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Duluth program aims to spur development

By Scott Carlson
Dolan Media Newswires

Minneapolis — With Duluth’s jobless rate hovering slightly above Minnesota’s overall unemployment mark, city leaders are creating a temporary program to retain and create employment, and to spur investment in private development.

The Duluth Economic Development Authority is taking advantage of new state legislation allowing local governments to spend uncommitted tax-incremental financing dollars by the end of 2011 on private construction and rehab projects.

After Duluth officials discovered that private companies weren’t coming forward with proposed projects under the new law, they decided to start their own job-creation program.

The DEDA board has issued a call for proposals, DEDA Executive Director Brian Hanson said.

In less than a week, DEDA’s program is attracting attention, Hanson said.

Duluth has at least $750,000 in uncommitted tax-incremental financing money that it can use to providing grants, loans or subsidies to private companies for job retention and growth plans or private business investment.

Hanson said the city is developing criteria for reviewing development and job-creation proposals. The maximum investment per project will be $350,000; three or more projects are anticipated.

The 2010 temporary state law lets cities use their undesignated TIF dollars for any area within their municipal boundaries; the permanent law requires TIF money to be used within specific, pre-established TIF districts.

TIF districts let municipalities borrow money to subsidize developments and pay for utility and street work that serves projects. Communities then use new taxes generated by the projects to pay off the debt.

Hanson said he expects the city by late October to set up criteria for judging development proposals, then receive all plans by November.

“That would give us time to have these projects started by the end of June and spend the (uncommitted TIF money) by the end of 2011,” he said.

DEDA will set guidelines for applications and determine the selection criteria through a competitive process, according to the organization. Money is intended for projects that start before July 1, 2011.

DEDA’s move to start the temporary program comes as Duluth’s unemployment rate is about 7.5 percent, about half a percentage point higher than Minnesota’s overall jobless rate.

“These funds will help generate economic activity but the end result is a more prosperous community with sustainable businesses and neighborhoods,” according to a statement attributed to Hanson.

DEDA officials said money will be available only for private entities. Projects must also meet other criteria such as having a sound business plan, consistency with city-planning regulations and a demonstrated public benefit.

“The lingering problem in this slow recovery is high unemployment,” said John Heino, DEDA president. “The state has given the city and DEDA additional flexibility and provided a deadline to challenge us to do everything we can to expand job opportunities.”

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