LUVERNE, Minnesota – In 2017, city officials welcomed the buzz about the town's newest soon-to-be major employer.

Tru Shrimp was coming. It planned to build a multi-million-dollar shrimp production facility. The company's arrival promised more than 200 jobs and inspired housing projects.

City officials did have some issues to iron out. They met with state pollution control regulators who voiced concerns about the city's wastewater plant and its ability to handle salty water left behind from Tru Shrimp's daily operations.

In late 2018, Tru Shrimp set up an early January meeting with Luverne officials for what the company's executives called a "project update."

Then, the hammer blow.

Tru Shrimp officials told Luverne officials it wasn't coming to the Minnesota town after all. It was building in South Dakota instead.

Mayor Pat Baustian could only watch from the sidelines a couple of days later as Tru Shrimp executives joined then-South Dakota Gov. Dennis Daugaard and others to announce that Madison, South Dakota, not Luverne, would be the site of the first Tru Shrimp plant.

“Nothing was communicated to us that it was a concern,” Baustian said. “That’s what I guess is most disheartening to everybody on the council and myself.”

Baustian and other Luverne officials hold out hope Tru Shrimp might still build a facility in the city in the future. But they haven't heard from the company since January.

In Madison, Tru Shrimp recently missed its planned construction date and has yet to set a new timeline.

With millions of public dollars on the line, city officials in two states are left asking questions about what comes next.

Tru Shrimp declined an interview request for this story and instead sent emailed statements in response to several questions.

“We continue our focused efforts to raise the capital required to build in Madison,” Sales and Marketing Director Jamie Brink-Thordson said in a statement.

Tru Shrimp's big promises, with strings

The company’s vision for growth promises massive facilities with new technology and plenty of jobs, but it also demands a lot of public resources.

Tru Shrimp executives have not been shy about leveraging economic development potential to get extra help.

Emails and documents obtained by the Argus Leader outline a two-year relationship between Luverne officials and Tru Shrimp executives, showing great efforts on the part of the city to accommodate the shrimp-grower and its needs.

Luverne officials agreed in December 2016 to commit land from their industrial park to Tru Shrimp.

Before announcing the project the following summer, company CEO Michael Ziebell signed a carefully worded letter-of-intent.

The letter included language allowing Tru Shrimp to build elsewhere if certain terms weren’t met. But in the short term, it resulted in a $2 million grant from the Greater Minnesota Business Development Public Infrastructure program and allowed Luverne officials to develop the site.

City officials promised to give Tru Shrimp a tax abatement and improve Luverne’s utilities for the development. They also promised discounts on utility rates and agreed to cost-share water pre-treatment costs if the factory’s wastewater was too salty for city systems.

Tru Shrimp bails out

Luverne officials say they didn't know it, but concerns expressed in late 2018 with the city's wastewater facility had effectively driven away Tru Shrimp.

A big pork producer was also planning to open in the city, adding its own significant amount of volume to Luverne's wastewater system.

Documents obtained by the Argus Leader show that regulators wondered about they system's capacity with two new businesses coming to town. Luverne's wastewater plant had already failed two tests measuring the quality of water it was releasing into the environment.

Even if the city's plant could treat Tru Shrimp's wastewater, state pollution control officials worried the fluid would still be too salty to discharge and eventually flow into the nearby Rock River, endangering fish, wildlife and downstream agriculture.

Luverne met with pollution regulators in November, also inviting representatives from Tru Shrimp to the meeting at the Minnesota Pollution Control Agency’s office in Marshall, Minnesota.

Minnesota’s pollution control officials never got a clear understanding about what to expect from the Tru Shrimp facility despite multiple requests for information, wrote ex-MPCA Commissioner John Linc Stine in a letter to Luverne officials, sent after the company's decision to build in Madison.

City officials didn't get the sense the pollution control issues were going to be a deal-breaker for Tru Shrimp.

Company executives always promoted a sense of environmental responsibility and often talked about recycling water in the facility and taking a zero-discharge approach, Baustian said.

So it was a surprise when Tru Shrimp came to the Jan. 2 meeting and said they wouldn’t be able to meet Minnesota’s restrictions on saltwater discharge, Baustian said.

But Tru Shrimp leaders expressed their concerns about the status of Luverne’s wastewater system as early as October, 2018, Brink-Thordson said in a statement. That’s when state regulators set a new limit on the amount of minerals allowed in the Minnesota city’s treatment facility.

“At that time, we clearly indicated this was a significant change for us and a significant issue,” Brink-Thordson said.

