The Port will use a $5 million federal stimulus grant, administered by the Minnesota Department of Commerce, to create a revolving loan fund that will help finance energy efficiency improvements in commercial and industrial businesses. Xcel Energy Co. and local Economic Development Agencies (EDAs) also fund the program. The program is called, “Trillion Btu Energy Efficiency Improvement.”

“This program emerged from our efforts to help the Rock-Tenn paper recycling plant reduce its energy use and become more competitive in its industry,” said Pete Klein, the Port’s vice president of finance. “In that yearlong process we saw how energy conservation measures helped turn that facility into one of the company’s most cost-effective producers.

“We now understand that the payback for energy efficiency and conservation is there for businesses. This is bread and butter technology that hasn’t been given the capital to work.”

The program would work in this way:

Businesses voluntarily would agree to energy audits paid for entirely by Xcel Energy. Engineering studies would follow to provide a blueprint to specific improvements that would reduce a company’s energy usage. Businesses in this program would pay about one quarter of the cost of these studies.

The Port, Xcel and local EDAs then would finance 100 percent of the capital improvements. The monthly loan repayment by businesses would be structured to be less than the expected energy savings. This structure will provide the business with an immediate positive cash flow from the project without the use of any of its own capital.

“This is a great idea because it puts people to work,” Port President Louis Jambois said. “This is a perfect fit for the times.

“The program increases the competitiveness of existing business and retains existing industrial jobs,” he said, adding: “It reduces our energy use and our carbon footprint. And it leverages the resources of Xcel Energy and potentially other energy companies to achieve our energy conservation goals.”

This project was made possible by a grant from the U.S. Department of Energy and the Minnesota Department of Commerce through the American Recovery and Reinvestment Act of 2009 (ARRA).

For more information contact Pete Klein at 651-204-6211 or email him at pmk@sppa.com

In late January, U.S.Treasury Secretary Timothy Geithner came to town to listen to Minnesotans talk about opportunities in the green economy.  The meeting was organized by the Blue Green Alliance and hosted at Honeywell in Golden Valley.  Blue Green Alliance Executive Director David Foster moderated the event.  The meeting was an invitation only affair, and I was fortunate to have received an invitation to make a brief presentation.

U.S. Treasury Secretaries don’t show up in these parts every day, so when they do it’s a pretty high profile visit.  My presentation was one of many, and was preceded by Saint Paul Mayor Chris Coleman, Minneapolis Mayor R.T. Rybak, and U.S. Representatives Betty McCollum and Keith Ellison.  State Building Trades President and Port Authority Commissioner Harry Melander presented as well.  All expressed gratitude that the Secretary selected Minnesota for his visit and all identified ways that Minnesotans and Minnesota businesses could help lead the way to economic recovery.  

My role was to highlight a specific example of a public-private partnership where being “green” would also improve the economic competitiveness of Minnesota businesses.  Of course, I provided a brief description of our new Trillion Btu program and its link to the federal economic stimulus package.  I emphasized the revolving loan nature of the program and the notion that loan repayments are made from the positive cash flow resulting from the borrower’s energy improvements. 

The audience with Secretary Geithner also provided the perfect opportunity to endorse the federal New Market Tax Credit Program (NMTC) – an existing program that is delivered and administered by the U.S. Department of Treasury.  Too often, change agents (and all new administrations view themselves as change agents) are quick to discount existing programs in their quest to create something new.  But the NMTC program is well run and with access to credit being a major challenge these days, it is more important than ever.  Call me a shameless panderer, but I put in a plug for the program, and a plug for our upcoming request for a new allocation of tax credits. 

The event was clearly a welcome relief to Secretary Geithner, who has been subjected to continual criticism for his efforts to calm the financial crisis and revamp the nation’s financial regulations. Under the best of circumstances that’s no small task.  But when the atmosphere in Washington is factored in – an atmosphere where ideological polarization is pervasive and no idea is ever a good idea – the contrast between our “can do” approach and his daily routine must be very stark indeed. 

More than once he expressed his appreciation for our positive attitude.  And he repeatedly stated what we all intuitively know is true – the future will belong to the people and places that can transcend political differences and forge partnerships.  

