Main Street Initiative well underway in North Dakota

Downtown Fargo. Photo courtesy of the Fargo-Moorhead Convention and Visitor’s Bureau.

Downtown Fargo. Photo courtesy of the Fargo-Moorhead Convention and Visitor’s Bureau.

by Daniel Nairn, AICP

North Dakota’s newly elected Governor Doug Burgum arrived to deliver the traditional State of the State address on January 3, 2017.(1) The plow drivers in the City of Bismarck were still working overtime to clear the roads from a record snowfall, while state legislators convened in the capital city for the first day of the biennial legislative session. Governor Burgum was an outsider candidate, who, without any previous political experience, won a decisive victory in the Republican primary against the candidate endorsed by the party. Although the governor had outlined some themes of his agenda while running for office, citizens in attendance and following online listened carefully for insight into his vision for North Dakota.

Governor Doug Burgum portrait from the Burgum for North Dakota campaign.

Governor Doug Burgum portrait from the Burgum for North Dakota campaign.

During the half-hour address, the governor touched on a variety of topics, from responding to budget shortfalls to addiction treatment, but he also raised an issue that does not typically rise to the highest priority in rural states like North Dakota: the design and growth of cities. Two issues, in particular, were driving his interest, how density impacts the cost of providing public services and how urban design can attract talent and energy to a community.

First, he noted how the costs of providing infrastructure and municipal services can often be measured in terms of linear feet, and serving more people with the same public investment can yield significant cost savings. He also called out prior government decisions, such as siting a new school on the outskirts of a city, resulting in the unintended consequence of abetting costly low-density growth. “How we design and grow our cities has a huge impact on property taxes,” he said.

He also stated, “It takes safe, healthy cities with vibrant, walkable main streets and downtowns to attract and retain a skilled workforce.” Beyond simply keeping costs down, good urban design can make a city into a destination for young professionals, who are often choosing a place to live as much as they are choosing a job to work. Governor Burgum labeled these issues as his Main Street Initiative, and he promised more details to come.

Anyone with a passing familiarity with the new governor was probably not surprised by the announcement of the Main Street Initiative. It turns out that Governor Doug Burgum is not much different from businessman, philanthropist, or activist Doug Burgum. After spending the first couple decades of his career building a software company, selling it to Microsoft for nearly a billion dollars, and then staying with the tech giant as an executive, he eventually transitioned into the land development industry.

The former Northern School Supply building, now North Dakota State University’s Renaissance Hall. Source NDSU.

The former Northern School Supply building, now North Dakota State University’s Renaissance Hall. Source NDSU.

This new pathway emerged when he found himself owning the historic but terribly dilapidated, Northern School Supply building in downtown Fargo. As he tells the story, the previous owner was preparing to demolish the building, and the City of Fargo was paying monthly rent in an attempt to forestall its demise when he offered to take the building and accept liability for $100,000. The owner happily divested, and Burgum got to work on $1.5 million in rehabilitation costs before donating the building to his alma mater North Dakota State University.(2) The building is now the downtown home for its architecture school. When Burgum was rehabilitating the Northern School Supply building, he used a brand-new statewide program called the Renaissance Zone to exempt property and state income taxes for the first five years after rehabilitation.

Burgum noticed something important about this project. The rehabilitation of the Northern School Supply building became more than just the reuse of a vacant old building. It was the revitalization of a district, drawing students and faculty from the university into the heart of Fargo. What started as a rather uneconomic endeavor that could only be undertaken by someone with a financial cushion to fall back on, became the catalyst for actual business opportunity. He formed Kilbourne Group in 2007 and started buying properties – warehouses, underutilized parking lots, and a vacant church, anything that needed a new life – in downtown Fargo.

Kilbourne Group has been part of a decade of revitalization in downtown Fargo that continues unabated. The total assessed value of properties in the downtown increased from around $197 million to over $600 million in the last 15 years,(3) and several projects are in the final planning stages, including the $98 million 18-story mixed-use development known as Block 9. (4) Nationwide organizations, such as the American Planning Association and Forbes Magazine, have heaped praise on the center of this locale previously known mostly for the eponymous Coen Brothers’ film. By all accounts, downtown Fargo is thriving, and other cities in North Dakota have taken notice.

