As anger at Grand Forks leaders crests, Fufeng forces normally low-profile EDC into spotlight

GRAND FORKS — After more than a year of blistering debate, Fufeng Group’s plans for a Grand Forks corn-milling plant are no more — crushed by cresting skepticism of China from local residents, North Dakota’s senators and, finally, the U.S. Air Force.

All that’s left now is the blowback.

In a stream of anger and frustration, and emboldened by a sense of vindication, Grand Forks residents opposed to the project are questioning the process that won Fufeng’s bid for a new facility. They are mad at City Hall . They are notably angry at City Council President Dana Sande, who is facing a recall petition .

Much of their anger is aimed at a group that has done some of its most important business with little public scrutiny: the Grand Forks Region Economic Development Corporation. For more than three decades, the group has helped bring big business to Grand Forks — including Fufeng Group — to shepherd the community toward a bigger and better economy.

But after this latest project, its critics see it as the source of an ill-fated venture, or even as a “special interest group” that’s become uncomfortably intertwined with the same city leadership that backed Fufeng.

“(The EDC’s) goals are understandable but not what the vast majority of citizens want,” Grand Forks resident Betsy Perkins wrote in a recent Herald letter to the editor. “Ordinary people will tell you that growing the population and subsidizing corn factories won’t do anything for them. The citizens are more concerned about mundane things — better wages, affordable day care and homes.”

It’s unclear how many of Perkins’ neighbors feel the same. Despite a push for a vote on the Fufeng project — backed by a petition with nearly 5,000 valid signatures — there was never any scientific accounting of support or opposition. City leaders are quick to downplay their number of critics, which some argue is a small group that does not represent the way Grand Forks really feels.

“I think there is a small group of people that are very noisy, that were angry, that were anti-China, that were anti-fossil fuels, that were anti-corn-mill-in-their-backyard that managed to persuade others to get on board,” Council President Sande said. “Overwhelmingly I hear from people telling me that the city did things the right way.”

But a parade of anger is underway nearly every City Council meeting, as residents take aim at leaders they feel have cast their concerns aside. City Council member Ken Vein said the aftermath reminds him of moving on after a natural disaster — and, as city engineer during the late 1990s, he’d certainly know.

It’s “totally different” than the historic flood, he notes. But a big event has stormed through town, and now it’s time to move ahead.

“I’d like to do an after-action type of study. What worked well? What didn’t work well? What were the issues that ended up being the biggest issues?” he said. “I think if we go through this and don’t step back and try and learn from it … then I don’t think I’ve done my job.”

Eric Hylden/Grand Forks Herald

The vast majority of the EDC is jointly funded by the city, the county and the business community. Its purpose is simple: to recruit big business investment in the Grand Forks area. Some of its attempts at new business never break ground, but among its successes — or at least, aided by its support — are LM Wind Power, the Grand Sky UAS business park and more.

The group was founded in the late 1980s, replacing the Grand Forks Development Foundation as the city pivoted toward a more intensive focus on development. Herald archives show that, in 1987, voters passed a sales tax hike in 1987 to support business growth, the city planned a “growth fund” and the EDC hired staff.

Its first annual budget was reportedly just $200,000 — with $65,000 from the city of Grand Forks, $35,000 from the county, and the rest coming from “private sources,” the Herald reported at the time.

Its first president was William Argo, an aerospace engineer turned consultant. At the press conference announcing his hiring, Argo acknowledged that Grand Forks was running behind other communities — but it wouldn’t for long, he promised.

"We're going to catch up in a hurry," Argo told reporters. "We're going to hit the ground running."

Mike Maidenberg, the former publisher of the Grand Forks Herald — and an early pioneer of the EDC — recalls those days clearly. The community needed an institution that would go out and bring back big business and grow the community.

“There were many models for that. We formed that, raised the funds for it, hired a professional staff, and that was the genesis of the development corporation,” the now-retired publisher recalled in a phone interview from California.

