Ground Level Category Archive: Economic Development

Behind the "brain gain:" Ups and downs of going rural

Posted at 11:43 AM on May 16, 2012 by Jennifer Vogel (0 Comments)
Filed under: Broadband, Community Development, Economic Development, Rural

"Growing up in the Twin Cities, I never thought I'd be standing under a tree someday, plucking chickens," said Karen Tolkkinen, who moved to Clitherall, in west central Minnesota, in 2010. "Oh, gosh, I felt sorry for them, especially the last one who kept calling and calling to the other chickens that were already butchered."

Raising poultry is just one of the adjustments Tolkkinen made after moving to her husband's family farm. She eats venison now and plans to generate income by selling produce at a nearby farmer's market. "I didn't realize it would be so hard to make money in rural Minnesota," she wrote in response to a query from MPR's Public Insight Network (PIN).

She is one of the people who represent what University of Minnesota Extension sociologist Ben Winchester calls the "brain gain" in research being published today. For a collection of other MPR News Public Insight Network members' experiences, go here.

"When I visit the city, I see my old friends wearing the latest clothes and they have smart phones with 4G and they go on expensive trips. I didn't realize it at the time, but when I lived in the Twin Cities, I looked down a little at poor people. You know, 'Get a job.' Well, when you're 30 miles from the nearest employer, and gas prices are $3.60 a gallon, and the job only pays $10 an hour, you really have to weigh whether that job is worth it."

And yet, she loves the "peace and beauty" of her new home. "Our farm sounds like a bird sanctuary in the spring. You can walk down the gravel roads for miles without seeing a car. In the winter, the snow stays white. During the summer, the fields shimmer with thick crops of hay or oats or wheat. And at night, the stars are brilliant."

Tolkkinen's experience is similar to that of many people who move from the city to the country. They love the beauty and peace and security. But they tend to have a hard time finding decent paying jobs and don't like to drive the long distances to work, school and shopping.

Winchester posits that while young people continue to leave rural areas for the cities, there is an ongoing countertrend of people in their 30s and 40s moving back. He calls the phenomenon the "brain gain." We'll have more coverage of the report this afternoon, but here's a summary of what people told us.

There are myriad reasons behind these moves to rural Minnesota. People may want to be closer to family and friends. In some cases, they return to look after a sick parent or relative. That's what inspired Jannet Walsh to quit a public relations job in Ocala, Florida and move to tiny Murdock, Minnesota. She made a video for us about the experience, which you can view here.

Sometimes people move to raise families, in the hopes of providing their kids an upbringing similar to their own, in a community where everybody knows everybody. Laura Knudsen moved to Alexandria eight years ago from Minneapolis. "My husband and I were ready to start a family. We had watched my niece and nephew grow up in a small town outstate. After a great deal of discussion we decided we wanted a similar experience for our children. There is a quality to life that is less revolved around material items in smaller areas. We felt that growing up in an area with a stronger sense of community was important when raising our kids."

The notion of freedom and natural pleasures was a big draw for Mike Bubany, a financial analyst who recently moved from Bloomington to Spring Valley, south of the Twin Cities, where he teleworks from his 21-acre property. He appreciates that nobody is looking over his shoulder, as he demonstrates in this video he made for us.

Sometimes, people move to rural areas dragging their feet, only to realize it was the best decision they ever made. "I was born and raised in Minneapolis and did not want to move to a small town," wrote June Kallestad, who moved to Cloquet in 1993. "I thought people would be small-minded...and there would be nothing to do. I found out that I LOVE the woods and outdoors. I didn't know that about myself. I have a lovely quality of life even though I don't make a lot of money. I have everything I need - including a horse! I also didn't know what a joy THAT would be!! I never even dreamed of owning a horse..."

BREAKING INTO THE CROWD

Interestingly, Winchester has found that people who move or return to rural areas tend to have higher incomes and be more civically engaged than longtime locals. That's definitely true of Ann Thompson, who returned to her hometown of Milan, in western Minnesota, seven years ago after living overseas for 18 years. "When I left, I didn't necessarily think I would come back," she said. "I just thought I wanted to see the world."

She moved back to spend time with her aging parents. "I didn't want to live with the regrets of not doing that," Thompson said. Also, "I wanted to start a business. I thought it would be easy to do here." She opened a gift and art shop called Billy Maple Tree's in a building that's been in her family for generations. She volunteers much of her time and teaches English as a second language to the town's growing Micronesian population. "Our lives are frantically busy, but that is our choice," she said.

"In a city it's easy to meld in with everyone and go with the flow. In a small town, your community is what you make it. I'm quite happy to get involved and make things happen. I've been energized by my return."

Michael Dagen, an audio engineer who moved to Hewitt in central Minnesota with his wife after living in Fargo, Duluth and St. Croix Falls, Wisconsin, kept to himself at first because he "didn't want to freak people out." But, he said, "It didn't take long to realize we needed to get involved." Now, they've used a grant to repair the local historical museum, are starting a lending library and have launched a music and barter festival that's in its third year.

"There is quite a creative community we're tapping into," Dagen said. "We feel right at home. We feel connected, which is a powerful feeling I've never had before. I imagine it's similar to the first settlers to the area that came because there was opportunity. Land was reasonable. Everybody depended on each other. Nobody had any money, so they would trade their services and goods."

But breaking into a small town's social scene isn't always easy. "It's hard to get to know people," said Amy Hoglin, who moved from a Twin Cities suburb to rural Lake Wilson in 1998. "People are all in their established groups and are not accustomed to welcoming newcomers."

"Meeting people when I first moved here was very difficult," Erica Ellis agreed. She moved to Bemidji from Delaware by way of Missouri 14 years ago. "A lot of people have lived here their whole lives and have established friendships, so breaking in to that was difficult....It is still difficult for me to meet people, because a lot of the social activity around Bemidji is church-centered and I am an atheist. There aren't any groups here for atheists, humanists, etc, so it is hard to find like-minded people. It is also a fairly conservative community and I am a liberal."

Being single doesn't help matters, wrote Cynthia French, who moved to Little Falls from Minneapolis 16 months ago. "People are nice, and it has been easier to make friends than I was told it would be... That said, most of my friendships are with people who have families. I have not found a supportive community for single people and I have to really work to make connections to creative people in my age group (which usually means driving 30 miles to arts events outside of my town)."

IT'S A LONG WAY FROM HERE TO THERE

Cheap housing draws a lot of people to rural Minnesota, judging by Winchester's research and responses to our PIN query. Hoglin wrote that her husband "was missing rural life and wanted to be able to hunt and fish more often. I was definitely not missing rural life, but eventually warmed to the idea of moving back when I realized we could afford to buy an acreage, while we couldn't afford to buy anything in the Twin Cities area."

"There are no decent restaurants," wrote Daniel Triestman, who moved to Eveleth 10 years ago from Philadelphia. "There is no diversity, be it ethnic or intellectual. On the plus-side, my wife and I were able to buy our home for under $12,000. Our family of five lives comfortably for under $30,000 a year."

While housing may be inexpensive, newcomers sometimes find that other aspects of rural living are more costly. "We have to drive to get everywhere or anywhere," wrote Tracie Yule, who moved from Chaska to Belle Plaine a decade ago. "It's expensive. Plus, it takes a long time to get anywhere and it's almost a day trip if we want to go shopping. Also, my husband and I have to commute to work because there aren't a lot of employment opportunities in our area or ones that pay well."

Knudsen, from Alexandria, wrote, "I also didn't expect the cost of living to be so out of balance with the wages in the area. Most of our expenses are the same or higher than living in the Twin Cities yet wages are lower."

French says the rural cost of living is helping push her to move back to the Twin Cities. "The decision is partially social and partially financial," she said. "I cannot sustain myself financially."

The answer for some is to adjust their standards of living and do more for themselves. "Friends from the metro tell me they would love to live in the country, but the jobs don't pay enough," said David Barrett, who moved from Kimball seven years ago to the country near Murdock. "My response is always that you don't need to make as much when your cost of living is less and you become somewhat self-reliant. Our taxes are less, we can't order food and the nearest big box is 35 minutes away. We are also able to cut our costs of living by providing our own heat, much of our own food and not having shopping as a hobby/habit. Living in the country is a luxury within itself."

WORKING AMONG THE TREES

With broadband Internet becoming more common in rural Minnesota, some people telework from home while drawing a paycheck from companies in the Twin Cities or other urban areas. But without an arrangement like that, the job landscape can be bleak.

Wrote Tolkkinen, "A lot of people in the country end up patching together several part-time jobs, so they work without any benefits, which is what I did for several years. After seven years in rural Minnesota, my savings are nearly depleted. I did start my own business four years ago, but finances and access to good health insurance continue to be a struggle. You have to look for different opportunities. You have to ask yourself, what do I have? What can I offer?"

Dave Konshok moved back to his home town of Park Rapids from Ft. Walton Beach, Florida, six years ago after decades in the military. He calls Park Rapids, "a great community in which to raise the family, surrounded by a fabulous natural environment... But I also knew to expect limited economic opportunity: Upon graduating from high school here many years ago, my friends and I dubbed it a 'BYOJ' area - 'Bring Your Own Job'"

"Without a doubt, the biggest challenge of living in rural areas or small towns is economic: making enough money to survive and thrive," he wrote. "It's very unlikely a high-paying job will even exist, let alone be handed to you. You have to dial down your financial expectations, while at the same time be ready to do whatever it takes to survive financially."

