/usr/web/www.marshallindependent.com/wp-content/themes/coreV2/single.php
×

Promoting economic development on Main Street

Photo by Mike Lamb The Tracy Economic Development Authority is working to help revitalize the city’s downtown area.

A voice from the back of meeting room inside the Clarkfield city offices building came from a concerned resident.

“There has to be someone who wants to be running the restaurant and have success,” she said.

“People would stop on the street and say, ‘where can we get something to eat?’ We say we don’t have a restaurant. They just look at you funny,” another woman said. “I think we should try to keep it. Find somebody to run it.”

The two residents were among about 50 people who squeezed into the small meeting room for a meeting called by the board members of the Clarkfield Economic Development Authority on Aug. 5. The board was recently informed by Minnesota Office of the State Auditor the Clarkfield EDA and the city could no longer own and operate Medea’s Cafe which is located inside the Diamond Mall in the center of town.

Earlier that same day, the manager of the restaurant had notified the EDA she was giving notice to leave the restaurant for a different job. It was more bad news for a city-owned business that was draining $3,000 a month from EDA coffers, according to its board president, Jamie Olerud.

It’s not uncommon for cities to own golf courses or liquor stores in Minnesota, but owning a restaurant is unique. Olerud said the move was made in desperation to keep the only restaurant in town open.

“The bank (F&M) donated the cafe to us in 2016, so we got the door open through the EDA,” Olerud said after the meeting. “We took it over and got it up and running. It took a few years to find somebody (to operate it). We wanted to just lease it out, but that didn’t work.”

According to the city of Clarkfield web page, the EDA “strives to promote the economic growth and development of the commercial, residential and industrial needs of the community.” The EDA board is made up of seven members, two of whom are City Council members. “It’s our job to seek out economic opportunities and promote economic growth in the city,” the web page also states.

EDAs act as bridge

Clarkfield is among many southwest Minnesota cities that have formed EDAs to help foster that economic development, including Marshall. While it’s by far the largest city in the Lyon/Lincoln/ Yellow Medicine counties region, Marshall shares some of the same goals. Tara Onken, the Marshall EDA director is well aware of the challenges faced by the small and large communities. She also served in an EDA positions in Tracy and Balaton.

“EDAs act as a bridge between businesses. It helps to connect people and businesses in the town,” Onken said. “I think all communities have different focuses. Some EDAs are actually an authority established by the city. Some of them are private, where they call them EDOs or economic development organizations and are privately funded. So even across economic development there are different organizations. Ours is obviously city.”

In Marshall, the economic development focus has led to two recent major large box store openings — Ashley Furniture HomeStore and Hobby Lobby in the shopping center that was once Kmart. But the Marshall EDA shares the same fights to revitalize the downtown and spur residential home building as its smaller neighbors in the surrounding area.

The city of Marshall contracts with Marshall Area Chamber of Commerce to operate the EDA, so Onken is not a city employee. But EDA services are funded through the city.

“We are boots on the ground,” Onken said. “We help the person (business owner) navigate through — OK, here’s the policy requirements. You need this and this.”

But Onken said the city is the decision-maker.

Like most cities and small communities, Marshall works though its EDA to offer tax abatements and in some cases, small loans to start-up businesses.

To help spur downtown renovation of retail storefronts, the city of Marshall recently launched a facade improvement program. The city offers grants up to $5,000 to improve the looks of the storefronts.

“Its public funds, obviously two bids are required. And it’s on reimbursement basis. We don’t give it to you upfront. We got to see the work that was done,” Onken said.

She said encouraging renovations of facades is important for downtown businesses.

“Everybody judges a book by its cover. The best place to eat, or best place to shop. If it looks run-down — if you are from a different town — you don’t want to really go in.”

That was one of the issues with the Clarkfield restaurant. A number of patchwork repairs done on the roof failed to stop water dripping from the ceiling.

“A leaky roof doesn’t bother us, but what if you are a visitor or John Q Public that hasn’t been there before. You walk into the building and the first thing you see is garbage cans to catch the water and a floor with carpets tore out. It’s not very appealing,” a man said during the Aug. 5 EDA meeting. “Something has to be done.”

His comments echoes the challenges that a small town EDA faces to keep a struggling restaurant open and support other economic services. While owning and operating a restaurant may seem unique, the Clarkfield EDA also operates 16 two-bedroom duplexes within the city. It is also a property owner of multiple for-sale locations in Clarkfield, including the historical downtown bank, prime railroad adjacent land and shovel ready acreage in the industrial park.

It also offers gap financing to the business community.

“The EDA is actually a place where a small business can come in and ask for loans,” Olerud said. “They actually have to have a loan from a bank and we will match funds. So they are getting one for $10,000 and they can slowly pay us back to get more business in town.”

Controversy in Tracy

Offering financing aid to businesses is not unique among EDAs in the various communities. But it has recently led to some in-fighting in Tracy and ultimately the removal of one EDA board member and the resignation of another. A third member successfully defended himself in a hearing and remains on the board.

James Mattson, a business owner who applied for loan from the city through the EDA, filed a discrimination complaint with then City Administrator Kris Ambuehl. Mattson alleged that EDA board member Jeff Salmon acted to “sabotage” his business.

