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Doug Burgum, Chairman and Founder of the Kilbourne Group, left, and Mike Allmendinger, General Manager of the Kilbourne Group, stand on top of the Loretta Building which overlooks the north end of the businesses on Broadway Friday, Oct. 30, 2015, in downtown Fargo. The Loretta building was refurbished and now houses the company along with several other businesses. Dave Wallis / The Forum
FARGO- Doug Burgum stood one night on the roof of the abandoned Northern School Supply building, which he’d recently spared from demolition, and scanned the downtown landscape in the dim light.
But Burgum also saw something else that night years ago: an influx of students who would flock to the heart of the city once North Dakota State University moved its architecture and art programs into the dilapidated school-book warehouse, infested with rats and pigeons.
That realization gave Burgum, who grew Great Plains Software from modest beginnings into a billion-dollar Microsoft acquisition, an inkling of what the downtown could become.
“If NDSU’s really going to come down here, that’s going to be a game-changer,” he said. “If we were smart, we’d be buying up a lot of downtown buildings.”
Burgum’s rooftop remark was made to Mike Allmendinger, who had graduated from NDSU’s landscape architecture program only a few years earlier, and had started to work with the software executive on a few projects.
Busy with business and family commitments, it would be six years before Burgum could really devote significant time and energy into what has become a driving passion for a man who once dreamed of becoming an architect: transforming the downtown into a thriving hub that will attract a mix of residents and businesses, as well as creative professionals who will fuel innovation.
After leaving Microsoft in 2007, Burgum turned his attention to investing in technology companies and, with the formation of Kilbourne Group, revitalizing the downtown where he has invested millions of dollars.
“In those days, there was no money to be made in downtown real estate,” Burgum said, recalling that many of his first projects involved philanthropy, including his purchase of the former Northern School Supply building, which he donated to NDSU.
Today, he said, downtown real estate is in such great demand that a number of developers including Burgum are routinely asking property owners whether they’d be interested in selling, and buildings often change hands without the seller posting a for-sale sign.
An adventure that comes with bruises
Still, buying old buildings, especially those in need of significant refurbishment, can be an adventure that comes with a few bruises, a lesson Burgum learned early on in his effort to save the Northern School Supply building.
The furnace went kaput in winter, and pipes for the sprinkler system on the top floor burst, flooding the lower floors, the water freezing into frozen cascades of ice stalactites.
Burgum, who was paid $100,000 for agreeing to assume all liabilities that went with taking ownership of the asbestos-laden building in 2000, ended up investing $1.5 million in improvements before donating it to NDSU in 2004.
Another early project was the purchase of a building adjacent to Plains Art Museum, which became the Katherine Kilbourne Burgum Center for Creativity, an art space for elementary school students and community classes.
Read former Plains Art Museum Executive Director Colleen Sheehy’s Letter to the Editor about the Katherine Kilbourne Burgum Center for Creativity. The buildings were owned by the Plains Art Museum. Burgum family donations catalyzed the renovation of the historic structures.
But it quickly became clear that the road to transforming underused downtown buildings was to redevelop them into commercial and residential buildings.
“The way you save all the buildings is you make it uneconomic for all the buildings to be torn down,” Burgum said. “There weren’t enough philanthropy dollars to save everything. The market had to come to the rescue.”
Kilbourne Group’s market rescue efforts have been ambitious. The firm has acquired or signed purchase agreements for a long list of downtown properties, including holdings related to two strategic parcels that could be integral in two major parking-and-redevelopment projects the city is considering building.
One includes the Schumacher Goodyear property facing Broadway; the other involves a city parking lot west of the iconic Black Building, which Kilbourne has a deal to buy.
Another recent Kilbourne Group acquisition in a strategic downtown location: the former Sahr’s Sudden Service block, which Burgum sees as a promising site, given its proximity to Sanford Medical Center.
Because of the growing number of property acquisitions, often including noteworthy buildings, there is a perception among some that Kilbourne Group is intent on buying much of downtown. That’s a view Burgum is quick to dismiss.
He has a map showing the location of Kilbourne’s downtown properties, which he said comprise 5 percent of the square footage — that’s 440,608 of 8.7 million square feet. Kilbourne buildings account for 64 units, or 4 percent of the 1,611 downtown apartments, Kilbourne figures compiled from city records show.
“Ninety-five percent of downtown is owned by other people,” he said. “This is a team effort.”
Mike Hahn, president of the Downtown Community Partnership, hears occasional comments about Kilbourne Group’s increasing downtown footprint. But he sees Burgum and Kilbourne Group as assets, catalysts in making the city core attractive while preserving its historical flavor.
“They’ve been leaders, they’ve been innovators,” Hahn said. “I, for one, am glad they’re here and doing what they’re doing. They do good work.”
Dave Anderson, Hahn’s predecessor and now Sanford Health’s director of public affairs, agrees. “Most cities aren’t that fortunate to have that kind of a champion with the resources to back it up,” he said.
Other downtown property owners have benefited from the vitality that Kilbourne Group has injected into the city core, Anderson said. “That rising tide lifts all the boats.”
As for any criticism that Kilbourne is “gentrifying” downtown, Anderson said downtown was faltering before revitalization, which Burgum gave a big boost, took hold.
“We couldn’t continue to be a ‘bottom dollar’ downtown,” he said. “It was emptying out and we didn’t really have great prospects.”
Back to the future
Burgum inherited his keen interest in downtown from his mother, who used to give him tutorials on the history of landmark buildings on shopping trips downtown.
