investments in areas that will help to sustain privately owned for-profit businesses for the long haul. According to individuals in Pope County, the county has recently increased operations that directly compete with the private sector businesses, sometimes using public funds to lower costs. Is this right or wrong? In a free market system, prices are determined by supply and demand, unlike a controlled market system in which the government actively regulates prices and/or supplies. Should the County be able to leverage funding that is not available to the private businesses in order to offer comparable products and/or services as a source of revenue? Are public tax dollars being used in a fair and consistent manner? How does the private sector compete with governmental agencies and still survive? Does this cross the line from a free market system to a controlled market system? Why do the local government entities seem disinterested in the concept of providing incentives in order to keep residents and businesses in the area and harvest the local, homegrown talent and University of Minnesota Carlson School of Management February 2012 Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure 11 opportunities down the road? Does this lead to a substandard environment for the local economies? Do counties need to raise the minimum standards to justify the taxes for the area? If so, standards must be enforced or they become pointless and unfair. Pope County could offer incentives designed to reverse the brain drain and to get people to come back to the area following the completion of their college degree. It’s these types of people that will ultimately keep the economic vitality alive in the region and become the “movers and shakers” of the town. Local government, businesses, and organizations need leaders such as these to grow and stay successful. And communities need these leaders to propel the community forward and to promote new growth and sustainable, long-term development. Incentives can be as simple as local tax incentives similar to the Federal First Time Homebuyers Incentive recently offered. This can lead to more homes being purchased in the area, which would be a major step towards boosting local economic development. It would increase the overall tax base, fill the schools, provide employees for local businesses, and afford more minds to help generate positive change. Why not offer local tax incentives in a similar fashion to TIFF? But, as with any incentive, where does the funding come from? One solution could be for the State Legislature and Governor to modify laws to allow for net gains on the sale of property to have a local assessment that gets pooled into a local general fund. It only seems logical that this would offer the counties an opportunity to raise the standards of establishments in the area, therefore raising actual values of the properties, and increasing the chances that net gains will be an outcome on property sales. If local governments were to implement local assessments of 5-10%, over time this could help to relieve the pressure of the cuts to Local Government Aid (LGA) that townships, cities, and counties are receiving from the State of Minnesota. LGA is a program that many local units of government can’t afford to lose, but at the same time, the State of Minnesota doesn’t seem to be able to afford to keep it in place – a double edged sword that has begun to slice into local budgets. University of Minnesota Carlson School of Management February 2012 Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure 12 This type of program would need to be phased in over time. In the beginning, it could eventually replace the LGA funding that the state provides, but over time, it could also be used as grant dollars to local area units of government to help invest in raising the standards of living, replace deteriorating infrastructures, and be used for economic development purposes. In the end, it could be a win-win situation for the State of Minnesota and for local area governments, if planned properly. A plan such as this would require minimum guidelines are set, that they are enforceable, and that a basis to help those townships, cities, and counties that would need assistance is provided. It is imperative that the government offers this type of program statewide. If not, there is no way to determine the program’s successes. As with any idea, there are pros and cons, but everything should be open for discussion and consideration as the state and local governments look at ways to revamp and balance budgets properly for the long term. The objective of this paper is to create a discussion surrounding new ideas and incentives for development and our aim in this discussion is to bring as many new ideas as possible to the table. Another possible incentive lies in changing how public funds are spent. Instead of using public funds to help defray costs to the consumer through the governmental agencies and services, would it be as cost efficient to use these same funds to help privately owned and operated businesses lower their costs through incentives? Or, does this path open the door for privately owned businesses to profit more from public funding? The opinions go both ways and it is evident that further analysis and examination needs to be conducted to determine whether or not public funds are being efficiently and effectively utilized. University of Minnesota Carlson School of Management February 2012 Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure 13 