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Bemidji City Council: HRDC talks BREC marketing

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Bemidji City Council: HRDC talks BREC marketing
Bemidji Minnesota P.O. Box 455 56619

The Headwaters Regional Development Commission is talking with the Bemidji City Council about how best to market the south shore of Lake Bemidji to potential developers.

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Dave Hengel, the director of leadership and development with the HRDC, has begun discussing with the city the role the HRDC could play in marketing and develop the land.

"We're willing to do anything or nothing at all," Hengel said. "We just want to help."

The HRDC now oversees the city's redevelopment funds, such as the revolving-loan, UDAG and small-city funds.

While managing those monies, Hengel said the HRDC and city staff began mulling how those funds could be used to assist in the development of the south shore.

Those conversations led to an initial proposal.

The HRDC offered to accomplish three goals:

E Process development: establishing a process through which developers would work to gain information about the site and opportunities. Contact people would be identified for developers to approach with questions or needing further information.

E Product development: working with the city to identify the incentives it would offer to entice developers in the south shore.

E Marketing: a local and Midwestern marketing campaign would target experienced and successful developers.

The cost of that proposal would be $70,000, of which the HRDC would contribute $20,000 with cash and in-kind staff work.

But Hengel also suggested a second option: a combination of efforts from the HRDC and a real estate broker.

The HRDC would essentially perform the same process and product development, but the broker would be responsible for marketing - and selling - the land.

"It's a different way of approaching the marketing of the south shore," Hengel said.

That option would cost the city a $2,500 monthly retainer, half of which would be reimbursed from commissions. The HRDC and broker would share a 5 percent commission on sales; if an outside broker is used (i.e.. a buyer's broker), a 7 percent commission would be shared.

"We don't have that connection to the major developers," Hengel said, in explaining why he was proposing a second option.

Specifically, Hengel proposed that the city hire Twin Cities-based North Central Commercial Real Estate, led by principal Russ McGinty, as the broker. McGinty also has a second home on Leech Lake.

Hengel encouraged the council to consider other brokers, but noted he was able to negotiate with McGinty to get him to share the 5 percent with the HRDC.

"Even if you choose not to go with (McGinty) ... what he provides, I would suggest to you, is critical," Hengel said.

McGinty has worked with multiple cities and notes that his retail clients have included national chains such as Wal-Mart, Target, Regal Cinemas, Trader Joe's, and Bed, Bath & Beyond. Restaurant clients have included Ruby Tuesday's, California Pizza Kitchen and Panera Bread. He also has worked with developers such as Mills Corporation, CSM Corporation, Opus Corporation and Ryan Companies.

The council noted one potential concern with McGinty: He is connected, in some way, with marketing Pinnacle Village Outlets, a long-planned outlet mall proposed south of Bemidji.

Would there be a conflict of interest, councilors wondered.

Hengel said McGinty himself did not feel there would be an issue.

The outlet center would be focused on larger "big-box" national shopping chains, Hengel said. For the south shore, McGinty has suggested that developments include restaurants, hotels, senior housing and boutiques.

Hengel encouraged the council to discuss the concern with McGinty himself.

Is broker needed?

Councilor Ron Johnson said he believed Bemidji already is progressing with development as two new hotels are planned.

The Doubletree Hotel will be connected to the Green Mill and, most recently, the council embraced an idea for a Holiday Inn Resort that would be attached to the Bemidji Regional Event Center.

"I kind of think we're way ahead of the game," Johnson said, noting that it took about 15 years before the Alerus Center in Grand Forks, N.D., had a hotel attached to it.

Hengel, too, said McGinty himself said it would be much easier to sell the land once a hotel is physically in development, attached to the BREC.

Hengel said that if the council had that confidence, then the first option would probably be a better fit for the city.

What's next?

The council will meet again in a work session to consider its options.

However, at the suggestion of Councilor Roger Hellquist, the council agreed that, first, it should begin considering incentives it would use to encourage development.

"One thing we've got to get (set) ... is what are we going to offer in the way of tools," Hellquist said.

And that work, Chattin said, should involve the HRDC.

"We've got to have them (the HRDC) for the process," he said.

The process and product work would not only identify the incentives available for developers, but would establish a clear path through which developers could approach city officials about potential projects.

Hengel noted that there needs to be guidelines and contact people for how a project would progress.

The HRDC would work to align the resources of regional partners - such as the HRDC, Northwest Minnesota Foundation, Joint Economic Development Commission and others - who would support development.

