“My goal is to get the material removed and get the site build-ready,” said Paul Nevanen, Koochiching Economic Development Authority director.
Nevanen is speaking about removing rock in a foreign trade zone that the KEDA manages.
In April, attorney Steve Shermoen presented the KEDA Board with a proposal to further develop the FTZ near Ranier, but board members have questioned the best way to proceed and several alternative suggestions have been made.
Nevanen is not alone in wanting to see the site progress. Several other members of the KEDA Board have expressed similar determination to get the lot ready for development.
Nevanen told The Journal that blasting, crushing and clearing the rock, along with other site-readiness projects, could help make the case for companies wishing to relocate into the tax-incentivized zone near the Canadian border.
“It’s very competitive out there,” Nevanen said of the attracting a client. Getting the site build-ready would help potential tenants visualize the location and allow the KEDA to provide them with a quicker timeline to get a project completed.
Now in August, no decision has been reached regarding the proposal and no work has been done at the site.
The FTZ is jointly owned by Koochiching County and International Falls. Those two entities, who are each represented on the KEDA Board, would ultimately provide input into the future of the site.
As it stands now, the county board is expected to discuss the client’s proposal, as well as alternatives for bidding out the job. They could then share any resulting recommendations with the Falls City Council.
Shermoen’s April proposal included three main factors: the client proposed to purchase two lots in the FTZ, a total 19.3 acres closest to the Canadian National Railroad tracks; the client would blast and crush rock to level the uneven landscape of these two lots, retaining the rock and any profits made from the material; the client would work alongside the KEDA to secure a permanent tenant to use the tax-incentivized zone.
In May, the KEDA Board was presented with a revised proposal, seeking a long-term lease of the property for 50 years at a rate of $2,000 per year.
Also in the revised proposal, wording requiring wetland mitigation on the site and a 10-ton road to the FTZ was softened after initial reactions to those two items from the KEDA Board was unfavorable. The client also offered a 25-cents-per-ton royalty to the KEDA when any Class 5 gravel material was used or sold by the developer.
During a June 29 County Board committee meeting, developer Dennis Wagner suggested, with no information or preview given to the board, including a rock quarry on Highway 11 in the deal. Wagner’s son Kalan Wagner is one of the lead people in a new company that would be formed under the proposal.
In information provided in the initial proposal made by Shermoen, the new company estimated to spend about $1.6 million in gross wages and provide 19 man-years of work by crushing rock and clearing the site.
Following the initial proposal, an FTZ Committee was formed by members of the KEDA Board and interested parties to study and make recommendations on the proposal. Involved in the sub-committee have been KEDA Board members Wade Pavleck, Mike Fairchild and Tim “Chopper” McBride; Nevanen; county Engineer Doug Grindall; Ranier Mayor Ed Oerichbauer; and Dave Serrano, Arro of the North.
In a summary presented to the KEDA Board in June, the committee noted that due to several concerns related to the proposal, it may be best for the KEDA to put out bids to complete the project. No action has been taken based on the conversations of the KEDA Board members or the committee summary.
Concerns noted in the committee’s meetings summary centered around the non-solicited nature of the proposal without a bidding process; insufficient compensation to KEDA for the rock; no certainty of long-term job creation and prime FTZ lots being used.
In addition, both Grindall and Pavleck have noted the county’s shortfall of gravel and indicated the rock could be useful for future local government projects.
Grindall noted that the estimated cost to the KEDA for crushing and blasting would be $750,000. That crushing and blasting would produce 160,000 tons of material with a value of $1.6 million. That rock material would come from leveling the lots to 1,120 feet, as suggested by Grindall. The depth of blasting, and the final level to make the site attractive to clients, has been debated by the parties involved.
Using Grindall’s estimate for rock of 160,000 tons and a 25-cent royalty would amount to $40,000 for the city, in addition to $100,000 in site rental fees paid over 50 years. That is far less than the estimated profit of selling rock of $850,000.
The subcommittee in June made an informational presentation to the Koochiching County Board explaining the proposal and accepting feedback. The International Falls City Council was scheduled to have a similar presentation, but removed the item from the agenda.
“We’ve been at this some time,” Nevanen said of the process to attract a client to the zone.
He cited the national economy, making a business and time case for a plan, and competition among locations as challenges to finding a tenant.
