Madison's thrift store relaunched this month as an entirely private, public-subsidy-free project. The private developers began demolition of the old Jensen building this week to make way for their downtown dream project.

But the thrift store has already received one significant public subsidy: they got the Jensen property for free from the Lake Area Improvement Corporation.

In a "sale" so fresh it hasn't entered the Lake County property tax database yet, the Madison Community Foundation acquired Lots 3 through 8, Original Plat Block 19, 213 through 219 South Egan Avenue. Here are the property tax records for those lots, still showing LAIC as the owner:

LAIC - Jensen building and lot property tax records, downloaded 2014.03.18

LAIC - Jensen building and lot property tax records, downloaded 2014.03.18

The sale record at the Lake County Courthouse indicates that the actual consideration exchanged for this property was none. LAIC exec Julie Gross confirms that the Madison Community Foundation acquired the old Jensen property for free.

Let's recall the cost at which the LAIC acquired this property. Back in 2008, the LAIC bought the above lots as well as the half-block across the street to the north from Rosebud Manufacturing for $500,000, as part of a deal to subsidize Rosebud's move out to the industrial park on the southeast corner of town. The City of Madison immediately gave LAIC $400,000 for the north part of that purchase, land that the city eventually sold to Inter-Lakes Community Action Program at a 66% loss. The LAIC, meanwhile, sold a piece of the southern half of its purchase for $35,500.

So the Jensen building and parking lot hung around the LAIC's neck at a cost of $64,500. And on March 5, the day the thrift store developers poked their heads out of their burrows and cast the shadow of their delayed thrift store back onto Main Street, the LAIC wrote off that cost and handed that property to the developers for free.

Now is that a public subsidy? It's hard to say. Julie Gross's LAIC predecessor, Dwaine Chapel, told me once that the LAIC is a quasi-public-private entity. It receives some money from private donations, but it also receives significant support from Madison and Lake County taxpayers. But like the meat and vegetables on your plate, those private and public donations all end up in the same pot. The money that bought the downtown property from Rosebud was partially public money. The loss that LAIC took on that land was thus partially a public donation... although the public never got to say anything about it.

Make no mistake: the LAIC really didn't give away much. The property has sat vacant for six years. Some developers have looked at it but decided that the building required more repairs and upgrades to its water pipes and infrastructure than would have been feasible for most business plans. Gross says that when she priced demolition of the building, she received estimates ranging from $80,000 to over $100,000. The location is great, but the building was a liability. The LAIC may be lucky that it didn't have to pay someone to take it.

But on paper, the thrift store has benefited from a giveaway, from a quasi-public purchase six years ago left to crumble until giveaway and demolition was the only viable option remaining.

Anyone care to lay odds on how soon the crumbling Masonic Temple at the other end of Main Street will meet the same fate?


Two noteworthy economic developments are afoot in Madison. First, I hear from my local correspondents that Lake Area Improvement Corporation director Julie Gross has officially endorsed—i.e., spent money!—on accessing materials produced by the Main Street program. The idea of the LAIC doing exactly what I recommend under previous do-nothing CYA director Dwaine Chapel. But Gross has bought into Main Street and convened a downtown development committee that is open to the public. I hope this isn't a sign that we are going to freeze over hard this winter.

The LAIC also gets to toot its horn about Dakota State University's new partnership with Advantenon, the evil overlord of Gamma Regulus whose robot hordes are invading this sector of the galaxy—oh, oops! Sorry, the cool alien name threw me.

Advantenon develops software for mobile devices. They base their business model on employing college students in rural areas to keep costs down—i.e., to pay less wages than they would hiring experienced talent in spendy urban areas. Advantenon discusses this strategy on a page called "Why Rural?"

Advantenon delivers mobile applications more efficiently, with fewer issues than applications outsourced to offshore teams, at costs up to 50% less than traditional on-site development.

By leveraging technically competent resources in lower cost rural communities, project costs are significantly reduced. By combining staff located outside major metropolitan areas with a limited number of onsite resource Advantenon delivers the benefits of rural and onsite flexibility [Advantenon, "Why Rural?" company website, retrieved November 5, 2012].

