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D m ph)651.645.4644 O N J E K Jon Commers,Principal Public Finance for Placeakers fax)651.227.4215 commers @donjek.com www.donjek.com August 16, 2007 Sandy Peine, City Clerk City of Pequot Lakes, Minnesota City Hall 4638 County Rd 11 Pequot Lakes,MN 56472 Dear Ms. Peine: As the City concludes the substantive fact-finding work undertaken by the Highway 371 Study Group over the last several months,and leads into some form of survey analysis of the residents and business persons in Pequot Lakes, I am pleased to submit a written summary of the work I have performed since May. Very generally,the presentations I gave on June 21 and August 7, and the discussion with business community members on July 19, focused on potential impact for the City's tax base and ways to mitigate any negative impact a bypass might exact on the downtown and the business environment as a whole. In each step of this analysis, I considered the three options examined in the environmental impact statement: No-build, "through-town"and an alternative alignment or bypass. As I described in the first public presentation,there have been a multitude of studies conducted to look at the impact of bypasses on property values,job creation and retail activity. Variations abound among the communities studied: No two towns are identical in the composition of their tax base,the development patterns and geographic features, or in their sense of place. Still, few communities face a planning choice like a bypass regularly, and the decision making process is enhanced by looking elsewhere to gauge impacts. Among the studies, some undertaken up to 40 years ago and many currently in process,there emerge some points of consensus. First,macroeconomic factors drive the nature of local impacts; in other words,the broader economic health and trends of a community influence the economic impact more than the specific route for moving highway traffic through the community. Second, the size of a town, its"pull factor"or relative status as a regional attraction, and the composition of its economic and tax base also influence outcomes. Third,certain segments of a local economy—businesses that are most sensitive to through-town traffic volumes, in particular—will likely experience less benefit or more harm than other segments such as office,housing, and local retail. Attached to this letter is an annotated bibliography of the studies most applicable to the City's decision on this issue.