HomeMy WebLinkAbout3.e. Rosemount P & R in August 1993 Issue of Minnesota Cities � . ,
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HO'VARD M. GUTHMANN
1300 NORTHWEST CEIVTER
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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. '
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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
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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
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