Gubernatorial Candidate Tom Emmer’s ‘Listening Tour’ gets an earful from 30 NAIOP members

July 13, 2010 at 3:55 pm

Tom Emmer, endorsed Republican candidate for governor, is a blunt-speaking lawyer with lots of opinions on what’s gone wrong with Minnesota state government. But he may not have been fully prepared for more than 30 equally blunt-speaking members who were invited to join him at one of his “listening tour” whistle stops, held at NAIOP’s headquarters.

Emmer didn’t pussyfoot around when assessing what has brought the state to its budgetary brink, and the fast-approaching legislative session faced with the daunting task of solving a deficit of historic proportions.“When government is the only thing that’s growing in the economy, it’s obvious that we have a serious problem,” he said in opening the conversation with developers, property managers and investors. “And when government is challenged, as it is now, it responds with the old, tired formula that ‘if you don’t increase taxes we will cut services.’”

 “The answer,” he said, “is not going to be found in a discussion about either cuts or taxes—it’s about creating entirely new ways of delivering services that are sustainable and eliminate 50 years of bloat and excess.”

Speaking specifically about the commercial real estate industry, Emmer said that growth in the size of government has put commercial real estate and development in an “incredibly precarious position. Government has become where you go to get permission for what you want to do. Big government policies are going to have a heavy influence over the future of your industry.”

His reference to government “permission” drew comments from Pat Mascia, Duke Realty, who cited the difficultly of securing permits to develop anything. “Minnesota has become an expensive place to do business, at the very time we need to be growing jobs. We have a lot of space to soak up. Our industry is driven by growth in real jobs, not government jobs, which seems to be all that’s happening today.”

“We have very few, if any, people in government who understand business,” he added. “They don’t understand costs, risks or margins, while they heap layers of approvals on everything we try to do.”

That sentiment was echoed by Charlie Pfeffer, Jr., Pfeffer Company, who observed that “to state agencies and their employees, we are the enemy. There is no respect among politicians for the risks we take,” he said. “We get no guaranteed checks like they do. Frankly, it’s time we separated needs from wants, but there seems to be no political will to do the heavy lifting that would require.

Larry Pobuda, Stewart Lawrence Group, national NAIOP chairman of the board, has traveled across the country in that capacity visiting and speaking to other chapters. “When I tell them what we pay in taxes—that we have shopping centers paying $8 a square foot in property taxes—they choke on it. They find it unbelievable.” The hard reality of those high costs is hitting almost every business, particularly the smaller ones, according to Lisa Dongoske, NorthMarq.

Members attending offered Emmer several examples of the steep property tax burdens borne by Minnesota’s main street merchants. “If you own a Great Clips hair salon, you have to do 800 haircuts just to pay your taxes” said one. Another described one of his retail tenants, an Asian restaurant that offers a popular $8 lunch. “My tenant has to sell 3,000 lunches at gross just to pay his real estate taxes.”

Kelly Doran, Doran Companies, cited the high degree of economic distress that has already occurred in the industry—50 percent unemployment among architects, and as much as 45 percent of building trades people sidelined. “This is an industry in crisis,” he said.

Emmer said the solution will not be found in the current structure of government.  He  outlined his own three-step solution:  reduce taxes; redesign the environment in which business has to function (regulations, licenses and permitting); and restructure government to eliminate the multiple layers of duplication and redundant bureaucracies..

Referring to the actions of New Jersey Governor Chris Christie as a model, Emmer said he is not seeking to “be elected governor. I want to be elected to govern. This perfect fiscal storm we are facing is a last opportunity for government to restore its credibility among Minnesota’s voters.”

Michele Foster, Foster Real Estate Advisory Services, challenged Emmer to provide more details on what he proposes to do, pointing out that “taxpayers are hungry for specifics.”  Emmer demurred, saying his detailed plans would be released in September, after he has finished collecting ideas and recommendations for action from individuals around the state and from organizations like NAIOP. But he promised a plan that is doable, and solutions that are practical.

“There are models for what needs to be done,” he said. “For example, in Minnesota we currently spend $60 billion every two years. Colorado, a similar state with a similar population, does the job for one-third less. I believe we can achieve that here, too. ”

Entry filed under: Featured Articles, Public Policy | Government Affairs.

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