Note: our connectivity issue has been resolved. This post originally appeared on Extra! Bluestem Prairie while our host was working to solve the problem. Much thanks to Typepad.
He’s back at it again. In a legislative email to constituents that was also published as Reform of prevailing wage law will benefit state, a letter in Glencoe’s McLeod County Chronicle. Gruenhagen argues that workers on small public infrastructure projects typical of greater Minnesota should be paid less so that the money would go farther:
One of my chief authored bills, HF508, updates prevailing wage provisions and raises the cost threshold for state government-funded projects that require prevailing wage. Currently, prevailing wage laws only apply to state subsidized projects that exceed a certain dollar amount.
Since infrastructure projects in Greater Minnesota tend to cost less than those in the Metro, raising this cost threshold will allow private contractors to bid on smaller projects without being forced to use union wage scales. The result will be that state tax dollars will go further in funding smaller infrastructure projects, which are more common in Greater Minnesota. . . .
As our gentle readers might suspect, construction workers aren’t on board with this concept anymore than women hoping to control their own reproductive rights.
State Rep. Glenn Gruenhagen’s prevailing wage ideas will cut pay and cost jobs for blue collar workers.
I am a retired construction worker who spent his career building infrastructure in this state. A recent letter in this paper caught my attention. He attacked prevailing wage laws in Minnesota. For those who don’t know, prevailing wage is nothing more than local area standard wages for construction workers.
Gruenhagen called prevailing wage the “union wage.” That’s false. The local wage rate is established by looking at local wages paid on real jobs in our area, both union and nonunion workers benefit. He also fantasizes that we can save millions of dollars by getting rid of prevailing wages and that this will create more jobs. The real reason Gruenhagen wants to mess with prevailing wage is simple, and it has nothing to do with taxpayers. He is working for cheap labor contractors that are using him to get rid of the laws that prevent them from paying workers low wages on public projects. The fact is that Gruenhagen and the business owners he fights for think construction workers in our region make too much money. I’m offended by that.
These people are highly trained workers; they put their lives in danger and spend countless days on the road away from their families building this state. They earn their money, Glenn, every penny. . . .
Read the rest online at the paper.
However, Bluestem wonders whether Gruenhagen might not have to wait long for the cost of labor to come down, and in the spirit of his bill we offer a modest proposal.
That leaves Minnesota with a dilemma, as Republicans put the brakes on sentencing and probation reform, creating more prisoners than there are beds. Let’s put these unfortunate souls into chain gangs that would repair our state’s road and bridges for nothing more than the price of a few guards, orange jumpsuits (blaze pink for the lady offenders), barracks and eggs. Pay them nothing while they learn valuable skills and work habits and soon the price of infrastructure will plummet.
Image: Handsome convicts could reduce the price of Minnesota’s infrastructure beyond Representative Gruenhagen’s wildest dreams and there would probably be a place for prison ministry as well.
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It's not a rural versus metro thing, the statements by both women made clear. What they didn't address is who is putting off bonding. To learn about that, Bluestem recommends Don Davis's piece for Forum Communications from late December, Don’t bet on big 2017 Minnesota bonding bill:
. . . While Republicans hold the majority in the House and Senate, they do not have enough votes to reach the required super majority to borrow money. That means Democrats who want a bigger bill, and different projects than the GOP wants, will have a say.
“We are open to a bonding bill, but it would be end of session,” said Sen. Paul Gazelka, R-Nisswa, who will be Senate majority leader. . . .
[Dean]Urdahl predicted a bonding bill for “some pressing projects,” but a big one will not come until 2018, “the way it normally is done.”
The representative handing the bonding gavel to Urdahl, Republican Paul Torkelson of Hanska, said he “would be very surprised” if there is a big 2017 bonding bill, adding that “it is really too bad.”
So what's the rest of Minnesota waiting for while one private sector--agriculture--goes to the head of the line? Hausman explains that it may set a precedent of individual projects going forward but other equally worthy projects being left behind. She cited an article from the Worthington Globe noting that legislators from that area are suggesting this:
Everyone in St. Paul agrees the Lewis & Clark Regional Water System needs to come to Worthington, but that isn’t the problem.
Robinson said while both houses and the Governor’s office are all in agreement that funding for the Lewis & Clark connection to Worthington is in their bill, the bonding bill is one of the last things that will be done in the legislative session in late May.
“It’s where all the bargaining chips are held; it’s the last piece of negotiation,” Robinson said.
Robinson, Hamilton and Weber don’t want to wait that long to get construction started. That’s why they’re working on standalone legislation to free up approximately $8 million in surplus funds from the money used on phase two construction from Magnolia to Adrian to be used on phase three. The extra money, which resulted from favorable bids, is locked up with a restriction that it can only be used for phase two construction.
Combined with $9 million in federal funds, Robinson said the money would get a majority of the construction done, but not all of it. The city and Lewis & Clark officials want to get the money as soon as possible in order to go out to bid early and get favorable bids.
“If it stays in the bonding bill and it passes, it would be late May, and we would lose much if not all of the 2017 construction season,” Robinson said. “The plans are done, and the easements are in place. So, if we had that $8 million, we could go out to bid within several weeks.”
As Hausman notes, other projects across the state face the problem of losing a construction season. Here's her observation:
Liebling also questioned why HF14 jumps ahead of other projects. She understood that the Minnesota Department of Agriculture couldn't make the loans for farmers but didn't know why this was more urgent than a leaking dam in Lanesboro and other infrastructure issues around the state that everyone feels are urgent in their communities.
Here's her question:
Miller responded that there was a timeliness in HF14 in that farmers need to get crops in during the spring. However, we're puzzled how this argument cancels the point that Hausman made about the construction industry, which like farming is bound by Minnesota's pronounced seasons.
We're seeing this frame--farmers' needs over those of others and "Greater Minnesota" defined as farmers vs the metro and regulators (Cargill CEO Greg Page at the Water Summit)--act as a shorthand in policy questions.
It obscures the needs of small cities for drinking water and wastewater system replacements, the Lewis and Clark water pipeline, the dam at Lanesboro, and dozens of other projects across Great Minnesota.
It's as if Minnesota outside of the metro is nothing but a monoculture of farms and nothing else. This is a lazy and divisive frame. By all means pass this bill--but let it be the exception and not the rule.
The legislature should knock it off treating the bonding bill as the item "where all the bargaining chips are held; it’s the last piece of negotiation," and instead get a bonding bill that funds projects across the state. Many of these were vetted last year--and a new construction season begins mere weeks from now.
We'd like to see construction workers, farmers, and more all prosper. Get working, representatives and senators.
Photo: The Lanesboro Dam.
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Yesterday, via a press release from the Minnesota Department of Economic Department, the Governor's Task Force on Broadband released its annual report, recommending biennial spending of $100 million in ongoing funding for the Border-to-Border Broadband Grand Development Program and $10 million in operating funds for the Office of Broadband Development.
The office is located within MN DEED.
In a statement issued today, Lt. Gov. Tina Smith said:
“Broadband remains a critical tool for building a fair economy that works for all Minnesotans. This report reaffirms that significant, sustained investment is necessary to provide all Minnesotans the affordable, reliable, high-speed internet they require to run businesses, get educations, and access modern medical care. If we don’t make this investment, Minnesota will be divided between those who can access the promise of the 21st century and those who cannot. That is not right."
“Our Administration will propose another robust investment in broadband infrastructure next session. I hope legislators, many of whom ran on a promise to strengthen rural communities, will fulfill this commitment.”
Bluestem's editor's own experience concurs. We moved to a new home in rural Big Stone County where fiber broadband was installed by a local telephone co-op on September 1. Our housemate is a photographer who documents the prairie pothole region's beauty--and arrival of fast upload and download times has been a boon to his ability to market his photos and studio open houses.
It's just an imperative for farmers and rural auto shops, as these businesses require the ability to receive and send data swiftly.
The recommendations outlined in the report are aimed at ensuring every Minnesotan has access to broadband and the ability to use it. The recommendations include $100 million in ongoing funding for the Border-to-Border Broadband Grand Development Program and $10 million in operating funds for the Office of Broadband Development, located within the Minnesota Department of Employment and Economic Development (DEED).