While actively developing downtown Fargo properties, Burgum continued to hone his message and share it with groups in Fargo and other nearby communities. Before long he became North Dakota’s chief apologist for vital city cores, obviously passionate about their potential. The first time I heard him speak was his address as the keynote speaker at the 2014 North Dakota Downtown Conference at the Bismarck Heritage Center. His vision for the future is very much rooted in the past. I recall him showing black-and-white images of early downtown Fargo, teeming with life, before the push-and-pull forces of urban renewal and suburbanization slowly degraded it throughout the latter half of 20th Century. Just like restoring a beautiful old building into a contemporary office, he wanted to restore the traditional city for the 21st Century.

At the same time, he was starting to ask some pointed questions about the role of local government in city growth, in many ways employing language from the smart growth movement, albeit from the perspective of a businessman with decidedly conservative impulses. One evening in November of 2015, he paid a visit to the Fargo Planning Commission and challenged them to stop annexing new land for development, which had been the city’s practice in recent years. He questioned why a return-on-investment analysis is never performed for all of the public money spent on roads and pipelines extended out into the undeveloped fringes. He also asked for more flexibility in the zoning code to allow more options for the kinds of mixed-use commercial and residential buildings he was developing downtown.(5)

The Planning Commissioners responded with some good-natured debate and a fair amount of agreement with his proposals. Planning Commissioner Joe Gunkleman asked Burgum an interesting question. He noted that the corporate campus that Burgum built in the 1990s for his software company was in a suburban location, and he wondered if Burgum would have made the same locational decision today. Burgum acknowledged that many tech firms are now seeking urban office settings, both to respond to their employee’s preferences and to spur innovation through denser networks of interaction. He appeared to have changed his views over the course of his career.

When Burgum announced his candidacy for governor, it was unclear how much of a role his urbanist leanings would play in the statewide election. Fargo is the largest city in North Dakota. He was already popular in Fargo but had to win the confidence of residents living on ranches and small towns across the state. He was already revered as a leader in the state’s emerging technology sector, but he needed to prove his support for the dominant energy and agricultural industries as well. He often spoke of his hometown upbringing in Arthur, North Dakota (population 337), and stayed focused on the standard menu of positions one would expect of a Republican running for office in a red state.

It was only after he won the Republican primary in June of 2016 – and his ultimate victory the following November was all but assured – that he began to talk again about city growth and development. He started running television commercials the following October referring, fairly ambiguously at first, to a Main Street Initiative. The video was set in the downtowns of Hazen, a mid-sized town in the coal-producing center of the state; Arthur, Burgum’s small town roots; Cassleton, a small bedroom community outside of Fargo; and Fargo itself. He emphasized the vision of “vibrant towns and cities across North Dakota.”

The breadth of this vision was really the central unresolved question. By this time, most North Dakotans had become aware of the downtown Fargo success story, and you could discern early evidence of the same trends occurring in the larger cities like Grand Forks and Bismarck. But how scalable was this initiative, really? One characteristically snarky political blogger joked about a small town in the Bakken oil patch with “its own olive oil shop, craft store, fine art gallery and loft apartments.”(6) While Burgum never promised any of this, the subtext was still lingering: are the towns across the state to become mini-Fargos?

This is where Brent Sanford, Burgum’s running mate and the state's new Lieutenant Governor, adds a layer of meaning to the initiative, drawing from his experience as the mayor of Watford City, an oil boomtown in the western reaches of the state. He announced the Main Street Initiative in a letter to the editor of the Fargo Forum newspaper, “As a mayor, I understand that every town faces different challenges, and there is no top-down, one-size-fits-all solution to economic success. However, I also recognize that what works in one community can work in another, and with innovative programs and forward thinking, we can work together to unlock the full potential of North Dakota.”(7) With the messaging coming both from Fargo and Watford City, most constituents could reasonably believe they fall comfortably within this spectrum.

