In 2006, Aberdeen beef man Dennis Hellwig asked the Brown County Commission to help him build his Northern Beef Packers slaughterhouse. The commission delivered help in the form of a tax increment finance district. Under the TIF designation, Brown County forewent $8.6 million in increased property tax revenue from the packing plant, allowing Hellwig (and, as it turned out, the Korean investors who bought him out in 2009) use that money top pay down the construction costs over time.
Brown County Commission Chairwoman Deb Knecht led the 4-to-1 majority voting for the TIF in October 2006. Defending her vote, she told KELO, "If we turn everything down we'll never have that tax base... we will however in a few years...we have to be patient and wait for it and hopefully with the new building of homes and things like that we will see some money generated for the county."
When Brown County residents submitted petitions to put the TIF to a public vote, Chairwoman Knecht led the same majority in rejecting those petitions, wanting to keep the public from standing in the way of this tax giveaway on the grounds that approving the TIF was an unreferrable administrative decision. Judge Jon Flemmer reversed that undemocratic rejection in April 2007, saying the TIF was clearly a referrable legislative decision. The TIF went to a public vote that month and won 2-to-1 public support.
But the voters, like Deb Knecht and her fellow county commissioners, the Governor's Office of Economic Development, Joop Bollen, Mike Rounds, and 160 foreign EB-5 visa investors, erred. Northern Beef Packers took five and a half years longer than expected to build and open. NBP collapsed into bankruptcy in under nine months, unable to pay its TIF bonds or even the reduced taxes it owes under TIF designation.
Deb Knecht is no longer chairwoman of the Brown County Commission. But she is now chairwoman of the South Dakota Democratic Party, culminating many years of active participation in the SD Dems.
So just think: If Deb Knecht had smelled the offal, if she had not suffered from the same anything-for-a-buck desperation that induces too many of South Dakota's elected officials to sacrifice tax revenues for the sake of economic development, she could have used her clout (and yes, Democrats had clout in Brown County in 2006) to sway just one more vote to join her and Dennis Feickert in voting against corporate welfare for Northern Beef Packers. That no vote could have stopped the project, saved 160 Korean and Chinese investors $80 million dollars, and erased from this universe's timeline state and federal investigations of financial misconduct in the Governor's Office of Economic Development and South Dakota's EB-5 program that looms over the Senate campaign of the governor who pushed NBP, Marion Michael Rounds.
So the whole scandal really is the fault of the chairwoman of the South Dakota Democratic Party. Ah ha! I knew it had to be a Democratic plot!
To be fair, I think we have to look at the position these politicans find themselves in-the tax base in this state is pretty thin and pretty resistant to increases. The politicos tend to grasp at any straw that is waved at them to improve that situation and this seems to extend across most of our political class without regard to party affiliation.
The problem with this is that politicans are not capable of making anything but political decisions and as we have seen, this frequently does not turn out well. Hey, we all knew it was a commie plot, right?
In the late 1990's I lived about 8 miles from Deb Knecht. Her family's farm is just east of Houghton and the Sand Lake Refuge. The Knechts are a big extended family. They farm and raise Red Angus cattle.
Deb was just beginning to get involved politics then. I found her, and all the Knechts to be kind, decent, hardworking folks. They did not seem to be likely to try anything underhanded or nefarious. Deb genuinely wanted to help her community.
As you said Cory, Democrats are dominant in Brown County. I don't mean 'dominant' in a heavy-handed way, but they usually have the numbers and the votes.
Even kind, decent, hardworking folks can fall prey to that South Dakota desperation, the misconception that we're in such tough shape that we have to sacrifice everything for economic development. Marketers try to create urgency and false needs all the time; it's easy to take advantage of our desperation. We need to get over that and make businesses live up to their civic duties. Therein lies a much better foundation for economic development.
Yeah, I know this is glacially late in blogosphere time. 2 things:
1. Anything new on Deb Knecht?
2. I know that a lot could have changed since 1999. But it will truly sadden me if this family, and Deb in particular, has succumbed to political pressure and the seductive lure of greed. Sigh. Sad to see.
No problem, Deb! It's good that we review these stories.
I have nothing new on Ms. Knecht's connection to NBP. I think this story stands as sufficient warning that, as we dig farther into NBP and EB-5, we are going to find all sorts of friends and neighbors connected somehow to the monkey business.
Thank you. I hope that she's clean. If not, she must get nailed for it.
Knecht's involvement in this story shows two levels on which the GOED/EB-5/NBP/Benda story matters. On the front page, we have the standard scandal: money diverted, secret offshore accounts, a suspicious suicide, etc. But on page A2, we have the policy context in which those scandalous, illicit activities took place. We have local officials like Knecht approving tax handouts for questionable business projects. We have the state backing businesses who can't get local funding who thus turn to foreign investors who are more interested in buying green cards than in creating lasting, profitable enterprises. We have South Dakotans at all levels putting unquestioning faith in anything labeled "economic development" just because we're desperate to keep our small towns from failing.
I have no reason to think Deb Knecht was involved in illegal activity. Her part in this story is interesting specifically because she didn't do anything illegal, but she made, along with her fellow commissioners, and really bad policy decision.
That is certainly true! There is too much assuming going on. Assuming that it must be okay because those people over there said it's okay and they are nice guys. They wouldn't lie.
That's exactly how the most successful scammers succeed. Charm. Sigh.