Opinion
The Greater MSP Mystery
Editor's Note

The Greater MSP Mystery

It’s still oddly difficult to figure out how much it benefits us.

Imagine you have a fantastic business idea. You take it to your CEO or to a group of investors, and they’re intrigued. They then ask the universally fundamental question: “What’s the potential return on my investment, and by when?” You answer: “I don’t really know, but you’re going to love it!”

In your case, you’d be out of luck. Not so with Greater MSP.

Founded six years ago, it has thus far spent more than $25 million—about 20 percent from taxpayers—to market the Twin Cities region as a great place to keep, expand or relocate a business—and admits it doesn’t have ROI data.

The reason is that its mission is to partner with and assist others, “in what otherwise was a less coordinated activity and to say that we have had more chances to have a bite of the apple, if you will,” says Greater MSP Chairman Richard Davis, who also is executive chairman and former CEO of U.S. Bancorp.

Each year, the organization provides a report describing more than a dozen projects it worked on and their benefit to our local economy. It doesn’t say to what extent Greater MSP helped. On four randomly selected projects touted in 2016, city officials told me the organization helped presentation materials look better and served basically as a well-connected administrative assistant.

Greater MSP also is coordinating meetings addressing labor needs, market changes and key economic benchmarks: the type of thing already done by chambers of commerce and other groups.

Spending nearly $6 million a year—including high salaries and lavish bonuses—for the above services seems overly expensive and in some areas, redundant. I first wrote about this four years ago (bit.ly/2nAQYtf); at this point, I’m not the only one who’s concerned. The City of Minneapolis late last year dropped its 2017 funding for the organization, and in January, St. Paul City Council officials questioned its investment in Greater MSP.

Meanwhile, we are losing Fortune 500 headquarters, along with a significant number of companies with Fortune 500 potential. Between 2006 and 2016 the number of Fortune 1000 companies in Minnesota dropped by 31 percent to only 25 today. Greater MSP understands how important such companies are and says its work is making a difference, it just takes time to materialize. Establishing relationships with site selectors in multiple cities, for example, has been key.

One example involved a major company looking for a location for a new data center. Greater MSP worked on it, not knowing the company’s identity at the time, and found that Chaska could work well. The company’s representative liked the idea, and Chaska wound up with a new $250 million data center. It turned out the company was U.S. Bancorp, which says today it would have done this in Colorado Springs or Cincinnati if not connected to Chaska by Greater MSP.

Another sign Greater MSP is doing its job is the fact that its investors are satisfied, Davis says. “Every two years we go out for funding, and we have 160 to 180 investors today. Virtually all of them, except for a small number that moved or went out of business, invested in each round. That they re-upped is a measure of success. If the investors are satisfied that this is a better way of telling a story not told anywhere else to attract people to this area, whether Greater MSP is the reason or just a helper, that says a lot.”

Yet on the outside, it’s undecipherable as to whether it has helped retain or attract headquarters here—and by how much.

For example, there’s Post Consumer Foods, which is one of the few companies in the last decade to move its headquarters to Minnesota. It employs 2,800 people companywide, with 361 at its Lakeville headquarters and 685 at its two manufacturing plants in Northfield. Post Holdings Inc. announced two years ago that it planned to purchase Lakeville-based MOM Brands (Malt-O-Meal), and merge it with its foods division to create Post Consumer Foods. Greater MSP says it led the charge to keep MOM jobs here. Its marketing materials position it this way:

  • “Post planned to move the Lakeville functions to its existing cereal division in New Jersey.”
  • “Greater MSP, Lakeville and the Minnesota Department of Employment and Economic Development (DEED) put together a package of financial assistance including tax abatement and state incentives.”
  • “The clincher turned out to be a key meeting Greater MSP coordinated between Post Holdings executives and local officials.”

Post officials won’t talk about how things really went down. But this account sounds as though Greater MSP’s assistance was key.

However, there is no evidence Post had planned to move jobs out of Minnesota. Financially, it made the most sense to consolidate operations here, saving it $50 million. Besides, MOM had just acquired and renovated headquarters buildings with extra space available. This was done with tax increment financing support from the city through 2022. And the Twin Cities was already known to be a hotbed of food-industry talent.

Lakeville led the charge developing the financial assistance package, working with DEED to come up with a tax-abatement for Post that would run for five years after the TIF district expired, according to Lakeville Community and Economic Development Director David Olson.

And the meeting between Post and local officials came about because Lakeville contacted the company, Olson says. Greater MSP’s involvement came later and involved providing demographic and local industry information.

Greater MSP maintains its phone calls to Post headquarters led to the meeting between company and city officials. And it says either way, this is a good example of what it does—it helped ensure all of the above went as smoothly as possible, and maintains that focusing on performance data as I am misses the bigger picture.

“Economic development partnerships are a lot bigger than how we decide to measure our ROI on projects,” says Michael Langley, Greater MSP’s CEO. “There are hundreds of projects that will take place now because we have a better understanding of our strengths and our workforce, and our challenges. We are working together to create opportunities for the future, and now more than ever, you need a coordinated approach to something like this.”

I get that, and see the value Greater MSP brings. I remain hopeful, though, that $6 million a year will deliver more substantive and significant results.

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