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HomeMy WebLinkAbout5.a. Economic Development Section of Comprehensive Plan EXECUTIVE SUMMARY Port Authority Meeting Date: June 19, 2018 AGENDA ITEM: Draft Economic Development Section- Comprehensive Plan AGENDA SECTION: Old Business PREPARED BY: Kim Lindquist, Deputy Director AGENDA NO. 5.a. ATTACHMENTS: Draft Section APPROVED BY: LJM RECOMMENDED ACTION: Discussion Item ISSUE Last month, staff brought forward a draft of the Economic Development section of the Comprehensive Plan, noting additional work would be needed. We continue to rewrite the item and provide additional data. As such, some of the items mentioned during the last Port meeting have yet to be incorporated, as verification or research of those issues is ongoing. If the Port has time, staff would like any feedback on the revisions. We will continue to bring this item to the Port until it is completed later this fall. RECOMMENDATION Discussion and provide staff direction. - 1 - ECONOMIC DEVELOPMENT ELEMENT Rosemount Employment Base and Resident Employment Rosemount is uniquely situated in the Twin Cities with the four lane, north to south running, US Hwy 52 connecting Rosemount with the Minneapolis St. Paul Airport and downtown St. Paul; the four lane, east to west running, County Road 42 connecting Rosemount to Hastings and Burnsville and connecting to the major routes leading into downtown Minneapolis; and the Mississippi River on Rosemount’s northeast boundary, including three barge terminals. The location of Rosemount’s economic base is also uniquely situated compared to its population base. The majority of Rosemount’s households are located in the western third of the City, while Rosemount businesses, industry, and institutions are spread through the community. Taking advantage of these economic development opportunities during the next 20 years will be the purpose of the Economic Development Element of the Comprehensive Plan. Table 1 shows the ten businesses and institutions that employ the most workers within Rosemount. Two of the top three employers are the educational institutions of Rosemount School District #196 and Dakota County Technical College. It will be important for Rosemount to maintain cooperative relationships with these institutions, not only because of their importance as employers within the City, but also to ensure that their education programs prepare trained workers for current and future Rosemount businesses. Table 1 also shows that seven of the remaining eight employers are manufacturing or industrial in nature. This illustrates the importance of industrial business for employment within the community, but also should caution the City that Rosemount is currently dependent on one sector of the economy. Rosemount should encourage additional retail commercial and professional office commercial in the community to provide balance to the economic landscape. Table 1: Rosemount Top Ten Employers in 2018 Product or Service Employees Flint Hills Resources Oil Refining 863 Independent School District #196 Education 767 Dakota County Technical College Education 373 Proto Labs Prototyping and Production 300 Wayne Transports Trucking 300 Spectro Alloys Aluminum Smelting 179 Endres Processing Recycled Food Products 90 City of Rosemount Municipal Government 80 Eldorado Packaging Multiwall Bags 75 Minnesota Energy Resources Natural Gas 55 Source: City of Rosemount - 2 - Table 2 shows that 12,243 Rosemount residents were employed in 2015 while there were only 7,822 jobs offered by the businesses within Rosemount, which results in over 4,400 people required to leave Rosemount to find employment. When looking at the various industries in which residents are employed, the disparity between where residents work and what employment opportunities are available in Rosemount is most prevalent in four industries: Retail Trade; Finance, Insurance, and Real Estate (FIRE); Professional, Scientific Management and Administrative; and Educational, Health and Social Services. Of the four industries listed above, all but Retail Trade offer average wages that match Rosemount’s level of household income. For example, within the professional, scientific, management and administration (professional) industry, there are 1,329 Rosemount residents employed within this field while there are only 223 jobs available within the city, creating an employment pool of 1,106 workers. Table 3 shows the average yearly wage in Rosemount for a worker in a professional field makes $51,447, while the metro area average yearly wage is $68,744. Professional businesses would typically be located with the commercial, corporate campus or business park land use designations of the Comprehensive Plan. Commuting habits of Rosemount residents reflect this data with 43% of residents commuting to a place of employment located outside of Dakota County. Additionally, 40% of all residents have commute times longer than 30 minutes. Providing places of employment within the community for Rosemount workers will reduce the overall cost of commuting. Reduced commuting costs can have a positive impact on the local economy by freeing up income that would normally be spent getting to and from work for more discretionary purchases. The City should recruit businesses in the FIRE and other professional industries to locate within Rosemount. There is a significant amount of Rosemount residents that are employed in these fields from which the new businesses could draw their employees. The establishment of these businesses