“Last year, we made strides with the largest investment in the Border-to-Border Broadband Development Grant Program to date, but we know there’s more work to be done to achieve our goal of broadband access for every Minnesotan,” said Margaret Anderson Kelliher, chair of the Governor’s Task Force on Broadband. “Broadband plays a vital role in connecting people to health care, education and the global economy. The recommendations in our report will continue to move us closer to the border-to-border broadband access we need to succeed now and into the future.”
“Our goal is to make high-speed broadband accessible to every home, school, business and community in the state, particularly in Greater Minnesota,” said DEED Commissioner Shawntera Hardy. “This is an important tool that will not only improve the quality of life of all Minnesotans, but will be an investment in the future economic development of our state.”
The Border-to-Border Broadband Development Grant Program, created by the Legislature in 2014 and initially funded at $20 million, provides funding to build the state’s broadband infrastructure and promote broadband access in unserved and underserved areas of the state. The grants provide up to a dollar-for-dollar match on funds, not to exceed $5 million for any one project, and are distributed to qualified entities. . . .
The Task Force recommendation to allocate $10 million in operating funds to the Office of Broadband Development recognizes that specific and targeted policies and programs can effectively aid the adoption of broadband and assist in deployment.
Additional policy recommendations include:
1. Take action to promote and communicate “dig once” policies
2. Establish a legislative cybersecurity commission for the purpose of information sharing, monitoring workforce issues, and supporting and strengthening infrastructure
3. Continue to monitor advancing telecommunications technologies
4. Amend building codes to require that multi-tenant housing units funded with public dollars deploy cabling that supports easier management of broadband connectivity
5. Build computer donation partnerships between state agencies and community-based organizations that get computers into the hands of those who need them
6. Modify the state Telecommunications Assistance Program to better align with the national Lifeline program to subsidize the cost of broadband service for low income households
7. Support continued funding of Regional Library Telecommunications Aid (RLTA)
8. Fully fund Telecommunications Access Equity Aid
Photo: The view from our kitchen window. All this and fiber broadband too. Photo by Sally Jo Sorensen.
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Gruenhagen said he will help repair Minnesota’s aging road and bridges by addressing one factor that makes the work expensive.
“We need to reform Minnesota’s prevailing wage law,” he said. “It artificially inflates the cost.”
Prevailing wage sets the hourly wage employers must pay workers on construction projects that receive state money. Gruenhagen said the mandated pay hurts state projects, and local projects that receive state money.
“Minnesota is among the four states with the highest prevailing wage law,” he said.
To see the prevailing wages for state-funded projects in Gruenhagen's district, check out Region 7 (includes Sibley County) here and Region 8 (includes McLeod County) here.
After he takes out "artificial" prevailing wages, maybe he'll go after worker safety measures and restrictions on child labor, both of which drive up the costs employers face. Perhaps prison chain gangs doing road work, rather than reopening the closed private prison in Appleton, could replace honest construction workers while we're at it. For a bit of porridge and bread crusts--roads would be repaired, prison overcrowding solved.
Photo: Glenn Gruenhagen arguing for his bill to make sure people use the bathroom assigned to their biological gender at birth. Maybe Minnesota construction workers could get second jobs as bathroom monitors if both of Gruenhagen's "reforms" succeed. Photo by Tom Olmscheid via MinnPost.
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Joseph Wang, CEO of the North American High Speed Group, tells Heather Carlson at the Rochester Post Bulletin that he was "shocked" that America had no high speed rail system when he moved to the United State in 1991.
Bluestem thinks the bigger shocker here is Wang's claim that the Chinese high-speed rail system was built and operational when he lived in China until 1991.
In an interview, Wang said he understands that many Americans are skeptical of high-speed rail. But he said he has seen firsthand the benefit of such projects. Wang was born in Taizhou, China. He worked for China National Technical Import and Export Corp., overseeing construction of massive infrastructure projects financed with foreign dollars. He also did a lot of traveling in China, Japan and Taiwan and saw the impact high-speed rail projects had a region.
"I saw how high-speed rail changed the human beings' lives. How high-speed rail improved the economy and created jobs," he said.
Wang moved to the U.S. in 1991 and became a U.S. citizen. He said he was shocked when he moved to America that there was no high-speed rail. [emphasis added]
That's a charming tale. But Bluestem struggles to understand how Wang could have been shocked at the absence of high-speed rail in the United States when at the time, high-speed rail in the People's Republic of China was only a glimmer in party officials' eyes.
Policy planners debated the necessity and economic viability of high-speed rail service. Supporters argued that high-speed rail would boost future economic growth. Opponents noted that high-speed rail in other countries were expensive and mostly unprofitable[citation needed]. Overcrowding on existing rail lines, they said, could be solved by expanding capacity through higher speed and frequency of service. In 1995, Premier Li Peng announced that preparatory work on the Beijing Shanghai HSR would begin in the 9th Five Year Plan (1996–2000), but construction was not scheduled until the first decade of the 21st century.
According to the entry, high-speed rail was launched in China in 2007. What Wang saw there in 1991 is anyone's guess, but whatever he and Carlson were smoking during that interview, they should learn to share.
The 2007 date is mentioned in Tom Zoellner's une 14, 2016 article in Foreign Affairs, China's High-Speed Rail Diplomacy. It's an interesting read, and includes news of the American regulation ( "a federal mandate that high-speed rail train sets must be manufactured domestically") that shut down the Xpress West proect from Vegas to Southern California. (North American High Speed Rail once claimed to be negotiating to operate that line).
Taiwan's high speed rail line dates from the same year. Time reported in A Brief History of High-Speed Rail that Japan built its first bullet train for the 1964 Tokyo Olympics; by 2009, 1,500 miles of high speed rail lines had been built on the island nation. The article noted:
The sobering expense of high-speed train travel has tempered the expectations of even the strongest rail advocates. "It sounds like a lot of money to Americans, but it's really just a start," James P. RePass of the National Corridors Initiative told the Washington Post. Some critics also predict a massive price tag to operate new rail lines, pointing to Amtrak's perennial shortfalls, and a proposed link between Anaheim and Las Vegas (in the home state of Democratic Senate leader Harry Reid) sparked outrage and derision among many Republicans.
In the seven years since, little headway has been made.
There also exists the strong possibility of a political backlash to the idea of Chinese-financed high-speed rail projects. In 2005, fears of growing Chinese influence—stoked by U.S. politicians and pundits—helped doom a bid by CNOOC, a Chinese firm, to acquire the U.S. oil producer Unocal. Today, anti-Chinese sentiment is running even higher than it was then, thanks in no small part the presumptive Republican presidential nominee Donald Trump, who regularly berates Washington elites for not taking a tougher line on Beijing. And critics of Chinese involvement in U.S. rail will no doubt exploit public concerns over safety. In 2011, a malfunctioning signal box caused the collision of two Chinese-built high-speed rail trains near the city of Wenzhou, killing 40 and injuring almost 200 more. The Chinese government moved to squelch criticism, even though investigations found that the rail line had been built hastily with substandard materials amid an atmosphere of official corruption.
The Committee on Foreign Investment in the United States (CFIUS), an arm of the Treasury Department designed to protect the nation from financial threats to its national security, would presumably review any large-scale involvement by Beijing in a critical piece of U.S. infrastructure. But the CFIUS approval process is somewhat opaque, and the committee’s decisions can apparently be swayed by high-priced lobbyists. When asked about their review process, a U.S. Treasury spokesman responded in email that the committee “does not comment on information relating to specific CFIUS cases, including whether or not certain parties have filed notices for review.”
Details, details.
Whatever the case, Bluestem thinks it's safe to bet that Wang, North American High Speed Rail Group's strategic communicator Wend Meadley and the rest of the gang are full capable of building the high speed rail that flourished in China and Taiwan over 25 years ago.
Perhaps they'll offer Mayor Brede a piece of the Brooklyn Bridge next or market vaporware to the DMC.
Photo: Maybe Wang was thinking of "theAsia Express steam locomotive, which operated commercially from 1934 to 1943 in Manchuria could reach 130 km/h (81 mph) and was one of the fastest trains in Asia" (Amtrak'sAcela Express on the east coast can reach 150 mph). Photo credits: This photographic image was published before December 31st 1956, or photographed before 1946, under the jurisdiction of the Government of Japan. Thus this photographic image is considered to be public domain according to article 23 of old copyright law of Japan (English translation) and article 2 of supplemental provision of copyright law of Japan.
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Are negotiations underway between the owner, Corrections Corporation of America and the State of Minnesota? How much is the closed Prairie Correctional Facility in Appleton worth?