Infrastructure and Commerce A large component of the 2010 analysis on Pope County hinges on increasing the depleting tax base and reviewing standards for businesses and residents alike. In order for the general population to care about what is going on and to encourage change, there needs to be a proactive effort by the local area governments to either assist or penalize property owners that do not keep up their properties as they should be. The 2010 analysis suggested that setting minimum standards and enforcing them could help to increase property values, make the area more appealing to visitors and potential new residents, and eventually to help provide additional funding from tax dollars or economic development. Like many of the properties that are depreciating in value and use, local roads and infrastructures are also becoming obstacles for local area businesses and property owners. Local infrastructures may include, but aren’t limited to water, sewer, lighting, utilities, and transportation. Pope County Transportation & Infrastructure. Mr. Canaday’s report found that Pope County taxes increased 67 percent over the ten-year period between 2000 and 2009. During this same timeframe, the infrastructure in Pope County remained relatively the same with a slight year-by- year variance. Pope County has had no new infrastructure or road projects in the past five years and hasn’t scheduled any new projects through the year 2015. The 2010 analysis of Pope County taxes revealed that highways, streets, public safety, and infrastructure spending in Pope County were typically stagnant or declining. In all, total spending in Minnesota Counties for streets and highways remained between 15 and 18 percent, fluctuating only one percent or so each year. Public safety also remained fairly constant during this same timeframe, changing only one or two percent each year between 2000 and 2009 (Figure 6). University of Minnesota Carlson School of Management February 2012 Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure 14 Figure 6: Primary Categories of Minnesota County Expenditures (2000-2009) The highest category of expenditures for counties over the ten-year period was human services, although the reports show that this area has decreased approximately 5% over the timeframe and is now closer to the other expenditures. Together these four expenditure categories account for almost 80 % of all county expenditures. How does this compare to Pope County? As you can see, Pope County has very little consistency (Figure 7). Unlike the average county in Minnesota, streets & highway spending is significantly higher. Figure 7: Primary Categories of Pope County Expenditures (2000-2009) Pope County Highway Department. Brian Noetzelman, Pope County Highway Department Engineer, has been working in Pope County since 2001. The primary focus of his department as University of Minnesota Carlson School of Management February 2012 Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure 15 it relates to Pope County is to build and maintain road systems around and throughout Pope County, with a secondary focus being that of bridge maintenance. Maintenance is important to maintaining a quality structure, yet it does not encourage optimal development or growth for the local communities. When Pope County shifts its focus from maintenance to new projects, it will certainly add value to the area. This added value would be create a Pope County that is attractive to business recruitment and retention, new residents to the area, and would show local residents that progress and improvements are being made to their area, further creating community between residents. Public entities contribute to the local economy in different ways than the private sector. One would wonder, is it cost effective to continue to use a County Highway Department, or is it cheaper, in the long run, to outsource the business to private industry? The same can be asked about the collaboration efforts between townships, cities, and counties. Currently, there is discussion amongst Minnesota counties of county consolidation. By consolidating counties we would be able to share resources between counties and could free up revenue for use in project creation and infrastructure development. City and Township Highways. The Pope County Highway Department provides some services to cities and townships, such as consultation services with the county engineer on prospective projects. However, the Pope County Highway Department does not work on the actual projects. There are many constituents within the county that are in favor of road development projects. Whether it is paving a dirt road, expanding the road to meet State and County guidelines, improving traffic flow and safety, or updating deteriorating infrastructure, there are several projects that would greatly benefit the area. In order for a project to move ahead, the city, township, or county all have to be supportive of the project. This is also true in cases where a constituent or business is willing to cover the costs of the project, including research, planning, design, and implementation. If all parties are not on board with the project, it is tabled and likely will not progress further. University of Minnesota Carlson School of Management February 2012 Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure 16 The County has many regulations involved with road projects. So many, that the cities and townships are conducting their own projects completely independent of the County government. In