For years, IT companies have been saving money by offshoring labor to India and other lower-wage countries. The labor cost-savings outweigh the disadvantages of language barriers, time-zone separation, and quality control. As wages in India catch up with the West, the cost advantage erodes. South Dakota wages may still carry a premium over India, but they are 29% lower than in Minnesota, Advantenon's home base. Hire college students, and the premium is even less. For their money, Advantenon gets quality work (you DSU kids do have the storied Midwestern work ethic, don't you?) from folks who sprechen sie Englisch, are smack in the middle of most North American customers' time zone range, and are a short domestic flight away from a snap inspection by the boss.

This can be our niche, South Dakota! Get trained, know your tech, and you can be the next Indians. You won't even have to make up a normal sounding name to answer the phone... until the Chinese become our primary customers.

And when you get done with work, you'll be able to walk downtown and enjoy a wonderfully revitalized commercial and cultural core district.

Comments Off on LAIC Buys into Main Street Program; Madison the New India?

In a sign that Madison's leaders may be coming to their senses, the Lake Area Improvement Corporation is finally putting together the Downtown Improvement Task Force:

Ashley Kenneth Allen is happy to announce that he will be representing this group's views and opinions on the new Downtown Improvement Taskforce led by the LAIC. We will be having a recruiting and kick-off meeting on Monday, October 22nd at 5 PM in the Madison Depot meeting room. Any individual interested in participating in Downtown Development and has 4-8 hours a month to volunteer is welcome to join us for our first official meeting. We will be establishing a committee of 8-10 individuals to work on initiatives to maintain and improve Downtown Madison. If you are interested, let us know [Citizens for Real Economic Development in Madison, Facebook post, October 9, 2012].

They've picked Ashley Kenneth Allen, and they are taking volunteers? It would appear the LAIC may be recognizing that Ashley and I are right about downtown development and citizen participation.

Alas, the LAIC is still lacking on the social media outreach side. There's no mention yet of the Downtown Improvement Task Force on the LAIC website. They haven't posted it to the Madison events calendar. But maybe LAIC exec Julie Gross knows she can count on Ashley on Facebook and Madison's most-read blog to get out the word.


I note with some approval that Madison is about to gain 125 jobs (maybe 175). Global Polymer Industries is moving its operations to town. One word, Madison: plastics.

The Lake Area Improvement Corporation and the usual Madison suspects are all ready to take credit for adding a quarter of the jobs that the LAIC promised to add in five years six years ago. But (you knew this was coming) Madison's success is Arlington's failure. Global Polymer isn't a new out-of-state recruit. Madison just pulled this company from its northern neighbor.

Current unemployment in Kingsbury County is 3.4%. That's 105 workers not on the job. Global Polymer's move will more than double the unemployment rate in Kingsbury County... unless those workers all commute to Madison or move out of the county. Whatever way the labor force adjusts, Madison celebrates gutting Arlington's economy.

The LAIC's job isn't to help the state or the planet. It's charter obliges it to serve the interests of Madison and Lake County. Luring Global Polymer away from Arlington does that.

But so much for collaborative regional economic development. It will be at least thirty years before anyone from the Arlington Community Development Corporation (hmm, which actually publishes the names and photos of its decision-makers on its front page, unlike Madison's LAIC) sits down at a friendly table with Madison's "every town for itself" developers.


Five weeks after local boosters proposed a downtown development task force to the Madison City Commission, four weeks after a group of citizens stepped forward to volunteer their services for that task force, and three weeks after the Lake Area Improvement Corporation wrote the mayor saying, "Let's do it!" the Madison City Commission has finally taken action on the proposal. They've passed the buck.

O.K., maybe that's not entirely fair. Monday night, the Madison City Commission acknowledged the LAIC's willingness and ability to manage such a task force and said, basically, o.k., fine, you do it.

Let's look at the LAIC letter that the commission sat on for three weeks. (I'd link to the PDF in the August 13 agenda packet, but the city deletes this useful public information from its website after four weeks.)