The answer to the first question appears to be no, while finding the answer to the second is more complex--and CCA's current price tag may butt against a little-known state law passed in 2014.
UPDATE August 19: About 20 minutes after this post was published, the West Central Tribune published Forum Communications political reporter Don Davis' article, Dayton not interested in Appleton prison purchase. [end update]
Rumors of negotiations
Earlier this summer, Representative Tim Miller, R-Prinsburg, told a town hall meeting in Appleton that CCA lobbyists met with the governor's office and made an offer to lease the Prairie Correctional Facility "for $6 million to $8 million a year, and to sell it for $99 million. The lease payments could be used toward the purchase price, according to Miller," Tom Cherveny reported in the West Central Tribune.
Miller said the opposition continued to ignore the fact that the corporation had offered the state an option to purchase or lease to own, and that the state would have operated the prison with union employees.
Corrections Corporation of America had offered to lease the facility for $6 million to $8 million a year, and to sell it for $99 million. The lease payments could be used toward the purchase price, according to Miller.
Appleton attorney Brian Wojtalewicz questioned the $99 million purchase price when Corrections Corporation of America is paying property taxes based on a $15 million value. Miller said that's the offer the corporation put on the table. Negotiations between the state and the company are not in the Legislature's hands.
While there was opposition to the prison legislation, Miller said there was also some progress. There was sentiment in the Senate in favor of purchasing the facility. And, the governor's office had met with lobbyists for Corrections Corporation of America to discuss the offer, he said.
The article--verified as accurate by two acquaintances who attended the town hall--raised a series of basic questions about the offer. With yesterday's announcement by the federal government that it will be phasing out private prisons, the notion of purchasing the prison was back in the West Central Tribune. Veteran reporter Carolyn Lange writes in Lawmakers speculate price of Appleton prison could drop with federal phase-out of private facilities:
News Thursday that the federal government intends to phase out use of privately owned prisons has renewed questions about the future of the privately owned prison in Appleton.
During the last year Corrections Corporation of America and officials from Appleton and Swift County launched a campaign to persuade the state to lease—or buy—the prison to ease overcrowded state prisons.
That proposal was opposed by Gov. Mark Dayton and a variety of political, religious and community groups who oppose for-profit prisons.
But there's speculation now that the Appleton prison may be available at a bargain price after CCA's stock prices plunged about 35 percent a few hours after the announcement by the Department of Justice.
The action by the federal government will likely put "downward pressure" on the price of the Appleton prison, said Sen. Lyle Koenen, DFL-Clara City.
"That puts us in a good negotiating position," said Rep. Tim Miller, R-Prinsburg.
Oh? In the earlier article, Miller asserted that the legislature had no role in negotiations, so it looks like Miller is indulging his proclivity for wanting to have things any number of ways depending on the audience and situation (more on that with regard to the prison in a bit).
Some basic questions (and answers) about "the offer"
Earlier, Bluestem had attempted to contact the governor's office, two state agencies, the Chief Fiscal Analyst of the Minnesota House Fiscal Analysis Department, a CCA staff lobbyist and contract lobbyists while consulting other sources in an attempt to learn more about the offer mentioned in the first article (and reported again in Thursday's article).
Our questions were basic in reporting terms, looking for the when of the meeting with the governor's office, the who of those attending the meeting, the how this offer was calculated and how it was conveyed (written or oral) and the like.
While the CCA lobbyists did not answer emails or voice messages, the Department of Corrections and the Department of Administration (which manages government property) both were unaware that an offer was on the table.
The office of senator Ron Latz, who convened the prison population task force, was not aware of the offer.
According to administration Press Secretary and Senior Communications Advisor Matt Swenson, Dayton's chief of staff Jamie Tincher met with a CCA lobbyist (or lobbyists) at their request. While Swenson offered few details about the meeting, it concurs with Minnesota Public Radio's Brian Bakst reporting in Dayton sounds off on prison, PolyMet, MNsure and more:
Reopening a western Minnesota prison. In no uncertain terms, the governor said he would veto a bill with traction in the House to reopen a private prison in western Minnesota under some level of state control.
“I’m told they want $100 million to buy it. Then we have to rehab it and operate it. Hugely expensive. And I certainly don’t support this private corporation being authorized or leasing the facility to them or paying to have them to come back and do it with all the problems they brought before,” Dayton said.
According to Swenson, Dayton's knowledge of the $100 million price tag comes from this single meeting with Tincher.
While advocates for reopening the prison took this press conference statement as a hopeful sign, a review of the press conference footage (unavailable online, as it was removed with other press conference footage that was found to be non-compliant with the state's Americans with Disabilities Act [ADA] policy) reveals that Bakst's account is accurate--and Dayton doesn't seem particularly happy with the added expenses that would follow a hypothetical purchase.
We also contacted nonpartisan House staffer Bill Marx,the Chief Fiscal Analyst of the Minnesota House Fiscal Analysis Department , who responded in two emails. Bluestem received the first on July 15:
The bill that had a hearing in the House and was moved to the Ways and Means Committee (HF 3223) directed the state to rent the Appleton facility. So the fiscal note on that bill did not address the value of the facility. The fiscal note is attached - there may be items of interest.
Here's the fiscal note for HF 3223, which only addressed the cost of leasing and operating the Prairie Correctional Facility:
Then the House Public Safety portion of the Supplemental Appropriations bill that went to the Supplemental Budget bill conference committee. contained language (copied below) that directed the commissioner of corrections to negotiate a contract to purchase or lease to own the facility. That language did not become law. I am not aware of any estimate that we had for the cost of purchasing the facility. Our fiscal analyst who works with Public Safety issues is not in the office today. . . .
The second email from was received on July 21:
I have talked with several more legislative staff about the value of the Appleton prison.
The taxable market value is $14 million, as you stated.
Our fiscal analyst who works with Public Safety issues says he heard a $90 million number at one time but has seen no documentation of that and only heard the number once. He says he is aware of no discussion of what the state might pay if the state purchased the facility.
If the prison were operating the taxable value might be considerable higher than $14 million. Do you have any way of getting county tax information from a time when the prison was operating?
When reviewed in tandem with the Department of Corrections and the Administrative Services being unaware of any offer, it appears that no active negotiations are underway, however pro-prison folks might spin it.
How much is that prison in the window?
A review of available sources about the value of the prison while it was operating suggests that $99 million or $100 million may be a steep price for the facility. According to bipartisan legislation passed in 2014 and signed by the governor, no state agency (with the exceptions of the DNR, MNDOT and BWSR), the University of Minnesota and MnSCU may pay not over ten percent of the appraised value of real property. Assessed, appraised and "carrying value" are not equivalent terms.
The highest assessed value that we were able to find in news reports is based on Swift County tax information that was challenged by CCA. In 2009, the Morris Sun Tribune reported in Appeal likely on valuation of Appleton prison:
A $20 million difference of opinion in the market value of a privately owned prison in Appleton could end up in court.
The Swift County assessor set the 2009 value of the property at $42.9 million.
A representative of the Corrections Corporation of America told the Swift County Board of Appeal and Equalization on Tuesday the property should be valued at $23.7 million.
The board, which is comprised of the members of the regular Board of Commissioners, denied a request to lower the property values. . . .
Unlike residential property values that are set each year, Swift County and the prison have agreed to go through the complicated process every three years to establish a three-year schedule for the valuations.
During the last round in 2006, the prison filed an appeal in court and then the two sides negotiated an agreement, said Giese. The county spent about $5,000 in legal fees.
The commissioners are hoping a similar smooth scenario takes place this time.
In 2003, a different approach was used. At that time, each entity hired appraisers and attorneys and negotiated an agreement without court intervention.
Ironically, that method cost the county about $125,000 in legal fees.
Giese said it's actually easier to negotiate an agreement once an appeal has been filed in court, than doing it outside the boundaries of the court. Also, he said, when an agreement is negotiated during a court appeal, the settlement is binding.
In 2006 the property value of the prison was set at $24 million. In 2007 it was $28 million and in 2008 it was set at $32 million.
Although prison populations are decreasing and the prison is currently at 55 percent capacity, during the last three years it's been at about 98 percent capacity, said Giese. That historical data was used to determine the 2009 rate.
