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Paynesville Press - Nov. 12, 2003

Future of economic development in town to be discussed

By Michael Jacobson

Industrial park mapFor years, PayDelCo - a nonprofit corporation formed to foster economic development in Paynesville - has held an annual meeting. But this year - with the dissolution of its parent, the for-profit Paynesville Development Corporation - PayDelCo is at a crossroads and in need of new members interested in working for economic development.

The biggest project of the Paynesville Development Corpora-tion was the development of the Industrial Park in Paynesville in the 1970s. According to city records, the Industrial Park now has 21 businesses, employing 223 workers. In addition to their payrolls, these businesses pay $156,000 in property taxes per year, of which the city gets roughly a third, or $55,000.

While some companies still own empty lots for future expansion, only four lots remain for purchase in the Industrial Park.

"We shouldn't stop here," said Joe Voss, a longtime local business owner in Paynesville and former mayor who has served as president of the Paynesville Development Corporation and PayDelCo for the past 28 years. "We should keep on going for the next 25 years."

PayDelCo's annual meeting will be held at city hall on Monday, Nov. 17, at 7:30 p.m. The current board members - Voss, secretary Ron Frauenshuh, treasurer Mark Malingen, director Mel Jones, and director Al Habben - will conduct the meeting.

Its purpose, though, is to attract new members interested in helping economic development in the area. PayDelCo's finances and future prospects will be discussed.

Also needed is a new membership base. With Paynesville Development Corporation, the shareholders were the membership base, but PayDelCo does not really have one. Instituting an annual membership fee will also be discussed at the first meeting. "The more people involved, the better," said Voss.

The Paynesville Development Corporation was formed in 1959 to bring a missile contractor to Paynesville. Technically for-profit - but with most approaching it as a donation for the community, according to Voss - the corporation sold $50 shares and raised $34,250.

This money was used in 1960 to erect the current vocational building owned by the Paynesville Area School District. Its first tenant was the missile company but that lasted only 18 months. Then, after a short stint as a warehouse for Fingerhut, the building was rented to Wonderalls, a manufacturer of children's clothing.

By 1975, Wonderalls needed more space, so an effort was made to develop an Industrial Park in town. The Paynesville Development Corporation purchased 87 acres from Pete Ampe for the Industrial Park. Ampe was civic-minded, said Voss, and wanted to help economic development in Paynesville.

The cost of developing the Industrial Park - building streets, installing water and sewer - was $1.26 million. In order to get grants to help pay for this, PayDelCo was formed, as only nonprofit corporations were eligible for the federal grants.

The name PayDelCo was chosen in an attempt to relate the two corporations, which had the same officers and acted in unison. But it led to confusion, said Voss, since most people could not differentiate between the two entities.

The land was deeded to PayDelCo, the nonprofit corporation, in order to receive the grants, while the Paynesville Development Corpora-tion handled the money.

To pay for the Industrial Park, which was established in 1977, PayDelCo received a $620,000 federal grant from the Economic Development Agency and a $150,000 grant from the Great Lakes Regional Development Commission.

The city of Paynesville was left with a bill for $490,000, of which $250,000 was assessed against the lots in the Industrial Park.

The Industrial Park, with 50 lots, opened in 1979, and PayDelCo sold a number of lots in the first year, including several lots to Wonderalls, which built a new factory, now owned by MasterMark Plastics, which is the largest employer in the Industrial Park with 61 employees.

Since lot sales went in spurts and since the Paynesville Development Corporation had to continue to pay taxes and assessments, during slow times the Paynesville Development Corporation faced financial pressures, said Voss. In the 1980s, the city agreed to defer assessments on the lots until they were sold.

The board of the Paynesville Development Corporation has discussed dissolving one or the other of the corporations on and off for the past 10 to 15 years, said Voss. Sometimes heirs would inherit shares in the for-profit corporation and want to cash them.

Then, this year, with Paynesville Development Corporation in a position of liquidity, the opportunity came to dissolve the corporation, said Voss. A few of the original shareholders - who paid $50 per share in 1959 - still held their shares, but most were held by widows and business owners who bought the shares with their business.

Shareholders were paid $240 per share when the Paynesville Development Corporation dissolved this year. Some shareholders, said Voss, donated all or part of their shares to the nonprofit corporation PayDelCo, which was kept to continue to promote economic development in Paynesville.

As a nonprofit corporation, PayDelCo will continue to be able to get grants to help finance economic development in Paynesville, said Voss, and to work with the Economic Development Authority of Paynesville (EDAP), formed in the 1980s by the Paynesville Development Corporation and the Paynesville Area Chamber of Commerce. While EDAP can provide loans to businesses starting in Paynesville, a role for PayDelCo still exists, according to Voss, since a nonprofit corporation can buy and sell property more easily than the city or a government agency.

PayDelCo's current assets include about $125,000 in cash and those four lots in the Industrial Park. (It has also recently sold three other lots, leaving it with just four.)

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