Empty feeling: Howard center marks effort to revitalize
HOWARD -- In the mid-1990s, the small town of Howard was in big trouble.
"We were dying," said Pat Maroney, a Howard native, resident and business owner. "All you had to do was stick up a tombstone and it would have been over."
In each decade between 1950 and 1990, Howard's population suffered declines of 1 to 3 percent. By 1990, the town's population was 1,156 people, nearly an 8 percent drop from 40 years earlier.
"We needed to try and resurrect it," Maroney said. In 1996, a group of Howard High School students, worried their town was fading away, devised and sent out 1,000 surveys to registered voters in Miner County. Led by Randy Parry, who was first a teacher and then the school's rural resource director, the students hoped to influence residents to spend more money locally.
The next year, gross sales in Miner County soared from $37.9 million to $53.6 million -- a 41 percent increase.
Inspired by the apparent success of the students' efforts, Parry left Howard High School in 1998 and formed Miner County Community Revitalization, a nonprofit organization dedicated to rural economic development.
MCCR gained momentum, funding and a national reputation as an example for other rural development groups to follow. Eventually, MCCR became the Rural Learning Center, a place for rural developers from around the country to learn what had worked in Miner County. And out of the Rural Learning Center came Maroney Commons, a state-of-the-art $6.5 million hotel, restaurant and conference center in downtown Howard designed as a place for "leaders from small towns to design and build 21st Century rural communities," according to the facility's website.
Through it all, as MCCR and the RLC and then Maroney Commons took off, the story of the 1996 experiment by Parry and Howard's high school students was told again and again. It formed a foundation for a veritable cottage industry built around rural development successes achieved in Howard and Miner County.
"A movement of change is rolling across the landscape as many rural communities pioneer a new future," the RLC's website boasts. "Rural is taking on an exciting new meaning. Small communities are coming alive with big ideas. People are connecting to each other and to a world of opportunity. Renewed hope is the driving force. And nobody knows it better than the people of Miner County, South Dakota."
But there was a problem: The reality of life in Howard and Miner County didn't quite match the rhetoric.
After that economic jolt in 1997 often attributed to the high school survey led by Parry, Miner County's taxable sales were erratic. They fell 18 percent in 1998; rose 20 percent in 1999; rose 29 percent in 2000; fell 22 percent in 2001; and fell 7 percent in 2002 to $48.5 million -- 27 percent higher than they were the year of the 1996 survey, but 11 percent lower than in 1997.
Meanwhile, Miner County's population was shrinking at an accelerating pace. Between 2000 and 2010, while the RLC's fortunes were rising, Miner County's population was plummeting. In those 10 years, the county suffered a population decline of 17.2 percent -- the second-worst trend among South Dakota's 66 counties. Only Campbell County in northern South Dakota had a worse decline of 17.7 percent.
Enrollment in the Howard School District was also shrinking. It fell from 619 students in 1995 to 529 in 2000, nearly a 15 percent drop. Between 2000 and 2010, enrollment fell another 28 percent to 381 students.
Perhaps it should not have been a surprise, then, that only a year after the $6.5 million Maroney Commons opened to great fanfare, with the leaders of the RLC singing its praises, it closed. Several of those leaders, including Parry, no longer work for the RLC and either failed to return messages from The Daily Republic or refused to talk about the situation.
The empty building has left community members with an empty feeling. They're slow to criticize, but quick to grieve.
"A lot of us felt a lot of disappointment," said Marcia Sherman, business manager for the Howard School District.
Jill Wunder is co-owner of Higher Grounds Coffee Co., which is located on Howard's Main Street less than half a block from Maroney Commons.
"It's sad to see," she said. "Kudos to them for trying."
Business at Higher Grounds slowed after the opening of Maroney Commons, which included a restaurant, and has picked up since it closed, she said. And yet Wunder hopes to see Maroney Commons open again.
