For more evidence that the Governor’s Office of Economic Development has no business picking winners and losers in the marketplace, we turn to Donnerite, a Minnesota company that moved to Howard to slurp up GOED business incentives and then defaulted on its $644K in state loans:
The South Dakota Economic Development Finance Authority authorized a notice of default and ‘right to cure’ letter be sent to Donnerite….
Authority members Monday told Steve Westra, commissioner for the Governor’s Office of Economic Development, to take action when he deems it necessary to protect the authority’s interests and to commence a lawsuit “if the default is not timely cured.”
…Owners Bill and Deb Donner moved to Howard from Spicer, Minnesota. They intended to provide services to trucks and heavy equipment in North Dakota’s oil fields [Bob Mercer, “Howard Business Faces Default Notices on State Government-Backed Loans,” KELO-TV, 2019.05.06].
Expert capitalist Russell Olson cheered the Donners’ westward expansion when it was announced, expressing certainty that Donnerite would fill the gap left by the state’s last failed pony in Howard, Knight & Carver:
“Donnerite Company is the perfect fit for Howard and the vacant Knight & Carver building,” said Russell Olson, CEO of Heartland Consumers Power District. “We have been working with state and local officials for some time to fill that space. Bill and Deb Donner have a passion for small towns and have run a successful company for nearly two decades. They will have a positive impact on the community and we at Heartland are excited about Howard’s bright future [Office of the Governor, press release, 2013.12.05].
Donner was certainly a good fit with the South Dakota capitalists who think their due reward for starting a business is getting out of taxes. In 2015, Bill Donner asked for and got a reduction of his property taxes from Miner County. Donner finagled a tax break from the Willmar City Council for one of his Minnesota shops in 2014. But all those tax breaks weren’t enough to make up for an apparently inadequate business model: Donner apparently couldn’t pay his mortgage in 2016, and the Willmar abatement went to the bank.
Maybe if our state and local governments would just make clear that everyone here, individuals and businesses, will pay their fair share of taxes, business owners would spend less time angling for handouts and more time practicing real capitalism.
Does the GOED keep a type of balance sheet showing how its “deals” with various businesses paid off, or not? IOW, do they know what their success rate is in actual $ and c?
I like the town and the people of Howard a lot. But how many failed businesses have they had suck state money there? It has happened for a couple of decades. They keep swinging, but have yet to hit on something that works.
Let’s just call in EB-6 and be done with it. Wonder who will commit “suicide” next ??
One aspect of the business model has me scratching my head. Wouldn’t it be easier and more convienient for oil field companies to have trucks and other heavy equipment serviced closer to the oil field? According to Google maps Howard, SD is 541 miles to Williston, ND. There are any number of companies that are qualified to do this work and are either located in the oil field area or are much closer than Howard. 125 miles to Minot, 227 miles to Bismarck, 315 miles to Billings, 329 miles to Rapid City, 389 miles to Fargo, 395 miles to Aberdeen. Why would anyone feel the need to haul equipment hundreds of miles away for servicing?
It sounds like the “economic development experts” at GOED were so over eager for a piece of the oil field bonanza that they jumped on the band wagon of any huckster with a golden tongue. It all reminds me of a previous huckster scam;
“We got trouble right here in River City.
That’s trouble with a capital T,
and that rhymes with P,
and that stands for pool.”
Did anyone notice any trombones?
I like Howard, too, Mike, and want them to succeed as much as any other town. But as Nick notes, location certainly wasn’t in their favor on Donnerite’s proposed business model. Howard just hasn’t been able to cash in on manufacturing. Does their location suit any other kind of development?
Russel was only doing his job, as far as the Donners are concerned, they are just grifters looking for a place to lite . What this story says, is that the vetting process in
place must be thorough .
Hugh, can we count on that vetting process being thorough when folks like Russ, Dennis, Kristi, and Steve are all grasping for headlines to affirm their faith that low taxes and low wages will makes businesses flock to South Dakota?