Former site selector gives new point of view on developing zone
Sometimes a fresh perspective on a topic sheds light on an area that has caused a rut for area governments.
Judging by the comments made by members of the Koochiching Economic Development Authority Board Wednesday, a visit by Jim Theusch, consultant for the Minnesota Foreign Trade Zone group, was enlightening. He has been involved with the Minnesota zones since July.
Theusch was, among other positions, involved with site selection for Target Corp. distribution facilities. He brought to the KEDA Board the perspective of a major developer looking at a U.S. region to site a new facility. With that experience, he described how a specific site could rise to the top of a long list of potential locations for a company.
Typically, a company may start a search with a three-state area in which it wants to locate. It will ask state economic development agencies for a list of locations that meet a given criteria. The company will then narrow down all submissions to a smaller selection of sites to further consider.
“You want to put yourself in the best competitive position,” he explained. Like cream rising to the top of milk, a site needs to stand out from the others to rise to the top of a site selector’s list.
This was Theusch’s first trip to International Falls. When driving to the area from Duluth, he compared the scenery to a Norman Rockwell painting.
“Obviously you have something here that’s an attraction,” he said.
Theusch toured the FTZ site with KEDA Director Paul Nevanen prior to the board meeting.
KEDA Board member Tim “Chopper” McBride asked Theusch point blank: “Should we develop it?”
“The question is why not?” the strategist replied. “Why shouldn’t we develop it?”
Not developing the FTZ would, in essence, be a signal that the city and county had given up on economic development efforts and had given up on job creation, he said.
While Theusch was willing to discuss specifics of the local FTZ near Ranier, which the KEDA manages, he focused more on the larger picture of what makes a site desirable. The answer to that question is often different depending on the project, but having the site prepared with plenty of “curb appeal” is important.
Some companies may utilize railroad access. Many others may not need or want to be near a rail line. Some companies would be able to use the FTZ designation benefits for international commerce. Many others would not. So for a site to rise to the top of a list of potential locations, soft incentives need to be in place to pique multiple developers’ interests.
Soft incentives for Theusch include availability of products and services that would ultimately reduce initial capital investment costs for the developer and minimize operating costs long-term. These could include having utilities in place and information available. Answers to the following questions need to be offered: What is the water pressure in lines leading up to a site?; does the site have redundant electrical supply, or would the company need to provide a generator?; where are nearby cable lines?
This could also include having an educated work force in place locally that would be able to hit the ground running at a new facility, and knowing the right people to tap in a community for a project. It might be having stockpiled material to raise a building or pave a parking lot.
“Be proactive, is what I’m suggesting,” he summed.
Theusch said the two largest issues facing development of the FTZ site are the rock and wetland mitigation. But remaining flexible for a developer’s needs is also important.
He recommended KEDA create a more robust FTZ marketing strategy, including example projects. Using hypothetical dimensions, show a client how a distribution center could be located. Provide information on utilities and services.
Having this information readily available by KEDA staff, including maximum building sizes that could feasibly be sited in the zone, would be helpful to target potential developers.
Further, he explained that having a single point of contact for the site with the authority to make decisions and negotiate on a potential project is of utmost importance. Companies will want to work directly with a liaison who has authority.
Without looking into the complex legal scenarios that often define these types of projects, Theusch recommended the KEDA look into the possibility of providing property tax abatement. Because the local governments of Koochiching County and International Falls, which own the FTZ, do not pay property taxes on the land, a unique ownership structure that would retain that property tax-free benefit should be explored, he said.
With job creation the ultimate goal, several KEDA members agreed, the lack of additional property taxes for the governments may not be of utmost importance, especially as no such taxes are currently collected.
International Falls city councilors on the KEDA, McBride and Gail Rognerud, presented a list of 12 “talking points” regarding an ongoing debate regarding blasting and crushing rock to clear the FTZ site.
The talking points were informational, intended for discussion and consideration at the next KEDA Board meeting.
The county had presented a plan to the city following an April proposal by private developers to blast and crush the rock. The county had asked the city for input on its plan, resulting in the city’s talking points. The developer’s proposal sparked discussion regarding the value of rock on the site and the best way to go about preparing the land for development. The private developer, Dennis Wagner, retracted the proposal in October following six months of indecision.
