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EDA Special Meeting Packet 11-09-2020 Special Meeting of the Economic Development Authority AGENDA Monday, November 9, 2020 5:30 p.m. Elk River City Hall The Elk River Vision A welcoming community with revolutionary and spirited resourcefulness, exceptional service, and community engagement that encourages and inspires prosperity 1. CALL MEETING TO ORDER 2. STRATEGIC PLAN 3. ADJOURNMENT Meeting Protocol No sidebar discussions No interruptions State your concern Ensure you understand Don’t take things personally Adhere to time limits Come prepared Ensure all are heard The Elk River Vision A welcoming community with revolutionary and spirited resourcefulness, exceptional service, and community engagement that encourages and inspires prosperity Request for Action To Economic Development Authority Item Number 2.0 Agenda Section Work Session Meeting Date November 9, 2020 Prepared by Colleen Eddy, Economic Development Specialist Item Description Strategic Plan Discussion Reviewed by Cal Portner, City Administrator Reviewed by Action Requested Receive information and recommendations from Stantec to create the EDA Strategic Plan. Background/Discussion At their April 20, 2020, meeting, the EDA approved a contract with Stantec Consulting Services, Inc. to proceed forward with the EDA Strategic Plan. After several discussions with staff, EDA work sessions, community events, and peer city interviews, the plan is in its final stages. Tonight, Stantec will present its Research Summary and Economic Development Strategy Recommendations, which will be utilized to create the EDA Strategic Plan. Financial Impact N/A Mission/Policy/Goal The Strategic Plan will build upon the EDA’s existing plans including the city’s vision, Mississippi Connections Plan, FAST Study, Comprehensive Plan, Parks and Recreation Plan, Capital Improvement Plan, along with any other relevant studies that have set forth goals and objectives for economic growth and sustainability. Attachments  Research Summary and Economic Development Strategy Recommendations Hello members of the EDA. We’re very happy to be forwarding you a robust report that summarizes all of our research on your behalf and offers a broad set of recommended economic development strategies for your consideration. I am hopeful that you will find a lot to think about here! If you have time before the meeting, we’ve also created a worksheet that you could complete to prepare for the meeting. It invites you to prioritize the menu of strategies according to: • Which ones you think would be most impactful? • Which ones you think could be most easily accomplished? • Which ones you are personally most intrigued by or interested in? The worksheet also creates space for you to think about the timeline of the various strategies and make other relevant notes. It’s been a true pleasure to dig into the economic potential of Elk River on your behalf! Best, Tom SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA Strategic Plan Elk River, MN November 5, 2020 SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 1 INTRODUCTION AND EXECUTIVE SUMMARY Elk River is a city with a strong economic foundation. It has benefited from fundamental strengths such as its natural setting along the Mississippi River, and its location at the crossroads of two transportation arteries. It has put focus and investment into its walkable downtown and other amenities that contribute to the quality of life of Elk River residents. And it has fostered a vibrant business sector. Stantec was contracted to: 1. Understand the City’s economic development context, activities and achievements 2. Identify opportunities for further strengthening the City’s economy in the future 3. Encapsulate the City’s program for continued economic growth in an EDA Strategic Plan This document, Summary of Research and Recommended Strategies, addresses the first two of these objectives, and sets the stage for the upcoming workshop with Elk River’s EDA and economic development staff. Part 1 – Research Summary Part 1 of this document summarizes the research of the consultant team, and illuminates important aspects of Elk River’s economic development context. Key findings include: • A thorough inventory of geographic and non-geographic assets, deterrents and opportunities that define Elk River’s economic context. • A population trendline and forecast that anticipates continued population growth, which implies ongoing demand for housing and other development, and eventually new demand for store-based retail development. • A demographic snapshot indicating a high proportion of families and children, and larger than average household incomes. • A very healthy job base, with most workers drawn from Sherburne, Wright, Anoka and Hennepin Counties. • And industry mix in which: o Seven sectors predominate (manufacturing, retail trade, educational services, public administration, health care and social assistance, construction, accommodation and food services). o There is a good supply of jobs that are well paying—particularly in the manufacturing, public administration and construction sectors. SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 2 o Three sectors provide the greatest opportunity for further increases in living wage jobs: Manufacturing, construction, and health care and social assistance. • The moderate levels of new multifamily and industrial development in the last decade imply ongoing development demand in those sectors. • The low level of retail development, the current pandemic conditions for store- based retail and restaurants, and the potential for lasting changes in consumer preferences toward retail delivery models—these factors suggest that new retail development may not be on the horizon for several years at a minimum, and maybe until continued population growth offsets the adverse structural changes to the retail market context. Part 2 – Recommended Strategies Part 2 of this document gathers and presents a set of opportunities for advancing the good work that’s been done by the EDA and its staff, to further strengthen Elk River’s economic vibrancy. The consultant team was responsive to the City’s expressed interest in a broad set of economic development topical areas, investigating them through focus groups, individual interviews, and additional topical research. Recommended strategies emerged in that process under six broad headings. Key opportunities are highlighted below. 169 Redesign. In a project that will relieve persistently problematic congestion through the city, the City has an immediate opportunity to weigh in on ways to protect existing businesses and enhance Elk River’s image. We recommend preparing and implementing a City advocacy strategy. This should include a constructive statement of Elk River’s aspirations for desired outcomes from the project, as well as concerns regarding potential adverse impacts both during construction and after completion. The strategy will map out an action plan for sustained advocacy throughout the duration of the project. Business Attraction & Retention. The City has a solid existing program in this core area of economic development. We recommend means of strengthening that program through strategies including: • Identifying land for future industrial development. (Considerations were explored relating specifically to land in the gravel mining area and Cargill owned property.) • Updating the City’s target industries to three that underscore the City’s most salient economic strengths—precision manufacturing, businesses with state-wide or regional customer bases, and data centers. Those target industries emphasize the City’s concentrated strength in manufacturing, its transportation connectedness, and its reliable energy infrastructure. • Maximize the attractiveness of future industrial parks by undertaking a set of proactive actions to set the stage for and demonstrate readiness for new development. • Utilize tax abatement as the primary public incentive for new industrial development and establish a policy that defines the level of abatement that can be considered. SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 3 Redevelopment/Catalysts. Elk River has several locations that have the potential to be highly attractive to the development community. Stantec reviewed the planning basis for development in the gravel mining area, in downtown Elk River, and in the emerging opportunity at the Great River Energy site. For each area we recommend steps to set the stage for attracting high quality development. We also recommend the modification of the City’s tax increment finance policy to support its utilization for redevelopment and multifamily housing projects in Elk River. Quality of Life. Although not a core responsibility of the EDA, investments and programmatic activities that enhance the quality of life are economic development strategies, contributing to Elk River’s economic vibrancy. We recommend a continued focus on the health and vibrancy of Elk River’s downtown, and extending the impact of downtown both upstream and downstream through the implementation of trail extensions along the Mississippi Riverfront. Tourism. Elk River has a set of distinctive local assets—its high quality sports facilities, its well-known mountain biking course, and the ERX event center—that draw numerous visitors to Elk River from outside the City. We explored the opportunity to leverage those assets to boost tourism to an economically meaningful level. That appears to be unviable—principally because Elk River’s proximity to the Twin Cities Metro dampens the likelihood of visitors staying overnight. As an alternative, we recommend: • Promoting news coverage of events at these and other venues to raise the regional visibility of Elk River • Exploring ways of cross-marketing Elk River’s retailers, restaurants and amenities to event participants. COVID Economic Recovery. We expect an infrastructure oriented economic stimulus bill to come out of the 2021 Congress. During the Great Recession, local governments were eligible to submit proposals for such funds if they had projects that were ready to go. We recommend reviewing Elk River’s capital improvements program and goals for one or more projects that may be positioned for such funding. SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 4 PART 1: SUMMARY OF RESEARCH SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 5 ELK RIVER’S ECONOMY This section of the