Donjek Project: Commercial Land Trust Feasibility

“By facilitating participation in market activity, neighborhoods expand wealth creation…A healthy neighborhood is a neighborhood that performs its functions well, connecting its residents to larger economic, social and political systems.”
– Weissbourd, Bodini, and He, “Dynamic Neighborhoods,” 2009

Dating to the mid-19th century, St. Paul’s University Avenue has matched entrepreneurial people with available space, central location, ease of access, and proximity to employees and other businesses. Central location and a mix of new ideas and longstanding networks in the community continue to stimulate entrepreneurship and business development on University Avenue. Its position in the Minneapolis Saint Paul region also frames the largest public works project in the state’s history: Construction of light rail transit service that will extend from Union Depot in downtown Saint Paul, the State Capitol, down University Avenue to the Midway, to the University of Minnesota and downtown Minneapolis. Illustrated in comparable markets, LRT service is likely to elevate demand for space and increase foot traffic substantially on University Avenue. As development increases around University Avenue, opportunities arise for business owners operating there.

At the same time, increased real estate values on and near University pose a challenge to the small and emerging businesses that help give the street its character. This report summarizes an exploration of models that could create space on University Avenue for new and existing small businesses, led by the Greater Frogtown Community Development Corporation and the Rondo Community Land Trust, and made possible by funding from the McKnight Foundation. Informal survey data suggest that 10% of business owners on University own the property in which they operate. While ownership can provide long-term stability of building cost for business owners, ownership is not a uniformly high priority – or even a uniformly desirable outcome – for businesses.

The report concludes a feasibility analysis undertaken with Donjek coordination over the last year. The project set out to address three priorities:

  • Explore the need for and interest in long-term stable-price business property ownership and leasing;
  • Identify and evaluate models for accomplishing long-term cost stability for business operators; and
  • Chart a course for accomplishing these objectives without ongoing subsidy.

Innovative models that blend ownership and leasing, public with private, may have a role to play in supporting entrepreneurs on University Avenue after light rail transit is in place. The report highlights selected strategies that allow business owners to structure more stable real estate costs, either through ownership or leasing. These strategies and a more stable cost structure for small businesses allow entrepreneurs to build reserves and working capital, invest in future projects or products, and hire more employees.

Charles Landry: City Making in Minneapolis Saint Paul

Landry Expectations were high for remarks by urban theorist Charles Landry, given late last week at Minneapolis' Guthrie Theater thanks to program partners at Metropolitan Council and the McKnight Foundation. I shared these expectations, due in part to this article, which described Landry's focus as "the complex blend of elements that most effectively draw talented people to specific cities and regions." In my view, interesting work with immediate relevance.

True to form, Landy offered a compelling and global perspective on what differentiates successful cities and metropolitan areas from those in decline. Each region's approach is key: Is the dominant strategy an "urban engineering paradigm," or "creative city making"? Presented directly to us in the Minneapolis Saint Paul region, Landry asked: Is this a city of projects, or is the project the city?

Most of the audience, I believe, share Landry's underlying confidence that urbanization can and ought to bring about a greener, more productive, healthier and happier world. In that vein, he offered five threads found in great cities. In each case, I've offered editorial comments:

  • Anchorage: What is a region's gravity, which attracts people and ideas? The importance of robust networks of people and activity – industry clusters – can't be understated. It's true for people involved in chemistry, and for people involved in music (and for those involved in both at the same time!). See the Metropolitan Business Plan for more.
  • Possibility: What's the potential for the place? Youth development, education, and workforce development (for the young and mature) are the critical areas of possibility for a place. No urban region can thrive without investing in the young, and their potential to generate new ideas.
  • Connection and Reconnection: Beyond the need for physical connections to give community members and workers access to their most significant destinations (whether work, school, civic, religious), successful regions maintain strong bonds well beyond their borders. High rates of immigration and import/export activity, and the ability to communicate a region's message in the global arena are two examples of such ties.
  • Learning: To me, Landry's citation of the importance of learning extends beyond the realm of education, which (as I suggested above) is a cornerstone for effective regions. Learning needs also to include the degree to which governance is flexible and intelligent enough to incorporate emerging trends and past experience, in planning for the future.
  • Inspiration: Establishing shared values and shared identity are crucial, so that a region can articulate what is its inspiration. Why are we here? What do we have to communicate to the world? What is our contribution to the cultural, economic and political life that surrounds and includes us? 

