WEST FARGO -- The city of West Fargo is broadening its use of artificial intelligence to gather data that may help show whether or not economic development incentives are working.
The West Fargo City Commission approved the purchase of Placer.ai software for two years. The software aggregates cellphone data to give a picture to businesses and city leaders of who is traveling, shopping and eating in West Fargo.
Director of Economic Development Casey Sanders-Berglund said Placer.ai is being used by more than 1,500 cities and economic development organizations, with 11 agencies using the software in North Dakota. Nearby municipalities and organizations using it include Fargo's Downtown Community Partnership, the Fargo Park District and the cities of Wahpeton, Sioux Falls, South Dakota, and Detroit Lakes, Minnesota.
Berglund said Placer.ai has partnerships with many different cellphone apps that can submit data.
"The data is sterilized from any personal or individual identifiers (like names or cellphone IDs)," she said in an email to The Forum. "Then the data is aggregated to track pools of users on each and every individual to offer insights into foot traffic patterns at locations. They use tools like geofencing locations to assist in site selections, trade area analysis, competitiveness and overall patterns."
In West Fargo, the software can gather data to help the city show whether tax incentive programs for new businesses are worthwhile.
For example, Sanders-Berglund used data gathered for Junkyard Brewing, which received incentives from the city when it opened in early 2023. Junkyard was granted a five-year payment in lieu of taxes, or PILOT, program totaling $249,470 and a business incentive program of about $440,000, creating a total investment of about $690,000 from taxpayers. The PILOT allows Junkyard to receive a property tax break on a sliding scale for five years.
In a demonstration, the software was able to show the brewery is attracting not only West Fargo residents but others from Fargo, Harwood, Horace, Dilworth, Casselton and Mapleton.
Sanders-Berglund said the data can show what markets or industry clusters the city might be missing, and the city could use that data to seek out more businesses. The data can show "which individuals or consumers are leaving our city to consume items at different stores, retailers or restaurants," she said.
Commissioner Rory Jorgensen said the Junkyard owners were "very impressed" with the data Placer.ai was able to provide, and they were also happy to see many West Fargoans are enjoying the brewery's second location.
The software can also compare stores in the city to an overall market to see how the West Fargo location is doing in comparison to other stores, such as Costco.
"Although we might not be looking to attract another big retailer like Costco, I thought this would be a good business to look at," Sanders-Berglund said.
Placer.ai estimated Costco sees about 2.5 million visits each year, of whom 406,800 are from West Fargo residents.
West Fargo Senior Director of Community and Development Dan Hanson said not only can the software be used for economic development, but other city departments may find a use for the data, from engineering to police.
"She's touching the surface of some of the functionalities (Placer.ai) can provide," Hanson said. "I really saw the value in the economic development sector of the software, but I also saw some other areas where we can use this."
Hanson said the software could be used during West Fargo's Cruise Nights that brings many visitors to the city every third Thursday of the summer months.
Sanders-Berglund said the data may also bolster the city's chances of grant acceptance. She said the Grand Forks Downtown Development Association recently included statistics gathered by the software to secure a $100,000 grant. The grant was nearly double the association's annual budget of $58,0000.
"In the past, they had applied and didn't even make it to the second round," she said.
Hanson and Sanders-Berglund said the data does not track personal or private information.
"I specifically asked. They are not tracking how many trips I've made to the track yard. It tracks cellphone data; it doesn't track who the person is," Hanson said.
He said there must be a certain amount of people using a hub for the software to track information.
"It wouldn't tell us who is coming and going. It is all anonymous," Hanson said.
Commissioners approved a two-year contract with Placer.ai that will cost $20,000 in the first year and $22,000 in year two on Monday, Dec. 16. The software will be paid for with economic development sales tax funds. Commissioners approved the purchase with a 4-1 vote. Commissioner Roben Anderson voted against the proposal.