10 April 2010

Be Quiet Children, an Adult is Speaking

Now children, I know you've all got spring fever and are already thinking about summer vacation and cannot wait to ride your bicycles all over the paths and hop on the light rail to go to a puppet show and hop off the light rail to get an ice cream cone before Sponge Bob comes on your school-provided laptop via the city-provided wifi system, but if you could just hold your tongues for a minute or two, a grown up is going to explain a problem with the Barista Utopia you've been building:

A new study comparing corporate headquarters costs ranks Minneapolis as the 15th most expensive of 50 U.S. cities, and second only to Chicago among 12 cities in the Midwest. Minneapolis' property taxes were the main reason for its relatively high ranking in the study by the Boyd Co. Inc., a Princeton, N.J.-based corporate relocation consultant.

Q How can Minneapolis become more competitive?

A Hold the line on taxes, especially property taxes. You need to understand that the impact of Minneapolis' high property taxes is compounded by the fact that land and construction costs are also high. The effective property tax rate in Minneapolis is about twice as high as the study's low-cost option, Sioux Falls.

Q Does the trend toward smaller, less expensive cities apply to any type of corporate facility? We're used to seeing companies move manufacturing operations but keep corporate offices here.

A It can be a national, regional or division headquarters. This is the next frontier of corporate cost-cutting. It's now in style for companies to associate themselves with markets that are less expensive. It makes them seem more fiscally responsible to their shareholders.

Perish the thought! Progressives forever tell us that it's the irresistible lure of liberal arts colleges and subsidised art cabals that make Fortune 500 employers beat a path to our frozen wasteland over a climate that's more affordable and usable more than 8 months each year.

Q Aside from costs, what role do amenities play in a company's decision about where to locate? How important are things like proximity to colleges and universities, a highly educated local workforce, cultural attractions, major-league sports teams?

A Historically, those have been very important drivers. Now it's becoming less about those qualitative issues and more about quantitative issues, like the state's business climate and taxes.

Now while the mayor gets his nostrils all flared out about the idea of Bicycle Mecca, he may want to consider, for 5 minutes, who is going to be riding those bicycles around the diseased core of Minneapolis in 5, 10 or 20 years from now.

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