Landry's framework of these five threads offered a provoking platform to consider how regions like Minneapolis Saint Paul move forward. Unfortunately, the speaker's efforts to speak in detail about the Central Corridor LRT line (and even specific sites along it) were neither specific nor reflective of context. He also appeared unprepared to discuss how manufacturing and other industry play a role as economic engines, job providers or as gateways for workers to earn good wages.

As Ed Glaeser argues in the Triumph of the City, places are powered by people, not buildings. Landry's presentation was worthwhile as a full (if high-altitude) depiction of how "creative city making," focused on harnessing talent, can craft durable regions in the 21st century.

Donjek Projects: Victory in the Minneapolis Riverfront Design Competition!

One of multiple reasons for my extended silence on the Cents of Place blog has been my involvement in the intense exercise of the Minneapolis Riverfront Design Competition. I posted in early November that my team, led by Kennedy and Violich Architecture (KVA) of Boston and the Tom Leader Studio of Berkeley, had been among four teams selected from over fifty to engage in a second round of competition.

FP12 This morning, the competition's supporters and sponsors (including the Walker Art Center, the University of Minnesota's College of Design, the Minneapolis Park and Recreation Board, the Minneapolis Parks Foundation, and others) gathered on Nicollet Island to announce that our team is the winner of the competition!

The process, inside our team, unfolded like a charette, only on a broader and deeper scale than I’ve seen before. Since early November, this team pulled together volumes to inform a thorough approach to a complicated river corridor. There are many meeting points in the project area that each represent opportunities: Where North meets Northeast, river meets shores, trails meet bridge heads, industrial meets other land uses, central business district meets neighborhoods. Hydrology, bridge design, area culture and history (indigenous, pioneer and more recent), land use economics, institutions, equity of access to parks – these topics and many others received focused, research-driven attention. Led by Tom Leader, and Sheila Kennedy and Frano Violich of KVA, this team produced an innovative approach to tie these issues all together in physical space.

FP13 It's a privelege to be a member of this team. I've also marveled at the compelling mix of collaborators who made this possible, from the sponsors to standout project manager Mary DeLaittre. That we will together have the opportunity to continue working, focused on a particular site to be determined on the Upper River in Minneapolis, promises to be a professional highlight.

See the final proposal here.

The Urban Engine, or Trading Places Part 1

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Welcome to the first in a short series of three posts inspired by three very different places.  I’ve spent today immersed in national and global issues thanks to the Federal Policy Forum hosted by the International Economic Development Council here in Washington, D.C. The second and third posts, as you’ll see, will address local development issues in a mid-size and small community.

Between the articles I read on the airplane, the content of the sessions and accessory conversations with other participants, I have notes on papers small and large hanging from folders and pockets and briefcase.  It’s all related to a notion I sketched out in a post about regional differentiation a few months ago, but I’d like to summarize a new line of inquiry related to the conference.

Bank of America CEO Ken Lewis and Pennsylvania Governor Edward Rendell have led an effort described in the publication of Retooling for Growth: Building a 21st Century Economy in America’s Older Industrial Areas (see a summary of the book here).  The content is unabashedly “metrocentric” in light of the following metrics outlined in a session today.  The nation’s largest one hundred metro areas:

• Use 12% of American land area;

• House and employ 65% of our population;

• Are home to 74% of college graduates;

• Generate 78% of patents; and

• Create 75% of gross domestic product.

In the words of Paul Brophy, a consultant who hatched the project, the metro areas are engines for economic, social, scientific and cultural development despite the increasingly conspicuous absence of a significant federal role or resources.  In particular, he says, to move the U.S. forward it is critical to harness and foster entrepreneurship, human capital, infrastructure and what he termed “quality of places” in our urban centers.  A few thoughts on the prospective form of such infrastructure and placemaking improvements:

• Establishment of a National Infrastructure Bank to provide coordinated, significant, long-term dollars for urban infrastructure reinvestment, with accountability measures in place for both the local and federal partners involved.

• Perhaps as part of or independent from the infrastructure bank, aggressively fund urban transportation networks, including transit.  Spendy, yes.  Essential to be competitive, definitely.  This month’s Urban Land magazine reports that the City of London’s Crossrail project will extend subterranean Underground lines at a cost of $30 billion.  The business community, in a testament to the project’s competitive potential, will fund much of the investment.

