What are the forces moving the Minnesota economy? Adam Belz tries to identify the trends and show the connections between Minnesota and the larger U.S. and global economies. You can connect with him on Twitter: @adambelz

Opening Belz, March 27

Posted by: Adam Belz under Business trends Updated: March 27, 2014 - 10:00 AM

Delays add $300m to cost of Southwest light rail – StarTribune
60 percent of rural counties are losing population – WSJ
Empty threats and “rhetorical pretzels” from the U.S. in Ukraine – Ian Bremmer
Digi-Key to run 3rd commuter bus to get workers to Thief River – Grand Forks Herald
Cargill to outsource some IT services – StarTribune
What it was like to walk into an ancient Egyptian tomb – Appendix
The right whale makes a comeback, returns to Cape Cod – Aeon
Watch the WTC base-jumping video (jumps start at 2:30) – YouTube

Opening Belz, March 26

Posted by: Adam Belz under Business trends Updated: March 26, 2014 - 9:34 AM

Regulators to decide solar vs. natural gas for new power generation – StarTribune
Koch Bros.-backed group wades clumsily into WI mine battle – State Journal
New Cirrus jet aces test flight – Duluth News Tribune
This will test your patience, but if you’re interested in the Midwest… – New Republic
Plan would relight iconic Pillsbury sign – StarTribune
Is Mark Zuckerberg becoming the Warren Buffett of technology? – Felix Salmon
Twin Cities water cluster promoted at tech conference – Pioneer Press
Grad students are driving the student debt problem – WSJ
Duluth waterfront hotel project moving forward – News Tribune
A few possible ways to invest in self-driving vehicles – Medium

Hiawatha light rail line caused little development through 2010: study

Posted by: Adam Belz under Business trends, Economics Updated: March 25, 2014 - 6:20 PM

Light rail was supposed to bring a development boom to the Hiawatha corridor, and the Met Council claims that it has, but a new study shows that the Blue Line has had very little effect on land use near rail platforms.

Sarah West, an economics professor at Macalester College and Needham Hurst, a graduate student at Harvard, have a new paper coming out in Regional Science and Urban Economics, demonstrating that the Blue Line, which started carrying passengers between the Mall of America and downtown Minneapolis in 2004, caused almost zero increase in the likelihood of new development in its first six years.

“The effects of light rail, at least through 2010 in Minneapolis, are very small, and are limited to industrial and single-family parcels,” West said in an interview.

Using Census data not released until 2012, as well as the Metropolitan Council’s Generalized Land Use Survey and City of Minneapolis parcel data, West and Hurst looked at land parcels near light rail platforms and calculated the likelihood of land use change, then compared that to the likelihood of land use change for parcels throughout Minneapolis.

They found “no effect” on development near light rail compared to the period from 1997 to 2000, and found that parcels within a ½ mile of rail platforms were only 1.39 percent more likely to be developed after the line started operating compared to the years the rail line was under construction, from 2000 to 2004.

West and Hurst are careful to point out that their paper does not address development since 2010 -- "casual observation of activity along the line in 2012 and 2013 suggests that substantial changes are taking place now that market outlooks have improved," the authors wrote -- and that the effects of light rail can take a long time to manifest themselves.

“It can take decades for the effects of the introduction of new public transit to be felt in a city,” West said. “It’s too early to close the book on the effects of the Blue Line.”

Still, the research is a cautionary note for optimists as Metro Transit readies to open the Green Line that runs from downtown St. Paul to the site of the Metrodome, where it will connect with the Blue Line.

Past studies have shown that the light rail line has increased property values along its route, particularly for single family homes. But major redevelopment and development of vacant property have been only slightly more likely to materialize compared with parts of the city not near the rail.

A recent story by Eric Roper explained how little has changed at the intersection of Hiawatha Avenue and Lake Street, a busy hub that was supposed to be a prime location for construction as a result of the rail line.

