Amid hundreds of smiles and handshakes, politicians gathered at the St. Paul Student Center on Thursday for St. Paul Mayor Randy Kelly’s State of the City address.

Gov. Tim Pawlenty and many of the city’s corporate partners were in the audience of more than 300 people.

Kelly’s address, “St. Paul’s Future: Progress Through Partnerships,” focused on the city’s ability to develop when it teams up with communities, nonprofit organizations and corporations.

“As leaders today we have to think outside of the box,” Kelly said.

Kelly spent little time focusing on the city’s financial problems and the looming state budget deficit; he said focusing on the problems would only make them worse.

“We choose not to define our city by our problems but by our abundance of assets,” he said.

Kelly said he considers St. Paul one of the safest cities of its size in the country and said St. Paul’s corporate partners, such as Xcel Energy, help the city develop.

“We have a corporate ethic of sharing assets with the community,” he said.

To demonstrate these partnerships, Kelly announced Xcel Energy has donated $2 million to the University to help create an “incubator” for biotech companies that want to come to the area.

The University, Kelly said, has envisioned a life-science corridor between the Minneapolis and St. Paul campuses, designed to serve as a place for start-up biotech companies to grow roots and bigger companies to expand.

“We have the opportunity not only to create jobs, but to save lives and transform the way that we live,” Kelly said. “If we do this right, we will lead a moment that will change science and medicine in our daily lives in way we can only dream about today.”

Wayne Brunetti, Xcel Energy’s chief executive officer, said he hoped Xcel’s gift to the University would “jump-start” a larger campaign of giving.

“When business and government work together, great things can happen,” he said.

David Hamilton, University vice president for research, told Kelly and Brunetti the University was the right place to spend the money.

“The ‘U’ of ‘M’ has the intellectual capital you need to succeed in this endeavor,” he said.

Kelly also talked about the necessity to have a “leaner, but stronger and more effective,” government because of budget shortfalls.

“These times mark a watershed for local government in Minnesota,” he said.

It is necessary to provide the city with high-quality services, while growing at the same time and keeping the city’s eyes on the future, Kelly said.

“We face the future with confidence, determination, hope and a relentless drive to succeed,” he said.

Emily Johns covers politics and welcomes comments at [email protected]