Written by Amanda Maher
New York City. San Francisco. Boston. These are among the cities often cited as leaders in urban economic development. Each of these three cities weathered the Great Recession well. Each is known as a hub of innovation. And each is known to attract top talent and retain college graduates. Meanwhile, smaller cities in the Midwest, such as Minneapolis and St. Paul, often fail to get the attention they deserve.
With a regional unemployment rate of just 4%, and with a robust talent pipeline (The U.S. Chamber of Commerce Foundation rated it as second best in the nation), the Twin Cities are a booming hub of economic development. Efforts to grow their local economy are illustrative for other cities. Here’s a look at some of their investments that are driving growth:
Investing in Public Transportation: When a new light rail transit line (the Green Line) connecting Minneapolis to St. Paul was initially proposed, there was significant resistance—especially among the low-income communities that would be impacted. There was real fear that the Green Line would cut through some of these communities and disconnect them, much like previous highway projects had done. Proponents were able to allay some of those fears, and the billion-dollar light rail line now connects and drives economic development in more than ten individual business districts – from the West Bank in Minneapolis to the Lowertown Artist District in St. Paul. Opened in spring 2014, the Green Line now surpasses 1 million riders per month, 35% higher than original projections.
Preserving Affordable Housing: As the aforementioned NYC, San Francisco and Boston experience has proven, access to public transportation often means that those living within the urban core are displaced as businesses thrive and new development takes root. The Twin Cities has land-banked parcels around the incoming Green Line station to ensure that affordable housing could also be built in these newly accessible neighborhoods. Tax breaks, grants and other financial support from the city and state government are encouraging affordable housing developments like the complex at Hamline Station, a five-story building with 108 units, most starting with rents at just $500/month.
Supporting Immigrant Entrepreneurs: Some of the Twin Cities most resourceful residents are entrepreneurs within the immigrant community. Many operate businesses in an informal economy, oftentimes operating out of their homes. The Neighborhood Development Center (NDC) issues about 40 loans per year to these entrepreneurs, each averaging about $25,000 with interest rates as low as 3%. Since 1993, the NDC has provided more than $11 million in loans to immigrant and minority entrepreneurs, which has resulted in the creation of 500+ new businesses and more than 2,500 new jobs. The program’s default rate is only 8%–largely because the NDC continues to provide technical assistance to businesses after loans are issued.
Concentrated Development Around the New Vikings Stadium: When the Minnesota Vikings announced it would be bringing a $1 billion stadium to an inner cityneighborhood known as Downtown East, Minneapolis city officials jumped at the opportunity to encourage surrounding development. Dubbed a “concrete oasis” by Governor Mark Dayton, the City broke ground earlier this year on a $400 million mixed-use project next to the new stadium, the largest real estate project the city has seen in nearly two decades. The project will include two 18-story office towers for Wells Fargo, a new four-acre urban park and about 24,000 square feet of retail space. More than 5,000 Wells Fargo employees will be relocated downtown, which the City hopes will help it to achieve its goal of doubling its number of downtown residents. Downtown East is an opportunity to spur development that the 31-year old Metrodome failed to realize, says Michael Langley, President of the Minneapolis St. Paul Regional Economic Partnership.
Much of what the Twin Cities are doing to promote economic development can serve as a model for other communities. Where possible, invest in public transportation. Support entrepreneurs through the use of loans and technical assistance. Preserve affordable housing to ensure economic opportunity for all residents—especially for those at greatest risk of displacement. And leverage community anchors, such as sports stadiums, that provide significant jobs and promote local spending, and promote additional growth around these anchors to create a bustling local economy.