Will there be any tangible positive outcomes from the meeting?  We might have sown a few seeds about our activities and our ability to collaborate, to innovate and to deliver. And If the Port Authority receives a 2010 NMTC allocation or additional funding for Trillion Btu, well, maybe the event was worth a couple hours of my time.

“We figured this was a good time to go the extra mile and make it as environmentally safe as possible,” said Rick Krause, manager of the facility that operated under several ownerships – Peavy and ConAgra – before becoming a division of Gavilon in 2008. Gavilon is in the Port Authority’s Red Rock River Terminal.

The Earth-friendly improvements include converting the 60-foot tower’s hydraulic operating mechanisms to an electrical system and replacing an old, open-style conveyor loader with an enclosed tube system.

“We were having problems with broken hydraulic lines and leakage, so converting to electricity is much cleaner,” Krause explained. “And we decided to go with the enclosed tube system so that no product could drop inadvertently into the lake.”

 Unless you’re in a boat, it’s almost impossible to see the two Gavilon towers, which sit on concrete pads near the shore of the lake. But they are very busy operations during the shipping season, when they load hundreds of thousands of tons of grain onto barges destined for downstream shipping. The towers also load and off-load fertilizer, coal and other products, including 75,000 tons of road salt destined for winter use on Minnesota’s icy highways.

“We can load out about 500 tons an hour,” Krause said. “A typical barge holds 1,500 tons, so it takes three hours to load it. That’s the equivalent of 60 truckloads or 15 rail cars of product.”

 The $1.5 million upgrade began at the end of December and is expected to be completed by March 15 in time for the start of the spring shipping season.

Krause, who has worked for the shipping operators for more than 35 years, says he’s a little surprised by the public interest in the improvements underway at the largely unseen facility. His career roughly coincides with the construction of the towers in the 1970s.

“We’re kind of back in our own little peninsula and we’re only seen from the river,” he said. “A few boaters come into the lake for fishing, but there’s not much traffic. 

“To me, this is the kind of normal maintenance that makes sense,” Krause added. “But it’s good to let people know that an investment is being made on the river, aimed at keeping it up.”

Would the crane be able to lift an 80-ton airliner filled with water? The delicacy of the operation interested staffers at National Oilwell Varco (NOV)’s offices in the Saint Paul Port Authority’s Riverview Business Center. But the ability of the crane to lift the airplane was never in question – not to these people.

Their company had designed the crane being used, the Weeks 533, a floating heavy-lift crane capable of hoisting 500 tons and revolving after doing it.

And, in fact, as cranes go, the Weeks 533 is not one of the bigger ones for the firm that traces its origins in Saint Paul back to building equipment for the timber industry in the 19th Century. The company’s Saint Paul operation has designed the largest crane in the world, capable of lifting 7,400 tons, or 14.8 million pounds. And in 1991, two of the 6,000-ton cranes it designed set the Guinness World Record for the largest single lift: 10,750 tons (21.5 million pounds).

The company’s buildings on Plato Boulevard are quiet places. Most of the 180 employees work in small offices or in warrens of cubicles where signs request visitors to keep the noise down. The corridors are lined with award plaques for engineering achievements and framed photographs of engineering behemoths.

While giving a tour, Cathy Leritz, the company’s Director of Human Resources, Quality Management and Risk, paused in front of a photograph of two cranes next to an off-shore oil-drilling platform.

“These are twin 6,600-ton cranes lifting a six-story building – living quarters – on to a stationary platform in the North Sea,” Leritz explained. “I know it doesn’t look like it, but the cranes are on a floating vessel next to the platform.”

Designing “super marine cranes” for offshore construction is one specialty of the Saint Paul operation. The visitor pointed to small objects in the photo that looked like several ants standing on their hind legs. “Those are people,” Leritz said.

It’s not surprising that few people are familiar with National Oilwell Varco, which is a name that has evolved from a convoluted series of mergers and acquisitions during the past decade. Probably the most familiar name of the Saint Paul company is American Hoist and Derrick – or Amhoist – which was its name from 1892 through the days when it had foundry and fabrication operations that stretched along the Mississippi River from the Wabasha Street Bridge to Highway 52. Amhoist equipment was used to build the Panama Canal and Mount Rushmore.