report provides information relative to Elk River’s economy. That provides a basis for the consideration of strategies for strengthening it. Two subsections follow. The first focuses on the locational characteristics of Elk River that are significant and that shape its economic opportunities. The second provides descriptive data and analysis in exploration of Elk River’s economy and its economic performance. Economic Development Context Elk River’s economic context has been explored through geographic and asset mapping that have been refined over the course of a number of conversations with the Elk River EDA and other stakeholders. Economic Context Map Elk River benefits from an abundance of natural amenities, with frontage along the Mississippi River, Elk River, and Orono Lake, and large wooded parks. It’s highway infrastructure gives it strong connections in every direction, with further improvements on the horizon when a long stretch of Highway 169 is reconstructed. The City has retail settings that benefit from its accessibility to the surrounding area. They range from the destination retail centers along Hwy 169 to the storefront business district in downtown Elk River. The City of Elk River has attended to the quality of life for its residents through the development of recreational opportunities in its park system, the creation of community space on its downtown riverfront, and its investment in a new community-serving multipurpose facility. SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 6 Assets, Deterrents and Opportunities The honeycomb array below identifies many of Elk River’s important economic assets, as well as some deterrents to economic growth, and some opportunities that are on the horizon. SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 7 Elk River’s Economy Population Growth Elk River is a growing city, and a growing population is an economic asset. It implies ongoing demand for new housing. It supports existing stores and service providers, and provides a basis for new retail development. It bolsters the values of existing property, which provides an incentive for property owners to invest in maintenance and rehabilitation. Conversely, where population is stable or declining, it can be difficult to attract new development. Maintenance and improvements to existing development tend to lag because those investments may not bring an economic return. The City of Elk River has experienced growth over recent decades, and that growth is expected to continue. Demographic Snapshot The following graphs provide an overview of Elk River’s population. It is a family oriented community. A higher proportion of households in Elk River are family households, in comparison with the state of Minnesota as a whole. Elk River households include an especially proportion of families with children. Those factors explain average household sizes that are higher than the state average, and are reflected in an age distribution that skews younger than the state as a whole. Household incomes in Elk River are around 22% higher than the state average, while individual incomes in Elk River are lower than the state average. That implies the prevalence of households in Elk River with multiple wage earners. In terms of educational attainment, a similar share of Elk River residents have graduated high school as the state of Minnesota as a whole. But a lower proportion of residents have earned a bachelors degree or higher. Source: ESRI Business Analyst SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 8 Source: ESRI Business Analyst (all charts above) Elk River Employment and Workforce Elk River is not a “bedroom community.” It is relatively job-rich for a city that is outside the state’s major metropolitan areas, and is not a regional center. There are almost as many people coming to work in Elk River as there are people leaving Elk River to work elsewhere. The chart at left reflects that reality, utilizing data from the U.S. Census Bureau’s LEHD Origin-Destination Employment Statistics. The chart’s data are from the year 2017, which is the most current year that is available from the Census Bureau. Elk River’s roughly 11,700 jobs in 2017 was a 14% increase over a total of around 10,300 jobs from seven years earlier in 2010— SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 9 reflecting a strengthening business environment. The growth in jobs is greater than the estimated increase in population over that period. Note that the ESRI Business Analyst data above showed a 14% population increase, but over a longer period of time from 2010 to 2010. On the other hand, the 2017 data doesn’t take into consideration the recent closures of Elk River’s Great River Energy facilities. It is interesting to note that the work destinations of Elk River residents are quite different than the home locations of those who come to jobs in Elk River. For example, Hennepin County is the most common work destination for Elk River Residents. But it only ranks 4th among the home counties that Elk River workers come from. The maps and tables indicate the top ten counties where those who work in Elk River are coming from, and the top ten counties where Elk River residents go to work. Home Counties of Elk River Workers Source: U.S. Census Bureau, OnTheMap Application and LEHD Origin-Destination Employment Statistics County Share of Workers Sherburne 42.5% Anoka 15.7% Wright 11.8% Hennepin 10.1% Mille Lacs 4.0% Isanti 2.2% Stearns 1.9% Ramsey 1.6% Benton 1.0% Dakota 1.0% Other Counties 8.2% SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 10 Work Destination Counties of Elk River Residents Source: U.S. Census Bureau, OnTheMap Application and LEHD Origin-Destination Employment Statistics The following graphs provide a demographic snapshot of Elk River’s workforce. Elk River’s workforce is quite similar in its age profile to the state as a whole. Earnings are a bit lower (as would be expected in a greater Minnesota community), but not dramatically lower. And the education levels of workers are also a bit lower than the state average. County Share of Workers Hennepin 38.8% Sherburne 21.3% Anoka 14.5% Ramsey 6.8% Wright 5.0% Dakota 2.5% Stearns 2.0% Washington 1.1% Scott 0.8% Mille Lacs 0.8% Other Counties 6.4% SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 11 Industry Mix A defining characteristic of any local economy is the type of economic activity that its businesses are involved in. Any city or county or region will have industries or business types that are particularly prevalent. One way of characterizing this business mix is through analyzing the NAICS (North America Industry Classification System) categories of an area’s businesses. For cities, data is available that breaks down employment into 21 NAICS categories. For larger geographies, a greater number of industry subsectors can be analyzed. The bar chart below shows the ten industry categories in Elk River that represent the highest shares of employment. For example, 16.1% of the jobs in Elk River are with businesses that are in the manufacturing sector. 14.4% of Elk River jobs are in retail sector businesses. And so forth. In each case the share of employment in Elk River is compared with that industry’s share of total employment state-wide. Note that 75% of jobs in Elk River are in just seven industry sectors: • Manufacturing • Retail trade • Educational services • Public administration • Health care and social assistance • Construction • Accommodation and food services SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 12 These seven industry sectors comprise the core of Elk River’s economy. Of the seven core industries, five are distinctively strong in Elk River compared with other parts of the state. Those five industries are: • Manufacturing • Retail trade • Educational services • Public administration • Construction These five industries represent the unique strength of Elk River’s economy. And they comprise 61% of all of its jobs. This business mix benefits Elk River. It is diverse, and it includes three sectors that tend to provide well paying jobs—manufacturing, public administration and construction. Additionally, manufacturing as the leading industry sector sector in Elk River, benefits Elk River in that it is a basic industry. That means its products are sold to customers outside of the area. Those revenues come in to Elk River manufacturers, are paid to their employees, and recirculate through the local area. Average Wages by Industry, Sherburne County, 2019 Average Weekly Wage Average Annual Pay Manufacturing $1,157 $60,163 Retail Trade $589 $30,624 Educational Services $489 $25,419 Public Administration $999 $51,964 Health Care and Social Assistance $786 $40,859 Construction $1,237 $64,342 Accommodation and Food Services $299 $15,538 Other Services (excluding public administration) $434 $22,589 Transportation and Warehousing $865 $44,993 Management of Companies $2,202 $114,521 SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 13 A more complete inventory of Elk River’s industry sector mix is represented by the pie chart below. Source: U.S. Census Bureau, OnTheMap Application and LEHD Origin-Destination Employment Statistics The following table provides a deeper additional analysis of Elk River’s industry mix. It lists each of the city’s industry sectors starting with those which are most dominant in Elk River. The ratio of the sector’s share of Elk River’s employment to the sector’s share of Minnesota’s employment is called the location quotient. The manufacturing sector, for example, comprises 16.1% of Elk River’s jobs, and only 11.2% of the state’s jobs. The location quotient for the manufacturing sector is 1.43, because 16.1% ÷ 11.2% = 1.43. When location quotients are higher than 1, that mean that the economic sector is an over- represented industry sector in the local economy—which may represent a local economic strength. The final column of the table takes the ratio of the current and past location quotient to show whether the industry sector is strengthening or weakening over time. The sector has strengthened as a component of the local economy if the change in location quotient is higher than 1.0. SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 14 Elk River Industry Mix - Location Quotient and Shift Share Analysis Industry Sector 2017 2010 Location Quotient 2017 Location Quotient 2010 Change in Location Quotient Elk River Minnesota Elk River Minnesota Job Count Share of All Jobs