11-14-2000

IRRRB OKs $8 million in projects

Housing, EVTAC lawsuit draw verbal fireworks

By JIM ROMSAAS
Mesabi Daily News

EVELETH -- More than $8 million in IRRRB funding took the backseat Monday to verbal fireworks between board members and with potential grantees.

Rep. Tom Rukavina, DFL-Virginia, questioned the numerous housing projects on the agenda when LTV Steel Mining is about to lay off 1,400 employees.

A short time later, Iron Range Resources and Rehabilitation Board citizen member Joe Begich asked EVTAC's president if he would agree to drop a lawsuit against the state if a $1 million grant was awarded. He got no answer.

The board did eventually approve $5 million in community development projects and $905,000 in business development projects. The U.S. Hockey Hall of Fame also received the second installment of a $225,000 grant.

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"Will you consider dropping the lawsuit?'' Begich asked EVTAC President Howard Hilshorst.

Hilshorst did not answer the question directly but said EVTAC is not suing the Range delegation.

EVTAC's intention with the lawsuit is to clarify a part of the law which requires them to pay a 15.4 cents per ton tax for acquisition of equipment for new procedures or technology. The part in question is the majority vote of mine representatives, which includes union and management officials.

EVTAC believes that is an unfair collective bargaining tool, said Brian Hiti, IRRRB mining and natural resources development manager.

Hiti added that a judge is still considering the lawsuit.

Begich, who originally supported the project, withdrew his motion after Hilshorst's response.

But Rukavina gave his support to the project if EVTAC agrees to keep its doors open for three years. The project and another at Hibbing Taconite was approved with the condition attached.

The EVTAC $1 million grant is earmarked to help fund improvements to its rougher magnetic separators, which was previously approved in June. Completion of the project will allow EVTAC to cut production costs at its Forbes plant by up to $1 per ton.

Since the project was approved the funding sources have changed and the total project cost went from $4.5 million to $4 million.

The major change will be the IRRRB converting its $1 million loan into a grant, while EVTAC will increase its owner equity from $763,000 to $2.21 million. The Minnesota Department of Trade & Economic Development will contribute a $500,000 forgivable loan and the Conservation Improvement Program will account for $287,000 in funding.

The change in funding became necessary after $1.95 million in federal funds could not be obtained.

At Hibbing Taconite, the $1 million grant will be used to help fund a new design method of tailing basin exterior dam construction, which is unique to the taconite industry. The entire project will cost $5.12 million, including $4.12 million from Hibbing Taconite.

Approving more than 15 housing projects did not sit well with Rukavina, though.

"What's going on here?'' Rukavina said. The housing program, which allocates $10,000 per unit, is out of control, he said, "considering what's happening at LTV.''

Rukavina was the only no vote against the approximately $5 million in community development projects, which included the housing.

Sen. Doug Johnson, DFL-Tower, disagreed with Rukavina's assessment of the housing program.

"Affordable housing is extremely important if we're going to rebuild the Iron Range,'' he said.

New housing opens up older housing for younger families to move into, according to Johnson.

"Who in the hell is going to buy all these homes?'' Rukavina said.

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The board also approved a $148,000 appropriation for marketing, preliminary design and engineering and an environmental review plan for a steel slab production facility at the LTV site.

Larry Lehtinen recently studied the feasibility of producing value-added iron products at LTV and found it was conceptually feasible from both a technical and financial perspective.

Lehtinen subsequently submitted a $9.8 million proposal from Ferrometrics (a company he founded in July) to develop the steelmaking business at LTV.

While the IRRRB was interested, they asked for a smaller proposal for Ferrometrics to undertake the next, most critical steps.

The $148,000 would be used to take the following steps in the next four months:

* Conduct a marketing assessment for semi-finished steel slabs, which would identify potential customers within the Great Lakes region.

* Prepare preliminary engineering drawings, including facility layouts, process flow diagrams and cross sectional views for phase one of a 1.25 metric ton steel slab making operation at LTV.

* Prepare an environmental review plan for the conversion of the LTV into a facility to produce steel slabs.