July 25, 2012

Dear Mayor Hexom,

At our recent Lake Area Improvement Corporation planning session, the board reviewed goals of the Forward Madison 2 initiative which was comprised of two components. The second component focuses on retail development and marketing. This includes working with local and regional retailers to encourage expansion into Madison and Lake County.

As you know, there have been numerous discussions about revitalizing downtown Madison. This will require time, commitment and the ability to involve a broad base of community leaders and citizens in the process. This is not an easy task, but the LAIC board feels confident we can lead the taskforce.

An undertaking of this magnitude will require appropriate funding and staff which we have in place. We are asking you and the city commissioners to give us your support for leading the taskforce. With a positive, cooperative and progressive attitude we will strive to ensure Downtown Madison grows and prospers.

Thank you for your consideration, please contact me if you have questions or need further clarification.

Kind regards,
Julie Gross
Executive Director
Lake Area Improvement Corporation

I want to read in Gross's letter, as I did in statements from Gross and others at the July 16 commission meeting, significant changes from past LAIC position and practice. First, we get the clear signal that our business leaders are ready to include retail development in their economic development efforts. The LAIC and city ordinance used to explicitly exclude retail recruitment from their purview, because Madison's business leaders felt Madison's retail sector was doing just fine. City ordinance still forbids the use of community development fund money for retail businesses (see Section 2-152, paragraph 2, Community Development Fund Eligibility Requirements). Madison's leaders are finally acknowledging the retail decline that has taken place right before their eyes for over 20 years. Accepting that you have a problem is the first step to a solution.

Gross's letter speaks of involving "a broad base of community leaders and citizens." Broad, open participation has previously meant open to those who write broad checks. And as a quasi-public/private organization, the LAIC still keeps its meetings and minutes and documents under wraps, away from public accountability. I remain suspicious of the city's decision to move the downtown development task force from its necessarily, statutorially public and accountable forum to the exclusive and secretive meeting table of the LAIC. We can only hope that Gross's letter signals a willingness to open the doors and recognize that downtown revitalization is not one of the topics that the LAIC has to keep secret.

The Yankton City Commission discussed retail development as well last Monday. Yankton's commissioners really like the idea of hiring an administrative assistant to the city manager who would focus on retail development and events planning. Madison doesn't have a city manager to administratively assist. Handing retail recruitment to the LAIC may fit most easily into Madison's current bureaucracy. But Yankton's model of bringing these economic development duties in-house, as Ashley Kenneth Allen proposed at the July 16 Madison City Commission meeting, better guarantees direct public accountability.

Whether the downtown development project is run from an office in City Hall or down at the LAIC/CHamber depot, Gross's letter recognizes the need to invest significant resources in downtown revitalization. The LAIC appears willing to spend its significant Forward Madison 2 funds on this project. That's encouraging.

The only question I raise here pertains to Gross's statement that the LAIC has in place the necessary funding and staff. If the LAIC is going to follow the official Main Street program (the LAIC letter doesn't mention that program, but let's not forget it! Main Street is the obvious, road-tested template for exactly what Madison wants to do!), that program will likely need a full-time coordinator. The LAIC has two staff members, Julie Gross and Kari Blom. They're great, but unless the LAIC is about to drop some other function and make Main Street its sole focus, their plates are full. The LAIC should support investing a big portion of its Forward Madison 2 dollars in a full-time downtown development coordinator to facilitate community conversations, manage the emerging plans, and make things happen.

I want to believe that the LAIC can make downtown development work. As I said last month, a task force led by Julie Gross and the LAIC board may be the best route we can hope for in the Madison context to achieve our common downtown goals.

But now let's judge by action. Let's see whom the LAIC names to the downtown development task force. Let's see how much effort the LAIC makes to engage the public in a real information-seeking, consensus-building, problem-solving conversation, not just a hierarchical ego-stroking marketing pitch for some card-table mafia's not-so-hot idea. Let's see democracy driving our dollars, not dollars driving our democracy.


I think we're winning... and the LAIC may help us.

No, Bulldog Media has not taken over the Madville Times. I maintain the opinion that the Lake Area Improvement Corporation, Lake County's quasi-private economic development corporation, has wasted perhaps millions of private and public dollars over the last several years on failed projects, bloated salary, and unaccountable expenditures.

