HERMANTOWN — Plans to redevelop a former Superfund cleanup site took a giant leap forward Monday thanks to a $2 million infrastructure grant announced by the Minnesota Department of Employment and Economic Development.
The funds greatly increase the odds that a property formerly occupied by the Arrowhead Refinery Co. will be returned to productivity after years of sitting idle.
ADVERTISEMENT
But the state funds must be locally matched, and Chad Ronchetti, Hermantown’s economic development director, offered assurances that the city and the property’s manager, TK Diamond Inc., stand prepared to share that cost 50-50, each potentially putting up another $1 million toward the project.
Ronchetti predicts the return on investment from the development of a 35-acre business/industrial park will more than justify the project’s expense. He anticipates the installation of basic public infrastructure, including streets and utilities, could attract $80 million-$90 million in private investment and lead to the creation of 200-300 new jobs.
The project also stands to increase the value of Hermantown’s property tax base and generate additional sales tax revenues, Ronchetti noted.
Ronchetti said the site, located near the juncture of U.S. Highway 53 and the Lavaque Bypass, offers excellent access for the sort of large-scale development that could benefit not only Hermantown but the entire region.
The property is controlled by TK Diamond Inc., but Mike Koski, the firm’s CEO, could not be reached for comment late Monday afternoon.
From what he has gleaned, Ronchetti said he believes there is strong interest in redeveloping the site. However, he said he was not privy to specific details about prospective future tenants of the proposed industrial/business park.
The grant provides a five-year window for infrastructure investments to be made on the property, but Ronchetti expressed confidence the site will attract additional “top-tier” private development well before that deadline.
ADVERTISEMENT
The $2 million award announced Monday — the maximum offered statewide — speaks to the strength of the application Hermantown put forward, according to Ronchetti, who described the selection process as “super-competitive.”
“It is critical that we get our fair share of support in greater Minnesota to help us secure new business development and expansion that will create good jobs and grow our local economy," state Sen. Grant Hauschild, DFL-Hermantown, said in a news release.
“That is why I am proud of the work we did in passing a budget that included more funding for the needs of economic development in greater Minnesota," he said, "and I'm grateful that funding is coming to my home community of Hermantown because our community is ripe for growth and jobs."
TK Diamond is no stranger to putting former industrial properties to new reuse. The firm is also marketing the 270,000-square-foot Diamond Match facility and about 20 acres of surrounding land in Cloquet.
The Arrowhead Refinery recycled waste oil until the facility’s closure in the mid-1970s. The property was classified as a federal Superfund site, and a massive $40 million cleanup began in 1977.
In all, more than 1 million gallons of petroleum products were removed from the site, as well as more than 71 million tons of contaminated materials.
It was delisted as a Superfund site in 2021 and has since undergone an Alternative Urban Areawide Review to determine the types of redevelopment that could suit the remediated property.
ADVERTISEMENT
The Trust Project