"We need new business ideas," she said. "Too many people are afraid to step out and try something new."
Jerry Johnson, owner of Rafferty Robbins, which is a pharmacy located on Howard's Main Street across from Maroney Commons, is also disappointed with Maroney Commons' demise.
"It's a shame," he said. "It's just too bad that it couldn't get recognized a little quicker or marketed a little more."
Johnson supports any effort to promote the businesses in Howard.
"Without any action at all, I don't know if there would even be a town anymore," he said.
The closing of Maroney Commons brought to a crashing halt a movement that had seemed unstoppable since it began with that 1996 student survey.
In 2001, MCCR and its grassroots origin story attracted attention from the Northwest Area Foundation, a St. Paul, Minn.-based organization that supports economic development groups in Minnesota, Iowa, North Dakota, South Dakota, Montana, Idaho, Oregon and Washington. That year, the foundation awarded MCCR $5.8 million over 10 years to be used to continue development in Miner County.
MCCR's story spread rapidly. Parry sent out hundreds of copies of his students' study to other economic development groups, and the story was even told by a national news program.
"It was the poster child for a while," Maroney said. Maroney joined MCCR's board of directors in the late-1990s and has been involved ever since. Maroney Commons was named for him because of gifts he pledged to the facility.
Jim Beddow, 70, of Sioux Falls, is a former president of Dakota Wesleyan University in Mitchell and was the 1994 Democratic gubernatorial candidate. He became involved in rural development in the 1980s while still DWU president.
"We were a strong, regional school at Dakota Wesleyan," he said in an interview in September with The Daily Republic. "So, having a viable region was valuable."
After leaving DWU, Beddow met Parry in 2002.
"They developed this entrepreneurial, outside-the-box approach," Beddow said of MCCR.
Together, Parry and Beddow came up with the idea to start another organization to complement and expand the work MCCR was doing in Miner County.
"We felt that no entity was really giving full attention to small communities," Beddow said.
The Rural Learning Center was born. Beddow became director of the RLC and Parry remained as head of MCCR.
On its website, the RLC is described as "a platform for rural people to discover, teach, share and reimagine -- together."
"I felt there was a place nationally for the Rural Learning Center to play a role," Beddow said.
Following the formation of the RLC, Howard experienced a surge of economic development.
In October 2003, Dakota Beef Company LLC announced plans to open an organic beef processing plant in Howard. At the time, it was estimated the plant could employ as many as 40 people.
The plant was run inside the building of a former beef plant that closed in the 1990s.
In July 2006, Knight & Carver Wind Group Inc., a wind turbine company, announced it would add to the growing industrial park on the west side of Howard by building a 26,000-square-foot wind blade repair and manufacturing plant expected to eventually employ more than 40 people.
A few years earlier, MCCR led an effort to install two wind turbines in Howard with hopes of attracting wind energy companies. Knight & Carver was given incentives by the state and MCCR that allowed the company to lease the plant with the option to eventually buy the facility and expand.
"Those guys in Howard are very aggressive," Gary Kanaby, manager of the Knight & Carver Wind Blade Division, was quoted as saying in a 2006 Daily Republic story. "They made us some proposals that we couldn't beat."
The August 2006 groundbreaking for the Knight & Carver plant was attended by about 50 people, including then-Gov. Mike Rounds.
"This is a great example of what happens when you start making long-term plans," Rounds said at the ceremony.
It was the fifth groundbreaking in Howard's industrial park in five years. Though businesses seemed drawn to Howard, the town's population still fell. Between 1990 and 2010, Howard's population declined from 1,156 people to 858, a drop of nearly 26 percent. "That's really not a surprise," Beddow said. "When we started tracking data in 2000, Miner County was one of the oldest counties in the state." According to the 2000 census, 24 percent of Miner County's population was 65 years or older. In the 2010 census, that figure declined to 22 percent. "The numbers are down, but it's much more vibrant," Beddow said. In 2003, gross sales in Miner County were $62 million. Sales in the county grew every year until reaching $126.8 million in 2008 -- a 104 percent increase in five years. "Sales tax had a tremendous growth in the 2000s," Beddow said. "Fewer people, stronger economy. "
In December 2008, the RLC, which by then had absorbed MCCR to form one organization, announced plans to expand by building a multimillion-dollar facility in Howard.
