DEED grants: The Saints go marching in

Dayton’s bonding picks stir political crossfire

In an announcement that brought cheers and jeers from both sides of the aisle, Gov. Mark Dayton ended more than three months of suspense Thursday by awarding $47.5 million in bonding money to nine projects.

The big beneficiary was the St. Paul Saints baseball team, which wants to build a ballpark in the city’s Lowertown neighborhood. The $25 million for the stadium, which constituted 53 percent of the total dollars at stake, immediately spurred accusations that Dayton was repaying St. Paul legislators for their support of the Minnesota Vikings stadium bill last session.

Senate Majority Leader Dave Senjem, R-Rochester, who embraced the grant program in this year’s bonding bill in the hope that it would yield money for his city’s Mayo Civic Center expansion, stopped short of expressly calling the Saints/Vikings issues a quid-pro-quo. But he said the Saints stadium had been discussed in backroom talks during the Vikings negotiations that dominated the 2012 regular legislative session.

“I don’t think, I know, [that] it relates back to the Viking vote and five St. Paul votes for the stadium,” Senjem said. “It was discussed quite a bit, but I didn’t think it was real. I thought probably it was casual conversation at the time, but it looks like it’s played out.”

Dayton rejected the accusations of politics.

“It was part of the discussion,” Dayton said. “But there was no deal. The fund itself was really an idea of the Legislature, and I went along with it.”

The state Department of Employment and Economic Development (DEED) received and vetted 90 applications totaling $288 million in requests.

Senjem, who is chairman of the Senate Capital Investment Committee that vets and assembles bonding bills, was a champion of the $47.5 million DEED fund. He remains supportive of the approach but thinks the Saints economic development potential comes up lacking compared to other projects.
“We were talking about an economic development block grant program,” Senjem said, “and we chose to put more than half of the money into a program in which the facility is used probably four months out of the year. Nice project, but I don’t think it has the economic development hum [of] other projects that could have been considered.”

DEED Commissioner Mark Phillips said the ballpark, which his agency gave the highest score among requested projects in the metro region, was held in high regard because of the opportunity it presented to clean up and develop a large commercial property.

Civic centers shut out

Dayton’s announcement represents a setback not only for Rochester, but likewise Mankato and St. Cloud. All three regional centers were looking for state funding for civic center projects.
Dayton included the Mayo center in his 2012 bonding request, but the Legislature didn’t include it in the $496 million bill last session. In the context of the DEED grants this summer, Dayton said the civic centers would have crowded out all other projects.

“This just demonstrates the inadequacy of the $47.5 million in the [face of] worthwhile projects throughout Minnesota and that this should be handled in an adequate bonding bill rather through this kind of backdoor method,” Dayton said. “I can assure those in Rochester, St. Cloud and Mankato that those three projects as well as other worthy projects around the state that will bring jobs and new economic vitality to their respective areas will be at the top of my 2013 bonding proposal.”
Republicans weren’t the only ones carping about Dayton’s picks. Rep. Carly Melin, DFL-Hibbing, took to Twitter to vent her frustrations over the lack of projects for the Iron Range.

“Zero DEED dollars coming to the Range,” Melin wrote. “Really glad we ALL voted 4 that Vikes stadium. I guess only the cities need economic development.”

Dayton discarded DEED’s ranking in awarding $2 million for the proposed Southwest Light Rail corridor that’s planned to run between downtown Minneapolis and Eden Prairie. DEED gave the $14 million request for the 15-mile rail line a measly 34 points. Pat Born, regional administrator for the Metropolitan Council, said the $2 million, while a fraction of the Met Council’s request, is essential for keeping the project eligible for federal funding. Omitting Southwest would have hurt the state’s efforts to secure federal funding to pay for half of the project, Born said.

“We were looking for razor blades all over the place,” Born joked with reporters about his reaction to the DEED rankings. “Were we desperate? We were really disappointed. But we didn’t think a decision had been made.”

The Saints and the Southwest Corridor were the only two projects awarded for the metro area out of 12 applications requesting a total of $59.8 million.

Bonding precedent criticized

While the ink is dry on Dayton’s bonding grants, the larger policy debate isn’t over. Indeed, several legislators, especially those who voted against the Vikings stadium, objected to allowing Dayton to do their work for them.