the end, it may cost them more than if they had worked directly with the County and leveraged some of the resources available to the County for road funding. Or, people decide that they don’t want to bother with the regulations and determine that the project isn’t worth the effort. Either way, the area is adversely affected and loses valuable infrastructure development. Bearing this in mind, think of the possibilities that could take place if all of the local governments pooled their resources and worked together. There is no reason that Pope County, Douglas County, Grant County, and Stevens County all need their own highway departments when the total landmass of the four counties is equal to that of Ottertail County (located just north of Pope and Douglas Counties). The government entities within Pope County need to shift their core focus from maintenance to development. Substantial road projects would bring standard conditions to a higher level. Once the conditions are improved, future repairs and maintenance would be minimal. This also provides opportunities to focus on the deteriorating infrastructures in the area. By coordinating new projects and creating infrastructure needing minimal maintenance, county governments can continue to focus on new projects and to perpetuate the cycle of development and growth. Township/City & County Disconnect. In speaking with local city and township members who have worked on projects within Pope County, it became apparent that local people are not comfortable directly contacting the county. From the conversations that took place, if a city or township constituent wants to relay a message to the county, rather than contacting the appropriate person at the county level, they will contact their city or township officials to have issues filtered or relayed through them. Once the city or township officials have been contacted, they will in turn take it back to the city/township board to decide whether the issue justifies going to the county or not. Sometimes this is done despite the fact that some of the ideas/projects won’t cost the local unit of government any money as the citizens or county may be capable of paying for it. There seems to be a definite disconnect between the County and the cities/townships that stops many projects/ideas before they ever get off the ground, which is unfortunate for everyone in Pope University of Minnesota Carlson School of Management February 2012 Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure 17 County. As shown in the upcoming sections, there is a need for infrastructure improvements in Pope County, yet there is no real vision for any significant changes at the present time. Over the years, there have been several projects that have been proposed that the city, township, or county have not approved. Even though these projects wouldn’t cost their respective governments. It’s these projects that impede the process of development and increased infrastructure. One would think that if a constituent, property owner, or local organization wishes to move ahead on these types of projects at their expense, which the elected officials would be willing to sign off on the project. In most instances, this does not hold true for Pope County. Differing Views. To the naked eye, one may think that Pope County is isolated because Interstate I-94 bypasses the county and runs through the neighboring cities of Sauk Centre and Alexandria. However, this is not the case. Pope County is home to the intersections of State Highways 28, 29, 55, and 104. It is fifteen minutes one direction and twenty-five minutes the other to Interstate 94 (in Alexandria and Sauk Centre respectively); and is near US Highways 71 (running north and south) and 23 (running northeast and southwest). Pope County is positioned to take one southeast to Minneapolis/St. Paul and Chicago; northwest to Fargo and Winnipeg; west to Morris and Sioux Falls; or northeast towards the Great Lakes. In addition to the highways and interstate access, Pope County serves as a junction point for the Canadian Pacific Railroad, where rail traffic can continue east to the Twin Cities or Chicago, west towards the Port of Vancouver, or north towards Winnipeg. In effect, the Minnewaska area has the potential to be a major transportation hub for international business in West Central Minnesota. To elaborate, Pope County could become the center of business transportation for the five-state area. Pope County is located within a 500-mile radius of Omaha (NE), Minot (ND), Des Moines (IA), Williston (ND), Rapid City (SD), and the major shipping ports of Duluth, Chicago, Vancouver, and Winnipeg. Pope County has a great opportunity to be an attractive location for University of Minnesota Carlson School of Management February 2012 Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure 18 major business relocations, expansions, or satellite divisions, without being considered isolated from the rest of the region, country, or to international locations. Speed and Convenience. One downfall to the transportation system in Pope County is that the two lane roads do not allow for the same speed and convenience of interstate travel. Many of the citizens of Pope County feel very isolated from many metropolitan or urban areas, unlike those of their neighbors in Alexandria and Sauk Centre. While Pope County cannot reroute the interstate, they can work to leverage the major highways and roads through Pope County, which in turn, could increase the number of people passing through the