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Thief River Falls Grapples with Growth

March 06, 2012 By Lee Egerstrom, Economic Development Fellow

Nearly every community in the state of Minnesota has a housing problem of some kind, but Thief River Falls may stand alone in struggling to find housing for the workers and their families who want to relocate there and pursue a better life.

Thief River Falls, home to Digi-Key, Arctic Cat and other entrepreneurial firms that supply and support these homegrown enterprises, pretty much sat out the Great Recession and the slow recovery that has followed.

“We have problems, too,” said City Manager Jodie Torkelson, who is a former White House management and budget official from the Clinton administration. “But all our problems come from growth.”

Thief River Falls has expanded the local airport’s runways to further assist its manufacturing and distribution businesses and has expanded hangar space for use by major package delivery services.

It has also helped bring in Great Lakes Aviation to provide passenger service from Thief River Falls to replace daily flights that were being lost.

Torkelson's counterparts around the state say they can’t imagine Thief River Falls’ problems, she said. “We all have housing problems. Few communities have shortages of housing for both purchase and rental.”

The uniqueness of Thief River Falls is worth observing because Minnesota is in the midst of an economic recovery that hints of robust times ahead, but not for every community.

Strong economic indicators for the city of Minneapolis were reported on here last week. At the same time, data assembled by the Minnesota Department of Employment and Economic Development (DEED) show the 80 counties of rural, or Greater Minnesota, are slipping behind the Twin Cities metro area in unemployment.

What isn’t well understood is that Greater Minnesota was hit especially hard by the 2001-2002 recession, said Kevin Ristau, Education Director for the Jobs Now Coalition nonprofit research organization. Greater Minnesota job vacancies have never returned to 2002 levels except around hot spots like Thief River Falls, Mankato, Winona and Worthington. Rural job seekers still outnumber full-time positions by eight-to-one, Ristau said.

Thief River Falls is a boomtown with full-time jobs that bring some of the best health benefits for workers and their families. This comes without oil, gas, coal or other resources that are causing booms in North Dakota and other parts of the country. It has nothing to do with the city of 8,573 being ideally situated to service markets; it is 303 miles northwest of Minneapolis and 140 miles southeast of Winnipeg.

Local entrepreneurial talent transformed this former farm service center in the Red River Valley into a global marketer of sophisticated products. Digi-Key Corp. has emerged as one of the largest electronic component distributors in the world supplying more than 500,000 products to customers in 170 counties. Artic Cat, a large manufacturer, is also a multinational corporation supplying snowmobiles and related products to Snow Belt customers around the globe.

Both companies told Gov. Mark Dayton at a recent meeting at Northland Community and Technical College they have problems recruiting employees from around the state and other states because of housing shortages.

“I’ve got a family with five kids trying to find a place to rent until they can sell their home in Iowa,” said realtor Kermit Genereux. “There aren’t many rental properties around for a family of seven.”

Rental properties and apartments are especially scarce, he said. A new employee takes a job in Thief River Falls and then must sell a home somewhere else before buying in the city or from the dozen communities around that are in commuting distance to Thief River Falls.

City manager Torkelson, meanwhile, said new workers in the city have commuted from as far away as Brainerd (187 miles) and Moorhead (113 miles), usually on weekends, until they were able to find local housing.

Is this a model that other Minnesota communities might adopt? Yes and no, say rural affairs experts. Mostly, yes.

What cities can do is invest in infrastructure to allow fortuitous development to occur, and then support it as development takes shape, Torkelson said. Thief River Falls is helped by its local schools and by Northland College in town, University of Minnesota – Crookston, University of North Dakota at Grand Forks, Fargo and Moorhead colleges and universities, and Bemidji State University, Torkelson said.

Local entrepreneurs who want to build businesses in their hometowns are too rare. George A. Hormel did it at Austin, Earl Olson started Jennie-O Meats turkey company at Willmar, and others have all over the state.

Ronald Stordahl started Digi-Key in 1972. William Ness, among others, started Artic Cat. European economists refer to such entrepreneurial startups as “fortuitous development.”

A city is blessed when it occurs, said Torkelson.

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