As early as 2002, Parry and Beddow had talked about building "a gathering place" for rural development, Beddow said.
"It was a longstanding part of the vision," Beddow said.
That expansion plan eventually led to the creation of Maroney Commons -- a 24-room hotel, restaurant and fitness center, with classrooms intended to be used for community and workforce development training programs and conference space.
Maroney Commons was built with a commercial scale wind-turbine, photovoltaic solar panels, geothermal heating and a thermal solar water-heating system. The building also collects rainwater and snowmelt, which is used in its bathrooms. It has a green roof with a garden of native prairie flowers and grasses planted in 30 inches of soil, which helps cool the building and collect rainwater runoff.
The facility was built on the site of Howard's former Legion Hall, and many of the materials from that building were recycled and used in the construction of Maroney Commons.
The building is certified LEED Platinum by the U.S. Green Building Council. LEED stands for Leadership in Energy and Environmental Design, and platinum is the top rank given for environmental performance and energy efficiency.
The total cost: $6.5 million.
Local voters approved the vacating of portions of an alley and a street for the project in August 2009. Ground was broken on the project the following month.
The facility was largely funded through loans, including a $3.2 million loan awarded by the federal government's USDA Rural Development Program. Up to 90 percent of that money, which is actually loaned by Miner County Bank, is guaranteed by the federal government.
Additional funding for the project included a $1.04 million economic development loan through Heartland Consumer's Power District, which was funded with a USDA Rural Economic Development Loan in the amount of $740,000 and a grant of $300,000. That money came out of USDA Rural Development's regular funding directed to South Dakota.
Also included in the financing package was $100,000 from Grow South Dakota's revolving loan fund, $150,000 from the Northeast South Dakota Economic Corp., and equity from the Rural Learning Center and numerous other investors.
In all, 30-plus organizations and individuals contributed to get the building constructed. The lenders who are stuck with the debt are now trying to sell the building.
The facility is named for Pat Maroney, who pledged $1 million would be left to Maroney Commons upon his death. In addition, Maroney bought $125,000 in stock in the facility, donated $10,000 for a room in the facility and donated a lot on the south side of the building worth $3,500.
He also sold his family's bar, which is located right next to Maroney Commons, to the RLC.
'A major hit'
As Maroney Commons went up, two major businesses in Howard went down.
Dakota Beef consolidated its beef-processing operation with another company in February 2010 and moved out of Howard. The company leased the Howard plant to another beef-processing company, Noah's Ark, of Dawson, Minn., that operated with 15 to 20 workers, or about half of Dakota Beef's workforce.
In May 2010, Knight & Carver laid off 16 of the 55 employees at its Howard wind turbine plant.
"It's not a sign of things to come," Parry said in a May 8, 2010, story in The Daily Republic. "That would be as if we were saying, 'We lost,' and we're not going to ever say we lost."
Just two months later, the Knight & Carver plant shut down completely. In January 2011, Noah's Ark also left Howard's beef plant.
The recession, Beddow said, is to blame for the loss of the businesses.
"It took two key businesses," he said. "It was a major hit."
After climbing for seven consecutive years, gross sales in Miner County fell nearly 21 percent from 2008 to 2009.
Despite the setbacks, the RLC continued construction of Maroney Commons.
In January 2011, Parry stepped down as president of the RLC at the age of 63. According to the RLC's public filings with the Internal Revenue Service, Parry was paid $95,321 in 2008 and $83,329 in 2009. In 2010, he was listed as a past president and paid $98,457.
