Examining Greater MSP

By Mike Kaszuba

Greater MSP may be one of the most influential organizations in Minnesota.  It is also largely unknown to the public, despite receiving substantial amounts of taxpayer money. And while Greater MSP has been praised by local governments for its participation in regional development projects, its exact role is not clear in every instance.

In just five years since its creation, the economic development non-profit has attained a considerable amount of clout.  Richard Davis, the head of US Bank, sits as the chair of a board that includes the president of the University of Minnesota, the chair of the Metropolitan Council, and Comcast’s regional vice president for the Twin Cities.  Top officials from Health Partners, Cargill, Target, Ecolab, the Mayo Clinic, and other leading Minnesota companies also are on the board.

Deep connections

Greater MSP has offices in Shanghai and Munich, was asked to help in the search for a new director of the Metropolitan Airports Commission, and has been serenaded at its meetings by the Minnesota Orchestra.  The group arranged a “behind the scenes” tour of the new Minnesota Vikings stadium for its members, and the head of the Minnesota Super Bowl Host Committee worked out of Greater MSP’s offices as she began her job.  The chief executive of Hubbard Radio sits on Greater MSP’s board, and in 2014 a Hubbard-connected entity was paid nearly $235,000 to provide the non-profit with television programming.

Neel Kashkari, the new head of the Federal Reserve Bank in Minneapolis, was the featured speaker at the group’s winter meeting.  Kashkari’s appearance was arranged through a connection with General Mills chief executive Ken Powell, a top Greater MSP official.

Greater MSP’s just-launched Minnesota Medical Manufacturing Partnership – like other components of Greater MSP – features a number of Twin Cities heavy hitters, including Minnesota Department of Transportation commissioner Charles Zelle, and Margaret Anderson Kelliher, the former speaker of the Minnesota House who is now president the Minnesota High Tech Association.

Operations funded by public, private sector sectors

Greater MSP spokesman Mike Brown said that contributions from private businesses make up “far and away” the bulk of the non-profit’s budget, which had $6.1 million in total revenues in 2014.

Though Greater MSP would not disclose specific amounts, many public entities have given money to the organization, and are listed as “investors” on the non-profit’s website.  The amounts were disclosed separately in hundreds of documents obtained by St. Paul non-profit Public Record Media (PRM).

In 2014, Hennepin County gave $150,000 to Greater MSP.  That same year, the Metropolitan Council contributed $150,000.  The University of Minnesota gave $75,000 in 2015.  Ramsey County was billed for $125,000 in each of the past two years.

Scott County gave $75,000 in both 2014 and 2015.  Anoka County gave $75,000 in 2015.  Washington County gave $50,000 in each of the last three years. Even the Minnesota Historical Society gave $5,000 in 2014 and 2015.

Documents obtained by PRM also showed that – at least in some instances – Greater MSP charged local governments for access to employment and business data bases. Ramsey County, for example, paid a $400 license fee to access a software portal.

Involvement in development projects

Greater MSP said it played a part in one of the Twin Cities’ major economic development undertakings last year – convincing Amazon.com to build an Upper Midwest distribution facility in Shakopee.  The project, with an estimated cost of $230 million, is expected to produce more than 1,500 jobs.

“We helped them connect with the folks in Shakopee who actually put all the details together,” said Mike Brown of Greater MSP.  “We provided them with some research.”

Samantha DiMaggio, Shakopee’s economic development coordinator, said Greater MSP was helpful, but stopped short of saying that the project would not have happened without them.  “Greater MSP works as an intermediary between businesses and the [cities].  The project may have happened without them but they aided in the communication between the two parties,” she said in an e-mail to PRM.

In a year-end brochure highlighting its achievements, Greater MSP listed the City of Shakopee as its partner on the Amazon project, along with the Minnesota Department of Employment and Economic Development (DEED), a state agency that performs development work that is similar to what is undertaken by Greater MSP.

Much of what Greater MSP does – by its own admission – is to act as a cheerleader for the 16-county Twin Cites region, hoping to get companies from elsewhere interested in coming to the state, and urging those companies already in Minnesota to stay and expand.

Greater MSP promotional initiatives

At the start of the year, the non-profit hosted “January 4Play” at Fort Snelling Beach, an event that Greater MSP said drew more than 2,000 people, and featured the throwing of over 6,000 snowballs.   Under the slogan “Cold Latitude, Warm Attitude”, promotional materials displayed a picture of people snow shoeing, and the words “Zero degrees does not equal zero fun.  MSPers laugh it off, strap on their snowshoes and get on with it!”

