2010 State of the City Address
New Ballfield, Same Fundamentals
Most nights when I drive home from work, I head south down Portland Avenue. As I get to about 38th Street, I start to remember what it was like on that horrible day last summer when — seemingly out of nowhere — a tornado roared through what had been quiet, tree-lined neighborhoods.
As the sky got frighteningly dark and the wind began to blow, people ran for cover. Then, just as suddenly, the storm was gone. There was an eerie quiet. Slowly, people came out from their houses to survey horrible and dramatic destruction all around them. People were shocked by what they saw, but mercifully, no one was hurt. As I walked through the streets with our remarkably effective City teams, we all did what we could to put life back to some sense of normal.
Seven months later on my nightly drive through those streets, the debris has been cleared, many of the damaged houses are being restored, and through our City Trees program, neighbors have planted scores of new trees to replace the 100-year-old elms that the tornado felled in seconds.
You could say that things seem to be getting back to normal, but on many levels it will never be the same ... at least not for a long time. You can't replace the family heirlooms. It will be a generation before those new trees shade the street like those stately elms, and it will be a long time before some of those residents will be able to fully forget what happened on that horrible late afternoon last summer.
Things are different now. It will continue to be harder for a while. But life goes on and a remarkable community got to know each other better in a crisis, and is coming back even stronger. Our job is to what we can to help them get back to normal — a new normal.
Seeing that neighborhood almost every night reminds we how strong we are here in Minneapolis, but it also reminds me of how we have to approach an even larger problem that faces every part of Minneapolis — and well beyond our borders.
An economic tornado has ripped through the heart of our city, our country and the global economy. In those months that followed we began to look up and survey the damage. We've been shocked by what we have seen.
- At the end of 2007, the official beginning of the recession, unemployment in Minneapolis stood at 4.3%.
- Today, it stands at 6.8% — after peaking in July 2009 at 8.4%.
- At the end of 2007, the retail-vacancy rate hovered around 6.0%.
- Today, it stands at 10.5%
- In the middle of 2008, the average traditional-sale price of Minneapolis home was $220,000.
- Today it stands at $193,500. That's $26,500 less in wealth that the average Minneapolis homeowner can count on.
The economic devastation in the economy also has a direct impact on basic services in the city. With the state budget in deep crisis, part of the solution proposed by the governor has been to cut an additional $29 million from the City. These are the funds we use to pay for police, fire, road maintenance and other basic services. I am currently working with our finance team and Council leadership to develop a supplemental budget based on deep state cuts. I will present it in early April. It won’t be pretty.
There are some signs, however, that we are turning a corner. Just yesterday, Forbes Magazine ranked Minneapolis Saint Paul the #4 metropolitan area in the country where the recession is easing. Still, even an optimist like me wonders whether we can ever get back to where we were before. But in the year and a half since the economy collapsed, all parts of this city have found a way to make progress.
Like those neighbors in south Minneapolis after the storm, we have found ways to work together. And our city government has been more engaged than ever in attacking our central challenge, which is to get the economy moving again.
Like those neighbors in south Minneapolis, we have to acknowledge that we can't just "get back to normal." We are getting back to a New Normal, where the basic principles of our economy are changed forever. So is the way many of us will work.
We're like the Twins — we're playing on a whole new field. But we're not playing alone.
First, in President Obama we finally have a champion at the federal level. When I stood here one year ago, the president's economic-recovery plan had only just passed. One year later, we've seen what it's meant: Minneapolis alone is benefitting from $60 million from the American Recovery and Reinvestment Act. We will continue to feel the positive effect of that assistance through this year.
We also have never had such strong partnerships with regional partners. We are working with both the Itasca Group, a coalition of regional CEOs, and the Regional Conference of Mayors on a regional economic development strategies. We have also never worked more closely with Mayor Chris Coleman and the City of Saint Paul, especially on green jobs and transit.
We are like the Twins — we're playing on a whole new field. But just like in baseball, the fundamentals remain the same.
And let's remember that the fundamentals of putting people to work and getting an economy moving isn't new to us in Minneapolis. We've had a plan and we've been working our plan. This is the fourth straight State of the City address in which I have laid out fundamentals of job growth:
- In 2007, I focused on the need to make sure that "Minneapolis remains a place where opportunity still provides a path into the middle class."
