Minneapolis re-evaluates its ties to Greater MSP

Greater MSP has just about lost the M in MSP.

Minneapolis pulled most of its next year's funding for the regional economic development group, as council members questioned what benefit the city gets and raised concerns that Greater MSP pits local governments against each other in the race to offer incentives to companies.

"My constituents have a right to see some return on our investment," said Lisa Goodman, Minneapolis council member.

The move, which happened despite the objections of Mayor Betsy Hodges, is hardly debilitating for Greater MSP, but it is a symbolic blow.

The state's largest city and commercial capital shrugged off the public-private partnership built on the gospel of regionalism and backed by several of the state's top business executives and local officials across the metro.

"We're disappointed," said Michael Langley, Greater MSP's chief executive. "We're going to work very hard with the city council, with the mayor, with the city, to find a way to restore those resources so that they are fully active members."

Minneapolis has given $800,000 to Greater MSP since 2011, and the mayor's proposed 2017 budget included $125,000 for the group. Hours before budget approval, the council took all but $10,000 of that away and slated it for a full-time city employee focused on business retention and expansion within Minneapolis. Only Council Member Jacob Frey voted against the amendment.

Goodman said in an interview she was troubled by reports that Greater MSP orchestrated a bidding war between local governments when it tried to help Prime Therapeutics, an Eagan-based pharmacy benefits manager, scout for a new headquarters location. Greater MSP disputes this characterization, but Goodman asked other council members if they wanted to take action, and most of them did.

Responding to council inquiries about what the group had done for Minneapolis, Greater MSP took credit for the Super Bowl coming to Minneapolis in 2018, the Downtown Commons project and Wells Fargo's decision to build $300 million office towers near the stadium, Goodman said.

"It would be a stretch to say that Greater MSP is responsible for these good things happening," Goodman said. "There were many players."

Greater MSP was launched in 2011 to promote job growth and business investment, often by putting the Twin Cities on the radar of chief executives and site selectors around the country.

Langley, head of the partnership and an apostle for regionalism and global competition, was paid $814,000 in 2015 — a base salary of $515,000 plus $299,000 in deferred compensation as an incentive for him to finish his five-year contract.

The organization employs 21 people and is headquartered in St. Paul. It is funded mostly by private companies, but about a fifth of its $6 million budget comes from local government, including $125,000 from St. Paul, $150,000 from Hennepin County, $100,000 from Dakota County and $75,000 from Anoka County. Several other cities and counties contribute lesser amounts.

U.S. Bank CEO Richard Davis is chairman of the board, and General Mills CEO Ken Powell, Ecolab CEO Doug Baker, University of Minnesota President Eric Kaler, Hodges and St. Paul Mayor Chris Coleman are on the 40-member board of directors.

The problem in Minneapolis, Davis said, was Greater MSP didn't explain its value well enough to council members.

"We should have known that the whole City Council needed to be advised, and they will be from now on," Davis said. "I'm not even worried about it. I've got meetings set up with [Council President] Barb [Johnson] and Lisa in the next couple weeks, and we'll tell our story and I think they'll value it."

Greater MSP says it has "been involved" in projects that yielded 25,000 jobs for the Twin Cities region and more than $3.2 billion in capital investment. The group declares in its 2015 annual report that it met or surpassed all of its 2015 goals — by bringing in 5,301 jobs and $578 million in capital investment.

Those figures reflect every deal in which Greater MSP had any involvement at all. Langley and his staff acknowledge that some projects would have happened anyway, but say their work is quiet, behind-the-scenes, forward-looking, and isn't always noticed.

In Minneapolis, Greater MSP commissioned a strategic plan for Downtown East in 2013 that helped inform development around the stadium, staff helped develop the pitch to the NFL to host the Super Bowl, and Langley traveled with the committee to Atlanta to make the Super Bowl pitch.

The group is focused on talent attraction and retention, by surveying newcomers to the region, professionals of color and professionals around the United States and sharing that data with its members. "More and more of our resources are focused there," Langley said.

Greater MSP points to survey data that shows site selectors and chief executives are dramatically more likely to think of the Twin Cities for expansion than they were a few years ago.

"The number one thing is that people who make decisions for business now have a much more positive view of Minneapolis, and look at us for business expansion," said Hodges, who opposed the council's decision to sharply reduce funding.

A spokeswoman for Coleman said he is a "huge proponent of Greater MSP and regionalism in general."

Officials in Chaska, Bloomington, Anoka County and even Woodbury — which doesn't currently fund Greater MSP — all said they are grateful for the data the group collects and its work bringing site selectors to the region.

"Frankly, our region was not even on the map," said Anoka County Board Chairwoman Rhonda Sivarajah.

She credits Greater MSP with landing $45 million in capital investment and 1,000 jobs for her county.

"That's something," she said, "that would not have happened without that regional coordination."

Adam Belz • 612-673-4405 Twitter: @adambelz