Two projects being funded by the half-cent local option sales tax that Rochester voters approved in 2012 are the $5 million Economic Development Fund and the $5 million for development projects in 17 area communities.
During legislative consideration in 2011, we were informed that Rochester's EDF was being cut from inclusion. John Wade, then president of the Rochester Area Chamber of Commerce, and I asked for a meeting with Rep. Greg Davids, chairman of the House Taxes Committee. He graciously accepted, at which time we requested that he add back the $5 million. Reluctant to do this, we asked if he'd consider allocating some money to area communities. He liked the idea and as a result restored funding for the city's EDF and added $5 million for area communities.
Including area communities caused some consternation among members of the Rochester City Council and at least one Rochester legislator. There was a hearing held on the matter but in the end, the council agreed and the "Good Neighbor Policy" was born.
Rochester area communities are independent from a governance perspective, yet thousands of people live in one community, work, and shop in another. While we may live in different cities, economically speaking our cities are interdependent. The economic relationship between area communities manifests itself most noticeably through daily commuting patterns. So, whether consciously recognized or not, this economic relationship makes us all part of a "larger" community.
What it's called is less important than recognizing the fact that our economic future is dependent in part on what happens in neighboring communities. In fact, 25 percent or more of Rochester's total sales tax dollars collected are from residents of surrounding communities.
Some will disagree, but my view is the "Good Neighbor Policy" in the end has created a lot of good will between communities and helps build a more cohesive and connected region -- something that could lead to a competitive advantage when comparing our economy to other area economies.
This policy will no doubt be part of the debate when renewing the tax is considered, some years down the road. A lot will depend on results. I can't speak to area community's use of the funds but I can address what Rochester is doing with its $5 million for economic development
The purpose of the EDF is to invest dollars in business development projects that help grow our community's economic base. To date, EDF has provided loans/investments totaling $1,457,450 to 13 Rochester businesses. Three loans have been fully paid off. Companies receiving funds have raised a total of $61 million of additional funding. That's $44 for every dollar of EDF. These businesses have created 67 jobs and are occupying over 46,000 square feet of space in Rochester. And 64 percent of fund recipients are women- or minority-owned businesses.
All grants are awarded by the city council and to date $1,047,333 has been granted to support entrepreneurial growth. These grants have been leveraged by an additional $2,835,651 invested by private entities. One of the grantees, Mayo Clinic Business Accelerator (a partnership between the City of Rochester, Mayo and RAEDI), currently houses 20 new companies. These companies have created 65 jobs and raised $38 million of additional funding. Grants were also used to further development of a local regenerative medicine industry.
The remaining EDF balance is $2,875,192, about 57 percent of what we started with. A complete report is available on request.
Rochester voters had the foresight to approve establishment of the EDF, and it has become a valuable financing tool to help build a strong and vibrant entrepreneurial ecosystem. The "Good Neighor Policy" is perhaps worthy of future consideration as we increasingly recognize the important role our interdependent communities play in building our economy.