- In 2008, as the Great Recession was looming but no one knew how hard it was going to hit, we insisted on the importance of building common ground and investing in an environment where opportunity and innovation is fostered.
- And last year, in the depths of the recession, we talked about needing to "reinvent ourselves for the new economy" — and that we shouldn't panic, because this work is not new to us.
We’ve laid out an economic plan in Minneapolis and we've stuck to the fundamentals. Every arm of city government has had a hand in building on the principles of getting people back to work. Those principles are, have been, and will continue to be:
- Investing in people;
- Investing in the common ground that helps everyone succeed;
- Focusing our efforts to help small business thrive;
- Fostering an innovation economy;
- Knowing when to help, and when to get out of the way.
Investing in people
The first fundamental is investing in people.
Most city governments are not actively involved in job training for hard-to-employ residents. We are, and it is paying off. In 2003, we merged Minneapolis' successful job-placement programs into a more powerful department of Community Planning and Economic Development. Since then, we have helped place nearly 11,000 people get training and good jobs.
- More than 7,200 are once hard-to-employ adults who are now making an average of more than $11 an hour.
- More than 3,600 are dislocated workers — people who lost their jobs that we’ve helped find a new one, at average wage of more than $20 an hour.
Much of this work, guided by the Minneapolis Workforce Council under Chair Carolyn Roby, is done through a partnership between the city and a network of community-based providers. We also partner with the state on two Minneapolis Workforce Centers. Last year those centers served 81,501 people, a 30% increase in one year. And I'm proud that the Office of the Legislative Auditor recently reported a high level of satisfaction among our customers, even in a period of high demand.
Minneapolis is also a national leader in partnering with the business community to develop the workforce for tomorrow. Since 2002, we have placed more than 11,000 young people from Minneapolis in summer jobs, the majority of them through STEP-UP. Last summer alone, we found jobs for 2,270 young people — and we’ve set an ambitious goal for this year of 2,300.
Here, once again, the Obama administration’s economic-recovery plan has been a great partner. We've received over $7 million and we are taking advantage of:
- $1.7 million in economic-recovery funds to provide jobs for 575 young people.
- Nearly $600,000 to help 240 low-income Minneapolis residents get training and employment.
- Nearly $1 million to help 150 dislocated workers get training in high-demand skill areas.
- Another $4 million through the Pathways out of Poverty grant, which will train hard-to-employ folks to get good jobs in the clean-energy economy.
Worker by worker, step by step, we are helping people find jobs.
Six years ago, unemployment was one percentage point higher in the city than in the surrounding suburbs. Now, for the first time in decades, unemployment in Minneapolis is below the suburbs, the state and the nation: as of January, it was 6.8% in the city and 7.4% in the region. In addition:
- Nearly 5,000 more Minneapolis residents were working in January than were working one year ago.
- That 2.5% increase surpasses last year's job increase in the metro area as a whole.
- 428 more Minneapolis residents had jobs in January than had jobs just one month earlier.
- In contrast, in the metro area and the state at large, fewer people had jobs in January than in December.
- There were nearly 1,000 more Minneapolis residents in the labor force in January than in December. This number represents unemployed people who are returning to the labor force to look for work who previously were not looking.
- In the same period, the labor force of the metro area shrank.
The trend is solidly established, and almost no other big city in America can say its unemployment rate is lower than the suburbs, or that its rate of job growth surpassed its suburbs. It didn't happen by accident and we need to keep it up.
Still, far too many people are unemployed, far too many are underemployed and far too many more are worried that they may lose their job. Government cannot solve this problem alone — and it shouldn't solve it alone. Most jobs are created in the private sector and it's important for the private sector to lead. But it is equally clear that if Minneapolis had not acted, if we had not had a long-term plan to get hard-to-employ people back into the workforce, the situation would have been much worse.
Minneapolis should be proud that for many years we have been helping people who are hard to employ, so we were ready to step up with the economy collapsed. But unemployment has hit every part of the workforce and some groups of workers are facing long-term unemployment.
As I mentioned earlier, over 3,600 mid-career professionals have gotten help returning to the workforce through our dislocated-worker programs. The workforce centers have been helpful for many who never expected they would be looking for work at that stage of their lives. But funds for serving people who are suddenly unemployed are growing scarce , and we ask our federal and state partners to come forward with the funds we will need to continue this important work, if not expand it.
