HomeMy WebLinkAbout1963 08-04 IDC REPORTINDUSTRIAL DEVELOPM39T COMMISSION
OF
Brooklyn Center* Minnesota,
' Preliminary Study of the Pros and Cone of an
Industrial Development Corporation in
Brooklyn Center
August 49 1963
PLANNING FOR THE FUTURE
0
!!ugrs a 49
To*. Brook]M Center Industrial Development Commissioa
From: Ernee McArthur and William Kegler
Subject: Preliminary Study of the Prosand Cons of an Industrial Development
Corporation in Brooklyn Center
In approaching this subject the following contacts and resource material was
used:
r 1. Opinion of Village attorney, Arlen Christenson.
2. Martin Poland, Northern States Power
(Recommended contacting U. S. Department of Commerce for a copy of
"Development Corporations and Authorities," which is reports, statutes,
and other materials on State amd Local Development Corporations and
Authorities. This report was printed for the use of the Committee on
Banking and Currency.
3. "Guide Book For Commomtj' Industrial Development"- Minnesota Department
of Business Development.
4. "How to Organise an Industrial Development Corporation"- U. S.
Department of Commerce.
5. "List of Industrial Development Corporations in Minnesota and Bey
people to contact." - Minnesota Department of Business Development.
8. West St. Paul Industrial Development Corporation, James Lennon, Secretary.
(One of the newest corporations in Minnesota)
7. "Prospectus" and introductory letter of West St. Paul Industrial
Development Corporation.
8. Bloomington City Manger, Ray Olson.
9. Brooklyn Center J C member.
10. Richard Jesbert, Prudential Insurance Company (discussion in regard to
Albert Leas's success)
11. Gil E,ngdahl, Accountant. (interested in serving in an advisory capacity
if a corporation were formed.
0
a r7..
IN
What would be the relationship between the Industri s:i. h i* "~(v? der ar•-uUk s; (-a
and a Corporation? The following questions were investigated by ouz Village
Attorney:
1. Can the Village create an Industrial Commission Corporation as
a non-profit enterprise?
2. Can the Villages credit be used to issue bonds for such a
development corporation?
3. Could such a corporation exercise any rights of eminent domain
through the Village?
In the Attorney's opinion, all of these questions must be answered in the negative.
If members of the Commission were interested in forming a Corporation, we would
do so as private citizens, possibly with other interested citizens participating.
A copy of the booklet, "Development Corporations and Authorities", was received
and it includes a wealth of information, which would be helpful to a Commission
as well as to a further study on a corporation. The section on Local Development
Corporations in Minnesota, was a report to the SBA, February 1958, prepared by
Ralph S. Fjelstad, Congdon professor of government, Carleton College, Northfield,
Minnesota. His report included the following
Part I:
Why these development corporations . . . • . •
Nature of development corporations . . . . .
Sources and adequacy of funds . . . . . . . .
State development corporation . . . . . . .
Ev-.luation of local development corporations . . . .
Part Z&:
The Albert Lea story . . . . . . . . .
Jobs, Incorporated . . . • . . . . .
Jobs Building . . • . • . . .
Evaluation of Jobs and Jobs Building . . . . . . . . . .
Part III.
Activities of local development corporation (46 communities discussed in
alphabetical order)
Copies of the""Evaluation of Local Development Corporations", as listed above in
Part I have been mimeographed and attached herewith.
In regard to the Development Corporations in Minnesota, one of the newest formed
and located in the metropolitan area is West St. Paul. We contacted James Lennon
of the Chamber of Commerce, who is also the Corporation secretary. West St. Paul
presently has a population of approx. 15,000 with a potential growth of 30,000.
T'zPir Industrial Development Commission consists of 18 members, including two or
• three sv.il---committees consisting of FREEWAY and SEWED AIM WATER. (You can see their
problems are much different than ours.) Promotion of the City was handled by
another section of the Chamber. They felt that more could be dons to promote
development so nine men were aPpdated to atad the prr. a. 1 A.
0 . - j-
:s a To liA. Ono
and the type of corporation to be formed. These nine mar. ttien be,r-au thH
Directors of their Profit Corporation. Simultaneously, as thayy are cel.li.n~" th.eiT
stock they have purchased a:five...aare site and have an option on an e,ddi.ticrat
five acres. What are their feelings after a few months in existence? They
.rc~F:l
they have been fairly successful.. It has taken a lot of work and money. but ;.t
is too early to evaluate their success. They do feel the Corporation has been
.r
very helpful for the spirit of the community. (Their Corporation is authorized to
sell 2,000 shares of Common Stock at its par value of $100.00 per share.)'