Job Count Share of All Jobs Share of All Jobs Share of All Jobs Manufacturing 1,891 16.1% 319,785 11.2% 11.7% 11.5% 1.43 1.02 1.40 Retail Trade 1,698 14.4% 287,652 10.1% 14.7% 10.8% 1.43 1.36 1.05 Educational Services 1,686 14.3% 266,547 9.4% 13.5% 9.7% 1.53 1.38 1.11 Public Administration 1,049 8.9% 125,567 4.4% 9.7% 4.6% 2.02 2.12 0.95 Health Care and Social Assistance 1,019 8.7% 482,650 17.0% 18.0% 16.4% 0.51 1.10 0.47 Construction 832 7.1% 128,442 4.5% 3.8% 3.3% 1.57 1.13 1.39 Accommodation and Food Services 767 6.5% 225,039 7.9% 4.1% 7.5% 0.82 0.54 1.53 Other Services (excluding Public Administration) 536 4.6% 92,891 3.3% 5.4% 3.4% 1.40 1.58 0.88 Transportation and Warehousing 441 3.8% 83,825 2.9% 4.0% 2.6% 1.27 1.54 0.82 Management of Companies and Enterprises 391 3.3% 84,362 3.0% 1.7% 3.8% 1.12 0.44 2.57 Professional, Scientific, and Technical Services 351 3.0% 163,548 5.7% 2.3% 5.0% 0.52 0.45 1.14 Finance and Insurance 253 2.2% 138,793 4.9% 1.7% 5.0% 0.44 0.34 1.29 Administration & Support, Waste Management and Remediation 243 2.1% 129,578 4.6% 3.8% 4.6% 0.45 0.83 0.54 Wholesale Trade 154 1.3% 133,538 4.7% 1.9% 4.9% 0.28 0.38 0.74 Utilities 106 0.9% 14,278 0.5% 0.5% 0.5% 1.80 0.89 2.02 Mining, Quarrying, and Oil and Gas Extraction 93 0.8% 5,740 0.2% 0.5% 0.2% 3.92 2.62 1.50 Real Estate and Rental and Leasing 89 0.8% 35,226 1.2% 0.6% 1.5% 0.61 0.37 1.64 Arts, Entertainment, and Recreation 88 0.7% 51,657 1.8% 1.0% 1.7% 0.41 0.57 0.73 Information 51 0.4% 52,669 1.9% 1.3% 2.2% 0.23 0.57 0.41 Agriculture, Forestry, Fishing and Hunting 20 0.2% 22,601 0.8% 0.1% 0.7% 0.21 0.10 2.11 Total 11,758 100% 2,844,388 100% 100% 100% SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 15 The preceding information is summarized in the following table for Elk River’s top ten industry sectors. Higher wage industry sectors are in bold. Elk River’s Top Ten Industry Sectors Strengthened from 2010 to 2017 Had similar strength from 2010 to 2017 Weakened from 2010 to 2017 Over-represented in Elk River economy compared with the state economy • Manufacturing • Construction • Retail Trade • Education Services • Public Administration • Other Services (excluding public administration) • Transportation & Warehousing Similar share of Elk River economy compared with the state economy • Management of Companies Under-represented in Elk River economy compared with the state economy • Accommodation & Food Services • Health Care & Social Assistance SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 16 This analysis points to the value of continuing to foster the manufacturing sector in Elk River. It indicates the benefit to Elk River of being the location of both Elk River and Sherburne County offices. It suggests there may be value in understanding and fostering the Elk River construction sector more intentionally. It raises the possibility that there may be opportunity to solicit additional health care facilities in Elk River. Development Trends Much of Elk River’s development over the past decade has been in the form of housing development. According to ESRI business analyst, Elk River had 8,542 housing units in 2010, and 9550 in 2020. Of that thousand new housing units, the great majority were single family homes and townhomes. The map below provides an overview of new development in Elk River. It locates all new commercial development (which in real estate terminology includes multifamily rental housing) that has been completed in Elk River since 2010, according to the records of Costar, a real estate data provider. Two general occupancy apartments were developed in 2011 and 2014 near Elk River’s Northstar commuter rail station. Senior living facilities were completed in 2017 and 2018 in west and central Elk River respectively. SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 17 Two industrial businesses built large new facilities, in 2014 and 2016. And three new retail properties were developed. Retail Market Context From Highway 10 up to 198th Avenue, the Highway 169 corridor in Elk River offers an array of businesses that provide an aggregate 2 million square feet of retail floor area. This retail district is anchored by a Walmart store, and several grocery stores including Cub Foods and Coborns. An additional 450 square feet of retail businesses are located along the Highway 101 corridor just south of the Mississippi River, anchored by a Target Store. These two highway oriented retail districts operate to some extent as a single destination retail area. They were largely built out by 2010. The closest competing highway oriented retail district to the Elk River/Otsego district is in Rogers, with a distance of around 8 miles between the center of the two districts. The highway oriented retail district in Rogers provides around 2.8 million square feet of retail just on the north side of Interstate 94. Because of the close proximity of a large highway oriented retail district in Rogers, the trade area for the Elk River/Otsego retail district will be predominantly to the north of the Mississippi River. The presence of competing Target and Walmart stores is one influence on the trade area for a Target or Walmart anchored destination retail district. The map below shows an approximate trade area for the Elk River/Otsego retail district. Elk River/Otsego Highway Oriented Retail District – Approximate Retail Trade Area SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 18 The retail market has undergone a shock due to the Coronavirus pandemic. And its effects have differed greatly between business types. A full recovery will take at least a couple of years. In the meantime the pandemic will have shaped consumer preferences and habits in ways that will be longlasting. One significant change may be a further shift away from store-based retail to various retail delivery models. That may slow future new retail development in Elk River for a time. Residential Market Context Residential development has not been sidelined by the pandemic in the same way as the retail sector has. Owner occupied single family homes and townhomes will continue to be in demand, bolstered by the quality of life investments that the City has been making. Based on the 2015 Housing Needs Assessment, and our experience in similarly situated cities, there will be an ongoing demand for a range of multifamily housing products in Elk River. Developers of market rate apartments will be selective about location, seeking areas with a strong set of locational amenities. Locations of interest may include sites near downtown Elk River, or near the Mississippi River or other waterfronts. Such locations will often require redevelopment of already developed properties. For that reason, and because of the high cost of new construction, City financial support will generally be required to make new multifamily development projects financially viable. Industrial Market Context Elk River has a lot to offer industrial businesses. It has excellent access to transportation arteries to the north, south, east and west; an existing concentration of manufacturing businesses; a high quality utility infrastructure including reliable municipal energy; and access to a high quality workforce. For businesses and distributors that primarily serve the Twin Cities Metro, however, there are numerous competing locations that are closer to their customer base. With clear marketing, and improvements to the availability of development sites, new industrial development should continue to occur at a measured pace. Other Research In additional to the investigations and findings detailed above, the Stantec team broadened its understanding of the Elk River economic context, its needs and its opportunities through a number of other avenues. Elk River EDA. The EDA offered its perspectives and insights during an introduction meeting and at the first EDA Workshop. Focus Groups. Three focus groups were convened that focused on Manufacturing and Industry, Downtown Elk River, and Manufacturing and Industry. Peer city benchmarking. We identified Forest Lake, Oakdale and Chaska as peer cities. For each city we conducted one to two very informative interviews that were two SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 19 hours in length to explore their management of economic development topics that are important in Elk River. Elk River staff participated in interviews. Interviewees were: • Dan Undem, Assistant City Administrator, Forest Lake • Nate Kabat, Assistant City Administrator, Chaska • Bob Streetar, Community Development Director, Oakdale Individual interviews. Individual interviews were conducted with the following people. • Paul Erickson, Founder and former Executive Director of the National Sports Center in Blaine. Mr. Erickson offered his expertise and insights on the potential for sports tourism in Elk River. • Tim Storey, real estate broker and hotel market specialist, Cushman Wakefield. Mr. Storey provided his thoughts on the potential for hotel development in Elk River. • Amy Lord, Career and Technical Training Coordinator, ISD 728. Ms. Lord was interviewed about opportunities for deepening workforce training strategies in Elk River. Elk River Staff. Elk River staff have been readily responsive in providing information and serving as a sounding board through the course of this stufy. They also served as tour guides for an Elk River site visit to many of the locations that are discussed in this report. Each of these additional points of input and perspective have been critical in shaping the recommended strategies in the next section of this document. SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 20 PART 2: RECOMMENDED STRATEGIES SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 21 ECONOMIC DEVELOPMENT STRATEGIES The research and analysis in the preceding section sets a foundation for considering a menu of strategies for strengthening Elk River’s already healthy economic context. The proposed strategies fall under 15 economic development topics, which are themselves grouped under six general headings, as follows. Highway 169 Redefine 1. Highway 169 Redefine Business Attraction & Retention 2. Business Attraction 3. Land Availability 4. Target Industries 5. Business Retention & Expansion 6. Incentives for Business Attraction/retention Redevelopment & Catalyst Sites 7. Gravel Mining Area 8. Downtown Elk River 9. Great River Energy Site 10. Incentives for Redevelopment Quality of Life 11. Downtown Quality of Life 12. Mississippi River