Whether someone thrives in rural Minnesota seems to come down to priorities, what's most important in a person's life. Where some see social and economic restrictions, others see new opportunities to connect with people.

"My community is nothing like I expected and everything that I had hoped," wrote Adrienne Sweeney, who moved to Lanesboro in 2002 from the Twin Cities and was raised in Philadelphia. "Growing up in a huge city like Philadelphia, I had no idea what to expect from a small (REALLY small) town. What I have found is that it is one of the most artistically creative places I have ever been... To be able to create a piece of theatre and then have an in-depth discussion about the work with the teller at your bank or your server at the diner the next day is a remarkable experience and makes your work feel so much more real and immediate."

"To be able to participate in a molten iron pour or attend a barn dance or string quartet performance with your neighbors is so inspiring," Sweeney wrote. "I have been more artistically energized here in this town of 750 than any of the 'big cities' I have lived in."

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Central Minnesotans kick the tires of regional plan

Posted at 3:24 PM on May 9, 2012 by Jennifer Vogel (0 Comments)
Filed under: Aging, Brainerd, Community Development, Economic Development, Local government finance, Rural

For more than a year, a group of a couple hundred people--business owners, elected officials, students, retirees and others--from five counties has been meeting to drink coffee and work toward establishing a set of goals for central Minnesota. They've been hashing over transportation, housing, job creation and other topics with the goal of creating a shared idea of what residents and local governments should try to accomplish by the year 2035.

It's an example of how organizers and leaders in Minnesota and elsewhere are looking for new ways to both sample public opinion and engage people in making choices about the future. The belief is that a strong, consensus-driven vision will lead to better policy and economic decisions. Ground Level has been tracking the project and we've even hosted a couple of related online discussions, which you can find here.

Yesterday afternoon, the group gathered at The Lodge in Baxter, where wooden boats and old motors festoon the walls, to review and give feedback on a preliminary set of plan recommendations built around 11 topics. In some cases, participants expressed skepticism at what the group has so far rendered and pushed toward greater specificity.

"We're getting closer to the end," said Dan Frank of the Little-Falls-based Initiative Foundation, which is helping facilitate the sessions. The process is sponsored by the U.S. Department of Housing and Urban Development to the tune of $825,000 and is one of about 45 efforts HUD is underwriting around the country. "This is the input part today," said Frank. "We want to give you the chance while [the plan] is still in draft form to give us input."

Participants, seated at numbered round tables, were asked to select four topics out of the possible 11 to discuss and to move to the appropriate, topic-centric tables. Specifically, they were asked to comment on what works, what doesn't, what's missing and what's next. "Focus on goals, rather than the how-to," advised Frank, adding that the action steps will come later.

At a table focused on "Changing Populations," participants contemplated an outstate population that's both aging and becoming more diverse. One person said immigrants will be crucial when it comes to offsetting the loss in economic contributions from retiring baby boomers. Another suggested including the goal of trying to improve the attitudes of locals when it comes to immigrants. Yet another said she simply didn't think the draft recommendations were attainable.

At another table, where people were talking "Education and Workforce Development," participants pushed to make the recommendations more specific by suggesting a focus on funding for college and apprenticeships. One person suggested that an emphasis on teleworking and online jobs should be included.

The meeting, it seemed, accomplished what leaders hoped it would. The group kicked the tires of a variety of proposals and gave frank, real-world feedback, which will be incorporated into the final plan.

Cheryal Lee Hills, executive director of the Region Five Development Commission, which has spearheaded the two-year project, told the group that central Minnesota is being held up as a model in other parts of the country, due to the high level of participation in the visioning process and the partnerships forged with foundations.

Hills said there are just two meetings left, one in June and another in August. In June, the group will review draft policies and discuss implementation. "On August 14th, we'll celebrate the final plan," she said, adding that she'd invited U.S. Senator Al Franken to be the keynote speaker. "So far, we're on his calendar," she said.

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More money for Minnesota entrepreneurs

Posted at 10:37 AM on April 13, 2012 by Dave Peters (0 Comments)
Filed under: Economic Development

As we showed in our "One Job at a Time" coverage last month, when entrepreneurs need money these days, they often wind up in the offices of a variety of Minnesota non-profits.

This week, 13 of those organizations got a $4.5 million shot in the arm to do more lending. The Minnesota Department of Employment and Economic Development announced how it was distributing money Congress appropriated a year and a half ago to ease the credit crunch for small businesses.

Finding money from private lenders has been harder in the past few years than it used to be, but a number of organizations have tried to supplement bank and other lending with revolving loan funds of their own. And some of those showed up on the DEED list.

One of the most active organizations in the state for helping entrepreneurs with small loans has been the Entrepreneur Fund in Virginia, which last year made $1.5 million in loans to small businesses. The loans varied from $2,000 to $150,000, including money, for example, for Catherine and Gary Branville, who returned to the Iron Range to take over a store in Virginia.

The Entrepreneur Fund (it's name is changing from Northeast Entrepreneur Fund because it has expanded into northwestern Wisconsin) will get $515,000 from the state to lend in a similar manner.

The biggest recipient of the new money is the Southern Minnesota Initiative Foundation in Owatonna, which is receiving $926,000.

"This is huge for us," said business development director Diane Lewis. She said the foundation makes loans of up to $150,000 if they are matched by other sources.

The new money is targeted at entrepreneurs who are women, minorities or living in areas the state considers economically distressed. It is aimed at operations employing fewer than 50 people.

The other recipients:

--Milestone Growth Fund Inc., Minneapolis, $233,000.

--Metropolitan Consortium of Community Developers, Minneapolis $295,000.

--Neighborhood Development Center, St. Paul, $266,000.

--WomenVenture, St. Paul, $112,000.

--Sparc, St. Paul, $135,000.

--Midwest Minnesota Community Development Corp., Detroit Lakes, $628,000.

--African Development Center of Minnesota, Minneapolis, $272,000.

--Metropolitan Economic Development Association (MEDA), Minneapolis, $309,000.

--Initiative Foundation, Little Falls, $407,000.

--Latino Economic Development Center, Minneapolis, $325,000.

--Headwaters Regional Development Commission, Bemidji, $77,000.

More details here on the state's Emerging Entrepreneurs Fund.

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Join a chat: Central Minnesota's housing squeeze

Posted at 11:06 AM on April 5, 2012 by Dave Peters (0 Comments)
Filed under: Community Development, Economic Development, Todd County

We're holding another online live chat at 11:30 this morning to talk about affordable housing in central Minnesota.

This is part of the planning effort that several hundred residents have been engaged in for more than a year, talking about what they want Crow Wing, Morrison, Wadena, Cass and Todd counties to look like in 20 years.

Right now, almost half of the low-income residents in those five counties spend more than 30 percent of their income on housing. You can check out what some people think about the situation and what to do about it by going to this page .

Then come back to the same page at 11:30 a.m. Thursday when you can join in a live conversation. See you there.

More on the central Minnesota "Resilient Region" effort here.

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Bemidji commercial kitchen launches

Posted at 9:00 AM on March 27, 2012 by Jennifer Vogel (0 Comments)
Filed under: Economic Development, Local Food

People in the Bemidji area wishing to turn local fruits and vegetables into raspberry jam, salsa or spinach pie for public sale now have a state-certified kitchen in which to do it. Harmony Co-op just opened its spanking new commercial kitchen, which is available to the public at an hourly rate.

The kitchen was almost three years in the works. I wrote about it last September, when the room still had exposed wiring and unpainted drywall. Harmony produce manager Lisa Weiskopf championed the kitchen along with Simone Senogles of the Bemidji-based Indigenous Environmental Network. They have big plans for the facility, including improving local eating habits and strengthening the regional "foodshed."

It's modeled on a similar facility in north Minneapolis called Kindred Kitchen and will come with all sorts of assistance for food entrepreneurs like help writing business plans, developing marketing strategies and meeting safe food handling standards.

According to Weiskopf, Harmony has already hosted a ServSafe workshop that was attended by 20 people, some of whom plan to make products in the kitchen. One person will bake gluten-free chocolate hazelnut tortes, while two others will bake bread to sell at a farmers market. Harmony is also working out a lease with a fledgling local micro-brewer, which MPR News' Tom Robertson reported on here.

In addition, the kitchen will host public cooking and nutrition classes, some centered on Native American foods. Bemidji is near three Indian reservations, where obesity rates are high.

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Join a conversation: Affordable housing in central Minnesota

Posted at 8:29 AM on March 26, 2012 by Dave Peters (1 Comments)
Filed under: Community Development, Economic Development, Todd County

Whose job is it to make sure there's enough affordable housing in central Minnesota? What's the difference between affordable housing and cheap housing?

We're starting our second online conversation about the future of central Minnesota, asking questions about affordable housing in the area around Brainerd. Check out this Resilient Region discussion here and add your thoughts by using the comment feature at the bottom.

As we did with the first of these conversations, we're posting questions posed by the Region 5 Development Commission and the Initiative Foundation to some of the residents involved in the Central Minnesota Sustainable Development Plan. Then we're inviting anyone who wants to join in.