In the years since its inception, the EDC has had a string of successes. It’s also helped bring less obviously successful deals to town — like the currently closed Red River Biorefinery, which has been bedeviled by environmental, technical and legal issues (Keith Lund, the EDC’s president and CEO, said that he hopes to see the biorefinery open its doors again soon).

Today, the EDC has an annual budget of more than $1 million, Lund said — with Grand Forks County providing $250,000, the city of Grand Forks paying about $325,000 and the “private sector” backing roughly $460,000. The group employs one roughly quarter-time worker and six full-time employees (soon to be seven).

The roughly 140 member organizations vary widely — among the largest are Alerus Financial, Xcel Energy, Altru Health System and Bremer Bank. A full list is available on the EDC’s website, at GrandForks.org .

The EDC’s board has 10 voting members, including County Commissioner David Engen and Grand Forks Mayor Brandon Bochenski, as well as eight non-voting “ex-officio” members who come from all over the community — like Grand Forks Air Force Base commander Col. Timothy Curry, Grand Forks Public Schools Superintendent Terry Brenner and Grand Forks Regional Airport Authority chief Ryan Riesinger.

Lund said officials will recuse themselves from weighing in on projects before the EDC if there are business conflicts; he said he’s never seen a mayor or county commissioner recuse themselves because a project will appear before their branch of government in the future.

“The EDC and all the partners that we bring to the table on a monthly basis are working in the common interest, not in a conflict of interest,” Lund said.

Multiple officials connected to the EDC pointed out that city and county officials’ roles on the EDC help them oversee tax dollars spent on its operations.

Meetings take place at 7:30 a.m. on the first Thursday of each month, currently in the former Herald building that’s now owned by the City of Grand Forks. The meetings are open to the public, EDC Board Chairman John Oncken said — though the room might be crowded, and portions of those meetings can be closed for confidentiality purposes, much like other public boards.

Fufeng came to Grand Forks after a broad search, which a top Fufeng USA official said spanned five states. But when city leaders first revealed the Fufeng deal, they piqued the community’s interest. As Lund noted at the time, it was the “largest single private capital investment in the region’s history.”

“The (North Dakota Department of Commerce) issued what they call a request for proposals, and for communities to respond if there was an opportunity that they felt they wanted to pursue,” Lund said. “And we took the lead in preparing that response, initially, and that resulted in the first (Fufeng) site visit (to Grand Forks).”

Deals like these, Lund said, are often kept private for business confidentiality purposes before transitioning into the public eye when it’s time for something like permitting, or a public loan, or some other process that requires public scrutiny. That followed for Fufeng in late 2021.

But after its public debut, a storm of public questions soon gathered. What were the ethics of a business relationship with China? How close was the company’s relationship with the Chinese government? And what were the risks of building a China-linked facility so close to Grand Forks Air Force Base?

Even after a year, the answers to the latter question remain elusive. The Air Force letter that ultimately condemned the project said it was a “significant threat to national security.” But it offered no details explaining how Air Force officials reached that conclusion.

Air Force officials declined to comment further on their reasoning in an email to the Herald this week, citing security concerns. So did Sen. John Hoeven, R-N.D., who noted in a statement to the Herald that briefing information he received was classified. He referred comments back to defense officials.

Sen. Kevin Cramer, R-N.D., who spoke with the Herald this week, appeared to tread carefully, given security and confidentiality needs, but acknowledged he had received an Air Force briefing.

“I don’t want to downplay their intelligence to just be sort of ‘We don’t like China,’” Cramer said, but argued that defense officials had more information than the Air Force memo raising concerns about Fufeng Group’s project that leaked last year.

Cramer called China “a very significant, high-tech adversary of the United States of America, and anybody who doesn’t understand that is not paying attention.”

He also criticized Grand Forks leaders who had continued backing the project, despite security concerns.

“City leaders made it way harder than it needed to be… This was not a hard thing to reject,” he said. “It just seemed to be hard for the wrong people in the wrong place at the wrong time.”

