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Perception Collides With Reality

12/20/2022

 
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This past week the majority of my time was spent on the issue of public safety. A week ago Monday, 2 men were fatally shot next to Central Station in downtown St. Paul. And the tragedy is that no one is surprised. This tragedy is a significant upward departure even from what we’ve been dealing with; two murders on a weeknight, during a Wild game. Yet, still, no one is surprised.  I’ll tell you what I think this is – another urgent wake-up call. The question before us is, what do we need to do differently moving forward?

On Monday evening, December 19, Councilmember Rebecca Noecker (Ward 2) convened a community forum (included SPPD, Metro Transit police, and Office of Neighborhood Safety) to talk about what is being considered to “do differently.”  You’ll hear more from City leadership/SPPD/Metro Transit soon, and the recommendations include closing the vertical connection for a period while security upgrades are installed; wrapping the skyway; and improving patrols volume and coordination. Listen to a recording of the forum here, when it becomes available. 
 
The challenge of improved public safety, of course, extends beyond this one incident. This simply exemplifies perception colliding with reality. We are challenged with caring for our unsheltered so they don’t sleep in the skyways and downtown buildings at night, addressing specific hot spots like Central Station, ensuring our police department is set up for success with sufficient resources to tackle the immediate needs before us.
 
Because the degree of frustration and concern is elevating. Monday’s meeting, while outwardly polite, also reflected the very serious frustration from participants. Know that we are conveying your intense concern as well and staying as close as possible to the situation to ensure we are part of the solution.

See you in the trenches.
B

All of Us Face Budget Challenges Ahead

12/12/2022

 
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The messages of uncertainty continue. Housing market forecasts indicate a slowing (and maybe even price reductions) into 2023, business leaders are expressing nervousness. Contrarily, per the Wall Street Journal, “comforted by recent data, more investors are betting that the U.S. can avoid a deep and prolonged downturn.” And Steve Grove, DEED commissioner, said this past week that Minnesota's leaders should not be defensive of an economy that is humming along. "I mean 13 months of job growth. We added over 17,000 jobs last month. Lowest unemployment rate in the country," Grove said. "There's a reason for Minnesotans to be optimistic." Grove eyed the second quarter of 2023 for when Minnesota will fully return to pre-pandemic job levels. It needs about 35,000 more people working to reach that level. Minnesota does possess historically low unemployment rates, with Mankato leading the nation with a 1.3% rate this fall.
 
All of this in a context defined by a “silver tsunami” now upon us; birth rates that continue to decline since 2007; and today’s workforce that can live anywhere they like.
 
Whether we’re talking government, business, or personal budgets, what I know for sure is that we’ve got challenges ahead. The state has announced an historic $17.6B budget surplus going into the FY 2024-25 biennium, which requires real work to hammer out how to invest thoughtfully. Cities like St. Paul and Minneapolis are increasing their levies, putting renewed pressure on family budgets. This dynamic of local tax increases and statewide abundance sets us for a very interesting legislative session in 2023, indeed!
 
Governor Walz recently was interviewed by the Star Tribune and hinted in this article that “circumstances may necessitate grabbing tools – including tax cuts and direct incentives to businesses – that area rarely used by Minnesota democrats.” Now definitely is the time to use these tools. I agree with Doug Loon’s comments here: “the state’s massive budget surplus is an opportunity to update the state’s tax code to make Minnesota more attractive to businesses.” I also am looking forward to Governor Walz recommending significant one-time infrastructure investments using the one-time surplus money.
 
We’ll keep you posted.
 