The Main Street Initiative has encountered some initial skepticism from state legislators. Al Carlson, the Republican majority leader in the North Dakota House of Representatives, raised doubts about whether the initiative was aligned with the culture of his state. Carlson is a Fargo-area contractor, who has been active for many years in the state homebuilders association. He declared that North Dakotans prefer to live in rural areas or less-dense suburban areas, rather than more dense neighborhoods in the centers of cities.(8)

A cursory glance at census figures suggests that the governor and the house majority leader could both be right at the same time. In 2010, there were 5,900 people living within a half mile of the iconic Fargo Theater in the heart of downtown, which amounted to about 3.9 percent of the population of Cass County. Burgum has suggested that the population of downtown Fargo could triple in size in the near future. Given that Cass County is adding about 4,300 people a year to its population, Burgum’s ambitious goal of downtown growth could be achieved even if a majority of newcomers still prefer to live in lower-density subdivisions. Burgum has stressed on multiple occasions that the initiative is essentially about market differentiation. Vital and growing downtowns can certainly coexist with neighborhoods of single-family homes and exurban hobby farms.

In practical terms, the Main Street Initiative is being implemented on two levels, local and statewide. The governor has already begun discussing strategy with mayors and city commissioners. In late December, only two weeks after he assumed the governorship, Burgum and Sanford convened a meeting with over a dozen mayors from around the state. Bismarck Mayor Mike Seminary and Mandan Mayor Tim Helbling, a city across the Missouri river from the capitol, both came away from this meeting with a sense of excitement and possibilities for their own communities.(9) They were impressed with Burgum’s level of interest, his willingness to sit down for hours and listen to the issues they raised. Both mayors said they shared with the governor the same vision for vibrant, active downtowns and fiscally-responsible growth. Burgum is essentially using the stature of his office to encourage the Main Street Initiative discussion at the local level and to lend a sense of credibility to similar efforts that are already underway.

The second level of implementation is more directly tied to the governor’s role. He has asked the directors of the various state departments to evaluate how their policies and practices, including the allocation of state funds or federal pass-through funds, exert an influence on municipal growth and budgets. While the average person sometimes assumes that the prevailing patterns of development are purely a creation of the free market, city planners and other professionals have long understood that public policy decisions at all levels of government heavily influence the shape of cities. One of the stated purposes of the Main Street Initiative is to examine this influence, at least as it pertains to state government.

A study commissioned by Smart Growth America showed that state departments of transportation spend more money on new roads than maintenance, even while conditions of their existing systems are demonstrably deteriorating and financial liabilities are mounting. (10) But if all of costs and benefits are laid evenly on the table, local leaders can make financially prudent decisions about infrastructure that create the most long-term benefit for their communities. However, large sums of federal money are often granted to local communities only for the initial construction of infrastructure, with the critical caveat that the locals must accept all maintenance liability – a serious temptation for officials who may already be more positively disposed toward a ribbon-cutting ceremony than the completion of a mill-and-overlay project. This pressure can lead to sub-optimal investments and incur additional local maintenance responsibilities under already-strapped infrastructure budgets.

Workforce development is another important tenet of the Main Street Initiative, which is likely to draw upon the work of the State Department of Commerce. Burgum has appointed an entrepreneur in value-added agriculture, Jay Schuler, as the new director of this department. Schuler has spoken very favorably about the governor’s initiative, calling North Dakota “a destination for people to move to.” He elaborated, “We’ve done some really wonderful things. Downtown Fargo has changed from when I went to school, now it’s the happening place. Doug Burgum’s idea is ‘How do we improve all the downtowns?’ I’m excited for that.”(11)

Workforce development is perhaps uniquely important in North Dakota. The state consistently ranks among those with the lowest unemployment rates and highest labor force participation rates in the nation, and this is especially true for the major metropolitan areas. The current unemployment rate for Bismarck is 2.4 percent, and the Fargo metropolitan area is as low as 2.1 percent. Despite the well-known downturn in the state’s energy industry over the last few years, the overall job market remains very tight in North Dakota’s cities.

