By Lori Ehde
In a time of projected state economic shortfalls, rural Minnesota needs to be especially vigilant in protecting its development interests.

Another tool may be available to outstate cities to attract business growth and to protect economic development already underway.

House Majority Leader Erik Paulsen and Rep. Doug Magnus recently circulated southwest Minnesota communities to talk about "Tax Free Zone" legislation.

Gov. Tim Pawlenty and House legislators are proposing the initiative to stimulate development and create jobs in economically distressed areas of greater Minnesota.

"Tax-free zones are the tools our border communities in southwestern Minnesota need to attract and retain job providers," Paulsen said.

"Tax-free zones will give our southwestern Minnesota communities the competitive edge they need when competing for new business and jobs."

Modeled after similar programs adopted in Michigan and Pennsylvania, the legislation would allow up to 10 tax-free zones with a maximum size of 5,000 acres (roughly 7.8 square miles) each to be established in greater Minnesota.

Two years after Pennsylvania designated 12 tax-free zones in February of 1999, the move was attributed to creating 5,700 jobs and retaining another 3,100.

Businesses operating within the zones would not pay property taxes or state income taxes.

"The state’s conventional development strategy can use a jump-start in southwestern Minnesota," Magnus said.

"To revitalize our part of the state, we need to be bold and think outside of the box. Tax-free zones have helped create thousands of new jobs in Michigan and Pennsylvania, and they can do the same for southwestern Minnesota."

It’s too early to tell what the legislation could specifically mean for Luverne, but Economic Development Authority Director Dan Statema said the discussion itself is encouraging.

"I can see there being some pretty stiff competition among regions for this tax-free designation," Statema said.

"But the most exciting thing about this is the governor and Legislature are recognizing the need for economic development incentives in greater Minnesota."

The initiative shouldn’t be confused with existing border city legislation, which allows tax breaks for qualifying new business construction.

Tax-free zones can apply to any economically distressed rural area, regardless of proximity to a border. It’s just that border communities are particularly vulnerable to losing business and labor resources to neighboring states.

"Every day another one of our kids leave southwestern Minnesota for a job in Sioux Falls or the Twin Cities," Magnus said.

"For years we’ve been looking for a tool that will allow more of our kids to find a job where they grew up. That tool could be tax-free zones."

Paulsen said tax-free zones for greater Minnesota will be a major initiative of Gov. Pawlenty and the state House in the 2003 legislative session, which began last week.

Magnus represents the newly redistricted House District 22A, which includes Rock, Pipestone, Murray and three-quarters of Nobles County.

Rock County used to be represented in the House by Richard Mulder, Ivanhoe, when it was part of the former District 21B. Mulder did not seek re-election last fall, and voters chose Republican Magnus over DFL incumbent Ted Winter for the job.

By Lori Ehde
A bus load of Rock County farmers and ethanol investors left Luverne at 5:30 this morning to see lawmakers in St. Paul about proposed cuts to ethanol subsidies.

"We want to make our presence known that rural Minnesota is taking a disproportional hit in the budget cuts," said David Kolsrud, manager of CornerStone Cooperative.

CornerStone is the 200-plus member co-op that owns the majority of the Agri-Energy Ethanol Plant in Luverne.

"We borrowed money and made the investments all with the understanding that the money would be there. … There are those who have loans out there, and you don’t just pull the rug out on those deals," Kolsrud said.

"When a new administration decides to pull the funding, it’s reneging on a contract, as far as I’m concerned."

In what is by far the biggest line item in Gov. Tim Pawlenty’s proposed budget cuts, the plan would eliminate $26.8 million in payments to 13 plants.

This represents three-quarters of what the state was set to pay out in subsidies this year.

"If they get by with this — getting our farmers and investors to put money in the plant and then reneging on the deal — farmers aren’t going to be interested in doing other programs with the state," Kolsrud.

Current subsidies provide 20 cents per gallon of ethanol produced — up to $3 million to each plant, including Luverne’s, annually.

Producers and investors in Luverne’s Agri-Energy Ethanol plant say the proposed cuts are unfair to rural Minnesota and would set back the value-added and renewable energies movement.

"It would put a severe crimp in the value-added market," Kolsrud said.

He and local producers were prepared to share some of these thoughts with Minnesota Public Radio in a 5 a.m. interview scheduled before they left town today.

