The city of Minneapolis recently examined its inventory of industrial land. It found such areas make up just 4 percent of the city’s total — and much of that is polluted, cut up into small parcels or owned by railroads unwilling to sell.
The City Council also recently voted to allow residential development in a previously industrially zoned area, and there is pressure to remove or at least reduce the industrial uses along the Mississippi River adjacent to North Minneapolis over concerns they’re a detriment to the health of the neighborhood.
All of which is to say that industrial areas in the city are becoming increasingly rare. And yet, regional planning policy calls for the protection of industrial lands in order to continue to provide employment for a growing region. The Met Council is developing its own survey of industrial lands.
Last month, the Met Council heard from David Chandler, the director of market research and innovation for the Center for Neighborhood Technology, a nonprofit group that does research and advocacy around improving urban economies. Chandler was in the Twin Cities to explain the center’s work on developing industrial land in such environments under the umbrella of something called Cargo Oriented Development, as well as the work he is doing thanks to a grant from the McKnight Foundation.
MinnPost talked to Chandler earlier this month about the pressures on the remaining industrial land in and near the urban cores of Minneapolis and St. Paul. The interview has been edited slightly for length and clarity.
MinnPost: Urban planners have made us all aware of Transit Oriented Development — that is, the potential for residential and commercial development on high-capacity transit corridors, particularly around stations. But Cargo Oriented Development is, for most people, an unfamiliar term. So what is your elevator speech to explain the concept?
David Chandler: Cargo Oriented Development is the development of industrial businesses in places that have a market advantage because of access to multiple modes of freight transportation, an accessible workforce and proximity to other industrial businesses. If you have those characteristics, it’s likely that you’re going to have industrial development that’s going to make sense environmentally. And it’s going to be a place where there will be development that is going to employ people in the more densely settled portions of the metropolitan area.
MP: If it has those advantages, why does it need assistance to redevelop it?
DC: In one of your articles you state that, ‘There’s a worry that land available for industrial uses in the city is declining. Most of the land currently zoned for industrial uses is not in play because it’s either owned by the railroads, is polluted or is chopped up into undesirable parcels.” That wouldn’t surprise me at all. Land that’s been in industrial use for 100 years or something is very likely to have those kinds of characteristics. So for Cargo Oriented Development to work you almost necessarily are going to have some strong public sector involvement that’s going to eliminate some of the impediments to development, such as brownfield conditions and land that’s fragmented into parcels that are too difficult to assemble.
MP: Your work in the Twin Cities is funded by a grant from the McKnight Foundation. What is their interest in the issue?
DC: From the economic development side it is in providing a fit between freight transportation and manufacturing/distribution activities that can reduce costs for shippers and improve the industrial climate of the region and create more jobs. There’s also a potential to create jobs closer to the communities that need the jobs so you can have an impact on the disparity problem you have in the Minneapolis-St. Paul region and create some well-paid jobs close to where people who are maybe not even in the workforce today live. And there are the environmental benefits that go along with that in terms of reducing truck traffic. That three-legged stool is our motivation and is pretty much in line with the McKnight Foundation.
MP: Part of the impetus for the effort is environmental: that shifting some cargo to rail from trucks that currently carry nearly 90 percent of freight traffic would help reduce air pollution and congestion. But you also said that Minneapolis-St. Paul shippers are close enough to distribution terminals in Chicago that it is still cheaper to use trucks. Are those economics changing?
DC: Your question conflates a couple of things. A growing mode of transportation is intermodal transportation where containers are moved between trucks and trains. If you can make the longer part of your trip by rail, there are economic and environmental advantages of doing that. The limitation on that is the transaction costs, or the costs of shifting from one mode to another, which has to take place in an intermodal terminal. Four hundred miles, which is approximately the distance between Minneapolis and Chicago, is kind of right on the cusp of what is an economical distance for intermodal use today. But there are extremely efficient intermodal operations that can work on a 400-mile distance or they can work on less. There are examples where people are doing intermodal shifts as low of 200-250 miles. So it’s technically possible to do a shift in Minneapolis where you could move product intermodaly rather than by truck. But you need to upgrade the quality of your intermodal connections. Part of that would have to be a less diffuse pattern of industrial development so you didn’t have to drive a truck 50 or 70 miles to get to an intermodal center in order to make the transition.
MP: You told the Met Council that the region’s export potential is limited by its dependence on trucks rather than intermodal shipping: containers that can move from truck, to rail to ships. Can Cargo Oriented Development change that?
DC: A good example has been provided by the Midwest Shippers Associations where they are shipping agricultural products in containers and shipping them overseas. If you ship that container out of Chicago, where you have ample intermodal infrastructure, your costs of getting that to a port is half of what it would be to ship it from Minneapolis-St. Paul. That’s a difference of about $200-to-$300 per container. To a certain extent that’s a consequence of your geography and your built rail infrastructure over a 100 years. So it’s not fixable quickly, but to some extent it can be mitigated. If you could develop the more efficient intermodal connections that I was mentioning, if you could start your intermodal movement in Minneapolis rather than in Chicago, that would reduce that price differential. Right now your only direct connection to an ocean port is your BNSF connection or possibly the CP to the Pacific Northwest. If you had a Union Pacific connection, a container loaded in Minneapolis-St. Paul could go directly to an ocean port in Los Angeles or New Orleans. That would give you a greater opportunity to reach ocean ports and give you a broader market.
