Pope County Minnesota: 2nd Edition

Pope County Minnesota: 2nd Edition
Pope County Minnesota: 2nd Edition
             County Infrastructure &
      Opportunities for Economic Development




                                Abby Huebsch




                   Funded by:
      The Klick Foundation, In Cooperation With
University of Minnesota Carlson School of Management
Pope County Minnesota: 2nd Edition
Pope County Minnesota Property Tax Analysis: County Infrastructure                                                                   1


Table of Contents


Special Thanks .....................................................................................................................2
Executive Summary .............................................................................................................3
Analysis: Minnesota Counties .............................................................................................4
   Minnesota Counties Trends .............................................................................................4
Issues and Opportunities in Pope County ............................................................................9
   “Brain Drain,” Education, and a Declining Population. .................................................9
Infrastructure and Commerce ............................................................................................13
Pope County Transportation & Infrastructure. ..................................................................13
   Pope County Highway Department. ..............................................................................14
   City and Township Highways. .......................................................................................15
   Township/City, & County Disconnect. ..........................................................................16
   Differing Views. ............................................................................................................17
   Speed and Convenience. ................................................................................................17
   Transportation Funding. .................................................................................................18
   Water and Sewer. ...........................................................................................................19
Capitalization of Value Added Resources .........................................................................20
   Rejuvenation of Main Street. .........................................................................................20
   Agriculture. ....................................................................................................................21
   Service and Industry. .....................................................................................................23
   Retail and Tourism. ........................................................................................................24
   Business Directed Incentives .........................................................................................26
Closing ...............................................................................................................................28




University of Minnesota                                                                            Carlson School of Management
February 2012                                                                                                      Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure                        2


Special Thanks

I was born and raised in Perham, Minnesota, a rural community similar in size to the
                             Minnewaska area. Growing up with a father who was on the Ottertail
                             Board of County Commissioners and a mother who was on the
                             School Board instilled a passion for politics in me at a young age and
                             gave me a solid understanding of how rural communities operate and
                             function. I was so excited to have the opportunity to expand my
                             knowledge of Minnesota government while researching rural
                             communities, economic development, and counties; all the while
learning more about things I’ve always been passionate about.

With the cooperation of University of Minnesota and the Klick Foundation, I was offered an
internship where the cost of my time for research and time spent drafting this paper was covered.
Keeping in mind my personal background and vision for the future, my professors agreed that I
was a good candidate for this internship as well. My experience interning in Pope County was
unparalleled and I know it will continue to serve me well in future endeavors. I am forever
thankful to my professors and the Klick Foundation for this awesome experience.

Throughout the course of the internship, I was fortunate enough to have the opportunity to meet
with many influential citizens and county officials with a wide array of opinions and ideas of
how to change the world, beginning in Pope County. I was able to gain firsthand knowledge in
how local government systems work.

This paper is coming to you via email from Washington D.C., where my current internship
brought me. I was chosen to intern for Senator Amy Klobuchar and to continue to research
business and economic development. My internship in Pope County has better prepared me for
this new endeavor, as well as set the stage for a future full of endless possibilities.

Forever Thankful,

Abby Huebsch


University of Minnesota                                              Carlson School of Management
February 2012                                                                        Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure                        3


Executive Summary

For this internship, I was asked by the Klick Foundation to further the research and findings of
the report titled “Pope County, Minnesota Property Tax Analysis” by Kyle Canaday. Mr.
Canaday, a University of Minnesota student, also did an internship for the Klick Foundation
during 2009 and produced the first report of this series.

The primary focus of Mr. Canaday’s report was an analysis of Pope County taxes, a declining
population, budget deficits, and possible solutions to revitalize the economic sustainability of a
deteriorating region. Mr. Canaday’s report also concluded that another contributing factor was a
lack of funding for economic development.

This paper will be the second of what will be an ongoing initiative for the Klick Foundation
focusing on Pope County, Minnesota. More specifically, the work will further the research and
independent views of University of Minnesota interns as they relate to the issues raised by Mr.
Canaday. Issues which portray a very serious disconnect between the County, its residents,
businesses, and cities.

Pope County is interesting in its history, make-up, and in controversies that have taken place
over the years. My research and subsequent conversations with county officials and residents
finds many of the same views of those portrayed by Mr. Canaday. More interestingly, however, I
found not only a disconnect between the County and those that make-up the various County
entities, but also between Pope County and other Minnesota counties.




University of Minnesota                                            Carlson School of Management
February 2012                                                                      Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure                                 4


Analysis: Minnesota Counties

To begin, let’s take a look at Minnesota County statistics and trends for comparison purposes.
Information for this analysis was obtained from various annual reports titled, “Minnesota County
Finances Report” conducted by the Minnesota Office of the State Auditor as well as information
from the Minnesota Department of Treasury.

Minnesota County Trends. In 2009, Minnesota county revenues totaled slightly under $5.7B.
During 2009, the Minnesota population was reported to be 5,300,942 while Pope County’s
population was reported to be 10,922. 1 Figure 1 below shows a comparison of county revenues
(per capita) for the State of Minnesota and Pope County. As you can see, Pope County revenue
figures are approximately 25% higher than the average for other Minnesota counties. 2

Figure 1: Minnesota Counties & Pope County Revenue Comparison (Per Capita)




1
  2009 Minnesota County Finances Report (Uncompressed Excel File), Minnesota Office of the State Auditor,
http://www.auditor.state.mn.us/default.aspx?page=20110419.001.
2
  2009 Minnesota County Finances Report (Uncompressed Excel File), Minnesota Office of the State Auditor,
http://www.auditor.state.mn.us/default.aspx?page=20110419.001.