Access Tourism 13. Sports, Mountain Biking, & ERX Tourism 14. Hotel Development COVID Economic Recovery Programs 15. COVID Economic Recovery Programs SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 22 HIGHWAY 169 REDEFINE The redesign and reconstruction of Highway 169 through Elk River is a high priority for Elk River and its EDA because it is underway and it will have significant economic, quality of life, and visual impacts on the City. SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 23 1. STRATEGY: HIGHWAY 169 REDEFINE The reconstruction of Highway 169 raises concerns and presents opportunities. In the short run it will present challenges for highway oriented businesses, with additional barriers to access. In the long new the reconstruction will relieve traffic congestion that has itself been an impediment to business success. It will make some properties along the freeway more desirable for new development and redevelopment. And it will provide an opportunity for enhancements that can contribute to Elk River’s branding. Cities can impact highway design in ways that a) add artistic elements, distinctive features or branding, b) ensure adequate wayfinding to highway oriented businesses and downtown areas, c) maintain access to businesses during construction. The images below are taken from highway redevelopment projects, and demonstrate construction enhancements that have been done in other cities. It would be timely for the City to engage substantively with the 169 Redefine project planning in new ways to ensure that impacts to businesses are being mitigated, and potential opportunities for City branding and beautification are part of the conversation. I-35E Noise Wall, Vadnais Heights Burnsville Parkway Bridge, Burnsville Strategies/Actions 1a. Prepare and implement a City advocacy strategy for the 169 Redefine project. It should include a constructive statement of Elk River’s aspirations for desired outcomes from the project, including elements such as signage to downtown Elk River and enhancements that add distinctiveness to Elk River’s northern gateway. It should note the importance of mitigating impacts to existing businesses, and of providing effective temporary wayfinding and physical access. The strategy would map out an action plan for sustained advocacy throughout the duration of the project. SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 24 BUSINESS ATTRACTION & RETENTION Business attraction and retention is a core area of responsibility for the local government’s economic development function. Through this project’s Request for Proposal, and conversations with staff and EDA members, some important strategic questions were raised that fall within this overarching topic. • Are the target industries that have been the focus of business recruitment still appropriate? • How are the limitations in land availability affecting business attraction, and how might the supply of land be opened up? • How effective and appropriate are Elk River’s use of incentives for attracting new business development? The strategies that follow address these questions and others, and provide a review of the City’s business attraction and retention practices generally. SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 25 2. BUSINESS ATTRACTION Elk River is active in marketing itself for business development. Its website and marketing materials are attractive. The website provides a good menu of resources that may be of interest to a new business or site selector. City staff regularly field calls from businesses and site selectors who are exploring development or starting a business in the City. Staff attends trade shows that build relevant connections and relationships. Elk River offers a rich cluster of strategic advantages that can be touted. These include its central location at a transportation crossroads, its reliable utility infrastructure, its tradition of manufacturing, its high design standards for new development, and the workforce development linkages that it promotes with local businesses. The high quality design standards that pertain to new industrial development in the Northstar Business Park are understood to make development too expensive for certain kinds of businesses. But it is attractive to businesses who want to develop a facility where their quality of development will be matched—because that protects their image and it protects the value of their investment. Businesses that require a lower standard of development can be accommodated in alternative Elk River locations. Acknowledging the overall quality of Elk River’s marketing materials, an area of improvement would be to make sure that the core strengths of an Elk River business location come through consistently and clearly in every publication. Those strengths— most importantly its transportation connectedness, the quality of the local utility infrastructure, and its concentration of high quality manufacturers—are defining assets of an Elk River location, and should be repeatedly called out in the City’s marketing materials. A City’s reputation for being business friendly really matters to prospective new business development. From our conversations we gathered that Elk River is recovering from some negative perceptions in the past. That recovery process takes time, and needs to continue. Note that cities can have high development standards and still be business friendly if requirements are transparent, processes are streamlined, and staff is service-oriented in helping businesses negotiate the processes. Strategies/Actions 2a. Continuing the present array of marketing and networking activities to attract new business investment and development. 2b. Continue conveying a customer service orientation to the City’s business community, and making continuous quality improvements to City development processes 2c. Sharpen the message about Elk River strengths, and make that prominent and repetitive in marketing and communications materials. SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 26 3. LAND AVAILABILITY The availability of land is a key factor in attracting new industrial development, as is the readiness of the land for development. The City of Elk River owns two sites in its Northstar Business Park, a 4-acre parcel and a 12 acre parcel. Additional land for new industrial development is in short supply, as are large sites suitable for industrial development. Two locations have been discussed for future industrial development. 1) Some of the reclaimed land in the City’s gravel mining area can be guided for industrial development, but that will have to wait until the completion of mining in certain areas. 2) Cargill has abundant land holdings along and near 165th Avenue NW, some of which is not currently utilized and would be well suited to industrial development. Elk River staff have not had recent conversations with decision makers at Cargill to discuss Cargill’s plans for this land. Strategies for teeing up land for industrial development was a topic of conversation in our peer cities interviews. Economic development leadership in Oakdale and Chaska had successful track records in establishing an industrial development pipeline in local industrial parks. They had different philosophies regarding whether cities should take ownership of land. But they agreed on core elements of how to make development parcels ready to go, and thereby increase the attractiveness of their industrial parks. Land, with the support of the land owner, should be master-planned with road layouts and conceptual parcels that meet the needs of today’s industrial development market. It should be zoned appropriately. The availability of utilities should be ensured. Decisions should be made concerning how road and utility costs will be shared between the developer and the City. A map of the business park, that clearly indicates development parcels, should be created to convey the availability of land and an organized municipality. (An example of such a map, in North Mankato, is at left.) SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 27 Strategies/Actions 3a. Develop business park site maps for future and existing industrial parks to include in materials for site selectors, interested businesses and developers. 3b. As new industrial land comes online, engage in master planning and related activities that increase the readiness of the land for development, and include the availability of large industrial lots. 3c. Make a creative push for engaging with Cargill about their plans for their Elk River property. The conversation can encompass learning about Cargill’s plans and intentions, the potential of making their land available for industrial development, and their interest in collaborating with Elk River on fostering synergistic food- related enterprises in the area or in Elk River more broadly. Stantec has made contact with Government Affairs staff at Cargill, and they have expressed interest in meeting with the City to discuss respective interests and future opportunities for collaboration. 