MP: Minneapolis has a large functioning industrial area on the Mississippi River next to an area where there’s a high concentration of poverty. Yet those neighbors don’t view the industrial area favorably but instead as a source of pollution that doesn’t contribute to the north Minneapolis economy. Given that this area seems to fit exactly into the CNT’s theory about Cargo Oriented Development, can that disconnect be overcome?
DC: If it is to be overcome, it has to be overcome by a pretty intensive community level, area-level planning process, which is one of the things that we propose to do in the project we’re seeking to implement now. One of the four components of that project is community level planning in select areas, and north Minneapolis may be one of those areas. I think your articles on the Wall development (in Southeast Minneapolis) were interesting and it might be that the solution to these kinds of conflicting views about how the land can be developed might well be resolved by some form-based code and planning that would allow more flexibility in exactly what kind of development does take place. But neighbors are concerned about what have been industrial uses in the past and the present that don’t operate as efficiently as they could, that is with minimal pollution and minimal noxious side effects like noise. It might well be that one of the conditions of public sector engagement in the redevelopment preparation of land is to have some combination of incentives and requirements that take away many of those negative features.
MP: One of the Met Council commissioners said her constituents in St. Louis Park — a near-in suburb with historic rail connections — see the railroads as polluting and dangerous. While the region might benefit by shifting more cargo from trucks to rail, those local residents don’t think they would benefit. How is that perception/reality overcome?
DC: Railroads are fortunately one of the most fixable types of technologies. Today you can readily use locomotives that are fully electric or what they call genset locomotives that just use a part of a diesel engine at any one time, depending on what’s needed. You can use compressed natural gas as a fuel source. Those are all viable locomotive products today and they generate virtually no noise and reduce the level of pollution from a conventional diesel engine by more than 80 percent. It’s a lot harder to fix trucks than it is to fix trains.
MP: We had an article recently about how Amazon can’t get enough workers for its Shakopee fulfillment center and has to offer special buses from neighborhoods like Cedar-Riverside to connect residents to jobs. What do you think the potential is for fulfillment warehousing, popularized by Amazon, in a Cargo Oriented Development plan?
DC: I’m bullish on it, actually, especially if you could make that distribution center rail served. There are some real differences between those and what people consider “traditional” distribution centers where everything that moved in and out was on a pallet or certainly in contained cases. The fulfillment center is where you are going down to the level of fulfilling Mrs. Jones’ order. Another difference is you are employing about four times as many people per area in a fulfillment center, which makes it a more attractive job-creation opportunity. It makes it more significant that you deal with the transportation issues that are related to the distribution operation both for commuters and the freight that’s moving in and out. If you can have a transit-served and rail-served fulfilment center, that’s a very real possibility.
MP: What happens next?
DC: There is a four-pronged approach. The first is to stimulate infill development with the industrial properties that you have today. Another is to improve the public transit connections between existing industrial lands and neighborhoods. The third one is to do some model community-level planning to try to get a copacetic view of what would be industrial development related to the community. And a fourth is focusing on regional policy so the region can consider questions that are beyond an individual project and individual sites. What is the land redevelopment policy the region can pursue, how should the region position itself to negotiate with the big railroads for increased intermodal capacity? Will the region adopt a policy of combining incentives and requirements so that you can more-readily make this integration of industrial logistic activity in community areas.
MP: One of the articles I wrote about the Malcomb Yards projects reported that both the Met Council and Hennepin County gave grants to the project to promote transit-oriented development near the Prospect Park LRT station. But at the time the grants were given, the land involved was zoned for industrial uses to protect it from incursions of residential uses. Isn’t that in conflict with your message that those lands should be preserved and reused for industry?
DC: It’s great in general that Minneapolis-St. Paul has had such an enthusiastic development response to its light rail line. It’s generally a great thing to see. But every transit station doesn’t necessarily have to be the same. It doesn’t necessarily have to be dense residential with convenience retail built into it. Maybe it’s a connection to industrial uses that are consistent with community life.
There is a lot of “industrial activity” that doesn’t mean you’re moving scrap iron around. There’s a lot of planning, a lot of design that has to be integrated with the manufacturing process. In Winnipeg we helped plan a project for a large-scale development around intermodal terminals where there’s sort of a set-back of uses. You have office space and professional uses on a commercial street followed by light-industrial activity followed by more-intense industrial activity set back a couple blocks from the street front.
If I see a problem with the Minneapolis-St. Paul industrial development effort, there’s an understanding that yes, we need to preserve land for industrial use. But there doesn’t seem to be — aside from the activities of the (St. Paul) port authority, which are necessarily limited in a number of ways — there doesn’t seem to be an understanding that we have to have a pretty aggressive, systematic approach to not just land preservation but land redevelopment and land positioning so we can have infill development on a viable scale. So I think what might come out of our work is a crystallization of that kind of work so that the region can utilize the industrial spaces that it does have in the more central part of the region.