University of Minnesota                                                   Carlson School of Management
February 2012                                                                             Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure                        5


Since 2002, the share of revenues derived from taxes has increased by 9% (from 35.7% up to
44.7%), at the same time that the share of revenues derived from state grants has decreased by
9.4% (down from 34.8% to 25.4%). This results in an overall shift of 18%.

Taxes and state grants are the most significant sources of county revenues, at 70.1% (Minnesota)
to 76.9% (Pope County) of the total revenues during 2000-2009 (Figure 2). The next two largest
sources of revenues for counties are charges for services and federal grants, making up an
additional 21.7% (Minnesota) to 17.1% (Pope County). The remaining 6% (Pope County) to
8.2% (Minnesota) of revenue was comprised of local unit grants, interest earnings, special
assessments, licenses/permits, fines/forfeits, and all other sources of revenues that were not
specifically broken down and included in the revenue analysis.

Figure 2: Sources of County Revenues




From 2000-2009, Minnesota Counties saw expenditures and outstanding long term debt increase
dramatically (Figure 3). In actual dollars, expenditures and outstanding longterm debt increases
totaled nearly five times the amount counties saw in revenue increases. In constant dollars (with
inflation factored in using 2000 as the base year), counties actually saw a decrease in revenues at
the same time expenditures and outstanding long term debt increased by 80%.



University of Minnesota                                            Carlson School of Management
February 2012                                                                      Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure                       6


Figure 3: Minnesota County Trends (Actual vs. Constant Dollars from 2000-2009)




When comparing figures during 2008-2009, all areas of the Minnesota County budgets saw an
actual increase (Figure 4). As noted earlier, in 2009, Minnesota Counties reported nearly $5.7B
in revenue, with expenditures at $5.8B, showing a budget shortfall. How are Minnesota Counties
balancing their budgets when their expenses are rising in larger amounts than their revenues?

Figure 4: Minnesota County Trends (Changes from 2008-2009)




Significant decreases in revenue categories such as interest earnings and local unit grants
minimized the overall growth in county revenues. At the same time, outstanding long term debt
increased by nearly 30% ($3.4B) in 2009 compared to that of 2008.

University of Minnesota                                            Carlson School of Management
February 2012                                                                      Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure                          7


It would appear that:

       Overall Revenues
       -(less) Expenses
       =County Budget Shortfalls

       County Budget Shortfalls
       -(less) Capital Outlay (Amortized Projects)
       =Increased Long Term Debt

Budgets can be balanced in a variety of ways. The typical household or business relies on
revenue to cover their expenses and strives to show a net gain or profit. When the revenue falls
short of covering the expenses, credit and extended payment terms are used. If the household or
business is relying on credit or extended payment terms too heavily, eventually it will catch up
with them. It is times such as these that proper financial planning is necessarily for survival.

In theory, it appears as though Minnesota counties are borrowing money to cover large portions
of their budget gaps. Does this justify the increases in long-term debt? If this theory is true, at
some point, the counties will be accountable for the payment of the debt, causing a ripple effect
for future generations. This also impedes future growth, development, and infrastructure
projects.

What is the end result of the long-term debt? Does the county show signs of substantial
improvements in infrastructure, economic development, housing rehabilitation, transportation,
and maintenance? Or does this simply imply that they are borrowing money because they are not
investing wisely, or are slowly going broke? Short of borrowing more money, how best does the
county balance the budget? Raising taxes? Spending less? Raising standards? How do all of
these decisions affect the long term stability of attracting and keeping businesses and residents?
Those are philosophical questions which bring out many strong opinions of debate. Ultimately,
refinancing long term debt only delays the inevitable.

How did Pope County compare to the rest of Minnesota during 2009? As you can see, Pope
County shows lower than average expenditures in the following departments: Human Services,
Public Safety, Conservation of Natural Resources, Culture & Recreation, Sanitation, Economic
Development, and Debt Service (Figure 5). Pope County, however, shows higher than average

University of Minnesota                                              Carlson School of Management
February 2012                                                                        Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure                      8


expenditures in the following three departments: General Government, Streets & Highways, and
Miscellaneous Current Expenditures. The streets and highways in portions of Pope County are
significantly higher than the average county during 2009. How much of this is related to only
County Highways versus leveraging state and federal resources on behalf of the cities and
townships in the area? How would these numbers be different if the highway department
contracted work out to private industry? Later in this paper, some of these questions will be
answered.

Figure 5: Minnesota vs. Pope County Expenditures




According to the budget numbers received from the Pope County Auditor/Treasurer’s office,
Pope County revenue increased by $4.2M, while the county recognized deficits totaling $4.7M
during the 2000-2009 timeframe. During this same time period, debt service rose by $3M and
capital outlay another $1.5M. Since Pope County is currently in the process of granting the
County HRA the authority to levy funds for economic development, it will be interesting to see
how this affects the region in the future since the County shows zero dollars for economic
development and is already in a tremendous amount of debt.