In short, when the prison was operating at near-capacity, it was assessed at $42.9 million, though CCA thought it was worth quite a bit less. An anti-privatization website created by the Private Corrections Working Group, includes subsequent news coverage in its Minnesota Hall of Shame page (we have broken the copy into block paragraphs to make it more readable, but have not changed the content)
June 21, 2012 West Central Tribune
The market value of the privately owned Prairie Correctional Facility in Appleton — its prison beds empty for nearly 2½ years — has been reduced by $7.5 million to a new value of $14 million.The reduction was approved Tuesday night by the Swift County Board of Equalization.
But even that large reduction may not be enough to prevent the prison’s owner, Corrections Corporation of America, from seeking even greater tax relief by means of an appeal to the state. “They left, we hope, content enough not to appeal to the state board of equalization,” said Swift County Auditor Byron Giese. Assistant County Assessor Wayne Knutson had said the prison property should be valued at $22.5 million.
The Corrections Corporation of America said it should be valued at $10 million.[bold added] The Swift County Board of Equalization members agreed that the value of the empty prison should be reduced and members compromised with a market value of $14 million. It’s not known if Corrections Corporation of America will accept that $14 million valuation or if it will stage another appeal.
The $14 million valuation is a far cry from the $42.9 million the county assessor valued the property at in 2010. That rate was also later reduced during a court appeal and binding negotiation — a process in which the county and Corrections Corporation of America has engaged ever since the 1,600-bed prison opened in 2001. “They have appealed every single time,” said Giese.
March 17, 2010 West Central Tribune
A tentative three-year tax agreement reached with the Corrections Corporation of America will mean lost revenues for Swift County, especially in 2011. Property taxes will likely increase to make up for a decrease in revenue that the Prairie Correctional Facility in Appleton had generated in the past, said Swift County Auditor Byron Giese.
The prison, which closed in February, had appealed its $42.9 million valuation last fall, triggering a series of negotiation sessions. Following a closed meeting Tuesday, the Swift County Board of Commissioners approved a three-year deal that assumes the prison will remain empty in 2011 and hopeful that it will reopen in 2012, said Giese.
The first part of the agreement includes a reduction in the 2009 valuation from $42.9 million to $32 million for the 2010 payable taxes. That translates into a loss of $50,000 in tax revenue to the county this year, which Giese said will have to come out of the county budget. “It’s something we have to deal with. It’s not insurmountable,” he said.
Harder hit is the city of Appleton that will see $250,000 less in revenue. The Lac qui Parle Valley School District will have a decrease of $40,000 because of the lowered valuation of the prison, and the state will get $60,000 less Giese, said. The 2010 valuation, for taxes payable in 2011, will be lowered to $17.5 million.
The financial impact on tax revenues for the local entities hadn’t been calculated with that low valuation. “Everyone will have to live with it and move forward,” Giese said. He said property taxes may have to increase 3 to 4 percent on each parcel to make up for the lost prison revenue: “Local taxpayers will pay more.”
In the final phase of the three-year plan, the 2011 valuation for taxes payable in 2012 would increase to $21.5 million. “We’re anticipating that, hopefully, it’ll be open again,” said Giese, explaining why the valuation is scheduled to increase at that time. Corrections Corporation of America, which has other empty prisons in the system, has assured the county that reopening the Appleton prison is their number one priority.
“It’s not good for any of us to have this thing closed,” Giese said. The board did express concern, however, that if the prison opens its doors again in a few months with the lower valuation that the county “could look like we have egg on our face,” said Giese. “But it would be a good thing to have it back open.”
The tax plan was approved on a 4-1 vote, with Chairman Richard Hanson casting the lone no vote. Commissioners Gary Hendrickx, Joe Fox, Doug Anderson and Pete Peterson voted for the plan, which still must get final approval from Corrections Corporation of America and the courts.
Another concern with the closed prison is the effect it will have on the 2010 Census. Ten years ago the facility had 1,400 prisoners that counted toward the county’s population. The population of a community is a factor in obtaining such things as federal aid. Giese said if the prison opens and the population increases in the future, the county could appeal the census count.
The one bright spot financially for the county is that a $200,000 annual tax abatement that was part of the prison’s economic development incentive has expired after 10 years, said Giese.
The carrying cost of the prison in CCA's most recent annual report (2015) is $17,961,000 (F-20). Carrying value reflects the purchase price of property.
Why buy or lease?
Those who oppose re-opening the prison by and large look to sentencing and probation reform, as well as expansion of alternative programs like the Challenge Incarceration Program (CIP) to reduce Minnesota's prison population.
Those who seek to re-open the prison see incarceration as an economic development tool (jobs, jobs, jobs) as well as serving a need. Sometimes the narrative of Swift County as the bottom of the pack for unemployment got a bit counterfactual, as in Tom Cherveny's article, Economic tipping point triggers campaign for Appleton state prison:
With assistance from the Upper Minnesota Valley Regional Development Commission, the city of Appleton assembled these numbers a few years ago looking at the economic impact of the prison and its closing:
365 the number of jobs the prison once provided the regional economy
86 the number of lost jobs experienced directly in Appleton.
$13,760,000 The dollar value multiplier of what the loss of jobs meant annually in economic activity for the community.
$500,000 The amount of property taxes the facility pays to the city of Appleton. The taxes would be lost were the state to purchase the facility.
$800,000 The approximate total property taxes paid by the facility including the city, county and school district.
$50,000 The monthly utility bill the facility paid the city of Appleton when it was operating at full capacity.
$300,000 The amount of local government aid the city of Appleton lost annually when the prison closed. Inmates had been counted as part of the city's population in calculating LGA.
90 The number of students the local schools lost when the prison closed.
$586,620 The estimated loss in pupil aid that resulted with the loss of students.
"The Governor's Office is not leading on this issue, especially considering a commissioner has said that we have an overcrowded prison crisis. Months ago he proposed spending $140 million for new prison beds and that proposal was taken off the table after the Appleton prison was found to be a viable option. It's time for Governor Dayton to finally address this crisis by supporting the re-opening of the Prairie Correctional Facility and providing hundreds of good-paying union jobs to unemployed Swift County residents."
However, faced with other audiences, Miller changed his tune, championing criminal justice reform over jobs in his district, while seeming quite sincere about it. At a forum about sentencing reforms and the Appleton prison that was held by Miller's colleague Rep. Raymond Dehn, DFL-Minneapolis, the Prinsburg Republican said:
I totally hear what you’re saying about prison population reform, basically people who don’t belong in prison, and I agree. If someone doesn’t belong in prison, and not by my definition, but if people don’t belong in prison, I don’t want that to happen. If that means reducing the number and that means Appleton doesn’t open, then I’m 100% for it.
Here's the video clip of the moment, courtesy of The Uptake:
Funny how we don't hear that sort of talk out here in the district from Miller, but perhaps truth is a Foursquare app for the freshman legislator.
He does seem to stretched it a bit about those negotiations when talking to his constituents, so maybe his work with the Barn theater came in handy in North Minneapolis.
Photo: Tim Miller (left) tells participants in a North Minneapolis town hall that if the prison population can be reduced, he's 100 percent against reopening the private prison in Appleton, while Jeff Backer, R-Browns Valley, looks on. Screenshot via The Uptake (above); the private prison in Appleton (below).
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At the request of the state legislature, the Office of the Legislature conducted a review of the Iron Range Resources and Rehabilitation Board (IRRRB) and the result wasn't pretty.
Far afield, the Charlotte Observer picked up Kyle Potter's report for the Associated Press with the most painful headline of all for the unemployed workers on the Range suffering through the downturn in the nation's steel industry: Report: Iron Range investments may not create many jobs.
Range blogger Aaron Brown includes some wonderful historical photos about the agency in his post about the document, Report details serious problems at IRRRB, only with this conclusion:
. . . By its very nature, the OLA report could not be overly specific about each deal, but the general tone is clear: the IRRRB must reform its process of distributing money, and improve transparency and accountability in its decisions.
From a political science standpoint, the IRRRB is one conservative wave election away from being gutted. For that matter, change could even come from within the DFL. The Iron Range is losing political clout, population and influence at a rapid pace. That’s why, in my opinion, responding in good faith to fair criticism now is vital to the future of the Iron Range. . . .
Read the news reports beyond the headlines and as always, read everything Mr. Brown writes.
Here's the Youtube of the Legislative Audit Commission - Evaluation Subcommittee hearing on the release of the Office of the Legislative Auditor Report on the Iron Range Resources and Rehabilitation Board (IRRRB).