The Headwaters Regional Development Commission is talking with the Bemidji City Council about how best to market the south shore of Lake Bemidji to potential developers.

Dave Hengel, the director of leadership and development with the HRDC, has begun discussing with the city the role the HRDC could play in marketing and develop the land.

"We're willing to do anything or nothing at all," Hengel said. "We just want to help."

The HRDC now oversees the city's redevelopment funds, such as the revolving-loan, UDAG and small-city funds.

While managing those monies, Hengel said the HRDC and city staff began mulling how those funds could be used to assist in the development of the south shore.

Those conversations led to an initial proposal.

The HRDC offered to accomplish three goals:

- Process development: establishing a process through which developers would work to gain information about the site and opportunities. Contact people would be identified for developers to approach with questions or needing further information.

- Product development: working with the city to identify the incentives it would offer to entice developers in the south shore.

- Marketing: a local and Midwestern marketing campaign would target experienced and successful developers.

The cost of that proposal would be $70,000, of which the HRDC would contribute $20,000 with cash and in-kind staff work.

But Hengel also suggested a second option: a combination of efforts from the HRDC and a real estate broker.

The HRDC would essentially perform the same process and product development, but the broker would be responsible for marketing - and selling - the land.

"It's a different way of approaching the marketing of the south shore," Hengel said.

That option would cost the city a $2,500 monthly retainer, half of which would be reimbursed from commissions. The HRDC and broker would share a 5 percent commission on sales; if an outside broker is used (i.e.. a buyer's broker), a 7 percent commission would be shared.

"We don't have that connection to the major developers," Hengel said, in explaining why he was proposing a second option.

Specifically, Hengel proposed that the city hire Twin Cities-based North Central Commercial Real Estate, led by principal Russ McGinty, as the broker. McGinty also has a second home on Leech Lake.

Hengel encouraged the council to consider other brokers, but noted he was able to negotiate with McGinty to get him to share the 5 percent with the HRDC.

"Even if you choose not to go with (McGinty) ... what he provides, I would suggest to you, is critical," Hengel said.

McGinty has worked with multiple cities and notes that his retail clients have included national chains such as Wal-Mart, Target, Regal Cinemas, Trader Joe's, and Bed, Bath & Beyond. Restaurant clients have included Ruby Tuesday's, California Pizza Kitchen and Panera Bread. He also has worked with developers such as Mills Corporation, CSM Corporation, Opus Corporation and Ryan Companies.

The council noted one potential concern with McGinty: He is connected, in some way, with marketing Pinnacle Village Outlets, a long-planned outlet mall proposed south of Bemidji.

Would there be a conflict of interest, councilors wondered.

Hengel said McGinty himself did not feel there would be an issue.

The outlet center would be focused on larger "big-box" national shopping chains, Hengel said. For the south shore, McGinty has suggested that developments include restaurants, hotels, senior housing and boutiques.

Hengel encouraged the council to discuss the concern with McGinty himself.

Is broker needed?

Councilor Ron Johnson said he believed Bemidji already is progressing with development as two new hotels are planned.

The Doubletree Hotel will be connected to the Green Mill and, most recently, the council embraced an idea for a Holiday Inn Resort that would be attached to the Bemidji Regional Event Center.

"I kind of think we're way ahead of the game," Johnson said, noting that it took about 15 years before the Alerus Center in Grand Forks, N.D., had a hotel attached to it.

Hengel, too, said McGinty himself said it would be much easier to sell the land once a hotel is physically in development, attached to the BREC.

Hengel said that if the council had that confidence, then the first option would probably be a better fit for the city.

What's next?

The council will meet again in a work session to consider its options.

However, at the suggestion of Councilor Roger Hellquist, the council agreed that, first, it should begin considering incentives it would use to encourage development.

"One thing we've got to get (set) ... is what are we going to offer in the way of tools," Hellquist said.

And that work, Chattin said, should involve the HRDC.

"We've got to have them (the HRDC) for the process," he said.

The process and product work would not only identify the incentives available for developers, but would establish a clear path through which developers could approach city officials about potential projects.

Hengel noted that there needs to be guidelines and contact people for how a project would progress.

The HRDC would work to align the resources of regional partners - such as the HRDC, Northwest Minnesota Foundation, Joint Economic Development Commission and others - who would support development.

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Bethany Wesley
(218) 333-9200 x337
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