Commissioners deny Harmony's
request for forgivable loan
Wednesday, October 02, 2013 3:12 AM
The Fillmore County Board of Commissioners denied the city of Harmony's request for a forgivable loan of approximately $57,000 during its Tuesday, Oct. 1, regular board meeting.
The city had recently sold its Economic Development Authority (EDA)-owned senior living facility, Heritage Grove, and sustained an approximate $500,000 shortfall from the sale. The city had planned to use reserves and a city-wide tax abatement to reduce the shortfall, but was still in need of roughly $120,000.
Coming to the county, city officials and financial consultants had asked the board to approve the Fillmore County EDA in granting a forgivable loan. The loan would have included $19,000 from the county share of a recently de-certified TIF district. The city would pay back the county around $38,000 in new property taxes from the now privately-owned facility over a 10-year period. The city had assured the county would get their money back even if the property was negligent on their taxes. The city was looking for assistance up front.
The county board had sent the request on to County Attorney Brett Corson for further review during its Aug. 20 meeting.
In an email to the city of Harmony, Corson raised several concerns with the request, which had come forth during the county board's Aug. 20 meeting. Corson mentioned that the loan should fit within the guidelines of the County Business Subsidy Policy since the loan is coming from the County EDA to the Harmony EDA.
State business subsidy law provides that any subsidy "must meet a public purpose other than increasing the tax base." Corson claimed that job loss did not seem imminent and thus could not be deemed a public purpose. He also stated that it did not appear the loan would influence the operability of the facility. He noted the facility would be taxed at a higher rate, with the county receiving approximately $7,185 per year instead of $2,100 per year.
Corson also questioned whether the project passed the "but for test" set forth in the Business Subsidy Policy. The test would indicate whether or not the project would still occur if the loan was not given. Corson argued that it did not appear the facility's future would be "threatened if the assistance being requested is denied."
Several other concerns were highlighted by Corson. The city countered with an argument that it was not requesting a business subsidy, but rather "financial assistance based on past and future benefits" to Fillmore County.
Commissioner Duane Bakke said Harmony's request could be seen as no different from requests made by other cities. He also brought up the county's current goal to reduce the levy to a zero percent increase, which means roughly $100,000 in department cuts. He asked where the money would come from in the budget.
Fillmore County EDA director Cris Gastner told the board that the county's EDA members had not recommended the loan request for approval at the Aug. 20 meeting, but had just sought a board decision.
Commissioner Mark Prestby said the process had gone forward too quickly and that the request should have gone back through the EDA.
Upon motion by Bakke, the board voted in favor of not granting the city of Harmony a forgivable loan.
Corson told the county commissioners that everything needing to be taken care of in preparation for the veterans' cemetery had been. He let the board know that the state had a title company look at the property where the cemetery would be constructed. The company will be addressing a number of concerns they had, although Corson said none of them looked to be controversial.
The board thanked Corson for his work in dealing with the state on the matter.
Commissioner Chuck Amunrud told the board the Department of Veterans' Affairs had originally slated a late October meeting to formalize the donation of the land for the cemetery as well as to hold a groundbreaking ceremony. Due to some conflicts with individual commissioners' schedules, the county will be communicating with the department to set up a date when those ceremonies will take place.
Not discussed at the meeting, but important to the topic was the news that a $10 million grant had been awarded to cover 100 percent of the construction costs associated with the new veterans' cemetery.
Discussion continued on the status of the Social Services manager position, which will be vacated by the resigning Gail Bunge after Jan. 2, 2014. The county was examining their options with either replacing the current position or changing the job description.
Fillmore County currently shares its Community Services director position with Winona County and County Coordinator Karen Brown reported Winona County wanted to continue working with Fillmore County in that capacity. She also stated Winona County had expressed interest in looking for other ways to partner with Fillmore County.
Dahl said their agreement to share the director was not likely to change. He added that he didn't see sharing of the Social Services manager position likely because of the workload.
Bakke asked the board how they envisioned the manager position in the future.
Brown said it had changed somewhat, but was ultimately saving the county money and increasing communication within the department.
Bakke said he didn't see why the board would do anything different with the manager position.
Human Resources director Kristina Kohn agreed, saying the county had created the position which had resulted in a leaner and more effective Community Services Department.
Brown reported that Community Services director Beth Wilms, though she has a vested interest in the discussion, had expressed her desire for the managerial position to continue.
Amunrud said he didn't see anything changing and moved to begin the process to hire a replacement with internal and external advertising for the position.
In other matters, the county commissioners discussed the following issues.
The board approved the temporary hire of a PC/Network technician to handle day-to-day operations and user support until a permanent replacement is found.
Corson submitted his 2014 salary request to be at $96,661. The total amount was 95 percent of the 2013 average county attorney wage without figuring in the high and low amounts from surrounding counties, including Fillmore County. The county also put on another 1.5 percent increase for inflation.
The board approved a payment of $936 for a new Information Services computer server purchase, previously approved in August.