Our view: Better vetting of call center needed

Insider politics? Maybe. But the story of a call center on the Iron Range that worked exclusively to get Democrats elected - including President Barack Obama - came off as more of a cautionary tale for government entities entrusted with responsibly investing the public’s money than any “gotcha” scandal.
The Star Tribune laid out the facts over the weekend, how Meyer Associates moved from Brainerd to Eveleth in 2006; how the company leveraged the promise of jobs for the Iron Range to land loans totaling $625,000 from the Iron Range Resources and Rehabilitation Board, a state agency; how the company hit on hard times, closed, was forgiven for $250,000 it still owed; and then, finally, how one of its executives bought back the company’s equipment from the IRRRB for $50,000 and reopened.
So we have a call center whose largest client is a group called Dollars for Democrats. And we have a state agency loaning it money that, by law, has to be run primarily by lawmakers representing the area, meaning, on the Range, DFL lawmakers.
The reporter from Minneapolis had little trouble, no doubt, finding a Republican to call the situation “outrageous” and “shameless.”
But was it?
The IRRRB’s primary purpose is creating jobs on the Iron Range, specifically employment and economic development not related to mining. The idea is that when the mines are depleted someday, there’ll still be something there.
So a business comes along, this Meyer Associates, looking for some help to get established. And it’s a call center business, too, an endeavor with a proven record of success on the Range, which already is home to call centers for Delta Air Lines, Blue Cross Blue Shield and DeCare Dental. Why wouldn’t the IRRRB step up to try to help? That’s what it does. That’s what it’s there for.
And, “so what” if the company makes calls mostly for Democrats, as former state Rep. Tom Rukavina, a DFLer who served on the IRRRB board, asked in the story? Did that really matter? No evidence has been brought forth to suggest Meyer Associates wouldn’t call for Republican causes, too, if hired to do so. Neither has any evidence been presented publicly to suggest the IRRRB ever has refused to help a right-friendly business.
“We didn’t care if they called for someone’s teeth or called for someone’s wallet,” Rukavina said. “All I (cared) about (was whether) the wages were decent. I would have given money to the Communist Party if they brought 100 jobs.”
Rukavina may have been exaggerating, but his point was well-made.
Actually, he made two points, the second one undoubtedly inadvertent. In its zeal to attract a new business and jobs to the Iron Range, the IRRRB clearly didn’t do as good a job as it could have vetting Meyer Associates’ chances of success and of using the public’s money to accomplish public good. The IRRRB is funded mostly with taconite taxes that stay home rather than going to the state.
The IRRRB even more clearly didn’t require enough collateral. With cellphones replacing land lines and fundraising moving mostly online, the call center struggled and closed last year. Its computer equipment, its collateral, was valued at only $50,000, a fifth of what the company still owed. Perhaps the IRRRB was a bit too quick, too, to forgive that outstanding debt.
But the argument can be made, too, that the IRRRB isn’t a bank and that its support of Meyer Associates was in line with help the agency offers any jobs-producing business in need.
To the IRRRB’s credit, its loans to Meyer Associates appear to be an anomaly. Since 2005, only nine of 91 business loans the IRRRB has made - about $1 million out of
$109 million - have gone bad, the Star Tribune found. According to economic development experts, that’s actually a very low loss rate.
Under a new name, the call center still is operating today. And it’s still employing about 100 Iron Rangers. That’s the very good news. And that’s precisely what it’s all about for the IRRRB - even if it could have been a bit more responsible with the public’s money in this instance.