'Dying communities' in small-town Minnesota find aid from federal grants

CLARKFIELD, MINN. – Thanks to federal taxpayers, the 800 or so residents of this southwest Minnesota town can look forward to the day when they won't have to tap their faucets in the winter to keep the city water tower from freezing up.

Clarkfield scored near the top this year in the annual distribution of Small Cities Development Program grants, which are given out by the U.S. Department of Housing and Urban Development (HUD) through the state to help rehabilitate housing for low- to moderate-income people, mitigate blight and slums and eradicate health and safety problems.

Clarkfield was awarded $1.1 million, one of 35 communities in greater Minnesota to get a share of $19 million distributed by the state Department of Employment and Economic Development (DEED). Individual grants are capped at $1.2 million, though they typically range from $600,000 to $800,000.

While the grants are just part of a mix of public assistance to rural communities across the state, they offer a financial boost to those struggling to hang on to residents and hoping to attract newcomers in an era when rural populations generally are declining.

Clarkfield plans to spend about half of its grant on a handful of businesses and up to 15 owner-occupied homes. The remainder will go to rehabilitate the town's water tower, which was built in 1980 when the city's population peaked at 1,171.

"Rehabilitation programs are more important than ever," said Ben Winchester, a rural development researcher with the University of Minnesota Extension office in St. Cloud.

Winchester said that while towns like Clarkfield have lost population as young people move out and the elderly die off, the number of households in many of those cities has held steady, partly because elderly, surviving spouses are staying put. But they often cannot afford to keep up the properties.

Which is where government can help, he said.

Under HUD rules, 70 percent of the Small Cities grant money must serve low- to moderate-income people, a threshold set at 80 percent of the median income in the counties where they live, said Chris Schieber, who oversees the program for DEED. The money goes to rehab privately owned homes, rental properties and commercial sites (typically retail). It's also used to spruce up streetscapes through landscaping or make other improvements such as adding matching trash cans or enhancing access for the disabled.

"We're talking about Small Town, Minnesota," Schieber said. "We try and fix up houses, fix up the downtown. We hope that people will come into town and shop, and create a business, or that the existing businesses will expand and create jobs. That's the whole goal."

A review of this year's Small Cities grants shows a variety of initiatives.

In northwest Minnesota, Winger, population 220, is getting $600,000 to spend on a new water tower, part of a $2.5 million project that also calls for new wells and removal of naturally occurring arsenic from its drinking water. The Polk County town has been in violation of the federal Primary Drinking Water standard since 2014 and depends on two failing wells for its water supply.

Winger Mayor Darrell Olson said the town needs public assistance to resolve the water problems.

"There's no way we'd be able to afford it," he said.

Several other towns plan to use their grant money on water and wastewater projects, including Kensington, Onamia, Verndale, Willow River and Winnebago.

Starbuck, at the western tip of Lake Minnewaska in Pope County, will use its grant of just over $940,000 to rehabilitate 12 owner-occupied houses, 10 commercial buildings and five rental units and improve the streetscape along Hwy. 129 in conjunction with a Minnesota Department of Transportation roadway project on the east-west corridor through town.

Lake Benton, a windswept prairie town of 680 residents in Lincoln County near the South Dakota border, built its nearly $635,000 grant around the need to preserve the housing stock and some historic properties. Possible projects include the Lake Benton Opera House, built in 1896 and operating as a performing arts center; National Citizens Bank, built in 1900 and now housing an antique store; and Lake Benton Hardware and Gifts, the town's hardware store since 1895 but now liquidating as the owner plans to retire.

"It's an investment in the region," said Teresa Schreurs, director of community development for Ivanhoe-based Development Services Inc., which prepared the city's grant application. "Our smaller communities are falling apart. If no homes are in good repair, nobody wants to move there. Small businesses start to fail. Those are dying communities."

Daryl Schlapkohl, a Lake Benton trustee and manager of Lincoln County Parks, said he believes the grant program's tax dollars are not only needed, but well spent.

"We take a lot of pride in our community," Schlapkohl said, noting that Lake Benton markets itself as a tourist destination with its well-kept parks and the Hole in the Mountain Prairie preserve nearby. "Maybe people would want to return and want to live here. We have big ideas. Even if we could get one or two of those people, that's huge for our community."

Clarkfield's population has steadily declined over the past four decades, making it harder for the city to pay for projects like the water tower, which hasn't had significant maintenance since 1987.

Nearly 60 percent of Clarkfield residents are low- to moderate-income and nearly a quarter of them are 65 or older.

To keep the tower water tank from freezing, residents are asked to open their faucets for a time each day in the winter, spilling about 17,000 gallons a day down the drain and driving up water bills. Blocks of ice break loose in the spring and bang against the inside of the tank. An inspection in 2010 found coating failures inside the tank and lead and chromium levels on the exterior and interior surfaces, respectively, that will require costly hazardous waste removal.

In addition to spending money on the tower, the city plans to use grant money to loan up to $25,000 each for qualifying residential projects and up to $40,000 each for businesses. A portion of those debts would be deferred and forgiven over seven years.

"In a small, compact community, this rehabilitation will provide a revival to those living, working, shopping or just passing through," the city's grant application says.

Amanda Luepke, city administrator, said no projects will be started until next spring, but she's already getting inquiries about the grant money.

Eric Guttormsson, co-owner of Clarkfield Outdoors, employs about 25 people who make and market hunting and work clothes. He said his business will apply for some of the money to build a handicapped-accessible bathroom, which would free money for business expansion.

"If we could get some help, we certainly could use it," Guttormsson said. "I don't know of any small towns that can actually expand anymore. It's very difficult to get enough workers. But with that being said, there are businesses like ours where the demand for our products is growing. … So that's why I think the government should give me money to build a new bathroom."

Berdette Schoep, president of Clarkfield Outdoors, which he started in 1983, said the city has put past grants to good use.

"Almost everything we've gotten in grants from the state or federal government is still here, and it's growing," Schoep said. "It's the incentive to make things better."

Dan Browning • 612-673-4493