During floor debate last session on the bonding bill, the Senate argued over a floor amendment that would have moved the DEED grant money to the Minnesota Department of Transportation to pay for road and bridge repair. Although the amendment was defeated 40-25, a bipartisan groups of legislators, including Sen. Scott Newman, R-Hutchinson, called for the Legislature to retain its traditional role of choosing the projects that get funded in bonding bills.

“What we’re really doing is abdicating our authority to look at various local projects, and determine whether we [support] them, and simply turning that process over to DEED,” Newman said. “That is something I just can’t see myself supporting in any measure.”

There’s another school of thought, though, that looks more favorably on the DEED grants because the Legislature, especially in an election year, is too tempted to select politically calculated earmarks.

Sen. John Carlson, R-Bemidji, said the bonding program through DEED creates a cleaner process by removing the decision-making from the political contingencies of the Capitol. Carlson said during floor debate in May the program sets up a “process whereby the jobs that have the biggest return on investment, create the most amount of jobs, create the most economic impact, that those would be projects that rise to the top regardless of which party is in power, regardless of which member has the most seniority.”

In political terms, the DEED program was an unlikely development. A year before its creation, Dayton and Republicans who control the Legislature deadlocked over the 2012-13 budget and endured a government shutdown. One lobbyist noted the improbability of the same Legislature giving the DFL governor a blank check to approve specific bonding projects.

“It’s remarkable that a GOP Legislature handed over $47.5 million to a DFL governor,” the lobbyist said. “But I think it had a lot to do with horse trading on the Vikings stadium at the end.”
Back-door approach

Another reason for the unusual move, according to many insiders: It would have been impossible to pass a bonding bill that gave money to the civic center projects owing to hard opposition from the most conservative Republicans in each chamber. So bonding chairs instead put money into the DEED program, believing that it was the only chance for the civic centers to be funded.

Taxpayers League of Minnesota President Phil Krinkie said his organization will voice opposition if legislators take the same tack in future bonding bills. Krinkie, who was Capital Investment chairman when he served in the House, said the practice is bad because projects get approved without the high threshold — a three-fifths majority of the House and Senate — that is required to pass bonding bills.

“Bottom line, it’s an aberration of the process, and I would hope the Legislature never does this again,” Krinkie said. “But of course, once you open a Pandora’s box, you’ll have all these entities that are going to want to carry on the tradition because that way, if they get shut out in the bonding bill, then they can say: ‘Ah hah, I’ve got a chance to compete over here through DEED and play footsies with the governor in order to get my money.’”

Dayton hinted he isn’t sanguine about doing more project selection in the future.

“Robert Byrd taught me in the U.S. Senate that the legislative power is the power of the law and the power of the purse,” Dayton said. “And I actually have a higher regard than some people for the ability of legislators to go through a process of meeting interests in the different parts of the state and come out with a good package.

“I don’t think this serves the process well. I think the people who are not going to be funded should hear that straight out.”

Senjem, despite his convention center loss, said he wants to push forward with the DEED grant approach in the future.

“We’re going to continue to advocate for it,” he said. “There’s reason to see if there is a way to take the politics and earmarks out of this process. Our objective was to take a small amount of money and to see whether or not this could work.

“I’m obviously disappointed. But I think it you’ve got good criteria and you follow the criteria, you’ll have good results. I’m just not sure the criteria this year was followed as closely as we would want it to be followed.”

In addition to the two metro-area projects, grants were divided into southern and northern areas of greater Minnesota.

Southern Minnesota projects:

1) Sanitary sewer line expansion in Litchfield ($2.3 million)

2) Waste water treatment plant expansion in Hector ($1.1 million)

3) Sewer and water infrastructure for business park in Lonsdale ($1.5 million)

4) Infrastructure for a recycling facility for Redwood and Renville counties ($1.9 million)

5) Regional entrepreneurship business incubator in Hutchinson ($763,700)

Northern Minnesota projects:

1) Building demolition and construction of parking lot and skyway in Duluth: ($8.5 million)

2) Design, construction and furnishing a public health and wellness facility to replace facilities destroyed in 2010 tornado in Wadena ($4.2 million)