More about the effort here.

The discussion is part of a federally funded, several-year effort to create a vision for life in Crow Wing, Cass, Wadena, Todd and Morrison counties for the coming 20 years.

We'll plan to follow up with an online chat at 11:30 a.m. on Thursday, April 5.

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New report finds entrepreneurism up slightly in Minnesota

Posted at 3:37 PM on March 19, 2012 by Jennifer Vogel (1 Comments)
Filed under: Economic Development

Minnesotans started more businesses in 2011 than in 2010, but only by a slim margin, according to the Kansas City-based Kauffman Foundation, which released its annual report on entrepreneurial activity today.

The foundation assigns an "index" to each state, which amounts to the number of residents per 100,000 participating in new business activity on a significant basis. In 2011, the index for Minnesota was 0.23, up from 0.21 in 2010. The national average, by comparison, is 0.32, down slightly. The index is based on data from the Census Bureau and the Bureau of Labor Statistics.

While the recession has led many people to start new businesses, including "necessity entrepreneurs" who may have trouble finding jobs, as we reported recently in our One Job at a Time project, tough economic times have also made people more cautious, according to the foundation.

Overall, the report found that the rate of new business creation nationwide dropped by almost 6 percent in 2011 and that fledgling businesses tended to be solo endeavors, rather than companies with employees. The western states continued to show the highest rates of entrepreneurism while the Midwest showed the lowest.

Other trends noted in the Kauffman report:

*Entrepreneurship rates for all ethnicities declined from 2010 to 2011, though Latinos remained much more entrepreneurial than other groups. Also, immigrants were more than twice as likely to start new businesses as people born in the United States.

*Growth in entrepreneurship was highest among 45- to 54-year-olds, though the proportion of new entrepreneurs in the 55- to 64-year-old category continued to grow due to a national population that's aging. This group represented more than 20 percent of new entrepreneurs in 2011.

*The least educated were the most likely to be entrepreneurial, perhaps due to outsourcing of manufacturing jobs and difficulty finding work. The largest drop in entrepreneurial activity occurred among college graduates.

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Northeast Minneapolis residents take development into their own hands

Posted at 1:56 PM on March 15, 2012 by Jennifer Vogel (0 Comments)
Filed under: Community Development, Economic Development

Hoping to fill some of the empty commercial space on Central Avenue in Northeast Minneapolis, a group of locals has come up with a novel idea. They're forming an investment cooperative, whereby members each throw in $1,000 and the money goes toward buying and fixing up properties and helping new businesses get established.

So far, the NorthEast Investment Cooperative (NEIC) has drawn 15 members and more than 30 pledges. At a meeting in late March, the group will establish bylaws and elect a board of directors. Much is yet to be determined, such as which properties around Central and Lowry avenues might be targeted, what sort of new businesses people want to encourage and what incentives and assistance might be offered to would-be business owners.

(Photo by Mike Mosedale)

All over the state, communities are trying to grow businesses from the ground up by offering microloans, mentoring programs and incubator spaces with cheap rent. We reported on the approaches as part of our recent One Job at a Time project. This is yet another twist on the theme.

If all goes according to plan, the NEIC will start with a high-profile troubled property on Central Avenue. The group will buy the building, rehab it and find one or more businesses to fill it. Once the businesses are on their feet, the hope is they'll purchase the building from the cooperative. The money would then be reinvested in the next property and so on. Since the NEIC is for-profit, members might see a return as well.

NEIC co-founder Amy Fields, who also manages the Eastside Food Co-op on Central, thinks local ownership and management of commercial properties can make a difference. "For a lot of property owners, they are interested in a return on investment, not whether a particular business makes it. So many businesses come in with six months of cash flow and once they've gone through that, they're gone."

At the NEIC, she said, "We've got the triple bottom line that includes community and environment and so I think we're going to be looking at a way to have a long-term relationship with tenants."

"How the main street goes is how the rest of the community goes," Fields said. "If Central Avenue is invested in and becomes a more desirable location, everyone who lives here benefits from that."

The NEIC is aiming for a minimum of 100 members and Fields hopes the effort will strengthen the fabric of Northeast Minneapolis. "This is my community," she said. "I know people and I see people every day. I just want more of that. There is a sense that there is such talent and good will and energy and just commitment that you don't know about that is out there."

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Local brewers discuss money, regulations and pairings with stout

Posted at 2:00 PM on March 8, 2012 by Jennifer Vogel (0 Comments)
Filed under: Economic Development, Local Food, Northern Minnesota

Today, MPR's Ground Level project and Minnesota Today hosted a lively chat among brewers, brew suppliers and beer fans on the current state of beer in Minnesota. The discussion lasted for an hour and a half and ran the gamut, from how local ingredients impact the flavor of microbrews to regulations that get in the way to how to build a customer base.

Guests included Tim Nelson from Fitger's in Duluth, Dan Schwarz from Lift Bridge in Stillwater and Julia Herz from the Brewers Association in Boulder, Colorado. But we had many more people participate.

When asked why the beer industry is thriving here when other industries are struggling, Tina Hanke from Bemidji Brewing had this to say: "Craft beer is an affordable 'luxury' item--even in a bad economy, folks are willing to pay the $5 that gets you a great pint."

Participants also discussed how to build a successful brewery. Start-up money is key and usually comes from savings or friends and family. Sweat equity was mentioned, too. Good beer is the primary ingredient, though. Carey Matthews from Summit Brewing summed up the formula this way: "Great local products, real people behind them, and affordable prices."

Partway through the chat, food writer Dara Moskowitz Grumdahl chimed in and prompted a wave of suggested beer and food pairings, like chocolate porters with dessert and bacon with brown ales.

The discussion was part of our "One Job at a Time" series on entrepreneurship. Here it is, in its entirety.

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What do you want to know about running a brewery in Minnesota?

Posted at 11:18 AM on March 7, 2012 by Jennifer Vogel (2 Comments)
Filed under: Economic Development, Local Food, Northern Minnesota

If you've been following the explosion of new microbreweries and taprooms in Minnesota, you know that the beer culture here is changing radically. Not only are new entrepreneurial opportunities coming to the fore, but some think we're developing our own hop-heavy "north coast style."

Tomorrow between 11:30 and 1:00, MPR will host an online chat on about where our blossoming microbrew culture is headed, as part of our One Job at a Time project on entrepreneurism.

The chat will include Tim Nelson from Fitger's in Duluth, Dan Schwarz from Lift Bridge in Stillwater, Julia Herz from the Brewers Association in Boulder, Colorado, and local food writer Dara Moskowitz Grumdahl.

We've invited many local microbrewers to participate and we hope you'll join us, too. You can find the chat tomorrow by following this link.

Do you have questions you'd like us to ask or topics we should explore? Feel free to post them here.

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Group targets obstacle to entrepreneurship: unnecessary licensing

Posted at 11:04 AM on March 6, 2012 by Jennifer Vogel (0 Comments)
Filed under: Economic Development, Public safety

There are regulations that protect the public, like the kind that say you can't store cleaning solutions next to raw chicken in a restaurant kitchen. Then there are those that create overly onerous barriers for entrepreneurs looking to enter a particular profession, according to the Institute for Justice, a law firm with a libertarian bent.

Lee McGrath, executive director of the Institute's Minnesota branch, refers to the latter category of regulation as "fencing," since it often serves to protect existing businesses and may not benefit public safety.

"This is just deadly for entrepreneurs," McGrath said. "You see this all over the place, because existing companies find it easier to beat competition at the state capitol or city council than in the marketplace. Regulation is often introduced and enacted under the pretext of health and safety, but it has enormous anti-competitive components to it."

As part of our "One Job at a Time" project, Ground Level has spent the past week looking at entrepreneurism in Minnesota, including obstacles like access to startup capital and, for new immigrants, language and cultural barriers. Regulations can also get in the way. We've seen how the recent loosening of state and local laws has led to an explosion of local food carts and microbreweries.

In the past, the Institute for Justice has represented local taxi drivers and succeeded in lifting a cap on the number of cabs in Minneapolis, which resulted in a proliferation of both new companies and cabs, said McGrath. The group also represented sign hangers, horse teeth "floaters" or sanders and monks who make caskets. They've won some and lost some. "We focus on that first rung of economic liberty," said McGrath. "This is how you climb out of poverty and realize the American dream."

He holds up hair braiders as a prime example. The institute sued the state of Minnesota in 2005 on behalf of three hair braiders, two from Africa and one from North Minneapolis. The women wished to open a salon, but the state said they had to get extensive cosmetology training, costing thousands of dollars and having little if anything to do with hair braiding.

"The state threw in the towel in 2006," McGrath said. "The hair braiders were free. The cosmetology board in a spiteful move came back the following year and imposed a licensing requirement of 30 hours. We chose not to challenge that."

McGrath's arguments contain an unusual mix of free market ideology and concern for social justice. "What happens is, regulations reward those with wealth and political connections," he said, and wind up costing thousands of jobs in Minnesota and driving up consumer prices due to a lack of competition. He thinks the market, rather than licensing, is best at ferreting out frauds and incompetents. "Denny Hecker was a licensed auto dealer," he said.