3d. As the visions for early phases of the Gravel Mining area are updated, consider guiding some of that land for industrial park development. SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 28 4. TARGET INDUSTRIES The City of Elk River benefits from having identified target industries as a focus for its industrial recruitment. It may welcome a broad range of industrial businesses that contribute to the City’s tax base and meet its standards for high quality appearance, but having identified target industries provides a focus to its outreach efforts. If those industries align with Elk River’s comparative advantages, they also contribute to the City’s marketing about what is special about the City’s economic development context. The City’s existing target industries are medical device manufacturing, light manufacturing, energy, and data centers. In our interviews we heard a concern from a medical device manufacturer that the skilled workforce for that industry may already be a little stretched locally, so attracting similar businesses to the area may create issues of workforce depth. That argues for broadening the target industry beyond its current medical specialization. We suggest the following targets because they reinforce messaging about the key comparative advantages that Elk River offers. • Precision or high-skill manufacturing. This is a little broader than medical device manufacturing. It reinforces the existing manufacturing ecosystem in Elk River, including its attention to workforce development, and sets an ambitious tone for the City’s aspirations. Precision manufacturers require stable, reliable energy which Elk River offers. • Companies with statewide or regional customer bases. This reinforces the fact that Elk River is situated at a transportation crossroads, and in fact has outstanding access to greater Minnesota, and especially northern Minnesota. • Data centers. Identifying this as a target industry reinforces messages about the quality and reliability of Elk River’s electrical utility. The health care and social assistance sector emerged from the industry sector analysis as a business sector that has a lighter than average presence in Elk River. Health care and social assistance jobs are less than 9% of Elk River’s job base, but around 17% of the jobs of the state as a whole. That suggests that Elk River residents may be underserved by health care providers, and that health care providers may see an opportunity in expanding into Elk River. Moreover, the jobs in this sector tend to be medium to high wage jobs. The Stantec team did not conduct research on the potential for attracting additional health care providers to the City. But because of the positive impacts associated with health care jobs, that is a possibility worth exploring. Strategies/Actions 4a. Update the target industries list in a way that reinforces key messages about Elk River's strategic advantages. Recommended target industries are: a) Precision or high-skill manufacturing, b) Companies with statewide or regional customer bases, c) Data centers SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 29 4b. Continue promoting the City for target industry attraction with site selectors, through attendance at trade shows, etc. 4c. Explore the opportunity for attracting additional health care development in Elk River. SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 30 5. BUSINESS RETENTION AND EXPANSION The business visitation program is a core activity in the City’s effort to retain its existing businesses and support their expansion—and by all accounts it is going well. A couple of visits are conducted each month. They encompass a formal survey, informal conversation and facility tours. Many of the visits are with newly established businesses, which provides an opportunity to ask about how City processes went, and to see if there are other ways that economic development staff can support the business. Amy Lord, the Career and Technical Training Coordinator from ISD 728, often participates in the meeting, bringing a focus on the workforce training needs of the business. The business survey has been another important resource for understanding the needs of the business community. A small business owner has to have a broad range of skills in order to run a successful business, but they are inevitably better at some things and less skilled at others. Technical assistance for businesses helps to fill in the information, training and skills gaps for small business owners in areas such as business planning, marketing, accounting, or human resources. This can be a lifeline for small businesses. Technical assistance providers may also be able to offer loans to meet certain business needs. Many cities partner with technical assistance providers to offer these services. Elk River does not currently contract with a technical assistance provider. The construction sector emerged from the sector analysis as a locally important industry sector. Elk River’s construction sector outperforms the state of Minnesota in terms of its share of Elk River’s jobs, and that share has grown over the past decade. Additionally, jobs in the construction sector are typically living wage jobs. Although we are not recommending that construction companies be included in the target industries list, these businesses play an important role in Elk River’s economy and for that reason are a category of business that deserves attention and support through the City’s business visitation program, to stay apprised of the industry and informed about how the City can support it. An additional need of the area’s business communities, as identified by Elk River’s Manufacturing and Industry focus group, and as is common to rural cities across the state, is the need for affordable housing, and for multifamily housing options more generally. The lack of these housing options can be an impediment to recruiting qualified workers for a job at a local business. Strategies/Actions 5a. Continue the business visitation program with an emphasis on strategically important businesses (including manufacturing and construction businesses) and newly established businesses 5b. Survey the business community annually as a follow-up to the recent business survey SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 31 5c. Consider contracting with a technical assistance provider (like MCCD’s Open to Business program) to make additional technical support services available to local businesses 5d. Look for opportunities to build and preserve multifamily and affordable housing options in Elk River SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 32 6. INCENTIVES FOR BUSINESS ATTRACTION/RETENTION For better or worse, public financial incentives that are offered to new industrial developments are a factor in their locational decisions. Having said that, incentives are usually not the overriding factor for a locational decision, because the fundamental strengths and weaknesses of a location have a greater impact on the long-run success of a business. Elk River has utilized a broad set of incentives to attract new business development, but for new development on previously undeveloped land, tax abatement has been the most important source of financial support—as is true for many similar cities. When Elk River provides tax abatement for new facility development, it benefits from the practice of Sherburne County to match its abatement with a comparable abatement of county property taxes. That essentially doubles the impact of Elk River tax abatement decisions. The level of incentive provided to a development is subject to negotiation between the City and the developer. Some cities establish clear policies relative to the level of tax abatement they will provide, which simplifies communication and reduces the time involved in negotiation. Chaska is an example of that, as we learned in our peer city interview with Assistant City Administrator Nate Kabat. The City offers new businesses/expansion tax abatement for a total of three times the annual total of new property taxes generated. The City of Elk River could also establish policies that provide for a certain level of tax abatement for target industries and a different set for other industrial development. We see a benefit to Elk River in establishing a policy that sets an attractive yet reasonable level of tax abatement support that is available, and in so doing reduces the negotiation that is required for determining the level of incentives for any given business applicant. The Business Microloan program has a number of subprograms, some of which have been seldom utilized. A review of little used programs could result in allowing some to expire. In other cases the subprogram may require additional resources to be useful to its intended recipients. Strategies/Actions 6a. Establish a tax abatement policy that sets a standard for the amount of tax abatement the City will provide for business attraction. 6b. Reevaluate the subprograms encompassed under the Business Microloan program, and determine whether underutilized programs should be eliminated or retooled. 6c. Increase marketing for the newly adopted Energy Incentive Program to increase its visibility and utilization. SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 33 REDEVELOPMENT AND CATALYST SITES Elk River has some significant areas that are conducive to new development and redevelopment in the future. The consultant team focused our attention on three of them. They are: • The gravel mining area • Downtown Elk River • The Highway 10 Great River Energy property We evaluated the plans for these areas for their sufficiency in guiding development, addressing challenges to development and articulating appropriate implementation strategies. Elk River has also requested guidance concerning the City’s use of incentives to support redevelopment. SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 34 7. GRAVEL MINING AREA A large amount of land will be reclaimed for development in northern Elk River as gravel mining operations are completed. That will occur in phases. In 2015, when the Gravel Mining Area Land Use, Transportation, and Utility Plan (Gravel Mining Plan) was adopted, some parts of the gravel mining area were expected to be available for redevelopment by 2020. Mining would cease in other parts of the area over a 20+ year period. As of late 2020, land has not yet been reclaimed and made available for redevelopment in any part of the gravel mining area. And the timeline outlined in 2015 has not to our knowledge been updated by the mining operators. The consultant team has reviewed the 2015 Gravel Mining Plan. It is thorough and provides appropriate guidance, with a primarily engineering focus. The vision for future development that it offers was reasonable when it was adopted, but the market for new development has undergone significant change since that time. The needs of the City may have changed as well. A specific concern of the consultant team is that the amount of retail land that is proposed may exceed the demand for new retail. Because of these considerations, we would recommend a fresh look at the development vision when the opportunity for development is becoming imminent. An updated plan should evaluate current retail demand, and it should reflect an updated sense of the City’s need for housing and industrial land. With that update, the City can also take additional implementation steps that will support the attraction of high quality development to the site. A master plan of the area can be developed based on the updated vision, which would include a more detailed street grid, and conceptual platting. Zoning should be changed to reflect the master plan. And planning for the provision of street and utility infrastructure can be advanced. SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 35 Strategies/Actions 