Crews continued to redevelop the 61-acre Beacon Bluff Business Center. In late June, construction crews leveled a 317,000-square-foot building on the site. The building is not one of five the Port Authority and Casserly Turley are marketing nationally for reuse.

From the President

Louis Jambois

In late June, an unprecedented event quietly occurred in the Twin Cities. The event involved hosting eight national site selectors on an informational site tour of our region. The local partners included the Minneapolis Regional Chamber of Commerce, the Saint Paul Area Chamber of Commerce, the City of Saint Paul, the Minnesota Department of Employment and Economic Development, the Itasca Project, and, of course, the Saint Paul Port Authority.

The three-day tour marks the first time all of these partners have worked together to showcase the region. The participating site selectors represent a small group of professional consultants whose primary work is to find suitable locations for business locations and expansions.

Information presented to them was wide-ranging and included the area’s cost of doing business, infrastructure, regulation, workforce, transportation systems, our network of educational institutions and available sites. We also touted our quality of life. Local corporate real estate experts including Doyle Shea, of 3M Co. and Jim Scannell of Travelers Insurance provided their perspectives on the Twin Cities’ business climate, as compared to the many other locations where those companies do business. The site selectors also heard from Mayors Chris Coleman and R.T. Rybak on why the Twin Cities is such a great place to live and do business. They heard from Dan McElroy, the Commissioner of DEED, Frank Cerra from the University of Minnesota, and Doug Baker from Ecolab.

I had the great pleasure of hosting our guests on a bus tour of three of our business centers – Williams Hill and Westminster Junction and Beacon Bluff. All three are great examples of the Port Authority’s Brownfields-to-Thriving Businesses capabilities.

As we toured further down Phalen Boulevard to Beacon Bluff, they were able to watch contamination cleanup and demolition work on two of the parcels, construction activities at the new Baldinger Bakery plant, and the finishing touches being put on the new HealthEast Medical Transportation facility.

The site selectors were genuinely interested in how the Port turns brownfields into jobs and tax base. They asked great questions and gave me a wonderful opportunity to show off our skills.  They were impressed by the quality of our cleanup efforts, the incentives we could offer, and they were very impressed by the quality and appearance of our finished business centers. If they had half as much fun on the tour as I had, they had a really great time.

But perhaps the most important segment of the entire event was a feedback presentation given by the site selectors. They were gracious, but candid. Their comments included some things that we’ve all heard including the need to continue to work on our general business climate. They also stressed the notion that Minnesota is a great place to do business and a too well-kept secret. We need to cooperate, brand, market and recruit regionally, they said. They thought our three-day event was a good first step, but that we need to organize and implement an on-going effort.

In all, the event was a demonstration to all of us that businesses, public officials and development organizations can work together to market our region’s strengths. There also was a common understanding that by working together, we will increase our prospects for future prosperity.

A tomato farm in Frogtown?

That’s the dream of Jim Hannigan, President and Chief Executive Officer of J & J Distributing, a Saint Paul wholesale produce company that supplies fruit and vegetables to most of the grocery retailers in the region.

Hannigan started the company with his wife and two other people in 1978 and now has more than 200 employees. He says a $1.3 million energy-conservation loan authorized by the Saint Paul Port Authority from its new Trillion Btu Fund is the first step toward creating an “urban farm” in Frogtown.

“The loan is for the energy-conservation phase of a three-part project,” Hannigan explained, adding that savings from new high-tech energy systems will be used to repay the loan in seven years.

This innovative program, created by the Port, will save Minnesota businesses money by reducing energy consumption by up to one trillion Btus a year. It is one of the first in the nation to use energy conservation as an economic development tool.

The Port Authority received a $5 million Federal stimulus grant through the Minnesota Department of Commerce for energy conservation projects in Xcel Energy’s Minnesota service territory. The Port program creates a financial reservoir for companies to draw upon for energy-conservation improvements by large energy users. In turn, the companies repay the loans from their energy savings, thereby replenishing the funding reservoir for other energy conservation projects.

The J & J loan is one of two newly launched Trillion Btu projects. Another Port-approved loan of $180,000 will be used to install an energy management system at Bandana Square in the Port’s Energy Park Business Center. Bandana Square, a commercial business complex, is owned by Wellington Management, Inc., which also is applying for a Trillion Btu loan to upgrade climate systems at another of its properties in North Oaks, MN.

Like the J & J loan, the money will be repaid through energy savings – within three to five years, according to David Bergstrom, Wellington’s director of project management and construction services.

“This loan program makes many things worthwhile that once were considered not worth doing,” Bergstrom said. “It’s a low-interest loan that pays for itself through savings.”