It is also clear that as the economy continues to change, not only because of the recession but because many rapidly changing factors in today's world, all of us will have to take responsibility for lifelong learning, in order to constantly update our skills and broaden our horizons. Lifelong learning will be part of the new normal.
Fortunately, in Minneapolis we have outstanding educational options for people wanting to learn at every stage of their lives, and we are here today at one of them: Capella University.
- You may not know that with over 33,000 students, Capella is the third-largest university in Minnesota, with the same accreditation as the other great colleges and universities in this state.
- You also may not know that:
- The average age of a Capella student is 39.
- 72% are women.
- 50% are people of color.
- 80% are learning at the master’s and doctoral levels.
- Capella is a homegrown success story. It was founded in 1991 by Steve Shank, who had a vision that high-quality higher education for adults should be as accessible as possible.
- Today, Capella employs over 2,500 people, including 1,400 here in Minneapolis.
- Capella has grown up along with the Internet, and anticipated the day when the majority of people seeking higher education would be non-traditional — that is, not 18-22 years old, not attending school full-time, not living on campus.
That day is today, and Capella continues to innovate in meeting the needs of students who need to work and take care of their families, and still want to give back to their communities while achieving their goals. Its financials are solid, and just last week, the New York Times recognized Capella one of the top three institutions in the country in online education.
Capella is prospering, but let’s be clear: its business model isn’t built on capitalizing on a bad economy sending people back to school for more education and training. Their business model is built instead on meeting a more deep-seated, longer-term need: the need for lifelong learning, and the need that all of us feel to bring meaning into our lives. Capella is prospering because they had a plan and are sticking to their fundamentals.
Investing in common ground
The second fundamental is investing in the common ground.
All this effort to develop the workforce is the first, and most important, fundamental in creating jobs. The second fundamental is to invest in the common ground that helps everyone succeed. The common ground includes five key elements:
1) safe neighborhoods;
2) stable neighborhoods;
3) technology infrastructure
4) well-maintained roads and bridges;
5) expanded transit options.
1) Investing in common ground starts with making every neighborhood a Safe Place to Call Home. This has been the top priority of our city government for eight years and that focus has paid off:
- Violent crime is down 33% since 2006, falling three straight years in a row to its lowest level since 1982.
- Property crime is down 24% since 2006, falling three straight years in a row to its lowest level since 1963.
A 46-year low in crime doesn't happen by accident. It happened here through a concerted, coordinated partnership that includes every police officer, every arm of City government, community leaders and neighbors, businesses and workers. And it happened here under the leadership of Chief Tim Dolan.
But three good years have been followed by two very difficult months. During this challenging period, we have to remain strong and focused, and even in tough budget times, do what we can to continue to provide the resources to keep us safe.
To that end, two weeks ago we reconvened the Youth Violence Prevention Committee that helped draft and implement the strategies that led to a 40% decrease in juvenile crime over the past several years. We took a hard look at the plan to determine how we can learn from recent tragedies and how it can evolve to meet changing needs and conditions.
Some of that work is already underway.
- Last year, in response from a request from young people, we launched 1-800-SPEAK-UP, an anonymous tip line for Minneapolis Public School students that enables them to report a weapons threat. It has already helped us defuse potentially dangerous situations, and provides a measure of safety and reassurance to students.
- Last month, the City of Minneapolis, along with Hennepin County, Hennepin County Medical Center, North Memorial Medical Center and 40 community-based organizations, announced a new hospital-based initiative designed to identify, address and intervene in the lives of youth violence victims who come to our emergency rooms.
- And soon, we will enter into a new strategic partnership with the University of Minnesota to further support organizations and community members who work with our youth.
2) The common ground also including helping neighborhoods stay stable. First, that means preventing foreclosures when we can.
- Foreclosure counseling and prevention costs the City an average of $500 per household — but foreclosure costs the public and private lenders an average of $68,000 per household.
- In 2009, the City helped prevent close to 500 foreclosures — which means that for an investment of around $25,000, we saved over $30 million in costs.
Fortunately, foreclosures appear to be dropping off: after 3,000 foreclosures in Minneapolis in 2008, the number fell to 2,000 in 2009. We predict that it will fall to 1,000 by 2011.
