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By Bob Kelleher
December 7, 1999
Part of "After the Mines"
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RealAudio 3.0 |
The Iron Range Resources and Rehabilitation Board is either Minnesota's least-effective state agency, or its least understood. The agency takes credit for thousands of new jobs in northeastern Minnesota through investments in communities and businesses. But the IRRRB suffers from a tarnished reputation, based largely on a some high profile bad investments in the 1980s and recurring criticism from the media and politicians.
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But the IRRRB's supporters can point to the 1980s as a perfect example why the state needs an agency geared to the benefit of northeastern Minnesota's iron-mining region. Gary Lamppa was commissioner of the IRRRB for much of the turbulent 1980s.
Lamppa: It was a whole different time economically, I mean things were really bad. I mean, all the mines were closed; and, I mean we lost 20 percent of the population up there in those years.In the early 1980s, the United States was plunged into recession. By late 1982, steel production was half what it had been just 18 months before, freezing demand for Minnesota taconite. By 1983, half of the 14,000 Minnesotans employed in the taconite industry had lost their jobs.
The IRRRB was under pressure to create new jobs fast. With Hibbing's Rudy Perpich back in the governor's office in 1983, innovative job-creation plans got very sympathetic hearings. Gary Lamppa was Perpich's choice to head the IRRRB.
Lamppa: My boss ran on jobs, jobs, jobs. And so there was a lot of pressure to start, to begin, to diversify - to really diversify - the economy of northeast Minnesota.The IRRRB cranked up it's pursuit of tourism jobs. In 1983 it purchased one of the region's last surviving downhill ski facilities, Giant's Ridge. Despite the ski industry's dismal prospects, the IRRRB sank nearly $7 million into improvements including new ski lifts and a chalet.
Nearly $9 million was pumped into the Iron Range Interpretive Center at Chisholm, while plans were drawn for a Las Vegas Style Casino in Ely.
But a report by the Minneapolis Star Tribune in early 1985 blasted the IRRRB's expensive ventures. The paper's report blamed the agency for sinking $23 million in tourism schemes that the report said lost millions of dollars, created few permanent jobs, and gave little indication of ever breaking even. The paper was critical of the agency's hiring, it's bid-free contracting, and accountability.
The Star Tribune's report was followed by a WCCO Television I-Team news feature that enraged Iron Rangers and commissioner Gary Lamppa.
Lamppa: They came up there and said that Giant's Ridge was dumb, okay? They took pictures of our chairlifts when they were warming up.A legislative audit that year recommended better accounting but cleared the agency of wrongdoing. However, the IRRRB's troubles were far from over as it waded into new, innovative, and unproven industrial schemes.
MPR: Empty chairlifts.
Lamppa: Empty chairlifts. And they came back and said that we we're way under expectations as far as visitation, showing the empty chairlifts. They said it was dumb; and now it's a success.
A Minneapolis company opened a rubber recycling plant in Babbitt in 1987. tapping the IRRRB for a $200,000 loan guaranteed by St. Louis County. But Tirecycle defaulted on its public loans in just two years.
And then there was what became the poster-project for IRRRB scorn-mongers: the ill-fated Hibbing chopsticks factory. Lakewood Industries, opened in 1987 with $5 million in public investment, including more than $3 million industrial-revenue bonds backed by the IRRRB. It only lasted till 1989. The building then stood empty for years in Hibbing's industrial park as mute testimony to a novel idea gone bad.
But according to Gary Lamppa, the idea was sound. He says the factory's demise was due to unpredictable factors beyond local control.
Lamppa: That project was probably one of the best projects that IRRRB has funded in many many years. The guy had a take-or-pay five-year contract for all the chopsticks he could produce. The problem was that the supplier of the equipment could not produce A-grade chopsticks. And that was the problem. It was not a dumb idea. All the mines were closed.Lamppa says economic development requires risk taking, and the agency was willing to take those risks during the 1980s. But the damage was done. Wayne Dalke was appointed commissioner soon after the Chopsticks snapped.
Dalke: Certainly people were really upset about that. And, it does not give a good image if they pour a lot of money into a failure of that kind. Because it's really tax dollars that are going into those things.The IRRRB's wounded image may have helped push Rudy Perpich out of the governor's office. As early as 1988, then state auditor Arne Carlson was calling for an audit of troubled IRRRB-backed projects.
A year later, Carlson was on the campaign trail seeking the Republican nomination for governor. Carlson hammered the IRRRB's investment history, making sport of the Tirecycle and chopsticks failures. With Perpich already labeled "Governor Goofy" by Time Magazine, Carlson's nips at Perpich-endorsed projects may have finished him off.
Under the Carlson Administration, IRRBB projects became less controversial, but its board continued to attract attention. The vigorous exchange of wit and wisecracks among mostly-DFL board members became mean spirited during Republican commissioner Jim Gustafson's term through the late 1990s. Republican House Speaker Steve Sviggum called the board "dysfunctional." DFL Senator Doug Johnson admits board member's public exchanges may have tarnished the image of the IRRRB.
Johnson: We speak our mind, unlike politicians from most other parts of Minnesota. When you speak your mind, it makes news. Some of that publicity that isn't all that positive, I think, does hurt us somewhat in recruitment and in the image of our agency.Despite the bickering, the IRRRB claims a year-by-year job-creation success rate through the 1990s including more than 700 new jobs in 1995, thanks to Northwest Airlines. Since September of 1993, the agency claims a hand in creating more than 2,000 Iron Range jobs averaging more than $11 an hour.
Dominated by the DFL through the '70s and '80s, and then under Republican leadership for most of the 1990s, the IRRRB now finds itself under the new administration of Reform Party Governor Jesse Ventura's Commissioner John Swift. The board and Commissioner Swift appear ready to enter a new era with a greater focus on job attraction and development.
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