By Lori Ehde
Tri-State Insurance, a company that's been in Luverne for nearly 100 years, is staying in Luverne after all.
Now known as Continental Western Group Tri-State Region, it was about to move to Sioux Falls following reorganization of its parent company, W.R. Berkley Corp., Greenwich, Conn.
After four years of informing his employees of corporate downsizing and leaving Luverne, regional manager Curt Bloemendaal, was glad to deliver good news last week.
"It was very, very positive ... There was applause," he said of Friday's employee reaction. "It was a fun announcement to make."
The city of Luverne had been unsuccessful in its efforts to keep Continental Western Group in Luverne, but when Berkley Corporation announced last fall that Berkley Information Services would also leave Luverne, efforts resumed to keep those jobs in town.
CWG and BIS generated a combined annual payroll of more than $5 million, and the loss would have been a major setback to the local economy.
Now known as Berkley Technology Services, about half its employees have already moved to a Sioux Falls office, which it is sub-leasing from CWG.
Those 30 BTS employees will remain in Sioux Falls, and 30 will end up staying in the Luverne office, which Berkley Corp. has been leasing from the city of Luverne.
"I think it's wonderful," said BTS president Joel Christensen. "It's great for the employees, and it's great for Luverne. There was a lot of joy."
Goal is to complete BTS addition by Jan. 1
The announcement followed signatures on letter of intent Thursday, July 25, by W.R. Berkley executives and the Rock County Development Corporation.
RCDC, a private organization of local business representatives, initiated negotiations, led primarily by Chairman Greg Burger and Vice Chairman Don Klosterbuer.
Local developer Virgil Christensen, who built the BTS building, assisted in the process.
In a special meeting Wednesday, the public body of Luverne Economic Development Authority approved RCDC's recommendation, putting the wheels in motion for construction.
The 10-year lease on the BTS building was due to expire in December 2004, but according to Wednesday's agreement, Berkley Corp. will sign another 10-year lease on the building contingent on the following conditions:
LEDA will add 8,500 square feet to the existing 20,000-square-foot BTS structure.
CWG employees will move into the BTS building. There are about 100 CWG employees, including 20 who will move back to the Luverne location from Sioux Falls.
Berkley Corp. will donate the vacated Tri-State building to the city. The 30,000-square-foot building is worth roughly $1 million.
The agreement was signed contingent on the City CouncilÕs approval of $700,000 in financing at their Aug. 13 meeting.
"It's a neat deal. I'm excited about it," said City Administrator Matt Hylen.
"They're getting a good deal, but weÕre going to get a good deal. The tax payers are getting a good deal."
The city still owes about $900,000 on the current BTS building. Hylen said lease payments on the building will cover those costs in addition to maintenance on the 33,000-square-foot Tri-State building.
Berkley will make lease payments of $10,000 per month, and at the end of 10 years will have the opportunity to purchase the building for $650,000 or extend the lease for five years at $10,000 per month.
The Tri-State property generated nearly $47,000 for local tax coffers last year.
Ideally, Hylen said, the city will recruit another business to occupy the building, or, he said, there'd be an option to have several smaller businesses occupy the office space.
Border city legislation, which allows tax breaks to new businesses in Minnesota border towns, did not apply in this deal, but the LEDA leaders hope it will work to attract new businesses to the vacated Tri-State building.
Hylen said negotiations have been "fast and furious," in the past three months, since the Sioux Falls lease is up Jan. 1, and no arrangements were in place for new office space.
According to Berkley spokesman Gene Ballard, the corporation had been evaluating the situation and ended up doing what would retain the most workforce.
"We have a high-quality group of people, and keeping them was always our preference if we could get the building situation figured out," Ballard said, "We were very happy we could find a way to make that happen."
Last year at this time BTS had 114 employees and CWG listed 147, including traveling employees and those in Sioux Falls.
The expanded BTS building will house fewer than 130 people in the combined workforce.
Ballard said one of the company goals was to put all the Berkley employees under one roof, and this accomplishes that, plus allows space for additional employees.
"The property casualty business has been growing steadily in the past 12 to 18 months, particularly in commercial lines," Ballard said.
The construction schedule will be "aggressive," Hylen said, with the goal to get exterior work done before winter, and the interior completed early next year.