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Project proposed for business park hits a snag
June 1, 2018


DELANO, MN – One of three proposed projects for the West Metro Business Park has been delayed due to financing challenges.

“Of the three projects that we have going right now, I thought Insolution would be the first one to close,” City Administrator Phil Kern told the council during a workshop Tuesday. “We don’t have a closing date on the calendar yet. They’re working on financing issues with their bank.”

Kern said the appraisal process “threw a wrench into everything.”

“The bank wants to know, once you’re done with this, what is it going to be worth?” Kern said. “It’s going to cost them X amount to build. The appraisal came back and said it’s only going to be worth this much. The bank said that’s all we’re going to give you.”

Kern said city staff have been working with the Wright County Economic Development Partnership and other entities to identify funding sources.

“We have a plan put together,” Kern said. “It’s up to them to make it work.”

He called the financing challenges “a huge surprise.”

Proposed business park development
One thing that has not surprised Kern is the number of businesses interested in the business park that don’t want to invest in building a facility.

“Since November, we’ve had 13 different unique leads in the business park,” Kern said. “The majority of those leads do not want to build their own building.”

He had asked incoming businesses if they would be interested in building a larger facility than needed and leasing the excess to another business, but “that hasn’t panned out.”

Another possible solution is for a private investor to purchase four to six acres and build up to a 40,000-square-foot building with multiple tenants.

If approved, the investor would secure tenants over the span of 18 to 24 months. If, in the meantime, a different business expressed interest in the lot set aside for the investor, the multi-tenant development would be shifted to a different site.

Kern said the multi-tenant site would likely be near the front of the park, close to Highway 12.

In other business park business, Kern said the closing date for Pizzey Ingredients is June 22, with a groundbreaking in early July; while he expects Randy’s Environmental Services to close on the property it is buying in mid-July.

The city of Delano and Delano Municipal Utilities may soon be looking for new warehouse space.

An agreement between the city and the owner of Spike’s Feed, at 511 Railroad Ave., granted the city an easement for the expansion of the road and gave the business the option to purchase the warehouse that the city and DMU share across the street for taxable market value in February of 2019.

With that agreement in place, both the city and DMU are seeking additional warehouse space.

“(DMU General Manager) Paul Twite and I would lead staff through the options we have and present those back at the next joint meeting for a good pro-and-con discussion with all of us together on whether or not we should go into a joint facility again or get additional space at current facilities,” Kern said, referencing the Tuesday, June 12, meeting. “ . . . It’s very possible we could have a project this late summer or fall that involves creating space or buying space in the community.”

He said the city could potentially add space to the public works building and building on the water treatment facility property could be a possibility for DMU.

Odds and ends
In other business, the council:

• reviewed the city’s five-year financial plan. The plan calls for a levy increase of 11.7 percent in 2019, resulting in a tax rate change of 4.8 percent, though those numbers are very preliminary and subject to change. The budgeting process will officially begin in July, with final decisions made in December.

• received the draft audit for 2017. The auditors issued an unmodified, clean opinion, which is the best audit result possible. There were three issues of legal compliance related to verification of compliance from bidders on projects of more than $50,000, a missing form that is required from bidders, and payments to subcontractors within 10 days.

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