Hennepin County Commissioner Peter McLaughlin said Tuesday that big picture, the history of the Hiawatha corridor is clear. There was little meaningful development for 30 years, and now, 10 years after the Blue Line opened, the route is dotted with new development. The 7,200 new housing units projected to be built along the Blue Line by 2020 have already been exceeded, he said.

Gauging the success of the line with a study period that ends in 2010 doesn’t give an accurate picture, he said, because the recession brought development “to a halt for about three years."

“We were hemorrhaging jobs when Barack Obama took office,” McLaughlin said. “Nothing was being financed.”

Further lines of inquiry include determining how much city land use policy has helped or hurt the ability of developers to bunch together parcels and start new projects, West said. She also said it would be worthwhile to figure out how much the interactive experience of each platform affects the likelihood of development.

The 38th Street station, for instance, is easy to get at from the west side of Hiawatha, West said, but much less welcoming from the east, where pedestrians have to walk past grain elevators and over nearly 50 yards of freight rail tracks and vacant lots – and that’s before they hit Hiawatha Avenue, which is six lanes of traffic at the intersection.

Having grown up just east of Hiawatha Avenue, West said she’s watched new apartments go up since the line started operating. Yes, multifamily development has been built along the corridor, she said. But it’s also been built in other places.

“You can’t conclude that we’ll never measure an effect,” West said. “You can’t conclude that there’s no effect. You can’t conclude that the Green Line will be exactly identical to this.”

The Green Line is set to open on June 14, and will run through the University of Minnesota and along University Avenue to downtown St. Paul, where the line will end at the Union Depot.

“My first sense is the Green Line is a better line,” said David Levinson, a civil engineering professor at the University of Minnesota. “It’s going to a denser area.”

Levinson points out that the Green Line – and any subsequent additions to the light rail system – will also improve the value of land along the Blue Line, thus making it more ripe for development as the network gets bigger and more people use it.

“That positive feedback system sort of kicks in, and it reinforces the growth,” Levinson said.

(Photo by Richard Sennott, Star Tribune)

This piece has been updated and amended since it was first posted.

Personal income rises in Minnesota, but more slowly

Posted by: Adam Belz under Business trends, Economics Updated: March 25, 2014 - 10:36 AM

Personal income in Minnesota grew slightly faster than the national average in 2013, and the state remains ranked 11th for per capita personal income, according to figures released Tuesday by the U.S. Department of Commerce.

Personal income -- the sum of net job earnings, property income, and personal current transfer receipts – rose 2.8 percent in Minnesota in 2013, compared to 2.6 percent growth nationally.

Per capita personal income in Minnesota – total personal income divided by the population -- is now $47,856 per year. In the Upper Midwest, only North Dakota’s number is higher than Minnesota's – at $57,084.

Illinois, Nebraska, South Dakota and Iowa all have per capital personal income above the national average of $44,543.

As you can see, the trend lines haven’t changed in the Midwest much over the past 10 years, except for North Dakota’s rapid rise, South Dakota’s leveling off in the past couple years, and Ohio surpassing Missouri.

In Minnesota, earnings in all categories of work rose, except for civilian federal employees and members of the military, the only two categories where earnings fell.

Opening Belz, March 25

Posted by: Adam Belz under Business trends Updated: March 25, 2014 - 9:54 AM

Cuba has a bustling little class of nouveau riche – Associated Press
“About 36 percent of all web traffic is considered fake” – WSJ
Undertaker mayor says struggling Indiana town will cheat death – Bloomberg
Wired South Korea trips over an Internet Explorer add-on – WSJ
Mark Cuban thinks the NFL will overexpose itself with new TV deal – ESPN
John Cassidy reviews the Thomas Piketty book on inequality – New Yorker
North Dakota businesses keep an eye on Ukraine – Fargo Forum
Yikes. Feds in a mine near Pittsburgh processing paperwork by hand – Washington Post
Russians are spending less on trips to London as Crimea takes toll – Evening Standard
Faribault Woolen Mill plans for swift growth – StarTribune

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