Business owners ask Minneapolis for more support, less red tape

Julie Kearns opened a secondhand store in Minneapolis' Longfellow neighborhood and decided to ask the city about offering wine or beer for special events, like a store anniversary party or a book club meeting.

She'd seen similar events at other businesses, and figured it would be easy to get approval.

Instead, Kearns says, she stumbled into a maze of regulations, was blocked by a city inspector without discussion, and developed the sinking suspicion that she'd have been better off holding the party and dealing with any consequences later.

Kearns is one of a growing number of small-business owners with complaints about Minneapolis' outdated rules, conflicting directions and slow turnarounds that can make starting and expanding enterprises a big challenge. Mayor Betsy Hodges and City Attorney Susan Segal have spent the past few months listening to stories like Kearns', poring over the city's regulations and coming up with a plan to make it easier and more enticing to do business in Minneapolis.

Segal said officials realize that concerns like Kearns' are a real problem, and know that improvements must be made — especially for small businesses.

"As businesses are evolving and trying to innovate … [there is] a need for our regulation to make sure we're keeping up with that and that we're not hindering good business models from opening and starting," she said.

The city has already held five "listening sessions" with business owners and is beginning to formulate specific proposals for changes. Segal said those are likely to include dropping some of the more than 250 business licenses offered by the city.

Some are outdated — licenses for jukeboxes, ice peddlers and nut vending machines, among others — and some amount to layers Segal said could be peeled away. She said it's also likely the city could streamline license applications (lessening requirements that license holders list years' worth of business addresses, for example) to save applicants time.

The city may also look into revamping the way inspectors decide about things like requiring an architect to draw up plans.

That's an issue near the top of the list for Chris Montana, co-owner of DuNord Craft Spirits, a distillery that opened a cocktail room in the Longfellow neighborhood in January.

As he prepared to launch his business, Montana said he was increasingly frustrated by how many hoops it seemed he had to jump through — particularly after he'd follow directions, only to be told he'd need to do something different. He said the city would tell him to hire an engineer and then he'd be "good to go." But once he got the engineer, he was told the city would need an architect's drawing, and so on.

"What seems to be the norm is that if you have a little more money, you pay someone who knows the intricacies, they understand that which is not transparent," Montana said of the permitting and inspections process. "You pay the fee, they navigate it for you. Our problem was that we don't have tons of money; we're truly a small business."

Even larger businesses run into similar issues.

When asked if he'd had any problems with city inspections and regulations, Majdi Wadi, CEO of Holy Land Brand — the northeast Minneapolis maker of hummus, Middle Eastern baked goods and other specialty foods — paused.

"Your question needs, like, three hours answering," he said.

Wadi said he's been able to hire engineers and architects when he's wanted to build or expand. But he's also gotten mixed messages from different city departments. He said he spent $37,000 getting his facility to meet fire codes, only to be told later he didn't need to do the work because his building didn't meet the size requirements.

While Wadi said he has worked successfully with many city officials, he believes the system they work under is in need of an upgrade.

"I think they should create a customer service department," he said. "What I mean by that is if you walk into the city [offices] and want to open a business, somebody would meet with you and go through all the procedures, from A to Z."

Segal said it's clear the city can improve how staff members communicate with each other and with business owners. She said an internal property tracking system, which is in a pilot stage, will let inspectors or others involved in the permitting process see the full range of information available about a business' dealings with the city.

"Certainly a goal is to instill in our systems and processes a notion that time is money," she said. "For a new business starting out, they are likely already paying rent for space, maybe paying an architect, construction people. So delays, rework, cost them."

Council Member Andrew Johnson, who worked with Kearns on her inspection issues, said he'd like to see Minneapolis create an online business portal similar to one operated by the city of San Francisco. That website provides an interactive guide on all aspects of starting and expanding a business, along with city permitting rules and procedures.

Johnson said he understands business owners' frustrations because he ran into multiple hurdles when he tried to launch a nonprofit urban agricultural organization. He said if the city doesn't address the problems, it risks losing out on economic growth to other nearby communities.

"These things get factored, because it's already risky enough to start your own business," he said. "And when there's some unnecessary regulation on top of it, that can change the equation enough and tip the scales enough that entrepreneurs decide not to open up shop."

Kearns' quest to serve alcohol at an anniversary party for her store, Junket: Tossed & Found, worked out — but only at the last minute. She said the same inspector who had told her repeatedly that it couldn't be done finally conceded that she could serve alcohol if she enlisted the services of a licensed caterer.

She said the confusion — which dragged on for weeks and ended up costing her more money to hire a caterer on short notice — could have been solved if the city had been able to provide more specific information right away.

"That you need a consultant to get through any of this process just boggles me," she said.

Erin Golden • 612-673-4790