GRAND FORKS – Del Shern is co-owner of Pro-Ag Equipment, Inc., a company that has been operating along Highway 81 north of Grand Forks for approximately 40 years. When Pro-Ag arrived, it took over space from a Massey Fergusson tractor dealership. The roots of his business run deep.
But before long, the region could look very, very different. Fufeng Group, a China-based agribusiness, is negotiating the arrival of a major corn milling facility on the northern outskirts of Grand Forks. It’s expected to bring rail and road traffic, as well as some sort of smell – likely something like cornflakes or farm food, officials say in other towns with factories. similar.
And – above all – it will lead to the expansion of the city.
“We’re not really for it,” Shern said. “You don’t really know what’s going to happen with all the possible traffic and smells and everything. There are too many unknowns.”
A deal with Fufeng Group to build the plant is set to be approved by city council leaders later this month. This will likely pave the way for the city to make huge upgrades to the city’s wastewater treatment capacity, improvements to local traffic arteries and more.
And soon, the same process could lead to the city annexing not just the plant, but a cluster of nearby properties along Highway 81, including Pro-Ag Equipment. That would likely mean higher property taxes – something new and frustrating for business owners well outside the city limits.
“Sometimes change is hard when you’re used to things the way they are,” Shern said.
The city’s bite into neighboring territory comes from Falconer Township, where there are plenty of hesitant, reluctant, or downright angry residents. For some, the city is riding on a small township that doesn’t want a new set of smokestacks within it and doesn’t want to lose revenue from businesses that might be annexed along Highway 81.
“I just don’t understand why city leaders are so excited about this,” said Lucy Matejcek, who lives on a farm near the new development. “There are a lot of economic development projects that could be undertaken that wouldn’t cause this kind of grief and trouble.”
Annexation is a common process for the city, which has planning and zoning jurisdiction that extends far beyond its borders, managed by a nine-member commission. In its current composition, six members come from inside the city and three from outside. As the city grows, it is common for it to absorb newly built suburban areas, but much less when it comes to a long-existing business district.
City Planer Ryan Brooks said this isn’t the first time the city has considered annexing this group of companies. In the 1980s, there were serious discussions about this, but annexation simply did not happen.
“What’s the cost to the city, what’s the cost to landlords, what are the tax changes?” he said. “A lot of the same things that you’re looking at now and asking me for some of these numbers are the same things that were looked at back then.”
But this time around, it seems much more likely. City hall officials point out that the properties slated for possible annexation are businesses that serve all the same customers as those within the city limits, but do not pay municipal taxes; and after the construction of infrastructure links and improvements for the new facility of Fufeng Group, they will be even more closely linked with customers and city services.
Brooks said the city uses a scorecard to determine if an area near the city should be annexed. It assesses water and sewer availability, distance to a municipal fire station, “adjacency” to the city and more. In the 1980s, Brooks said, the area qualified to be absorbed into the city.
“I anticipate they will meet the criteria today as well,” Brooks said. “It will probably just be a stronger number.”
Currently, Brooks said, annexation is expected to proceed through a four-meeting process, before the city’s planning and zoning commission as well as city council. On one of the fastest possible timelines, it could be concluded by the end of April.
However, calculating the severity of the impact on businesses in the region remains a tricky task. Tami Lazur, assistant city assessor, points out that not only would tax levies be moved — from the township to the city — but the properties themselves would likely also be reassessed by the city. Both sides of a two-part equation could change.
Brooks confirmed that taxes will likely rise for businesses in the area, even if they are at least partially offset by some of the benefits of inclusion in the city. For example, the Grand Forks Fire Department’s high ratings will likely give newly annexed businesses a break on insurance rates.
And some of the businesses might see special assessment bills for upcoming infrastructure improvements in the area. Although Fufeng Group is the one driving many new projects, the improvements could benefit other local properties, meaning the city could charge for them as well.
“That one is going to be a lot more complicated,” Brooks said. “But we want to get that answer before we propose annexation in March. We hope that within a week or two, (we) will have those answers on the costs of special assessments.”
