Proposal could provide $70 million for new economic development programs in Minn.

WILLMAR -- A multi-faceted plan that would provide $70 million in new money for economic development in rural Minnesota could help counties with high unemployment and low population be better prepared for the future.

WILLMAR -- A multi-faceted plan that would provide $70 million in new money for economic development in rural Minnesota could help counties with high unemployment and low population be better prepared for the future.

The state has invested in education and health care, but hasn't dedicated the same kind of resources to economic development, said Dan McElroy, Commissioner of the Minnesota Department of Employment and Economic Development.

The Strategic Entrepreneurial Economic Development plan, known as SEED, would help balance the investment.

The SEED initiative is one of Gov. Tim Pawlenty's key proposals that will be introduced in the 2008 Legislature. Legislative authors for the proposal are expected to be named in January.

During a presentation Tuesday in Willmar, McElroy outlined the proposal to regional economic development leaders.


Because economic development is a non-partisan issue, McElroy said, he believes the initiative has a "good chance" of being approved by the Legislature. He encouraged community leaders to lobby local legislators.

Rep. Dean Urdahl, R-Grove City, who sat in on the presentation, said he likes the governor's "innovative" plan and believes it will stimulate the rural economy. Urdahl said some of his ideas for tax credits have been included in the governor's plan.

Rep. Al Juhnke, DFL-Willmar, said in an interview that he also likes some of the ideas Pawlenty has packaged in the SEED proposal and that it "certainly deserves a look by the Legislature."

Juhnke said, however, that Pawlenty's plan to provide loans and grants for cities to fund infrastructure needs is a "backyard way" to borrow money that would otherwise be funded through Local Government Aid. "I think that's the wrong way to go," he said.

The proposal includes:

- $2.1 million in new funding for "developing and growing entrepreneurs" through such things as small business development centers, assistance to entrepreneurs, manufacturing extension grants and rural entrepreneur programs.

- $13.5 million dedicated for new capital for rural businesses, including tax credits, a loan fund, small business product development and the Minnesota investment fund.

- $20 million for a category called "sustained competitive advantage for rural Minnesota" that would include updating the Job Opportunity Building Zone program, community leadership and planning, and Main Street Minnesota revitalization.


- $50 million in bonding revenue for business development infrastructure, redevelopment grant programs and bioscience development infrastructure.

Under Pawlenty's plan for updating the JOBZ program, 64 greater Minnesota counties would be identified as "targeted rural opportunity communities" and would be given some additional economic development tools.

Those communities -- which McElroy called "more challenged counties" that have experienced declining population between 1980 and 2000 and have above average unemployment between 2000 and 2006 -- would be allowed to extend the JOBZ program for 12 years for agreements signed before Dec. 31, 2015.

Another 16 counties, including Kandiyohi County, would be able to extend JOBZ agreements for an additional 10 years.

This second group would be eligible for all other SEED programs except the Main Street Minnesota Revitalization grants and the Community Leadership and Planning program.

McElroy said because Kandiyohi County is a "success story" in terms of population and unemployment, it was not named one of the "targeted" rural counties.

None of the seven metro counties is eligible for the SEED programs Pawlenty is proposing.

JOBZ has not been universally supported by legislators, who suspect the state has subsidized jobs and business growth that would have happened whether or not JOBZ existed.


McElroy said the program has been "very successful" by creating 11,000 jobs with an average wage of $12 an hour in 310 districts.

He said one-third of the new jobs were created in towns with a population of less than 2,500.

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