University of Minnesota                                           Carlson School of Management
February 2012                                                                     Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure                          9


Issues and Opportunities in Pope County

After a thorough analysis, the Minnewaska area proves to be a place with endless opportunities.
We need the right people in the right places and motivated to see a better Minnewaska. They
need to create a vision for the future and then break down that vision into actionable steps that
are realistic and achievable. Throughout the following sections, I will outline some
recommendations that I, as an outsider to the community, see as potentials for growth and
development.

The recommendations and opportunities that are offered in this paper are very similar to those
made by my predecessor, Mr. Canaday. While it seems that new recommendations would be
more appropriate to address, I purposely chose to stick with similar thoughts because, to me, they
are the most important factors to consider for Pope County. In order to better understand the
recommendations, we need to first understand the issues facing the community and why they
appear to be present.

The Brain Drain, Education, and a Declining Population. Like many other rural areas in the
country, the Minnewaska area seems to be experiencing a phenomenon commonly referred to as
the “brain drain” which simply refers to the migration of people with technical skills or
knowledge in search of better opportunities. Many students who graduate from Minnewaska
Area High School leave Pope County to pursue degrees and higher education. Few return to the
area after completing their studies because the opportunities in large cities for jobs and career
development are seemingly much higher than in the rural areas.

Research shows that most students in the top half of a rural graduating class leave the area and
settle into an urban setting. The remaining students tend to stay in the rural area and settle into
jobs that require less skill, take on jobs within family owned and operated businesses, or
continue with jobs that they held while in high school simply because they can and they are
comfortable with it. This makes me wonder who the leaders of Pope County are. Are the leaders
leaving with the top half of the graduating class? Or are they the people who stay in the
community? Is higher education necessary to lead a community to achieving growth?



University of Minnesota                                             Carlson School of Management
February 2012                                                                       Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure                        10


Not only does the brain drain affect individuals; it also affects businesses and organizations.
Over the past couple of decades, Pope County seems to have maintained the economic
sustainability of some local area businesses. Too often, however, businesses are pulling up roots
and moving to other areas or simply going broke. Why does this happen?

It appears that some local authorities in the area are not as proactive as they could be to address
the needs of the business community properly. It’s logical to think that local area businesses
should ask for assistance when they need it, but it’s also logical to think that by having more
programs to offer, being proactive and widely recognized in the community, and through regular
communications, the local economic development authorities can have a greater impact.

Many times you hear the saying, “You can lead a horse to water, but you can’t make it drink.”
But in our case we need to ask the question of who should be leading – the economic
development authorities or the local area businesses? One would think that if the economic
development authorities were helping to lead the way, the businesses would better appreciate and
utilize the resources that could be available. This, however, isn’t always true. Economic
development authorities need to be scrutinized and reevaluated to determine whether or not
they’re an effective use of city and county resources.

Additionally, Pope County also seems to lack investments in areas that will help to sustain
privately owned for-profit businesses for the long haul. According to individuals in Pope County,
the county has recently increased operations that directly compete with the private sector
businesses, sometimes using public funds to lower costs. Is this right or wrong? In a free market
system, prices are determined by supply and demand, unlike a controlled market system in which
the government actively regulates prices and/or supplies. Should the County be able to leverage
funding that is not available to the private businesses in order to offer comparable products
and/or services as a source of revenue? Are public tax dollars being used in a fair and consistent
manner? How does the private sector compete with governmental agencies and still survive?
Does this cross the line from a free market system to a controlled market system?

Why do the local government entities seem disinterested in the concept of providing incentives
in order to keep residents and businesses in the area and harvest the local, homegrown talent and


University of Minnesota                                             Carlson School of Management
February 2012                                                                       Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure                        11


opportunities down the road? Does this lead to a substandard environment for the local
economies? Do counties need to raise the minimum standards to justify the taxes for the area? If
so, standards must be enforced or they become pointless and unfair.

Pope County could offer incentives designed to reverse the brain drain and to get people to come
back to the area following the completion of their college degree. It’s these types of people that
will ultimately keep the economic vitality alive in the region and become the “movers and
shakers” of the town. Local government, businesses, and organizations need leaders such as
these to grow and stay successful. And communities need these leaders to propel the community
forward and to promote new growth and sustainable, long-term development.

Incentives can be as simple as local tax incentives similar to the Federal First Time Homebuyers
Incentive recently offered. This can lead to more homes being purchased in the area, which
would be a major step towards boosting local economic development. It would increase the
overall tax base, fill the schools, provide employees for local businesses, and afford more minds
to help generate positive change. Why not offer local tax incentives in a similar fashion to TIFF?

But, as with any incentive, where does the funding come from? One solution could be for the
State Legislature and Governor to modify laws to allow for net gains on the sale of property to
have a local assessment that gets pooled into a local general fund. It only seems logical that this
would offer the counties an opportunity to raise the standards of establishments in the area,
therefore raising actual values of the properties, and increasing the chances that net gains will be
an outcome on property sales.

If local governments were to implement local assessments of 5-10%, over time this could help to
relieve the pressure of the cuts to Local Government Aid (LGA) that townships, cities, and
counties are receiving from the State of Minnesota. LGA is a program that many local units of
government can’t afford to lose, but at the same time, the State of Minnesota doesn’t seem to be
able to afford to keep it in place – a double edged sword that has begun to slice into local
budgets.




University of Minnesota                                             Carlson School of Management
February 2012                                                                       Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure                         12


This type of program would need to be phased in over time. In the beginning, it could eventually
replace the LGA funding that the state provides, but over time, it could also be used as grant
dollars to local area units of government to help invest in raising the standards of living, replace
deteriorating infrastructures, and be used for economic development purposes. In the end, it
could be a win-win situation for the State of Minnesota and for local area governments, if
planned properly.

