Of farm fields and fairs

How does Falcon Heights fare with two-thirds of the city taken up by the University of Minnesota’s agricultural campus and the state fairgrounds?

July 18 5K Color Run, which hosted more than 18,000 runners, is one of many special events that take place at the state fairgrounds throughout the year. Photo by Kristal Leebrick.

If you check the website for Falcon Heights, you’ll see it in the slogan: it’s the city of “Family, Fields and Fair.”

The “fields” refer to the University of Minnesota’s world-class agricultural campus. The “fair,” of course, is the second-largest state fair in the country.

The Minnesota State Fairgrounds occupy 320 acres, slightly less than St. Paul’s Como Park, most of it within the city of Falcon Heights. Grounds south of Como Avenue lie in St. Paul.

Combined, the fairgrounds and the university holdings constitute about two-thirds of the city of Falcon Heights, which was incorporated in 1954. Prior to that incorporation, the fairgrounds, once a poor farm, were included in Rose Township.

Living near the fair has well-known advantages and disadvantages in terms of lifestyle, according to Mayor Pete Lindstrom. “When you move into Falcon Heights, you know that for that section of the summer, it’s going to be crazy,” he said.

But the economic costs and benefits are less clear, he said. Neither the university nor the fair pays property taxes.

Many aspects of the Minnesota State Fair are subject to state sales tax, including ticket sales, concessions and items sold at the fair and at other events held on the grounds throughout the year. But that money does not go to the City of Falcon Heights.

Minnesota’s local government-aid program is intended, in part, to offset the sort of disadvantage Falcon Heights faces in taxable property. But aid formulas are subject to politics at the Capitol and not only have varied considerably in recent years but have been targets for midyear budget balancing, causing scrambles to cut costs. Recent changes in homestead credits have also eroded the city’s revenue.

Proceeds from fairground events are plowed back into upkeep of the grounds, as governed by the Minnesota State Agricultural Society, which fair literature describes as “a quasi-state agency.”

“We do not get, nor do we want, any help from any government source,” said Minnesota State Fair spokesperson Jerry Hammer.

The Minnesota State Agricultural Society includes delegates from the state’s county fairs and various agri-business groups, under Minnesota Statutes Chapter 37. The society has bonding authority and is audited by the state. It holds an annual meeting in January, which was held in Bloomington this year. It manages the fairgrounds and the State Fair and rents out the grounds to event promoters the rest of the year.

Since 2004, a nonprofit fundraising arm of the fair, the Minnesota State Fair Foundation, has handled a large proportion of the fair’s annual income and expenses.

Attracting nearly 1.8 million visitors each year, the State Fair can be viewed as a major economic engine for the region, and indeed, its permanent location as of 1885 in what was then Rose Township resolved a longstanding competition among municipalities for the blue-ribbon business opportunity that such a large event can become.

Carrie Donovan Ford, director of sales and marketing for the Roseville Visitors Association, estimated the State Fair’s economic impact on Roseville hotels, restaurants and retail at $6.8 million, not counting non-fair events at the grounds.

Falcon Heights does not see the same economic impact. The city has little commercial land and the added burdens of public safety and sanitation during major events at the fairgrounds. Mayor Lindstrom said the fair “used to cost the city money” before the fair began reimbursing Falcon Heights for public safety. Lindstrom now considers it “a wash” from a financial standpoint.

“The question I get oftentimes is, ‘You guys must be rolling in it, aren’t you?’ ” from those who assume the city that has the fair also gets its sales taxes, Lindstrom said. “People have to keep in mind, those are all sales taxes [that go to the state]. The city [of Falcon Heights] does not get a dime.”

Merwin Liquors at the corner of Larpenteur and Snelling avenues may be the only business in Falcon Heights that draws extra business from fairgrounds events, he said. Other businesses report that the traffic hassles during the fair and other major events actually cut their sales, he said.

Many people assume that the fair brings extra business for Falcon Heights, “but I think that’s not the case,” Lindstrom said.

Suggested edit: In 2008, State Fair officials commissioned Markin Consulting to analyze the economic impact the Great Minnesota Get-Together has on the Twin Cities. The study described the fair’s economic impact in terms of taxes, employment and “spending,” which includes an estimation of money “re-spent” in communities around the fairgrounds resulting from income earned on the grounds, as well as jobs “induced” in communities around the fair because of that re-spending.

Markin found an “expenditure impact” in the fairgrounds and surrounding areas of $185,700,000 in 2008 for year-round activities including the fair.

The year-round “employment impact” was 3,890 jobs (including part-time) plus 1,720 estimated to be “induced” by re-spending of fair income, for a total employment impact of 5,610 jobs.

The fiscal impact, or tax payments estimated to be generated by events at the fairgrounds, was $5.7 million for 2008, more than $5 million of that in state sales taxes and the rest in lodging, fuel and local taxes.

Hammer extrapolated the 2008 numbers for 2011, using a 16 percent increase in business over that period. He came up with total expenditure impacts (money spent and re-spent in and around the fairgrounds for the year) $215,412,000 for 2011.

A similar calculation for taxes remitted as a result of activities at the fairgrounds yielded an estimate of $6,612,000 fiscal impact for 2011.

Much of the induced income and re-spending calculated by this economic model flows through hotels and restaurants. Falcon Heights has no hotels, and restaurants are among the businesses too close to the grounds to evade the traffic impact, Lindstrom said.

Retailers such as Warners’ Stellian, at the corner of Snelling and Larpenteur avenues, do not benefit from the fair traffic, he said. No one is going to buy a refrigerator while visiting from out of town, and someone who lives nearby and whose fridge quits working during the fair might drive elsewhere to avoid the traffic.

Lindstrom, who has been mayor for five years and served on the Falcon Heights City Council since 1997, said he receives few complaints about noise and other nuisances during the fair itself.

“What’s more of a challenge is the growing number of outside events taking place in the fairgrounds,” Lindstrom said. “Things that are more unexpected generate more calls for me.”

Jerry Hammer at the State Fair office said that except for the fair itself, “we’re landlords,” and it’s hard to peg the attendance at events sponsored by outside promoters renting the grounds for all the other events.

The calendar has been fairly full in recent years, he said. Many of the events are weather-dependent, he said, so that in a given year, a beautiful weekend might attract large numbers.

The Back to the 50’s auto show in June is the largest non-fair event, Hammer said. “They had a record number of auto entries a few years ago. This year they came close” to that record, he said, but the fair does not keep those records.

The Minnesota Street Rod Association posted 11,795 registered vehicles attending the 2012 event.

Mayor Lindstrom said that while economic benefits may not be great for his city, fair personnel respond to complaints.

“They are a good neighbor,” Lindstrom said.

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