Why do St. Paul and Minneapolis maintain separate chambers of commerce, given that both cater to members beyond the immediate borders of their cities?
Business leaders raised questions of that sort in the 1880s, but efforts to merge the two dues-based associations resulted in little more than some spirited debate. As recently as 2010, discussions about a possible merger again fell apart amid concerns that Minneapolis, Bloomington and other west metro needs and interests will overshadow east metro priorities, and that their regional cultures are too distinct.
Since then, long-standing employers like TKDA, Cray Inc. and Wold Architects have left downtown St. Paul for Bloomington and Minneapolis, leaving the capital city scrambling to fill empty commercial spaces in an increasingly challenged downtown.
Nevertheless, with money and membership stretched thin in the digital era for geographically-based chambers everywhere, discussions about a possible merger between the St. Paul Area Chamber and the Minneapolis Regional Chamber have resurfaced, this time with more organizational legs.
Pros and cons
In February, the two chambers assembled a 22-member joint partnership committee to begin analyzing the pros and cons of a full or partial merger, bringing together representatives of what’s been described as a wide variety of employers from both sides of the river.
“A united voice is critical,” said Jeff DeYoung, a recently retired managing partner from the Baker Tilly accounting firm who chairs the St. Paul Area Chamber board. “Many employers voice concern about safety in both cities. Neither city is growing or has the level of commerce to the degree that it should.
“The prices that they’re selling (downtown commercial) buildings for, we are going to have a really sobering valuation change in both cities, and that’s going to have a tax impact on everyday homeowners,” DeYoung continued. “A lot of the buildings are going back to the lenders. It’s going to come to a head here pretty quickly.”
Opposition and a federal investigation
John Regal, a former board chair with the St. Paul Area Chamber, said he’s adamantly opposed to a merger. In addition to his work with the chamber, Regal is a former assistant risk manager for the city of St. Paul and the current president and chief executive officer of Sargasso Mutual Insurance Co.
His experiences in all three areas tell him that a chamber merger would leave St. Paul and its priorities further in the west metro’s shadow. Small businesses in particular could be left behind.
“Who is responsible for advocating for business and commerce in this town? … There’s different priorities coming out of City Hall, and there needs to be an organization that represents the interests of business in advocating for a strong commercial and light industrial tax base,” Regal said. “That advocacy doesn’t seem to be very strong right now. It seems to be that the St. Paul Port Authority is really the only entity doing that, and they’re tasked with dealing with distressed properties and the river.”
Meanwhile, the U.S. Department of Justice is investigating financial turmoil within the Minneapolis chamber, according to multiple sources close to the chambers.
Last summer, the Minneapolis chamber’s executive director Jonathan Weinhagen abruptly resigned following an internal investigation that uncovered a hefty budget shortfall. Filed last November, the 990 tax forms available through Guidestar.org showed a net revenue loss for the Minneapolis chamber of nearly $300,000 in 2023.
“I do think it was a catalyst,” said Mike Logan, interim president and executive director of the Minneapolis chamber, who grew up in St. Paul. “I do think his departure — and his abrupt departure — led to a moment of reflection.”
A 22-member committee
Logan and B Kyle, president and chief executive officer of the St. Paul Area Chamber, have been coy about revealing the full membership of their 22-member joint committee, but they’ve said large players and smaller companies both have roles in analyzing what unique aspects of each chamber deserve to be celebrated and maintained distinctly, and what part of their mission might benefit from combined resources.
Co-chaired by DeYoung, the joint partnership committee meets monthly to discuss the work of four subcommittees focused on governance, communications, operations and strategy. The goal is to have a recommendation about a possible merger to the full boards of each chamber ready by the end of the year, for potential rollout in 2026.
“We’ve not talked structure at all. The people who are saying ‘no’ think we’re just going to drop everything and form one chamber,” DeYoung said. “We might have Mike and B just pick two or three issues to work together on. A lot of times, people want to pick structure before strategy, and that never works.”
“We are anticipating that whatever we come up with, there will be some people who say ‘we don’t like that.’ We’re going to lose some memberships along the way, but we’re going to lose some memberships if we don’t do anything, too,” DeYoung added. “We’ll hopefully get those people back.”
Combining the two chambers is now officially on the table, but not necessarily guaranteed. The result could be that the chambers maintain separate physical hubs in each city under one umbrella. Then again, the result could be a lot of things.
“This is the first time we’re taking a very deep dive to do a cost-benefit analysis,” said Kyle, in a recent interview. “That plan could be anything from ‘we’re remaining good friends across the river’ to ‘we’re merging.’”
