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Fufeng Group negotiations with Grand Forks could go public by Dec. 13

Fufeng brass, including company chairman Li Xuechun, were in Grand Forks the week of Nov. 15 to see the community up close and learn more about a potential investment in a corn-milling facility they’re pursuing north of the city.

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The future site of the Fufeng Group project on the north end of Grand Forks. Eric Hylden / Grand Forks Herald

After a week on the ground in Grand Forks, Fufeng Group leaders boarded their plane and headed back home. Negotiations to bring them back to the city are ongoing, however.

Fufeng brass, including company chairman Li Xuechun, were in Grand Forks the week of Nov. 15 to see the community up close and learn more about a potential investment in a corn-milling facility they’re pursuing north of the city. The week saw Fufeng touring the community, learning more about available utilities, housing and office space and more. It’s a big week for community leaders, who are pitching Grand Forks — and its resources — as a suitable home for a major investment.

In early November, city leaders revealed that Fufeng Group had chosen Grand Forks as the site for a “wet corn milling” facility, possibly consuming about 25 million bushels of corn once it’s running at full capacity, sometime around 2024 or 2025. It is expected to create more than 200 jobs directly and more than double that indirectly.

Keith Lund, who heads the local economic development corporation, said the week was a big success, though it’ll still be weeks before negotiations on the new plant are finalized and made public.

“The week went great,” Lund said. “We developed a very nice relationship with the chairman and the Fufeng team. Many we’d met before, but a few we hadn’t.”

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Fufeng, too, is looking for commitments from the city — from tax incentives to construction of its infrastructure grid — that will help make the plant a success. City Administrator Todd Feland said the “most aggressive” time frame for finishing negotiations would bring a draft agreement before City Council members by Dec. 13.

The project is projected to bring more than 700 jobs to Grand Forks, with 233 at the plant itself and the rest indirectly created by the plant — from truck drivers and other connected jobs serving the facility to extra grocers working at community stores.

But those numbers are a long way in the future, arriving after the plant, pending successful negotiations and quick construction, opens in late 2024. So what happens after that? And how could a tight labor market affect things?

UND economist David Flynn said a tight labor market might persist long enough to make those roughly 500 indirect jobs slow to materialize. And, he pointed out, the years between now the plant’s opening could bring plenty of change.

“Let’s be realistic,” he said. “Between now and doors opening, the company might change their plans. There’s just a lot of moving pieces when it comes to things like those job estimates.”

Mark Schill is a consultant with Praxis Strategy Group. He said the roughly 525 indirectly created jobs will appear at different paces, depending on the industry.

“For instance, the housing and construction sector is likely to be impacted mostly before reaching the 233 (plant) jobs as some share of new residents relocate and create demand for housing,” he said.

Lund, in an interview this week, agreed that those numbers are estimates — “and estimates are always wrong,” he said, whether they’re too high or too low. But he said it’s important for the community to try to do the most it can to bring in more business.

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“We can’t stop attracting and developing opportunities,” Lund said. “... We can’t give up, and we won’t give up. We’re all, collectively, the never satisfied business.”

Housing market

There’s another question to all this, too: where will all the new workers live?

In 2012, Mayor Mike Brown called housing availability perhaps “the number one potential bottleneck for the city.” In the same speech, he called for the creation of a blue-ribbon housing commission to investigate the issue; by the end of the year, the group had issued a report calling the local market “moderately unaffordable.”

The cost of housing has been a perennial issue for city leaders, with prices remaining high. Since the beginning of 2013, the Federal Reserve’s housing price index for the region has jumped 37.6%. That’s faster than Bismarck, which clocks in at 33.7%, as well as the statewide average of 35.4% (it’s no match for Fargo’s price growth, though, which is a remarkable 45.8%).

Grand Forks Mayor Brandon Bochenski ran on a platform that focused on local costs of living, even suggesting a $10,000 payment assistance program for first-time home-buyers. That was a lofty goal before the pandemic that’s since been sidelined by the realities of the virus and the day-to-day grind of governing the city.

For now, Flynn warns, relying on the market to fill the void will just push prices higher.

“If you say ‘the free market signals are going to drive developers to act,’ that means prices have gone up,” Flynn said.

Bochenski is aware of those challenges.

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“We’re promoting these projects and talking to developers and trying to get them excited to see the future demand," Bochenski said. "So making them willing to go out and build housing — whether it’s apartments, single family homes, to add to that stock, so that they can maybe take out a little bit more risk, which will hopefully lower the prices.”

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David Flynn Photo submitted by UND

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