would create jobs that can support households and provide a market for other local businesses. - 3 - Table 2: Comparison of Employees to Employers within Rosemount in 2015 Rosemount Residents Employed by each Industry Number of Employees in Rosemount Businesses by Industry Deficiency of Jobs within Rosemount to match Resident's Place of Employment Agriculture 33 0 -33 Construction 358 1,214 856 Manufacturing 1,296 1,962 666 Retail Trade 1,391 224 -1167 Wholesale Trade 470 86 -384 Transportation, Warehousing and Utilities 909 1,133 224 Information 350 16 334 Finance and Insurance, and Real Estate 1,300 120 -1,180 Professional, Scientific, Management and Administrative 1,329 223 -1,106 Educational, Health and Social Services 2,742 1561 -1,181 Arts, Entertainment, Recreation and Food Service 950 42 -908 Other Services (Except Public Administration) 575 154 -421 Public Administration 540 318 222 Total 12,243 7,822 -4421 Source: Minnesota Department of Economic Development and US Census Bureau Table 3: Rosemount Industries in 2012 Establishments Employees Total Wages Average Weekly Wage Average Yearly Wage Agriculture, Forestry, Fishing, Hunting and Mining 4 32 $1,846,751 $1,127 $57,711 Construction 59 811 $46,605,926 $1,105 $57,467 Manufacturing 19 1440 $138,167,000 $1,845 $95,949 Real Estate, Rental and Leasing 9 14 $386,000 $530 $27,571 Retail Trade 34 347 $8,250,000 $457 $23,775 Transportation, Warehousing and Utilities 20 706 $44,792,000 $1,220 $63,445 Health Care and Social Assistance 36 393 $7,502,000 $367 $19,089 Accommodation and Food Services 29 466 $5,105,000 $210 $10,954 Professional, Scientific, and Technical Services 55 94 $4,836,000 $989 $51,447 Administrative Support and Waste Management & Remediation Services 23 207 $8,089,000 $751 $39,077 Arts, Entertainment, and Recreation 12 87 $866,000 $191 $9,954 Other Services (Except Public Administration) 27 221 $6,999,000 $609 $31,669 Public Administration 3 43 $2,279,736 $1,020 $53,017 Source: Minnesota Department of Employment and Economic Development - 4 - Rosemount Port Authority In 1979, the City of Rosemount established the Rosemount Housing and Redevelopment Authority (HRA) which conducted a number of projects, most notably the Rosemount Plaza block located southeast of the intersection of 145th Street West and South Robert Trail. In 1991, the City converted the HRA into the Rosemount Port Authority for the purpose of undertaking housing, economic development and redevelopment activities within the City. The Port Authority has seven members consisting of the Mayor, three City Councilmembers, and three appointed residents. The Port Authority sets the economic development policy for the City, acquires and demolishes buildings on blighted and underutilized land for redevelopment, and recruits new businesses to locate within Rosemount, among many other responsibilities. Many of the programs described within the Economic Development Element, such as Downtown Redevelopment and the establishment of the Rosemount Business Park, have been or are being accomplished through the work of the Port Authority. The Port Authority is responsible for implementing the Goals and Objectives of the Economic Development Element, as well as continuing to monitor the economic health of the City while recruiting new business and encouraging the growth of existing businesses. Downtown Redevelopment The City of Rosemount originally adopted a redevelopment plan for downtown Rosemount in 2004 entitled the Development Framework for Downtown Rosemount. That plan has since been updated to reflect the changes that have taken place in the Downtown since the plan’s original adoption. The Framework covers the properties in the historic downtown, roughly described as the blocks on both sides of South Robert Trail from 143rd Street West on the north to approximately 148th Street on the south. The Framework addresses seven focus areas within downtown: Crossroads North; Crossroads South; Core Block West; Core Block East; Legion Block; Genz-Ryan; and Fluegel’s. To help spur downtown redevelopment, in 2004 the City established the Downtown- Brockway Redevelopment Tax Increment Financing (TIF) district. The TIF district uses the increased tax income (also known as tax increment) from the former Brockway Glass factory redevelopment into the Harmony residential neighborhood to pay for the land acquisition, land clearing, and infrastructure costs associated with downtown redevelopment. TIF funds were used for infrastructure and parking space construction and were instrumental in the redevelopment of Core Block East. Since 2008, the City has received almost $1.4 million from the Metropolitan Council’s Livable Community Demonstration Account (LCDA) grant for land acquisition costs and infrastructure improvements for redevelopment projects such as The Rosemount Senior Living and Cambrian Commons senior apartments. The goal of public inputs into downtown redevelopment is to spur private sector investment in redevelopment of other properties. The Downtown has seen major renovations of both the First State Bank of Rosemount and Fluegel’s in the past ten years. - 5 - The City has been active in the redevelopment of other focus areas to improve the lifestyle and work setting of downtown Rosemount. Following the renovation and conversion of St. Joe’s church into a community gathering space called the Steeple Center, an addition was constructed between The Rosemount Senior Living and the assembly hall. Additionally, the City applied federal grant funds toward the construction