A plan such as this would require minimum guidelines are set, that they are enforceable, and that
a basis to help those townships, cities, and counties that would need assistance is provided. It is
imperative that the government offers this type of program statewide. If not, there is no way to
determine the program’s successes. As with any idea, there are pros and cons, but everything
should be open for discussion and consideration as the state and local governments look at ways
to revamp and balance budgets properly for the long term. The objective of this paper is to create
a discussion surrounding new ideas and incentives for development and our aim in this
discussion is to bring as many new ideas as possible to the table.

Another possible incentive lies in changing how public funds are spent. Instead of using public
funds to help defray costs to the consumer through the governmental agencies and services,
would it be as cost efficient to use these same funds to help privately owned and operated
businesses lower their costs through incentives? Or, does this path open the door for privately
owned businesses to profit more from public funding? The opinions go both ways and it is
evident that further analysis and examination needs to be conducted to determine whether or not
public funds are being efficiently and effectively utilized.




University of Minnesota                                              Carlson School of Management
February 2012                                                                        Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure                          13


Infrastructure and Commerce

A large component of the 2010 analysis on Pope County hinges on increasing the depleting tax
base and reviewing standards for businesses and residents alike. In order for the general
population to care about what is going on and to encourage change, there needs to be a proactive
effort by the local area governments to either assist or penalize property owners that do not keep
up their properties as they should be. The 2010 analysis suggested that setting minimum
standards and enforcing them could help to increase property values, make the area more
appealing to visitors and potential new residents, and eventually to help provide additional
funding from tax dollars or economic development.

Like many of the properties that are depreciating in value and use, local roads and infrastructures
are also becoming obstacles for local area businesses and property owners. Local infrastructures
may include, but aren’t limited to water, sewer, lighting, utilities, and transportation.

Pope County Transportation & Infrastructure. Mr. Canaday’s report found that Pope County
taxes increased 67 percent over the ten-year period between 2000 and 2009. During this same
timeframe, the infrastructure in Pope County remained relatively the same with a slight year-by-
year variance. Pope County has had no new infrastructure or road projects in the past five years
and hasn’t scheduled any new projects through the year 2015.

The 2010 analysis of Pope County taxes revealed that highways, streets, public safety, and
infrastructure spending in Pope County were typically stagnant or declining. In all, total
spending in Minnesota Counties for streets and highways remained between 15 and 18 percent,
fluctuating only one percent or so each year. Public safety also remained fairly constant during
this same timeframe, changing only one or two percent each year between 2000 and 2009
(Figure 6).




University of Minnesota                                              Carlson School of Management
February 2012                                                                        Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure                     14


Figure 6: Primary Categories of Minnesota County Expenditures (2000-2009)




The highest category of expenditures for counties over the ten-year period was human services,
although the reports show that this area has decreased approximately 5% over the timeframe and
is now closer to the other expenditures. Together these four expenditure categories account for
almost 80 % of all county expenditures. How does this compare to Pope County? As you can
see, Pope County has very little consistency (Figure 7). Unlike the average county in Minnesota,
streets & highway spending is significantly higher.

Figure 7: Primary Categories of Pope County Expenditures (2000-2009)




Pope County Highway Department. Brian Noetzelman, Pope County Highway Department
Engineer, has been working in Pope County since 2001. The primary focus of his department as


University of Minnesota                                          Carlson School of Management
February 2012                                                                    Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure                         15


it relates to Pope County is to build and maintain road systems around and throughout Pope
County, with a secondary focus being that of bridge maintenance.

Maintenance is important to maintaining a quality structure, yet it does not encourage optimal
development or growth for the local communities. When Pope County shifts its focus from
maintenance to new projects, it will certainly add value to the area. This added value would be
create a Pope County that is attractive to business recruitment and retention, new residents to the
area, and would show local residents that progress and improvements are being made to their
area, further creating community between residents.

Public entities contribute to the local economy in different ways than the private sector. One
would wonder, is it cost effective to continue to use a County Highway Department, or is it
cheaper, in the long run, to outsource the business to private industry? The same can be asked
about the collaboration efforts between townships, cities, and counties. Currently, there is
discussion amongst Minnesota counties of county consolidation. By consolidating counties we
would be able to share resources between counties and could free up revenue for use in project
creation and infrastructure development.

City and Township Highways. The Pope County Highway Department provides some services
to cities and townships, such as consultation services with the county engineer on prospective
projects. However, the Pope County Highway Department does not work on the actual projects.

There are many constituents within the county that are in favor of road development projects.
Whether it is paving a dirt road, expanding the road to meet State and County guidelines,
improving traffic flow and safety, or updating deteriorating infrastructure, there are several
projects that would greatly benefit the area. In order for a project to move ahead, the city,
township, or county all have to be supportive of the project. This is also true in cases where a
constituent or business is willing to cover the costs of the project, including research, planning,
design, and implementation. If all parties are not on board with the project, it is tabled and likely
will not progress further.




