St. Paul tries to shed 'hard-to-work-with' reputation in the business community

Business owners gathered in a classroom on St. Paul's East Side this summer and came up with a list of ways the city makes their lives difficult.

They said departments do not communicate, staff members give differing answers, city processes move too slowly and St. Paul's website is difficult to navigate. As the meeting came to an end, City Council Member Jane Prince stepped before the group.

"We're not making it easy and user-friendly for our businesses," she said. "We hear you."

Attracting and keeping businesses has taken over as a top priority for city officials as they develop the 2017 budget. Mayor Chris Coleman announced a $2 million grant and loan program for businesses during his budget address and said the city needs to redevelop old spaces that could house new companies. City Council members, meanwhile, are sifting through business owners' concerns in hopes of addressing some of them next year.

The emphasis on jobs comes as two technology companies, supercomputer manufacturer Cray and software developer When I Work, opted to move from St. Paul to nearby cities.

Businesses are an essential part of the city's tax base, and property taxes are increasingly important as the city receives less state and federal aid, Council Member Rebecca Noecker said.

"It's great to see so much residential construction happening." she said. "But we've also seen the loss of a number of major employers."

Swede Hollow Cafe had to spend about $10,000 to add a second handicap-accessible bathroom on its upper level, which patrons can get to only by using the stairs. The owner of 11 Wells distillery waited weeks for appointments with city staff.

Colossal Cafe staff members have spent hours gathering the community signatures needed to serve wine and beer on outdoor patios. The requirement is aimed at preventing a barhopping atmosphere, co-owner John Tinucci said, but, "We're not beer joints. We're not bars. We're not open past three [o'clock] in the afternoon."

City leaders set out to gather those frustrations when they launched an "open for business" initiative in June, with the goal of identifying issues in time for budget season.

The city is facing a budget crunch this year, Coleman said, after Gov. Mark Dayton did not sign a bill that included an additional $3 million in local government aid for St. Paul.

However, Noecker said most of the needs that came up in conversations with business owners were low- or no-cost items. Her office sent out a news release Thursday grouping the top concerns into five categories: "regulations, challenges navigating the city, customer service issues, inconsistent enforcement, and marketing."

Coleman's proposed grant and loan program, called the Job Opportunity Fund, would be started with $2 million from the sale of the Penfield apartment complex. It would target areas in St. Paul with high poverty and where at least half the residents are people of color, Planning and Economic Development Director Jonathan Sage-Martinson said at a recent budget hearing.

But some council members, who will eventually vote on the idea, were skeptical. They said the proposal needs work and questioned how the mayor's office came up with it.

During council members' listening sessions with business owners they heard many ideas, Prince said, but the creation of a financing program was not one of them.

Noecker also said she needs evidence that "this is why we're not seeing more job creation and then this is the best way to fill that gap."

Council members noted the fund is similar to the city's Neighborhood STAR Program, which gives grants and loans to local businesses, nonprofits and public agencies to make capital improvements. A half-cent sales tax pays for that program, and Coleman said the city will give out $1.9 million through the program in 2017.

The new fund would help support that demand, but it would be geared toward job creation and would be available throughout the year. City staff would decide who gets the money, while community members and council members determine who receives STAR funding.

STAR board members, who review grant and loan applications, said they have seen more businesses asking for money. They also said the city has used STAR funding over the years to cover police, parks and public works projects — a practice that concerns some board members. Last year, $155,000 of STAR money went to public works projects, another $13,020 paid for a police camera at an intersection and $123,000 went to a variety of parks-related projects.

Small businesses lose out when a big grant is given to the city, said Alex Bajwa, a board member and small business attorney.

"If you're talking about a mom-and-pop store that needs a new roof, that $10,000 they're getting to help them with the new roof may be the difference of whether or not they stay open," he said.

Colossal Cafe, a daughter-and-pop restaurant run by Tinucci and his daughter Elizabeth, was one of the STAR fund recipients last year, and got $50,000 in loans and grants for expansion and renovation. The cafe also received $40,000 in loans and grants from the program in 2011. Tinucci said he initially found out about it because he knew former Council Member Pat Harris.

If St. Paul moves forward with the Job Opportunity Fund, Bajwa said staff should work with neighborhood organizations to knock on businesses' doors and spread the word.

"It doesn't matter how great a program the city makes … if no one knows that person is there and no one knows that funding is there," Bajwa said.