"There’s a lot of money that has circulated throughout the community by farmers who have added value to their grain prices," Kolsrud said.

"It’s just an unfortunate situation when years worth of work can be undone by a new governor."

Brent Bosch (left) and Larry Goebel purchased Jubilee Foods from tony Bosch in October 2001. Teh new store opened August 2000.

By Lori Ehde
A town that only five years ago supported three grocery stores will be down to one following the sale of Jubilee Foods to Glen’s Food Center this week.

According to a purchase agreement signed Saturday, Glen Gust will buy the Jubilee Foods building from Brent Bosch and Larry Goebel, who have co-owned the business since it reopened in its new location August 2000.

Gust will move his operations into the 30,000-square-foot Jubilee building, and the existing 20,000-square-foot building will be offered for sale.

The Jubilee store in Luverne will close its doors Saturday, Jan. 25.

"The trend in the grocery business is toward bigger stores," Goebel said in a statement released Tuesday. "Unfortunately, towns of 5,000 people cannot support more than one bigger store, and we have two here."

Meanwhile, Bosch and his father, Tony, are negotiating the purchase of two Sunshine Supermarkets in Sioux Falls.

"Obviously, this is a huge risk for our organization, but it’s an opportunity I’m looking forward to," Brent Bosch said. "These opportunities don’t come along very often, which, like a lot of things in life, force us to make tough decisions."

Jubilee Foods in Luverne employs about 20 full-time employees, and about 50 others part time.

"We’re going to be taking care of our employees in helping them find jobs," Bosch said.

"Granted this is a negative thing for Luverne, but we’re trying to make this as positive as possible."

Opportunity to expand
Several weeks after Jubilee closes, Gust will reopen the doors as Glen’s Food Center, and his current location on Cedar and Lincoln streets will be closed after 27 years of operating there.

"I’m out of space and out of parking, and it will be a great opportunity for my employees and my customers, if everything works out," he said.

Glen’s currently employs 83 people, about 30 of whom are full-time.

"My concern now is to get someone else in my existing building," Gust said. "There might be a little mini mall downtown, you never know."

Gust said the deal came through so quickly — in the past two weeks — that he hasn’t had a chance to see what interest there might be for a new occupant for his current space.

When asked if his $1.99 milk prices will stay the same, Gust said, "You better believe it."

He said the First National Bank branch will continue its operations there and store policies will remain the same.

"I hope my customers trust me enough to know that I’ll run my store like I always have," he said.

"It’ll just be a newer, bigger operation, I guess. I don’t anticipate any changes other than a new location."

Glen’s will remain open to customers through the transition to the new building, but may need to close early on a final Sunday night to move the computers.

‘Sign of the times’
Both grocers say the deal was driven by market forces.

"It’s a sign of the times," Gust said. "People are a lot more mobile these days. Sometimes they forget their local person is the one supporting all their activities."

Gust said market analysts say towns smaller than 7,500 can’t support two stores. He added that he feels secure that Glen’s will thrive long-term in Luverne.

"Glen’s will be fine. All we need to do is continue as we’re doing taking care of our customers," he said.

Bosch also pointed to competing markets in nearby towns as a reason for closing Jubilee.

"Unfortunately, in this day and age, independent grocers are forced to get bigger or get out in order to compete," he said.

"With stores like Wal-mart 30 miles in two directions from Luverne, and strong local competition, there is no room to expand our business here."

Bosch added that he’s enjoyed his time managing Jubilee in Luverne.

"The last three years of my life living in Luverne have been a very rewarding experience, both professionally and personally."

Goebel said he plans to continue to manage the Rock Rapids Jubilee Store and live in Luverne.

Tale of two groceries and thoughts on Tax Increment Financing
The assessed market value of Glen’s Food Center, located downtown one block north of Main Street, is $400,300.

The 27-year-old business generated $14,102 in property taxes in 2002.

The assessed market value of Jubilee Foods, located downtown one block south of Main Street is $1,351,800.

It contributed $20,380 to local property tax coffers in 2002.

In addition, Bosch paid nearly $31,000 to the city of Luverne as an annual installment on the Tax Increment Financing loan.