And the savings will be huge for J & J, which Hannigan describes as an “energy hog.” That’s easy to understand when you consider how much energy is required to chill J & J’s 100,000-square-foot facility that is filled with highly perishable fruit and vegetables.

The building’s climate system currently has 44 rooftop units that roar like locomotives on hot summer days, Hannigan said.

“Depending on designs that are still being worked out, those 44 units will be replaced by one to six units that are more powerful and efficient,” Hannigan said. “They have the same capacity, but use about half the energy. And they will capture the heat produced as a byproduct of the chillers and use it to heat office space in the building and, eventually, a 20,000-square-foot greenhouse.”

Hannigan also envisions a 20 percent expansion of his distribution facility, something that is expected to produce new jobs in the Frogtown neighborhood. That’s phase two of his three-part plan. But his biggest dream – and his biggest gamble – is phase three: A greenhouse that will grow organic hydroponic tomatoes year-round.

“In the winter, the byproduct of our new energy system will be a cash crop,” he said. “The produce industry is an energy hog and we’ve got to look at our energy consumption and figure out how we can make a difference. In fact, reducing the energy costs of farming and food distribution is something we have to deal with as a country.”

The concept of building growing facilities for food in the middle of urban areas populated by consumers is one way to reduce the energy footprint of agriculture, Hannigan believes. He thinks of himself as a trailblazer.

“The University of Minnesota doesn’t know about this yet, but I’m going to try and make them part of my project,” Hannigan said, referring to the University’s agriculture campus in Saint Paul. “I think urban farming is a very big part of our future, so the new greenhouse should not only be a growing facility, but also a teaching facility.”

Installation of J & J’s new climate system is expected to begin immediately and be completed by November. The expansion of the plant is planned to get underway in the fall.

“The greenhouse is the last part of the project,” Hannigan said. “The phase with the Port is about saving energy and the next two phases are about creating jobs and an urban farm environment. So it’s not just about energy – it’s about the future.”

For more information contact Pete Klein at 651-224-5686.

The Economic Development Association of Minnesota (EDAM) presented Saint Paul Port Authority President Louie Jambois with the organization’s 2010 President’s Award during EDAM’s conference in June at Madden’s Resort.

Louie has more than 30 years of experience in developing and implementing community financing programs at the federal, state and local levels. He has extensive experience managing and overseeing legislative policy creation, innovative development financing, and initiation of collaborative efforts between public and private community and economic development entities.

Prior to joining the Port, Louie joined what is now the Minnesota Department of Employment and Economic Development (DEED).  There he managed a variety of Community and Economic Development programs.  He also helped create and launch state-funded Contamination Cleanup and Redevelopment Programs, natural disaster recovery programs and Minnesota’s Job Opportunity Building Zone (JOBZ) program – the model used to create legislation in 2010 to retain Ford Motor Company in Saint Paul.

As president of the Port Authority, Louie is responsible for leading the organization in a direction that, in cooperation with our economic development partners, leverages the Port’s strengths in redevelopment, business and workforce development to create jobs, grow the tax base and assure a sustainable Saint Paul.

The Minnesota Department of Employment and Economic Development awarded the Saint Paul Port Authority two grants totaling $1.55 million  for contamination remediation at the Beacon Bluff Business Center ($950,000) and the Port’s newly acquired Pelham Business Center ($600,000) at Interstate 94 and Minnesota Highway 280.

Quintin Rubald provides living proof about the old cliché that says when you’re fired from a job you should consider it an opportunity.

Rubald founded Summit Fire and Protection in 1999, just a few weeks after being laid off by another company. He started with five employees and now has 250 — including 35 who were added earlier this year when Summit acquired Minnesota Conway Fire & Safety and moved its workers from Bloomington to Summit’s offices in the Port Authority’s Great Northern Business Center South.

“In 11 years we’ve become the largest full-service fire-protection provider in the Midwest,” Rubald declares. “It’s a hands-down fact.”

If that sounds like bragging, so be it. The acquisition of Minnesota Conway continues Summit’s methodical plan to diversify in the fire-protection industry.

Originally founded as a business specializing in the engineering and installation of building sprinkler systems, Summit now has a division that provides consulting services for fire-code compliances, plus another division called Dakota Mechanical that specializes in complete plumbing, heating and HVAC services.

The acquisition of Minnesota Conway, which specialized in fire alarms and fire extinguishers, adds another element to Summit’s glossary. “We’ve become a one-stop shop for a building owner or new-construction manager,” Rubald says.