We also play a strong role in stabilizing neighborhoods after foreclosure has hit. In partnership with Hennepin County and Brooklyn Park, we recently received another $14 milllion from the federal Neighborhood Stabilization Program, which helps us acquire and redevelop foreclosed properties. And the Minneapolis Advantage Program offers downpayment and closing-cost assistance to help make homes affordable to buyers in the neighborhoods that have been most affected by foreclosure.
We're finding other ways to help people as well. We launched a new loan program with the Metropolitan Consortium of Community Developers to help Minneapolis residents repair damaged credit scores as the result of a mortgage foreclosure or another financial setbacks. The initial phase of the program was launched with entrepreneur clients of MCCD and was recently extended to Project for Pride in Living. As of today, 31 participants total have closed their loans and are on the road to credit-recovery.
3) The common ground includes technology infrastructure. The Minneapolis wireless network is now complete, and USI Wireless now has over 16,000 residential subscribers. Over 50 Community Technology Centers have free wi-fi access, and this spring here will be over 100 free outdoor wi-fi hot spots throughout the city. Minneapolis continues to lead the way as the first large city to build such a network.
4) The common ground includes upkeep on the network of roads that all of us need to succeed. This is a terrible, terrible year for potholes — and it would have been much worse if two years ago, we hadn't implemented the Infrastructure Acceleration Program. The Infrastructure Acceleration Program will ensure that we resurface or sealcoat one-third of City-owned arterial streets and parkways by 2013.
- Last year, the first full year of the program, we resurfaced or sealcoated 41 miles of streets in Minneapolis — and the Infrastructure Acceleration Program was directly responsible for two-thirds of them.
5) And the common ground includes visionary planning and implementation of new transit options. When we launched Access Minneapolis a few years ago, some said we were moving too fast, that it was unnecessary to plan into the future because we had no way to implement our vision.
Well, we were right. By launching these big plans, we were ready when new federal resources arrived. That's how, for example, we got $130 million to remake Marquette and Second Avenues into transitways that will dramatically decrease downtown congestion.
In the last year alone:
- The Northstar Commuter Rail started passenger service.
- We reached the final stages of planning for the Central Corridor.
- An alignment was picked for our third LRT line to the southwest suburbs.
- Planning is underway for the fourth LRT line to the northwest.
- Construction has begun on the first bus rapid transit stop on 35W at 46th St.
- And we are about to launch NiceRide, our bikeshare program that will put 1,000 bikes on the streets of the city.
All this could only happen because we looked to the future and moved aggressively.
We have also planned for streetcars — but when on January 13, the Obama administration announced that they were changing federal-funding rules that had stood in the way of streetcar projects, we realized we hadn't moved aggressively enough. Other communities got there first. That shouldn't and can't happen again.
- Within days of the federal decision, my staff began working with Public Works to update the Financial Analysis. That plan will come before the Council's Transportation and Public Works Committee on March 23.
- We have big decisions to make and we need to make them. If any city in America is going to be partnering with the federal government to build streetcars, I want it to be Minneapolis.
We also need to make sure transit supports and builds our neighborhoods. I was disappointed that the alignment chosen for the Southwest LRT does not serve Uptown and Midtown, so we need to move aggressively on transit options on the Greenway. And when the LRT line is chosen to the north, we need to make sure it serves North Minneapolis.
The sweet spot: small business
Invest in people. Invest in common ground. And sometimes government needs to invest in business. The third fundamental is investing in small business.
Too often, economic development means special assistance to just a lucky few big players. But there’s a better way to do it. When government does provide assistance to businesses, it needs to be focused on the job-creation sweet spot of the partnership between the public and private sectors — and that's small business, where most jobs are grown. It’s another fundamental that we’ve focused on.
About five years ago, we began unifying several previously disconnected City programs for small business into a unified effort called Great Streets. To someone who wants to open or expand a business on a commercial street, Great Streets offers gap financing, low-interest loans, façade-improvement matching grants, and business plans and marketing assistance.
Since 2007, we have invested $3.7 million on commercial corridors throughout Minneapolis. This investment has:
- created 400 new jobs;
- retained 125 jobs;
- created tens of thousands of construction hours.
Great Streets has also:
- Helped 85 small businesses with over $300,000 in façade-improvement matching grants — which has leveraged another $1 million in private investment.
