Howard Lake-Waverly Herald, Aug. 13, 2001

Tempers flare as property owners discuss value of lots

By Lynda Jensen

Tempers flared as two property owners discussed their property's worth to the city during the Howard Lake City Council meeting Tuesday.

The city is buying lots on the block, between Bergie's and Milo's restaurant, known as block 16, situated on the south side of Highway 12. The city wishes to develop it commercially.

There are five lots on the block, from east to west: two houses owned by brothers John and Dave Kadlec, of which the city previously condemned and filed eminent domain proceedings; a house owned by Dave and Michelle DuChaine, one empty lot with an absentee owner, and a house owned by Tom and Jim Peterson of Lakes Realty.

The redevelopment is probably the largest and boldest ever made by the City of Howard Lake for commercial development, Administrator Doug Borglund said.

In the most recent step for block 16, the city negotiated with the two property owners at its meeting, and after a closed session, called for eminent domain proceedings against both. It involved the empty lot, and the house owned by the DuChaines.

The DuChaines told the city council that they wanted $126,000 for their house, even though it was appraised at $77,000.

The reason for this is to buy an equivalent new house in Cokato, albeit on a larger lot, Dave DuChaine said.

All the council members and Borglund disagreed about the value with the DuChaines.

"I think that $120,000 is way too much for that house," commented Councilor Tom Kutz.

Councilor Shelly Reddemann noted the house is 116 years old. "It seems like a large price for a house of that age," he said.

The tax valuation on the property is $42,000. "You're looking at three times that amount," Reddemann said.

"You're asking us to leave," Dave DuChaine said. "Our lives will change."

"We have no intentions of moving," Michelle DuChaine said.

The DuChaines explained that it was nearly impossible for them to find something reasonable for an equivalent price.

"We can't find anything out there for a family of five," DuChaine said. "We will triple our house payment," he said.

"You're asking the amount that we just bought a business for," Mayor Gerry Smith said, referring to Milo's.

"Even at $90,000, it cuts a big chunk out of the next house," Reddemann reasoned.

"We've got other payments," DuChaine said. "We know that's not your problem."

Smith indicated that the city asked two other Realtors and both said they would not list that house for $120,000.

"We know the house isn't worth that," Michelle DuChaine said. "But we can't find anything for that."

It was noted that Dave Kadlec's property was not appraised, although Smith pointed out there was no need to, since it was not livable and the lot was worth more than the structure.

John Kadlec's property, on the corner, was appraised at $84,000.

Approximately $20,000 was added to the price because it was an income-producing property, since it was rented out to tenants, Smith said.

"We want to be fair to you and all the residents of Howard Lake," Smith said.

Reddemann made a motion to offer the DuChaines $96,000 for their property. "I think that's a very fair offer," Reddemann said.

Negotiations will probably continue with the DuChaines, Borglund said after the meeting. Most likely a judge will appoint a third-party appraiser to determine value, he said.

Leo Gagnon, Waverly, attended the council meeting to persuade council members to pay $72,620 for an empty lot that was given an estimated market value of $11,300 by the county assessor.

Gagnon, who is familiar with the owner of the lot, Lynette Coldiron-McIlree, has 10 years of experience as a Realtor, he said.

Coldiron-McIlree walked away from the property after a fire in 1996 burned the building down, leaving the city to pay for about $16,000 in demolition and clean-up costs, Borglund said.

The taxes have been unpaid on the property since 1992, and $21,000 is owed in back taxes, Borglund said.

"What I can offer is a clear title in a short time," Gagnon said, although it was unclear how he could do this, since he was not the owner of the lot.

He also claimed that costs incurred by the city for filing eminent domain would take the city up to a year and would help justify his asking price.

Reddemann reacted with anger. "I have a feeling, council, that we have a gun pointing at our heads," he said.

"Now it's a desirable piece of property," Reddemann noted. "Before it wasn't."

Gagnon said he was interested in building an upholstery business on the lot.

Borglund indicated the lot was too small for that to submit to proper setbacks, and that no designs were submitted to the city yet.

"Obviously, I think we are a long way apart," Smith said.

The city started eminent domain proceedings after the meeting for the lot.

The city plans to file for a 90-day quick claim deed on the lot, Borglund said after the meeting, since it is tax forfeit property. This way, it can take possession as soon as possible, Borglund said.

Usually in this scenario, money is put down on the property in an escrow account, and the exact amount for the sale is determined later by the court, which is close to the appraised value, Borglund said.

In a related move to the development, the city signed a purchase agreement for Milo's restaurant, which is to the east of block 16, for $125,000. This includes restaurant equipment valued at $8,000 to $10,000, which the current owner of Milo's wishes to buy back.

Owner Milo Westrum indicated that he was considering opening a restaurant again in the future. Milo's will remain open until Saturday, Aug. 18.

The closing caused resident Pat Van Oss to comment about the loss of eateries in Howard Lake. "You can't get a bite to eat on a Sunday afternoon," he said.

In was also noted that there is contaminated soil under Milo's that will be cleaned up along with the Highway 12 project, Borglund said.

Landscaping located in the right of way

Next, councilors wrestled with the issue of property owners who recently built a retaining wall 10 feet into the right of way at Seventh Street and 10th Avenue.

Right of way is 33 feet from the center of the road, Borglund noted.

Before the wall was built, owner David Hagar had an existing hill, although not as high as the wall; and erosion problems, Borglund said.

"The contractor did a wonderful job," Smith commented. "I just wish he would have stopped by city hall first."

Borglund indicated that removing the wall would be hard for the owners. "It would screw up their driveway," he said.

The city could ask the property owners to sign a "hold harmless" release, which would alleviate some of the liability; although there was no guarantee that it would keep them out of the courtroom, Borglund said.

This was a bad idea, and the wall must be removed because it was clearly a safety hazard, City Attorney Chuck Paschke said.

"If snow piled up (on top of the wall), and two cars meet at night, that wall could directly cause an accident," he said. The city would be liable for any death, injury, or damages, even if the property owners signed the hold harmless agreement, Paschke said.

"We have trees on the boulevard," commented councilor John Swanson, about the possibility of people hitting them.

"Trees move," Smith said. "Walls don't."

Smith noted that the county refused to allow him to put landscaping on his property under the same circumstances, he said.

City maintenance supervisor Tom Goepfert indicated it would be a problem for crews to plow snow around the wall.

Paschke repeated his advice three times to council members, urging them to make the homeowners remove the wall. "It's just too many problems," he said.

City workers could help dismantle the wall, Smith said.

Reddemann suggested asking the homeowners to attend the next meeting to discuss the issue. The subject was tabled for two weeks.

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