Sur la table: Rosemarie Cornelius (left) and Emma "Pinky" Iron Plume (right) discuss housing and community development with me where business happens in Manderson: the back table at Pinky's store, 2014.08.18.

Sur la table: Rosemarie Cornelius (left) and Emma "Pinky" Iron Plume (right) discuss housing and community development with me where business happens in Manderson: the back table at Pinky's store, 2014.08.18.

Emma "Pinky" Iron Plume opened Pinky's, the only store in Manderson, South Dakota, thirty years ago. She continues to run the store on BIA Highway 33 today, providing her neighbors and folks from the nearby elementary school and the Oglala Lakota College branch campus a place to buy a few staples and snacks and gather to do business.

Iron Plume serves her neighbors with an even larger economic development project on the Pine Ridge Reservation. Through the Oglala Sioux Tribe Partnership for Housing, Iron Plume helps Indian families become homeowners, which Iron Plume says is central to personal and community economic security.

The benefits of homebuilding and homeownership are obvious. Building homes creates jobs and economic activity. It addresses the critical housing shortage on the reservation, where Iron Plume sees families doubling and tripling up in the few available houses. Owning a house not only makes a family safer, healthier, and happier but also gives that family a real sense of ownership and a stake in the community that does not exist when a family must bounce from rental to rental or other temporary lodging.

Getting Indian families into new homes isn't easy. Iron Plume says the OST Partnership for Housing used to build homes, like Habitat for Humanity, but found that model too costly to coordinate and carry out. Now the Partnership focuses on educating homeowners and finding allies to help them buy homes.

A key part of that education is financial education. The Partnership helps Indian families learn about credit and savings. Iron Plume says the group warns its clients of predatory lenders, both the payday lenders and the subprime mortgagers who crashed the economy a few years ago.

Once families have a grip on their finances, the Partnership helps them find willing lenders and homes, often the small, affordable Governor's Houses built by state inmates.

The Partnership also helps families find land. Those who have driven through the wide open expanses of Pine Ridge would think that finding available land would be no big deal. But viable building land is hard to find on the reservation. Infrastructure is limited: a lot of places around Manderson, Wounded Knee, and Porcupine don't have electric lines or water pipes. (Pinky also notes that AT&T hauls extra cell-phone transmitters to Sturgis for the Rally but provides unreliable cellular service to Pine Ridge year-round; get with it, AT&T!) The Partnership thus has conversations with utilities and agencies to try to extend infrastructure to make new land available for development.

Where infrastructure exists, land ownership is complicated by fractionation, the slicing up of ownership through inheritance. The Oglala Sioux Tribe is using Cobell settlement money to buy back and consolidate small tracts into viable housing plots. Iron Plume says the tribe will keep ownership of the buy-back land and lease it out to homeowners in 50-year intervals.

So far, the Partnership has helped put over 100 families into homes of their own. The Partnership has now received a grant from the Administration for Native Americans (under the federal Department of Health and Human Services) to help young Indians invest in homeownership and other economic development. The Partnership will use that grant to launch a savings-match program in 2015: young Indians (age 16 to 26) who apply can receive two dollars for every one dollar they place in an "Individual Development Account." The money invested must be earned income, not gifts from Grandma. The IDA money must then be used to buy a house, take postsecondary classes, or start a business. The match goes up to $1,500, so young investors can turn $1,500 into $4,500.

The goal of the grant program, says Iron Plume, is to create assets. Thus, the program will also include an insurance fair to teach its young participants how to protect their assets. The program will offer a marketing workshop to young entrepreneurs to help them expand their sales and create even more assets.

Iron Plume says the Partnership has promoted other projects to help her neighbors with homemaking. Among other things, the Partnership has promoted food self-sufficiency. Iron Plume recognizes that a lot of the prepared foods she sells at Pinky's are not the cheapest or healthiest options. She encourages her neighbors to try making meals from scratch. The Partnership has given out cookbooks. It held a canning workshop last year and has a jelly-making workshop coming up. Iron Plume says a lot of her neighbors garden and derive great satisfaction from that bit of self-sufficiency (not to mention the chance to make maybe one less trip to Walmart in Rapid). She sees local food as an important part of the Partnership's philosophy of centering life on the home.