However, what I heard last night during the new LAIC exec Julie Gross's budget request to the Madison City Commission makes me think the LAIC might be ready to lead on downtown economic development.

Gross submitted the LAIC's request for $260,000 from the city in the 2013 budget. That's the usual $140,000 just to pay Gross's and Kari Blom's salaries and run the office, plus $120,000 for Forward Madison 2, the LAIC's second five-year plan for making Madison magnificent. Right now, that Forward Madison money is designated for marketing the city.

Commissioner Nick Abraham balked at appropriating $120K for a single line-item that just says "marketing." He expressed distaste for appropriating $140K to pay salaries with no city oversight or control. He wants more detail and more accountability, just as he has pressed the LAIC throughout his tenure on the city commission.

But the difference last night was that other commissioners expressed agreement that the LAIC has not been sufficiently accountable in its use of city funds. Commissioner Dick Ericsson, the godfather of the modern LAIC, said there has been a "disconnect" in the LAIC office. Ericsson acknowledged that the LAIC has been far too secretive.

Gross acknowledged that the LAIC doesn't need to spend all of the city's Forward Madison contribution on marketing and suggested it could be used for other projects. Dr. David Borofsky, DSU interim president and LAIC board member, noted that the Forward Madison brochure declares "retail development in downtown" as one of its goals and says the LAIC will pursue that goal.

Gross also promised that she would offer the commission quarterly updates on how the LAIC is spending the city's money. She said she will come to the commission on October 8 with a more detailed budget to support the LAIC's budget request. Commissioner Mike Waldner welcomed those updates. Commissioner Scott Delzer indicated that the LAIC hired Gross with the directive to do what she does well: to communicate. He praised her promised e-mail updates on LAIC activity as a welcome change. (And permit me to jump for the moment on that communication backwagon: Gross sent out her first LAIC e-mail update yesterday. A friend forwarded it to me; I e-mailed Gross and asked if she would add me. She replied and added me to her distribution list in six minutes.)

So I'm hearing the LAIC exec, LAIC members, and the city commission all saying the LAIC will be more open and accountable. I'm seeing the LAIC exec make a greater effort to be more accessible, even as she takes on a new job where she's still learning the ropes.

And then to top it off, in the midst of his remarks, Dr. Borofsky, whose welcome to Madison included some rough blogging from me, complimented the comment I made to the commission earlier about following the Main Street program. He said that back in New Hampshire, he worked for the Chamber of Commerce. His town looked very hard into doing the Main Street program. It would have been great for their downtown, but, he explained to me after the meeting, the only reason they didn't do it was that they didn't have an economic development office with a staffer to coordinate the program.

We have an economic development office. That office has requested $120,000 from the city for Forward Madison 2. That office admits it only needs $60,000 for marketing... meaning it could use the other $60,000 to hire a full-time coordinator for a serious Main Street program.

Does any of this sound familiar?

We could be two meetings away from launching a Madison Main Street program: one city budget meeting to designate funding with firm downtown strings attached, one LAIC board meeting to authorize... and holy crap! We could do this thing!

Now please understand, I feel like FDR and Churchill deciding to throw in with Stalin to beat Hitler (I will not let Dick Ericsson outdo me in hyperbole). When I imagine total victory for my conception of downtown development, I envision Ashley Kenneth Allen ousting Mayor Hexom, dissolving the LAIC, pouring all previous LAIC funding into a new city economic development office, and appointing my wife and me as co-czars (just say it: co-czar!) in charge of downtown revitalization.

In the real world, we're not going to get an additional city office, let a lone a thrilling coup d'état. In the real world, where compromise and pragmatism rule, the best result we can practically achieve may be that Julie Gross decides to put her stamp on the LAIC by taking it in a new, active, downtown direction. The LAIC board, hearing the public clamor and tells Julie to go for it. The LAIC brings on a new staffer, holds real public meetings (key word again: World Café!)...

...and in five or ten years, I write a blog post saying, "Holy cow: the LAIC helped us build a better downtown and a stronger sense of community. Good work, Julie... and good work, Madison!"