In April, the non-profit’s website featured the headline: “Greater MSP Feeds The World!”  The region was the “World’s Leading Food and Nutrition Hub” according to the web post, because of the fact that it hosts some of the world’s largest health and nutrition companies.

The organization was no less enthusiastic in launching its “Make It MSP” initiative last year, which focused on keeping young professionals in Minnesota.  As described in one e-mail, a launch party at the Muse Event Center in downtown Minneapolis was meant to show that “Make It MSP (was) all about … making a future, making a name and making a scene.”  In March of this year, Greater MSP used a Minnesota Wild game against the Chicago Blackhawks as the backdrop for an event aimed at luring Minnesotans living in Chicago to come back home.

All of these efforts have been largely promotional in nature, and were aimed at raising the profile of the metro area.  At the same time, Greater MSP has also been involved in efforts that have required more heavy lifting.

Job creation efforts

Armed with a $400,000 grant from the McKnight Foundation, Greater MSP is now targeting job creation and capital investment in four of the Twin Cities’ neediest areas:  North Minneapolis, Northeast Minneapolis, and Saint Paul’s Eastside and Midway neighborhoods.  In a draft of its grant application, the non-profit acknowledged that it was taking on a task many others had failed at: “While both cities have for decades employed multiple strategies to provide these opportunities and reverse trends of disinvestment in certain neighborhoods, many would agree that few have [led] to significant changes of scale.”

Though the initiative is in its early stages, Greater MSP identified key goals for the targeted areas, which included the creation of more market-ready sites, and simply closing “more deals.”

Greater MSP has also moved to consolidate and expand Minnesota’s already-leading role in medical technology.  At a May luncheon at the St. Paul Saint’s ballpark, Greater MSP officially launched the Minnesota Medical Manufacturing Partnership with the aim of making the state the “global leader” in the field.  With an assist from the Obama Administration, the partnership will get support from 11 federal agencies that have more than $1 billion at their disposal.  “There’s truly a uniqueness about this community,” said Jay Williams, an assistant secretary for the U.S. Department of Commerce, who spoke at the event.

Greater MSP chair Richard Davis told the assembled crowd that the effort would provide additional “leverage.”  He noted that the region’s existing efforts in medical technology, coupled with the groups’ new emphasis, were already enabling new medical products to hit the market sooner than those from other areas.  “That is [sometimes] the difference between thriving and failing,” he said.

Facilitating business networking

Documents obtained by PRM show that the non-profit is also adept at something else:  Providing access to the behind-the-scenes world of business networking.

In a December e-mail, Andrea Kajer of the Minnesota Historical Society contacted Cecile Bedor, Greater MSP’s executive vice president, and noted that she “recently had an informational interview with Tom Dooher … the former President of Education Minnesota.”  Dooher had recently returned to Minnesota,  Kajer noted, and is “thinking about his next career plans. I have told him you would be a good connection.”

In September, Greater MSP attempted to use a hockey game to woo AstraZeneca, a multinational pharmaceutical and biologics company headquartered in London.  “They are looking for partner/acquisitions in the region, and we will have a suite for local partners to meet them,” a Greater MSP official wrote to Louis Jambois, the then-president of the St. Paul Port Authority.

Documents also revealed a push by a Saint Paul city official to get Gene Goddard, Greater MSP’s director of business investment, seated on a key panel overseeing the building of St. Paul’s Major League Soccer stadium.  “If you or the mayor are looking for local residents who can offer experienced-based and real world insights, it would be hard to do better than Gene,” wrote St. Paul official Matt Freeman.

Partnerships with public agencies

In recent years, Greater MSP has forged alliances with several public agencies, including Minnesota’s DEED, the state’s principal economic development arm.  Greater MSP has “done an excellent job bringing together leaders in the public and private sector,” then-DEED Commissioner Katie Clark Sieben told PRM via e-mail.  “The Twin Cities ranks among the country’s healthiest and most vibrant metropolitan economies, attracting new companies and generating more than 34,000 new jobs in the past year alone, and Greater MSP has played a key role in that success,” she added.

Documents indicate that Greater MSP also has a close relationship with the University of Minnesota.  The school’s board of regents, operating through the  UMore Park Development company, entered into a confidentiality agreement with Greater MSP in 2014, when the non-profit had a client that was interested in locating a business on land owned by the school.  The agreement contained multiple warnings about the release of “confidential” or “proprietary” project information to third parties.

Greater MSP has also been involved in other under-the-radar projects.  Late last year, Greater MSP officials discussed an initiative that was only identified in e-mails as “Project Sapphire Sky.”  “The client has been given the green light by their executive team to move forward with their campus expansion,” Greater MSP’s business investment director, wrote in a November 2015 e-mail.  “A reminder from the client to keep this confidential.”

