2010 Annual Report by Jody Gunderson

NORTHFIELD ECONOMIC DEVELOPMENT AUTHORITY

Annual Report

2010

2010 Board Members Jenelle Teppen President

Northfield Economic Development Authority ECONOMIC DEVELOPMENT IN NORTHFIELD: 2010

Steve Engler Vice President

JENELLE TEPPEN, PRESIDENT

Rhonda Pownell Secretary/ Treasurer and City Council Liaison

Jim Pokorney City Council Liaison Rick Estenson Jack Hoschouer (appointed August 2010) Victor Summa

MISSION STATEMENT Operating under the authority of the City Council, the Economic Development Authority shall be the chief economic development agency for the City. Goal The primary goal of the Economic Development Authority of the City of Northfield is to “improve the economic condition of Northfield through appropriate commercial and industrial development, thus creating a higher tax base and further job opportunities, all in ways that meet the guidelines of the City’s Comprehensive Plan.” Approved by the Northfield City Council, Resolution 90-292, September 17, 1990

n 2010, the Economic Development Authority began an ongoing discussion of what constitutes economic development. The EDA’s charge is based on a traditional understanding of economic development: direct investments (infrastructure development, tax abatement, loans and grants to businesses) that expand Northfield’s tax base and increase employment. Its programs, however, have expanded to include more indirect activities: consulting services, advocacy, tourism-related promotion and support to local non-profit organizations. The lingering impact of the recession on both citizens and the city warrant continuing conversation about whether and how such indirect activities have an impact on the primary EDA goals of expanding the tax base and increasing employment. By design, the Authority focuses on both short-term conditions (such as emergency loans and small grants to help local businesses cope with the effects of flooding or road construction) and long-term conditions (such as planning and financing activities to ensure an appropriate supply of commercial and industrial property). At issue is how to balance these activities and timeframes in ways that will support and sustain existing businesses while attracting new and larger businesses. During 2010, the EDA was often drawn into procedural disagreements and lengthy discussions of policy. One of the central questions underlying the debates is about the balance of attention and investment spent on downtown versus commercial and industrial development in other areas of the city, particularly the land annexed for a new business park. Some EDA members placed the highest priority on incremental efforts to retain and sustain existing businesses in the core downtown; others placed the highest priority on preparing for more mixed-use commercial and industrial development. There is a consensus understanding that one of Northfield’s most important characteristics is its vibrant small town charm. The core downtown is arguably stronger and more appealing than that of

Northfield Economic Development Authority

surrounding communities, and is an attractive asset. EDA grants and loans in 2010 were almost exclusively focused on supporting downtown businesses and organizations. But the tax base and employment in downtown is not sufficient to drive the economic vitality of the entire community. Building and business owners note that property taxes are unsustainably high; retail and office employment are stable, but unlikely to expand enough to drive the community’s economic growth. Although there is considerable interest in “infill” development, there are, in fact, relatively few buildings and little land available in close proximity to the core downtown, and the physical assets that do exist are relatively expensive, when compared to Northfield’s competitor communities. The most significant accomplishment of the EDA in 2010 directly addressed the long-term need for more commercial and industrial land. The Authority hired the Hoisington Koegler Group, Inc. to work with a citizen steering committee to develop a master plan for two properties: a “north” parcel of 530 acres recently annexed into the city, and a “south” parcel in Bridgewater township. HKGi drew on the existing city planning documents, the land development code, and prior plans and studies to prepare a thoughtful mixed-use plan. A realistic assessment of market demand for such development informed a deliberate staging strategy for building out the infrastructure. The planning process included extensive steering committee meetings, three public forums, and frequent reviews by members of the EDA. The business park planning process is worth highlighting because it represents the fundamental work an economic development authority must undertake for its community. Individual businesses will decide whether or not to invest in Northfield; the planning commission and city council will exercise control over the implementation of development plans and proposals; but the EDA is responsible for presenting a vision of the kind of development we seek, and for creating favorable conditions for this long-term private sector investment and development to occur. The master planning process was a significant and important step forward.