Since the feasibility study was completed , the IRRRB and Cleveland-Cliffs Inc., which holds an option to acquire the LTV property, have had several discussions. CCI is interested, but all parties realize the Lehtinen study is preliminary and these efforts must be made to develop the concept into a bankable business proposal.

The business development projects approved were as follows:

* Cast Corp. of Buhl, $165,000 loan to purchase additional equipment as part of a $330,000 expansion. Cast manufactures high end tooling for the automotive, recreation and heavy equipment industries. Five full-time jobs will be created and seven full-time jobs will be retained.

* Hibbing Fabricators, a $150,000 loan to purchase additional sheet metal stamping equipment for a $600,000 expansion. Nine full-time jobs will be created and 58 full-time jobs will be retained.

* Northern Lights Houseboats of Orr, a $180,000 loan to purchase equipment and provide working capital to build houseboats in Orr. The $450,000 project will create three to five full-time positions.

* North Bay Trail, a $225,000 loan to renovate the former Longyear building in Hibbing, which will then be leased to Hibbing Electronics to expand. The $764,000 project will create 90 full-time jobs and retain 500 full-time positions. In a related matter, Hibbing Electronics is seeking an employee incentive grant of up to $150,000 ($3,000 per full-time equivalent) for the expansion.

* The Virginia-Eveleth Economic Development Authority, a $35,000 grant to install an adequate HVAC system in the eastern portion of the VEEDA building formerly occupied by Sykes Enterprises. Sykes has just occupied its new building and Entronix International will be expanding into the vacated 10,000 square foot space. The funding for the HVAC system was previously approved so Sykes could remain in the space until its own building opened.

The community development projects from the board account are as follows:

* $80,000 to the city of Babbitt for infrastructure and construction of eight single/multi-family homes.

* $200,00 to the city Deerwood for infrastructure for the expansion of a new business, which will add 35 new positions.

* $80,000 to French Township for the construction of eight single family homes.

* $250,000 to Hibbing for infrastructure to phase one (25 lots) of single/multi-family or townhomes.

* $50,000 to Mountain Iron for infrastructure to a new business that will create three new positions.

* $40,000 to Northern Habilitative Service for construction of four specialized housing units. The business will create 11 new positions.

* $130,000 to Orr for infrastructure for a new business at the airport. The business will create nine new positions.

* $40,000 to Range Center for construction of four units of specialized housing. The business will create 11 new positions.

* $80,000 to Schroeder Township for infrastructure to eight housing lots.

* $50,000 to Silver Bay for improvements to maintain the viability of the airport.

The proposed community development projects from the Taconite Area Environment Protection Fund, which will be split between fiscal years 2001 and 2002, are as follows:

* $150,000 to the Arrowhead Economic Opportunity Agency for construction of a transit/service building in Two Harbors.

* $240,000 to Aitkin for construction of a 24-unit market rate apartment complex.

* $100,000 to Buhl for infrastructure to 10 single family lots.

* $320,000 to Chisholm for expansion of its industrial/business park.

* $120,000 to Coleraine for infrastructure to its industrial park.

* $400,000 to Eveleth for construction of a 48-unit market rate senior housing.

* $375,000 to East Range Joint Powers Board to establish a development fund for issues related to LTV.

* $120,000 to Gilbert for construction of 12 housing units.

* $225,000 to Hibbing for extension of the Irongate Business Park.

* $100,000 to Ironton for infrastructure to 17 lots for single family homes.

* $300,000 to Mountain Iron for infrastructure to a new business park.

* $150,000 to Nashwauk infrastructure to 38 lots for single family homes.

* $410,000 to Sunrise Homes for construction of 41 senior housing units in Two Harbors.

* $140,000 to the Temperance Co. for construction of 14 apartment units in Tofte.

* $150,000 to Tower for water, sewer and roads to the East Two Rivers Development.

* $300,000 to Virginia for construction of a new business park on Highway 53.

* $100,000 to Virginia for construction of two fourplexes and one duplex.

* $100,000 to Virginia for construction of two fourplexes and one duplex.

* $200,000 to White Township for water and sewer along the road to Giants Ridge for business development.

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