- Helped 270 small businesses become more successful through assistance with business plans and marketing tools.
Great Streets also markets other City financing products for small businesses — primarily the 2% loan program. Since 2007:
- We have invested $6 million more in 2% loans to 115 more small businesses.
There are so many great stories from Great Streets, but let me tell you about just a few of them:
- Owner Sean Mackay from The Citizen Caf on East 38 th Street took over a defunct establishment, and with a façade-improvement grant has created new vitality on his block — just down the street from Ted Cook’s 19th Hole Restaurant, another business that did the same with another façade-improvement grant.
- Developer Stuart Ackerberg’s Five Points Building is transforming the long-vacant Delisi's building at Penn and West Broadway. It will be the new home of KMOJ Radio, commercial office space and possibly a restaurant — and it wouldn't have been built without gap financing from Great Streets. In addition, many of the workers on this project will come from the Northside and have been trained at Summit Academy, so Great Streets is helping us circulate and grow wealth in Minneapolis.
- And today 38 small businesses--including a dress shop on Blaisdell, a convenience store Cedar--are open because of our Alternative Financing Program specifically for Muslim entrepreneurs, so that they may borrow needed capital without violating their religious practices.
Great Streets is a success that creates jobs and brings life to our neighborhood commercial streets. But years of very tough budget choices have meant that we are underinvesting in community-development programs like Great Streets that get us more bang for the buck than almost anything we do. We have to fix that. We face many tough challenges as I prepare our 2011 budget — but one of my goals is to find more consistent long-term funding for community development.
Government should always be looking for ways to foster innovation, but at no time should we be working harder at it than when the ground is shifting underneath us. We don’t know exactly what the New Normal is going to look like or when we're going to land there, but we know that innovation is fundamental to getting us there.
In Minneapolis, three areas where we've been working on innovation stand out:
1) Clean-energy jobs;
2) Homegrown Minneapolis;
3) the Minnesota Science Park at the University of Minnesota;
1) Three years ago, Saint Paul Mayor Chris Coleman and I helped launch a coalition of labor and environmental groups called the Blue Green Alliance to make Minneapolis–Saint Paul the center of the emerging Clean Energy Economy. The goals were simple:
- To create jobs. We knew that green-sector jobs were growing faster than other jobs — and are currently growing six times faster than jobs in the economy at large.
- To do our part to reverse climate change.
Today that work includes:
- Helping ReGo, a start-up business that converts gas vehicles to electric. We want them to locate in Minneapolis and we're exploring having them convert some of the City's fleet of cars.
- Partnering with the Minneapolis Chamber of Commerce to build a green business-to-business network.
- Installing the largest solar array in the upper Midwest on the Minneapolis Convention Center, using a local contractor and local union labor.
- Partnering with St. Paul to use the $4-million federal Pathways out of Poverty grant to train unemployed, disadvantaged and hard-to-employ workers in green manufacturing and clean-energy jobs.
- Creating more of those jobs through another $700,000 federal grant that helps homeowners assess what they need to save energy and, in turn, then hire people with this new training to do the work.
2) Another innovation in job growth is Homegrown Minneapolis. A year ago, I announced the formation of Homegrown Minneapolis, an initiative to expand consumption of and markets for locally-grown, healthy, sustainably-produced food — and by so doing, to:
- support small farms and local jobs,
- create new business opportunities,
- improve health and food security
- improve the environment, and
- encourage the recirculation of capital within the city.
More than 110 residents, business owners, farmers and environmentalists have come together to develop recommendations on how the City can support this work. Over the past year, as we’ve begun to implement the community's recommendations, we have:
- expanded the number of farmers markets throughout the City;
- begun working with new emerging food businesses looking to set up in Minneapolis; and
- supported new youth gardens in North Minneapolis.
As the growing season approaches, you can expect to see even more community gardens and more opportunities for small farmers to sell their bounty.
And this work has potential to expand beyond farmers' markets to small business. For example, Local Dlish in the Warehouse District is a market for purveyors of locally-sourced fruits, vegetables and preserved food. New community kitchens at 1200 Broadway and in the Midtown Global Market are helping home-based food businesses grow into small business that can grow and create more jobs. As part of Homegrown Minneapolis, our small-business team is preparing to extend the supports that have done so much to enliven our commercial streets to new food-based businesses.