See you in the trenches.
B​
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  • Ex-Minneapolis cop J. Alexander Kueng gets 3.5-year term in George Floyd death.
  • John Bandemer, Director of Safety Strategies at the St. Paul Downtown Alliance, sends out weekly updates on a SafetyComms dashboard. This dashboard is designed to pass along information that is useful to members of a SafetyComms network such as recent crime stats, unsheltered encampment status, and social media channels. If you’d like to sign up and receive weekly updates, simply go to the SafetyComms sign-up.
  • With 2 dead after shooting at downtown St. Paul light rail transit station – Twin Cities, feeling safe downtown isn't providing St. Paul much confidence. 
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  • The Federal Open Market Committee meeting begins Tuesday, with the press conference held Wednesday at 2 p.m. The Fed is expected to agree to a rate hike of 50 basis points, but lingering fortitude in the labor market may change those plans. 
  • Nurses reach deals at Twin Cities and Duluth hospitals, avoiding strike.
  • DEED: the Minnesota Department of Employment and Economic Development (DEED) announced the final component of the $97 million State Small Business Credit Initiative (SSBCI): the Small Business Loan Participation Program. SSBCI was part of the American Rescue Plan Act (ARPA) of 2021 and included $10 billion for state, territory and tribal business finance programs. This is the second SSBCI initiative – Minnesota received $15 million through the Small Business Jobs Act of 2010. 
  • MN lost 90,000 workers during pandemic; now has one of the tightest labor markets in the country. State experts say the labor gap has been a lingering problem for years and the pandemic made that gap even wider. Minnesota’s big economic challenge: finding people to fill jobs.
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​Because I so appreciate the Citizen League: I wanted to make sure you saw that Citizens League just released a new report.  This report explores why people run, decline to run, remain serving, or step down from office, and the impact on local government. See more in the email below and read the full report here.
 
Federal
  • Government funding: Congress faces a Friday deadline to avoid a partial government shutdown. What we're watching: Lawmakers entered the weekend at a multibillion dollar impasse, and House Appropriations Committee Chair Rosa DeLauro (D-Conn.) said the House is not drafting a short-term stopgap measure to buy more time. If leaders can't come to an agreement on an omnibus appropriations package, she and other leaders — Democratic and Republican alike — have indicated the likely outcome will be a one-year continuing resolution, much to the chagrin of the defense community. 
  • Can immigration avoid a cold winter in Congress? That’s the question immigrants and their advocates are asking as time runs out on the current Congress. The fate of Afghan evacuees, Dreamers, farmworkers and others hinges in the short term on whether crucial legislation can be passed before the new Congress takes over in January, with a split House and Senate making progress even more difficult. Several major immigration proposals are currently being debated in the final weeks of the year. This includes the Afghan Adjustment Act, protections for so-called “documented Dreamers,” and the possibility of a bipartisan compromise that would protect undocumented youth while cracking down at the border.
 
State
  • Recounts confirm 2 state House Democrats unseated in northeastern Minnesota. This in heavily contested District 3A (Ely/International Falls) and 3B (Island Lake).
 
Regional
  • Twin Cities property taxes jump, cutting deep into family budgets. Earlier article on St. Paul hosting a hearing on the proposed 15% tax hike – and how to apply for a refund.
  • Saint Paul: After months of deliberation and community engagement, the Saint Paul City Council voted to adopt the city’s $781.5 million budget for 2023.  Highlights of the budget the council approved were the Reduction of Office of Neighborhood Safety services of $350,000, leaving a remaining ONS budget of $150,000 in addition to $4 million in American Rescue Plan allotment.  
Local 
  • ​At least three St. Paul City Council seats will be open in 2023: Council President Amy Brendmoen and Council Member Jane Prince will not seek re-election, paving the way for a big shakeup in city leadership starting in 2024. The announcements, which follow former Council Member Dai Thao's resignation in August, mean there will be open races for at least three of St. Paul's seven council seats, all of which will be up for election in November. Read more.
 
Subscribe to our Chamber Advocacy Update to keep up with advocacy news.
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  • Visit Saint Paul’s Guide to the Holidays in Saint Paul!
  • And we’re already looking ahead to January and our annual Breakfast With the Mayors on January 26.  Please join us!
  • December's episode of B’s Table Talk featuring Ken Smith has been published on PodBean.
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  • It looks like many are hedging against a potential recession in 2023.  Want to know how?
  • TCB 100: Innovators and Newsmakers to watch in 2023. Special shout outs to Chamber members: Amy Brendmoen, St. Paul City Council President; Jude Bricker, CEO of Sun Country Airlines; Darrell Brown, President/COO of Ecolab; Acooa Ellis, SVP of Community Impact at Greater Twin Cities United Way; Elizabeth Emerson, VP of Public Affairs at Goff Public; John Frawley, President of Minnesota Zoo; Tracey Gibson, VP and Chief Diversity Officer at Andersen Corp; Barry Gisser, SVP/CFO at American Public Media Group; Jazz Hampton, CEO of TurnSignl; Christina Hennington, Chief Growth Officer at Target; Eric Johnson, President/CEO of Aeon; Neel Kashkari, President/CEO of the Mpls Federal Reserve; Suzanne Rivera, President of Macalester College; Marc Lore and Alex Rodriguez, Owners of Minnesota Timberwolves; and Stephen Spears, SVP of Twin Cities Community Banking at Bremer Bank!​
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  • Final reminder: the launch of Twin Cities Vanguard Accelerator to support Black, Indigenous, and Latina owned businesses. Applications are due Monday, December 12! Apply here.  
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  • Sears stores in St. Paul, Maplewood, and Burnsville hit the market, the latest properties in a long string of such releases since 2015. The properties are owned by REIT Seritage Growth Properties. Sears, which once maintained 3,500 Sears and Kmart stores, recently emerged from bankruptcy with just 22 active locations nationally. 
  • First affordable housing project in St. Paul’s planned Highland Bridge breaks ground. Residents at the Lumin will be 55 or older and earn 30% or less of the area median income. ​