Chambers elsewhere have lost members in the digital era as employers question the value of paying dues to a local association when so many of their clients and partners are online or otherwise located outside of their immediate geographic area. The pandemic exacerbated membership declines nationally, inspiring more chambers to merge. The committee, said Logan, is looking at examples of mergers around the country, from purported success stories to attempted mergers that failed.
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‘Additive, rather than competitive’
Still, Kyle said St. Paul memberships have held fairly steady over the years, and the goal isn’t so much to stem potential membership losses as to be “additive, rather than competitive” across chambers.
That means finding ways to leverage a more regional focus, such as partnering on regional conferences and conventions, workforce development, networking and leadership training, and helping member benefits go farther. Both chambers engage in — and could better combine resources around — advocacy and legislative lobbying, which is something many other economic-development organizations don’t do.
That regionalism is already a reality for many members, as “40% of our members already have a business headquarters address outside of St. Paul,” Kyle said.
“This is not about scarcity,” Logan said. “This is about growing beyond one-plus-one into three. Efficiencies are part of it, but those will probably be marginal efficiencies. … If anything, it’s an amplification. Let’s say I’m a small marketing agency and I love being part of both chambers. I might love even more being part of one.”
That logic works for Joe Thornton, a longtime public relations specialist with AIMCLEAR based out of downtown St. Paul, who noted that the St. Paul Downtown Alliance — a partnership between private employers and City Hall — already maintains a business improvement district with street ambassadors and other downtown programming.
“St. Paul businesses are being served effectively in a somewhat similar manner by the Downtown Alliance,” Thornton pointed out. “It seems there is a lot of overlap between the St. Paul Chamber, Downtown Alliance and (tourism bureau) Visit St. Paul. A Twin Cities Chamber could elevate businesses metro-wide, while the Downtown Alliance could really focus on elevating business opportunities for St. Paul and Visit St. Paul serves destination marketing purposes.”
Lea Hargett, past chair of the St. Paul Area Chamber, prefers to see a joint venture rather than a full-out merger, allowing each chamber to maintain their autonomy while combining efforts around public policy advocacy, legislation and networking events. A membership survey last year showed that many members expressed concern about rising costs and the need for more support.
While some chamber members may continue to question whether west metro interests will overshadow east metro priorities in a merged chamber, Kyle noted St. Paul has some leverage in key areas.
St. Paul has stronger finances
The St. Paul Area Chamber has established relatively strong financial footing for itself through its WorkStream consulting practice, which offers staffing and services for 19 affiliate chambers and nonprofit organizations, from the Oakdale Chamber to the St. Paul Parks Conservancy and the Hmong Chamber of Commerce.
The St. Paul chamber lost about $232,000 in 2023, according to its 990 tax form, but that had to do with some long-anticipated expenses coming to a head in a single year, DeYoung said, and it was the first loss in over a decade.
Overall, “the net cash position has held strong,” said DeYoung, a certified public accountant by trade. “We’re making money this year. We made money the year before. The St. Paul chamber is rock solid financially. … B runs a very tight ship.”
Minneapolis has had a tougher time of it financially, as revealed after Weinhagen’s departure, even after absorbing the Plymouth-based TwinWest Chamber of Commerce in 2020 and the Bloomington chamber years prior to that.
“With the dire circumstances Minneapolis is facing, especially with a federal investigation going on, (a merger) makes zero sense,” Regal said. “At a minimum, you’d wait until the dust settles on the investigation, and then go back and answer the question: What’s in it for St. Paul? It just looks like a bail-out for Minneapolis.”
Despite its documented financial challenges, Logan said the Minneapolis chamber had renegotiated agreements with key external vendors and should be profitable by the end of the year. Some of its debt is internal — money the organization owes to itself for services rendered, as opposed to bills owed to a bank. Its financial situation would have to be sorted out before a merger moves forward, not after, he said.
“Our debt and our challenges are our debt and our challenges,” Logan said. “We’re not going to saddle St. Paul with any of it.”
Both Kyle and Logan acknowledged that some members have expressed fear about a loss of local identity following a merger. “You can’t create something new and give up what has gotten you here,” Kyle said. “The question we have to ask our members is, what do we treasure that we want to retain, and what are we hoping for that we want to achieve?”
The chambers
Minneapolis Regional Chamber of Commerce: There are 700 dues-paying members. Fifteen employees, including transportation management affiliate Move Minneapolis and RealTime Talent workforce research. It has a $4 million annual budget.
St. Paul Area Chamber of Commerce: There are 900 dues-paying members, or 1,600 members after including 19 affiliate chambers staffed through WorkStream consulting. There are 26 employees. Its annual budget is $3.9 million.
Source: 990 tax forms for 2023, available on Guidestar.org; stpaulchamber.com; mplschamber.com.
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