Currently, the institute represents a St. Paul funeral home owner who wants to open a second location, but is being required by the state to build an embalming room, even though that service can be legally outsourced.

"There is a vibrant trade of third party embalmers," said McGrath, who notes that the funeral home provides low cost, no frills funeral services and spending "$30,000 to $50,000 to build the embalming room with all the piping and air and filtration" would be difficult. He thinks the case could go to trial in a year and is optimistic the funeral home will prevail. "We do feel very good about it. We have a terrific client."

The institute also is working on a bipartisan bill in the state Legislature that would make it harder for the state to impose new licensing requirements. "The idea is that when the Legislature is considering new occupational regulations, they must define real harm," said McGrath. "Not the hypothetical type. Second, once you have identified real harm, you must choose the least restrictive type of regulation to address the harm."

The legislation, McGrath said, "could have a big effect because it will create almost as many jobs as Governor Dayton is talking about when he talks about the bonding bill or creating a new stadium. This could be tremendous economic stimulus."

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Like everyone else, entrepreneurs getting older

Posted at 2:40 PM on March 2, 2012 by Dave Peters (0 Comments)
Filed under: Economic Development

Baby boomers throw their weight around in every other form of human activity; why not entrepreneurism?

And indeed, numbers from the Kauffman Foundation show the increasing role of aging boomers in the world of start-ups and self-employment.

Fifteen years ago, only one in seven entrepreneurs in the country was between the ages of 55 and 64.

Today, as boomers swell the numbers of that group, sure enough, almost one in four entrepreneurs is of that age.

But they put a different face on the phenomenon. They're people in second careers, people forced by the stock market to find new ways to bring in money, people fulfilling long-delayed dreams.

They're people like Greg Jodzio, a 64-year-old Hutchinson man who felt the need to add to his income after retiring. So he scraped up some money and started up a hot dog stand, as he explained to MPR News reporter Jennifer Vogel. Check out how he and others are becoming "encore entrepreneurs."

The story is part of our Ground Level series "One Job at a Time."

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Minneapolis art students share ideas with a small city

Posted at 2:45 PM on March 1, 2012 by Dave Peters (2 Comments)
Filed under: Community Development, Economic Development, Local Food, Rural, Young people

MONTEVIDEO -- Last Saturday at the community center here, a handful of students from the Minneapolis College of Art and Design (MCAD) presented ideas aimed at revitalizing the local economy and culture through arts, broadly defined.

An arts-based economy is emerging in western Minnesota, in the Upper Minnesota River Valley. I wrote a story about it that will run next Tuesday as part of Ground Level's One Job at a Time project.

Meeting with some four dozen residents, including potters and organic farmers, the MCAD students tossed out ideas that included enlisting young documentarians to make a short film establishing a narrative for the region, opening a restaurant with local foods and furnishings and formalizing an internship program where MCAD students would earn credits for working with local artisans.

The students were part of the school's new Rural Arts Initiative, funded by the Bush Foundation, which seeks to lay fresh, problem-solving eyes on the Montevideo area and also the Iron Range. The students spend a little time in each location and return to present creative suggestions, along the way gaining a feel for real-world problems. (Full disclosure: Ground Level receives support from the Bush Foundation.)

"We are not coming in to save people through art or design," said class professor Bernard Canniffe, who chairs MCAD's design department. "I think artists and designers do more damage than good in these things. 'Oh look, we're going to create a mural.' It's like God almighty, really? That's all we can do? Or create a papier-mache donkey standing on its head that symbolizes hope in Montevideo? Many times that's what these things become, padded resume builders for designers or artists. It doesn't accomplish anything. This is something different."

Canniffe, who is from South Wales, said the goal is to "create innovation" and hopefully establish a long-term relationship with the community. "Art can assess and create," he said. "That's what art and design can do, look at things quickly and assess them really quickly."

"The next ground-breaking initiatives or ideas are going to come out of the Midwest and not the coasts," he said. "Pick any subject that's affecting the world now. It could be globalization, population densities, entrepreneurism, agriculture, cultural ethnicity, Christian versus Muslim identification. All these things are happening in one shape or form in Minnesota or Iowa."

Aside from one audience member who thought it paternalistic to have student documentarians from elsewhere tell the region's story, the response to the presentation was largely positive. Attendees seemed to appreciate the opportunity to exploit young talent and energy and perhaps draw a student or two to stay. "Out of the creativity phase, hopefully something comes and clicks and becomes a new model," said Patrick Moore, of Clean Up the River Environment, based in Montevideo.

Moore is one of those people who make things happen in a community and he facilitated the student presentation. "I'm hoping that the economic development of western Minnesota can grow. I love the towns and the people and the river. I want people to live in this landscape. I don't want it to be inhabited by robots and machines. I want people in these communities to thrive and raise kids and create art and music and plays."

"It's about building a new society in the shell of the old," he said.

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Minnesota entrepreneurship: From beer to replaceable lawnmower blades

Posted at 1:49 PM on February 29, 2012 by Dave Peters (1 Comments)
Filed under: Economic Development

It's in vogue to praise entrepreneurship as the engine that can expand Minnesota's economy.

Fading is the instinct for communities to build industrial parks and chase the smokestack, the out-of-town employer who can roll in and hire 200 people. You can hear the crescendo for "growing your own," helping small operations and the self-employed.

But how do you do that? For the past couple of months we've been reporting on the contours of that effort as our latest Ground Level project. And today we're starting to publish and broadcast the results. Check out our new One Job at a Time page.

Minnesotans provide an unending stream of entrepreneurial ideas, from a sunflower-seed snack inspired by a peanut allergy to a heavy pipe-handling machine that sprang to someone's mind after an oilfield injury in Texas; from a brewery financed by community members willing to kick in a few bucks to the Gillette-razor-like notion of selling lawnmower blades that can be replaced.

Breweries, in fact, seem to be capturing a lot of entrepreneurial spirit, including that of Scott Kolby and William Norman in Red Wing:

But when you look at the numbers, gains in entrepreneurship are hard to spot in the past couple years. There have been a few signs lately that things are picking up and lots of people around the state are trying to encourage that.

In Little Falls, Red Wing, Mankato and elsewhere, incubators, both real world and virtual, are helping entrepreneurs launch themselves. Foundations are increasing the number and amount of microloans they issue to startups -- the two most active are in opposite corners of Minnesota. Communities like Worthington are trying to tap the education and business expertise in their areas to create niches. Other efforts focus on specific groups of would be entrepreneurs, like Latinos.

We'll be adding to this web page in coming days, and we'll be on the air today through the middle of next week with a series of special reports. It's good stuff on two levels -- the bright ideas springing from the minds of Minnesotans are compellikng in their own right and, perhaps more important, maybe some communities are gradually figuring out how to foster a new economic culture.

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Join the chat about central Minnesota's future

Posted at 10:23 AM on February 23, 2012 by Dave Peters (0 Comments)
Filed under: Economic Development

I've written several times about an ambitious planning process going on in the Brainerd area -- Crow Wing, Todd, Morrison, Cass and Wadena counties, to be exact -- and in a few minutes we're going to hold an online chat with folks.

What do people want the place to look like in 2035? Clearer lakes? Better roads? Tougher shoreline regulations? Lower taxes? What's the best route to economic dvelopment?

Hundreds of people have been involved in a process that is taking several years and tackling tough issues.

Check out comments residents have made here and join the chat at 11 a.m.

See you there.

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Just how clear should central Minnesota lakes get?

Posted at 2:41 PM on February 17, 2012 by Dave Peters (0 Comments)
Filed under: Economic Development

When a group of central Minnesota residents got together in December to talk about the future, most agreed they wanted to see economic growth, particularly in manufacturing, tourism, agriculture and several other sectors.

They also agreed they wanted the quality of the region's abundant lakes to improve.

Interestingly, they divided on how much.

And that seems like a pretty central question for anyone trying to decide what Todd, Crow Wing, Cass, Wadena and Morrison counties should look like in 2035.

When 130 residents were asked at a meeting in Brainerd to choose between several scenarios regarding the region's 1,263 lakes, they were almost evenly divided between these two:

--A future involving investment in lake quality to achieve "significant" improvement in water clarity. Some 60 percent of lakes would improve.

-- A future in which lake clarity improved "slightly" and in which investments in water quality would be made in order to maintain economic activity.

Is there a trade-off between economic development and lake quality?

To Vicki Chepulis, a rural arts and culture consultant near Wadena, the environment takes precedent. She says in a Ground Level forum, "Economic gain for the short term, at the expense of our natural environment, will have long term costs that go far beyond profits."

In the same forum, Dave Johnson, retired from the construction industry, is nuanced. "Once we are able to articulate what is most important it should be easier to determine how we can accommodate growth and economic development. With give and take there should be room for both without violating what we've established as priorities."

So what IS most important to preserve and how does a region that clearly has a lot to protect accommodate development?

If you have thoughts, join the conversation here.

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Red Wing wakeboarder hopes incubator will pull him to success

Posted at 9:30 AM on February 15, 2012 by Jennifer Vogel (1 Comments)
Filed under: Economic Development

Kyle Mehrkens grew up on Lake Pepin near Red Wing, so it was only natural that he'd invent a contraption that makes it easier to be on the water. The 28-year-old is building the third generation of a specialized electric winch that can pull a waterskier or wakeboarder for 25 seconds toward shore without a boat or even another person around.