• Adoption of local, state and federal policy that recognizes the missed opportunity that vacant and polluted urban land represents, and enables its reuse as developed property or open space such as parks.

• Perhaps most germane to the Cents of Place forum, standardization of the development process and fundamental property tax reform is also in order.  In Minneapolis and St. Paul, Minnesota – contiguous and mutually dependent municipalities – zoning codes and the development process continue to remain estranged.  And, as documented by a property tax report I authored last year, the current property tax system stifles the concentration of tax base upon which the health of our urban areas (and the states that rely on them) will rise or fall.

• Adoption of at least a regional, and at best a statewide approach to subsidies that seek to attract businesses location.  This idea is hardly new:  See the Economic War Between the States report published by the Minneapolis Federal Reserve in 1994.

• Focus on retaining the talented people who arrive in your region from Bangalore or Missoula or Moscow, to pursue educational experience.  See the integrated approach Philadelphia has taken to housing, employing and engaging students before they graduate and leave.

Resolving these underlying finance and policy issues is a priority that simply can’t wait.

Still with me?  Then, dear reader, indulge yourself and browse over one other publication I encountered today:  The 2007 State New Economy Index compiled by the Kauffman Foundation.

Photo:  Musely, Flickr

Economic Gardening in Houston, Minnesota

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"Men and Wheat", Joe Jones, 1939

The agrarian revolution took place on the various continents between 7,000 and 10,000 years ago, but the evolution of “economic gardening,” while promising, remains in infancy. In process for twenty years in the work of Chris Gibbons, Director of Business/Industry Affairs for Littleton, Colorado, economic gardening is a provoking, simple alternative to what Gibbons calls trawling for capital. Under his leadership, Littleton has no marketing budget nor do they provide incentives to individual companies, while posting strong economic fundamentals.

Highlights of the Garden Manual
Inspired in part by experience in Leadville, Colorado, where layoffs in mining pushed the town’s unemployment rate north of 40%, Gibbons now describes the economic gardening concept with a series of ideas:

– The essential concept is that relying primarily on the entrepreneurship found in any community in America is a more efficient, durable mode of cultivating economic activity and tax base than recruiting jobs.

– A region’s cultural proclivity for entrepreneurial activity, risk and innovation are key to converting the ideas of local people into growth companies.

– Towns primarily in the business of producing commodities are in a constant duel with both increasingly international markets and regional weather conditions. Gibbons observes that frequently such towns pursue commodity industries, which favor low costs of labor, utilities, and taxes. When the fortunes of the town and regional markets improve, costs for the commodity industries rise and such firms look again to relocate.

– Providing information on topics ranging from markets to vacant real estate can represent a powerful public contribution to fruitful economic gardening, as in Littleton’s case.

– Infrastructure in the form of the physical (transportation, telecommunications, parks and open space) and the intellectual (links with area institutions that provide continuing education and technical training opportunities) is an important support to local entrepreneurialism.

Local Produce
The community of Houston, Minnesota is located in southeast Minnesota, roughly twenty miles from the Mississippi River and slightly farther to the southeast corner of the state.  Houston’s population has held stable in recent years, recorded at around 1,020 during the 1990 and 2000 census, as well as a 2005 estimate.

The population of school-age children has, however, been diminishing as a proportion of the whole. According to the Minnesota Department of Education, the resident school-age population (termed “average daily membership” in the K12 lexicon) has fallen from 528 in the 2002-3 year to a projected 464 in the 2008-9 year. Similar declining enrollment trends, though not usually as steep, are not uncommon in Minnesota, and they create significant stress because most district funding is apportioned on a per-pupil basis, while only a portion of school costs vary with enrollment. The specter of consolidation remains for many districts, including – until not long ago – the Houston School District.

Calling on local entrepreneurial skills, the district moved forward with the formation of the Minnesota Virtual Academy. The academy was the first online education program approved by the state, and now ranks as the largest provider of public education provided through the internet medium. The number of students served by the Houston School District has risen from 528 in the 2002-3 school year to a projected 1,456 in 2008-9 – an increase of 175%, and a very encouraging shift for the district’s future.

Houston’s experience strikes me as a compelling example of the use of economic gardening to create long-term results for cities, large and small alike.

A network of professionals trade ideas about economic gardening through a Google group; visit their forum here.