Parry was replaced by Montrose native Joe Bartmann, who had been the RLC's vice president of community housing.
"I was drawn to Miner County by their really powerful story of a community coming together to reinvent itself," Bartmann said in an interview in November with The Daily Republic.
Bartmann, 35, describes himself as a "rural guy."
"I've never lived anywhere but small towns," he said. "It's part of my spiritual geography."
When asked about the RLC, which he ran during part of the construction of Maroney Commons, Bartmann refused to speak about it. His departure came before Maroney Commons' closure was announced, and he now helps run Rural Weaver LLC, a rural development company he said "helps communities, organizations and businesses design change processes and host conversations that are sometimes hard to talk about."
'A huge day'
After 14 months of construction, Maroney Commons officially opened Aug. 18, 2011.
More than 500 people gathered on Howard's Main Street that day to celebrate the event. Among them were Parry, Beddow, Bartmann, Howard Mayor Andrew Dold and U.S. Sen. Tim Johnson, D-S.D.
"What a huge day for rural America," Bartmann told the crowd.
Dold proclaimed Aug. 18 as Rural Learning Center Day.
The RLC had been awarded at least $99,900 in stimulus money as a result of the American Recovery and Reinvestment Act, and Johnson hailed the completion of the project as a success for rural development.
"For those who say the stimulus hasn't worked, I tell them they need to pay a visit to Howard, South Dakota, and see the Rural Learning Center," Johnson said in a speech to the crowd.
Johnson secured hundreds of thousands of dollars in federal earmarks to support the RLC. They included one for $450,000 in 2003 to support the construction of the RLC and another in 2005 in support of the organization, according to a news release his office issued in December 2011 after Maroney Commons was awarded a 2011 National Smart Growth Award from the U.S. Environmental Protection Agency.
A plan to utilize the building's training facilities to generate revenue had been put in place about a year before the opening when the RLC signed a five-year agreement with a California-based wind industry company, Airstreams Renewable Inc., to host wind-energy workforce training at Maroney Commons.
But in August, Miner County Development Corp., a corporation created by the RLC as a for-profit partner in 2003 to own and operate Maroney Commons, announced the facility would be shut down Sept. 3 for financial reasons, barely a year after it opened.
Randy Parry did not respond to numerous Daily Republic messages left on his cell phone and home phone during the weeks leading up to the publication of this story. That, paired with his successor Joe Bartmann's refusal to talk about the RLC, makes the reasons for Maroney Commons' failure somewhat difficult to ascertain.
Kathy Callies was acting president of the RLC when it was announced Maroney Commons was closing, having taken over shortly after Bartmann left the RLC in November 2011.
Maroney Commons anticipated more windindustry training programs would be created, Callies said in an Aug. 29 interview with The Daily Republic, but those never came to fruition.
Training programs were expected to bring in as much as one-third of Maroney Commons' annual revenue, an amount in six figures. The lost revenue, coupled with the start-up and operating costs of the facility, led to the decision to shut it down.
Airstreams Renewable backed away from the training programs when Congress left the wind industry's federal production tax credit at risk of expiring at the end of this year.
The production tax credit provides wind industry developers with incentives and funding that encourage growth in the industry. It pays developers 2.2 cents per kilowatt-hour, which can account for nearly onethird of the funding for an aver age wind energy project.
"When the recession came the wind industry just stopped," Beddow said.
The remainder of the revenue was expected to come from the restaurant, bar and hotel, as well as from hosting local events, such as conferences, reunions or weddings, Callies said.
Sitting in her office Aug. 29 in the RLC's building, located across the street from Maroney Commons, tears welled in Callies' eyes as she explained the immediate impact of the closure -- 17 people employed at Maroney Commons would lose their jobs.
"You always look backward and second-guess and think what you might have done ..." Callies said. "You can only look backward so much. You just have to put your energy into moving forward, and that has really always been the story with this."