MPR News photo/Alex Kolyer

"I set out to change the way you participate in wakeboarding and waterskiing," said Mehrkens, noting that the latter was invented on Lake Pepin. His winch hasn't hit the market yet, though he's planning demonstrations at a couple of upcoming water expos and hopes to "pull" a big competition this summer. "If I pull that it will be game over because everyone will know about it."

Mehrkens, who has a physics degree from Hamline University, began development of his self-operated winch with his high school shop teacher and now has filed for a patent. He credits an entrepreneurial uncle for his drive, friends and family for the practical support that's gotten him this far and Red Wing's virtual business incubator for pushing him to the next level.

The incubator, which started last year in part with a grant from the Southern Minnesota Initiative Foundation, has lent advice and mentorship and also $4,000 in the form of a microloan. "Throughout the whole process, they've been willing to work with me and push me and support me," said Mehrkens. "It's been very inspirational."

One of the incubator's goals is to create opportunities for younger people in Red Wing, said John Becker, a fine print shop owner who heads a nonprofit called Red Wing Downtown Mainstreet, which championed the effort. "We're not growing rapidly but we are getting older very rapidly," he said. "That means the whole property tax burden shifts to a fixed income demographic. It's hard to grow a community like that."

"Kyle is the poster child for what we want to do," Becker said. "He's young and ambitious and aggressive." If Red Wing can burnish its credentials as a sports Mecca, perhaps more young people will want to live there. "There is no point in trying to fill a pipeline that's draining when the kids aren't coming back," said Becker. "They need reasons to stay."

The way it sounds, Mehrkens intends to do just that. "This is a good spot to start a business," he said. "The bonus here is how easy it is to talk to people. You can get a lot of advice. Red Wing has so much to offer to everyone of every age. My age group is probably the least served, but I want to give back to this community in any way I can."

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Central Minnesota's future: Join a conversation

Posted at 10:22 AM on February 16, 2012 by Dave Peters (0 Comments)
Filed under: Economic Development

If your economy depends on clean water, how do you make sure the water stays clean while you take advantage of it?

For people living in one of the five counties around Brainerd in central Minnesota, we want you to weigh in on that question and others by going to this Ground Level page.

I've written a couple of posts (in February 2011 and again in December) about how a few hundred people in Crow Wing, Todd, Morrison, Cass and Wadena counties are trying to map the region's future.

It's an interesting example of people in a community trying to wrestle with challenges in order to maintain and enhance their quality of life.

After the last post about the effort, I told the chief organizer of this Resilient Region effort, Cheryal Lee Hills, executive director of the Region 5 Development Commission, the people involved could use Ground Level as one means to carry on a conversation if they wanted. It's a group that crosses a lot of lines -- different counties, different walks of life, different political outlooks.

Hills took me up on it so here it is, an effort to help Central Minnesotans discuss the economy, the environment, housing, transportation and anything else they think will be important 20 years from now.

The organizers of the planning effort put three questions about the economy and the environment to a handful of residents and their responses are posted on this page. As I mentioned in the first paragraph above, many think it's crucial to maintain a balance between environment and economy. How to do that over coming years isn't easy to agree on. How do you think it should be done?

If you live in Central Minnesota, we're inviting you to add your comments to the page and then join us here at 11 a.m. next Thursday for a live chat about the questions. Depending on how things go, we'd love to repeat the process in future weeks on other topics. Check back often.

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Want more entrepreneurs? Welcome immigrants, for one thing

Posted at 9:43 AM on February 10, 2012 by Dave Peters (0 Comments)
Filed under: Economic Development

If you're looking for ways to make it easier for entrepreneurs to succeed in Minnesota, the Kauffman Foundation has a list for you.

The Kansas City foundation has been studying entrepreneurship in the United States for many years and just put out two reports focusing on how states and local communities can make things easier.

States and their citizens are better off encouraging the formation and growth of new companies, rather than pursuing the timeworn and cost-ineffective approach of competing for the headquarters and/or expansions of existing firms (sometimes referred to as "smokestack chasing").

The evidence is clear: Entrepreneurial growth is key to the growth of net new jobs and of major advances in living standards.

So. How to make that happen exactly?

The foundation runs through a number of legal and other shifts states can consider:

--Speed commercialization of university-born ideas.

--Create new health insurance options for entrepreneurs.

--Cut or streamline regulatory hurdles like occupational licensing requirements and business registrations.

--Be lenient in enforcing employee non-compete agreements, encouraging mobility.

--Encourage and allow credit unions to finance start-ups more actively.

--Regarding taxes, keep it simple, but not necessarily low. Research seems to indicate entrepreneurial activity is depressed more by complex rules and incentives that skew the market than by the tax rates themselves.

But the foundation also argues that more nebulous cultural changes are important and offers a few more recommendations for both state and local policy makers:

1) Welcome immigrants. From 1995 to 2006, they created a quarter of all technology and engineering firms in the nation. "There is nothing to stop a state from branding itself as
immigrant-friendly, as one that is welcoming to immigrants who study in public universities, start companies, and so on."

2) Build networks of entrepreneurs and funders. Research is showing that access to other entrepreneurs, potential employees, potential professional service and potential funders is more important than money.

3) Celebrate success. Tell the stories over and over of successes that build the idea that entrepreneurship is an accepted pursuit.

4) Measure it. Build your own set of metrics that includes a variety of these criteria.

You can find a summary of the two reports and links to pdf files here.

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Microloan lets Iron Range couple move back from Twin Cities

Posted at 8:40 AM on February 9, 2012 by Jennifer Vogel (2 Comments)
Filed under: Economic Development, Rural

Catherine Branville always knew she wanted to own a store. But she wasn't sure what sort it would be. She'd moved with her husband, Gary, from Virginia on the Iron Range, where they both grew up, to the Twin Cities to get her business degree at the University of Minnesota.

Branville's decision was made for her when Irma's Finland House, a mainstay gift shop in Virginia, came up for sale a year and a half ago. She'd shopped there as a kid and had an attachment to the place.

"We love it on the Iron Range," 27-year-old Branville said. "Both of our families are from here and we knew eventually we wanted to come back this way. We needed the right opportunity and job. The store went up for sale and it all ironically fell into place. It gave us the opportunity to come back for a reason. We both have Scandinavian heritage, so the store was an interesting fit for us."

But putting together the $60,000 they needed to buy the store, plus extra for repairs, wasn't so easy. It can be tough to get a business loan from a bank these days. Some have tightened up lending standards. In other cases, individual assets, like homes, are worth less and so don't provide the same collateral they used to. (Branville and her husband live with her parents because they've been unable to sell their home near Lake Nokomis.)

Foundations and other organizations have stepped in to fill the gap with microloans. These loans, usually up to $50,000, can be easier to land than bank loans. And in some cases, getting the seal of approval from a foundation can lead a bank to loosen its purse strings.

That was the case with Irma's. Before making an offer on the store, Branville attended a small business financing seminar in Duluth, where she learned about the Northeast Entrepreneur Fund's microloan program. The nonprofit wound up lending her $25,000, which triggered the bank to provide most of the rest (the city and her parents chipped in also).

"It was huge," she said. "We knew the bank would never have lent us the full amount we needed. Without Northeast we could not have bought the business."

Branville and her husband have fixed the store's foundation and roof and painted its interior and exterior and replaced the carpeting and lighting. She's expanded the offerings a bit to include locally made glass jewelry and is thinking of turning the back of the building into a coffee and bake shop with cooking classes.

Irma's employs six people part time. "Things are going really well, knock on wood," said Branville. "We're beating all the projections we had for the first couple of years. There is a lot of work to do and a lot of projects on our list. Slowly but surely we're getting there."

"It's really nice to be back up here," she added. "We both ski and hunt and fish. This is where we want to be."

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Is there a thriving entrepreneurial community where you live?

Posted at 9:46 AM on February 13, 2012 by Dave Peters (0 Comments)
Filed under: Economic Development

What makes one place seem to have an entrepreneurial spirit and another not?

We asked entrepreneurs in our Public Insight Network and, naturally, the answers add up to a complicated weave. Respondents cited factors like support from local shoppers, people with ideas that fill a niche, perhaps a handful of like-minded start-ups that create a market, local government or non-profit expertise and, of course, money.

Steve Piragis said Ely definitely shows an entrepreneurial spirit. "Ely has a very aggressive group of canoe trip outfitters who are extremely competitive. We all work hard for market share and we all do quite well. They are mostly innovative and willing to risk to market."

Rick Morris said he finds the attitude "casual" in Waseca. "Years ago real entrepreneurial people made this town expand" but the lions of an earlier day are missing -- Edgar Johnson, who founded radio giant E.F. Johnson, Wayne "Bumps" Brown, who created Brown Printing, and George Herter, the flamboyant businessman behind Herter's outdoor and mail-order firm.

"Today these businesses are either gone or sold to national or international concerns," Morris said. "We have other entrepreneurs in town who keep this town alive but I can't say it's due to a fostering environment."

Check out what others told us.

What do you think?

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Minneapolis Fed finds little evidence self-employment has grown

Posted at 9:36 AM on January 30, 2012 by Dave Peters (0 Comments)
Filed under: Economic Development

There's a difference between saying entrepreneurship is increasingly important and saying it's picking up speed.