“We keep evolving, but now we’re really an engineering and project-management company,” Leritz said. “Virtually everything we design is a prototype. We design it and we have a whole group of project managers who oversee the project from beginning to end by subcontracting all over the world. The boom might be made in Korea, the upper works in China. At any one time, we can be dealing with people from Norway to Singapore.”

Not everything they design winds up in deep water. At the Target Center in Minneapolis, for example, NOV’s Saint Paul engineers designed a concrete arena floor that can be raised or lowered on nearly 100 separate jacks.

National Oilwell Varco, which took its current name after a merger in 2005, has its headquarters in Huston, TX, and has 35,000 employees in 49 countries. But while the company and its products are huge, longtime employees characterize the Saint Paul operation, Leritz said.

“We have plenty of people who are 35-year-plus veterans,” Leritz noted. “We have a very low turnover. The people here are really the company in terms of technical knowhow.”

But why have an engineering operation that designs equipment for deepwater oil drilling located in the Midwest?

“Nobody wants to leave Saint Paul,” Leritz explained. “Occasionally there’s talk of moving us, but it’s never been seriously considered. Besides, we’re also equal distance from all the coastlines, and because we have an airline hub, you can hop a flight to Amsterdam or the Orient.

“We don’t have a walk-in customer base because all of our business is through the industry – and those people know us and our reputation,” Leritz added. “We’re also not manufacturing here, so it doesn’t matter where we are. We have a long history in Saint Paul, but technology and people with knowhow have kept us here.”

After a brief struggle amid much laughter, Mayor Chris Coleman and Port President Louis Jambois yanked away the black cloth covering a large sign displaying the century-old district’s new name and logo. Beacon Bluff is officially launched.

The site selected for the ceremony was fitting: The lobby of Building 21, an imposing limestone structure designed by architect Albert Kahn in 1939 to house 3M’s corporate headquarters. Though temperatures in the currently unheated building were frigid, participants stood on a pattern-inlaid marble floor and marveled at the gracefully curved Art Deco wood paneling that reached from floor to ceiling.

One older attendee recalled where the offices of William L. McKnight were located, noting that McKnight had been president of 3M for a decade when the building was constructed in 1939 and had offices there until the early 1970s.

“We see much history here,” Mayor Coleman said, adding that Beacon Bluff “balances what has been a great past and great opportunity.”

After a year of study and nearly 30 meetings with a Community Advisory Committee, the Port has launched a marketing campaign to develop 61 acres, including 46 acres that were once the 3M campus, plus adjacent property once used by Globe Building Materials and Griffin Wheelworks. The plan envisions selling five existing 3M buildings for reuse — including Building 21 — and the remaining property for building sites.

In all, Beacon Bluff would include a mix of light industrial, office and retail businesses that together would bring about 1,400 jobs and $2 million in annual property taxes.

“We think this is what we’re all about in the redevelopment game,” Jambois said. “We are about jobs, tax-based growth and building sustainable communities.”

Reviving a heritage is also a major goal. Saint Paul City Council Member Dan Bostrom, who is also a Port Authority commissioner, noted that his father spent his career working for 3M in Building 20, located directly across the street from the former corporate headquarters. As an East Sider, Bostrom said his dad vowed never to have a job that he couldn’t reach by walking from home.

“We want to see those opportunities come back,” Bostrom said.

The project, considered the largest redevelopment effort tackled by the Port in 20 years, has already notched some successes. HealthEast Medical Transportation service recently broke ground for a 44,000-square-foot medical transportation and training facility on Arcade Street, which is the far-western edge of Beacon Bluff. And Baldinger Bakery, a local institution since the 1880s, is expected to break ground this spring on a 144,000-square-foot building at Phalen Boulevard and Atlantic Street. Taken together, the two developments represent nearly 14 acres of the 61-acre project.

The five existing 3M buildings represent the historic core of the company’s original campus and retrofitting them for reuse is considered efficient, environmentally desirable and historically responsible. When completed, Beacon Bluff will fill the center of the Phalen Corridor, crowning a 15-year effort to transform a once-polluted rail corridor into a thriving East Side neighborhood.