of a park and ride transit station located near the Legion site. Finally, the City has established the Downtown Code Improvement Program that provides grant funding for improvements to bring the existing downtown buildings into compliance with the building code. The program is eligible to any business or property owner whose building is listed within the Framework and is making exterior and façade improvements to the building in accordance with the Downtown Rosemount Design Guidelines. To encourage the reinvestment in the façade improvements, business and property owners who pay with their own funds for the façade improvement can request grant funds to pay for code improvement to their building. Business Recruitment, Assistance, and Retention To support small businesses and promote entrepreneurship in Rosemount, Open to Business is available to provide one-on-one business counseling to current and prospective business owners at no cost. Consultants provide assistance with business plan development and the identification of challenges and opportunities, among other things. Additionally, business owners can learn about other resources such as training programs, governmental services, and networking opportunities. The City also partners with the Dakota County Regional Chamber of Commerce to connect with businesses to understand the needs and concerns business leaders in the community. The City works closely with the Minnesota Department of Employment and Economic Development and Greater MSP to respond to requests for information by businesses that are looking to relocate, particularly those businesses that are looking for greenfield sites on which to construct new facilities. The City shares data regarding municipal services, site details, transportation, as well as any other specific information requested. The City has also collaborated with Xcel Energy’s site certification program to compile information to have specific site information ready when City staff fields a request for information. The City’s relationships with the educational institutions within Rosemount, such as Rosemount School District #196 and Dakota County Technical College, and the greater region, such as Inver Hills Community College and the University of Minnesota, are important for business recruitment and the health of the local economy. Businesses that are looking to locate within Rosemount have concerns that there is an existing base of well- educated employees to recruit from, as well as local educational institutions that have training programs to create new workers and provide continuing training and education for existing employees. It is important for Rosemount to work with the local educational institutions to ensure that their training programs will support the needs of existing businesses within Rosemount and provided a well-educated employee pool for future businesses to draw from. - 6 - Rosemount Business Park The City has established the Rosemount Business Park which contains about 280 acres of contiguous land, roughly bounded by County Road 42 to the north, a line one quarter of a mile north of County Road 46 to the south, Biscayne Avenue to the east, and the Union Pacific rail line and South Robert Trail to the west. The Rosemount Business Park was initiated with the City purchasing the northern 80 acres of the business park and establishing a TIF district to provide the initial infrastructure to the park. The original 80 acres have since been developed with seven new buildings housing businesses such as Proto Labs, Sweet Harvest, and Geometrix. Approximately 35 acres located south of Boulder Trail have been designated as Shovel Ready by the Minnesota Department of Employment and Economic Development. Sites that are certified as Shovel Ready have already undergone the most time-consuming legal, technical, and regulatory aspects of the development process. The Shovel Ready site within the business park has received preliminary plat approval for future subdivision as well as a Phase I environmental review. Retail Commercial The City currently has about 100 acres of land developed with retail commercial uses. The retail businesses are predominately located either in downtown Rosemount or in a district west of South Robert Trail and south of County Road 42. The retail businesses are predominately small service retail business, several restaurants, and two grocery stores. The vacant retail commercial space in town is located in small portions of multiple tenant commercial strips as well as the former Terry’s Hardware Downtown. Vacant land that has been designated for future commercial development is located on the north side of County Road 42 just east of South Robert Trail and also on the east and west sides of Akron Avenue, north of County Road 42 near the newly developing residential neighborhoods. At present, there are no general merchandise, home improvement, or other types of big box stores in Rosemount. For this reason, most Rosemount residents are required to leave the City to fulfill their daily or weekly shopping needs, typically to the communities to the west and north, such as Eagan, Apple Valley, Burnsville, and Lakeville. Recent efforts to solicit big box businesses to Rosemount have been unsuccessful for a number of reasons, but businesses most commonly cited the lack of direct controlled access to major roads and the lack of residential households. Over 6,400 additional households are expected to be constructed by 2040, which is an increase of 76% over the 8,400 households within Rosemount