7a. In collaboration with the gravel mining company, update the phasing plan for completion of mining activities 7b. At around 3 years from when the first phase of land will be ready for redevelopment, undertake a set of actions that set the stage for attracting new development o Update the development vision to reflect current market demand and needs for retail, housing and industrial land o Create a detailed master plan that includes a concept for local roads and platting o In the area identified as Phase I of land reclamation and development, take City actions that commit to extending Proctor Road NW as proposed, and extending water and sewer services o Prepare cost estimates for roadway and utilities, and determine cost sharing approach with developers SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 36 8. DOWNTOWN ELK RIVER Downtown Elk River is a traditional storefront business district that has retained its integrity and architectural character. Building facades have been by and large maintained, and the district has been enhanced by new public space connecting it to the Mississippi riverfront. As an event and civic gathering place it makes a really important contribution to Elk River’s quality of life. As a location for new development, the City’s vision is less clear. There is developer interest in Downtown Elk River, as one of the premier addresses in the City. But there seem to be different views about the desirability and character of additional development downtown. And there are valid concerns about impacts to downtown related to traffic congestion and the availability of parking. The plan for Downtown Elk River is called Mississippi Connections Redevelopment Framework (Mississippi Connections). It was adopted in 2012. Mississippi Connections captures the City's hopes and goals related to the downtown area, and set the stage for some important implementation actions. However, it does not provide guidance for key aspects of downtown Elk River’s future. It doesn’t identify development opportunity sites, or provide the traffic and parking analysis that would address community concerns proactively so as to take the burden of analysis off of individual developers. Our experience has led us to value new development in the areas in and around traditional storefront districts because of the vibrancy they add, the activation of street life, and the economic support they provide to downtown businesses. Perhaps the business district will continue to thrive based primarily on destination customers. But it is an uncertain time for retail businesses and restaurants. And the addition of housing density in walking distance of downtown businesses would add an important additional pedestrian-oriented submarket for local businesses. We believe that additional opportunities for development in and near downtown Elk River exist, and such development would add vibrancy to the downtown area. SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 37 Having said that, there certainly are reasons to be cautious about new development in and near downtown Elk River. Done poorly, new downtown development could fail to activate the pedestrian realm, and it could be less compatible with existing development than would be desired. Clear development guidelines are needed to ensure that new development makes a full contribution to downtown vibrancy, and is compatible with existing development. We believe it benefits Elk River to update its downtown plan to build consensus around how downtown development can benefit the City, and to proactively address concerns about parking and traffic. Strategies/Actions 8a. Create a plan for downtown Elk River that honors its special role in Elk River, explores the potential for new development, further strengthens its connections to and along the River, and addresses concerns about parking constraints and traffic congestion. SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 38 9. GREAT RIVER ENERGY SITE The decommissioned Great River Energy site on Highway 10 has outstanding development potential that may not be realized without near-term action to assess the opportunity it represents, and put guidance in place to realize its potential. The site on Highway 10 just north of the Highway 169 interchange, 17845 US-10, if positioned properly, may be the most attractive development location in Elk River currently. It is a very large property, offering flexibility in terms of site layout and mix of uses. It has views of and proximity to the Mississippi River on the west. It is centrally located in Elk River, close to downtown, and conveniently close to a destination retail district on the east. We imagine the frontage along Highway 10 to be highly attractive for multifamily housing development. In the absence of investigating its development potential, and making appropriate adjustments to development guidance, there is a risk of underdevelopment and missed opportunity. Strategies/Actions 9a. Create an implementation-oriented redevelopment plan for the US-10 Great River Energy property that takes into consideration current market conditions, the perspectives of the development community, and the potential for connections to downtown and the FAST area. SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 39 10. INCENTIVES FOR REDEVELOPMENT Redevelopment projects will typically require public sector financial support in all but the strongest market locations. This financial support is offset by the benefits that developments bring to local communities. They may provide housing formats that are needed, or add ground floor retail businesses. They may contribute activity and streetlife, remediate a site that was past its prime, and meet other identified public goals. They are generally speaking also beneficial in the long run from a public financial perspective—providing years of additional property tax revenues after the incentive amount has been recouped. The general need for and appropriate use of incentives for redevelopment was reinforced in our peer city interviews. Public financial support was required for most if not all redevelopment in Oakdale, Forest Lake and Chaska. Public financial support was also required for most new multifamily housing development. In Minnesota, the predominant form of financial subsidy for such projects is tax increment financing (TIF) where that is viable. TIF has two important benefits. First, it doesn’t come at the expense of other city budget items. It consists entirely of future property tax revenues, which are returned to the developer or developer’s lender for a certain number of years. Second, the City’s share of foregone property tax revenues are matched by the contribution of county and school district property tax revenues. That is a differentiator in comparison to tax abatement, because City tax abatement actions are only matched by the county and school district if they also explicitly take that action. The concern about over-enriching a developer by awarding TIF financing can be mitigated by having the TIF request analyzed by the City’s financial advisor. Strategies/Actions 10a. Update the City's tax increment financing policy statements to support its use for any redevelopment project, housing project, or mixed use project that is consistent with City plans and policies 10b. Utilize the City's financial advisor to ensure that tax increment financing is scaled to the genuine needs of the project SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 40 QUALITY OF LIFE The City of Elk River has placed a clear emphasis on enhancing its amenities to support a high quality of life for its residents. Active Elk River is a clear current demonstration of that. It is enlightened and far-reaching, resulting in improvements to parks, recreation and community spaces. Beyond adding to the enjoyment and health of residents, quality of life investments are economic development strategies. They contribute to the economic vitality of the City. They have marketing value for attracting new residents and population growth. And many businesses prefer to locate in locations with a positive community identity, and where there is an educated and capable workforce. Elk River’s EDA may not be the lead entity for advancing quality of life strategies, but the EDA does play a role in advocating for the economic competitiveness of Elk River in a broader sense. For that reason we’ve highlighted the importance of quality of life considerations, and highlighted a couple of specific quality of life strategies related to downtown Elk River and its Mississippi River riverfront. SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 41 11. DOWNTOWN QUALITY OF LIFE Development and development planning for downtown Elk River was discussed above. This section recognizes the importance of the multiple strategies associated with activating and enlivening downtown. That encompasses strategies such as marketing, branding and communications, facade improvements and streetscaping, and event programming. The property owners and businesses in a storefront business district often provides leadership for these kinds of activity, and research shows that the organizational energy and capacity of that business group makes a pivotal difference in how effectively the district is branded and activated. Programs of this kind can be affiliated with an umbrella organization and structure, such as the National Main Streets program. Or they can be independent, drawing ideas from any number of examples, and from their own inspiration. Downtown Elk River has done very well. With support from the City and local businesses it has remained attractive, has built a beautiful public space at its heart that connects to the river, and hosts numerous festivals and events. In our focus group and other conversations we learned that the businesses vary in terms of the sufficiency of their customer support, and some of the older buildings are due for significant rehabilitation if they are to continue to be viable into the future. We recommend consideration of creating a downtown special service district. Downtown Elk River is certainly significant enough to warrant one. From the City perspective that would add an organized partner and downtown advocate that is focused entirely on downtown Elk River. From the perspective of the business community, it is a form of self-organizing that gives the business community a clear voice and greater ability to weigh in on the investments and activities they feel are most beneficial to downtown. It also ensures that the contributions of the business community to district enhancements, marketing and events are shared more equally. The levy level can be proposed by the business community itself at a level that will result in majority support for the levy. SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 42 Strategies/Actions 11a. Continue downtown Elk River’s successful marketing and events 11b. Continue providing funding for building rehabilitation and facade improvements, making adjustments to resources and partnering strategies in order to meet real world needs. 