Pine Ridge and our Indian neighbors face all sorts of challenges, but Pinky Iron Plume views every challenge as an opportunity to find new partners to help. Iron Plume tackling those challenges both as a traditional entrepreneur, selling goods to her neighbors and providing a meeting place for her community, and as a social entrepreneur, helping others use and build their financial well-being. The Oglala Sioux Tribe Partnership for Housing is a good example of a local effort building cooperation among numerous agencies to make life better on Pine Ridge.

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Governor Dennis Daugaard has declined the Rapid City Journal's invitation to debate in Rapid City in October, saying he's too busy with all of his gubernatorial duties...

...like hobnobbing with rich people in New York City to promote Sioux Falls:

South Dakota's governor and economic development leaders are leading a campaign to encourage national companies to relocate to Sioux Falls.

The delegation is in New York City this week to promote the state's largest city to financial writers in the hopes of attracting development, said Sioux Falls Development Foundation president Slater Barr.

"The real reason behind these types of visits is we recognize a disparity between the reality of crunching the numbers and the perspective of executives as to the viability of Sioux Falls and South Dakota as an attractive business location," Barr said of efforts to attract new business.

...Joining Daugaard on the New York trip are two leaders from the Governor's Office of Economic Development, commissioner Pat Costello and Steve Watson, business development director [Carson Walker, "Governor Promotes Sioux Falls to Promote Investment," AP via Sacramento Bee, 2014.08.05].

Wait: Mayor Mike Huether isn't on this trip? Whose job is the Governor doing?

Of all cities in the state, one would think that Sioux Falls is best positioned to promote itself, without state assistance. But in true GOP fashion, Governor Daugaard keeps working to help the rich get richer.

*   *   *

Among his media stops, the Governor gets ten blurpy minutes on Bloomberg TV:

The panel of interviewers seem to have trouble sticking with one line of questioning or following up on Governor Daugaard's statements. The Governor credits our population growth to out business-friendly environment of low taxes and low costs of doing business but says nothing about Indians having more babies.

One interviewer notes that economic development is not just about taxes but also about amenities and infrastructure. Governor Daugaard responds that South Dakota has concerns about federal Highway Trust Fund that "all the states depend on" but offers no statement about what South Dakota is doing to promote better roads, schools, and parks.

The interviewer asks about high-speed Internet access, Governor Daugaard brags that he has fiber-optic cable at his place in Garretson. Daugaard's respons epitomizes Republican "I've got mine!" thinking, and the interviewer fails to follow up on whether anyone is doing anything to ensure better Internet and infrastructure for all of South Dakota. The interviewer does return to the topic toward the end of the chat to ask who laid that fiber: Governor Daugaard manages to say his local co-op without saying the word socialism. Daugaard's co-op, Alliance Communications, spent $66 million over eight years to build that fiber network; some of that money came from federal Universal Service Funding. Alliance is seeking more federal dollars to expand its rural broadband service. Ah, self-reliance.

Asked about partisan polarity, Governor Daugaard says South Dakota Republicans and Democrats "get along pretty well" and "treat each other with civility." His Beltway-focused hosts chortlingly encourage Daugaard visit Washington with his lessons in civility, not asking Daugaard why his party has hired Dick Wadhams to launch personal attacks on Democrats.

Opining on how Washington obstructs entrepreneurship, Governor Daugaard says the feds burden us with uncertainty: would the stimulus affect the economy in the way it was hoped, would the sequester take hold, would the government shut down. Governor Daugaard ignores the fact that the stimulus worked except for the drag his own party put on it by (among other things) hamstringing government hiring. He also ignores the fact that the potential for economic destruction from sequester and shut down came from his party's kamikaze politics.

When asked for his five-year plan for South Dakota, Governor Daugaard offers no new ideas, just the typical Republican faith in marketing: South Dakota just needs to "get the word out" about its business climate. But remember: in Republican circles, "getting the word out" means sharing unchallenged sound bites with New York journalists, not fielding questions from local journalists who know what questions to ask in front of challengers for your job.

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Madison's new thrift store, now christened the Encore Family Store, is scheduled to open in November. Store organizers have scheduled donation drives to collect merchandise for the store for Aug. 16, Sept. 6 and Sept. 13 from 9 a.m. to noon. On those days, folks can bring the usable contents of their basements and rummage sale leftovers to the empty lot between Lewis and Montgomery's on South Washington.