Callies resigned from the RLC in October. Calls made this month to Callies by The Daily Republic were not returned.
Beddow believes Maroney Commons could have succeeded under better circumstances.
"It was a very legitimate vision and a legitimate concept," he said. "You've got to have great marketing and great operation whether you're in Sioux Falls or you're in Howard. I'm not sure they did well on the marketing."
Beddow still works as a consultant with the RLC, but he works exclusively on two grants he wrote in 2009 -- one to develop rural housing and another to recruit new teachers for rural schools.
Sen. Johnson said it's important to keep trying to create job growth and economic development in rural areas.
"If I knew then what I know now, obviously I wouldn't invest money in it," Johnson said of Maroney Commons. "The trick is to not risk money but not be too conservative that you never have a loss."
Pat Maroney blames the failure on managerial mistakes, poor marketing and the recession.
"It was too one-dimensional," he said, referencing Maroney Commons' dependence on the wind industry. In an interview Wednesday with The Daily Republic, Howard Mayor Andrew Dold said the project may have been "doomed from the beginning." "It was a lot of little things that led to the big thing," he said of the many factors that led to the closure. The RLC may have counted its successes too quickly when it decided to build Maroney Commons, Maroney said.
"But I was comfortable with it," he said. "And so were the other people who came on board."
The future of Maroney Commons is now in the hands of the lenders who funded the project. Dave Callies, executive vice president of Miner County Bank (and not a blood relative of former RLC employee Kathy Callies), said it will be a slow process determining what will be done with the building.
"It does get frustrating," he said. "It's part of being in a small town. You have to work together to try to resolve things."
Privacy laws prevent Callies from releasing any specific information about the loans used to build Maroney Commons, he said, but he did say the lenders are putting the facility in a position to be marketed to potential buyers.
"If somebody wanted to come in and buy it at an acceptable price today, we could make it happen," he said.
'A badge of honor'
With the loans used to finance Maroney Commons now in default, Maroney said the future of Maroney Commons and the RLC itself are uncertain. With the project's lead money lenders now in charge, Maroney himself remains optimistic the facility will open again.
"I'm not going to give up thinking positive," he said. "I still think there's promise for this building. At least I hope so."
If it ever is reopened, operational changes are needed to make it successful, Maroney said.
"I think we have to make sure we hire an experienced, qualified manager that can handle the situation," he said. "Put that in bold capital letters."
When asked who was to blame for prior management failures, Maroney said he didn't want to engage in finger-pointing but said the restaurant and hotel management at Maroney Commons had been a problem.
The $1 million that Maroney pledged to the project is still in his trust fund. His family's bar, which he had agreed to sell to the RLC, was returned to him after Maroney Commons closed.
"It's very sad that this thing has gotten to the point where it's at," he said. "If these small communities give up, well, there is no hope for them."
Bryan Hisel is the executive director of both the Mitchell Area Chamber of Commerce and Mitchell Area Development Corp. The struggle against depopulation and economic decline faced in Miner County is one faced in small towns across South Dakota, he said. Attempting to instill an "entrepreneurial spirit" into a community and build locally, Hisel said, is essential to the survival of small towns.
"It doesn't always work all the time, every day, but you need multiple strategies," he said.
Maroney Commons, whether it succeeds or not, should be seen as an attempt to bring people to Howard and revitalize the area, Hisel said.
"The other option is to do nothing. Some communities have accidentally chosen that."
Economic developers need to be allowed to fail, according to Hisel.
"Failure is as much a part of what we do as success," he said. "People need to look at failure as a badge of honor."
After nearly two decades in the making, the town of Howard may have its own ill-gotten badge of honor -- a gleaming, energy-efficient, empty building towering above Main Street. Yet for some, hope isn't lost.
"If the spirit we've developed in Howard lives on, I think we can resurrect things and move on into a positive future," Maroney said. "It's very tough, but in my opinion, you've got to try."