Homegrown Minneapolis has already received recognition from First Lady Michelle Obama and Congressman Collin Peterson, chair of the House Agriculture Committee, for our innovative work in helping to build the new food economy.
3) There is no better driver for innovation in Minnesota than the University of Minnesota. The U is one of the top research universities in the country — and finally, after many years of planning, we are starting to see related business development around the campus.
We are working with the University of Minnesota to help develop the Minnesota Science Park, the private-sector real-estate companion to the University’s Biomedical Discovery District. It is designed to promote collaboration among science and technology researchers, businesses, venture-capital firms and University talent — to be the place, in the words of Pete Bianco, where Minnesota discoveries become Minnesota jobs. The businesses that will grow in the Science Park are the key to the emerging new Minnesota economy. They will harness research — local brain power — leverage federal research dollars, and have the potential to create whole new industries. And they will harness the public investment in infrastructure that we will make, along with the University's resources and talent.
Knowing when to help, and when to get out of the way
There are those who say that the only thing government needs to do to help jobs grow is to get out of the way. I don’t believe it’s that simple. Much of what I’ve just talked about — developing the workforce, investing in common ground, fostering small business and innovation — are examples of an engaged government partnering with businesses to develop markets and grow jobs.
But there is something to the idea that especially in tough times, government needs to know its limits, when to make things simpler — when to get out of the way. Government should cut red tape and regulation to help business grow. This has been a high priority of ours and thanks to significant reform, especially in Regulatory Services, it is now easier to do business in Minneapolis. Here's evidence:
- In 2007, it took an average of 42 days for the City to issue a restaurant license.
- In 2009, it took an average of 11 days.
- In 2006, it took an average of 35 days for the City to issue a taxicab license.
- In 2009, it took an average of 25 days.
- In 2005, it took an average of 79 days for the City to issue a liquor license.
- In 2009, it took an average of 33 days.
With Minneapolis Development Review, we have also streamlined the City's development review processes.
- In 2005, it took an average of 37 days for the City to route formal development plans. In 2009, it took an average of 10 days.
- In the past year, we integrated Business Licensing into the Service Center, so now, partners can receive new or renewal licenses and obtain permits for many construction-related jobs the same day — all in one location.
- We've made it easier and clearer for partners seeking to open new food businesses to navigate licensing, inspections, zoning and health-code requirements.
- We've established a Business Development presence at the Service Center so small businesses can meet with City staff to obtain information on low-interest loans and the other services we provide for small businesses.
We're also processing more and more permits via the Internet. In 2003, we processed exactly zero permits on the Internet. Last year, we processed 21% of all permits via the Internet, and we're going to continue to maximize that tool and move as quickly as possible toward paperless review.
We have more work to do to make it quicker and easier to do business in Minneapolis, but these are strong steps in the right direction.
Over this last year and a half since the economy collapsed, there have been many times when I've asked myself whether the radical restructuring of the economy needed a radical new approach. But each time I saw that the core values we laid out in these last four State of the City addresses, the core values the City Council practices week after week, and the core values we laid out today, are right for what we have come through — and right for what's ahead.
New ballpark, same fundamentals.
That shouldn't surprise us: This is a city, and a city government, that has gotten results in tough times because we laid out clear-eyed, long-term plans and put them into action.
- Our Five-Year Financial Plan has steered us through one deep financial challenge after the other these last eight years, and we will use that plan to help deliever a new financial strategy in the weeks ahead.
- Right after 9/11 we laid out an Emergency Response Plan. That was the basis of our response to the 35W bridge collapse and it's what we will rely on if something unspeakable happens again.
- When we were hit with a wave of youth violence four years ago, we brought the community together to lay out a plan to help our kids grow up in peace. That led to a dramatic decrease in juvenile crime, and that's why that same plan is the basis of our response to this latest round of violence.
Our greatest challenge right now is the challenge of putting people to work. No one can wave a magic wand and suddenly make jobs appear, especially not now. There isn’t one single action to take, and nothing right now is easy. But we know what works:
- Invest people and the common ground that helps everyone succeed.
- Invest in small business, and innovation.
- Know when to help and when to get out of the way.
In the uncharted territory of today's economy, we don't know what's around the corner. But we do know this: We're ready for it.
Last updated Sep. 27, 2011