Main Street Grants promote businesses in downtown Rochester

There’s something for every creative soul at Art Heads Studio in downtown Rochester.

As she walked through her art shop and studio, owner Leah B. proudly pointed out her collections of crystals, seashells, used goods and other curiosities.

"“We have things to make your own stamps, clay, sketchbooks, and paint,” that’s in addition to the art classes taught here as well.

Bee recently doubled the size of the store by moving next door, something she says she couldn’t have done without a $55,000 Main Street grant from the Minnesota Department of Employment and Economic Development. Hers is one of about 100 Rochester businesses to receive the grants, and the money was intended to help businesses stay afloat during the retail downturn caused by the pandemic.

“We applied and put in a few bathrooms and classroom sinks and put in some walls and doors,” Bee said. “And here we are a few years later.”

These additions are not very exciting. But they’ve helped Bee succeed in a city full of businesses that’s also dealing with never-ending waves of construction and road closures. The city is undergoing a 20-year economic development project called the Destination Medical Center, which is giving downtown Rochester an exciting facelift to make the city more attractive to both the people who live here and those who come to the city to visit Mayo Clinic.

More recently, Mayo began construction of a $5 billion hospital a few blocks from the Bee store.

With closed roads, sidewalks, detours and orange cones everywhere, it has been difficult to run businesses downtown, she said.

"We could have moved to another part of Rochester, on the north side. It’s all growing. But I didn’t want to leave downtown. “I love the chaos of things and the community that surrounds us,” Bee said. “I get to meet visitors as well, and I think that’s something really special that Rochester has to offer because of the clinic."

Grant money invested in infrastructure

Over three years, DEED has distributed more than $64 million in grants across Minnesota, including $3.8 million and counting to businesses in Rochester.

To qualify, owners had to provide at least 70 percent of the financing for things like renovations, expansions, or opening a new store. The state contributed up to an additional 30 percent of the total cost. Companies did not receive grant money until they submitted receipts for the work they had done.

Grants in Rochester have focused on small businesses and businesses owned by people of color or veterans, said Patrick Sipe, executive director of the Destination Medical Center Economic Development Agency, which is leading Rochester’s redevelopment.

"“Instead of having two or three companies eat up the entire grant pool, you really try to target small businesses and make it affordable,” he said. “Our average award was about $20,000.”"

They had to be in a downtown area that overlaps with DMC’s development footprint. Nonprofits receiving funding ranged from homeless shelters to places of worship. A few large commercial and residential projects received large grants as well.

The money was used for physical improvements that remain with the property even after the tenants leave. That’s a good thing because it can continue to pay dividends to the building owner and the city, even if the company the grant was intended to help moves out or closes up shop, Seib said.

“I think the beauty and perhaps the genius behind this program is that the prize goes to a capital investment, so what one would consider is generally permanent installations, rebuilds or permanent finishes,” he said.

Some Rochester storefronts are closing despite winning grants

Most of the grant recipients have survived the ups and downs of Rochester’s transformation — but not all.

A cafe Which received an $181,000 grant, it closed in less than a year. The property remains vacant.

The owners of a downtown building received a $186,000 grant to open their restaurant. He – she closed Less than a year later, the building’s owner — who also opened the restaurant — was allowed to put up the newly renovated space Back in the market And profit from it.

The bakery, which was approved for a $120,000 award in the first round of the program, never used the money. These funds were returned to subsequent grant rounds after remaining unclaimed.

Nate Nordstrom used a $32,000 grant to open a second location of his bike shop two years ago on a busy downtown corner.

“One of the big groups we serve is commuters. So, cargo bikes and electric bikes are absolutely perfect for that. And of course, Mayo is also making a lot of investment downtown, and then you see a large number of these apartment complexes. The idea was to continue to serve that population,” Nordstrom said.

But Nordstrom closed the new store earlier this year. He said his experience shows that running a successful business in Rochester now depends on much more than just a good location and financial support from the state.

"I think we need more volume, which takes time. “Construction is definitely a big pain point,” he said. “I actually think that part of town that we tried to start there is going to be good. “I think we’re very early.”

However, Nordstrom said he is excited about what downtown Rochester will look like in a few more years. It may be a long time before taxpayers know whether the Main Street grant investments will pay off.