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Macy's in Downtown St. Paul is scheduled to close this spring.

Glen Stubbe, Star Tribune

Macy's exit is a wakeup call

  • Article by: PAUL OLSON
  • January 8, 2013 - 7:33 PM

Be wary of a mayor, City Council member or Chamber of Commerce president who puts lipstick on a pig to avoid the hard realities facing the city of St. Paul.

To call the closing of the downtown Macy's store an "opportunity" amounts to deception, especially in light of the long downward trajectory of businesses exiting the capital city. Citizens should demand that elected officials speak the truth -- and they should be able to expect local newspapers to examine the veracity of officials' statements, especially on the editorial page ("St. Paul can handle its Macy's challenge," Jan. 5).

Two observable trends are at work in St. Paul -- taxpayer-subsidized development and corporate departures. Recent development in the downtown area has been financed almost entirely by government.

The $246 million Union Depot; the $25 million Saints ballpark; the Xcel Energy Center and River Centre convention venue; light rail between the cities; the Lawson building; numerous government office buildings; the Metro State and Saint Paul College expansions, the lofts near the Farmers Market; the Hwy. 52 bridge, and even restaurants like Cossetta's -- all are taxpayer projects funded from local, state and federal sources.

Granted, the transportation and educational investments will have some broader impact on the economy, but the others were authorized with the promise of rejuvenating the once-glorious city of St. Paul. One means of measuring success would be the return on investment in terms of job creation or increased tax base. But you cannot get an answer about the private-sector jobs created or whether the tax base is growing.

The other trend is the exodus of companies from the city. The Macy's departure (after the retailer received a $6.3 million grant from the city to stick around for 10 years) only continues the downward spiral of the past five decades.

Recall the once-grand headquarters of the Great Northern and Northern Pacific railroads, which J.J. Hill promised would create the Inland Empire, starting here! Remember that 3M once thrived on St. Paul's feisty East Side, and that West Publishing was in the heart of the city. And the oldest corporate citizen, The St. Paul Companies, was headquartered here.

There were breweries, like Hamm's and Schmidt's. Northwest Airlines was based on St. Paul land granted to build the airport. Weyerhauser, American Hoist, the Ford assembly plant -- all are gone.

Sure, some of this is the result of the "creative destruction" that is a necessary part of capitalism. But who at City Hall ran up a red flag and asked: Why are so many major firms departing, and what can we do to prevent future losses?

These departures have decimated the service businesses left behind. St. Paul once boasted the Minnesota Club, where Hill and the other captains of industry dreamed about a vital region based on agriculture, forestry, mining, transportation and finance, then recruited millions of immigrants to make it happen.

Today that club is long gone, along with the Athletic Club. Clothiers like Hubert W. White, Dayton's, Frank Murphy's and Liemandt's all are gone because their corporate clients exited from the city.

As corporations have departed and as retailers have folded, the tax burden has shifted to homeowners. But residential property taxes cannot support the oversized number of public employees. About half of the city's budget goes for police and fire. Meanwhile, one-third of the recipients of these services are tax-exempt. The Department of Revenue estimates that the city has $8 billion worth of tax-exempt real estate.

So, for example, Travelers pays $2.8 million in property taxes; the University of St. Thomas pays nothing, yet requires police and fire protection in order to buy insurance.

On the sidelines sit the philanthropic foundations of St. Paul: Bush, McKnight, Northwest (the Hill family), Bremer, Wilder and the St. Paul Foundation. Not to be accusatory, but what are they doing to advance the very community that gave birth to their endowments, which are greater than $3 billion? There has not been a burst of civic activity since former Wilder Foundation President Len Wilkening, through force of personality and love of his community, gave birth to Energy Park.

My message to my former colleagues is: We need your spirit of innovation and financial resources. Use your unique independent position to analyze the situation and speak truth to powerful people. Issue a report card on real progress, not feel-good stories. Put the skunk on the table. Hold candidates and public officials accountable.

Cities rise or fall on the basis of some economic reason for being, such as river transport, an ocean harbor, or having a population of educated, hardworking people. It takes civic leadership to transform such strategic advantages into economic advancement.

Forget the lipstick and start dealing with the stark realities of a city that is not sustainable on its current downward trajectory.

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Paul Olson, of St. Paul, is a former president of the Blandin Foundation. He is at pmolson27@hotmail.com.

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