Luverne was dealt a powerful blow this week when tru Shrimp officials informed local leaders that the first bay harbor will be built in Madison, South Dakota, not in Luverne as promised.
Company executives met with city and county officials Wednesday morning, Jan. 2, the first business day of 2019, to deliver the news.
Tru Shrimp indicated that environmental regulations were impeding the company’s timeline.
“As a part of the final permitting process, the company encountered a state regulatory challenge that could not be addressed in the timeframe needed to meet its commercialization goals,” the company wrote in a statement released Friday.
Luverne Mayor Pat Baustian said he was sickened by the news, especially considering the short notice after a long-term relationship had been developed with the company.
“This is a new industry, and we knew we were taking risks in working with tru Shrimp, but we seemed to have developed a level of trust,” Baustian said. “I just didn’t see this coming.”
He wasn’t the only one caught off guard by the news.
Investment considerations
Beaver Creek’s David Kolsrud is working for tru Shrimp to raise investment equity for upfront costs such as preordering construction materials.
“I’m baffled,” he said. “It is almost unexplainable.”
Kolsrud said the financing is not yet in place for construction set to start this year, but he said several key investors are poised to commit to the project.
Madison’s site for tru Shrimp is located in a federal Opportunity Zone, which makes it an attractive location for financiers seeking tax-free options for capital gains investments.
Kolsrud said he couldn’t comment on whether investment returns prompted tru Shrimp’s decision, but he said Luverne was the clear choice in terms of its efforts as a community partner for the new industry.
“I’m proud of Luverne and everything it’s done to make this happen,” Kolsrud said. “I have never seen a community pull together so much, and to have this happen with no warning at all, I’m disappointed.”
Minnesota-based Ralco owns the shrimp company and the patented production technology. It has been fine-tuning the process in Balaton (in the former school building) for the past three years.
Ralco and its subsidiaries have a 40 to 50-year history in Minnesota, and as such, company officials had committed to building their shrimp hatcheries, harbors and processing facilities in the state.
Courting tru Shrimp
Early in 2017 tru Shrimp announced it was searching for a launch community for its first commercial harbor, and Luverne was on the short list of cities courting the company, which promised hundreds of jobs and millions of dollars in economic stimulation.
To entice the company to Luverne offered
•nearly 70 acres in Luverne’s industrial park along I-90,
•infrastructure additions including a road, water, sewer, electric to the tune of $2.6 million.
•improved electrical capacity with a third substation in the industrial park at roughly $4 million.
•improved wastewater treatment capacity to handle additional effluent.
•workforce housing options to for employees
•tax abatement (city and county) for the company’s first five to 10 years of production.
In addition, Luverne Sen. Bill Weber had spent considerable political capital on the venture by authoring a bill in the state legislature to garner production incentives for aquaculture to attract tru Shrimp. It was estimated to amount to $3 to $5 million per year.
Further, Weber worked to legislate that shrimp production be considered an agricultural commodity eligible for tax breaks on property, equipment and construction.
He too, expressed disappointment about tru Shrimp’s move to South Dakota, but he vowed to keep working on the regulations that prompted the decision.
“The problem that created this change of venue remains, and we have to solve that problem,” Weber said. “My efforts going forward will focus on this.”
MPCA commissioner: ‘I’m confused’
Despite the red carpet treatment in Luverne, tru Shrimp officials said the regulatory hurdle was too steep to clear.
“There are several reasons why we are building our initial Harbor in South Dakota, but, importantly, this location immediately provides the economic and regulatory conditions that allow us to pursue our goals,” said tru Shrimp president and CEO Michael Ziebell.
In the Jan. 2 meeting with tru Shrimp executives Luverne leaders asked for 30 to 60 days to address the environmental concerns, but by that time the company had already arranged for a Jan. 4 press conference in Madison to announce the news.
John Linc Stine – Commissioner of the Minnesota Pollution Control Agency, weighed in on tru Shrimp’s assertions. “I’m confused,” he said.
“We were working with them on a way to comply … This was really kind of a surprise to us.”
He said a Dec. 19 letter to the city outlined a regulatory standard that would need to be addressed, but he hadn’t heard from the company that it would be a problem.
“We don’t really know if there’s a problem with meeting that standard … If there’s something we can do, we are committed to helping the city meet its clean water standards,” Linc Stine said.
“We weren’t expecting this. … or maybe they had other reasons. I don’t know.
The standard in question regulates the level of salt the company would discharge into Luverne’s wastewater treatment system.
Specifically, treated water – even softened residential water — can kill organisms in the environment if the salt is concentrated after discharge.
The MPCA requires city wastewater treatment plants to reduce the toxicity of its effluent before discharging into the Rock River, and Linc Stine said tru Shrimp had been steadily working toward meeting state standards.
“Our top scientists have been working with their consultants — some of them effluent experts — to understand how toxic the water is before it hits the streams and rivers,” Linc Stine said.
“Our staff put a lot of hours in supporting their needs and interests, and I’m disappointed they made this decision.”
He said the industry presents new challenges to municipal wastewater treatment facilities, and over the past several months it appeared clean water was a shared goal.
“They’ve been very, very cooperative,” Linc Stine said. “They’re a good business. They’ve come forward right away with good information.”
While he would like to see tru Shrimp remain in Luverne, he also pointed out that the MPCA’s ultimate responsibility is to protect the environment.
“We obviously want to help the city expand its business opportunities, and we’ve been working hard to help them find a path to comply both sustainably and affordably,” Linc Stine said.
“And that’s why we were very hopeful about getting all these things to align. … We want people to understand we want to protect clean water and restore it. … We thought this [tru Shrimp] was a good news story for the community and the environment.”
Mayor: Nothing lost; now we’re ready for growth
Mayor Baustian said he remains hopeful that Luverne could still be part of the tru Shrimp family of harbors and hatcheries, and there was discussion about the second harbor locating in Luverne three years from now.
He added that Luverne’s efforts in attracting tru Shrimp aren’t considered a loss.
“These are all good investments that were needed already,” he said. “This sets up our industrial park for any future industry. … It will be ready.”
Further, he said the city received federal grants for housing and the industrial park infrastructure that allowed the city to complete the work for 20 cents on the dollar.
“We already have a shortage of workforce housing, especially with Premium Iowa Pork coming, and we’ll need the apartments even without tru Shrimp employees.”
The same is true for the infrastructure investments, which were already needed in order for Luverne to attract any future development.
County administrator Kyle Oldre said he doesn’t regret the county’s role in taking over Walnut and Koehne avenues as 10-ton county highways.
He said Friday that Luverne is poised to welcome a variety of interested industries, and it likely won’t take that long.
“We’re disappointed about tru Shrimp,” Oldre said. “But we’re looking forward to new opportunities, whatever they may be.”
Attempts to reach tru Shrimp for a comment for this story were unsuccessful.