Economic Outlook – still a mixed bag

12/5/2022

 
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​In my conversations with you, right now we’re talking a lot about economic projections. I track earnings reports of individual companies and sectors. I follow various leading indicators. And I ask you about your businesses.  Across all those inputs, I am hearing very mixed results and expectations. Still. They tend to be sector-specific and tied to supply chain challenges and interest rate moves. The economy’s fundamentals are still strong, so I wonder – as I’m hearing about companies “preparing,” making leadership decisions in anticipation of stagflation or worse, I wonder if such decisions might not actually be TAKING us there to some degree. I’ve been asking you and here’s what you’re telling me:
  • Right now, a significant challenge seems to be uncertainty. Nobody really knows the likelihood of a recession ahead, but the largest companies seem to be preparing – just in case. 
  • Supply chain challenges are still hugely significant across all facets of the manufacturing sector. Companies battling supply chain shortages and price instability continue to be very seriously interrupted. And this is creating economic shifts, currents that our largest companies are really battling.
  • The financial and real estate sectors are still trying to manage the impacts of changes in interest rates. Absolutely nothing is certain across these sectors. And appraisers? Forget about it; in a changing market, they really are challenged to get it right.
  • Manufacturing and construction are investing heavily in automation. Not to avoid hiring people, but to adapt to a future of fewer workers.
  • Healthcare organizations’ job openings are at a critical level, and they continue to lose millions of dollars across the last 3 years.
 
Leading indicators I watch:
  • The Federal Reserve’s economic research/”FEDS Notes”: In a recent speech at the Brookings Institution, Federal Reserve Chair Jerome Powell said that while the central bank may slow its interest rate hikes, it may keep rates higher for longer than expected amid continuing tightness in the labor market. Powell said that there are signs that inflation is easing and that the Fed may begin to dial back rate increases as early as the December Federal Open Markets Committee meeting (Dec 13-14). (The Washington Post)
  • Fitch Ratings: US corporate earnings trends, historically a leading indicator of recessions, will continue to weaken through 2023.
  • Manufacturing PMI is now at 49%. This is a key one for me. The manufacturing sector typically is about a 6-month leading indicator of economic changes.  And the metric I track is the Purchasing Managers Index (PMI).  When the PMI is above 50%, the economy is in growth mode. When it falls below 50%, it indicates retraction.  For the first time since mid-2020, the PMI fell below 50% for November. The contract manufacturers in Minnesota are bracing for retraction in the second half of 2023.
  • The jobless rate in November remained at 3.7%, a historically low level that is pushing up wages. Low unemployment and wage gains are helping fuel consumer spending—and contributing to inflation that’s close to a four-decade high. The jobs report keeps the Fed on track to raise interest rates by a half percentage point in mid-December. Meanwhile, prices for gas and food commodities are dropping (though you’ll still likely feel the pinch at the supermarket checkout).
  • OECD's composite leading indicator for the United States. This leading indicator is a summary index of consumer confidence, business confidence, production and labor market indicators, and financial variables. The probability of a recession over the next four quarters from this estimated model is is quite low as of March 2022, at about 5 percent. But the value has continued to decline gently every month since then.
 
On a lighter and more seasonal note, St. Paul Winter Carnival has released its 2023 buttons! Designer this year, for the first time in the carnival’s 137-year history, is a person of color, Nigerian-born local muralist Geno Okok, known for the joyful energy in his art.
 