Larry Rivard runs Rivard’s Turf & Forage, a seed and fertilizer company that supplies cover crops to farmers, as well as golf courses and other customers. It is located on 27th Avenue North, a stone’s throw from the Fufeng site. He moved his business from Argyle, Minnesota to Falconer Township in 2011. He moved there because it’s outside the city limits.
Being there has advantages – its customers don’t have to pay municipal taxes on the products they buy. But that’s just one of his concerns.
Traffic is one of the main concerns. Hundreds of trucks could arrive at the Fufeng plant each week, making it difficult for Rivard’s suppliers and customers to pass through. He showed a Herald reporter a photo — a Google map photo of a corn milling plant in Iowa, the same one city leaders visited in late January. More than two dozen trucks were parked on a road outside the factory, waiting to drop off or pick up products.
He’s also concerned about paying municipal taxes and assessments, much like other Highway 81 business owners. Rivard took a pragmatic approach when the Herald spoke to him on Tuesday, Feb. 8. New taxes would almost certainly improve services – water for example – but his company already has rural water. The city’s utilities would allow him to install a sprinkler system and therefore reduce his insurance, but it wouldn’t offset what he has to pay the city in assessments.
And then there is the smell of the corn plant. Rivard installed a better ventilation system in his building because of the pandemic. The air exchange brings in outside air, and he worries about breathing in what Fufeng might expel.
In the end, he doesn’t know what he’s going to do. Although he doesn’t want to, it can mean picking up and leaving.
“It could be 70 miles south of here. It’s hard to say,” Rivard said. “We do a lot more marketing in the Fargo area than we do in Grand Forks.”
As Rivard considers the possibility of leaving, others could simply retire, depleting the sector of companies that would be valued for the cost of infrastructure upgrades.
Al Neuwsma, owner of Al’s Diesel Injection Inc. near Highway 81, retired once before but decided to return to work. He fears new taxes and assessments will strain businesses that have been in the area, some for decades. He said he had heard “horror stories” about the financial impact annexation could have on businesses in the region.
Phil Kraemer is the chairman of the township’s supervisory board. He describes the township’s relationship with the city as a collection of David and Goliath neighbors – with little influence on the city’s planning and zoning process. Earlier this month, Kraemer said he wasn’t sure what annexation might cost the township.
“Falconer, because we’re right on the Red River…we’re really only half a township,” he said. “So we only have half the area to manage, but we certainly have reduced income coming in as well.”
But for some city leaders, annexations like Falconer’s are a natural part of the city’s growth cycle, part of welcoming a new manufacturer and its expected 230 jobs. Top business leaders have described the project as a massive economic boon, with the 230 jobs boosting perhaps another 500 in the community and paving the way for even greater agribusiness development north of the city.
And for the city, the Fufeng Group’s new factory makes perfect sense in Falconer, where other big food companies, like JR Simplot and Philadelphia Macaroni, are already located. City Council President Dana Sande puts it in no uncertain terms: when leaders are elected to look out for the best interests of the community, that must come first.
“That doesn’t mean we want to overwhelm or exert undue influence on our surrounding neighbours. But the greatest good of our community is what we take care of,” he said.
Part of Sande’s argument is that the city will always continue to expand, making development and annexation inevitable. One day, he says, the city’s borders will stretch to Thompson, a town eight miles south of Grand Forks. Maybe not tomorrow, of course, but eventually.
“I’m absolutely certain there’s no answer the City of Grand Forks can provide that will make the people of Falconer Township happy,” Sande said. “They don’t want the city to grow in their neighborhood, and I think that’s the crux of the problem. It’s less about Fufeng, or plant development, and in my opinion it’s more about “stay out of my garden”.
One of the complaints from Falconer Township executives is that they were unaware of the project earlier. Should the city have done more to include them?
“We could have brought them in two years ago,” Sande said, “and it would have given them two years to complain about it.”
Denis Kadlec is the owner of H20, Inc., a wholesaler of pumps, tanks, fittings, valves and more on Highway 81. At recent city council meetings, he was one of the loudest critics virulent of the agreement.
“What they’re going to do is annex everybody here,” he said, “and then they’re going to tax us for it.”
Adam Kurtz of the Herald contributed to this report.