One person who watched the unveiling ceremony with obvious approval was Barbara Raye, whose company, the Center for Policy, Planning and Performance, has been working for the past year to bring together the various stakeholders, planners and community members to formulate a development plan. As she surveyed the audience dominated by project participants, Raye seemed pleased.

“The energy here is very positive,” she said. “Everyone seems to be going in the right direction.”

The Port has retained the firm of Colliers Turley Martin Tucker to conduct an international search for companies interested in the rehabilitation and reuse of the historic 3M buildings. The Port will actively seek buyers for the remaining shovel-ready sites in Beacon Bluff.

“We’ve still got a lot to do,” said Monte Hilleman, the Port’s vice president of development. “But we’re moving forward.”

If 2009 was such a slow year, how did it disappear so quickly?

I’ve had the honor and privilege of being the Port’s President for just slightly more than one year and I am happy to report that there have been no dull moments. Acquisition and redevelopment of the former East Side 3M campus dominated our efforts in 2009. The Port now owns the entire 46-acre site. Equally important though, the Port worked for a solid year with a small army of individuals and organizations to help us determine how the redevelopment of that site should proceed.

On the fee for service side, we employed architects, engineers, historical consultants, environmental specialists, marketing experts and commercial realtors.

On the volunteer side, we worked with district council representatives, Historic St. Paul representatives, Saint Paul Planning Commission members, business association representatives and interested citizens.

The result is a plan that calls for the immediate demolition, clearance and environmental cleanup of some buildings, and the preservation and marketing of other buildings for a period of up to two years.

We are working with two firms to brand and market the buildings that we would all like to see reused, as well as the rest of site. I want to thank the entire team, but mostly I want to thank the volunteers who gave up countless hours and helped us think creatively about the reuse and redevelopment of the site.

I also want to thank Saint Paul City Council members Dan Bostrom and Kathy Lantry for bringing the Advisory Committee together, and Mayor Chris Coleman for his unwavering support for job creation on the East Side.

But the 3M redevelopment was by no means the only Port activity in 2009. We are finishing up construction on our new Southport Barge Terminal and will move operations from the current site near the Lafayette Bridge to Southport next spring.

We also are prepared to launch next year our truly innovative Trillion Btu energy conservation loan program.  We will use economic stimulus funds from the U.S. Department of Energy and appropriated by the Minnesota Legislature. We were hoping to roll out the program earlier, but the paperwork barriers out in Washington D.C., turned out to be more formidable than the concrete and asphalt barriers at the former Minnehaha Lanes site, where we’ve completed building demolition, contamination cleanup and parking lot construction. We have a great development site ready to go and a couple real prospects are kicking the tires now.

We also assisted HealthEast Medical Transportation service and Baldinger Bakery in expanding and modernizing their operations on two of our East Side properties. HealthEast has begun construction on one of the former 3M parcels. We still are working with Baldinger to finalize the financing for that important project. Interestingly, both projects were contingent on lower-interest financing through the Port’s allocation of federal New Market Tax Credits (NMTC) – signaling to us that the much-publicized commercial credit crunch is not over. It’s also clear that we will pursue another NMTC allocation for 2010.

With new leadership at the Port, 2009 was the time to reflect on the past and look into the future. Our job was to create a strategic plan for the Port that will help us progress into the second decade of this century. The consultant Prouty Project assisted us. The outcome wasn’t revolutionary. It was mostly a validation of what we currently do. But it also opened our eyes to new opportunities that we might have otherwise missed. From the strategic planning process we determined that our core purpose for existing is to improve the lives of Saint Paul’s citizens by helping build a vibrant economic community. Our vision is to be the premier local economic development entity in the nation (no point in aiming low). Our mission should be familiar to those are familiar with the Port’s history; it is to create quality job opportunities, expand the City’s tax base and advance sustainable development.