University of Minnesota                                             Carlson School of Management
February 2012                                                                       Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure                           16


The County has many regulations involved with road projects. So many, that the cities and
townships are conducting their own projects completely independent of the County government.
In the end, it may cost them more than if they had worked directly with the County and
leveraged some of the resources available to the County for road funding. Or, people decide that
they don’t want to bother with the regulations and determine that the project isn’t worth the
effort. Either way, the area is adversely affected and loses valuable infrastructure development.
Bearing this in mind, think of the possibilities that could take place if all of the local
governments pooled their resources and worked together. There is no reason that Pope County,
Douglas County, Grant County, and Stevens County all need their own highway departments
when the total landmass of the four counties is equal to that of Ottertail County (located just
north of Pope and Douglas Counties).

The government entities within Pope County need to shift their core focus from maintenance to
development. Substantial road projects would bring standard conditions to a higher level. Once
the conditions are improved, future repairs and maintenance would be minimal. This also
provides opportunities to focus on the deteriorating infrastructures in the area. By coordinating
new projects and creating infrastructure needing minimal maintenance, county governments can
continue to focus on new projects and to perpetuate the cycle of development and growth.

Township/City & County Disconnect. In speaking with local city and township members who
have worked on projects within Pope County, it became apparent that local people are not
comfortable directly contacting the county. From the conversations that took place, if a city or
township constituent wants to relay a message to the county, rather than contacting the
appropriate person at the county level, they will contact their city or township officials to have
issues filtered or relayed through them.

Once the city or township officials have been contacted, they will in turn take it back to the
city/township board to decide whether the issue justifies going to the county or not. Sometimes
this is done despite the fact that some of the ideas/projects won’t cost the local unit of
government any money as the citizens or county may be capable of paying for it. There seems to
be a definite disconnect between the County and the cities/townships that stops many
projects/ideas before they ever get off the ground, which is unfortunate for everyone in Pope

University of Minnesota                                               Carlson School of Management
February 2012                                                                         Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure                          17


County. As shown in the upcoming sections, there is a need for infrastructure improvements in
Pope County, yet there is no real vision for any significant changes at the present time.

Over the years, there have been several projects that have been proposed that the city, township,
or county have not approved. Even though these projects wouldn’t cost their respective
governments. It’s these projects that impede the process of development and increased
infrastructure. One would think that if a constituent, property owner, or local organization wishes
to move ahead on these types of projects at their expense, which the elected officials would be
willing to sign off on the project. In most instances, this does not hold true for Pope County.

Differing Views. To the naked eye, one may think that Pope County is isolated because
Interstate I-94 bypasses the county and runs through the neighboring cities of Sauk Centre and
Alexandria. However, this is not the case.

Pope County is home to the intersections of State Highways 28, 29, 55, and 104. It is fifteen
minutes one direction and twenty-five minutes the other to Interstate 94 (in Alexandria and Sauk
Centre respectively); and is near US Highways 71 (running north and south) and 23 (running
northeast and southwest). Pope County is positioned to take one southeast to Minneapolis/St.
Paul and Chicago; northwest to Fargo and Winnipeg; west to Morris and Sioux Falls; or
northeast towards the Great Lakes.

In addition to the highways and interstate access, Pope County serves as a junction point for the
Canadian Pacific Railroad, where rail traffic can continue east to the Twin Cities or Chicago,
west towards the Port of Vancouver, or north towards Winnipeg. In effect, the Minnewaska area
has the potential to be a major transportation hub for international business in West Central
Minnesota.

To elaborate, Pope County could become the center of business transportation for the five-state
area. Pope County is located within a 500-mile radius of Omaha (NE), Minot (ND), Des Moines
(IA), Williston (ND), Rapid City (SD), and the major shipping ports of Duluth, Chicago,
Vancouver, and Winnipeg. Pope County has a great opportunity to be an attractive location for




University of Minnesota                                            Carlson School of Management
February 2012                                                                      Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure                          18


major business relocations, expansions, or satellite divisions, without being considered isolated
from the rest of the region, country, or to international locations.

Speed and Convenience. One downfall to the transportation system in Pope County is that the
two lane roads do not allow for the same speed and convenience of interstate travel. Many of the
citizens of Pope County feel very isolated from many metropolitan or urban areas, unlike those
of their neighbors in Alexandria and Sauk Centre. While Pope County cannot reroute the
interstate, they can work to leverage the major highways and roads through Pope County, which
in turn, could increase the number of people passing through the area.

People travel based on convenience and in the public’s perception, driving faster equates to
shorter trips. Increasing speed limits on major highways could potentially help to utilize more of
the major highways versus the interstates, which not only have convenience factors, but also
economic factors for the region.

How do you increase the perception of being “faster” in rural areas? To start, one could consider
increasing the number of driving lanes similar to what has been suggested with State Highway
29 between Glenwood and Alexandria. This suggestion would increase the highway from two
lanes to four lanes between the towns. One could also consider routing freight traffic around
cities versus through the downtown areas, which not only slows down traffic, but also creates
some unsafe conditions for pedestrians and bicyclists. Or, one could define alternate routes that
take about as much travel time as interstates and major highways (due to mileage, traffic
congestion, etc.). Short of simply increasing speed limits, there are several ways to efficiently
and effectively help people travel and arrive at their destinations in a timely manner.

Transportation Funding. Because County and Municipal State Aid Street Funding is allocated
to counties and municipalities with populations greater than 5,0003, cities and townships in Pope
County are NOT able to be access this funding without the aid of the county. Pope County is
large enough in population to be eligible to obtain funding from the County State Aid Highway



3
 Minnesota’s Highway Finances, Minnesota Department of Transportation,
http://www.dot.state.mn.us/about/pdfs/historyofrevchanges.pdf

University of Minnesota                                                  Carlson School of Management
February 2012                                                                            Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure                           19


(CSAH) Fund because the overall county population is above the 5,000 person minimum
threshold.