11c. Work with property and business owners to establish a downtown special services district (SSD) to create new capacity and energy for downtown's image, marketing and events. Collaborate with the SSD in the maintenance and improvement of downtown, and the administration of downtown's programmatic activities. SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 43 12. MISSISSIPPI RIVER ACCESS For all of its commitment to quality of life investments, including the development of the beautiful riverfront plaza space in downtown Elk River, there is opportunity for improving the City’s access to its riverfront. Elk River has a trail plan that includes extending trails along the river in both directions from downtown Elk River. Trails along the Mississippi Riverfront would be highly popular, and if the experience of other cities is a guide they will be heavily utilized. From a real estate perspective, water access and trails spur development. There are few amenities that are more attractive than water proximity, and the availability of trail systems, and Mississippi River trails connecting to downtown would extend the development value of downtown Elk River to locations upstream and downstream. As a specific example, a trail downstream and south from downtown Elk River would enhance the value and attractiveness of the already strong Great River Energy site on Highway 10. If extended further to the south of Highway 101 it would also provide additional value and attractiveness to riverfront properties south of the Highway 101 bridge, including the vacant automobile sales lot on Zane Street. Another way to increase the relationship of Elk River to the river would be to explore how some of the existing or future downtown development could be positioned to improve its orientation toward the Mississippi River. Strategies/Actions 12a. Continue building out the City's trail system along the Mississippi River, with a priority on trails connecting downtown Elk River to locations upstream and downstream of downtown. 12b. As part of an updated downtown development plan, explore ways to increase the orientation of some downtown businesses and development toward the river. SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 44 TOURISM Tourism strategies are valued from an economic development perspective because they bring visitor expenditures into the local economy. The Elk River EDA and its staff have identified a set of amenities that have potential for being marketed more broadly and enhancing tourism in Elk River. They have also observed that the limited number of hotel options is a constraint for attracting overnight visitors to Elk River. The two strategies in this section focus on a) the tourism potential related to Elk River’s sports infrastructure, its mountain biking trails, and the ERX facility, and b) the potential for attracting additional hotel development in Elk River. SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 45 13. SPORTS, MOUNTAIN BIKING AND ERX TOURISM Elk River’s EDA and economic development staff is well aware that the attractiveness of City amenities draws visitors from well beyond its borders. The question it has asked as part of this study is: • Can the attractiveness of its sports facilities and parks and ERX events be further leveraged to create an expanded economic impact from tourism to Elk River? Because these three amenities attract a different visitor pool, and operate in different competitive contexts, an individual analysis is required for each in order to fully answer the research question. While it wasn’t possible to give full consideration to all three of these opportunities, we did dedicate time to sports tourism research, and that included connecting with one of the premier sports tourism experts in Minnesota. This research also provides perspectives that are relevant to the other two tourism focus areas. Sports tourism. The quality and number of sports venues in Elk River is enjoyed locally and could plausibly be leveraged to attract additional sports events and foster sports tourism. Topical research on sports tourism yielded the following information, summarized from Sports Tourism: State of the Industry Report. • Nearly 180 million people traveled to a sports event in the U.S. in 2019 either as a participant or spectator, which generated 69 million room nights. • Sports travelers, event organizers, and venues spent $45.1 billion in 2019, which generated $103.3 billion in business sales when including indirect and induced impacts. • A total of 739,386 jobs were sustained by sports tourism in 2019. This included 410,762 direct and 328,624 indirect and induced jobs. • Sports tourism generated $14.6 billion in tax revenues in 2019, with $6.8 billion accruing to state and local governments. • An estimated 54% of all sports travelers spent the night in the event destination, which generated 69 million room nights in 2019. When Elk River sports venues are mapped out and compared to neighboring cities, it can be observed that Elk River offers more high quality baseball diamonds, softball diamonds and ice sheets than any other cities between the Twin Cities Metro and St. Cloud. A challenge the city faces, however, is that the City is not far enough away from the Twin Cities Metro and St. Cloud that sports participants and spectators from those cities are likely to want to spend the night in Elk River. They may purchase gas in Elk River or go out during or after the event to a bar or restaurant, but the economic impact of those purchases are limited when they don’t involve an overnight stay. SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 46 To bring more information and insight to this question, the consultant team reached out to Paul Erickson, the founder and longstanding former Executive Director of the Minnesota Sports Center in Blaine, to get his perspective and insights on the potential of sports tourism in Elk River. (Mr. Erickson has also consulted with other cities in Minnesota concerning about their potential for attracting sports tourism, and worked with them on developing the organizational infrastructure for doing that.) We provided him with our research on the inventory of Elk River sports venues and how that compares with neighboring cities. Mr. Erickson provided the following observations. • Elk River has a good reputation as a quality growing community with many new facilities. • Elk River has an excellent reputation in producing certain quality sports programs, including ice hockey. • Elk River has a limited history of creating and hosting large amateur sports events. • Of the top eight amateur sports, it appears that the Elk River region may only have multiple fields to support major softball and baseball events. (Note that stand-alone 4 field softball complexes and 2-sheet ice arena complexes are fairly commonplace in Minnesota.) • Due to Elk River’s proximity to the Twin Cities region, most sports visitors from the metro area would not stay overnight in a local hotel and may not eat any meals in Elk River restaurants. Economic Impact from sports is derived primarily from overnight stays and restaurants. Given these observations, there doesn’t seem to be a high likelihood of achieving a significantly greater economic impact from sports tourism. Having said that, there is certainly value in a set of activities that may require a lower level of effort. Those include using the events at Elk River’s premier facilities as a marketing focus for the City, and exploring ways of cross-marketing city restaurants, stores and events to the users of the City’s sports venues. Mountain biking tourism. The tourism potential of mountain biking in Elk River is subject to many of the same considerations as sports tourism. There is no disputing that Elk River has high quality trails for mountain biking. But major mountain biking events are limited. The Minnesota Mountain Bike Series, for example, consists of ten events in ten different cities. It would certainly benefit Elk River to be on that circuit as often as possible, but it doesn’t appear that there are many such large-scale events for the state’s mountain bike community. Moreover, the tourism benefit of attracting mountain bike visitors to Elk River is limited by the same expectation as sports tourists—that most visitors will not combine their visit with an overnight stay in Elk River. The economic development opportunity seems to be in marketing the quality of the trails in Elk River, and in publicizing any major events that happen locally. ERX tourism. ERX is a known tourist attraction with a steady stream of events. Undoubtedly some the event attendees are staying overnight in Elk River, although again most will not. There is an economic benefit to capitalizing on ERX events by SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 47 drawing media attention to them. And there may be unrealized opportunities to cross- market Elk River’s retailers and other events to ERX attendees. Strategies/Actions 13a. Explore methods for cross-marketing Elk River’s stores, restaurants, and complementary events to visitors, participants, spectators and attendees of Elk River’s sports events, mountain biking courses, and ERX events. 