WILLMAR -- A $500,000 state economic development grant to improve a township road leading to a new dairy in rural Kandiyohi County could be in jeopardy because of a recent Minnesota attorney general's ruling.
Without the grant, more of the cost of the project will be carried by local taxpayers and developers of Meadow Star Dairy, which is to be built in St. John's Township just west of Willmar.
St. John's Township had secured the matching grant from the Department of Employment and Economic Development to build up a minimum maintenance road to 10-ton standards to handle heavy-weight traffic that will be generated during construction and operation of the 9,560-head dairy.
But because legislation prevents townships from receiving this particular DEED grant, the Kandiyohi County Board of Commissioners voted two weeks ago to serve as the conduit so that St. John's Township could access the money.
The commissioners agreed to receive the grant on the condition the township retain ownership of the two-mile stretch of road. That's where the issue gets sticky.
Under the terms of the DEED grant, the entity that receives the money must own the road.
The county and township had verbal assurances that if the county temporarily "owned" the road while it was being reconstructed by the township, it would be able to turn ownership back to the township once the road was completed.
But the attorney general's office said that if the county receives the grant, it must permanently own the road.
The commissioners said they have no desire to own another two miles of road, especially one that's being built specifically for one business.
"This ruling from the Attorney General's office may very well dead-end that funding," said Duane Hultgren, chairman of St. John's Township.
County Administrator Larry Kleindl said if the attorney general's current ruling stands, the county's agreement with the township will be nullified. The county won't proceed until the conditions of the agreement are met.
It "seems a shame to lose that money" that would create jobs and spur economic development in a rural area. "It's very frustrating."
Hultgren said the township is working with its own attorney to set up a meeting with the attorney general to see if an agreement can be worked out.
It's not an unusual request.
Counties are often the conduit for federal and state road dollars when township road and bridges are built without having to permanently own the roads.
This DEED grant is the exception. "I don't understand why," said Hultgren. "Counties have been doing this for townships for a long time."
Kleindl said he's glad the county didn't rely on a verbal agreement and included the ownership condition in the agreement. He said the county is not involved in making an appeal to the state. That action is being taken by the township.
Hultgren said DEED has been "very patient" and is holding the grant money for the township until the issue is resolved.
If the township does get the money, Hultgren said the road could be built yet this fall, before construction of the large dairy would begin.
If the township loses the grant money, the road project may be delayed until after the dairy is built. He said the township will recoup its cost because the dairy will increase the tax base, but losing the grant "isn't going to speed things up for the dairy."