Greater Minnesota public infrastructure funding needed

Cities and counties in Greater Minnesota could see expanded infrastructure help for business growth. This hinges on whether $25 million is appropriated in this year’s bonding bill to support the Greater Minnesota Business Development Public Infrastructure Grant Program.

The program provides grants to cities and counties in Greater Minnesota of up to 50 percent of the capital costs of the public infrastructure necessary to expand economic development, retain or create jobs, or increase the tax base.

“Cities will benefit by being able to attract businesses, which lead to jobs,” said Rep. Jay McNamar (DFL-Elbow Lake).

HF2059, sponsored by McNamar, was heard Tuesday in the House Jobs and Economic Development and Policy Committee. It would increase capital funding for the BDPI grant program by $25 million and increase the maximum funding per project from $1 million to $2 million. The bill now moves to the House Capital Investment Committee. The Senate companion, SF2007, sponsored by Sen. Vicki Jensen (DFL-Owatonna), awaits action by the Senate Finance Committee.

Amanda Duerr, representing the Coalition of Greater Minnesota Cities, said that cities and counties outside of the Twin Cities metropolitan area depend on this program to attract new businesses and create jobs in their communities by being able to build out infrastructure like water, sewer and roads. The program’s balance is nearly depleted.

The grant program is administered by the Department of Employment and Economic Development and requires a 50 percent local match. According to DEED, some facts about the program include:

  • 107 Greater Minnesota cities have received BDPI grants since 2004;
  • 3,125 jobs have or would be created and more than 4,000 jobs retained;
  • more than $142 million in total investments;
  • nearly $50 million has been appropriated by the Legislature since 2003; and
  • on average, small grant amounts are generally issued in the $250,000 to $500,000 range.

Kelcey Klemm, Perham city manager, said his city has been a grant recipient three times in the last 10 years, which added 1,200 jobs to the community. He said that the city’s industrial park is running out of space, and the city wants to build out the rest of the industrial park with utilities in preparation for business expansion.

“It’s difficult for a city of our size to finance,” he said. “Adding water, sewer and streets is expensive.”

Klemm added that without funding from the grant program, Perham would have to hold off on these kinds of projects or do special assessments that would increase the local tax levy.

“It’s easy to do something like this in the metro with a decent sized tax base,” said Rep. Mark Uglem (R-Champlin). “With smaller towns, if you’re sitting in a special assessment hearing, that’s always a difficult call. Putting that [burden] on the taxpayers of a small city could be astronomical.”

Rep. Tim Mahoney (DFL-St. Paul), committee chair, sees the bill as a big expansion of the program. The current language of the bill states that a city or county can “expand or replace part of all of an existing public infrastructure system that does not meet the needs of the economic development project.”

“We have many cities in the state that are vastly aging,” Mahoney said. “The City of St. Paul just got rid of its last wooden gas line. I’m very uncomfortable with this bill.”

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    Sonja Hegman's picture
    Sonja Hegman