S.D.'s sweetener: a $6.5M low-interest loan

In a deal brokered by then-Gov. Daugaard and economic development groups from the Madison area, Tru Shrimp’s decision to abandon immediate plans for a Luverne plant and build instead in South Dakota came with a $6.5 million sweetener in the form of a low-interest loan.

Most of it came from Daugaard’s economic development office – a $5.5 million chunk committed by the governor just weeks before the Madison announcement, which came just days before he left office.

The state’s money was granted to the Lake Area Improvement Corporation, which turned it over to Tru Shrimp in the form of a loan, adding an extra $1 million from the Heartland Consumers Power District, another Madison-area group that helped land the Tru Shrimp deal.

More:Tru Shrimp's plans prompt bills regulating saltwater aquaculture

The loan came with strings attached, including the ability for Lake Area to demand full repayment plus interest if construction doesn’t happen by the end of 2019.

Lake Area helps oversee the Lakeview Industrial Park, where Tru Shrimp was expected to build its facility, what Tru Shrimp calls a "harbor."

Company leaders said they were looking forward to getting construction underway. Crews would start work in June.

'Fool me twice, shame on me'

Tru Shrimp’s plans to build in Madison caught the attention of Jay Gilbertson.

Gilbertson brings a no-nonsense gruffness to his advocacy work on behalf of southeastern South Dakota's water.

A native of Minnesota and geologist by background, he is the manager-treasurer for the East Dakota Water Development District.

And whatever Minnesota regulators were worried about was now heading for his territory.

“Fool me once, shame on you. Fool me twice, shame on me,” Gilbertson said. “This may be the second time around. It behooves South Dakota to take a long look at what’s going to happen.”

Gilbertson’s agency has no enforcement ability, but promotes conservation and management of water resources in nine counties – a geographical footprint that includes both Sioux Falls and Madison.

Protecting Madison’s water resources – including its crown jewel, Lake Madison – is top of mind for local officials.

“Everybody involved takes water quality very, very, very seriously,” said Casey Crabtree, economic development and government affairs director for the Heartland Consumers Power District. “That is not an afterthought for us.”

Salty wastewater from Tru Shrimp is one of the top priorities in the development agreement currently being drafted between the company and Madison city officials, Utility Director Brad Lawrence said.

“We’re not going to do anything that endangers the lake,” Lawrence said. “Or the residents there, or the environment.”

Where is South Dakota's money now?

In Madison, they're still waiting for Tru Shrimp.

Tru Shrimp executives this summer scrapped the construction timeline, delayed building and declined to set another date.

“We continue our focused efforts to raise the capital required to build in Madison,” Tru Shrimp's Brink-Thordson said in a statement.

South Dakota’s money is instead going to work in Balaton, Minnesota, where Tru Shrimp runs a research facility.

The state’s investment isn’t lost yet, even if nothing is built.

Lake Area Improvement Corporation could also extend the terms of the loan or convert the money into Tru Shrimp stock if the company needs more time. But Lake Areae Executive Director Eric Fosheim is confident in Tru Shrimp will build.

“They are realizing some huge efficiencies as they continue to raise their capital,” Fosheim said. “We want to make sure it’s right when it happens.”

The head of the Governor’s Office of Economic Development declined to be interviewed for this story but sent an emailed statement. Steve Westra, who started in January after Daugaard left office, also expressed confidence in Tru Shrimp.

“While the project delay is unfortunate, we realize changes in large real estate development projects are not uncommon,” Westra said in his statement. “Big projects take time, especially ones involving new industries. We remain confident this will be a big success for the Madison area.”

For Luverne, the Tru Shrimp dream isn't dead

When Tru Shrimp told Luverne it was leaving for Madison, Baustian drafted a statement.

Expressing his disappointment, Baustian’s words came with a caveat filled with potential.

The dream wasn’t dead. Tru Shrimp’s Madison facility wouldn’t be its last and Baustian promised to continue to work with the company.

After all, the city still had two massive industrial park parcels, specifically developed for Tru Shrimp’s operations and plans to make $14 million in improvements to the city’s wastewater facility.

Those parcels are still empty, still on hold for Tru Shrimp.

In her statement, Tru Shrimp’s Brink-Thordson said the company is still targeting Luverne for a facility.

“As we committed to do in January, our company has continued its discussions with the MPCA and other state officials in hopes we’ll someday be able to build a Harbor in Minnesota and specifically, Luverne,” Brink-Thordson said.

But Baustian is getting impatient. After years of working with local governments to prepare for the necessary infrastructure upgrades and attracting millions of dollars in grants and loans from two state governments, Tru Shrimp has yet to get shovels in the ground for a single production facility.

“We’ve heard nothing from them, what their intentions are for Luverne,” Baustian said. “It’s kind of disheartening after everything we went through to make that happen.”