Typically, the local cities and municipalities must rely primarily on their own funding because
they are reluctant to utilize or leverage the county resources purely because of political
controversies. This proves to be a challenge when local cities and municipalities have a need or
desire to implement street projects, but the boards, councils, or commissions aren’t working
together. History has proven that the political climate in Pope County continues to be
challenging to overcome in this issue.

While it is challenging to overcome, there are several opportunities to increase funding by
working together with the County on projects. This seems logical and much more realistic in the
short term, or until they can attract enough new residents to the area to make a difference in the
overall population on their own. The cities and townships in Pope County can’t seem to set aside
their differences, forget the issues of the past, and work together to eliminate the struggle to
finance projects that are needed to benefit the area as a whole. If they were to do this, wouldn’t
that provide a major boost to the economic development of the region?

Water and Sewer. A report by the USDA titled, Economic Impact of Water/Sewer Projects and
Facilities on Rural and Urban Communities suggests that small water and sewer projects
generate private investment and public funds, thus increasing the overall property tax base. It’s a
proven fact that major water and sewer projects adds value to many more people than simply
those involved with the initial project. These water and sewer projects are the most micro and
basic forms of economic development. The forms that sustain and drive further development in
rural communities.

By offering incentives for new construction, local government entities encourage cost sharing for
water and sewer projects between the private and public sector. Not only will the cities benefit
from water and sewer improvements, but through cost savings, the government entities become
the “good guys” after the process is completed. Why don’t Pope County and cities/townships in
the area openly welcome and encourage new building projects that involve water and sewer sub-
projects through cost sharing?


University of Minnesota                                             Carlson School of Management
February 2012                                                                       Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure                           20


Capitalization of Valuable Resources

It is illogical to only increase the efficiency of the roads entering and leaving the area, without
also promoting the valuable resources (resources that an area provides which add value to the
community and surrounding areas). If Pope County worked to continually develop the entire
area, while capitalizing all of the valuable resources, the need for increased traffic capacity
would come.

If more businesses were coming to the area bringing more people with them, Pope County would
need to better connect itself to the rest of the state or offer incentives for people to remain in the
area and buy locally. I’ll continue this discussion later. Before that, I’d like to discuss some other
areas I chose to research and base my recommendations off of. They are: the rejuvenation of
main street, agriculture, service and industry, retail and tourism, and business directed incentives.

Rejuvenation of Main Street. As it currently stands, office buildings and service organizations
occupy many of the buildings on Glenwood’s “Main Street,” otherwise known as Minnesota
Avenue. There are very few retail businesses and restaurants located on Minnesota Avenue. The
rejuvenation of Glenwood’s main street needs to start with the relocation of these businesses
currently occupying prime retail spaces in the area. There are many other towns in Minnesota
that have the welcoming culture and atmosphere necessary to field the full force of the
Minnesota tourism industry in the summer. Some of these stores are open seasonally while
others remain open year ‘round and encourage holiday traffic.

The problem with seasonal or limited quantities of retail shops is that during the off-season, the
local residents are forced to shop out of town, which soon becomes habit. A community cannot
be expected to survive on the revenues generated from tourists, but must work together to
become self-sustaining. There are several programs out there that help to promote local
shopping.

The Glenwood Chamber of Commerce has had a “Shop Local” promotion each year during the
Holiday season. Why does the Chamber focus on the holiday season to promote shopping locally
with their give away? Why are there not incentives imbedded in the retail sector to provide


University of Minnesota                                              Carlson School of Management
February 2012                                                                        Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure                       21


rewards for repeat business from the local residents? On the other hand, the Glenwood Chamber
also promotes a program using “Minnewaska Dollars” as the Chamber Bucks to be used locally.
While this program can be used all year long, it is not promoted well enough for people to use.
Why don’t local businesses offer Minnewaska Dollars to their employees for bonuses, promoting
the money to be spent locally and fostering a “support each other” type atmosphere? Why don’t
more people know what “Minnewaska Dollars” are? If they don’t know it exists, how are they
supposed to use it?

Minnesota Avenue has the potential to be another Sinclair Lewis’s picturesque main street. The
places in town where you can park on one end and roam up and down the street, visiting stores as
you pass. There could be a book and coffee shop with wireless Internet, encouraging weekenders
to come in and check their email or sit and enjoy a relaxing book over coffee, an ice cream parlor
or candy shop, more specialty gift shops, or places with kids toys, games, or things to do;
creating a perfect day out for the family.

Another idea involves collaboration between the communities of Glenwood, Alexandria, and
Sauk Centre. This collaboration’s mission would be to drive traffic to the three communities
through a “Tour of Minnesota’s Main Street.” This tour would feature the main streets of
Alexandria, Glenwood, and Sauk Centre. People would be encouraged to exit Interstate 94 in
Alexandria and Sauk Centre and would travel through the three communities using State
Highway 28 and 29 instead. Each community would offer incentives for visitors to partake in the
Tour of Minnesota’s Main Street (ie: free coffee at a shop in Sauk Centre, buy-one-get-one lunch
at the Lakeside in Glenwood, and a coupon for free ice cream in Alexandria). When tourists
embark on their tour, they would be given a “passport to the lakes” that guided the visitor
through each community and had coupons for various stores inside. The tour would primarily
target people travelling north from Minneapolis or south from the Fargo area.