Ambuehl passed along findings of his investigation to City Attorney Matthew Gross. The report alleged violations of the Minnesota Open Meetings Law, city codes and violating the Fair Credit Reporting Act.

The city attorney recommended the City Council to hold a hearing to decide whether or not to remove Salmon from the EDA board. He ultimately was removed after a four-hour hearing that involved the city attorney and Salmon’s lawyer.

The hearing, however, pointed a spotlight on the loan application process. It was alleged that City Council member Tony Peterson, who is an employee at Salmon Motors, independently conducted a background check of Mattson through an online service. Testimony at the hearing also fostered concerned that maybe Mattson was treated differently than previous applicants because he is not a long-time resident. City records show loans in the amounts of $25,000 and $20,000 were approved to two Tracy businesses during the past year.

In an interview after the hearing, Ambuehl defended EDA practices, stating what Salmon and Peterson were alleged to have done was not standard procedure.

“I think it was clearly stated by Council, a board member should not, No. 1, act independently. They need to act as a board. And pulling unauthorized background checks on someone else is not standard EDA policy. In my understanding it has not been done before,” Ambuehl said.

The entire Mattson episode has taken a toll on EDA Chair Dennis Fultz who has served on the board since its inception in the mid-1980s. He choked up at times when talking about the recent events.

“When the EDA got formed, the intent was we would be that lender of last resort,” Fultz said. “If somebody wanted to expand a business in the community and the bank really wouldn’t lend them the money, we were there to just back it up. And we had limits on how much dollars we could lend to any one person.”

He said $25,000 is the limit for any one loan and the EDA and city would only approve lending out 30 percent of “our available” revolving fund dollars to any one request. Fultz said typically the city would only put $75,000 to $100,000 into the revolving loan fund.

In the past, however, Fultz admitted that money was lent out without “a whole lot of security or collateral to protect the city.”

“In most cases, the city or the people on the board, knew the person who was asking for the revolving loan funded out,” he said. “On several occasions in the late ’90s and maybe early 2000s, we gave loans to people who basically —   the business was struggling and a new person came in and they hoped they could take over and pick it up again. Well, in about three cases, that did not happen and where the EDA lost a little bit of money.”

Jeff Carpenter, Tracy’s EDA director, cautioned that the city is not a bank.

“We already know the credit isn’t way high or maybe they don’t have a lot of credit yet. We are still here to take some calculated chances and calculated risk.”

And taking risks has led to the city owning a deteriorating building that once housed the “Asian Market.” That was the building Mattson was going to move into and fix the roof. Ambuehl said estimates state that it will take $18,000 to fix the roof and an additional $20,000 to $30,000 in additional work inside the building.

If you take the personalities out of that particular loan (request) — I felt very comfortable we as a EDA, we were protecting the city. That building had been on our radar, but it was considered a blighted building,” Fultz said.

He explained that the previous owner left the building without addressing the blight issues.

“The thoughts were maybe we should just buy it. And that was the decision that was made,” Fultz said.

The building remains vacant and may end up being demolished. Ambuehl points out it’s just not the lost investment into that building. The city is also losing potential tax revenue with no operating business inside the building.

“And when you tear down a building in the downtown area, it becomes green space. And nobody is building new buildings in the downtown. It’s just not happening. It’s very rare,” Ambuehl said.

Fultz, however, sees more than lost tax revenue. He sees the lost opportunity for economic growth and employment possibilities.

“I’m looking for ways to grow a community and add services and that (Asian Market building) would have done that,” Fultz. “Maybe that would have become an incubator building for something much larger. That is what I saw in that small building. The opportunity for the future and make the city bigger, better.”

Success stories

But while the Asian Market building turned into a controversial black eye for the city and the EDA, there has been plenty of success stories.

Chasing our Tails, a manufacturer of pet treats, is setting up shop in Tracy. Besides the manufacturing operation, Chasing our Tails owner Steve Trachtenberg said he plans to buy the Dairy Queen building to open a market/cafe. And a facelift operation being conducted by new owners at the Tracy Lanes building is progressing in its downtown building. And there is talk of making the downtown area more pedestrian friendly by adding bump outs on intersection corners. Plans call for making the downtown more of “mall-like” area.

It’s those kinds of hopes that spur the EDA in Clarkfield to continue to look for solutions to keeping the only restaurant in town open.

Since that Aug. 5 meeting, the EDA found another operator for the restaurant who has already taken over. On Thursday, Natasha Lynne said she took a “leap of faith” in agreeing to run the restaurant. She was loaned some items out of the local museum to decorate the inside. And after the last rainstorm, she walked into the restaurant the next morning and everything was dry inside. So she’s pleased that roof repairs have stopped the ceiling leaks.

The restaurant is now open 8 a.m.-3 p.m. Monday through Friday.

Olerud explained that the State Auditor’s Office is in approval of the city continuing to own the restaurant until it’s stabilized. But the restaurant will eventually have to be taken over by a co-op or a new operator buys it.

“We don’t have to close down right away, but we do have to find a solution,” she said. “If it fails, it will be a big loss. We have been working on this cafe for many years and we want it to succeed and we want this cafe in town. The community wants it and we do too.”

Newsletter

Today's breaking news and more in your inbox

Today's breaking news and more in your inbox
Are you a paying subscriber to the newspaper? *
   

Starting at $4.38/week.

Subscribe Today