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HomeMy WebLinkAbout3.e. Rosemount P & R in August 1993 Issue of Minnesota Cities � . , , .�>,4 HO'VARD M. GUTHMANN 1300 NORTHWEST CEIVTER Ft�-FtvE E�sT Ft�'x S�rxEer 3T.Pauc,Mmn�n 55101 . . . � . �TELEPHONE(6t2)22Y-1801 � . � � . September 7, 1993 Mr. John G. Hoeschler 420 Pillsbury Center Minneapolis, Minnesota 55402 Dear 7ack: You have asked for my suggestions regarding the proposed Rosemount business park. You called me because I have been the President of the St. Paul Port Authority for the past _ llh years. I am happy to respond and I would say the same to anyone who called me from Rosemount. You should note, however, that I do so on my own letterhead since the ideas are mine personally. This issue has not been presented to the Port Authority Board and the Port Authority has taken no official position except as I will note below. You have told me that the Rosemount Port Authority is considering establishing a business park in the southeast quadrant of Highway 3 and County Road 42. You have also told me that there is some concern that the Part Authority should have an initial or anchor tenant in hand before it purchases the land and commits to the infrastructure investment that will be required. Finally, you have said that a movie theater chain has proposed a multiplex thea.ter as the first occupant of the park and that the theater will be located directly : along County Road 42. You have also said that another movie theater chain has proposed a multiplex theater west of Highway 3 on land that is owned and being privately developed by Carlson Properties, your client. Let me state initially that in years past our office has done some consulting work for Cazlson family members. I, however, have not been involved in this work and my opinion is based solely upon my experience with the St. Paul Port Authority. ' . ! ,f � . � � . . . . . . . Mr. 7ohn G. Hoeschler : Page Two September 7, 1993 As you know, the St. Paul Port Authority is one of the oldest, largest, and perhaps the best known port authority in Minnesota. We began initially as a traditionat industrial development arm of local government. Our baard and staff are independent of the city with onl two ci council members on our board. Our y � board members are, however, appointed by the mayor with the consent of the city council. As a result of our pioneering use of the pooled bond fund and careful attention to nurturing good quality industrial property and tenants, by the mid 70's we had an "A" rating for any bonds issued by our fund and we were the envy of the region. In the mid 70's, however, we extended our lending to a much wider range of commercial projects including hotels, theaters, retail, office buildings and speculative real estate projects. In a word, we regret that decision. To all who ask us, we sa.y that we have leazned our lesson and that we are once again clearly focused on providing financing for good job and tax producing industrial and wholesale commercial businesses only. Ba.sed on this experience, I have the following specific advice to anyone considering establishirtg a port authority and providing ' tax exempt bond financing for private industry. ' First, stay focused on helping good job producing industry that cannot get adequate financing from the private sector. Second, sta.y away from retail, service sector, and all but very prime office building lending -- the underwriting pitfalls are too risky to handle even for a large, well-staffed operation such as we have in St. PauL Third, resist political pressure to jump at any and every possible project. Stay focused and be patient. Fourth, avoid competing with the private sector and don't let yourself be used to whipsaw private sector lenders or developers. ti � < Mr. John G. Hceschler Page Three September 7, 1993 Fifth, choose carefully the inidal tenant in your business park so that they set the proper tone for the long range success of the park. In light of this general advice I would emphasize strongly that I think it would be unwise to try to launch a high clas�s industrial park with a movie theater as the first and most prominent tenant. This is true whether or not there is an alternative theater location in town. It is all the more true, however, if the private , sector can adequa:tely meet the city's perceived need for a movie theater complex. An ideal first tenant would be an industrial company providing job and growth potential as a model for many of such tenants. I hope this is helpful to you. I would be happy to speak further with either staff or board members of the Rosemount Port Authority and, if they think it might be helpful, to set up a meeting with key people from our staff to discuss the lessons we have learned over the years. In the meantime, I wish you all good luck. Sincerely, �ioward M. Guthmann I�MG:nn