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South Dakota company expands in Minnesota
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Total Card will move into this building in Luverne. It was built by an insurance company which outgrew it. (MPR Photo/Mark Steil)
What Governor Tim Pawlenty calls the "mother of all economic incentives," has landed its first big out-of-state prize for rural Minnesota. A South Dakota company says Minnesota's "Job Opportunity Building Zones" or JOBZ program, played an important role in its decision to expand to Luverne. But despite Pawlenty's enthusiasm, officials with Total Card, Inc. say JOBZ was not the most important factor. Pawlenty will be in southwest Minnesota Friday to welcome Total Card to Luverne. It's a sweet catch for Pawlenty, who says he's sick and tired of seeing Minnesota companies move west.

Luverne, Minn. — Pawlenty has been frustrated for years with South Dakota. The state aggressively courts Minnesota businesses, selling its low tax advantages. JOBZ is designed to counter those claims. The program forgives corporate income taxes for 12 years. Pawlenty told a Luverne audience, three months ago, that JOBZ is a great leveler.

"We don't have to match their tax and regulatory climate exactly. But we got to at least make it close enough so that it's a reasonable business decision to expand your business in Minnesota if you factor in loyalty to home state, closeness to grandkids and the other great quality of life advantages that we have here. You know the problem with having a business in Sioux Falls is you got to be in Sioux Falls," said Pawlenty.

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Image Total Card President Greg Ticknor

Pawlenty's first JOBZ prize turned out to be even better than he hoped for. It wasn't a case of keeping a Minnesota company at home, he reversed things and brought South Dakota jobs east. Total Card contracts with banks and other financial institutions to manage their credit card businesses. The Sioux Falls company does everything from collections to customer service. Total Card will keep its headquarters and 150 employees in South Dakota, but it needs more room. A promising facility in Huron, South Dakota fell through. Total Card President Greg Ticknor says Luverne city officials came calling. They talked about JOBZ benefits, but Ticknor says it was something else which sparked his interest.

"It was the building itself," says Ticknor.

Ticknor's talking about a nice, modern office building in Luverne. It was built by an insurance company which outgrew it. He says the building is perfect for Total Card.

"We liked the proximity to Sioux Falls. The size is just what we were looking for. The openness, the layout is just right for us. We like the building," says Ticknor.

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Image Dan Hindbjorgen is with the Sioux Falls Development Foundation.

Ticknor says JOBZ benefits played an important, though secondary role in the company's decision to expand to Minnesota. Without the program's tax incentives, he says Total Card may have ruled out that perfect building in Luverne. With JOBZ, let the party begin.

"This Friday I guess they're having a celebration there and the Governor is coming. They're going to supposedly actually give us the key to the city. Which is something I never dreamed of, I guess," says Ticknor.

Total Card's decision underscores the fragile nature of attracting businesses. Critics of JOBZ says the program gives away too much, mainly tax revenue. Supporters say there is no give away, since without JOBZ the company wouldn't be in Minnesota. They say the company's payroll is more important than possible lost tax revenue. Dan Hindbjorgen works across the border, with the Sioux Falls Development foundation. He says JOBZ is just another factor in the Minnesota-South Dakota border war.

"Sometimes it gets right down to taxes, other times taxes have very little to do with it. It could be the land, it could be the quality of life, it could be are they going to be able to get the employees that they need," says Hindbjorgen.

It appears the labor force in Luverne is ready for Total Card and the 200 plus employees it promises. City economic development director Dan Statema says many residents work in Sioux Falls, 30 miles away. He says they're interested in working closer to home, for Total Card.

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Image Luverne Economic Development Director Dan Statema

"My phone has been ringing off the hook since the announcement. How do I get a job, where do I get an application? Everybody's really excited about job opportunities inside of Luverne," says Statema.

It's a promising start for a company which plans to be in Luverne at least 12 years. That's how long the JOBZ benefits last. Total Card President Greg Ticknor says when they end the company will have a decision to make. He says whether Total Card stays beyond 12 years could depend on Minnesota fixing what he calls its corporate income tax problem.

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