Luverne Economic Development Corporation contributed $570,000 in TIF loans to the $3 million project.
TIF is used as a tool to encourage developers to clear away blighted, low-tax-generating properties and to redevelop the land with new buildings that yield higher taxes.

When a new structure is built, the property owner pays the full taxes, but the difference between the original taxable value and the new value is used over a period of years to pay for the cost of redevelopment.

As new owner of the property, Gust will assume the same payments, and will benefit from the 25-year TIF agreement.

When TIF on the Jubilee deal was approved, Gust was among the most vocal residents to oppose it, since Jubilee Foods was an existing thriving business.

Despite the fact that he’ll now benefit from that arrangement, Gust says his opinion remains the same.
"If it’s not creating jobs and bringing new people to the community, then it’s not being used in the right way," he said Tuesday.

"My opinion on TIF is exactly the same."

By Sara Strong
The Luverne City Council Tuesday settled a clean-up agreement with Jerome Kapperman, owner of the burned storage facility on Southeast Park Street.

Kapperman and the city agreed that the site will be completely cleared of building debris and Kapperman’s refrigeration supply inventory by July 1.

Kapperman sells refrigeration products as K & K Refrigeration.

Kapperman also owns property at 501 West Edgehill, in a residential zone, which he uses for the refrigeration business.

Under the agreement, Kapperman will have to stop using the Edgehill site for the business by January 2012, when it will conform to the codes set by the city for its zone — R-2, or single and multi-family housing zone.

The city is allowing Kapperman to use the Edgehill site for the business outside of the regular zoning code if he meets certain conditions:

No business activity other than wholesale refrigeration and grocery store equipment sales may be conducted on the premises. All boats, vehicles, trailers, etc., not directly used in the business operation must be moved by May.

The building must be secured by June, to include but not necessarily be limited to, fully functioning doors and windows in all openings as determined to the satisfaction of the City Building Official.

A 6-foot-high wooden fence must be erected by June 1, meeting R-2 zone requirements, to completely block the sight of materials on the property.

All materials associated with the business must be stored behind the fenced area or in the building.

The use for the business cannot be expanded on the site.

By Sara Strong
Before two outgoing Luverne City Council members said their last round of ayes or nays, they failed to get a salary increase for City Administrator Matt Hylen.

Councilman Jim Kirchhofer made a motion to override Mayor Glen Gust’s decision and increase Hylen’s salary by 4 percent.

Hylen hasn’t received much of a raise for two years, earning $75,545 a year on contract in 2002. His contract for the previous year was $74,651.

The mayor was given the authority by the council to negotiate the city administrator’s salary and set it without further council approval.

Councilman Keith Erickson seconded the motion, saying Hylen’s performance goals were met and that his job evaluations were positive, so a raise similar to other city employees was warranted.

"My suggestion, quite bluntly," Erickson said, "is that there’s something more than performance at issue here."

Mayor Glen Gust suggested that the salary issue should be one the new council takes on, since the outgoing council members were at the end of their terms after a short special meeting.

Assistant City Attorney Jeff Haubrich said that since the old council was meeting as part of a special meeting, it probably shouldn’t add items to the agenda.

Gust declared the motion and second out of order and the meeting ended.

The City Council sets regular union employees salaries and 11 managers at a 4 percent increase for 2003. Those salaries got the approval of the council.

New council
After an invocation from the Rev. Dell Sanderson, new council members Pat Baustian and Bob Kaczrowski participated in their first meeting.

The council elected Tom Martius as acting mayor, who leads the council meetings in the absence of Gust. Martius and David Hauge were eligible for the position, as the two senior-most councilmen.

In other business Tuesday, the council:
Designated the Rock County Star Herald as its official newspaper to carry city legal notices and publications.

Heard from Betty Mann, president of the Rock County Historical Society, about the barn recently moved to the fairgrounds to serve as an agriculture history museum.

The city disconnected electrical lines for the barn to be safely moved on site and didn’t charge the Historical Society for the work. Mann thanked the city.

Heard a request from the Southwest Minnesota Chapter of Habitat for Humanity. The group is soliciting members to represent Rock County on the board and asked the City Council to help suggest good candidates. Interested people should contact City Hall.

Voted to subsidize the electric use of $2,100 for the Senior Center.