The Iron Range Resources and Rehabilitation Board (IRRRB) provides loans and grants for economic development in its northeast Minnesota service area. It also owns the Giants Ridge Recreation Area and the Minnesota Discovery Center museum.
Overall, IRRRB oversight and evaluation of its loans and grants are inadequate.
IRRRB did not adequately specify objectives—such as job growth—in many loan contracts we reviewed, and it collected insufficient evidence on how well loans met their objectives. Whether IRRRB provided loans to certain applicants that may not have needed them was unclear.
IRRRB does not require most companies to report the number of jobs they create using IRRRB subsidies. For companies that do provide job data, IRRRB relies solely on their self-reported data.
The database IRRRB uses to maintain information on loans is inaccurate and outdated. It lacks needed information, such as number of jobs created, to allow the agency to evaluate loans or their impacts.
For IRRRB grants, many files we reviewed that referred to job creation contained only vague estimates of job growth and had little evidence of achieving objectives.
Some of IRRRB’s grant programs did not consistently follow agency policies on reviewing applications, monitoring projects, or issuing payments to grantees.
From 2006 to 2014, Giants Ridge operating losses increased by more than 500 percent. IRRRB has subsidized operating losses with an average $1.9 million yearly. IRRRB has not set sufficient targets to measure how well Giants Ridge meets its stated goals.
State statutes on IRRRB’s governance structure are vulnerable to a constitutional challenge.
IRRRB has not adequately overseen the use and impacts of its loans and grants.
Key Recommendations:
IRRRB should explicitly analyze to what extent loan applicants can complete projects without IRRRB funding.
IRRRB should take steps, such as specifying in loan contracts the numbers of jobs that companies are to create, to ensure its loans actually help create jobs. It should also improve how it measures job creation.
IRRRB should more consistently determine how well its grants meet their stated objectives, including job creation.
IRRRB should ensure that all of its grant programs comply with agency policies.
IRRRB should regularly analyze the collective impact of its loan and grant programs on the area it serves.
IRRRB should measure Giants Ridge’s performance against its stated goals and determine whether the resort remains consistent with the agency’s mission.
Photo: It was all downhill at the Giant's Ridge ski resort, which received loans repeatedly from the IRRRB but suffered massive losses.
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Appleton has a message for the state of Minnesota, and will tell it first to a home audience.
It is hosting a community meeting on the proposal to reopen the Prairie Correctional Facility at 6 p.m. Wednesday in the Appleton Armory, 25 North Munsterman Street.
Organizers are encouraging residents, elected officials and interested people from throughout the region to attend.
The first goal is to let people know what the reopening of the facility would mean for the region’s economy, said Gary Hendrickx, a member of the Swift County Board of Commissioners and Appleton business owner.
Organizers hope that getting the message to more people will help state decision makers see the importance and benefits of the proposal, he explained.
If you plan to attend, please be respectful.
Photo: The Walking Dead prison guards. What would The Governor say?
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The DFA plant in Zumbrota has been fined more than $100,000 by the city since 2014 over a smelly wastewater discharge. The dispute between the city and DFA eventually landed in the Minnesota Court of Appeals. Repeated wastewater violations prompted the city to increase its fee and fine schedule for the third time since 2009, which led to the legal challenge by DFA.
Bauer said Saturday that the local dairy plant, which processes about 8 million pounds of milk each week, has continued to be fined in recent months, though the new fines pale in comparison to the $90,000 fine that was issued in the summer of 2014; exact totals were not available.
"It has been better," Bauer said of the city's relationship with the dairy plant. . . .
Zumbrota is located on the North Branch of the Zumbro River. A friend who grew up in the area said kids called it the Scumbrota River, so we're hoping they manage to talk to those stinky cheese guys and figure it out.
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After dithering for months about the possibility of a special session to help workers struggling with the consequences of a long-term crisis in the American steel industry, Minnesota House Speaker Kurt Daudt, R-Crown, has told Bill Hanna at the Mesabi Daily News that he's open to a deal.
House Republicans have proposed draft language for a special session bill that would provide a 13-week extension of unemployment benefits for laid-off mining-related workers on the Iron Range.
It would also reform the state Unemployment Trust Fund by providing some financial relief for Minnesota employers who pay into it, which House Republicans say mirrors a DFL House proposal in 2013.
That fund, which would finance an extension of benefits for Iron Range workers, currently holds about $1.6 billion. There is bipartisan agreement the fund is too flush at the expense of employers. . . .
Daudt has said his caucus believes there is no need for a special session because the Legislature convenes in about seven weeks on March 8.
However, in a telephone interview with the Mesabi Daily News Friday afternoon, Daudt said if the governor calls a special session he will bring a bill to the House floor to extend benefits for mining-related Iron Range workers.
He also said it would have his support and the backing of the House GOP caucus.
Hanna doesn't post links to the language (and it's not clear from the article that he's read it) and we haven't been able to find a draft posted on the Speaker's page.
However, the Speaker did mention to Hanna that the language " mirrors a DFL House proposal in 2013." Bluestem went looking for that, and turned up HF0577 a bill which had former state representative Joe Radinovich as chief author. It gathered 13 co-authors--including four Republicans (Uglem, Abeler, Runbeck, Quam). The state senate companion bill, SF619, authored by Edina DFLer Meliza Franzen, gathered the maximum number of four co-authors, including Republican Eric Pratt, R-Prior Lake.
Neither bill got a committee hearing, but before Daudt starts carrying on about the DFL not doing anything about this pressing issue when it had control of the legislature, as he is wont to do, we thought we'd see if a similar bill had been introduced since the Republicans took control of the lower chamber.
Sure enough.
Freshman Dennis Smith, R-Maple Grove, authored HF1416, picking up nine co-authors; the bill was introduced on March 4, 2015. Dan Sparks, DFL-Austin, wrote the senate companion bill, SF1320, which has two Republican and two DFL co-authors.
Like the 2013 bills, both were referred to committees, where they crawled off and died. In the House, Pat Garofalo ignored it, while he connived ways to zero out broadband grants and eliminate net metering.
We wondered what was up with the inaction and so asked a source who understands the legislature better than we; the source suggested that the bills hadn't attracted the votes for passage and so languished.
In short, bipartisan sloth, if not downright dolor on the part of those interests seeking this relief, regardless of whether Thissen or Daudt gripped the Speaker's gavel.
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The Minnesota AFL-CIO endorsed Republican Jim Abeler in the special election for state Senate District 35. It wasn't surprising, since Abeler supported overriding former Governor Tim Pawlenty's veto of a gas tax in 2008 and the district is reliably Republican.
Thus, it's not surprising to find that a newly registered political committee, Citizens For Abeler, is chaired by Chelsie Glaubitz, the dynamic 30-year-old woman who was elected president of the Minneapolis Regional Labor Federation on December 9. (It's important to note, again, that the lit piece at the top of this post isn't from the new PAC, but from the candidate--but it does illustrate the common interest).
At the time of her election, Workday Minnesota reported New Minneapolis labor federation president brings fresh perspective. The creation of an independent PAC with labor roots for a Republican in Minnesota is unusual. It's also prudent to recognize that transportation requires dedicated long-term funding, not temporary shifting around of pots of money or bonding, and organized construction workers appreciate a dependable revenue stream.
Dayton said he had a private meeting Thursday with DFL lawmakers to discuss transportation funding issues. He said he apologized to them “for having to blurt out” his assessment of the gas tax six weeks ago.
House Republicans want to use surplus money and dedicate existing sales tax revenues to transportation.
Dayton said he’ll do all he can to push back against that approach.
We'll keep an eye out on this PAC's spending when the First Report of Receipts and Expenditures (Period covered: 1/1 through 3/31/2016) are due on April 14, according the calendar for PAC disclosures on the CFB's website. It's possible that Citizens for Abeler spent money on the January 12 primary, since "The treasurer of a political committee or political funds must register within 14 days of raising or spending in excess of $750" to nominate or elect candidates, according to the CFB's website.
Image: An Abeler lit piece via his website. This piece is not from the newly-registered PAC.
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Olmsted County rail consultant Chuck Michael said he was not paid by the private company seeking to build a high-speed rail line from Rochester to the Twin Cities.
Michael sent an email to the Post-Bulletin following an article published that reported Michael did some consulting work for North American High Speed Rail Group last year. In the email, Michael wrote, "you should be interested to know that my total compensation from NAHSR was $0."
