Howard business faces default notices on state government-backed loans

Capitol News Bureau
South Dakota Counties Miner.jpg

PIERRE, S.D. (KELO) —  A governor-appointed panel that provides assistance to business projects for creating jobs in South Dakota has reversed course on a Miner County deal that looked sweet when it was announced five years ago.

The South Dakota Economic Development Finance Authority authorized a notice of default and ‘right to cure’ letter be sent to a Donnerite, a truck- and heavy-equipment repair business that moved to Howard from Minnesota.

Authority members Monday told Steve Westra, commissioner for the Governor’s Office of Economic Development, to take action when he deems it necessary to protect the authority’s interests and to commence a lawsuit “if the default is not timely cured.”

Westra, a Republican former legislator from Sioux Falls, was one of the first Cabinet members whom new Governor Kristi Noem appointed upon taking office in January. He replaced Scott Stern of Freeman.

Owners Bill and Deb Donner moved to Howard from Spicer, Minnesota. They intended to provide services to trucks and heavy equipment in North Dakota’s oil fields. A December 5, 2013, news release trumpeted their change of geography.

“Donnerite Inc.’s decision to expand its operations to our state is a testament to what South Dakota has to offer,” then-Gov. Dennis Daugaard said. “Word is spreading that South Dakota has a business-friendly environment, quality workforce and an unbeatable way of life.”

Pat Costello of Sioux Falls was Daugaard’s economic-development commissioner at the time. Finance authority members who approved the Donnerite loan at their February 20, 2014, meeting were chairman Terry Nelson of Spearfish, Gerrit Juffer of Wagner, Jody Sperlich of Rapid City, Ron Wagner of Pierre and Stephen Jones of Jefferson.

According to the official minutes: “A motion was made by Gerrit Juffer and seconded by Stephen Jones to approve the APEX loan to Donnerite SD in the amount of $175,000. Secured by a 1st position on the new equipment and personal guarantees of principals with more than 10% ownership.”

Current authority members who voted to look into liquidation Monday were chairman Nelson, vice chairman Juffer, Sharon Casey of Chamberlain, Jeff Erickson of Sioux Falls, Tom Jones of Viborg and Don Kettering of Yankton. A seventh, Michael Luken of Watertown, wasn’t on the teleconference.
Casey, Erickson, Jones, Kettering and Luken are also members of the state Board of Economic Development that makes low-interest business loans. Erickson, a retired banker, is the board’s chairman. He also chairs the state Banking Commission.

The Board of Economic Development in 2013 made a $468,750 loan to a second company, WM 3D SD Properties LLC, that Bill Donner created at Howard. The board in March authorized the commission’s staff to begin working with its legal counsel. 

The South Dakota Secretary of State office issued notices of administrative dissolution to both Donner businesses last year. Neither of the Donners nor any representative for them participated in the teleconference Monday.

In the 2013 news release, Bill Donner spoke about his business plan. “We are very excited to be expanding our design and fabricating business to Howard,” he said. “We are moving into an existing building and will be hiring local people. We hope to bring in others from outside Howard and surrounding areas, encouraging them to relocate to the community.”

The deal drew praise from Russ Olson, top executive at Heartland Consumers Power District in Madison. He previously was the state Senate Republican leader.

“Donnerite Company is the perfect fit for Howard and the vacant Knight & Carver building,” Olson said in the release. “We have been working with state and local officials for some time to fill that space. Bill and Deb Donner have a passion for small towns and have run a successful company for nearly two decades. They will have a positive impact on the community and we at Heartland are excited about Howard’s bright future.”

Howard, with a population of 858 in the 2010 U.S. census,  has been swinging for a home run in job creation for decades.

During the administration of Governor George S. Mickelson, state government officially proposed Howard as the potential site for the U.S. Department of Energy’s superconducting super-collider physics project because of the area’s flat terrain.

A Texas site was chosen and construction began. The project potentially could have meant 15,000 jobs, and 2,000 people already were working at it when Congress canceled it in 1993. Howard also tried for years to make work a state-backed card-wrapping business. The community suffered another blow when a rural-revival center shut down.

Donnerite planned to hire about 60 people at Howard and initially looked like it might be part of the answer to Miner County’s slowly declining population. The company began in 1996 as a repair shop based from the Donner family’s home and grew to six locations in Minnesota with more than 90 employees.

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