13b. Solicit news coverage and other publicity for the broad range of events that are hosted in Elk River, and the quality of its parks, facilities and event venues. SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 48 14. HOTEL DEVELOPMENT The limited options for hotel stays in Elk River was noted by the EDA and staff as a limitation in attracting tourists. It was also noted as a limitation by a local business owner for hosting business relationship while they are in town. Elk River only has one nationally branded hotel—the three story, 77-room Country Inn and Suites near Highway 169 and School Street, built in 1997. Another hotel— a four story, 125-room Holiday Inn, is located right across the river in Otsego and also serves visitors to Elk River. Both are offering room rates currently at around $79 per night, although in all likelihood that’s heavily discounted because of the pandemic. Our understanding of Elk River’s development landscape leads us to believe that there are strong potential locations for an additional hotel. For a quick perspective on market demand for new hotel development we contacted Tim Storey—a real estate broker at Cushman Wakefield who specializes in hotel development—to talk about the prospects of attracting an additional hotel in Elk River. Mr. Storey made the following observations. • It’s obviously a challenging time. The entire industry is stressed by the decline in hotel occupancy. Lots of hotels are exploring conversion to apartments, or are working on debt restructuring. • The Holiday Inn in Otsego has been for sale for a while, which may not bode well for adding a hotel to the area. • A new hotel would not be a high amenity hotel. A smaller property with streamlined amenities might be a possibility, if it has a strong location. Cushman Wakefield and other brokerages could do further research on hotel viability in Elk River, and help to market a site to potentially interested hotel chains. But that’s a project that wouldn’t make sense until the dust settles on the currently challenging hotel economy. The value of having an additional hotel option should also be borne in mind as planning occurs for parts of Elk River that may be good hotel locations—including downtown Elk River and the Great River Energy site. SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 49 Strategies/Actions 14a. Identify opportunities for hotel development in future small area plans 14b. Consider a standalone hotel market study, after the hotel economy has recovered, which would offer deeper analysis of the market demand for a new hotel in Elk River, and the hotel brands that may be attracted to potential Elk River hotel locations. SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 50 COVID ECONOMIC RECOVERY PROGRAMS COVID has had tremendous impacts on many small businesses. For some, the financial stress that they’ve experienced will go on for some time. Local government can play a role in providing support. We foresee the likelihood that a federal infrastructure bill will be passed in 2021 with the purpose of stimulating economic recovery. Preparing one or more projects so they are ready to go would increase the likelihood that an Elk River project is awarded funds. SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 51 15. COVID ECONOMIC RECOVERY PROGRAMS A primary concern of local governments and communities has been the impact of the COVID pandemic on local businesses. Many local stores, service providers, bars and restaurants have experienced greatly reduced sales, have had to close temporarily, or have gone out of business. Elk River was prompt in taking proactive steps in support of its business community through a program to promote shopping locally, called “Together Elk River”, and through its COVID-19 Small Business Emergency Microloan Program. As the business impacts of the COVID pandemic continue, renewed efforts or additional steps could make a difference to local businesses. Six common forms of municipal support for local businesses are in the sidebar at right. Congress has considered but not passed an infrastructure bill in recent years. An infrastructure bill is likely to be considered again in 2021, with the additional focus of providing economic stimulus to the country. When an infrastructure stimulus bill was adopted during the Great Recession, projects needed to be ready to go in order to receive funds. If there are infrastructure improvements that the City has been contemplating in its road, trail or utility systems, it may benefit the City to be proactive in making selected projects “shovel ready” in the event that federal funds for that purpose become available. That may entail steps such as completion of conceptual design and engineering. Strategies/Actions 15a. As COVID pandemic impacts on local businesses continue, consider taking additional supportive actions. 15b. Set the stage for receiving potential 2021 stimulus or infrastructure funding by preparing one or more shovel-ready infrastructure projects. COVID Business Support Strategies in Minnesota Cities • Information clearinghouse/exchange. • Small business relief programs. • Technical assistance. • Reducing financial and procedural burdens. • Shop-Local campaigns. • Facilitating outdoor space for businesses. Click here for additional information Elk River EDA Strategic Plan - Prioritization Exercise Highest Impact (Choose 5 total)Low Hanging Fruit (Choose 5 total)Personal Enthusiasm (Choose 5 total)Timeline (Now, Next, or Later?) Notes 1a. Prepare and implement a City advocacy strategy for the 169 Redefine project, including desired enhancements and measures to mitigate adverse business impacts. 2a. Continuing the present array of marketing and networking activities to attract new business investment and development. 2b. Continue customer service orientation toward businesses, and making continuous quality improvements to City development processes. 2c. Sharpen the message about Elk River's strengths, and make that prominent and repetitive in marketing and communications materials. 3a. Develop business park site maps for future and existing industrial parks to include in materials for site selectors, interested businesses and developers. 3b. As new industrial land comes online, engage in master planning and related activities that increase the readiness of the land for development. 3c. Make a creative push for engaging with Cargill about their plans for their Elk River property. 3d. As the visions for early phases of the Gravel Mining area are updated, consider guiding some of that land for industrial park development. 4a. Update the target industries to reinforces Elk River's strategic advantages. Recommended: a) Precision or high-skill manufacturing, b) Companies with statewide or regional customer bases, c) Data centers. 4b. Continue promoting the City for target industry attraction with site selectors, through attendance at trade shows, etc. 4c. Explore the opportunity for attracting additional health care development in Elk River. 5a. Continue the business visitation program, emphasizing strategically important businesses and newly established businesses. 5b. Survey the business community annually as a follow-up to the recent business survey. 1. Highway 169 Redefine 2. Business Attraction 3. Land Availability 4. Target Industries 5. Business Retention and Expansion Page 1 Elk River EDA Strategic Plan - Prioritization Exercise Highest Impact (Choose 5 total)Low Hanging Fruit (Choose 5 total)Personal Enthusiasm (Choose 5 total)Timeline (Now, Next, or Later?) Notes 5c. Consider contracting with a technical assistance provider to make additional technical support services available to local businesses. 5d. Look for opportunities to build and preserve multifamily and affordable housing options in Elk 6a. Establish a tax abatement policy that sets a standard for the amount of tax abatement the City will provide for business attraction. 6b. Reevaluate the subprograms encompassed under the Business Microloan program, and determine whether underutilized programs should be eliminated or retooled. 6c. Increase marketing for the newly adopted Energy Incentive Program to increase its visibility and utilization. 7a. In collaboration with the gravel mining company, update the phasing plan for completion of mining activities. 7b. At around 3 years from when Phase I is ready for redevelopment, undertake a set of actions that set the stage for attracting new development. 8a. Create an updated downtown plan to honor its special role in Elk River, explore its development potential, strengthen its connections to the River, and address parking and congestion concerns. 9a. Create an implementation oriented redevelopment plan for the US-10 Great River Energy site that reflects its development potential. 10a. Update the City's tax increment financing policy statements to support its use for redevelopment projects, housing projects, or mixed use projects that are consistent with City plans and policies. 10b. Utilize the City's financial advisor to ensure that tax increment financing is scaled to the genuine needs of the project. 11a. Continue downtown Elk River’s successful marketing and events. 6. Incentives for Business Attraction/Retention 7. Gravel Mining Area 8. Downtown Elk River 9. Great River Energy Site 10. Incentives for Redevelopment 11. Downtown Quality of Life Page 2 Elk River EDA Strategic Plan - Prioritization Exercise Highest Impact (Choose 5 total)Low Hanging Fruit (Choose 5 total)Personal Enthusiasm (Choose 5 total)Timeline (Now, Next, or Later?) Notes 11b. Continue funding for building rehabilitation and facade improvements, adjusting resources and partnering strategies to meet needs. 11c. Work with property and business owners to establish a special services district. Collaborate with the SSD in downtown maintenance, improvement, and programmatic activities. 12a. Continue building out the City's trail system along the Mississippi River, with a priority on trails to and from downtown Elk River 12b. In a future downtown development plan, explore ways to increase the orientation of some downtown businesses and development toward the 13a. Cross-market Elk River’s stores, restaurants, and events to visitors, participants, spectators and attendees of its sports events, mountain biking courses, and ERX events. 13b. Solicit news coverage and other publicity for the broad range of events that are hosted in Elk River, and the quality of its parks, facilities and event 14a. Identify opportunities for hotel development in future small area plans 14b. Consider a standalone hotel market study to assess market demand for a new hotel in Elk River, and the hotel brands that may be attracted to potential Elk River hotel locations. 15a. As COVID pandemic impacts on local businesses continue, consider taking additional supportive 15b. Set the stage for receiving potential 2021 stimulus or infrastructure funding by preparing one or more shovel-ready infrastructure projects. 12. Mississippi River Access 13. Sports, Mountain Biking & ERX Tourism 14. Hotel Development 15. COVID Economic Recovery Programs Page 3