In an interview, Michael said he does a lot of voluntary, pro bono work and didn't think about mentioning this was one of those cases. . . .
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One of the legislative architects of the plan to re-open the facility, state representative Tim Miller, R-Prinsburg, shared and responded to the Don Davis article on his Facebook page:
Fact: the state needs more prison space. Fact: Appleton prison has adequate facilities. Fact: utilizing the prison would bring 200-600 well paying union jobs to a county with the second highest unemployment rate in the state. Fact: there is broad bipartisan support in the legislature. [emphasis added]
And yet it appears the Governor and public unions are fighting against this plan. Incredible. I'm absolutely stunned.
Facts about Swift County unemployment
While Miller asserts as fact the notion that leasing the privately-owned prison would bring jobs to "acounty with the second highest unemployment rate in the state," data available through a mapping tool at the Bureau of Labor Statistics suggest that Swift County is nothing of the sort. (Select Minnesota on the pulldown menu and November 2015 here).
As one can see from the legend, other counties--especially in the northern part of the state, have higher rates. Koochiching County's rate is the highest at 8.8 percent:
Here are all the counties with a higher unemployment rate than Swift County in November 2015, according to results obtained via the BLS county unemployment mapping tool, in alphabetical order (we number them for counting purposes only):
Aitkin County 5.6
Carlton County 4.4
Cass County 6.0
Clearwater Co 7.7
Crow Wing Co 4.9
Hubbard County 5.8
Itasca County 7.2
Kanabec County 5.2
LOTW County 4.7
Mahnomen Co 4.5
Marshall Co 5.4
Mille Lacs Co 4.7
Morrison Co 4.7
Pine County 4.4
Red Lake Co 5.1
Saint Louis Co 4.9
Wadena County 5.0
That puts Swift County at number 18 statewide--and given the cluster of high unemployment in the Northeastern corner of the state, the facts make us wonder why Representative Miller wasn't out beating a loud drum for a special session for laid-off steelworkers or other state efforts to relieve these seventeen counties ahead in the misery queue.
Granted, Swift County has the highest unemployment rate in Representative Miller's district--but we have to ask why an unemployment rate should trump other solutions to the state's increased number of inmates. The Davis article notes that ">Minnesota Sentencing Guidelines Commission last month approved a plan to reduce sentences for many drug offenders, which would reduce pressure on packed prisons[,]" while the ISAIAH MN organizer praised an investment in recovery beds.
Perhaps Miller can share where he found his "facts" --and notion that the only solution for prison populations is more prison space. Meanwhile, will he be suggesting government spending to solve unemployment issues in all those other unfortunate counties?
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It's an older story from December 16--and the details are behind a firewall--but the Tower Timberjay reported in Future cloudy for solar panel maker:
A solar panel manufacturer, that has claimed millions of dollars in public subsidies since opening in 2011, has laid off all but two workers and faces an uncertain future . . .
This is more bad news for the Range, where about 2000 iron miners have been laid off because of the downturn in the American steel industry. It's also likely to spur anger among other solar panel firms that did not enjoy the subsidies that were directed toward Silicon Energy.
We'll have more in this post as we learn more.
Photo: Solar panels.
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In the latest Aitkin Age, Adam Hookenakker reports in CMCC, 2016 levy discussed by county board, that a county commissioner fact checked Dale Lueck's recital of his caucus' new talking point about federal broadband funds:
Although not on the regular agenda, Rep. Dale Lueck (R-10B) gave the Aitkin County Board of Commissioners his opinion on a couple topics affecting the county at the regular meeting of the board Dec. 8. . . .
Lueck also talked about broadband coming to the county, reporting that Aitkin County will see an expansion of the service through CenturyLink, as it will be spending significant federal funds within the county in the next few years.
Commissioner Anne Marcotte said she spoke with someone at CenturyLink and was shown a map of where the work would take place – around Hill City and Aitkin – not in outlying areas that need coverage the most. She also said the work wouldn’t be done until 2017.
If I’ve learned nothing else from the TV show Toddlers in Tiaras, I learned that sometimes you don’t want to win the first crown. Winning the first crown is better than winning nothing, but it usually puts you out of the running for Best in Show. Getting access at speeds of 10/1 is better than what the communities receiving CAF 2 funding have now. And any improvement is an improvement. BUT those speeds are slower than the Minnesota speed goals of 10/5 (The MN Broadband Task Force is looking to update those speeds.) and they seem even slower when you compare them to rural areas that have Gig access, such as Grand Rapids, Red Wing, Lac qui Parle County, New Prague, Rogers, Melrose and others.
Treacy notes that Aitkin County will be getting $3,388,534; the county commissioner drilled down even more--and found that the federal money isn't going to rural areas that are underserved. Nor will the speeds be required to match state goals.
Why is Lueck inserting himself into a county meeting to tout federal funding he had nothing to do with securing? It's a salvage operation for Minnesota House Republicans, who tried to unfund rural broadband and close the state Office of Broadband development.
They would have gotten away with it if it weren't for the public outcry--and those meddling Democrats.
(Back) story of a talking point
Last April, Minnesota House Republicans planned to zero out spending on the the Border to Border (B2B) grant program and eliminate the state Office of Broadband development, PIM's Capitol Report Mike Mullen reported in Jobs and energy panel shifting priorities.
. . . So what has happened between last year — when even the Governor’s Task Force on Broadband suggested a $100 million infusion of state money — to this year, when broadband will be lucky to leave St. Paul with $12 million to keep the initiative’s lights on?
Former GOP Rep. Dan Dorman left the House in 2009 and now is executive director of the three-year-old Greater Minnesota Partnership, a consortium of 90 members — including 10 MnSCU campuses and 10 chambers of commerce — that advocate for Greater Minnesota issues. “Basically,” he says, “what you see is that technological ignorance and politics have intertwined. I was in the House for eight years. I’ve seen this firsthand. In general, Republicans don’t like to spend money. If they can find a reason, any reason, not to to spend they’ll cling to it no matter what.” . . .
Dorman’s bet is that broadband expansion leaves the Capitol next week with “$12 to $14 million and the promise to do better next year. Then,” he laughs, “they’ll come back and promise to do better the year after that.”
Lambert noted that the free-market development of wireless--the solution touted by Republicans--was soundly criticized by one of the lobbyists who helped draft broadband legislation during the earlier session:
Chris Henjum, like Dorman an attorney/lobbyist with the St. Paul firm of Flaherty & Hood, helped research and draft last year’s broadband legislation. “As it is today, wireless is still too costly, data is often capped and it doesn’t have the reliability businesses and hospitals need.”
The final figure was $10 million and Republican legislators throughout Greater Minnesota jumped on the broadband wagon. News of the federal funding allowed Republican lawmakers to point to it and appear to be broadband's BFF, even though CAF2 is more of a beard than a real date. Henjum outed that detail in a December 3 tweet:
Keep hearing that fed broadband $$ is sufficient? It funds service that's *less than 1/2* of the speed defined as broadband by FCC (!)
Two additional examples of GOP broadbandwagon "fraud" from Bluestem's senate district stand out. DFL front group Alliance for a Better Minnesota rips MN17B freshman Dave Baker in Too Little, Too Late for Broadband Funding:
Luckily, Governor Dayton and the DFL-controlled Senate ended up standing up for Greater Minnesota and pushing for broadband funding last session. But due to the resistance to compromise from the GOP House, including Rep. Baker, only about $10 million was passed.
Meanwhile, Rep. Baker’s Kandiyohi County has some of the worst internet access in the state, with only 14% coverage.
Sure, it’s nice that Rep. Baker is finally talking about broadband, but he already made the choice to put ultra-rich property owners ahead of his own neighbors and local businesses having broadband internet access.
Oh snap! Bluestem finds that Baker's new faith in broadband funding pales beside the miracle of state representative Tim Miller's born-again belief in public funding for rural broadband. As we've pointed out for months, the Prinsburg Republican never promised to support broadband in order to get elected.
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In June's special session, the Minnesota legislature asked the Commissioner of Agriculture "to identify causes and submit a report of the relative growth or decline of poultry and livestock production in Minnesota, Iowa, North Dakota, South Dakota, Wisconsin, and Nebraska of a certain time period."
Just last winter, the Minnesota Milk Producers Association and the Midwest Dairy Association commissioned a study that showed Minnesota was not keeping pace with neighboring states’ milk production. Though milk production was climbing, it wasn’t climbing as fast as neighbors or the country as a whole.