This kind of expansion was anticipated in 2006 when Summit built its headquarters on land that had been prepared for development by the Port on a parcel just north of Minnehaha Avenue between Dale and Arundel streets. That same year, Summit acquired the financial muscle for its expansion plans by selling the majority of its holdings to Chicago-based Prospect Partners LLC, a private-equity firm.

“It’s given us the gunpowder to go out and do the acquisitions and keep the business going, even in a down economy,” Rubald said.

And there have been big deals. For example, Summit handled the sprinkling systems in the University of Minnesota’s new TCF Bank Stadium and its consulting division did major fire-protecting consulting work for the Minnesota Twins’ new Target Field.

At the time it moved into the Great Northern Business Center South, Summit also had offices in Rochester and Saint Cloud in Minnesota, and Iowa City in Iowa. The enticement that brought Summit to Saint Paul was a standard 10-year Port workforce agreement that requires the creation of living-wage jobs with stipulated pay minimums, plus specific building designs. In return, the firm got the land for $1.

It’s been good for the city. Once known as the Dale Street Shops, the 11-acre Great Northern Business Center was heavily polluted railroad and industrial land when it was acquired by the Port in the late 1990s and subsequently cleaned up in preparation for development. In addition to Summit Fire Protection, the site is now home to Restoration Professionals, Circuitech and Dakota Supply Group.

Rubald says Saint Paul has become the epicenter of Summit’s ambitions.

“We’re on the move,” he said. “Our plan is to grow as a full-service of life safety systems. There’s still a tremendous amount of opportunity in the industry.”

Learn more about Summit Fire and Protection at http://www.summitfire.com/

Call it symmetry of purpose: The Saint Paul Port Authority has managed river terminals on the Mississippi River since 1932. It has cleaned up and redeveloped land inland since the mid-1950s. Yet last year, for the first time, the Port used a portion of soil dredged from the river as backfill in one of its redevelopment projects.

This step, although perfectly reasonable for this 78-year-old redevelopment organization, was a footnote on line 15 of the Port Authority’s 2009 “Annual Dredged Material Report” to the Minnesota Pollution Control Agency: 15,418 cubic yards of river-dredge silt and sand deposited at the Port’s Southport River Terminal was reused as backfill at the Port’s $6 million Minnehaha Lanes redevelopment project in Frogtown.

“We will be reusing this material in future projects because it’s green and that’s what we’re all about here at the Port Authority,” said Kelly Warden, the Port’s Vice President of Property Development and the Minnehaha project manager. “Reusing this material saved – and will continue to save – us money on redevelopment projects.”

Warden, who also is the Port’s project manager on the $5 million Southport River Terminal redevelopment project, said it made perfect sense to use the dredge material as fill. The dredge material from efforts to keep the river channel open to barge and boat traffic, is deposited at Southport by the U.S. Army Corps of Engineers and other private contractors.

Eric Hesse, of Liesch Associates, the Port’s consultant on the Minnehaha redevelopment project, said that while not all dredge material is suitable for the geotechnical support for buildings, the particular material used at the Minnehaha site is highly organic and can sustain vegetative growth that buffers the property against erosion. The material has been used in other Minnesota cities and throughout the country for similar purposes.

The symmetry of mixing environmentally friendly projects is not lost on Warden, who is used to breaking ground in her work at the Port Authority. Just last year, her Minnehaha redevelopment project was the first in the nation to land U.S. Environmental Protection Agency stimulus funding to help demolish a building to make way for a new development.

From the President

The Minneapolis-St. Paul Business Journal informed the Saint Paul Port Authority in March that our Beacon Bluff Business Center was a finalist for their annual “Best in Real Estate” awards.  The Business Journal’s selection process is pretty rigorous  applications must be submitted, applicants are interviewed, and a panel of regional real estate experts serves as judges.

We were honored to have been selected as a finalist, but didn’t have any expectations.  We planned to attend the annual awards event on  April 14 – both to see how the awards selection turned out and to network with the region’s top real estate professionals.

Even after many years in the development business, I still was greatly thrilled when Beacon Bluff was announced the winner in the Industrial and Warehouse Development or Redevelopment category.  Bill Morin, Monte Hilleman, Tom Collins and I accepted the award on behalf of the entire staff and Port Board.  And of course, the project itself gave the Business Journal good reason to select it.