In our contact with Bloomington we inquired whether or not citizens of Bloom-
ington hai,considered forming a corporation. It was felt that finances could be
obtained from normal banking facilities and a corporation was more important to
a central city. Also, that there were new and expanding businesses in the area
r and it depended on who sold them on their community.
We inquired whether or not the local J Cts had considered the possibilities of
a Corporation. We were told this sort of promotion was possibly better geared for,
a senior Chamber of Commerce.
We visited with Richard Jesberg, who is most familiar with the Albert Lea
Corporation. We did not contact Jobs, Inc in Albert Lea# as we did find the
completo Albert Lea story in the booklet on corporations in Minnesota.
SW.4ApY:
It would appear afther this preliminary study, that if there were sufficient
interest among`', the members, a larger group could be formed, apart from the
Commission of edurse; and include other interested citizens for a further study
as to whether a Corporation is needed in the Village at the present time. If a
Corporation were formed, this Committee would then be prepared to serve as
llir^ctors,
0 -4-
An immediate reaction might be, t4hy do we ne6fl a 007POra,tior:.? Wo. h.- ve to
wait until more is known on the disposition of the Earle Brown Farm." :in
actuality, there are a number of tracts of laad aisiilable for development. If
a Corporation were successful in purchasing a tract of land, might this not be
helpful in stablixing land prices throughout the Village? One of the
questions we should ask ourselves is "Are we successful enough as a Commission
to promote the development of Brooklyn Center? Or would a Corporation be helpful
to the Commission to stre)ethen community spirit and stimulate development?"
e**~~►~~*e**~e
s
0
EVALUATION OF LCr-AL DBVELOPMM CORPORATIONS
(Local Development Corporation in Minnesotan- By.- Ralph S. fjelstads Congdon
professor of governments
Carleton College, Northfield, Minn.)
February 1958
Local development corporations have been successful devices for encouraging the
growth and wxpansion of business, Nocther conclusion is possible from the survey
conducted as a part of research for this report. These organizations have raised
funds to expand local businesses or to bring in new enterprises; they have i.ncreas ed
the payrolls of their communities. Even where the development-corporation has not
been able to get a nev or expanded business into the community* the corporation usM
ually provides a basic leadership for industrial growth and progress. Committees of
chambers of commerce or other civic groups seem to lack the dedi-sation and zeal
which attaches to development corporations. As a generalizations therefore$
communities have managed better business develo1ment after the creation of such
development corporations than seemed possible before. This becomes one of the
great pressures ofor other communities being interested an such organizations.
It should not be concluded, however, that development corporations are indispen•»
sible to business expansion. Some-eomm mi.ties achieve results without them. Thus
the Duluth Industrial Bureau has been very successful and no corporation is involved,
This bureau was organi ed on a 5 year trial basis in June of 1945, when WOs000
was raised to underwrite the program.. The industrial director writes that.«
We offer a wide variety of services in the interest of attracting new business?
developing new home industry., and assisting7ocal industry with its problems„
We do not make loans but we do make every attempt to secure private financing
for any project which is considered economically sound for Duluth.
This so-called Duluth plan has brought great progress to that city. Since the
creation of the industrial bureau business construction has totaled $33,2544562;
6,009 more people are working; 301-more rates businesses have been established;
there has been an increase of k667p282,798 in bank debits; there are 18,356 more
telephones and 9.,342 more electric customers; there has been an increase of
$58,983,000 in buying power, Not all of these gains can be traced exclusively to
the Duluth Industrial Bureau but neither has there been any kind of local industrial
development corporation assist.
It could be argued that Duluth is a large city and can use the device described
but that such wo uld not work in a smaller community. However, there are many eomne-
unities in Minnesota which have used the methods of the development corporation to
secure business expansion without having the corporate device itself. A group of
businessmen in Lester Prairie provided the funds which assisted the otimi.:ng" of ah
zZ*W* 1i,ch now -employs 50. °to` 70-~ le. The New Industries Committee of
Cokato (not incorporated) has raised over `'140,000 to aid in the establishment of a
new industry. Some 636,000 of this is being paid to about 70 certificate holders
over a period of 10 years at 4 percent interest. Trustees who handle the certificates
.lave a recorded lien hn the building constructed by these funds until it is paid for
by the firm occupying it. Fifteen businessmen in North Branch put up the money
• which started an industry employing a large number of people. A Minneapolis firm
wised 130,000 in New London to keep Steel Tanks., Inc., in that community. The
7irginia Chamber of Commerce has a 160 acre industrial site which it is making
available to industry, The Commercial Club in 14orristoun has managed small loans
to get businesses established. The industries committee of the Bemidji Civic and
,,ommerce Association raised p150,000 for the promotion and erection of the Nu-Ply
)lant which now employs 80 people. A group of businessmen in Anoka kept a lame firm,
in that community by purchasing a piece of land which they then sold to this firm.
she Mountain Lake Industrial Committee spearheaded a drive to keep Land Ol a.kes
growing in their community; this firm then spent y?500.,000 on a new building in which
30 people are employed„ Here are specific examples of substantial business improvem
ments in communities which have not found it necessary to establish development
corporations.