Last summer, the Minnesota Legislature asked the Minnesota Department of Agriculture (MDA) to conduct an all-species assessment of the relative growth or decline of livestock in the state versus its neighbors. The dairy portion of that study was released to me last Friday.
Over the last five years, Minnesota’s dairy processing capacity grew a respectable 1.2 billion lb., or roughly 3.2 million lb./day. That’s nearly a 20% increase in processing capacity. . . .
Read the entire article at Ag Web. Here's the study itself:
This briefing paper argues that today the most pressing issue the Minnesota dairy sector is facing is no longer the sluggish milk production growth, but bottlenecks in milk processing capacity. Should policy makers seek to boost Minnesota’s dairy sector, they should consider measures to stimulate investments in dairy processing capacity and boost demand for locally produced fluid milk and soft dairy products.
Some in the legislature and their industry hirelings cried havoc, and let slip rhetoric of a war on agriculture. Refuse one dairy, and the cows would never come home. By the end of the special session, the fate of the board was sealed. At MinnPost, Doug Grow provided a decent overview in How the MPCA’s Citizens’ Board did itself in.
One co-op's proposed expansion--and a bonding request
. . . By the end of the week there will be 3,000 animals.
Eventually, the farm will house a total of 8,500 animals, including about 7,000 cows that will be milked twice a day.
The cows will generate eight semi-tankers of milk daily that will be transported to the First District Association processing facility in Litchfield. . . .
. . . Located just east of the small town of Pennock — and about six miles northwest of Willmar — Meadow Star Dairy will be an 8,500-head dairy farm that will produce 500,000 pounds of milk every day and employ about 50 people when it’s in full swing.
It will be the largest dairy in Kandiyohi County and the eighth such facility owned and operated by Riverview Dairy LLP, which is based in Morris. . . .
Those 500,000 pounds of milk will be part of the increased milk supply that First District Association co-operative hopes to turn into cheese and cheese byproducts as it expands, the Litchfield Independent Review reported at the end of November in First District buys 'entire city block': CEO:
First District Association might break ground on a $125 million expansion project as soon as this spring, Chief Executive Officer Clint Fall said last week.
The project would increase the Litchfield dairy processor’s production capacity from 5 to 7 million pounds of milk each day. . . .
With expansion planning underway, company officials are seeking funds from the state for new electrical generators at the city’s West Third Street power plant, which would provide back-up power for First District in the event of a power outage.
Fall has said the generators are critical because First District’s plant relies heavily on refrigeration, and an extended power outage could cost the company in product loss and supply chain disruption.
Litchfield gets most of its power from outside sources, while it runs generators during peak-demand periods and outages. The city operates five generators able to produce 10 megawatts of power, and First District wants to add four generators capable of generating an additional 8 megawatts. The four new ones would be dedicated to First District’s operation during a power outage, while the other five would power the rest of the city.
A group of state senators, including Sen. Scott Newman, R-Hutchinson, visited Nov. 19 First District’s plant, where Fall discussed the expansion project. The senators belong to the Senate Capital Investment Committee, which will decide whether to allocate funds for the new generators, along with many other projects throughout the state, in a bonding bill next year. Members of the House of Representatives also visited First District this year. . . .
Like they did two years ago, several legislators visited the dairy processor to listen to First District and City of Litchfield officials explain why they want the state to give Litchfield $5 million for new generators at the city’s power plant.
The request fell short two years ago, and failed again last year, but officials remain persistent in lobbying for funds because of electrical generation’s importance to First District’s expansion plans.
First District is studying whether to increase production at its South Swift Avenue plant from its current 5 million pounds of milk each day to 7 million pounds. The cooperative, whose members include dairy farmers in 45 Minnesota counties, expanded as recently as 2012, but it’s under pressure to grow more, according to First District Chief Executive Officer Clint Fall.
As the new report embedded above notes, with milk production increasing across the region, including Minnesota, there's a perceived need to increase processing capacity.
The request is supported by Governor Mark Dayton, but was removed from the bonding bill, the Independent Review reported:
Next year could be First District’s best chance of getting the funds. While the project never made it into the 2013 bonding bill signed by Gov. Mark Dayton, $250,000 was included for designing the project. This past year, Dayton included $5 million for the generators in his bonding proposal, but the Legislature removed the project from its final bill.
“The governor being supportive of it is certainly helpful,” Rep. Dean Urdahl, R-Acton Township said. “I think we have a decent chance of being included” in the bonding bill next year.
While legislators have touted First District as one of Minnesota’s leaders in the dairy industry, they have hesitated to include money for new generators in previous bonding bills, in part out of concern for the precedent it might set. Bonding bills, which are typically adopted every other year, pay for infrastructure projects throughout the state, but not historically for electricity generation.
“This does take us in a different direction. We don’t normally build power plants to serve a local city,” Rep. Alice Housman, DFL-St. Paul, noted during last week’s visit at First District. She raised the possibility of First District pursuing another route to obtain funding, such as through Minnesota Department of Employment and Economic Development.
Farmers from 45 counties are co-op members, while many of the 155 employees inside the plant are represented by the Teamsters.
With processing plants at capacity across much of the Midwest, a shrinking basis is causing milk checks to contract at a time when every penny counts.
In Minnesota, the milk price basis—the difference between the mailbox price and Class III—has shrunk to about 75¢/cwt. For the past few years, it was nearly $2. But early this year, as milk plants filled up, basis starting declining, says Marin Bozic, a dairy economist with the University of Minnesota.
“I do believe a portion of this basis will be recovered in 2016,” says Bozic. But before it does, a further decrease of 25 to 35¢/cwt could occur in the next few months.
Tim Swenson, a business consultant with AgStar Financial Services, agrees. “We will get a little back, but it will still be 50 to 75¢/cwt less than historical levels,” he predicts. . . .
Bozic also gave his annual milk price prediction for 2016 at $17/cwt. There’s a 20% chance the price could fall below $16 and a 10% chance it could shoot above $18.50, he says. (For comparison, last year Bozic predicted a $17.50 mailbox price for the year. The actual average will be about $17.40.)
Swenson notes that the Class III futures market is offering stronger prices in the second half of 2016. “You need to work with your marketing experts to protect those better prices,” he says. “And they could move even above where they are now, so you need to protect these values and still leave some upside potential.”
Dropping cull cow prices are also a concern. Where cull cows were selling for more than $100/cwt for much of the year, those prices have now fallen to $80, $70 or even $65/cwt. “We will not be able to rely on beef prices next year or even the year after for cash flow,” says Bozic.
We'll keep an eye of the bonding request when the session begins in March.
Photos: One of Riverview Dairy's operating dairy barns (above); First District Association plant manager Doug Anderson gives legislators a tour of the cooperative’s plant in Litchfield; photo by Andrew Broman, Litchfield Review (below) .
If you appreciate Bluestem's posts, you can mail contributions (payable to Sally Jo Sorensen P.O. Box 108, Maynard MN 56260) or use the paypal button below:
A developer seeking billions for a proposed high-speed rail line between Rochester and the Twin Cities has federal approval to launch Liberty Minnesota Regional Center, an EB-5 immigrant investment center.
North American High Speed Rail group has been quietly negotiating with the Minnesota Department of Transportation to conduct a feasibility study and for exclusive rights to build an elevated line along the 84 mile Highway 52 corridor.
The Minnesota-based group plans to raise much of the estimated $4.2 billion — in private capital from foreign individuals and governments, including China — to finance the rail project. The EB-5 program provides permanent green cards to foreign investors who invest $500,000 to $1 million in businesses or economic development projects that create or preserve at least 10 jobs for U.S. workers.
We learned of the suspended site from tip emailed by a reader:
I went to the MN Dept. of Employment & Economic Development (DEED) website and found three (3) EB-5 regional centers that either have been approved or have approval pending at the USCIS website.
Bluestem checked that statement out and located EB-5 Immigrant Investor Program, the page on DEED's website where the information is posted:
The Immigrant Investor Pilot Program was created by Section 610 of Public Law 102-395 (Oct. 6, 1992), and has been extended. EB-5 requirements for an investor under the Pilot Program are essentially the same as in the standard EB-5 investor program, except the Pilot Program provides for investments that are affiliated with an economic unit known as a “Regional Center.”