Approved citizen appointments to various city boards and committees. They are: David Paquette (reappointment) to the Airport Board; Mike Jarchow (replacing Robert Dorn) and Bill Ketterling (reappointment) to the Board of Appeals and Adjustments; Mike Jarchow (replacing Dorn) to the Planning Commission; Nancy Frakes (replacing Joyce Bennett) to the Library Board, and Larry Wills (reappointment) to the Luverne Economic Development Authority.

The city still has one vacancy to fill on the Airport Board.

Glen Gust said customers will be able to buy groceries during the transition from the current location to the new building. He's photographed here in July 1999 when he was named Minnesota Grocer of the Year by the state Grocers Association.

By Lori Ehde
A town that only five years ago supported three grocery stores will be down to one following the sale of Jubilee Foods to Glen’s Food Center this week. Story inside

By John Rittenhouse
The Hills-Beaver Creek Patriots continue to surprise boys’ basketball opponents in the Red Rock Conference by remaining unbeaten in league play.

Patriot coach Steve Wiertzema expected his young team to experience some growing pains early in the year, but now he’s the leader of a surprising team that has a perfect 5-0 record in RRC play.

Southwest Star Concept became H-BC’s latest victim Monday in Hills.

The teams played a tight game through the first three quarters, but the Patriots, who made 65 percent of their field goals in the second half, went on a 25-15 scoring run in the fourth quarter to secure a 61-47 victory.

H-BC took a 36-32 lead into the final eight minutes of play and expanded it to 17 points (57-40) with a 21-8 surge in the first six minutes of the period.

SSC outscored H-BC 7-4 the rest of the way, but the game was out of reach at that point.

Kale Wiertzema, who had six rebounds and six assists in the contest, led the Patriots during the fourth quarter. Wiertzema canned a pair of three-point shots while netting eight of his team-high 17 points in the period.

Both teams had their moments in the first three quarters.

The game was tied at four when H-BC received a three from Wiertzema and a field goal by Jesse Leuthold during a 5-0 run that gave them a 9-4 lead.

Field goals by Tyson Metzger and Clint Roozenboom gave the Patriots a 13-5 cushion as the period progressed, but the Quasars closed the gap to five points (13-8) at period’s end.

SSC pulled to within two points of the Patriots twice in the early stages of the second quarter before knotting the score at 15 with 2:58 left to play.

A pair of field goals by Metzger regained the lead for H-BC, but the Quasars moved in front 20-19 with a three-point play with six seconds remaining in the first half.

Wiertzema tied the game at 20 with a free throw with two seconds remaining.

Wiertzema gave the Patriots a 28-24 cushion with a three-point shot at the 5:40 mark of the third period, but SSC responded with a 6-0 run that gave it a 30-28 edge with 1:21 remaining in the stanza.

H-BC countered with an 8-0 run consisting of four points each from Tyler Bush and Roozenboom to move in front 36-30 before settling for a 36-32 lead at period’s end.

The fourth quarter belonged to the Patriots as they opened a 10-point cushion (43-33) 3:30 into the quarter. The lead swelled to 17 points (57-40) at one stage of the period before SSC put together a late 7-4 run to fall by 14 points in the end.

Metzger had a double-double for the winners by scoring 12 points and collecting 10 rebounds.

Bush contributed 11 points, six rebounds, four assists and three steals to the winning cause. Leuthold added four steals.

Box score
Bush 3 0 5-5 11, Wysong 0 0 0-0 0, Jackson 0 0 0-0 0, Roozenboom 4 0 0-1 8, Broesder 0 0 0-0 0, Wiertzema 1 4 3-4 17, Metzger 6 0 0-2 12, Leuthold 4 0 0-0 8, Van Wyhe 2 0 1-2 5.

Team statistics
H-BC: 25 of 60 field goals (42 percent), nine of 15 free throws (60 percent), 33 rebounds, 13 turnovers.
SSC: 14 of 46 field goals (30 percent), 12 of 15 free throws (80 percent), 25 rebounds, 18 turnovers.

By John Rittenhouse
A bid by the Hills-Beaver Creek girls’ basketball team to record back-to-back victories in 2003 ended with a 65-32 loss in Worthington Saturday.

Two nights after beating Southwest Star Concept in Hills, the Patriots were gunning for an even bigger trophy when they took on the undefeated Trojans on their home floor.