area. People travel based on convenience and in the public’s perception, driving faster equates to shorter trips. Increasing speed limits on major highways could potentially help to utilize more of the major highways versus the interstates, which not only have convenience factors, but also economic factors for the region. How do you increase the perception of being “faster” in rural areas? To start, one could consider increasing the number of driving lanes similar to what has been suggested with State Highway 29 between Glenwood and Alexandria. This suggestion would increase the highway from two lanes to four lanes between the towns. One could also consider routing freight traffic around cities versus through the downtown areas, which not only slows down traffic, but also creates some unsafe conditions for pedestrians and bicyclists. Or, one could define alternate routes that take about as much travel time as interstates and major highways (due to mileage, traffic congestion, etc.). Short of simply increasing speed limits, there are several ways to efficiently and effectively help people travel and arrive at their destinations in a timely manner. Transportation Funding. Because County and Municipal State Aid Street Funding is allocated to counties and municipalities with populations greater than 5,0003, cities and townships in Pope County are NOT able to be access this funding without the aid of the county. Pope County is large enough in population to be eligible to obtain funding from the County State Aid Highway 3 Minnesota’s Highway Finances, Minnesota Department of Transportation, http://www.dot.state.mn.us/about/pdfs/historyofrevchanges.pdf University of Minnesota Carlson School of Management February 2012 Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure 19 (CSAH) Fund because the overall county population is above the 5,000 person minimum threshold. Typically, the local cities and municipalities must rely primarily on their own funding because they are reluctant to utilize or leverage the county resources purely because of political controversies. This proves to be a challenge when local cities and municipalities have a need or desire to implement street projects, but the boards, councils, or commissions aren’t working together. History has proven that the political climate in Pope County continues to be challenging to overcome in this issue. While it is challenging to overcome, there are several opportunities to increase funding by working together with the County on projects. This seems logical and much more realistic in the short term, or until they can attract enough new residents to the area to make a difference in the overall population on their own. The cities and townships in Pope County can’t seem to set aside their differences, forget the issues of the past, and work together to eliminate the struggle to finance projects that are needed to benefit the area as a whole. If they were to do this, wouldn’t that provide a major boost to the economic development of the region? Water and Sewer. A report by the USDA titled, Economic Impact of Water/Sewer Projects and Facilities on Rural and Urban Communities suggests that small water and sewer projects generate private investment and public funds, thus increasing the overall property tax base. It’s a proven fact that major water and sewer projects adds value to many more people than simply those involved with the initial project. These water and sewer projects are the most micro and basic forms of economic development. The forms that sustain and drive further development in rural communities. By offering incentives for new construction, local government entities encourage cost sharing for water and sewer projects between the private and public sector. Not only will the cities benefit from water and sewer improvements, but through cost savings, the government entities become the “good guys” after the process is completed. Why don’t Pope County and cities/townships in the area openly welcome and encourage new building projects that involve water and sewer sub- projects through cost sharing? University of Minnesota Carlson School of Management February 2012 Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure 20 Capitalization of Valuable Resources It is illogical to only increase the efficiency of the roads entering and leaving the area, without also promoting the valuable resources (resources that an area provides which add value to the community and surrounding areas). If Pope County worked to continually develop the entire area, while capitalizing all of the valuable resources, the need for increased traffic capacity would come. If more businesses were coming to the area bringing more people with them, Pope County would need to better connect itself to the rest of the state or offer incentives for people to remain in the area and buy locally. I’ll continue this discussion later. Before that, I’d like to discuss some other areas I chose to research and base my recommendations off of. They are: the rejuvenation of main street, agriculture, service and industry, retail and tourism, and business directed incentives. Rejuvenation of Main Street. As it currently stands, office buildings and service organizations occupy many of the buildings on Glenwood’s “Main Street,” otherwise known as Minnesota Avenue. There are very few retail businesses and restaurants located on Minnesota Avenue. The rejuvenation of Glenwood’s main street needs to start with the relocation of these businesses currently occupying prime