Private/Public Economic Development Efforts Forum

Highlights from Forum on Private/Public Economic Development Efforts
Presented by: IDC and JOBS 2020
10:00 a.m. – 1:00 p.m. May 27, 2003
Sawmill Inn, Grand Rapids

Panelists: Bob Fragnito, Mayor of Nashwauk, Gene Radecki, retired Senior Vice President of Finance for Blandin Paper, Bill King, Vice President of Administration for Cirrus Design Corporation
Keynote Speaker: Jim Campbell, retired Group Executive Vice President for the Minnesota Banking Group of Wells Fargo

The eighth IDC and JOBS 2020 forum was held May 27, 2003 at the Sawmill Inn. The topic was how the private and public sectors can work in concert to accomplish winning economic development efforts. Each panelist shared their personal experiences of how the public and private sectors worked together to align successful economic development efforts.

City of Nashwauk – Bob Fragnito: The City of Nashwauk was created as a mining company service city when the Hawkins Mine - the first iron ore mine in Itasca County - opened. Mining evolved from natural ore to taconite and then to direct reduction iron.

In 1986 Butler Taconite closed and the plant was sold and scraped. The closing was a devastating blow to the community. The only good thing coming from that closure, according to Mayor Fragnito, was that the Butler land which surrounded the city became available. The city was able to acquire the tax forfeited property adjacent to the Nashwauk city limits. Mayor Fragnito chaired an IRRRA group formed to aid in the creation of industrial parks. The city established an industrial park and housing project on the newly available land. Business expansion was promoted by offering property to businesses for free and using a tax bill to pay down the property. There is now industry and business location in the Nashwauk Industrial Park as well as a new housing development. This would not have been possible without public sector involvement. Local government can help private business ventures locate and/or expand by making land available, providing sewer, water, roads and housing. The private business sector obviously benefits, but the public also reaps the economic benefits through jobs, taxes and community growth.

Mayor Fragnito believes that the closing of mines and taconite plants need not be the end of the story; he believes they are just a detour on the way to building steel mills on the iron range. He also stated, “You can chase business, but you cannot forget about the businesses you already have”.

Blandin Paper Company – Gene Radecki: Just as important as creating jobs for the economic health of an area, is the retention of existing jobs according to Gene Radecki. A partnership between the private and public sectors is essential for a vital and growing economic environment. Both must be willing to take risks, both must invest, and both must take responsibility and the rewards will be mutual. Gene recalled how Blandin’s partnership with the local community provided an essential component of the success of Paper Machine No. 6. Tangible contributions made by the public sector included:Vacation of 3rd Street Northeast.

• The state agreed to a sales tax exemption on construction materials under distressed county legislation
  
• A building located in the expansion area was condemned by the city
  
• The county and city offered TIF financing for infrastructure
  
• The city of Grand Rapids through public utilities issued bonds to finance expansion of waste treatment facilities and disposal

Gene emphasized the need to have all factions of a community on board; this includes community residents, businesses, institutions, non-profits, as well as government. The attitude of the local community back in the 1980s had a very significant influence on the decision to go ahead with the $325 million No. 6 Paper Machine. The community formed a partnership with Blandin Paper and both were willing to accept the risks and responsibilities – and hopefully, reap the rewards. Blandin Paper was owned by New Zealand based Fletcher Challenge at the time and the community’s cooperative attitude was very instrumental in Fletcher Challenge’s decision to complete the expansion.

Gene gave an example of how not working together or not having a community partnership can have a significant impact. The IRS forced the sale of Blandin Paper Company back in 1977. Gene said, “One can only dream about what might have been if those tax laws had not been initiated.” With the partnerships in place for the No. 6 machine, the outcome was far more positive.

Cirrus Design Corporation – Bill King: “Everyone must get their head in the game” was the powerful statement made by Bill King of Cirrus Design Corporation. Economic development takes place for a variety of reasons, only one reason being money. Bill agreed with the other presenters at the forum that a key factor is team work. Bill shared the story of how Cirrus Design Corporation started with 25 employees and now employs more than 800. That expansion and growth would not have happened without the cooperation and drive exhibited by key business leaders and the city of Duluth and St. Louis County. The Mayor of Duluth put on the V.I.P. treatment when Cirrus came to town looking for a place to locate – including a helicopter tour of Duluth. The follow-up was quick and decisive – Duluth wanted Cirrus and was prepared to do what it took to get them there. Grand Forks, North Dakota was unable to put a financial package together in 14 months; Duluth was ready in 45 days. Bill told the JOBS 2020 participants that TEAM Duluth was the engine that sealed the Cirrus location to Duluth.

Bill applauded the local efforts of IDC and JOBS 2020. He is familiar with the success story of Tupelo, Mississippi and voiced his compliments to the community for taking the initiative to travel to Tupelo and put the lessons learned from that community to work here. The size of the community is not important; it is the partnerships, vision, and preparedness to work as a team that matters.

Keynote address – Jim Campbell: Jim Campbell shared stories of his small town beginnings in Byron, Minnesota and subsequent work experience and involvement in successful public/private endeavors throughout Minnesota. Jim said that only teams willing to work hard can truly win in economic development activities. Jim is currently involved in locating a new Twins ball park in the Twin Cities. He outlined the critical components of economic development success. Teams must be formed; each player (community member, business owner, government leader) must be in the game and decide on the specific roles they can play. The team provides the drive and dedication necessary to reach a successful end. “Relationships are the conduit through which transactions occur” Jim told audience participants. Forming teams is hard, but necessary in order to accomplish the desired goals. Time is of the essence.

The Itasca area has a lot going for it, according to Jim. He said things always get tougher before they get easier. In order to address conflict, Jim said two things are important: 1) Get people around the table, 2) Leave the baggage behind. Jim advised JOBS 2020 participants to look for local growth opportunities and ‘don’t hustle from a long ways out’. Your best chances for economic growth come from the people who already have chosen this as “the place to be”. Pay attention to your strengths and the reasons why businesses are located here.