See you in the trenches.
B
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  • Minneapolis says crime down year-over-year. Operation Endeavor launched in Sep, and a city report released Thursday showed “marked decreases in most metrics for measuring violent crime.”​
  • St. Paul police chief calls on his newest officers to be ‘ambassadors’ for their profession.
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  • No “Fedspeak” this week, as we are in the official blackout period ahead of the Federal Open Market Committee (FOMC) mtg that runs Dec 13-14.
  • Nursing strike would weaken Minnesota hospitals financially. The 3-day walkouts in September  cost hospital systems tens of millions of dollars; a prolonged winter strike would be far more expensive.
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​State
  • State House recounts scheduled to begin Monday, Dec 5. These are for two extremely close state House races in NE MN: House District 3A and 3B (Cook, Itasca, and St. Louis counties) – each within 50 votes.
  • Gov Walz says child care access will be ‘fundamental priority’ in legislative session. The governor said the state's multibillion-dollar budget surplus presents an opportunity to address the child care shortage. 
 
Regional
  •   St. Paul property tax: Why the increase, how to get a refund.
 
Subscribe to our Chamber Advocacy Update to keep up with advocacy news.
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  • Visit Saint Paul’s Guide to the Holidays in Saint Paul!
  • Please join us at St. Paul’s holiday party –  Holiday Chamber Connect: Tuesday, December 6, 5-7pm. Register here!
  • ​Our Young Professionals network is having its end-of-the-year celebration at Can Can Wonderland: Wednesday, Dec. 14, 4-6pm. Register here!
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  • Mackay: learning how to network is an essential tool. Cultivating relationships with the people who can help you, and vice versa, is key.
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  • Twin Cities BIPOC business accelerator launches. CEI joins with private partners (Founders First CDC, NEOO Partners, JP Morgan Chase) on a $5M effort that will impact up to 60 minority-owned small businesses.
  • U.S. Bancorp completes $8B acquisition of West Coast’s MUFG Union Bank. The purchase gives Minneapolis-based U.S. Bank a much bigger presence in CA, OR, and WA.
  • University of Minnesota, DEED launch $34.5M Minnesota Venture Capital Programs: The University of Minnesota is partnering with the State of Minnesota to inject $34.5 million into Minnesota’s early-stage, venture-backed businesses — a key step toward maintaining Minnesota’s position as one of the best states nationally for growing new businesses. The University-operated programs officially launch today, focusing particularly on investments in life sciences, agriculture/food tech, climate tech, advanced manufacturing, software, and technology. Last month, University officials joined Governor Tim Walz and Minnesota Department of Employment and Economic Development (DEED) Commissioner Steve Grove to announce nearly $100 million in new funding to support small businesses thanks to the federal American Rescue Plan Act.  
  • Capital Projects Fund: The U.S. Department of the Treasury approved broadband projects in six states under the American Rescue Plan's Capital Projects Fund in Florida, Georgia, Iowa, Minnesota, Missouri and Utah. Together, these states will use their funding to connect more than 180,000 homes and businesses to affordable, high-speed internet. A key priority of the Capital Projects Fund program is to make funding available for reliable, affordable broadband infrastructure.  
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  • Homebuilding permits down sharply in November. Residential construction continued to soften throughout the Twin Cities in November as buyers and developers held off on making big moves in an environment of rising construction costs and higher interest rates.
  • Renovated historical building brings affordable rentals to Snelling and Larpenteur. This is the former Farmer’s Union Grain Terminal Association, once home to the Teaching Institute for Excellence in STEM. Now opening as Amber Union, with 135 units affordable at 50% of area’s median income (AMI).
  • Maplewood Mall owner Brookwood Capital Advisors top put shopping center up for auction. The mall's current owner, Nashville-based Brookwood Capital Advisors, bought the shopping center in June for $27.5 million. Brookwood is looking for a new owner, preferably a local or regional buyer, that will take on the approximately 321,000-square-foot mall.
  • Dakota County: Dakota County officials will hear feedback on a proposed mental health crisis and recovery center in West St. Paul at a community engagement meeting Thursday. The West St. Paul City Council will vote on the project on Dec. 12. Some residents have expressed concerns about transparency and neighborhood safety after learning more about the project in recent weeks. Owned by Dakota County and operated by mental health service provider Guild, the proposed facility would provide 16 beds for both intensive and short-term mental health care at the site of the current northeast parking lot of the Dakota County Northern Service Center. $3.4 million will come from state bonding, $2.5 million from Dakota County’s American Rescue Plan funding, $1.5 million in other state funding and $750,000 from partner contributions, according to the county’s website. 

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  • Home
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    • Foundation >
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      • We St. Paul/ We Love Midway
      • Herbie Awards
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      • B Kyle - Press Kit
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