Such planning does not, however, diminish the EDA’s commitment to, and interest in downtown. It simply reflects the higher priority, longer-term need for public investments of time, money and imagination in efforts to attract new business that will accomplish the EDA goals of an expanded tax base and increased employment. In the long-term, commercial and industrial development is the best strategy for ensuring the economic and cultural vitality of our community.

ECONOMIC DEVELOPMENT AUTHORITY FUNDING ACTIONS Micro Grants The EDA allocates funds from the Clement F. Shearer Micro Grant Fund, to support small businesses in the downtown business district. Grants in 2010 included: BUZZ SALON — $5,000 for computer equipment and web development DIGS, INC. — $5,000 for production equipment MANDARIN GARDEN — $2,000 for outdoor signage

Working with “Partner” Organizations In 2010, the Economic Development Authority supported economic activity in the downtown through grants and loans to downtown businesses, as well as professional services contracts with three “partner” organizations. Each “partner” was engaged to provide varying types of assistance to local businesses, organizations and entrepreneurs. Professional service contracts were executed with the Northfield Enterprise Center (NEC), the Northfield Downtown Development Corporation (NDDC), and the Southeastern Minnesota Initiative Fund (SMIF). The NEC, originally created by the EDA to serve as a business incubator, provided consulting services to entrepreneurs and small business owners, as well as conducting due diligence reviews of grant and loan applications made to the EDA. The EDA’s funding supported consulting services directed at encouraging small business development, most of it in the core downtown.

NORTHFIELD ATHLETIC CLUB — $5,000 for computer equipment and software RE*DOUX HOME — $5,000 for business and graphics software acquisition Community Initiatives The EDA made discretionary grants to several organizations or projects with long-term benefit to the community’s identity and vitality. Funds allocated in 2010 included: NORTHFIELD ROUNDTABLE — $9,000; partial funding to support consulting with architect and planner Bill Johnson COMMUNITY VIDEO — $15,000; partial funding for a video produced by Blue Moon Productions SOUTHEAST MINNESOTA INITIATIVE FUND — $6,000; grant to support services to Northfield area organizations Emergency Flood Loans The EDA responded to the extraordinary flooding in downtown by offering two-year loans, subject to personal guarantees, at a nominal 1.5% rate of interest. Loans approved included:

The NDDC served as a liaison between the EDA and downtown building and business owners, as well as a producer or supporter of activities that encourage retail sales and tourism. The EDA’s funding was directed at business retention efforts and an inventory of infill opportunities.

ASCENDANT ACCESSORIES — $1,100

The SMIF provided limited business consulting

WEST BANK PROPERTIES — $20,000

services and grants to Northfield organizations. The

HVISTENDAHL, MOERSCH, DORSEY & HAHN — $20,000

CHAPATI, INC. — $8,600 FROGGY BOTTOMS, INC. — $20,000 JEKKL, INC. — $18,100 LARSON’S FABRIC PRINTING, INC. — $20,000 MANAWA, LLC DBA ARCHER HOUSE — $13,791.45

EDA’s modest contribution to SMIF was primarily intended to provide Northfield business and organi-

Partnership Agreements

zations with access to SMIF’s programs and services.

The EDA entered into agreements with two organizations to provide services that extend the reach of the EDA and provide support to existing and new businesses, especially those located in the core downtown.

TABLE OF CONTENTS Business Park Development

p. 3-4

Infill and Redevelopment

p. 5

Business Recruitment, Marketing, and Public Relations

p. 6

Business Retention and Expansion

p.6

Financial Report

back cover

NORTHFIELD ENTERPRISE CENTER — $50,000 for contracted consulting services to entrepreneurs and small businesses

NEC northfield enterprise center

NORTHFIELD DOWNTOWN DEVELOPMENT CORPORATION — $40,000 for contracted services in business retention

Annual Report 2010

BUSINESS PARK MASTER PLAN STEERING COMMITTEE Mike Berthelsen NORTHFIELD PUBLIC SCHOOLS

Glen Castore

BUSINESS PARK DEVELOPMENT

he Business Park Development work group included EDA members Estenson, Pokorney and Pownell. This group’s goals were to improve the economic condition of Northfield by: » Continuing and completing the business park master planning process initiated at the end of 2009;

BRIDGEWATER TOWNSHIP

Tracy Davis NORTHFIELD PLANNING COMMISSION

Tim Geary MALT-O-MEAL

Jay Jasnoch JADE ARCHITECTS

John Klockeman

» Supporting city efforts to reach an annexation agreement covering the so-called Prawer/Gill property; » Developing an understanding of infrastructure financing options and phasing strategies related to the northwest annexation and the Prawer/Gill property; and » Coordinating appropriate review of the master plan by the Planning Commission and City Council.

