Twin Cities to get in game of selling image

To the relief of many, a regional economic development agency is taking shape to help brand the metro area as open for business.

By JENNIFER BJORHUS and DAVID PHELPS, Star Tribune

The Twin Cities is about to get a head marketer.

Saying the metro area needs to brand itself and court new business in a unified way, the Itasca Project has been quietly creating a new regional economic development agency it wants up and running by the new year. At a time when money is tight, it's out raising an initial $2.8 million for the effort and has just launched a national search for a director.

"We are the largest metro area in the nation without a regional entity," said Kathy Schmidlkofer, a General Mills financial executive heading up the effort to create the as-yet-unnamed agency. "We've maybe rested on our laurels a little bit."

St. Paul Mayor Chris Coleman has pledged $125,000, subject to the council's approval, and noted "we were in first."

"We're getting beat on a regular basis in a game that we're not even playing," Coleman said. "Every site selector that we talk to says we're not even on the list of potential cities."

Schmidlkofer has been working on the project full time for the past year for Itasca, an alliance of influential CEOs and public officials from around the area including Ken Powell, General Mills' CEO. The group largely works out of the Minneapolis offices of consulting firm McKinsey & Co. and is perhaps best known for a report it released a few years ago on achievement gaps in Minnesota's schools.

Last April the Itasca Project released another report saying the area's business rankings were dropping, its economic development efforts were too fragmented and a regional game plan is needed to jump-start the state's ailing jobs machine. The Twin Cities just isn't on the radar of site selectors around the country that companies hire to find new locations for them, it said.

The new entity is a work in progress, Schmidlkofer emphasized. But it hopes to have a director in place by Jan. 1, with an operating budget for 2011 of $2.8 million and a staff of perhaps 12 people. The goal is to increase the annual budget to $4 million and the staff to about 20 after a few years, she said. Finding an office is on the to-do list.

It has hired Chicago-based DHR International Inc. to lead the executive search. Michael Langley, the former head of Pittsburgh's regional economic development agency, has been working with the Itasca Group as a consultant on the project.

Schmidlkofer wouldn't say how much of the $2.8 million she's raised so far, but said most of the money will come from corporations, with roughly one-third coming from cities, counties and other public bodies. No state money is going to it.

The effort appears to be gaining broad support despite both public and private belt-tightening.

Burnsville, for instance, earlier this year made a permanent $3.5 million budget cut. But it has $25,000 in its annual budget for the new economic development group. The City Council won't vote on the budget until December. As Burnsville Mayor Elizabeth Kautz sees it, her city had just one economic development person on staff and couldn't create its own marketing campaign for $25,000. She said she's not concerned that any new jobs the group might create wouldn't necessarily wind up in her city.

"We need to continue to market our city so we attract new businesses," Kautz said. "We can't do this alone."

Minneapolis Mayor R.T. Rybak has committed $150,000 in his budget for the project, although the amount still needs City Council approval.

Chief of staff Jeremy Hanson Willis said the city's contribution would come from the budget for its Economic Development Department. "I can't imagine creating a regional economic development entity without Minneapolis being part of it," he said.

Hennepin County has been asked for a contribution of around $150,000 but nothing has been committed, said Patrick Connoy, the county's economic development manager. Ramsey County would only say it hasn't committed anything.

Even tiny Rosemount, a city of 22,000, has given a preliminary pledge of $10,000 to the entity.

"There's benefit to the public tax base," said Rosemount city administrator Dwight Johnson. "This gives the metro area a regional entity to market the area national and globally."

A similar public-private economic development group called Advantage Minnesota operated in the 1990s to market Minnesota, but with relatively limited results, a person familiar with that group said.

Separately, Rebecca Driscoll, formerly Yanisch, Jesse Ventura's commissioner of Trade and Economic Development, said that it's tough to measure results of such collaborative economic development groups.

Dane Smith, president of the policy group Growth and Justice in St. Paul, also gave the effort a thumbs-up.

"I do think that something beyond 'no new taxes' as an economic development strategy makes some sense," he said. "The Itasca Group has a reputation for being thoughtful and not ideological."

"I like this idea of branding," Smith added. "Our brand is progressive. Economic fairness is our brand."

jennifer.bjorhus@startribune.com • 612-673-4683

dave.phelps@startribune.com • 612-673-7269