The thrift store organizers continue to seek financial donations. A fundraising letter sent around town on July 25 says that the project as reached two thirds of its fundraising goal. Last March, organizers reported that the thrift store had raised $400,000 of the projected $650,000 it needed; that was 62%. Climbing from 62% to 67% (assuming the July 25 letter isn't rounding) in four months isn't exactly a torrid fundraising pace.

Inter-Lakes Community Action Partnership will run the thrift store, as it runs similar operations in Howard, Flandreau, and Clark, to generate revenue for its various community service programs, like 60s Plus Dining and rent and utility assistance.

ICAP will need some rent assistance of its own. A flyer distributed with the July 25 letter indicates that the thrift store's operating expenses will include rent. Recall that the landlord, the Madison Community Foundation, acquired the property for free, meaning they have no mortgage to pay off. I suppose someone has to pay the property tax on the lot, and I suppose it doesn't hurt to have one non-profit pay another non-profit to pay the city and county and school district, but I can't imagine the Madison Community Foundation will charge ICAP much more than that.

The thrift store promoters continue to press the fear of federal budget cuts as a reason to support the thrift store and "lessen ICAP's dependence on governmental support." Since that fear of federal budget cuts is generated mostly by the government-crashing politics of Kristi Noem, Mike Rounds, and the GOP, I assume this fear will also motivate everyone supporting the thrift store to vote for Rick Weiland and Corinna Robinson this fall.

In a discussion here in early July, local reader DB, responding sarcastically to comments questioning Madison's commitment to desirable economic development, contended that the thrift store can meet a currently unfilled role in boosting the local economy by recycling otherwise economically valueless goods locally:

Yeah, we have no need for a thrift store. Don't mind the Goodwill Truck shipping thousands of dollars of items out of the city every quarter(it will be in town in the next week), not to mention the overflowing bins located on main, near Nicky's, and near El Vaquero. Let's just keep letting that slip away while someone will fully fund a venture by taking worthless taxpayer assets and turning it into something good. It's a need that can't be filled by one of the many consignment shops in town [DB, comment, Madville Times, 2014.07.09].

I have mixed feelings about that comment. On the one hand, I appreciate the notion of increased recycling and local self-sufficiency. But don't we already meet that need with rummage sales? And should we really let ourselves get into the mindset of thinking of donations to Goodwill and other state and national non-profits as losses to our community? If we must think in economic bottom-line terms, we could argue that the system of rummage sales and current donation exports is more efficient for the local economy. At rummage sales, the owners set up a few tables in their garages and yards for a day or two. The free market quickly sorts the usable treasures from the junk no one wants. The owners strike their tables, leaving no sale infrastructure or overhead. They dump the remaining items in the donation bins, which are emptied by out-of-town interests, leaving Madison with no lingering useless inventory—and remember, from a strict economic perspective, static inventory is a cost.

The thrift store will shift that inventory from basements and closets to a new downtown store. It will shift some of the economic benefit from individual rummage sale profits to a few ongoing salaries and support for charity. But the thrift store will establish new ongoing overhead, and it will reduce the economic benefit of outside agencies removing our junk at no local cost.

Of course, these costs and benefits are all pretty marginal. Remember, Madison is spending $650,000 to turn an empty lot into a secondhand store, a venue with slightly more draw but the same basic mission as the city recycling station on Southwest 7th.

Send your cash contributions for the Encore Family Store to the Madison Community Foundation, 820 N. Washington Ave., Madison, SD 57042

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Sen. Larry Tidemann (R-7/Brookings): "Nothing to see here..."

Sen. Larry Tidemann (R-7/Brookings): "Nothing to see here..."

Senator Larry Tidemann (R-7/Brookings) says the Government Operations and Audit Committee's probe of financial misconduct in the Governor's Office of Economic Develoment and the EB-5 visa investment program are pretty much over.

Over? I didn't even notice that they'd begun.

Michael Larson describes Tidemann and GOAC as rookie cops telling us there's nothing to see here. Rep. Kathy Tyler (D-4/Big Stone City) reminds us there's plenty to see, like...