The Business & Industrial Park Master Plan represents a significant step forward in Northfield’s growth and development, reflecting recommendations outlined in the 2006 Comprehensive Economic Development Plan and the 2008 Comprehensive Plan. Informed by a series of transportation, natural resource, recreation and energy studies, as well as by a recently adopted storm water management ordinance, the Master Plan and accompanying Development Guidelines anticipate the city’s ongoing preparation of a new Land Development Code by incorporating expected features of the Code.

BRIDGEWATER TOWNSHIP

Jim Pokorney NORTHFIELD CITY COUNCIL

Rhonda Pownell NORTHFIELD CITY COUNCIL

Scott Richardson NORTHFIELD HOSPITAL & CLINICS

Pete Sandberg ST. OLAF COLLEGE

Christopher Sawyer COLLEGE CITY BEVERAGE

Neil Lutsky CARLETON COLLEGE

Erica Zweifel NORTHFIELD CITY COUNCIL

EDA Members on the Steering Committee Jenelle Teppen Steve Engler Rick Estenson Victor Summa Technical Committee Brian O'Connell DIRECTOR OF COMMUNITY DEVELOPMENT (through September 2010)

Katy Gehler-Hess DIRECTOR OF ENGINEERING

Dan Olson CITY PLANNER (through September 2010)

Jody Gunderson DIRECTOR OF ECONOMIC DEVELOPMENT

Northfield EDA

North Site

The Master Plan provides the framework for making land available for commercial and industrial development, creating employment opportunities, increasing the tax base, and sustaining the overall health and vitality of the greater Northfield community. The recommendations in the Master Plan are informed by a market study conducted as part of the planning process; this study assessed regional competitors, the state of the economy and a variety of other factors in identifying target industries for which Northfield can offer a competitive location. The market analysis, extensive review of community goals and objectives, and the guidance of the Comprehensive Plan, lead to a Master Plan that presents an economically diverse, mixed-use development program designed to be built in stages over a 20-40 year period. The intentional mix of land uses will provide future employment centers within the business park with amenities that distinguish this development opportunity from competition in the marketplace, and will contribute to a more environmentally and economically sustainable development pattern.

South Site

The Master Plan provides city decisionmakers with the tools and direction to guide future development. By offering a clear vision of mixed-use development and a deliberate phasing strategy with which to manage the implementation of the plan, Northfield has provided developers, site selectors and commercial and industrial employers with an exciting statement that this community now has available land resources, and is open for business. Annual Report 2010

INFILL AND REDEVELOPMENT

he Infill and Redevelopment work group included EDA members Engler, Estenson and Summa. This group’s extensive goals for improving the economic conditions of Northfield included: » Developing a complete inventory of available infill property; » Identifying potential funding sources for infill and redevelopment; » Developing a policy to guide the EDA’s acquisition and disposition of real property; » Identifying potential funding sources for property acquisition; » Determining the legality of the EDA’s involvement with local real estate investment funds; » Monitoring infill and redevelopment activity of other organizations; » Evaluating and supporting, as appropriate, private sector infill initiatives; » Evaluating proposed infill projects that might come before the Planning Commission and City Council; » Assisting in identifying sites for municipal buildings; » Develop suggestions to help the Marketing and Public Relations work group promote infill opportunities; and » Sponsoring forums on issues important to the advancement of economic development.

ACCOMPLISHMENTS The inventory of available infill properties is incomplete; EDA partner, the Northfield Downtown Development Corporation was asked to assist in the compilation of the inventory, and the task is in process. City staff continues to make use of the state’s MNPro database (which will be phased out in 2011), and to work with StrataPoint to develop a local alternative. Potential funding sources for infill and redevelopment, and for acquisition of property, have been constrained by the economic downturn of 2008-present, but staff continues to monitor programs and opportunities. The Infill work group presented policy language to guide its investment in real property. After considerable discussion, the EDA deferred adoption to 2011. The City Attorney issued an opinion indicating that the EDA was not legally authorized to invest in real estate investment funds. In general, specific infill promotion was deferred due to economic conditions and the focus on the business park master plan process. Staff continued to support private sectors investors with support for prospective infill developments, but none came to fruition in 2010. With the completion of the business park master plan, the EDA expects to devote substantially more attention to infill and redevelopment in 2011.