Ron Wirtz, editor of the fedgazette, looked hard for data that might show an increase in entrepreneurial activity lately. As he explains in the January edition of the fedgazette, the quarterly newsletter published by the Federal Reserve Bank of Minneapolis, he didn't find much.

In sum, there appears to be very little in the way of data to suggest that self-employment is increasing, whether you're talking about temporary, make-ends-meet endeavors or more formal, incorporated businesses designed to shape a new career or fulfill a dream of being your own boss.

The piece is an in-depth look at what the numbers do and don't say about entrepreneurism and a great summary of the variety of ways to look at the data. (It's more exhaustive than my little effort the other day, but, I'm happy to report, similar in conclusion.)

None of which is to say the increasing emphasis on entrepreneurship among economic development officials, community activists, foundations and even the president, is somehow wrongly placed. Growing or not, entrepreneurs are increasingly appreciated as a powerful engine of potential economic growth.

And there is one chunk of data Wirtz points to that provides room to think self-employment may indeed be growing. The Bureau of Economic Analysis measure of income taken in by proprietors fell for three years in a row but rose sharply in 2010. Wirtz points out a lot of caveats about what that might mean, but at least it's one graph that turns upward at the end.

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One Job at a Time: The story of Nots!

Posted at 9:49 AM on January 27, 2012 by Jennifer Vogel (0 Comments)
Filed under: Economic Development

Rob Fuglie's brainstorm began with the swinging of a hammer to smash sunflower seeds on his kitchen counter. His young son is allergic to nuts and so, tired of munching plain old sunflower seeds, Fuglie endeavored to create something more crunchy and tasty. "My wife and I missed peanuts in our life," he said. "I was frustrated because I wanted sunflower seeds to snack more like a peanut."

He added some sweet ingredients and a bit of olive oil to the crushed sunflower seeds, popped the mixture into the oven and presto, the first Nots! were born.

Fuglie is the kind of person who encounters a problem and then actually goes out and creates a solution, unlike most of the rest of us. When his square Costco milk jug wouldn't pour neatly, he invented a customized cap to help it along (he started shipping them to consumers last week).

In a lot of ways, the 40-year-old is typical of entrepreneurs in Minnesota. He started Nots! with $1,000 of his own money. But what's most interesting is that he's succeeded so far with a lot of help, from fellow entrepreneurs, from a test kitchen in Crookston and from the city of Fergus Falls, where the company is located.

Fostering entrepreneurism is an economic strategy that has gained momentum in Minnesota of late, especially given a sluggish economy in which established companies may be reluctant to start a new plant or open a new office. It seems that everyone these days, including President Obama, is looking to encourage small business start-ups. And there are myriad ways to do it, whether through microloans, incubators or simply helping out where needed.

Fuglie is good at networking and lucky for him, he knew Lois Josefson, executive director of TiE Minnesota, an entrepreneurs' education, networking and mentoring organization. She was the first to try his sunflower snack and said they were "not bad." But, they needed work, an assessment Fuglie agreed with.

"They tasted not bad but looked really bad," he said. "They looked like chicken feed, pale and extruded looking. They were very formed and cylindrical. They were not the most appetizing looking pellets."

Josefson suggested that Fuglie perfect his snack at the Agricultural Utilization Research Institute in Crookston, founded by the state Legislature decades ago to help develop new agricultural products. He spent three days at AURI last spring and learned how on scale up the Nots! recipe and improve their texture. He also discovered that molasses was a good way to add a warm tone to an otherwise pale snack.

Once he had the formula down, he needed an inexpensive place in which to make the Nots! Though Fuglie lives in Chanhassen, Josefson suggested Fergus Falls, where she lives, because a smaller city would be cheaper than a bigger one and because Fergus has a culture that supports entrepreneurs.

Fuglie had already met Harold Stanislawski, executive director of the Fergus Falls Economic Improvement Commission, and so the connection was easy to make. Stanislawski offered commercial kitchen space in an empty nursing home in town. Fuglie moved in and began production in mid November. So far he hasn't had to pay rent, but he hopes to give back in other ways.

"We're working with a group in Fergus Falls called Productive Alternatives," Fuglie said. "They work with adults with severe developmental disabilities. We're working on getting them in to do packaging for vocational training."

Nots! shot out of the gate and by Dec. 5, the product--every nugget of which Fuglie makes by hand--was on backorder. "We had product demand that was six months ahead of what I'd planned," he said. "That's over the top. That's awesome. But it also means the business plan is six months behind." He's since caught up with orders and again has Nots! to sell.

Fuglie has ordered customized equipment that should streamline production and he's hoping to hire two staffers by spring and also start paying his lone volunteer. "My goal is not to be the Nots! maker," he said. He's working to become "retail ready" and figure out distribution.

He acknowledged that things wouldn't be going as well or perhaps at all without the help he's received. Working in Fergus Falls has been "fabulous," he said. "You've got a lot of people who want to do things. The people you deal with on a daily basis are generally very active in the community."

Also, he said, locals in Fergus Falls are interested in local products and are some of his best customers. "You are not missing anything by not having a brand name that everybody has heard of."

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One job at a time

Posted at 9:56 AM on January 24, 2012 by Dave Peters (3 Comments)
Filed under: Community Development, Economic Development

Measuring entrepreneurship is an elusive business.

Data crunchers from the census bureau, the Internal Revenue Service, academia, the Bureau of Economic Analysis and other organizations take a variety of stabs at getting a handle on it.

None of them capture precisely the psychological, light-bulb-going-on approach to the world that people have in mind when they think about entrepreneurship. But, taken together, they can shed light as communities try to think differently about entrepreneurship and its role in economic development.

A lot of those measures haven't looked so good lately in Minnesota.

You hear more people around the state talking these days about developing a "culture of entrepreneurship" as a promising means of developing and sustaining healthy local economies. It's time, you hear these people say, to stop relying on large employers coming into town and hiring hundreds. Instead, you hear increasing talk about "gardening" and "growing your own," one job at a time, by creating environments that make entrepreneurship more attractive.

Ground Level, MPR News' project for exploring community issues in Minnesota, is going to take a look at that effort over the next month or two. Look and listen for stories from around the state about incubators, microlending, start-ups, people with bright ideas and people forced by a poor economy to become entrepreneurs. We're calling it "One Job at a Time."

But first, here are two things that jump out at me after strolling through the data for a few days.

--When you look at graphs showing change in Minnesota's self-employment or in new companies started or in income generated by sole proprietors -- all of which get at part of entrepreneurship -- you see a dropoff in the latest years for which numbers are available.

Two examples:

The number of Minnesotans identifying themselves on their tax returns as generating income from self-employment peaked in 2007 and then fell two years in a row. Some predict this number is starting to rise again but here's what it looks like from the numbers available.

And the amount of income reported by business proprietors (including both self-employed and those who hire others) likewise has seen a decline since a peak in 2006, as reported by the Bureau of Economic Analysis.

--But interestingly, when you break those sets of numbers down geographically, an area of southwestern Minnesota seems to be fighting the trend better than other places.

Almost every county declined in self-employment since the peak in 2007, but a half dozen counties along the upper Minnesota River were among those with the smallest declines. The darker shaded counties showed the least decline (Yellow Medicine was flat, in fact.)

And when it comes to proprietor income, counties bucking the trend and actually increasing since the 2006 peak are concentrated in the same part of the state. Again, the darker shaded counties showed the biggest increases. (Traverse County, the state's least populated, led the way.)

I asked Kurt Thompson, program officer for the Southwest Initiative Foundation in Hutchinson why this might be the case. The farm economy has been booming, he noted, but he also mentioned an ethic of hard work and something in the culture of the region that makes people do for themselves.

Likewise, Pam Lehmann, economic development authority director for Lac qui Parle County, said the emphasis is on entrepreneurs in her part of the state. She told MPR News reporter Jennifer Vogel:

"When I started in January 2007, my board said, 'We don't want you to chase any smoke stacks. We don't want you to chase the big company that will employ a couple of hundred people.' If they want to come here, we won't turn them down, but we're not actively recruiting them. We feel we'll have more long-term impact by helping the one-man shops get started and grow. If you help 100 small guys get started, you've created 100 jobs. If one or two fail, that's not the impact of one big employer failing and losing all the jobs."

I'd love to hear people's thoughts about the value of this data and whether there are signs of change in the wind. We've been asking entrepreneurs in our Public Insight Network what they think about conditions, as well.

We plan to go down this avenue with our reporting in the coming weeks. We'll look at places where artists underpin entrepreneurship, where former manufacturing plants have formed a platform for small-business growth, where green energy is triggering action and where the "secret ingredient" seems to be a person who's just plain good at making something happen.

Stay tuned.

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Minnesotans find themselves "Forced to Choose"

Posted at 3:51 PM on October 26, 2011 by Dave Peters (0 Comments)
Filed under: Community Development, Economic Development, Local government finance

Over the past couple of weeks, MPR News listeners have heard a half dozen news stories on All Things Considered and Morning Edition generated by a new project called "Forced to Choose."