Katherine Kilbourne Burgum grew up at 1114 4th St. N. in the Horace Mann Elementary School neighborhood, and developed a fondness for downtown that she passed along to her son.
Burgum, born in 1956, witnessed the urban renewal era of the 1960s and 1970s, which left Main Avenue and other areas bereft of historic buildings, and began the disruptions that devastated the downtown.
It was much better before the wrecking ball. When spreading his downtown revitalization gospel, Burgum is fond of showing a photograph of downtown Fargo taken in the early 1930s, a view facing north on Broadway from south of Main Avenue.
The old photo depicts a thriving downtown, with a trolley car, street traffic and pedestrians, all drawn to the city core for shopping or to work in auto or other manufacturing or clerical jobs then clustered in the heart of the city.
For Burgum, the old photograph perfectly illustrates how a jumble of mixed building uses, creating a center of residential, retail, office, education, government and commerce, promotes population density and vitality in a downtown.
It’s a message he has promoted with evangelistic zeal, most recently last month at a 1 Million Cups event at The Stage at Island Park, where it was announced that a new Kilbourne Group acquisition, the Mathison’s building, will be the home of a Prairie Roots Food Cooperative grocery store.
His vision is distilled in Kilbourne Group’s motto: “Vibrant downtowns create healthy, smart cities,” an idea he is eager for business and civic leaders to embrace. Vibrancy, in his view, results from a downtown that is walkable, full of mixed building uses, densely populated, with its historic character preserved.
Filling in underused spaces, notably parking lots, will add to population density by creating residential, office and commercial spaces that will attract people. In that regard, downtown has great potential, 115 acres of space, by Burgum’s tally, mostly parking lots, that could be the springboard for future development.
If developed creatively, downtown can be an even greater draw for young professionals, including technology startups or corporate headquarters, he said.
“Today’s job seekers are picking the city first and the job second,” he told the 1 Million Cups audience, which had packed The Stage for the announcement.
The reverse of smart growth, in Burgum’s view, is sparse development on the city’s edge, where it costs the city more to deliver services than developed property contributes in property tax revenues.
More than once, Burgum has rued his placement of the former Great Plains Software campus, now Microsoft, in what then was far south Fargo. As head of Great Plains, he was emulating the Apple model, a remote, freestanding campus with its own cafeteria.
The cafeteria was needed, Burgum said, because there still are no restaurants within walking distance. By contrast, downtown Fargo brims with cafes, restaurants and coffee shops, all within easy walking distance for residents and workers.
Kilbourne Group’s own Loretta Building, 210 Broadway, illustrates downtown’s potential for greater density.
Before it was redeveloped, the brick building housed two businesses that employed six people; now 21 businesses, including Kilbourne Group’s headquarters and a restaurant, employ 120, Burgum said.
“That’s a 10-X move,” he said, meaning multiplier. “We can keep making those 10-X moves.”
Nearby, the 18-story Radisson Hotel provides more property tax revenue, per square foot, than any other property in the city, Burgum said.
“Downtown is the profit center,” Burgum said. It’s also what he calls a “differentiator,” providing distinct entertainment, shopping and residential options as well as historic character that people increasingly find appealing.
So do television producers. Burgum noted that a major Kilbourne “in-fill” project, 300 Broadway adjacent to the iconic Fargo Theatre, lured the ESPN GameDay producers to twice choose it as a backdrop for its show. It’s doubtful, he added, they’d have found the parking lot it replaced as attractive.
“We know what the elements are,” Burgum told the 1 Million Cups audience.
Downtown playbook in plain sight
A large window of a meeting room in the Kilbourne Group offices overlooks Broadway, with a view facing east, toward the U.S. Bank plaza, where Burgum yearns to build a tower.
It’s a visual reminder of what downtown can become, in Burgum’s eyes.
He sees a future with many of downtown’s underused spaces filling in, adding density and variety to downtown.
He would like to see the downtown population triple. That could happen, he said, if downtown comprises 10 percent of the city’s population.
To do that, he’d like to see downtown capture a 10 percent slice of new construction every year, compared to the sliver today. New hotels would be especially welcome, since accommodations downtown have been dwindling, he said.
In a typical construction year, say $600 million, that would mean $60 million is spent downtown.
The number of jobs downtown could double or even triple.
To accommodate those residents, workers and visitors, downtown will need a lot more parking spaces, a goal the city is pursuing, Burgum said.
If those things happen, downtown will become much more attractive to companies searching for locations to tap creative young professionals, he said. R.D. Offutt and an undisclosed company are eyeing downtown for a company headquarters.
“We’re not quite there in Fargo, but I can see that over time,” Burgum said. “If we get a couple of corporate headquarters that come to downtown, we’ll get many that follow.”
After reciting his indicators for progress, Burgum pauses to reflect. “We just feel there’s a lot left to do. We feel like we’re just getting started.”
Those who are eager for a hint of what Burgum’s Kilbourne Group will be doing in the future again are told to look to the past.
“If you look at what we’ve done,” Burgum said, you’ll see what’s coming. “The playbook really is instructive. It’s bringing back the principles of mixed use, walkability, incorporating the fit and feel of historic proportions.”
Now, if Burgum were to climb onto the roof of the former Northern School Supply building, reborn as NDSU’s Renaissance Hall, many of the buildings in sight are owned by Kilbourne Group. Burgum doesn’t like to boast of any grand vision, but does admit to enthusiasm.
“It’s a passion for sure,” he said.
This article was published in The Forum of Fargo-Moorhead on November 16, 2016.
KILBOURNE GROUP
210 Broadway, Suite 300
Fargo, ND 58102