today. Office Commercial Rosemount has minimal office space, with the current office supply normally occupied with either professional office, such as dentists or insurance agents, or associated with existing manufacturing or industrial businesses. As shown in Table 2, there are over 1,300 Rosemount residents who are working in the finance, insurance, and real estate (FIRE) field, while Rosemount FIRE businesses employ only 120 people. This deficiency of about 1,200 residents who need to leave Rosemount to work in the FIRE field would indicate that there is a need for additional office space within Rosemount. Table 2 also shows a deficiency of over 1,100 residents who need to leave Rosemount to work in the professional, scientific, management, and administrative field. - 7 - Lastly, over 1,100 residents leave the community to work in educational, health, and social services. The Comprehensive Plan should designate commercial and corporate campus land to support independent stand alone office buildings, but also ensure the ability to provide office space needed in conjunction with manufacturing and industrial businesses as well. Industrial Rosemount has a long history of industrial development, from manufacturing facilities near the downtown, such as Greif Paper and the former Brockway Glass factory, to heavier industrial on the east near US Hwy 52, such as Flint Hills Refinery, Spectro Alloys, Endres Processing, and CF Industries. More recently, industrial development has occurred in the form of office/warehouse and manufacturing industrial within the Rosemount Business Park and trucking terminals near the interchange with US Hwy 52 and County Road 42. While Rosemount is discouraging new heavy industrial or other industrial businesses that require significant amounts of outdoor storage, Rosemount does encourage new manufacturing, warehousing, and trade industrial businesses to locate within Rosemount. These businesses bring jobs that can support an entire family while providing a significant industrial property tax base. Table 2 shows that nearly 400 Rosemount residents in the wholesale trade field need to leave Rosemount to work every day. By continuing to provide sufficient business park and industrial/mixed use land within the Comprehensive Plan would allow these businesses to locate within Rosemount. UMore Park The University of Minnesota owns about 5,000 contiguous acres of land, 3,000 acres of which is located in southern Rosemount and 2,000 acres of which are located in northern Empire Township. The University has used the land as a research farm named the University of Minnesota Outreach, Research and Education (UMore) Park. Within this Comprehensive Plan, most areas within UMore Park will continue to be designated as Agricultural Research, but areas that will potentially develop over the next 20 years will be designated for land uses according to the UMore Park Alternative Urban Areawide Review (AUAR). The University has taken the first steps toward the development of UMore Park by releasing a Request for Proposals to residential developers as well as entering into an agreement with The Opus Group to market a piece of land in the northwestern portion of UMore Park for the development of a light industrial or manufacturing use. These steps follow a planning process that took place to develop the UMore Park Strategic Plan and the AUAR. The plan proposes a community of 16,000 households mixed in with retail commercial, employment centers, and institutional uses. The UMore Park Strategic Plan calls for approximately 2,500,000 square feet of commercial and industrial (500,000 square feet of retail, 1,000,000 square feet of office, and 1,000,000 square feet of industrial) development, mostly located on the eastern third of UMore Park. - 8 - Fiscal Disparity In the seven county Twin Cities metropolitan (metro) area, the tax base gained from new commercial or industrial growth is shared by the entire metro area, not solely by the community in which the economic development occurs. This commercial and industrial (C/I) tax base sharing program is called fiscal disparity. Since 1971, forty percent (40%) of the tax base of any new C/I development is taken from the local community and given to a common metro area pool. This common pool is then redistributed to all the communities based on their total tax base (commercial, industrial, residential, and agricultural). Essentially, fiscal disparity takes tax base from communities that have seen significant economic development since 1971 and gives it to communities where post-1971 commercial/industrial development is a small percentage of their total tax base. Various justifications are given for this program, most notably to discourage individual communities from competing for the same new businesses. Fiscal disparity has historically taken C/I tax base from the first and second ring suburbs along the I-494 and I-694 strip that have seen significant growth since 1971 (Bloomington, Minnetonka, Eagan) and given it to the inner cities who had significant C/I tax base prior to 1971 (Minneapolis and Saint Paul) or to suburban communities that have lower levels of C/I tax base compared to their total tax base (Cottage Grove, Apple Valley, Prior Lake). Minneapolis has seen significant growth in C/I tax base leading to reversal of that trend. Table 4, attached to this executive summary, shows that in 2016 Minneapolis lost $3.3 million while Saint Paul gained $29 million in tax base due to fiscal disparity. Table 4 also shows that Minnetonka lost $9.7 million in tax base while Cottage Grove gained $2.9 million in tax base. Rosemount is affected fairly neutrally by fiscal disparity, receiving only about $37,000 in tax base in 2016. Table 4: Fiscal Disparity of Select Cities Payable in 2016 Pre-1971 C/I Tax Base Post-1971 C/I Tax Base Total 2016 Tax Base 2014 Population Fiscal Disparity Tax Base Adjustment Post-1971 C/I Tax Base as a percentage of Total 2016 Tax Base Prior Lake $278,935 $2,924,181 $30,471,969 24,911 $1,253,009 10% Cottage Grove $537,275 $5,845,969 $30,784,863 35,250 $2,852,812 19% Lakeville $1,215,214 $14,086,875 $65,746,835 59,361 $1,220,959 21% Apple Valley $1,113,396 $10,882,278 $50,625,395 50,330 $1,994,871 21% Rosemount $702,215 $6,634,755 $26,239,489 22,490 $36,956 25% Saint Paul $25,299,251 $79,262,261 $239,695,221 299,641 $29,541,974 33% Minneapolis $56,441,944 $181,464,021 $499,641,258 411,273 -$3,310,064 36% Minnetonka $3,361,788 $38,370,443 $10,4503,721 51,144 -$9,744,736 37% Eagan $2,654,377 $34,786,939 $91,004,063 66,810 -$5,810,075 38% Source: Metropolitan Council - 9 - Economic Development Element Goals and Policies 1. Provide local shopping opportunities for residents to purchase their daily and weekly needs within Rosemount. a. Work with the Dakota County Regional Chamber of Commerce to recruit more retail commercial businesses to locate within Rosemount. b. Provide retail commercial land adjacent to planned controlled accesses onto major roads. c. Provide retail commercial land near existing and planned households. d. Continue to use the Downtown Code Improvement Plan, Twin Cities Community Capital Fund, and similar programs to assist businesses to improve existing retail commercial buildings. e. Continue to actively market Rosemount to commercial brokers and retail businesses through the Rosemount marketing strategy to expand the retail opportunities within the City. 2. Expand Rosemount’s employment base to provide jobs that can support an entire household. a. Provide office commercial land to support businesses with the financial and professional fields. b. Provide additional light industrial land to support wholesale trade, warehousing, and utility businesses. c. Work cooperatively with the Dakota County Technical College, Rosemount School District #196 and other educational institutions within Dakota County to train workers with the skills needed for existing and future Rosemount businesses. d. Pursue outside funding sources to develop or redevelop land for commercial and industrial uses, such as Metropolitan Council Livable Communities Demonstration Account and Tax Base Revitalization Account, Dakota County Community Development Agency, Minnesota Department of Employment and Economic Development, and other applicable grants. e. Continue to actively market Rosemount to commercial brokers and appropriate businesses through the Rosemount marketing strategy to recruit businesses that provide wages to support an entire household. 3. Expand Rosemount’s employment base to provide employment opportunities for all residents. a. Provide land that would support a variety of commercial and industrial businesses to ensure a sufficient mix of employment opportunities for all skilled Rosemount residents. b. Work cooperatively with the Dakota County Technical College, Rosemount School District #196 and other educational institutions within Dakota - 10 - County to train workers with the skills needed for existing and future Rosemount businesses. c. Pursue outside funding sources to develop or redevelop land for commercial and industrial uses, such as Metropolitan Council Livable Communities Demonstration Account and Tax Base Revitalization Account, Dakota County Community Development Agency, Minnesota Department of Employment and Economic Development, and other applicable grants. d. Continue to actively market Rosemount to commercial brokers and appropriate businesses through the Rosemount marketing strategy to recruit additional businesses. 4. Balance economic growth within the overall tax base of Rosemount. a. Provide land available for a balance of commercial and industrial businesses, including expanding the retail and office commercial sectors while continuing to support industrial businesses. b. Work cooperatively with the Dakota County Technical College, Independent School District #196 and other educational institutions within Dakota County to train workers with the skills needed for existing and future Rosemount businesses. c. Continue to provide for additional residential growth to serve as an expanding employee pool for Rosemount business, a growing market to attract additional retail establishments, and balanced tax base when considering the regional Fiscal Disparity program. 5. Provide for economic development opportunities that create a vibrant Downtown that maintains a home town feel. a. Continue Port Authority involvement in redevelopment projects that implements the Development Framework for Downtown Rosemount. b. Pursue outside funding sources to redevelop downtown properties, such as Metropolitan Council Livable Communities Demonstration Account and Tax Base Revitalization Account, Dakota County Community Development Agency, Minnesota Department of Employment and Economic Development, and other applicable grants. c. Continue to use the Downtown Code Improvement Plan, Twin Cities Community Capital Fund, and similar programs to assist businesses to improve existing retail commercial buildings and implement the Development Framework for Downtown Rosemount and Downtown Design Guidelines.