In Owatonna, voters are choosing between higher taxes and letting a historic set of buildings deteriorate. In Foley, residents hope to save money by cutting police protection. All over Minnesota, businesses are bracing to bear a bigger property tax burden resulting from a state effort to save money.

Today we've launched the online version of this project, a look at how Minnesota communities are coping with a new austerity that is putting pressure on city, school and county budgets, on taxes and on how residents come to agreement on what they want their communities to accomplish.

The new "Forced to Choose" site will collect, amplify and add to the stories we're doing for broadcast. For example, you can listen to reporter Jennifer Vogel talk this afternoon with All Things Considered host Tom Crann about the increasingly shabby look some Minnesota cities are taking on and then check out her thoroughly reported story online with all the details.

Likewise, if you're confused by how the state changed the property tax law in its special-session efforts to balance the budget (and who isn't?), check the stop-action video MPR News staffers Curtis Gilbert and Molly Bloom put together. It's got music, it's got houses made of Legos and it's only three and a half minutes long.

Did the Legislature in effect raise property taxes this year? We're surveying selected cities to find out and will report the results soon.

Look for a lot more in coming months as cities, schools and counties choose what to spend money on, what to give up, how to pay for what they want. This reporting effort is part of our Ground Level project to look at community issues, but we've pulled in other resources as well, assigning a total of a half dozen reporters, editors, photojournalists and web developers.

We're going to report on decisions about fixing streets, providing enough police, closing libraries and finding innovative ways to save money -- all crucial elements of the public debate.

But we also want to shine light on how communities come to grips with these questions and how they make decisions. What happens when every idea has an enemy? Does a customer-service approach leave residents expecting more than they're willing to pay for?

We've already tapped into our Public Insight Network to learn from residents about city services, libraries, law enforcement and other topics. We'll continue to do that and to look for other ways to let people contribute. Feel free to comment here and stay tuned for more coverage.

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Minnesota's communities making tough choices

Posted at 7:00 AM on October 24, 2011 by Jennifer Vogel (0 Comments)
Filed under: Economic Development

For the past couple of weeks, MPR News has been airing stories about how cities are coming to terms with smaller budgets--reduced because of cuts in Local Government Aid, a lagging economy and declining property values.

Foley has done away with its police department in favor of hiring a private security firm. Grand Rapids is cross-training its employees and working to go paperless. In the metro area, a legislative change will likely result in higher property taxes for landlords and, therefore, higher rents.

All these stories are part of a project called "Forced to Choose," which explores the tough choices communities are making as local governments finalize their budgets for 2012. The project is a partnership of Ground Level, which previously examined budgetary issues in our "Cities in Crisis" series, and the larger MPR newsroom.

This morning, MPR News reporter Elizabeth Baier looks at a school referendum in Owatonna that would, if passed, place a vacant Bible college campus in public hands. Purchasing the campus would allow for an expansion of the elementary school and also allay a nagging concern of city leaders: that a collection of empty buildings can become an eyesore in a hurry.

We'll be presenting more stories along these lines--both on the air and online--in the coming months. We hope you'll stay tuned.

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Social Security's role underappreciated in rural economies

Posted at 8:41 AM on October 31, 2011 by Dave Peters (0 Comments)
Filed under: Aging, Economic Development

Aitkin County lost 26 jobs in the past year, according to state employment data. On the other hand, Social Security recipients across the nation got the news this month that they'll get a 3.6 percent cost-of-living increase in their checks in January.

Which of those developments is more important if you live in the north central Minnesota county of 16,000?

Here's one way to think about it:

If each of those lost jobs paid, say, $30,000 a year, then there's $780,000 a year less washing around the central Minnesota county, money not getting spent at the Ford dealership or the Holiday station or the new grocery store in Aitkin.

But that cost-of-living increase for the 4,400 Social Security recipients in Aitkin County could add up to about $2 million in 2012, a lot of which will get spent on groceries, gas and even cars.

Obviously jobs matter, and there's a lot more to a local economy than this simple comparison, but it does point out that the value of Social Security payments can be huge and sometimes underappreciated, especially in rural areas.

That's why the Daily Yonder, an online publication covering rural America, has pulled together an analysis of the impact of Social Security payments for retirees, survivors and disabled people for the nation. Rural areas tend to rely more on Social Security payments to shore up local economies than urban and suburban areas.

The Daily Yonder compiled figures for every county in the nation and agreed to share the data ahead of time with Minnesota Public Radio News' Ground Level project.

It turns out that in Minnesota, Aitkin County leads the way -- 11.9 percent of all personal income arrives in residents' hands in the form of Social Security payments. Most of those recipients are retirees. The county is part of a corridor of retirement extending north to the Canadian border. There are six Minnesota counties, all in that region, in which 10 percent or more of personal income comes from Social Security.

By contrast, Carver County in the Twin Cities metro area gets only 2.9 percent of its income from Social Security.

For the state as a whole, the number is 5.1 percent, slightly less than the national average.

So what?

To Ben Winchester, a rural sociologist from Hancock who does research for the University of Minnesota Extension Center for Community Vitality and who studies rural demographics intensely, there's a lesson for economic development.

Enticing new jobs and helping employers grow is important, but so is understanding that Social Security and other non-wage payments like private pensions and income from rents or investments are important, too.

"Don't silo economic development apart from retirement issues," Winchester said.

Maybe that means developing ways to keep or entice senior citizens; maybe it means realizing there's a buffer in the local economy against tough times. "Think about condos as economic development," Winchester said, for example.

You can see from the map where the reliance on Social Security is greatest -- the north central retirement corridor. It's interesting to note other parts of the country that fit the pattern -- the Ozarks, northern Idaho, parts of Florida -- retirement meccas that don't necessarily have high-income economies otherwise.

It all makes sense to David Hasskamp, who runs the Aitkin County Growth non-profit to foster development. One of the big job engines in Aitkin County lately has been the hospital in the city of Aitkin. "The health care system has grown to take care of these folks. It's not like having Ford Motor Co. come in but these are good jobs."

Mark Partridge, a rural economist at Ohio State University, told the Daily Yonder, "The seniors who get these payments are primarily going to spend their money locally. And they are a key reason why some communities are still viable. If this money dried up, there wouldn't be a lot of these small towns."

You can see all the county-by-county numbers here. (Note that OASDI stands for Old-Age, Survivors, and Disability Insurance, known to most of us as Social Security.) The Daily Yonder's full coverage is here.

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Balancing the state budget in 3 1/2 hours. Almost.

Posted at 12:01 AM on July 23, 2011 by Dave Peters (0 Comments)
Filed under: Economic Development, Local government finance

What happens when you ask 30 people to sit down in Rochester for 3 1/2 hours and solve the state's seemingly intractable budget problems?

It turns out they can't entirely do it either (which is oddly reassuring in a way), but they do take a good stab at it, mostly arriving at an approach that doesn't use one-time fixes like shifting K-12 money and does include revenue increases along with spending cuts.

They express a swell of interest in broadening Minnesota's consumption taxes, for example, considering a tax on parts of the service economy that has grown outside the tax system -- lawyer's fees, perhaps, or accountant services.

And, as interesting as anything else, Tea Party member Cindy Maves and United Way official Dave Beal sit down at the end to talk about their differences.

The discussion Thursday evening at the Ramada Hotel in Rochester was the last of three that the Bush Foundation engineered this week just as the state government shutdown was ending and the dust was clearing from the budget shootout between DFL Gov. Mark Dayton and Republican legislative leaders.

For the three -- in Grand Rapids, Bloomington and Rochester -- a total of 130 participants were chosen to represent a cross section of political philosophies. Broken into small groups of a half dozen or so, they were told to come to consensus on where they would have found $5 billion to solve the problem -- a "citizens' solution." The goal was to treat the budget as more than just a math problem but to consider it an expression of philosophical principles that perhaps people can agree on.

In general, people preferred an approach that considered spending cuts, revenue increases and redesigning the way the state delivers some services. Tiny minorities said they preferred all-cuts or all-revenue increase solutions. One-time fixes were frowned upon. And trying some longer term structural ideas that Dayton and legislators declined to do, participants offered up a number of ideas: broadening the sales tax, merging higher education systems, eliminating mortgage interest deductions, cutting state employee numbers by 5 percent.

In Rochester on Thursday, people started out all over the map. Some shifted to come to agreement; some didn't. As the small groups soldiered on, I heard various mutterings, exclamations and complaints.

"$5 billion? Really?"

"What about the Internet sales tax?"

"I'm kicking the can down the road."

"I don't believe we have to do this. We have more revenue than we did last year."

"Everybody's going to have to share some pain."

"I lived in Indiana. That's where you nickel and dime services."

"Why does every county have to have its own jail?"

"Face to face at this table, it's a lot harder to be an a-----e."

"We have a spending problem, not a revenue problem."

"Our big idea was the sales tax," said participant Bradley Smoley. "We did balance it and we all like each other."

Former revenue commissioner John James had perhaps prompted the notion early in the evening when he noted that one reason the state has a structural problem is that the economy has grown in directions that bypass the tax system -- the service sector, for example.

At the table including Maves and Beal, there was no last-minute deal as the deadline passed. Maves was adamant that government should provide basic services and no more. Beal and others wanted to raise more revenue. Both said their differences were such that they could never reach consensus -- decision by means of a vote, yes, but consensus, no.