That's not an exhaustive list of topics related to the Governor's Office of Economic Development and the EB-5 program that legislators of good conscience thought they were directing Chairman Tidemann and GOAC to address. But it's a good starting list of the symptoms of the culture of corruption in Pierre. Chairman Tidemann and his Republican colleagues have ignored this list of symptoms, put their stethoscope to GOED's big toe, declared the patient healthy, and gone golfing.

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Before being ruled out of order for asking questions Republicans don't want asked, Rep. Susan Wismer (D-1/Britton) told the Government Operations and Audit Committee that she had just read an article raising grave concerns about the EB-5 visa investment program.

She couldn't remember the title (she does have a lot on her mind—Republican stonewalling and corruption, her own campaign for Governor), but I think she was referring to this Fortune article from last week:

From the law’s inception in 1990, selling potential citizenship to the rich struck many as a corruption of American ideals. “Have we no self-respect as a nation?” asked Texas congressman John Bryant on the House floor that year. “Are we so broke we have to sell our birthright?”

But that powerful objection was overcome with an even more potent counterforce: The program would generate jobs where they’re needed most. Immigrants seeking EB-5 visas must invest their half-a-million dollars in a new business that creates 10 full-time U.S. jobs in a high-unemployment or rural district [Peter Elkind, "The Dark, Disturbing World of the Visa-for-Sale Program," Fortune, 2014.07.24].

The article notes that EB-5 enjoys bipartisan support, a fact alluded to by GOED boss Pat Costello in his testimony before GOAC today. Tycoons Warren Buffett, Bill Gates, and Sheldon Adelson support a reformed and expanded version of EB-5 and are worried that Congressional gridlock will result in the expiration of EB-5 on October 1 (what? Wait a minute—suddenly, I like gridlock).

But the Fortune article sees fraud and abuse in EB-5, just as we've seen (but which GOAC and the South Dakota Republican Party refuse to see) in South Dakota:

But because the EB-5 industry is virtually unregulated, it has become a magnet for amateurs, pipe-dreamers, and charlatans, who see it as an easy way to score funding for ventures that banks would never touch. They’ve been encouraged and enabled by an array of dodgy middlemen, eager to cash in on the gold rush. Meanwhile, perhaps because wealthy foreigners are the main potential victims, U.S. authorities have seemed inattentive to abuses [Elkind, 2014.07.24].

Lack of regulation, dodgy middlemen... sound familiar?

Rep. Wismer tried to get a straight answer from GOED chief Costello on how much economic impact the EB-5 program has had in South Dakota. Costello said South Dakota doesn't have such data.

Rep. Wismer should have read Costello and the committee this part of the Fortune article, which says Uncle Sam can't show any reliable economic impact from EB-5, either:

Others who have examined the program view it very differently. They question whether it generates many jobs—especially in needy areas. A December 2013 study by the Department of Homeland Security’s inspector general [also reported in the Madville Times, 2013.12.13] found that the government “cannot demonstrate that the program is improving the U.S. economy and creating jobs for U.S. citizens.” A February 2014 paper by the Brookings-Rockefeller Project on State and Metropolitan Innovation concluded that “knowledge of the program’s true economic impact is elusive at best.”

There are two reasons for that. First, the government is exceedingly generous in its employment tally. It gives EB-5 investors credit for all the jobs theoretically spawned by a project even when EB-5 money represents only a sliver of its financing. Second, for many mainstream ventures, EB-5 money isn’t really creating jobs—it’s merely saving developers money for projects that would be financed anyway. (Indeed, those big companies are actually “hijacking” money from worthy smaller investments in hard-hit areas, argues Michael Gibson, a financial adviser who vets EB-5 investments.) [Elkind, 2014.07.14].

In other words, EB-5 is a poorly regulated, easily abused program with no reliably demonstrable economic benefits. But given the bullying and stonewalling the Republicans on the Government Operations and Audit Committee displayed today, you won't hear about that.

Why bother having legislative hearings on EB-5? Rep. Wismer, just read us that Fortune article... and start handing out copies on the campaign trail.

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I know better than to get my hopes up. But after mostly idle chatter on the topic at the last couple meetings, the Legislature's Government Operations and Audit Committee will hear from not just one but two state officials tomorrow on the topic of financial misconduct in the Governor's Office of Economic Development related to the EB-5 scandal.

