Howard Lake-Waverly Herald, Dec. 24, 2001

Details aired on HL development financing

By Lynda Jensen

Numbers took shape for a large development planned by the city at the Howard Lake Council meeting Tuesday.

The development is related to the proposed Security State Bank and expanded medical clinic located at Highway 12 in the heart of town.

During the past year, the city has been buying lots on blocks 16 and 17, located between Bergie's and Gerry's Super Valu, to make way for it.

The deal involves the city buying the existing bank building, including the furnishings.

The cost to taxpayers will be $500,000 for the deal, or a payment of $42,245 per year for 20 years with an interest rate of 8.5 percent, Administrator Doug Borglund said.

The bank will purchase the now-empty lots from the city to build a new facility that will span a block along Highway 12.

The bank will be buying the land for $4 per square foot. The city will be footing the bill for most of the demolition costs of the land, Borglund said.

This is well worth the price of acquiring a new building for city offices, keeping the bank downtown, and replacing blighted houses with commercial development along two blocks of Highway 12, Borglund said.

The development will be subsidized with income from tax increment financing (TIF), which amounts to $12,000 per year, or $210,000 over roughly a 20 year span, TIF financial consultant Michele Hartman said. This was already computed into the $42,245 per year number.

Resident Gene Schmidt protested the cost "Taxpayers are going to be paying some good money out for this development," he said.

Schmidt compared the numbers now to what he was told at an earlier meeting when the city council toured the bank building several months ago. Before, Schmidt heard that the bank building would be sold for only $350,000, and the contents of the building would be donated to the city.

"Now I heard Doug talk in terms of $500,000," he said.

The figure before did not reflect actual appraisals of the building, Borglund said. Aside from this, the cost of land bought by the city turned out much higher than expected, even though the city filed eminent domain proceedings against every house involved in the development, except for one.

"Everyone thinks the city has deep pockets," Smith said. In addition, another house was added to the project, he added. "It cost more than we originally thought."

The money for the project is already built into the city budget, Borglund said.

The furniture, which is made of oak, is valued at $80,000.

Schmidt protested purchase of the bank building. "I never heard of it before, and now it's a forgone conclusion," he said.

The closing date for the city to buy the existing bank building is Dec. 28. The city will lease the building back to the bank for $1 per month until the new facility is built in the spring, Borglund said.

"It is a project right for our town," Mayor Gerry Smith said. Cities don't usually make money off developments, other than to benefit the common good by organizing and focussing commercial sectors, he said.

Hartman agreed.

"The inner city would die, and the town will grow around the edges," Hartman said.

Other councilors pointed out other towns that suffered when major businesses left the downtown.

"Look at Delano," Councilor Don Danford said. Delano lost its Snyders downtown, which made other smaller restaurants and businesses suffer, he said.

"I don't like to compare, but look at Maple Lake," Councilor Shelly Reddemann said.

Demolitions, eminent domain continues

Previously, the city filed eminent domain proceedings against two lots owned by brothers Tom and Jim Peterson. One lot contains a house, which is just east of Bergie's.

The city offered $130,000 for the house, Borglund said. It was which originally thought to be worth $120,000, Reddemann said.

This offer was rejected, with a counter offer $145,000 from the brothers.

Reddemann indicated the council should stand with the $130,000 offer, and proceed with condemnation after Dec. 21. "That's it," he said.

Donna's Salon continues to stand, since the owners are to stay through the end of December.

Demolition of the five lots that the city purchased took place two weeks ago.

In a related matter, the city is negotiating to buy Robert Taaffe's lot, which is the brown house located behind Donna's Salon.

Taaffe recently listed his house for $105,000. He offered the city $100,000, with the following break down: $82,000 for the house and land, $1,200 for relocation costs, and $6,000 for closing costs.

Taaffe owes the city $428.61 for utilities.

The city is offering $93,000 for the house, which was appraised at $80,000.

Water tower debacle is tabled for now

The council tabled what appeared to be a deal from Wright County Board of Commissioners.

The city and county have been haggling over water usage at the water tower, which is located at the Wright County Fairgrounds in Howard Lake. The water tower sits on property owned by the county.

A former city administrator verbally approved free water usage for the county fair three years ago.

In the past six months, the issue heated up after the county tried to obtain signatures on a written form of the verbal agreement.

A handful of city officials, county fair, and county board members met recently to discuss the problem, although the meeting got pretty hot, Smith said.

Among those in attendance were Smith, county commissioners Ken Jude, and Pat Sawatzke, county coordinator Dick Norman, and Assistant County Attorney Brian Asleson.

After the meeting, most thought an agreement should be made, Smith said.

The county is offering the city a cap for water use, or what would be free use of 185,000 gallons of water for the fair, with payment of water that goes beyond that, Smith said.

The matter was tabled so that City Attorney Chuck Paschke, Smith, and Borglund could discuss the alternatives.

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