Despite strenuous objections from one member, Faribault’s City Council voted Tuesday to move ahead with applying for state aid to help facilitate the move of one of Faribault’s most valuable and fast growing businesses to downtown.
At the Aug. 13 meeting, the council specifically requested a $100,000 forgivable loan through the Minnesota Investment Fund and a $153,000 forgivable loan through the Job Creation Fund, both administered by the Minnesota Department of Employment and Economic Development.
The loans would help to support a project expected to cost $4.8 to $5 million in capital expenses and help the city retain 78 current jobs and add eight more. City Planner Dave Wanberg said the project is in line with the Council’s goals of bringing an anchor business downtown.
Wanberg hailed KGP Co as a “locally based company with global reach,” noting that it partners with leading telecommunications and technology companies across the globe to help design and produce networks that meet the needs of its commercial clients.
KGP Co has grown over the last 50 years as the world of information has become steadily more digital. Starting in the Faribault garage of founders Dale and Kathleen Putrah, the KGP moved downtown and then to its current spot near the I-35 and Highway 60 interchange.
The company also has offices in Kansas City and the Dallas-Fort Worth area, but has maintained its headquarters in Faribault. However, it has outgrown its current headquarters and is working with Faribault Real Estate on plans to move to the 500 block of Central Ave.
Councilor Sara Caron expressed surprise that staff and Council were prepared to move ahead with making KGP’s development a “downtown anchor,” saying that she believed there to be more support for looking for a potential retail anchor that could maximize foot traffic.
Furthermore, Caron criticized staff for a presentation which she felt should provide greater depth and expressed deep concerns about a proposal which she argued would likely, when all is said and done, represent a major investment to keep a large company in town.
“I cannot support spending money unnecessarily, especially at this time, when taxpayers are tightening their belts and I think the city needs to do the same,” Caron said. “Multi-million dollar companies and wealthy real estate developers don’t really need our help.”
Wanberg said that KGP is hoping to move downtown in part because they want to show off the downtown and that the move would thus help to facilitate increased traffic at downtown businesses, not only from KGP’s employees but guests as well.
KGP Co’s General Counsel Matt Drevlow said that in the 15 years since he has joined the company, KGP has grown dramatically, going from a few hundred employees to now over 2,000 employees across the country and the world as it has expanded into new markets.
Throughout it all, Drevlow said that KGP has been loyal to Faribault and much prefers to stay in town, even though given the state of the real estate and labor markets the company could easily move its operations to another, larger city.
In order to stay in town, Drevlow said that KGP needs a larger space that will allow it to recruit, retain and attract talent in Faribault. In the post-pandemic era, he said that quality workers have become more selective and have higher expectations for their workplace.
“In this work from home environment, you can’t just bludgeon your employees and tell them ‘you’ve got to come into the office,’” Drevlow said. “You’ve got to create an environment where they want to come into the office.”
Outside of Caron, the Council appeared to be fully supportive of moving ahead with the project. Councilor Royal Ross said that he believes KGP could make a “wonderful” downtown anchor, even if the business won’t itself have a retail component.
“Everybody would like to see more retail, but we have to be realistic — I can’t think of a retail business that would bring 86 jobs downtown,” Ross said. “But with the addition of 86 professional level jobs downtown, I can see us adding more smaller retail to it.”
Ross also emphasized that by endorsing KGP’s application for the two state loans, the city is not committing a dime to the project itself. However, Caron responded by predicting that if the project continues to move forward, KGP would soon ask for significant city funding.
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