To meet our core purpose, achieve our vision, and accomplish our mission, we also needed to establish our core values. These values serve as guideposts to help the Port Board and staff to determine which opportunities we should embrace, and which we should refer to others. The primary core value is to remain fiscally sound. As an entity that must be both entrepreneurial and prudent in order to keep the doors open, this value is an imperative. But the other core values are important guideposts as well. We intend to be socially responsible, collaborative, innovative, willing to take reasonable risks, and we must act with the integrity that is expected of public entities. Nowhere in our plan does it say that we will only do one type of development, or that we won’t do some types of development. We know the Port’s sweet spot is industrial development, but if we can assist or fill a niche on other types of developments that are consistent with our purpose, vision, mission and core values, we should. As our Saint Paul economic development partners contemplate the future of our joint efforts and relationships through the Mayor’s Economic Development Task Force, the Port’s strategic plan represents flexibility, with criteria, that will help us do our part to create a long-term vibrant economic future for St. Paul.

I’m looking forward to 2010. But in the meantime, I hope everyone has a wonderful holiday season.

“We always answer the phone,” said Ed Strom, president of the company that built its headquarters in the Saint Paul Port Authority’s Great Northern Business Center in 2006.

“Other contractors stop work at 5 or 6 o’clock, but we have an employee answering the phone 24/7, 365 days a year,” Strom said. “Our customers know that they’re not going to talk to an answering service.”

This devotion to their customers has not gone unnoticed. Recently, the company received the St. Paul Area Chamber of Commerce Deubener Award for Emerging Business. That award was added to industry accolades the company has received over the past few years, including two received at the Multi Housing Achievement in Design, Advertising and Community Support (MADACS) Awards Ceremony.

Restoration Professionals (www.restpro.com) could be called the emergency ambulance version of contractors. Its 60 employees tackle everything from major fire and flood damage to duct cleaning and pest control and its 36,000-square-foot facility has areas where damaged documents or expensive art can be painstakingly freeze-dried or where all the contents of a house or business can be stored securely during long periods of reconstruction.

“We’ve done work for some of the largest corporations in the Twin Cities and we’ve done one room in a corner of a homeowner’s basement – and everything in between,” Strom said. “A lot of our employees feel like they’re the guys in the white hats riding in to save the day.”

Leah Mesic, the company’s quality systems manager, grins when she describes the prevailing company attitude. “I think everyone here is a kind of adrenaline junkie,” she said.

Technically, Restoration Professionals has been in existence since 2003 when Strom and founding CEO Tim Labey decided to take a family-owned carpet-cleaning business in a new direction.

“It wasn’t like we started from nothing because the other business had been around since 1998 and we had some good employees – 15, including Tim and I – and some good customers who came with us,” Strom said. “It was slow for only a few months and it’s been a race ever since.”

By 2005, Strom and Labey, who grew up near each other in the same Saint Paul neighborhood, were looking for a larger facility to replace rented space in Roseville. And they liked the idea of relocating in their hometown.

“After looking at a variety of existing buildings, we realized that we were never going to get exactly what we really wanted and that we would spend a lot of money anyway,” Strom recalled. “That’s when the opportunity with the Port Authority to build from scratch presented itself and it took just a year to close on the property and build.”

From the start, Strom says the company sought to be the single-source solution for emergencies, with a highly trained staff. A wall in the main office is covered with training certificates earned by company employees. “We are the only company in the Midwest with three master restorers on its staff,” Strom said with evident pride.

When giving a tour of the company’s neat-as-a-pin operations and storage areas, Strom relishes the chance to show off high-tech imaging equipment used to detect hidden water damage or huge areas where equipment is readied for quick deployment. Parts of the building look like a well-maintained fire department, with vehicles lined up at the ready behind big overhead doors.

A major point of satisfaction, Strom said, comes from providing services to people who have been clobbered by an unexpected emergency.

“We put a lot of emphasis on customer service and relationships,” he said. “We deal every day with people who have experienced trauma and we have to be fast, efficient and accurate about things like cost and expectations.

“We have to deal with emotions and heartaches and sometimes it’s tough,” Strom added. “But it’s great to help people and it’s exciting because the work is fast-paced. It’s addictive and contagious.”

DEED received the national honor during the U.S. Environmental Protection Agency’s (EPA) national conference in New Orleans. The Saint Paul Port Authority nominated DEED for the national honor.

DEED launched the statewide Contamination Cleanup and Investigation Grant Program in 1995. Since that time, more than $112 million in grants have been awarded to more than 200 projects. The Port Authority received more than $17 million of that total in contamination cleanup and redevelopment grants.