retail spaces in the area. There are many other towns in Minnesota that have the welcoming culture and atmosphere necessary to field the full force of the Minnesota tourism industry in the summer. Some of these stores are open seasonally while others remain open year ‘round and encourage holiday traffic. The problem with seasonal or limited quantities of retail shops is that during the off-season, the local residents are forced to shop out of town, which soon becomes habit. A community cannot be expected to survive on the revenues generated from tourists, but must work together to become self-sustaining. There are several programs out there that help to promote local shopping. The Glenwood Chamber of Commerce has had a “Shop Local” promotion each year during the Holiday season. Why does the Chamber focus on the holiday season to promote shopping locally with their give away? Why are there not incentives imbedded in the retail sector to provide University of Minnesota Carlson School of Management February 2012 Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure 21 rewards for repeat business from the local residents? On the other hand, the Glenwood Chamber also promotes a program using “Minnewaska Dollars” as the Chamber Bucks to be used locally. While this program can be used all year long, it is not promoted well enough for people to use. Why don’t local businesses offer Minnewaska Dollars to their employees for bonuses, promoting the money to be spent locally and fostering a “support each other” type atmosphere? Why don’t more people know what “Minnewaska Dollars” are? If they don’t know it exists, how are they supposed to use it? Minnesota Avenue has the potential to be another Sinclair Lewis’s picturesque main street. The places in town where you can park on one end and roam up and down the street, visiting stores as you pass. There could be a book and coffee shop with wireless Internet, encouraging weekenders to come in and check their email or sit and enjoy a relaxing book over coffee, an ice cream parlor or candy shop, more specialty gift shops, or places with kids toys, games, or things to do; creating a perfect day out for the family. Another idea involves collaboration between the communities of Glenwood, Alexandria, and Sauk Centre. This collaboration’s mission would be to drive traffic to the three communities through a “Tour of Minnesota’s Main Street.” This tour would feature the main streets of Alexandria, Glenwood, and Sauk Centre. People would be encouraged to exit Interstate 94 in Alexandria and Sauk Centre and would travel through the three communities using State Highway 28 and 29 instead. Each community would offer incentives for visitors to partake in the Tour of Minnesota’s Main Street (ie: free coffee at a shop in Sauk Centre, buy-one-get-one lunch at the Lakeside in Glenwood, and a coupon for free ice cream in Alexandria). When tourists embark on their tour, they would be given a “passport to the lakes” that guided the visitor through each community and had coupons for various stores inside. The tour would primarily target people travelling north from Minneapolis or south from the Fargo area. Cannon Falls, a town in Southeastern Minnesota, is one of several towns that is in the process of rejuvenating its main street and downtown area. A wealthy entrepreneur and businessman from the area decided to invest his money in the buildings and businesses of downtown Cannon Falls. This ongoing project started in 2006 and has created three new businesses and remodeled four buildings. This rejuvenation project has had astronomical success in the town of Cannon Falls. University of Minnesota Carlson School of Management February 2012 Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure 22 On weekends, the businesses are full of people who drive to the area for a day trip. One can head to the Deli, the first in the installment, any day of the week and find it packed. The success of the Cannon Falls main street rejuvenation project put the city in the national spotlight. President Barack Obama visited Cannon Falls on his tour of the Midwest in late summer 2011. Cannon Falls was the only Minnesota city Obama visited on his tour. His visit consisted of a town hall meeting with locals where he congratulated the Cannon Falls on their accomplishments in increasing business and keeping Main Street America alive and flourishing. Agriculture. Rural communities in Minnesota are dominated by agriculture. This agriculture has, however, changed over time. Fifty years ago, many of the agricultural products produced in one area were consumed in that same area. In today’s global economy, we find our farmers specializing in certain crops, such as corn and soybeans, and no longer continuing to provide the basic produce that local people need. One way I see to rejuvenate the economies of both the Minnewaska area and Pope County as a whole is to encourage farmers to go back to the basics. Right now there is a huge campaign for people to ‘buy local’ and support local businesses. So, why not include agriculture? The county cannot directly contribute to the rise of value added agriculture. The county can, however, work to create the systems that encourage and support value added agriculture now and in the years to come. Another component of the agricultural incentive programs could be an incentive provided by local government to encourage farmers to produce products that people locally can buy. Bring the farmers markets like those in the Twin Cities to the Minnewaska area, not