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Delano not interested in utility-sharing proposal from Independence
Nov. 7, 2011
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By Ryan Gueningsman
Managing Editor

DELANO, MN – Delano City Council said ‘thanks, but no thanks’ to an offer from the City of Independence, which was again requesting a utility extension agreement between the two cities for future “big box” development.

At a previous city council work session, council members indicated they weren’t interested in talking with Independence officials again unless a specific proposal was on the table. At a work session Tuesday night, city officials agreed they weren’t interested in the latest proposal from Independence officials.

In 2008, officials from both cities negotiated and worked toward a utility-sharing agreement that was never approved by either municipality, as Independence pulled the request due to fiscal disparities and tax impact ramifications.

The agreement at the time was to work toward development of a 30-acre area at the northeast corner of Highway 12 and County Line Road in Independence, with the anchor store likely being Target.

“On the Delano side and on the Independence side, that agreement never made it to a formal decision-making step,” Kern said. “That agreement has sat since December 2008. Nothing has been done with it, and essentially no discussions have happened.”

A more formal request was made to the City of Delano in late September and, at its Oct. 4 work session, the council appointed a sub-committee to meet with Independence officials regarding the request for utility service.

Delano Mayor Dale Graunke, Council Member Dan Vick, and City Administrator Phil Kern met Oct. 12 with Independence Mayor Marvin Johnson, Council Member Lynn Betts, Administrator Toni Hirsch, and the Independence city planner.

Larry Palm, the owner of the site, was also in attendance, according to a memo for the Delano City Council prepared by Kern.

At the meeting, Palm stated he is in contact with a private development group interested in building a 140,000-square-foot big box store, along with future developments, Kern said.

“The user is time-dependant upon whether it will proceed,” Kern said, adding that a quick decision would be needed by Delano officials, or that the developer may invest in some other project.

“They would like to know yesterday if Delano is interested,” Kern added.

Unlike in 2008, Kern said there have not been site plans or drawings for the proposal presented, and he said the developer wanted to wait to take that step until it knew utilities would be realistic.

Going into the meeting with Independence officials Oct. 12, Kern said he expected to discuss some terms of a possible utility-sharing agreement, and said Independence officials had done a good job of preparing what their city would do and what it wouldn’t do as far as an agreement.

“Essentially, their request of Delano is they would like utilities, and allow Delano to negotiate with the property owner in terms of compensation,” Kern said. “They are not proposing any property tax sharing.”

In the 2008 proposal, the sharing of tax revenue to cover impacts on services in Delano was included at an amount of $50,000 per year from Independence to Delano for 10 years. It was presented that the costs of public improvements (installation of utilities, intersection improvements at County Line Road, Highway 12, and St. Peter Avenue; and storm water improvements) would be 100 percent the cost of the developer.

Another difference from the 2008 proposal was that Independence would adopt “Delano-similar” design standards, but control the review. In the current proposal, Independence would control the review and standards.

“We would have the opportunity to comment, but have no authority,” Kern said.

He said much of the remainder of the draft agreement between the two entities would be the same.

Another element that was important to Delano officials in 2008 was future development beyond that big box site.

Council Member Betsy Stolfa said her concern from 2008 remains today, in that she doesn’t believe that encouraging growth eastward is something she would be interested in.

“Not when we have plans on the table to do something to the west,” she said.

Discussion took place regarding infrastructure charges/revenue to cover expenses in Delano, traffic plans, and the makeup of the proposed development.

Though not identified publicly, the potential project has been described as a competitor of Target with a blue sign.

Vick said it seemed Independence officials were “pretty much set on their proposal,” and didn’t offer much room to negotiate.

Council Member Holly Schrupp felt if this is something Independence wants, then Independence would have to be willing to negotiate on terms of any agreement between the two cities.

“I don’t think you can just say, ‘this is what we want,’” she said. “If it’s something that they desire, I’m curious as to why they’re not willing to negotiate.”

Council Member Derek Schansberg asked what other options Independence may have if Delano does not enter into an agreement, such as hooking into utilities from Rockford or Greenfield, or if the Metropolitan Council would let Independence go with a septic/well system for the area.

“I think they believe that they can,” Kern said. “There would be alternatives should Delano say ‘no, we’re not interested.’”

An “annexation” scenario was also discussed briefly by the city council. Kern said Delano’s ordinances only allow utilities to be put in the city limits, but said that could be amended as part of this should the council be interested in attempting that process.

“The thought process behind it was the city could incorporate it and the city could have it as part of the city to have it part of the city limits and provide some sort of payment to Independence that would exceed what they’re getting currently,” Kern said. “It would be a net gain for them, and Delano would be responsible for everything related to the site.”

He said this option was “off the table” in 2008, and informally, Kern said he felt Independence officials would not be receptive to that again this time around.

It was asked if the new proposal was a project the Independence City Council was favorable of, and it was noted there haven’t been any public hearings on the issue.

A handful of people were in the audience at the work session, and Graunke asked if anyone would like to comment on the issue. No one did.

“It’s not as good a deal as what it was before,” Graunke said of the proposal. “I think the consensus is we’re not in favor of anything they’ve offered us.”

The rest of the council agreed, and no formal action was taken on the issue.

Contacted later in the week, Hirsch said she had been e-mailed by Kern regarding the outcome of the work session, and said she is unsure what the next steps may be.

She said it is possible a special meeting may be called to discuss what additional options to pursue, including possibly looking at tax increment financing (TIF) options. The next regular Independence City Council meeting is scheduled for Tuesday, Nov. 15, but Hirsch said the developer does not want to wait that long, and said the developer has been “sitting on the fence” regarding the utility issue thus far.

“We don’t want them to go away,” she said.

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