2015 accomplishments

In its most recent list of annual achievements, Greater MSP said it had a hand in 26 projects that helped to produce $578 million in capital investment and create 5,301 direct jobs.  The non-profit also said it made 852 business retention and expansion visits locally – visits aimed at making sure businesses already located in the Twin Cities stayed put.

“We were busy in 2015,” said Michael Langley, Greater MSP’s chief executive.  According to the non-profit’s financial statement for 2014, Langley was paid more than $475,000, including $68,000 in bonuses and incentives.

Many of the organization’s undertakings involved smaller-scale endeavors, such as a project at Spectro Alloys Corporation in Rosemount that produced 25 jobs.  It also helped Sterilmed, Inc. to add a $250,000 pre-clean operation to its Brooklyn Center facility – a project that added 11 jobs. Greater MSP also highlighted site improvements at Sunopta in Edina “to help [the] company gain visibility.”

Greater MSP said that another of its 2015 projects produced 375 jobs at Prime Therapeutics in Mendota Heights.  That undertaking had a common thread found in its other accomplishments:  it was an expansion of an existing facility.

Two of Greater MSP’s 2015 projects produced more than 500 jobs. Thirteen other projects produced less than a hundred jobs each.  The numbers were similar in 2014, according to Greater MSP documents.  That year, the non-profit said it had a hand in 28 projects that produced $502 million in estimated capital investment, and led to 5,025 direct jobs.  Seven of the 28 projects led to as many as 300 jobs.  The biggest – at Smith Medical MD Inc. in Plymouth – yielded 778 jobs and involved the“consolidation of offices into [a] headquarters and manufacturing facility.”

Greater MSP and DEED

The non-profit’s statistics do not indicate how much of a role Greater MSP has played in the development projects it has been involved with.  In the case of the Smiths Medical MD project, Greater MSP was one of five partners that included the City of Plymouth, Minnesota’s DEED, Life Science Alley, and Gardner Builders.

In 24 of the 28 projects that Greater MSP listed as 2014 accomplishments, Minnesota’s DEED – the state agency charged with a similar mission – was also listed as a partner.

While Greater MSP’s efforts frequently overlap with those of DEED or other agencies, some local officials indicate that they are still interested in having the non-profit around.

Louis Jambois, the former president of the St. Paul Port Authority, praised the non-profit, and maintained that Greater MSP augments Minnesota DEED.  “It’s a big planet, and DEED does have a trade office,” he said.  But “it’s a fairly small office.” Jambois noted that businesses won’t come to Minnesota if they don’t know that the state exists, and Greater MSP helps to provide additional outreach.

Case studies

Jambois detailed Greater MSP’s aid on one of the port authority’s major projects – convincing Japanese manufacturer Matsuura Machinery to locate in St. Paul’s River Bend Business Center.  Jambois said that Greater MSP was helpful, but in a supporting role.

He said that Matsuura had already approached the port authority about the 38,000-square-foot project before Greater MSP got involved, but the organization was able to add its contacts with the state to help move the project forward.  According to Jambois, “they made sure that if Matsuura had some trade questions, those questions got answered.”

In addition, he said that Greater MSP was able to ‘name drop’ and make “Matsuura feel comfortable here in the Twin Cities area.”  Matsuura “had one installation in the entire United States, so they weren’t certain St. Paul was a place they really should have been,” Jambois added.

Greater MSP has also been noted for its role in the expansion of Life Fitness in suburban Ramsey – a project that resulted in a 48,525-foot expansion of the company’s existing facility.  The project added 26 jobs, and represented a $5.6 million investment.  In that case, the non-profit’s contribution largely centered around filling out grant paperwork, according to an Anoka County official, who nonetheless praised Greater MSP.

“Greater MSP provided technical assistance to the city by working with DEED to complete the Job Creation Fund application and coordinated to make sure all funding sources were being considered,” said Karen Skepper, the executive director of the Anoka County Housing and Redevelopment Authority.

“Having Greater MSP complete the [paperwork] and coordinate activities between the city, county and DEED allowed the city to focus on city originated funding and city council approvals while maintaining the confidentiality of the project,” she added.  “Greater MSP plays a role in helping cities assist businesses that no other organization in our region fulfills,” Skepper noted.

Greater MSP’s role with Abdallah’s Inc., the Burnsville-based candy company, has also received attention.  The non-profit listed Abdallah’s expansion project in Apple Valley among its 2015 accomplishments.  That year, the candy company built a 75,000-square-foot facility that created 20 jobs, and represented a $12 million investment.