The DEED programming started with state appropriations funding to get contaminated sites back into productive reuse. Prior to the establishment of this program, sites went through the Superfund process and could be tied up for years. The Contamination Cleanup and Investigation Grant program aimed to jump start development.

A statutory requirement of the grant program, which awards nearly $4 million per grant cycle, is that a quarter of the funding is designated for rural areas. Site investigation grants are awarded up to $50,000 per project. The size of cleanup grants can vary, but average $500,000 per project.

The EPA Revolving Loan Fund grants provided to DEED throughout the years is used as gap financing for projects that use the Contamination Cleanup and Investigation grant program. To date, DEED RLF funding includes $3.1 million for hazardous substances and $2 million for petroleum.

It takes a region to raise Saint Paul’s visibility

German Immigrant is small business success 

Grzywinski honored

Anfang legacy 

This month, I would be remiss if I didnt start this column by celebrating the great news about two important East Side development projects. In October, the Port Board of Comissioners approved land sales and financing for Health East Medical Transportation and Baldinger Bakery. While further detail is provided in a separate article in this edition of the RePort, those two projects will result in at least nearly 200 jobs, and new capital investment of $34.5 million along Phalen Boulevard. Equally important, both projects involve modernization activities that will help these valuable employers meet the demands of the marketplace. We are truly excited about these deals and are working toward others, as well.

But the other topic that I would like to explore this month is the growing momentum around the region for a more coordinated and cooperative marketing effort. The Port’s primary economic development partners including the St. Paul Chamber, Capital City Partnership, the Riverfront Corporation and, of course, the Mayor’s Office and Saint Paul’s Planning and Economic Development Department are discussing ways to improve how we portray the citys assets to business prospects within the City, Region, nationally and internationally. Those discussions are being complemented and buttressed by a second discussion among regional business and government leaders about creating a more sophisticated approach to marketing the entire Twin Cities Metropolitan Area.

There is enough excitement around the notion of regional marketing that it was the catalyst for an Inter City Leadership Visit, organized by the St. Paul Area and Minneapolis Chambers of Commerce, to Charlotte, NC. The Ports Lorrie Louder and I participated in the meetings, and we were one of many sponsors of the event.

Our takeaway from the event and previous discussions here is Saint Paul is pretty straightforward. The primary job of site selection firms is to quickly weed out prospective locations for their clients and concentrate their attention on a few good prospects. Those areas with a solid brand, organized marketing and site information, and a one-stop point of entry stand a greater chance of winning business development than those who lack these basic elements. Simply put, the Twin Cities is considered a solid brand we still have a good image in the marketplace for many of the reasons that weve been reciting to each other for years. But the Twin Cities lacks an organized, focused marketing effort and it also lacks an easy point of entry for anyone who is looking for development opportunities in the region. That means the Twin Cities in general, and Saint Paul in particular, is often weeded out before we have a chance to put on our best face.

The Itasca Project, a civic engagement organization whose makeup includes leaders from the states largest corporations, is interested in a regional marketing effort as a component (and perhaps the centerpiece) of their jobs and economic development initiative.

So why would Saint Paul, the Port, and all of our local economic development partners want to be part of this effort? Arent the other communities in the region our competition? The answer lies in another takeaway from the Inter City Leadership Visit and other research. Both the people who have organized successful regional efforts, and the site selection consultants who help companies make location decisions suggest that the model for successful economic development relies on three basic tenets Brand Regionally, Market Regionally, Compete Locally. When a regional branding and marketing system nets a business prospect for the region, it is up to each individual community to match its positive attributes to the expressed needs of the prospect.

One national site selection consultant referred to this process as, coopetition. One of our Charlotte hosts described the arrangement as follows: Work to get the prospect interested in the region, and then compete like cats and dogs.

However its characterized, there is some energy around attempting to organize our region and we will participate in the effort. To be ready for the day, if it comes, that a regional economic development marketing infrastructure is created and launched, the Saint Paul economic development partners need to continue to improve our own branding and marketing. And ultimately, thats a worthwhile exercise regardless of whether a regional approach is ever created.