Cannon Falls, a town in Southeastern Minnesota, is one of several towns that is in the process of
rejuvenating its main street and downtown area. A wealthy entrepreneur and businessman from
the area decided to invest his money in the buildings and businesses of downtown Cannon Falls.
This ongoing project started in 2006 and has created three new businesses and remodeled four
buildings. This rejuvenation project has had astronomical success in the town of Cannon Falls.

University of Minnesota                                           Carlson School of Management
February 2012                                                                     Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure                       22


On weekends, the businesses are full of people who drive to the area for a day trip. One can head
to the Deli, the first in the installment, any day of the week and find it packed.

The success of the Cannon Falls main street rejuvenation project put the city in the national
spotlight. President Barack Obama visited Cannon Falls on his tour of the Midwest in late
summer 2011. Cannon Falls was the only Minnesota city Obama visited on his tour. His visit
consisted of a town hall meeting with locals where he congratulated the Cannon Falls on their
accomplishments in increasing business and keeping Main Street America alive and flourishing.

Agriculture. Rural communities in Minnesota are dominated by agriculture. This agriculture
has, however, changed over time. Fifty years ago, many of the agricultural products produced in
one area were consumed in that same area. In today’s global economy, we find our farmers
specializing in certain crops, such as corn and soybeans, and no longer continuing to provide the
basic produce that local people need.

One way I see to rejuvenate the economies of both the Minnewaska area and Pope County as a
whole is to encourage farmers to go back to the basics. Right now there is a huge campaign for
people to ‘buy local’ and support local businesses. So, why not include agriculture? The county
cannot directly contribute to the rise of value added agriculture. The county can, however, work
to create the systems that encourage and support value added agriculture now and in the years to
come.

Another component of the agricultural incentive programs could be an incentive provided by
local government to encourage farmers to produce products that people locally can buy. Bring
the farmers markets like those in the Twin Cities to the Minnewaska area, not just for the
summer months, but all year long. If the farmers in the area are encouraged to produce the
products people need, the area can become its own self-sustaining community. Local markets are
a great way to keep money circulating through the local community as opposed to circulating
through the global economy and global financial markets. Local markets equal local revenue.

While it is not feasible for farmers to grow everything that people need, they can focus on value
added resources for their local economy. Like the Cannon Falls scenario previously mentioned,


University of Minnesota                                             Carlson School of Management
February 2012                                                                       Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure                         23


this could help to increase business, and keep Pope County farmers and agriculture related
businesses alive and flourishing.

There is a small, but growing effort where the local greenhouse grows fruits and vegetables
during the winter which is being used locally. Why aren’t there more entrepreneurial incentives
to provide funding for locally owned/operated greenhouses producing fruits and vegetables for
the area residents? Why can’t the local Farmer’s Market be run all year long, just sold indoors
during the winter? This is possible for the Minnewaska area, it just takes a little more planning,
cooperation, and support from the residents.

One local area business raises chickens, processes them naturally, and sells them to many
markets outside of the Pope County area. What is surprising is that the local businesses of Pope
County who sell chicken (restaurants, meat lockers, and stores) don’t purchase their chickens
from the local producer, forcing them to cater to the larger markets in the Twin Cities metro
areas. Again, this provides an opportunity for the Minnewaska area farmers and proves to be
better for the local economy. It’s also better for local area businesses who are interested in
working together and “coop-ing” their resources, collateral, and profits.

Service and Industry. Many new businesses are located in the Minnewaska area such as the
nationally known businesses of American Solutions for Business, Healthland (formerly
Dairlyland Healthcare Solutions), and WASP. They haven’t been known in recent years. Current
trends in Pope County show that more businesses are leaving the community than joining it.

The Glenwood Development Corporation does some work in the area, primarily financing low-
interest loans to businesses as a form of “gap financing” to already established businesses in the
area. In addition to the Glenwood Development Corporation, the Klick Foundation strives to
enhance the economic development in the region.

The Klick Foundation has established Business Incubators (Incubators) in the Minnewaska and
Long Prairie areas, both small towns in Western Minnesota. The primary focuses of the
Incubators are to support and incentivize new business development in these communities,
primarily in the service or manufacturing industries. The difference between the two incubators


University of Minnesota                                             Carlson School of Management
February 2012                                                                       Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure                         24


is that the Long Prairie Incubator is run by the local city government, while the Minnewaska area
Incubator is privately run by the Klick Foundation.

The Long Prairie Incubator has been in existence for approximately four years. At one point, it
was home to a pillow company (Rustic Ridge Pillow & Hospitality Supply Co.) which moved
locations from Alexandria to Long Prairie in early 2011. The city of Long Prairie offered the
company the entire business incubator warehouse (designed to house four new businesses) at a
very low rent. This company didn’t bring any new jobs or people into Long Prairie, as the eight
people who work for the company traveled daily from Alexandria to Long Prairie.

The Long Prairie Incubator isn’t serving the people of Long Prairie or acting as the Klick
Foundation had intended. The purpose of a “business incubator,” as the Klick Foundation
describes, is to “support new businesses in a community, increase the community’s number of
jobs, thereby supporting and boosting the local economy.” When I spoke with community
members in Long Prairie (a nurse, teacher, coach, business owner, and chiropractor), none had
heard of the Incubator and didn’t even believe that Long Prairie had an industrial park.

