IRRRB OKs loans creating jobs, for a price

Iron Range newsOn Thursday the Iron Range Resources and Rehabilitation Board approved loan packages for two Iron Range business projects to create almost 150 new jobs. The first, which I mentioned yesterday, was a $5.9 million loan for Delta Airlines to expand its Chisholm ticket reservation center, a move that the company says will add 107 jobs to the 418 people already employed there.

The second loan was just more than $5 million to the Hibbing Economic Development Authority to expand the infamous “spec building” by the Range Regional Airport to accommodate plans by Detroit Diesel to add 40 jobs to their previous 10 new positions created with the company’s relocation to the long empty spec building.

These were both loans but both agreements the Delta agreement carries provisions that would allow forgiveness of the loans under certain circumstances, mostly that the jobs still exist by the end of the loan period. These kinds of IRRRB loans are often forgiven. As Ed Kohler at the Deets points out, this puts a rather hefty price tag on the creation of each of these specific jobs. He lays out an argument that what the IRRRB is doing is paying about $36,000 a year to Delta with only the guarantee of 32 new jobs. That’s a rather pessimistic outlook, but nevertheless he is technically correct it could turn out that way.

UPDATE: The Detroit Diesel loan does not include forgiveness, but will be paid by the Airport Authority using money the company pays to lease the building. Works great, as long as the company continues to lease the building.

So, this news is certainly good for the companies involved and the workers they’ll hire. The local communities, too, will see a benefit from the increased activity. But sustainable public policy? Good in the long run? That remains unproven. It could be argued that this strategy will only keep our economy patched together for a while.

Still, today’s Mesabi Daily News carries the banner headline “Good Day for the Range” and a gigantic feature photo of a bald eagle in flight. Who am I to bust up the party?


  1. I hope Delta surpasses the minimum requirements of the loan forgiveness terms. The report discusses upgrades being made to the facility, so that should help bring in some work beyond the call center jobs.

    If the call center is generally considered to be a good project to support, perhaps the IRRRB could find other businesses looking for friendly Minnesotans to field calls? Here’s an example from Tennessee.

  2. Gregg Peppin says

    Fair and objective report on what is, in my mind, corporate welfare. In the end, the big guys receive low interest loans, grants, TIF financing, loan forgiveness, etc., and small main street businesses are overlooked. Government picking winners and losers is never a good idea.

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