I'd really like to write that blog post... and maybe write it from the sidewalk table at Mochavino as I look out at folks competing for parking spots out front of ten new downtown retail stores. Last night's city commission meeting gives me hope that I might get to write that post.

* * *
After the meeting, I learned one more bit of important history relevant to Madison's downtown development. Dick Ericsson said that back in the day (1960s? 1970s?), banker Ed Dirksen owned at least seven buildings downtown. The moment one of them went vacant, Dirksen hustled to bring in a new business. He charged relatively low rent and lost money on his buildings. But he built and maintained good Main Street buildings because he believed in downtown. He didn't want business leaking away to the highway or the edge of town. He apparently shared the belief that Main Street is the heart of a community. If it's in good shape, if you have people who are willing to fight to keep it in good shape, then your whole town is in good shape.

We need someone, some group, maybe the whole dang town, to be the contemporary Ed Dirksen. LAIC, that ball's in your court. Call the meeting!


Julie Gross made her first appearance before the Lake County Commission as Lake Area Improvement Corporation handout seeker on Tuesday. She requested $35,000 from county taxpayers. Technically, she made two requests: $10,000 to help cover her salary and other general budget items, and $25,000 to go toward the vaunted zombie of the unsuccessful Forward Madison project. That's $5,000 more than the LAIC requested last year, and $10,000 more than it got from Lake County.

Of course, it's also $35,000 more than the Spearfish Economic Development Corporation gets from its county taxpayers. Somehow, Spearfish makes economic development happen without asking for a single penny from the Lawrence County Commission.

The LAIC's motto: if at first you don't succeed, spend more money!

Don't forget: vote in the Madville Times thrift store poll! Click in the right sidebar! Poll closes tomorrow at breakfast.

I read Eve Fisher's letter to the editor in last night's Madison Daily Leader with relish (and a spicy Italian sub with chipotle sauce). She aptly condenses a wealth of public commentary on the proposed publicly subsidized thrift store in Madison into four rock'em-sock'em points. With Ms. Fisher's permission, I reprint in full:

Dear Editor,

I've read the June 11th article re the Thrift Store, and I can assure LAIC and the steering committee that they are pushing for an idea that almost no one in town likes or supports. The following are some of the reasons:

(1) Madison is already the home of two dollar stores, Loopy's, the Flea Market, the Pawnshop, 2nd chance, Unique Boutique, and the Front Porch. A new thrift store will in no way fill a need, a niche, or add value or "progress" to Madison's downtown.

(2) No consignments, eh? Just donated stuff? Why should the citizens of Madison just give the thrift store stuff to sell? And, if they do, won't it all be crap that basically otherwise would go in the landfill? And who on earth would want to buy it?

(3) Since "the steering committee had spent six months visiting thrift stores in other communities... [to] create a practical plan for Madison's proposed thrift store", why on earth didn't the steering committee (or the LAIC) bother to ask the citizens of Madison first what WE would like to see downtown?

(4) Number one among the answers of what most people in Madison want is another grocery store. If Madison can handle nine different secondhand/consignment stores and yet be told we need another, surely we can handle two grocery stores, which would provide competition and service to Lake County as a whole.

I hope that this thrift store will not be passed without a vote by the people. And I strongly encourage the steering committee and the LAIC to actually talk to a variety of Madison citizens and ask what we want, instead of telling us what they think we should want to have in our community.


Eve Fisher

Note: open citizen participation is a key aspect of this debate. You readers have submitted over a hundred comments to my three posts on the thrift store over the last couple weeks. But I'm not convinced the steering committee wanted a lot of public input. According to the minutes of the May 31 Madison City Commission meeting, after numerous citizens voiced their objection to the use of city funds for the project, "Jerry Johnson stated that he would support the Commission tabling the issue for 30 days in order to provide more information to the citizens." They didn't see engage us in public dialogue; they said give us the answers. The steering committee's Question and Answer sheet embodies the mistaken Madison philosophy: we're not here to involve you in finding answers together; we're here to tell you our answers.


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