"We learned it's possible to reach a civil impasse," Beal said.

In the end, Maves said she came to appreciate better other people's interest in the sales tax. "I saw people analyze it differently."

For Beal's part, having the difficult conversation was a learning experience. "It's possible to have these conversations, these kinds of disagreements without calling each other liars or evil or godless."

As most of the crowd left the Ramada, Maves and Beal were still sitting, talking.

Not everyone was convinced the effort was really a level playing field. One participant, former GOP Rep. Fran Bradley, said he thought the exercise was predisposed to come up with a solution that would use a variety of approaches that included revenue, although even he said there is value in considering a consumption tax of some sort. Best part of the evening for him: "People could see this is complicated."

While the effort may not have resulted in a single "citizens solution," it did come closer to addressing long-term structural problems than the state's leaders did. Perhaps it can inform the discussion when the math problem comes back in two years.

(Disclosure: MPR News is a partner with Bush in its InCommons initiative to find means of helping Minnesotans make connections and deal with challenges.)

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Rural America heads for St. Paul

Posted at 9:30 AM on May 31, 2011 by Dave Peters (0 Comments)
Filed under: Community Development, Economic Development

For a couple days in late June, St. Paul will become the heart of rural America as the third National Rural Assembly comes to town.

More than 200 local elected officials, community advocates, non-profit leaders, federal officials and issue experts from the Midwest, the Mississippi Delta, Indian Country, Appalachia, the Pacific coast, New England and elsewhere are expected to show up to talk about the issues consuming rural communities.

If you think that somehow makes this an ag summit, think again. They'll be talking about Internet access, about health care, about education, about housing, about philanthropy, about climate change and more.

Among the questions to be tussled with: How does health care reform affect rural communities differently? What are realistic expecations for economic development when broadband is available? What are communities doing on their own to curb greenhouse gas emissions? Are there fresh ways to tackle immigration tensions?

Supported by several foundations, the assembly is organized jointly by a number of grassroots and other organizations, with the Center for Rural Strategies in Kentucky acting as the operations nerve center. The goal: finding ways to link people with similar interests across a broad swath of geography.

Why St. Paul's Crowne Plaza hotel for the first one of these outside Washington, D.C.? A big reason is the plethora of non-profit and community activist leaders in Minnesota and the Midwest generally, says Tim Marema, vice president of Center for Rural Strategies. The state is home to a lot of rural-focused groups, he said, mentioning the McKnight Foundation and the Institute for Agriculture and Trade Policy.

The federal government isn't a sponsor but among those agencies with a presence will be the Federal Communications Commission, the Department of Education, the Health Department and, of course, the U.S. Department of Agriculture.

"Rural America is big and it's diverse," Marema said. "It's not just one thing."

For a feel for what makes the Center for Rural Strategies tick, check out the online newspaper it produces, the Daily Yonder. The gathering takes place June 28-30. Find more about the assembly here.

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Todd County votes to pursue broadband

Posted at 12:30 PM on May 17, 2011 by Jennifer Vogel (0 Comments)
Filed under: Broadband, Economic Development, Todd County

Todd County commissioners took a step today toward building a fiber-to-the-home broadband system, voting unanimously to spend up to $20,000 to match a grant for a feasibility study.

Ground Level has been tracking the progress of the "Broadband 7," a group of communities across the state either planning or building broadband networks. Todd County, northwest of the Twin Cities, has been considering a high-speed system for years, but only now has taken concrete action toward building one.

Spurred on by the Todd County Livestock Advisory Council, which argues that fast connection speeds are necessary to meet the demands of a global agriculture market, the county held a community meeting at Long Prairie High School last week.

Around 80 people from all walks of life attended, said County Administrator Nathan Burkett, who has advocated broadband as an economic development tool for years.

"It was fewer than we wanted, but more than we expected," noted Burkett, who said the idea of pursuing broadband received a favorable response. "Not everybody spoke, but those who did had some good questions.They seemed to understand and be in favor of accomplishing something."

The meeting was enough to push county commissioners to take the next step and pursue a $40,000 feasibility study grant from the Grand Rapids-based Blandin Foundation.

Todd County also has support from the business sector. County officials have partnered with Arvig Communications Systems, which already provides service to a third of the county, to help determine if a countywide system is feasible. Arvig has committed $20,000, said Burkett, bringing total funds for the study to $80,000.

"We have a handshake agreement to get through the first phase," he said. "Then we'll see what the study shows us and what the business model will require to make it work."

Stillwater-based consulting firm U-reka Broadband also will lend a hand. "We got lucky and stumbled across a couple of key players early," said Burkett. "Some of the obstacles other projects have run into, maybe we won't."

That's a reference to opposition from private telecommunications providers in locations that have pursued publicly owned and built broadband systems.

"Others who have done this with a private partner have made it through pretty well, without too much legal consternation," Burkett said.

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Arrowhead urges entrepreneurship as big mining renews its lure

Posted at 11:48 AM on April 6, 2011 by Dave Peters (0 Comments)
Filed under: Arrowhead Region, Community Development, Economic Development, Northern Minnesota

Some 200 residents of the Iron Range, Duluth and the North Shore chewed over their economic challenges for an hour and a half last night. In many ways, they covered the familiar ground of mining, tourism, education and diversification in a spirited conversation they could have had 10 or 20 years ago.

But you could sense urgency in the room, a theme picked up by community college teacher and Iron Range blogger Aaron Brown, who was there and wrote about it this morning. It was an urgency pointing increasingly toward self-sufficiency and entrepreneurship.

"Our region was settled by adventurers, not really entrepreneurs," Mary Mathews, president of the Northeast Entrepreneur Fund, told the crowd, which gathered for a forum sponsored by MPR News and Northland's NewCenter in Duluth. "People, after those businesses were started, they left. We became a company town.

"To some extent we're still a company town, but there are nuggets of entrepreneurial spirit," Mathews said.

Her non-profit organization has helped 1,300 businesses get started or grow over the past 22 years, she said.

Obstacles are the lack of a clear career ladder for enterprising young people and a dearth of investment capital, she said.

Drew Digby, a labor analyst for the state Department of Employment and Economic Development , agreed, noting that it's a spirit that doesn't seem to come naturally in northeastern Minnesota. In the past, "people would come and assume a big company would give them a job. That sense of creating your own opportunity is really hard."

Some in the room had it.

There was a fifth-generation Duluthian who moved away and came back and is selling solar energy collection equipment. An artist talked about the boon the Internet has been to keeping his business going for 15 years.

Matt Tyler said he's put together a forestry consulting business and his girlfriend runs an organic farm in Finland, Minn. He harvests wild rice to supplement his living.

At the same time, hovering over the whole evening was the big PolyMet proposal to start mining copper and nickel near Eveleth. For some, it's a great promise that holds the possibility of firing
a struggling economy for decades to come. For others, it's a repeat of relying on big outsiders that will prove harmful in the end and threaten to dampen fledgling entrepreneurial spirit.

So it's fascinating to watch communities struggle with the notion of helping entrepreneurs as the path to a different future, at the same time a big outside force is holding up the promise of wealth "the old-fashioned way." To be fair, PolyMet's Brad Moore told people the mining industry has learned lessons and simply has to do better than it has in the past in terms of protecting the environment and staying in the community long-term.

What was clearer by the end of the evening was how three Arrowheads are trying to find their way -- the Iron Range, Duluth and the North Shore. A near-depression in one place is a good time in another. A savior in one place is sometimes seen as a destroyer in another.

Can a move to "relocalize food," for example, or build a narrative involving artists compete for mindshare and people's energy and enthusiasm with the promise of hundreds of mining jobs? The conversation at the Duluth Radisson was a useful look at a community asking itself questions like these that will define their future.

To get a sense of the evening, read the live blog hosted by MPR News' Michael Caputo, complete with lots of Twitter contributions from those attending.

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Northeastern Minnesota's economic future: Join a forum tonight

Posted at 10:00 AM on April 5, 2011 by Dave Peters (0 Comments)
Filed under: Arrowhead Region, Broadband, Community Development, Economic Development, Health care, Northern Minnesota

We're expecting at least a couple hundred people to show up in Duluth this evening to talk about how northeastern Minnesota's economy might look two, five or 20 years from now.

Will the Iron Range and the North Shore continue to go their separate ways economically?

Will tourism thrive forever? Mining?

How does so much growth in the health care industry square with efforts to rein in health care spending nationally?

How will the North Woods economy respond to climate change that alters the forests? Will broadband access to the Internet change the economy up the shore?

As much as any region of Minnesota, the Arrowhead is a complex brew of powerful economic forces, engaging cultural history, new ways of thinking about the environment and changing politics. If things go well tonight, a lot of that will be on display.

If you can, come to a forum this evening at the Duluth Radisson hosted by MPR News and Northlands NewsCenter. Reception starts at 6 p.m., the conversation hosted by MPR News' Cathy Wurzer runs from 7 to 8:30. Details here.

If you can't, join what promises to be a lively chatterfest/live blog at MPR News' Insight Now. Michael Caputo and Michael Olson will be blogging, tweeting and collecting comments from bloggers and tweeters around the room and the Arrowhead.

Click here for more about that or simply come back to this Ground Level post when the action starts and watch and participate through this window:

Details

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