..3-
It is interesting to note that five of tho communitites mentioned, Benadli,
Mountain Fake, New London, North Branch, and Virginia, are cities listei by the
department of business development as having development corporations. Yon e
of them have such organizations. There are many others like these--communiti-tss
which have achieved some measure of industrial growth without the kind of corporate
structure we have been describing. Another one of these is East Grand Forks, from
which the writer received the following comments on the relationship of development
corporations to business growths
We have not felt that the development corporation thing is essential
to the promotion of business. Our experience has indicated that quite
frequently firms which need this assistance are so weak financially
that they are not true assets to the community.
Some of the new businesses which have come into the area have formed
corporations and sold both preferred and common stock which our local
people invest in. This sort of thing has, in our opinion, been much
more successful than the development corporation idea.
Development corporations are so common that the advantages and
• novelty.of such an organization have been depleted. I know this is
contrary to opinions that will be expressed by some communities.
The fast that many communities achieve business growth without a development
corporation, as indicated, does not invalidate a basic finding of this study.
It is that such corporations are convenient devices to encourage industrial expans-
ion. There is real evidence that leadership can be attracted to such organizations
which will not flourish without them. For this reason, all others factors being
equal, most communities are likely to do more with business development by use
of a corporation than without one. Incorporation tends to create a new lease on
life. Perhaps this is reason enough for the enthusiastic support which these
corporations get from the department of business development in this State.
The importance of effective leadership to the success of development corporat-
ions in Minnesota indicates that those which have had the most dedicated and
inspired leadership have been the ones which have gotten things done. The Albert
Lea story would never have happened without the zeal for community growth and the
willingness to work of people like Charles Myers, William Sykes, and many others.
The same can be said for New Ulm, Braham, Alexandria, Pipestone, and similar
communities. Where key figures in the community are sold on the development corp-
oration and will give unstintingly of their time and effort, money can be raised
and progress made. Where there is lethargy and disinterest, funds are difficult to
find and nothing is accomplished. Leadership at the top is more important than
either widespread participation by citizens or extensive capital resources, for
these seldom exist without that leadership.
Leadership may not be enough. A tougher problem than competent leadership or
adequate financial resources may be the lack of suitability of communities for
business expansion. Merry cities with dedicated leadership and sufficient capital
resources are not making much progress in luring new enterprise. Factors which the
development corporation cannot do much about may stand in the way. Providing a
building at modest rental is no solution to these. The location of a community,
its size, its facilities for schooling and recreation, its future as a place to
live, its capacity to provide an appropriate labor force- failures here may may so
handicap a community that no amount of enthusiasm or leadership in a development
.orporation can overcome them. This problem will not be lessoned as more and
lore corporations appear to compete for the limited number of businesses looking
for new locations. The future of the development corporation in many towns
.vhich have little to offer as communities is not bright. No amount of preaching
that these should undertake a "bootstrap operations to help themselves will
eliminate their basic inadequacies.
Many development corporations in Minnesota have been one-shot operations. They
have managed to provide a building for a single firm and have stopped at this point.
Pew of them can cite a series of successes like those in Albert Lea, New Ulm or
Jinona. Even in communities where leaders grant that funds can be reaised for
:urher business expansion, assistance to a single firm has been the extent of
success.
-3-
This difficulty may reflect the fact t7iat more basic problems are involved than
leadership and financial resorro,:s. These problems cannot be attacked only
through selling communities or lending money to business firms. They may stem
from the deep economic and sociological problem indicated in the withering of a
nonurban area as agriculture becomes more mechanized, farming is depressed and the
rural way of life loses its security and appeal. The development corporation'aloue
cannot solve this problem.
A final word should be added on local business development corporations in
Minnesota. This report has emphasized the ways by which these organizations raise
capital and use this capital for the purchase of industrial sites of the const-
ruction of buildings. The impression may have been left that development corp-
orations are successful only to the extent that they do these things. It should
be stressed here that many of them have been highly useful in areas where no
expenditures of funds are involved. In many communities the development corp-
oration has been the focal point of voluntary assistancecf many kinds--legal advice,
sales promotion, patenting of products, research, and so forth. Work in areas
like these may contribute as much to business growth in a, community as investment
of capital. The importance of such work should be recognized even though it is
discussed little in this report.
•
0