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Dassel discusses future of Summit Hills development
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May 11, 2015

By Ivan Raconteur
Editor

DASSEL, MN – A variety of opinions and ideas were expressed regarding the Summit Hills development during a special city council meeting in Dassel Thursday, but one thing Mayor Jeff Putnam made crystal-clear is that the city has not made any decisions about the property.

Putnam began by stating it was just an informational meeting, and the council was trying to get the public’s point-of-view concerning the development.

He then asked Meeker County Economic Development Authority Director David Krueger to present some background information about Summit Hills.

Krueger said the property was developed about 2005 by a local developer. Streets were constructed, but only the first lift of bituminous was put in, and the paving was not completed.

The city did not accept the streets as meeting its engineering standards.

The property went into foreclosure about 2011.

Krueger said the Summit Hills property is an unusual case. He explained that in most cases, the city would have bond insurance or a letter of credit to fall back on if a developer fails, but in this case, amid the turmoil in the housing and financial industries, the insurance company also went bankrupt.

The development ultimately became the property of the State of Minnesota.

Meeker County, which became the agent for the property, tried three times to sell lots in the development at public auction, but failed to attract any bidders.

Krueger said the biggest issue in marketing the lots is the restrictive covenants that are in place. This appeared to be the consensus of others at the meeting, as well.

Changing the covenants would require agreement by 90 percent of the lot owners, and, according to Krueger, the state (which owns most of the lots) has refused to change the covenants.

He said the Minnesota Department of Revenue will sell the property to a public body for $1 if the sale serves a public purpose. Resolving economic blight would meet that standard, Krueger said.

When asked if the city could purchase the lots and then sell them, Krueger replied, “Yes, that’s exactly what they probably would do.”

Putnam then opened the meeting to public comments.

Comments in favor of city involvement
Former Council Member Wayne Medcraft said former councils have struggled with what to do about Summit Hills, and he is excited that the development could finally become an asset for the city.

Medcraft said Dassel needs to grow. He said the city needs to help local businesses, and bringing in new residents would do this.

Resident Kari Wendroth said she and her husband have lived in Dassel for a year, and can’t find a residence to purchase.

She said property is moving quickly in the area, and multiple offers are being made on some properties. She encouraged the council to talk to a Realtor about the local housing market.

“If you want families like us to go to your school and spend money in your businesses, help us find a place to live,” Wendroth said, addressing the council.

Comments opposed to city involvement
Former Mayor Mike Scanlon asked the council how it would pay for the project if it were to purchase it.

He said there are county costs that have not been discussed.

Scanlon also said the city should not be in this business, competing with private developers.

“I think this (the city purchasing the property) is a terrible idea,” Scanlon said.

Other residents also expressed concerns about risk and costs the city might incur.

Estimated costs
City Engineer Chuck DeWolfe presented estimates on what costs the city might incur if it were to purchase Summit Hills.

The total estimated cost is $695,000, including:

• $559,000 for street repair/improvements within the development and completing an overlay of 5th Street;

• $38,000 to correct erosion issues and clean out drainage ponds;

• $75,000 to shape a large stockpile of clay on the site, cover it with black dirt, and seed it with grass;

• $22,000 for other miscellaneous improvements.

Other matters
There was some discussion about asking the state to void the covenants on the property.

It was noted the state has not been receptive to this in the past, but Bob Ness said he does not believe the legislative piece will be a problem.

“There is plenty of proof that you have exhausted all other options,” Ness said.

He noted there are 90 lots platted in the development. At one point, there had been discussion about reducing this to 52 larger lots, but that could not be done without changing the covenants.

Regarding the estimated cost of improvements, Krueger said the city would not have to make all the improvements right away, but could phase them in over a period of years, which would reduce the financial burden.

Meeker County Commissioner Mike Housman said the county board would like to see Summit Hills developed.

Housman described the current situation as “a three-headed monster,” with the state, county, and city each having an interest in the property.

If the city were to purchase the property, it would put the entity with the most vested interest in control, he commented.

Housman also mentioned the concern about the city competing with private developers, and said the city would have to keep this in mind when pricing lots, if it were to purchase the property.

Another point of consensus seemed to be that before any decisions are made, it will be necessary to determine what the real potential costs and liabilities are.

Putnam ended the meeting saying the council has had several meetings regarding Summit Hills, and has brought the matter to light to provide transparency. He said the council will weigh all the variables and look at the best interests of the city. He added that the council will schedule a public hearing before taking any action on the matter.

Putnam encouraged residents to contact him or any council member with questions or comments about the subject.

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