Some city leaders maintain that they did everything by the book. In their eyes, they welcomed interest from an international company and vetted that company the best a small city hall could — touring other corn mill sites , sitting for a briefing with the FBI and more. When the Air Force weighed in, they stopped the project.

“We acted swiftly and deliberately when we got (the Air Force letter),” Mayor Bochenski said. “But I would say nationally, people are seeing that the city handled itself pretty well, in going through the process, taking a deep look, allowing options and not just immediately eliminating something without looking into the details.”

Contributed/City of Grand Forks

To Oncken, who is the CEO of True North Equipment, the story of Fufeng is also one of the political ground shifting under Grand Forks’ collective feet. As it pursued a deal, U.S. relations with China deteriorated. The Fufeng project then became a victim of a national risk assessment that followed suit.

He also points out that the fallout has been noticeably uneven, with seemingly little concern about local manufacturer Cirrus Aircraft, which has Chinese government ownership (Cirrus did not respond to a request for comment).

“I think ... the EDC’s next move is to do what they do best,” Oncken said. “And that’s to collaborate, bring new opportunity to the community, work on workforce…and do what we do well.”

Much of the criticism now aimed at the EDC comes after decisions not that leaders there made, but decisions driven by City Hall — which took the reins on the project’s development during the last year.

Confidence in City Hall also suffered a blow when City Administrator Todd Feland admitted he had “the opportunity” to know about the identity of Fufeng Group earlier than he’d previously said — a sticking point for a community that had demanded who knew about the Chinese company and when. Feland expressed contrition this week, saying the complex timeline and details in the project made it hard to clearly recall, when first asked, when exactly he had first learned the company’s identity.

And, City Hall, during the last 12 months, fought a petition that opponents of the Fufeng project had circulated that would have forced facility plans to a public vote. About 5,000 Grand Forks residents signed the petition, but it ended up tangled in legal technicalities, never reaching the ballot box — a fate that has come to look more and more like the bitter debate’s point of no return.

To critics, it’s when City Hall stiff-armed public oversight. Some City Hall leaders, though, have argued that it would set bad precedent for the city to put a business arrival at the ballot box, or to settle national security questions by referendum.

It’s unclear where the community goes from here. One of the biggest recent changes came from the Herald itself: Publisher Korrie Wenzel stepped down from the EDC’s Board of Directors, in perhaps the most significant break ever between the Herald and the EDC — which has traditionally seated the publisher on its board.

Wenzel said calls for him to step away had grown louder from critics throughout the last year. While in decades past it might have been easy to answer that he’s not involved in newsroom activities, shrinking staff have placed him closer and closer to day-to-day editorial operations.

Leaving the board, Wenzel said, helps protect the Herald’s credibility with the community and quiets questions about who newspaper leadership is hobnobbing with. And, he concedes, it’s a decision he probably should have made sooner.

“After a while, I just realized, they’re right,” he said of critics of the paper, though he stressed that he means they are right about the appearance of impropriety — not that the Herald’s coverage was unduly influenced by city leaders. “I don’t have any problem saying it. They’re right. So why stay on the board?”

There is also the open question of Council President Sande’s recall, which will help gauge the strength of the political blowback against city leaders.

There is, across Grand Forks, a sense that some people are angry. There’s a healthy debate about how many, to be sure, but it’s difficult to deny that the city has critics. How will it handle them?

At the EDC, there’s a commitment to looking for more big business — and a vow that it has nothing to hide.

“I think we are pretty open about everything that takes place on a regular basis,” EDC Board Chairman Oncken said. “...There’s no special cloud, there’s no curtain with the Wizard of Oz behind it, that we’re pulling levers without people seeing it. I don’t believe that has ever been the course at the EDC or the Chamber or anything.

“I think it’s a very open forum,” he added. “And I think it’s a great conduit for business owners, for government and community to talk.”

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Editor’s note: Korrie Wenzel, the Herald’s publisher and executive editor, assigned this story, but recused himself from the editing process. Before publication, this story was reviewed by Herald Managing Editor Sydney Mook.