The same is true of the Minnewaska area Incubator. Both business incubators need press and
advertising to let local residents and aspiring entrepreneurs know of the opportunities provided in
these communities. The “if you build it, they will come” philosophy only works when “they”
know that “it” exists. Each Incubator should have a website connected with the city, county, and
other economic development sites that promote growth and opportunities. Press releases should
go out detailing the opportunity provided by these Incubators as well as what the Incubators are
currently producing. Without knowing what the Incubator is and does, people won’t utilize the
resources it offers.

As it currently stands, the Minnewaska area Incubator offers opportunity to those looking to start
a business in the technology, service, and industry fields. These are important businesses to have
in a community – there isn’t a town without industry. I think, however, that the incubator should
also be open to people looking to open a retail business on Main Street (or in Glenwood’s case,
Minnesota Avenue). This increased business on main street would help with the rejuvenation
project and would provide a place for tourists to shop and gather in the Minnewaska area. At the


University of Minnesota                                           Carlson School of Management
February 2012                                                                     Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure                        25


same time, this would provide the assistance that a starting business would need in order to get
past the “growing pains” of the first few years. Research shows that a business must survive the
first three to five years to be considered successful and incubators, when utilized properly, can
help to avoid closing down during those years they typically struggle to become established.

Retail and Tourism. Perhaps the largest and most underutilized value added resource in Pope
County is tourism. Pope County is home to Minnesota’s 13th largest lake, Lake Minnewaska.
Lake Minnewaska has the reputation around the state of Minnesota for being a wonderful sight,
with a community that sits right on its banks. As discussed earlier, when tourists come to the
Minnewaska area, they’re not contributing to the local economy enough to sustain all that is
needed. According to some national statistics, locally owned and operated businesses
traditionally return 68% of their income to the local economy through jobs, taxes, investments,
donations, or business to business transactions. To a county as small as Pope, this make a big
difference in the big picture vision of the local economy. What people don’t purchase in the
Minnewaska area or Pope County hurts the local economy more than one may think.

Most tourists and seasonal property owners stay at property on or near Lake Minnewaska but
don’t shop locally because the area doesn’t appear at first glance to have what they are looking
for. Consequently, they find themselves traveling to the nearby community of Alexandria where
they are able to fulfill their shopping needs – in both grocery and retail stores.

Pope County seems to be rich with Scandinavian and German ancestry. One of the local shops,
The Valley Troll, is a seasonal Scandinavian gift shop located downtown Glenwood. During the
beginning of May each year, Glenwood posts the Norwegian flag throughout the downtown area
along with the United States flags to celebrate Syttende Mai, or the Norwegian Constitution Day.

While there is a lot of activity in the area celebrating Scandinavian ancestry, there isn’t as much
for the Germans or other ethnic cultures. Has anyone ever thought about opening a German
styled restaurant, pub, and hotel? What better attraction to an area that has a strong sense of
German culture than German music, food, beer, and rooms for rent to tourists? Pope County has
a very limited number of hotel rooms available, yet there aren’t a lot of specialty bed and
breakfasts either. Where do people stay when they come to Lake Minnewaska or visit the


University of Minnesota                                              Carlson School of Management
February 2012                                                                        Abby Huebsch
Pope County Minnesota Property Tax Analysis: County Infrastructure                          26


community for an event such as a wedding or the summer festival, Waterama? Why should I, as
a tourist, stay in Glenwood when there are hotels and resorts with all of the amenities and
attractions I want in Alexandria? What incentives are there for people to stay in Pope County as
opposed to Alexandria?

But why stop with the Germans? The local Italian restaurant, Café Bella, recently closed the
downtown Glenwood location and is now housed in Alexandria. If there were more specialty
places to work, shop, stay, and play, maybe this area could hit the national radar like Cannon
Falls did. There’s a lot of cultural, arts, and recreational history that seems to be disappearing in
the Pope County area, despite a few people who are working hard to try and keep it alive.

Pope County and the Minnewaska area need to have a “Rainy Day” plan. This plan provides
entertainment for tourists and cabin owners within Pope County during rainy days or whenever
they feel like getting people out of their cabins and interacting with the community. There are
several different places that are popular attractions to both residents and tourists alike. The
Minnewaska area has Central Square, a cultural arts and community resource center; Pope
County Historical Society and local museum, plenty of parks, trails, lakes, and scenic sites to
picnic at, restaurants to meet friends at, and many other places to eat, shop, or visit. While some
of these places do run all year long, there are some that are seasonal attractions, yet all play an
important role in the community. The Minnewaska area should continue to make use of these
valuable resources and needs to advertise them to visitors.

Pope County has many opportunities to become a premier destination area such as that of
Nisswa, Duluth or Brainerd (Minnesota) or that of Medora (North Dakota). Even their neighbor,
Alexandria (Minnesota), has a number of small, specialty shops, which bring people into the area
and contribute tremendously to the local economy. The more people who come to the area, the
larger it becomes. The people of Pope County complain about this, yet don’t pressure the local
government units to change so that this can become a reality instead of a wish.

Business Directed Incentives. The final segment of my research entails the necessity for the city
and county to offer business directed incentives. These incentives should be designed to promote
business development and expansion in new and existing businesses. Incentives that might be


University of Minnesota                                              Carlson School of Management
February 2012                                                                        Abby Huebsch
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