Northfield Economic Development Authority

BUSINESS RECRUITMENT, MARKETING, AND PUBLIC RELATIONS

he Business Recruitment, Marketing, and Public Relations work group included EDA members Pokorney, Pownell and Teppen. This group’s goals for improving the economic conditions of Northfield were to: »Continue development of print materials targeted at specific development audiences; »Enhance marketing through the City’s website, including full implementation of StrataPoint software; » Use the business park master plan market analysis to develop a citywide business recruitment program; » Improve media relations; » Develop marketing materials with which to solicit infrastructure funding; » Organize an employer recognition event; and » Develop and community video to promote Northfield.

ACCOMPLISHMENTS Three issues of a quarterly EDA newsletter was created to reach a target audience of real estate developers and brokers in the region. While material related to the business park master planning process was posted through a dedicated project website, enhancements to the City’s website (including the addition of StrataPoint software) was not addressed. The work group initiated regular meetings with the local newspaper and radio stations to promote community awareness of EDA work, particularly the public events related to the business park master planning process. Significant efforts to solicit infrastructure funding or to host an employer recognition event were deferred due to economic conditions. Staff continues to monitor state and federal funding programs from which Northfield will eventually seek funds. Blue Moon Productions is nearing completion of a community video highlighting Northfield’s distinctive character. The EDA will use these videos in on-going efforts to make real estate and business developers more aware of the community’s strengths. Other groups involved in the project – including Northfield Hospital and Clinics, Carleton College, St. Olaf College, the Northfield Area Chamber of Commerce, Rebound Enterprises, the Archer House and Northfield Automation Systems – will promote the videos on their own websites.

BUSINESS RETENTION AND EXPANSION

he Business Retention and Expansion work group included EDA members Engler and Estenson. This group’s goals for improving the economic conditions of Northfield were to: » Develop a local business database to track business conditions; » Conduct business retention and expansion visits with top ten Northfield employers; and » Facilitate growth and expansion of existing businesses by advocating on their behalf.

ACCOMPLISHMENTS The Business Retention and Expansion work group outsourced its effort to build relationships with existing Northfield employers to the Northfield Downtown Development Corporation. The NDDC conducted a dozen formal employer visits and held a number of downtown forums for building and business owners concerned about economic issues and Northfield community development. The work group outsourced its business recruitment and incubation effort to the Northfield Enterprise Center, provide consulting services to approximately 50 local businesses and 15 individuals. The NEC also provided reviews of the business plans, financial statements and grant proposals of applicant for micro grants and the emergency flood-related loans. Through a small, ongoing investment in the Southeast Minnesota Initiative Fund, the EDA continued to provide support that enabled local businesses to obtain grant funding to explore promising ideas, like the Riverwalk Market Fair. Annual Report 2010

FINANCIAL REPORT EDA BUDGET

2010

2009

2008

2007

Budgeted

Actual

Budgeted

Actual

Budgeted

Actual

Budgeted

Actual

$490,509

$301,676

$340,984

$213,136

$223,450

$ 53,289

$ 81,031

$110,031

Partnership Funding

$91,000

$90,000

$103,800

$104,800

$ 75,000

Total Expenditures

$581,509

$391,676

$444,784

$316,936

$328,250

$158,089

$156,031

$185,031

EDA Operations

CITY OF NORTHFIELD ECONOMIC DEVELOPMENT DEPARTMENT 801 Washington Street Northfield, MN 55057 Phone: 507-645-3018 | http://www.ci.northfield.mn.us/business | Email: eda@ci.northfield.mn.us

Economic and Community Development Director: Jody Gunderson | 507-645-3018 | jody.gunderson@ci.northfield.mn.us Photographs and illustrations courtesy of Griff Wigley, HKGI, and the City of Northfield.