Pat Costello, current GOED commissioner, is on the agenda for Tuesday's 9 a.m. GOAC meeting. GOAC has summoned him to follow up on the discussion of what GOED is doing to make sure folks don't double-bill their plane tickets or claim other questionable reimbursements.

But first, they'll hear from the potential man of the hour, Attorney General Marty Jackley, who sends this note to the press today:

Tomorrow July 29th at 9:00 am, Attorney General Jackley will address the South Dakota Government Operations and Audit Committee of the Legislature regarding the Attorney General's investigation into potential financial misconduct at GOED. The hearing will be held at the State Capitol Building room #413 [South Dakota Attorney General's office, press release, 2014.07.28].

In a subsequent note to reporters, the AG's office says Jackley intends to "address matters that are outside of legal advice in open session." In other words, we may actually get some interesting comments from the state's top investigator on what's happening with the GOED/EB-5 investigation.

Chairman Tidemann, Rep. Wismer, members of GOAC, tomorrow's your chance to ask some really good questions to help South Dakota understand what happened with EB-5 money and to assure the voters that their elected officials are doing everything in their power to identify, prosecute, and prevent corruption in state government.

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Deadwood makes the New York Times... for being confused:

This old Western town of gunfights and gambling is going through an identity crisis.

...“It feels more modern, a little bit more Vegas style,” said Russell Lehmbeck, 43, a tourist from Wyoming who complained that Deadwood seemed confused about what it wanted to be. “It used to feel like I could get on a horse and ride down the road and no one would say a thing” [Steven Yaccino, "As Gold and Gambling Lose Their Luster, Deadwood Seeks a Spark," New York Times, 2014.07.10].

As we discussed in February, this identity crisis is motivated in part by the decline of gambling. It's not the smoking ban draining Deadwood's casinos; it's competition from 48 states that have legalized gambling in some form. Deadwood thus continues its civic conversations about how to retool its downtown and its community brand.

I still say build the outdoor-recreation brand. Get more hikers, bikers (the pedal kind), climbers, and skiers. Pitch the natural beauty that surrounds Deadwood... and make sure Wharf and the other miners don't take away any more of the mountaintops on which Deadwood should base its brand.

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I've heard this bit of Madison lore in a couple of permutations. Back in the 1960s, a contractor on a new project was planning to pay his workers wages higher than the local going rate. One of the city fathers (has Madison ever had a "city mother", a powerful woman going around and laying down the law?) went to the contractor and told him he couldn't do that. Pay your workers more, said the concerned civic leader, and everybody else will have to pay their workers more to compete. And heaven knows Madison doesn't want competition.

This story jumps to mind as I read Aaron Renn, who asks whether cities really want economic development and the change inherent in growth:

economic struggle can be a cultural unifier in a community that people tacitly want to hold onto in order to preserve civic cohesion.

Jane Jacobs took it even further. As she noted in The Economy of Cities, “Economic development, whenever and wherever it occurs, is profoundly subversive of the status quo.” And it isn’t hard to figure out that even in cities and states with serious problems, many people inside the system are benefiting from the status quo.

They have political power, an inside track on government contracts, a nice gig at a civic organization or nonprofit, and so on. All of these people, who are disproportionately in the power broker class of most places, potentially stand to lose if economic decline is reversed. That’s not to say they are evil, but they all have an interest to protect [Aaron Renn, "Do Cities Really Want Economic Development?Governing, July 2014].

Replace cities with South Dakota (o.k., and do with does and want with wants). Does South Dakota really want a huge class of well-paid workers who are not bound by local history or state assistance? Does South Dakota really want to invite a creative class that might revitalize local economies but would also include a bunch of people who don't look or pray or vote the way everyone else does? Does South Dakota really want to build an education system that guides students to become something other than cogs in a managerial machine and an economy that invites those independent thinkers to stay and thrive?

It seems nuts that a community of any size would throttle economic development and hold back its own general welfare. But combine concentrated power with an identity built on struggle (oh, life on the prairie is so hard, we're just barely hanging on, just like our homesteading ancestors...), and you can get a community that chooses a plodding status quo over dynamic growth.

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