just for the summer months, but all year long. If the farmers in the area are encouraged to produce the products people need, the area can become its own self-sustaining community. Local markets are a great way to keep money circulating through the local community as opposed to circulating through the global economy and global financial markets. Local markets equal local revenue. While it is not feasible for farmers to grow everything that people need, they can focus on value added resources for their local economy. Like the Cannon Falls scenario previously mentioned, University of Minnesota Carlson School of Management February 2012 Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure 23 this could help to increase business, and keep Pope County farmers and agriculture related businesses alive and flourishing. There is a small, but growing effort where the local greenhouse grows fruits and vegetables during the winter which is being used locally. Why aren’t there more entrepreneurial incentives to provide funding for locally owned/operated greenhouses producing fruits and vegetables for the area residents? Why can’t the local Farmer’s Market be run all year long, just sold indoors during the winter? This is possible for the Minnewaska area, it just takes a little more planning, cooperation, and support from the residents. One local area business raises chickens, processes them naturally, and sells them to many markets outside of the Pope County area. What is surprising is that the local businesses of Pope County who sell chicken (restaurants, meat lockers, and stores) don’t purchase their chickens from the local producer, forcing them to cater to the larger markets in the Twin Cities metro areas. Again, this provides an opportunity for the Minnewaska area farmers and proves to be better for the local economy. It’s also better for local area businesses who are interested in working together and “coop-ing” their resources, collateral, and profits. Service and Industry. Many new businesses are located in the Minnewaska area such as the nationally known businesses of American Solutions for Business, Healthland (formerly Dairlyland Healthcare Solutions), and WASP. They haven’t been known in recent years. Current trends in Pope County show that more businesses are leaving the community than joining it. The Glenwood Development Corporation does some work in the area, primarily financing low- interest loans to businesses as a form of “gap financing” to already established businesses in the area. In addition to the Glenwood Development Corporation, the Klick Foundation strives to enhance the economic development in the region. The Klick Foundation has established Business Incubators (Incubators) in the Minnewaska and Long Prairie areas, both small towns in Western Minnesota. The primary focuses of the Incubators are to support and incentivize new business development in these communities, primarily in the service or manufacturing industries. The difference between the two incubators University of Minnesota Carlson School of Management February 2012 Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure 24 is that the Long Prairie Incubator is run by the local city government, while the Minnewaska area Incubator is privately run by the Klick Foundation. The Long Prairie Incubator has been in existence for approximately four years. At one point, it was home to a pillow company (Rustic Ridge Pillow & Hospitality Supply Co.) which moved locations from Alexandria to Long Prairie in early 2011. The city of Long Prairie offered the company the entire business incubator warehouse (designed to house four new businesses) at a very low rent. This company didn’t bring any new jobs or people into Long Prairie, as the eight people who work for the company traveled daily from Alexandria to Long Prairie. The Long Prairie Incubator isn’t serving the people of Long Prairie or acting as the Klick Foundation had intended. The purpose of a “business incubator,” as the Klick Foundation describes, is to “support new businesses in a community, increase the community’s number of jobs, thereby supporting and boosting the local economy.” When I spoke with community members in Long Prairie (a nurse, teacher, coach, business owner, and chiropractor), none had heard of the Incubator and didn’t even believe that Long Prairie had an industrial park. The same is true of the Minnewaska area Incubator. Both business incubators need press and advertising to let local residents and aspiring entrepreneurs know of the opportunities provided in these communities. The “if you build it, they will come” philosophy only works when “they” know that “it” exists. Each Incubator should have a website connected with the city, county, and other economic development sites that promote growth and opportunities. Press releases should go out detailing the opportunity provided by these Incubators as well as what the Incubators are currently producing. Without knowing what the Incubator is and does, people won’t utilize the resources it offers. As it currently stands, the Minnewaska area Incubator offers opportunity to those looking to start a business in the technology, service, and industry fields. These are important businesses to have in a community – there isn’t a town without industry. I think, however, that the incubator should also be open to people looking to open a retail business on Main Street (or in Glenwood’s case, Minnesota Avenue). This increased business on main street would help with the rejuvenation project and