Tuesday, December 30, 2008 By Aaron Brown
That Excelsior report from the OLA prompted a series of posts and a column from me, and also exposes the Achilles Heel of economic development on the Iron Range. If developers can come to the Range promising a job-creating project, receive a large loan with loose terms, and use that money to actively lobby for regulatory change essentially mandating that their original idea be protected from market forces, then we are essentially asking to be exploited. This sort of thing has produced modest, some would say negligible gains in the local mining sector, but has flopped nearly every time it's been applied outside mining. I suspect Excelsior will be the next flop. I merely contend now that it is a very big, very expensive bad idea.
I've been criticized for "getting personal" with the backers of the Excelsior Energy coal gas power plant, but it's not personal. It's business. In business, emotions matter but not as much as facts. In the blogosphere, emotions are plentiful but facts are rare. That's why an impartial, professional agency like the OLA is so important in an Information Economy.
The OLA didn't explore all the same complaints I have about the IRR Excelsior loans, but they were professional and fair. A couple key passages of their report indicate a sort of amazement at the structure of the loan agreement and strongly recommend that Iron Range Resources clarify the matter of lobbying with public funds in the future. If that comes to be then the OLA will have done a great service for the future of the Iron Range.
As you can see from the St. Paul Legal Ledger story, the Office of the Legislative Auditor serves the state well in countless ways.
ADDENDUM: And to head off the anti-Range complaints that so often emerge when the matter of Iron Range Resources spending comes up, let me again clarify:
Iron Range Resources is funded by taconite production taxes paid by mining companies for the ore they remove from the land. This is not extra money or a secret pot of Ranger booty; it is money paid by these companies in lieu of property taxes to local governments. The money is divvied, by statute, to schools, cities and counties on the Iron Range and then also spent by the agency in ways that rehabilitate and revitalize the Range economy. Sometimes I agree with their actions and sometimes not, but the importance of this tax structure and the agency itself to our region cannot be overstated.