Worthington, however, played an outstanding defensive game while forcing the Patriots to 26 turnovers and limiting the visitors to 30-percent shooting from the floor.

Unable to get anything going offensively against Worthington’s man-to-man defense, H-BC was outscored by 38 points in the first three quarters before falling by 33 points at game’s end.

"We struggled against their pressure," said Patriot coach Tom Goehle. "We have not faced that type of pressure this year, and we had a hard time adjusting to it."

The Trojans stormed to a 19-9 lead in the first quarter before putting the game away by outscoring the Patriots 37-9 in the second and third periods.

Worthington led 38-15 after outscoring the Patriots 19-6 in the second period. An 18-3 advantage in the third quarter made it a 56-18 game.

H-BC did sport a 14-9 scoring advantage in the fourth quarter, but the game had been decided at that point.

Cassi Tilstra led H-BC with seven points and three steals in the contest.

Erin Boeve and Amanda Olson grabbed 10 and seven rebounds respectively. Brittney Rozeboom chipped in four steals.

Box score
B.Rozeboom 0 0 2-6 2, Bush 0 1 1-2 4, Feucht 1 0 1-4 3, Sandstede 1 0 0-0 2, Tilstra 2 1 0-0 7, S.Rozeboom 0 0 1-3 1, Boeve 1 0 4-4 6, Olson 0 0 3-4 3, Mulder 2 0 0-0 4.

Team statistics
H-BC: nine of 30 field goals (30 percent), 12 of 23 free throws (52 percent), 33 rebounds, 26 turnovers.
Worthington: 25 of 61 field goals (41 percent), 11 of 20 free throws (55 percent), 36 rebounds, 18 turnovers.

By John Rittenhouse
A fourth-quarter eruption for the Ellsworth boys’ basketball team carried the Panthers to an 83-63 win over the Hills-Beaver Creek Patriots in Hills Friday.

The game was tight through three quarters before Ellsworth took control by outscoring the Patriots 30-16 in the final eight minutes of play to prevail by 20.

"We really didn’t do anything different in the fourth quarter," said Panther coach Ken Kvaale. "We just kept executing our offense, and kept on believing in ourselves. It seemed like they were a little worn down at the end of the game."

The Patriots, who took a three-game winning streak into the tilt, were in a position to upset the state’s ninth-ranked team when they trailed the Panthers by six points (53-47) heading into the fourth quarter.

Ellsworth, however, used strong play in the fourth quarter by Dylan Kvaale and Curt Schilling to win by a comfortable 20-point margin.

Kvaale drained a trio of three-point shots and scored 11 of his 21 points in the decisive fourth quarter. Kvaale also had eight rebounds and seven assists in the game.

Schilling, who scored a game-high 36 points and pulled down 16 rebounds, contributed 10 points to the fourth-quarter surge.

To their credit, the 4-3 Patriots played with the Panthers in the first three periods.

Ellsworth sported 18-17, 38-34 and 53-47 leads at the first three quarter breaks.

Brant Deutsch had eight rebounds and six assists to the winning cause. Blake Brommer added six assists for Ellsworth, which improved to 11-1 with the win.

Tyson Metzger burned the nets for 29 points for H-BC.

Tyler Bush scored 13 points and recorded six assists and three steals for the Patriots. Kale Wiertzema had six assists and four rebounds, while Trey Van Wyhe added four rebounds.

Box score
Ellsworth
Schilling 14 0 8-9 36, Jenniges 2 0 0-2 4, Janssen 0 1 1-3 4, Kvaale 3 4 3-6 21, Sieff 1 1 0-0 5, Deutsch 3 0 1-2 7, Brommer 1 0 2-3 4, Myhrer 1 0 0-0 2.
H-BC
Bush 4 1 2-4 13, Wysong 0 0 0-0 0, Roozeboom 0 0 2-4 2, Broesder 0 0 0-0 0, Wiertzema 2 0 4-4 8, Metzger 5 3 10-11 29, Leuthold 1 0 1-2 3, Van Wyhe 4 0 0-0 8.

Team statistics
Ellsworth: 31 of 56 field goals (55 percent), 15 of 25 free throws (60 percent), 42 rebounds, nine turnovers.
H-BC: 20 of 52 field goals (39 percent), 19 of 25 free throws (76 percent), 19 rebounds, four turnovers.