would provide a place for tourists to shop and gather in the Minnewaska area. At the University of Minnesota Carlson School of Management February 2012 Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure 25 same time, this would provide the assistance that a starting business would need in order to get past the “growing pains” of the first few years. Research shows that a business must survive the first three to five years to be considered successful and incubators, when utilized properly, can help to avoid closing down during those years they typically struggle to become established. Retail and Tourism. Perhaps the largest and most underutilized value added resource in Pope County is tourism. Pope County is home to Minnesota’s 13th largest lake, Lake Minnewaska. Lake Minnewaska has the reputation around the state of Minnesota for being a wonderful sight, with a community that sits right on its banks. As discussed earlier, when tourists come to the Minnewaska area, they’re not contributing to the local economy enough to sustain all that is needed. According to some national statistics, locally owned and operated businesses traditionally return 68% of their income to the local economy through jobs, taxes, investments, donations, or business to business transactions. To a county as small as Pope, this make a big difference in the big picture vision of the local economy. What people don’t purchase in the Minnewaska area or Pope County hurts the local economy more than one may think. Most tourists and seasonal property owners stay at property on or near Lake Minnewaska but don’t shop locally because the area doesn’t appear at first glance to have what they are looking for. Consequently, they find themselves traveling to the nearby community of Alexandria where they are able to fulfill their shopping needs – in both grocery and retail stores. Pope County seems to be rich with Scandinavian and German ancestry. One of the local shops, The Valley Troll, is a seasonal Scandinavian gift shop located downtown Glenwood. During the beginning of May each year, Glenwood posts the Norwegian flag throughout the downtown area along with the United States flags to celebrate Syttende Mai, or the Norwegian Constitution Day. While there is a lot of activity in the area celebrating Scandinavian ancestry, there isn’t as much for the Germans or other ethnic cultures. Has anyone ever thought about opening a German styled restaurant, pub, and hotel? What better attraction to an area that has a strong sense of German culture than German music, food, beer, and rooms for rent to tourists? Pope County has a very limited number of hotel rooms available, yet there aren’t a lot of specialty bed and breakfasts either. Where do people stay when they come to Lake Minnewaska or visit the University of Minnesota Carlson School of Management February 2012 Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure 26 community for an event such as a wedding or the summer festival, Waterama? Why should I, as a tourist, stay in Glenwood when there are hotels and resorts with all of the amenities and attractions I want in Alexandria? What incentives are there for people to stay in Pope County as opposed to Alexandria? But why stop with the Germans? The local Italian restaurant, Café Bella, recently closed the downtown Glenwood location and is now housed in Alexandria. If there were more specialty places to work, shop, stay, and play, maybe this area could hit the national radar like Cannon Falls did. There’s a lot of cultural, arts, and recreational history that seems to be disappearing in the Pope County area, despite a few people who are working hard to try and keep it alive. Pope County and the Minnewaska area need to have a “Rainy Day” plan. This plan provides entertainment for tourists and cabin owners within Pope County during rainy days or whenever they feel like getting people out of their cabins and interacting with the community. There are several different places that are popular attractions to both residents and tourists alike. The Minnewaska area has Central Square, a cultural arts and community resource center; Pope County Historical Society and local museum, plenty of parks, trails, lakes, and scenic sites to picnic at, restaurants to meet friends at, and many other places to eat, shop, or visit. While some of these places do run all year long, there are some that are seasonal attractions, yet all play an important role in the community. The Minnewaska area should continue to make use of these valuable resources and needs to advertise them to visitors. Pope County has many opportunities to become a premier destination area such as that of Nisswa, Duluth or Brainerd (Minnesota) or that of Medora (North Dakota). Even their neighbor, Alexandria (Minnesota), has a number of small, specialty shops, which bring people into the area and contribute tremendously to the local economy. The more people who come to the area, the larger it becomes. The people of Pope County complain about this, yet don’t pressure the local government units to change so that this can become a reality instead of a wish. Business Directed Incentives. The final segment of my research entails the necessity for the city and county to offer business directed incentives. These incentives should be designed to promote business development and expansion in new and existing businesses. Incentives that might be University of Minnesota Carlson School of Management February 2012 Abby Huebsch
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