Anyone driving by the site today would see a flurry of activity.  On the west end, the 46,000 square foot HealthEast Medical Transportation building just off Arcade Street and Reaney Avenue is progressing nicely.  In the middle of the site at Forest and Phalen, Rachel Construction is demolishing the old 3M Building 99 complex to make way for a new roadway that will be built this year, and two clean building pads ready to host new businesses. On the east end along Phalen Boulevard, PCL Construction is grading the site of a 144,000 square foot Baldinger Bakery development. That’s three major construction activities within a stone’s throw of each other, on the east side of Saint Paul, in a down economy.

And the best part is we’re just getting started.

We’ve got shovel-ready building sites within the Beacon Bluff footprint, and we also have existing buildings for those who may be interested in buying and occupying a piece of history.   Our commercial real estate broker, Cassidy-Turley, continues to aggressively market Beacon Bluff and we’ve had conversations with several prospective buyers.  Prospects come and go, of course, but we’re excited about the level of interest that we’ve seen in Beacon Bluff.

We are grateful for the Best in Real Estate award.  It’s both wonderful recognition and validation of our efforts to date, but there’s still much to accomplish.  The Port’s mission is to create quality job opportunities, expand the City’s tax base and advance sustainable development.  We accomplish that mission one site at a time.  We’ve still got a lot of great buildings and building sites and our job is to fill them with a lot of great businesses.  That’s why we’re here.

Following a year dominated by bad economic news – federal government bailouts, rising unemployment, and business closures – manufacturers are noticeably more optimistic about the economy and their companies for 2010.

Although most manufacturing executives have described a difficult business environment in 2009, fear about future recessionary woes has waned dramatically. More than a quarter (26 percent) of executives are anticipating economic growth in 2010, and only 19 percent foresee a continued recession.

This finding is remarkably consistent across all types of manufacturers, though larger firms (in terms of revenue and employee size) are much less worried about a recession this year. For companies with $5 million or more in annual revenues, concern about a bad economy has dropped from 62 percent in December 2008 to 15 percent in January 2010.

Compared to a year ago, executives are reporting that key business projections are up as well. Not surprisingly, manufacturers are more confident about their own firms from a financial perspective. Last year, executives anticipated decreases in gross revenues, profitability and capital expenditures for 2009. This year, 44 percent of all executives surveyed say they expect their firms’ gross revenues to increase in 2010 – nearly twice as many as last year’s projection (23 percent).

Profitability expectations have also improved across the board. Last year, manufacturing executives expected their firm’s profitability to see a net decrease (17 percent expected an increase, while 34 percent braced for a decrease), while today they are aiming for a net increase (with 36 percent predicting an increase and only 17 percent anticipating a decrease). Even capital expenditures appear to be holding steady.

Yet, when it comes to making Minnesota a more competitive business location, executives believe more can be done at the state level. Despite the rosier projections about their own firms, many believe the state has yet to turn the overall business climate around. A majority of executives (54 percent) still believe the business environment is on the wrong track – a finding identical to the result in last year’s survey, when 55 percent of executives expressed this sentiment.

Last year’s survey revealed the cost of health care as manufacturers’ number-one concern, despite a teetering economy. This year, worry over mounting health care expenses continues to be the top concern, with more than two-thirds (68 percent) of manufacturing executives say they remain concerned about health care costs. The group of executives expressing they are “very concerned” has grown to 42 percent, up 6 percent from last year’s survey. One focus group participant put the situation’s severity into perspective when he stated, “My health insurance bill is bigger than the mortgage on my building.”

For some, fear of rising health care costs has been realized as more companies have recently been forced to drop employee coverage. The percentage of manufacturing firms who say they offer some variety of health care plan has dropped 11 points over the past year, from 63 to 52 percent.

Interestingly, despite the increased importance placed on health care, firms do not appear to be proactive about its challenges by promoting health care consumerism, or by offering wellness programs or other preventive health care initiatives at work. Where one-third of firms surveyed in December 2008 said they offered wellness programs or other initiatives, only a quarter now claim to do so. Most executives do not expect any government reform to remedy the health care challenge, either.

Finally, while executives believe in the importance and long-term value of taking measures to protect the environment, they do not always believe these eco-friendly actions are necessary for their own companies. Nearly two out of three manufacturing executives say it is important that the industry plays a role in protecting the environment. However, executives are split on whether green practices are important to their business.

Twin Cities-based firms are slightly more likely than firms across the rest of the state to see environmental measures as important to their businesses (53 percent vs. 46 percent). So maybe lean is not yet green in the eyes of Minnesota manufacturers.

Excerpted and reprinted with permission by Enterprise Minnesota. The author of this analysis of the 2010 State of Manufacturing in Minnesota is Rob Autry, a partner of Public Opinion Strategies (POS), a national political and public affairs survey research firm based in Alexandria, VA.