The move to Apply Valley came at the expense of Burnsville, which competed for the project, and attempted to convince Abdallah to expand in a city where it already had a presence.  “We had discussed giving them [a tax increment financing subsidy] and the state had discussed the possibility of a job creation grant,” said Skip Nienhaus, Burnsville’s economic development coordinator.  “We had not gotten into definite [dollar] amounts as it was early in the process.”  Nienhaus spoke highly of Greater MSP, which he said receives $25,000 annually from the city of Burnsville.

Burnsville “met with Abdallah on a number of occasions regarding expanding their current location,” Nienhaus wrote via e-mail.  “Greater MSP worked with Abdallah on finding sites, and was supportive of the site in Burnsville. Unfortunately the cost to expand at their current location was prohibitive,” he noted.  Since Abdallah kept its original facility in Burnsville, Nienhaus called the Apple Valley expansion was “a win-win for both cities.”

Comparison to other regions

Janna King, a consultant with Isanti County’s economic development arm, said Greater MSP’s emergence was overdue.  “Compared to peer regions around the country and around the world, the MSP region was slow to establish a regional economic development organization,” she said in an e-mail.

“Greater MSP is a relatively young organization.  They seem to be mostly done with the pains of starting up,” she noted.  King added that the non-profit’s new focus on attracting talent and retaining businesses already located in Minnesota were important.

King also noted the differences between Greater MSP and DEED, the state agency.  “DEED has extensive grant, loan and financing programs,” King stated, while Greater MSP does not. “DEED has historically had a minimal budget for marketing,” she added.  “Greater MSP’s primary focus has been on marketing”

King stopped short of saying that Greater MSP had made a major impact on Isanti County thus far.  Though Isanti County has given money to support the non-profit, King noted that “Isanti County can’t identify specific ‘deals’ that it can attribute to Greater MSP.”  However, she added that the county “recognizes that not every jurisdiction is going to get a project [and Greater MSP’s help] every year.”

Minneapolis seeks more information about Greater MSP

Documents show that some municipalities have had difficulty quantifying the outcome of their involvement with Greater MSP.  In a March, 2015 e-mail, Minneapolis city officials requested more information about what Greater MSP had been providing to the city before another financial payment could be authorized.

“It is rather unusual to not tie compensation to more specific deliverables.  Do you know whether we have been collecting periodic reports from Greater MSP documenting past services?  Have we done any kind of evaluation of the costs/benefits/outcomes?” asked Nikki Newman, one city staffer.

In another e-mail, a Minneapolis official told Greater MSP about the problem.  “There’s a bit of a hullaballoo going on over here about how logistically to handle our Greater MSP annual membership payment,” wrote Kristin Guild, the city’s business development manager.

When Greater MSP provided more details of its relationship with the city – including a previous memorandum of understanding – Guild said it was not enough.  “It’s something,” Guild told her city colleagues in a May, 2015 e-mail, “but it doesn’t get us as far as I’d hoped as far as articulating the rationale for Minneapolis financial support or providing clarity.”

Documents obtained by PRM showed that Minneapolis paid Greater MSP a total of $300,000 in 2011 and 2012 to, among other things, “promote the City of Minneapolis and its economic development”, and a total of $250,000 in both 2013 and 2014.

Marketing efforts continue

Now in its sixth year, Greater MSP continues to market both itself and the Twin Cities metro area.

When a New York Times reporter wanted to do a story on Minnesota’s business climate last November, Greater MSP used its leverage to get Steven Rosenstone, the chancellor of the Minnesota State Colleges and Universities System, to clear his calendar for an interview.  A schedule provided by Greater MSP showed that over a two-day period in November, interviews were also set up with the chief executive of Health Partners, the president of Thrivent Financial, the chair of M.A. Mortenson Co. and the president of the McKnight Foundation.

When CNBC named Minnesota the “Top State for Business” in 2015, Greater MSP was able to capitalize on the coverage.  Scott Cohn, the CNBC reporter, was invited to be a guest speaker at Greater MSP’s annual meeting.  Greater MSP also swung into action to challenge an advertisement at the Minneapolis-St. Paul International Airport that claimed the “top state for business” title for South Dakota. “What can we do about this?  MN earned this designation and SD is claiming it in OUR airport??  [How] do we fix it?” Greater MSP’s David Griggs asked in an October, 2015 e-mail.

The next day Brian Peters, an assistant director for the Metropolitan Airports Commission, sent Griggs and others a reply.  “Good news everyone,” he wrote.  “I was able to reach the operations manager for the Clear Channel group here at the airport, and they are removing the ad and destroying it!”