While Minnesota is seeing expanding economic growth, a new report from the Minnesota Chamber of Commerce says things like environmental permitting and a lack of local government support is limiting the state’s economic potential.
Minnesota continues to miss out on “megaprojects,” the chamber report says. These are projects rising out of recent federal policy and the interest rate environment, where companies invest billions in facilities for electric vehicles, semiconductors and clean energy.
Sean O’Neil, the chamber’s director of economic development and research, said in an interview that bills signed by President Joe Biden, like the $1 trillion Infrastructure and Investment Act, the CHIPS Act, and the Inflation Reduction Act, all brought a surge in capital for certain projects. Minnesota has reaped benefits from this, O’Neil said, and has continued to expand.
However, both the state and local government, he said, have not taken steps to try and facilitate faster development or create accommodations to usher more megaprojects to Minnesota.
In a report earlier this year, the chamber estimated that air permitting review times in Minnesota are six times longer than in other states and that Minnesota could gain as much as $910 million in annual economic output if it were to reduce its permitting time.
In response to Finance & Commerce request for comment, the Minnesota Pollution Control Agency Communications Director Andrea Cournoyer said the agency is consistently working to improve the permitting process and that it has been in discussion with other states about improving efficiency. She said the agency must balance efficiency with the health of the environment.
“We look forward to working with the Minnesota Chamber and other partners to identify ways for those seeking permits from the MPCA to invest in engaging with their neighbors and host communities to build better relationships and understanding of how the facility’s operations will be protective of health and the environment,” Cournoyer said.
Local governments, O’Neil said, could start ensuring resources for infrastructure and utilities are in place to serve a possible development on the scale of a megaproject.
Some of the biggest projects that have come to the state include the $700 million data center investment Meta made in Rosemount and the Polar Semiconductor site in Bloomington, worth $372 million.
Between 2018 and 2023, Minnesota saw 477 new and expansion projects announced in the state. This puts it in eighth place in its 12-state region, according to the report. Ohio and Illinois led the pack, and both saw over 2,700 projects announced, while Indiana was in third with 1,240 projects announced.
The report also mentions Minnesota’s housing shortage being a disadvantage for Minnesota, something O’Neil in turn says is the “No. 1 challenge and barrier” that holds back businesses from expansion.
“Even if a company thinks they could hire enough workers, if there’s not enough available housing to support those new workers that might come into that community, then that might make it difficult for the company to actually move forward with an expansion project,” O’Neil said.
O’Neil calls housing shortages, as well as child care shortages, a “make-or-break issue” for companies already in the state and those eyeing Minnesota for expansion.
There’s no easy answer when looking at ways to expand housing stock, O’Neil said, but reducing barriers to building and allowing developers to meet the demands in a community and region is critical for the economic development of the state.
Earlier this year, the Chamber of Commerce threw its weight behind a bipartisan bill that would essentially end single-family-only zoning in the state, while also requiring that multiplex housing be given a more streamlined way through political votes in local planning boards and city councils. The bill ultimately didn’t pass after an informal lobbying campaign led by the League of Minnesota Cities and done by mayors and city council members convinced enough legislators to steer clear of the proposal. Supporters of the policy say the bill will be worked on again in the next session.
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