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Witnesses testify about 'absolute crisis' in rural workforce, housing

ST. PAUL – KLN Family Brands in Perham has more than 100 job openings, but the western Minnesota community has no homes for people the company hires.

Similar stories came from far-flung parts of Minnesota, such as Willmar, Roseau, Cook County and Red Wing, before a state Senate committee Monday approved a series of bills designed to help pave the way for homes to be built, as well as for would-be workers to receive adequate training.

“In rural Minnesota, we have an absolute crisis in terms of our workforce,” said Steve Renquist of the Kandiyohi County and City of Willmar Economic Development Commission.

The Senate Jobs, Agriculture and Rural Development Committee passed five bills aimed at rural Minnesota worker issues. Similar bills are advancing in the House as lawmakers work to improve greater Minnesota’s economy. All the bills must make several committee stops.

Three bills dealt with worker housing, mostly providing cities methods to raise funds for apartment construction.

KLN, makers of Barrel O’ Fun snacks, Tuffy’s pet food and other products, employs 1,200 people in Perham, a community of fewer than 3,000 people.

Fred Sailor of the company told the Senate committee that KLN jobs are good: The firm offers profit sharing, pays a high percentage of workers’ health insurance premiums and jobs may start at up to $23 an hour. KLN also gives employees with the company at least three years of experience $10,000 forgivable loans for home down payments.

“We have people driving 45 miles, as far as 90 miles from Brainerd,” Sailor said.

Finding workers is important, in part because it cost KLN $330,000 when the company had to shut down some of its production lines for six months because of an employee shortage, he added.

City Council member Lisa Bayley of Red Wing gave a similar message. Much of the economy “is going gangbusters” in her southeastern Minnesota community, she said, but “the problem is they don’t know where to live.”

Renquist said it is difficult to build housing in rural Minnesota. Todd Peterson of Roseau Community Development testified that is because property is appraised lower in rural Minnesota, sometimes less than it costs to build. Banks only will loan less than the appraised value.

He told of an apartment complex being built in his northwestern Minnesota city. The project costs $3.2 million, he said, but because it was appraised at just $2.1 million, the bank only financed about half. The developer was forced to mortgage an unrelated property, land for the project was donated and the city and state contributed, Peterson said.

Even the $850-per-month rent expected to be charged for an apartment ($300 higher than current rents around town) could not bring in enough money to fund the project, Peterson added.

Nothing short of government involvement will help the appraisal issue, Jim Boyd of the Cook County Chamber of Commerce said. “This is a market failure; it is something the market will never fix.”

He urged senators to consider allowing counties to take advantage of the housing programs, although current legislation only gives cities that ability.

“We are growing older and older and older and losing our young people,” Boyd said.

Two bills of Sen. David Tomassoni, D-Chisholm, passed. One would provide grants, the other tax credits for employers that need to have train workers.

“It addresses a need for skilled labor,” the senator said, and his bills are “open to all employers in greater Minnesota.”

Former state Rep. Dan Dorman of the Greater Minnesota Partnership said more jobs are remaining open. Incentives to get training could help change that, supporters testified.

“It is not a phenomenon to one area of greater Minnesota,” Tomassoni said. “It is happening all over the place.”

In his area of northeastern Minnesota, Tomassoni said that high schools and colleges already are training would-be workers to fill jobs. He said that is the type of thing he wants to see through his bills.

Don Davis
Don Davis has been the Forum Communications Minnesota Capitol Bureau chief since 2001, covering state government and politics for two dozen newspapers in the state. Don also blogs at Capital Chatter on Areavoices.
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