Investments made through regional centers can take advantage of a more expansive concept of job creation including both “indirect” and “direct” jobs. A Regional Center is defined as any economic entity, public or private, which is involved with the promotion of economic growth, improved regional productivity, job creation and increased domestic capital investment.
The organizers of a regional center seeking the “Regional Center” designation from USCIS can find more detailed information on the process and requirements at the USCIS website. The following Regional Centers have been approved or have approval pending by the USCIS to facilitate investment in Minnesota (Disclaimer: The listing of these organizations does not imply endorsement):
When we click on the link, we had the same experience as the source. Here's a screenshot of what she sent us:
What does this mean? We're uncertain. Domain Tools yielded this information (in part) for the URL:
When we google Empyrean West, we find a website for another EB-5 service, Empyrean West. According to its website's About Us page:
We established Empyrean West to answer the demand for commercial project financing in the US. Empyrean West is working with multiple EB-5 projects, establishing our first tri-state Liberty West Regional Center encompassing Southern California, Arizona, and Southern Nevada. We have also launched other Regional Centers across the U.S., details of these centers can be found at (www.LibertyRegionalCenters.com).
What does this mean? That the site is suspended while it's under construction? There are other possibilities (such as non-payment) but we just don't know.
Image: A friend suggested that this snowpiercing high-speed train might be a great illustration for the hypothetical NAHSRG shortline between the Twin Cities and Rochester. Just teasing, we hope.
We're conducting our November fundraising drive. If you appreciate Bluestem Prairie's original reporting and analysis, you can mail contributions (payable to Sally Jo Sorensen P.O. Box 108, Maynard MN 56260) or use the paypal button below:
Bluestem is continuing to search for evidence to back up the claim asserted to the Rochester Post Bulletin by a spokester for the North American High Speed Rail Group that it is " negotiating with the owners of the XpressWest proposal for the chance to build and operate the corridor."
In the page below, we embed a pdf of the presentation XpressWest made to the Nevada High-Speed Rail Authority on the day it was awarded the franchise, and the XpressWest application for the project is found here on the nvhsra.com website.
In a brief phone interview, rail authority contact person David Clyde said that the XpressWest presentations did not include mention of the North American High Speed Rail Group, but said that questions of this nature are best addressed to XpressWest or its parent company, the Marnell Companies.
In other news, our data practices request to the Minnesota Department of Transportation (MNDOT) for the business plan for the metro-to-Rochester line has been approved and we eagerly await the arrival of the disk from MNDOT.
The company purports to be able to build a private HSR line between Rochester and the Twin Cities without public funds, but Citizens Concerned About Rail Lane (CCARL), groups like the Minnesota Farmers Union and local governments in between the stops have reservations about the project.
For news about a recent CCARLS meeting, check out the Cannon Falls Beacon article, CCARL meeting draws big crowd. The next CCARLS meeting will be at 6 p.m. on Thursday, December 3 at the Cannon Falls High School auditorium.
Image: A friend suggested that this snowpiercing high-speed train might be a great illustration for the hypothetical NAHSRG shortline between the Twin Cities and Rochester. Just teasing, we hope.
We're conducting our November fundraising drive. If you appreciate Bluestem Prairie's original reporting and analysis, you can mail contributions (payable to Sally Jo Sorensen P.O. Box 108, Maynard MN 56260) or use the paypal button below:
While Minnesota opponents of the EPA's Clean Power Plan moan about potential increases in the price of energy (while never uttering the phrase "climate change"), some of them were not the least reluctant to support legislation that will raise electrical rates for residential consumers in favor of energy-intensive industries.
Residential customers of Minnesota Power would pay more for electricity each month to help taconite plants and paper mills survive an onslaught of global competition under a plan to be filed today with the Minnesota Public Utilities Commission.
The rate re-jiggering, authorized by the 2015 Minnesota Legislature, would see the average Minnesota Power customer's household electric bill go up 14.5 percent, or about $11.45 per month.
An average homeowner, who uses about 750 kilowatts of electricity, would see their monthly Minnesota Power bill go from about $79 per month to $90.45.
Other customers — most businesses, government agencies, schools, etc. — would see their rates go up by a flat fee of $11.45 per meter, per month, an increase of between 1 and 4 percent. . . .
It's not a done deal, and even the sponsor of the legislation is having second thoughts:
Investor-owned Minnesota Power has a clear stake in the future of mining in the region. Mining companies alone account for more than 47 percent of Minnesota Power's revenue. Add in paper mills, and heavy industry accounts for nearly 60 percent of the utility's customer load, far different from most utilities, such as Minneapolis-based Xcel, which are tilted toward residential customers.
That makes it critical for Minnesota Power's financial health to retain its largest customers. If one or more of those large customers close permanently, Minnesota Power probably would file a rate proposal that would cause homeowner rates to go up much higher, Mullen noted.
But state Rep. Tom Anzelc, DFL-Balsam Township, who sponsored the legislation calling for the rate shift, said he's now having second thoughts. Anzelc said he's not sure the time is right for such a major shift in pricing for electricity.
"What they (Minnesota Power) are proposing to the PUC is not what they are going to get. It's too much" for homeowners, Anzelc said.
During the spring legislative session "it seemed like the right policy. But the timing now is not good," Anzelc said. "I have to see what people think. The PUC is going to have to decide if $11.45 is too much for people on fixed incomes; whether it's worth it for a 5 percent cut for taconite plants. I'm not sure right now."
Buddy Robinson, director of the Minnesota Citizens Federation, Northeast, said the formula used to make the claim that industry has been subsidizing homeowner rates is flawed.
"This isn't the first time the taconite industry has tried to do this and we've challenged it every time," Robinson said. "There are ways to figure the true cost (of electricity) that show there is in fact no subsidy going on." . . .
Here's the Minnesota Power press release. Note that qualified low-income customers won't have their rates increased. We have to wonder why--if those who claim to worry about the cost of the Clean Power Plan to the poor--aren't willing to give them a break on the rates to soften the blow to help save the planet.
Or does that only work when helping out industries that can't compete against cut-throat global capitalism?
We're conducting our November fundraising drive. If you appreciate Bluestem Prairie's original reporting and analysis, you can mail contributions (payable to Sally Jo Sorensen P.O. Box 108, Maynard MN 56260) or use the paypal button below:
It is a fact universally acknowledged that during the 2015 session, the Minnesota House Republicans attempted to defund the Border-to-Border Development Grant Program, while eliminating the Office of Broadband Development.
Fortunately, DFLers got the contrarian caucus to say uncle and some money squeaked through, though nothing close to the pressing need businesses and residents had hoped for.
In the latest issue of the St. Peter Herald, state representative Clark Johnson, DFL-North Mankato, reflects in Connect Minnesota:
Broadband across all of Minnesota would be a long-term investment that would make our businesses and farmers competitive with those who have the access. These enterprises would have the ability to download data-rich information that can help them fine tune their operations and create partners for trade in markets across the globe.
During the 2014 legislative session, I voted for $20 million in broadband grants for underserved areas. Some of that has been invested in south central Minnesota. When Governor Dayton proposed an additional $30 million in broadband grants in his state budget earlier this year, it appeared likely that we would further expand broadband to Greater Minnesota.
With a projected $2 billion state budget surplus last year, there was plenty of room for a significant investment in Greater Minnesota broadband. Unfortunately, the House Republicans initially opposed any type of funding for broadband development grants. It was only after weeks of pressure from Greater Minnesota that they began to consider supporting funding for broadband.
After long negotiations with Governor Dayton, and a special session, the final budget bill only included $10.6 million, about half of what we invested in 2014. A budget surplus is not a time to retreat from investing in critical infrastructure critical to the future of Greater Minnesota.
Now is the time for one-time investments like broadband funding. We currently have a stable budget and more than a $1 billion budget surplus. . . .
While people in Greater Minnesota are patient, let's hope the legislature can deliver faster than the pokey Internet upon which far too many of us rely.
Photo: In many places in rural Minnesota, broadband is not outstanding in its field.
If you appreciate Bluestem Prairie, you can mail contributions (payable to Sally Jo Sorensen P.O. Box 108, Maynard MN 56260) or use the paypal button below:
All of the statements, opinions, and views expressed on this site by Sally Jo Sorensen are solely her own, save when she attributes them to other sources.
The opinions, statements, and views of contributing writers are their own.
Sorensen, editor and proprietor of Bluestem Prairie, serves clients in the business and nonprofit sectors. While progressive in outlook, she does not caucus with any political party.
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