This economic reality puts considerable pressure on the state’s employers to recruit professionals and convince them to move from other places. Governor Burgum has referenced a fundamental shift underway in how people choose where to live, a phenomenon that has been studied by Richard Florida and others.  Finding a job and then moving to the necessary place was once the norm, but now many young professionals start with choosing the place and then finding a job there. In a January address to the state cabinet, Burgum said, “whether it’s a restaurant, or an art gallery, or a downtown area, or a park, or a zoo, or something. You say, ‘hey, this is why you would want to live here.’”(12) Under this perspective, the practice of place making is as important to economic development as the traditional functions of recruiting major industries, business development, and job training.

The Department of Commerce manages the Renaissance Zone downtown incentive program. The Renaissance Zone is a statewide program in North Dakota that allows cities to offer five-year property and income tax exemptions in exchange for rehabilitation or new construction projects within a targeted area. Burgum’s Kilbourne Group and other businesses utilized this program on many occasions to revitalize downtown Fargo, and they have credited the targeted incentives with helping to make these complex and risky redevelopment projects more financially feasible. Although Governor Burgum has publicly spoken out in favor of this program, bills have been introduced in the 2017 state legislative session to either end or scale back the roughly 15-year old Renaissance Zone. It remains to be seen whether this program will be an integral part of the Main Street Initiative or not.

Another state institution with a stake in the Main Street Initiative is the Bank of North Dakota. The state-owned bank, the only one of its kind in the United States, manages the general funds of the state government and makes loans to further socially-beneficial purposes within the state, including the development of affordable housing. In an interview with President of the Bismarck-Mandan Chamber of Commerce, Governor Burgum indicated that an “180-degree turn” was ahead for the state bank, reorienting incentives away from Greenfield development and toward mixed-use infill.(13)

Governor Burgum’s tenure in office is in the very beginning stages, and the many functional details of the Main Street Initiative are still in process. However, it has become clear that the initiative is, in many ways, about the conversation itself, about elevating the issues of fiscally-responsible infrastructure, workforce development in a contemporary economy, and the creation of vibrant communities. In this respect, the Main Street Initiative is already well underway in North Dakota.


Daniel Nairn, AICP, is a planner for the City of Bismarck, North Dakota. He serves on the Editorial Board for the Western Planner.


Endnotes

  1. Burgum, Doug, State of the State Address, North Dakota Office of the Governor, January 3, 2017.
  2. Burgum, Doug, Remarks at 2014 North Dakota Downtown Conference, October 15, 2014.
  3. Williams, Mike, “Fargo Property Taxes and Renaissance Zone,” Renew ND, May 14, 2016.
  4. Lyden, Grace, “9 things to know about Block 9, Fargo’s future downtown high-rise,” Fargo Forum, May 27, 2016.
  5. Tu-Uyen, Tran, “Burgum: Fargo should stop getting bigger, start getting denser,” Fargo Forum, November 18, 2015.
  6. Anonymous, “Burgum’s Vision: A Boutique on Every Street,” Mean Read, December 12, 2016.
  7. Sanford, Brent. "Main Street Initiative can unlock potential." Fargo Forum, October 19, 2016.
  8. Jacobs, Mike. "Main Street Initiative' drawing attention." Bismarck Tribune, January 10, 2017.
  9. Eckroth, Leann, "Governor talks Main Street vision with mayors." Bismarck Tribune, December 30, 2016.
  10. Smart Growth America, Repair Priorities 2014: Transportation Strategies to Improve Road Conditions and State Fiscal Outlooks, March 2014.
  11. Bismarck Tribune Staff, “Burgum appoints entrepreneur Jay Schuler to state post,” Bismarck Tribune, January 27, 2017.
  12. Johnson, Sharon, “Governor Burgum speaks with Cabinet about Main Street Initiative,” KFYR TV News, January 23, 2017.
  13. Sprynczynatyk, Cathryn, “Burgum Talks Business,” Bismarck-Mandan Chamber Connection, February 2017.

Published in May 2017 The Western Planner

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