Commissioners ponder forgivable loan request from city of Harmony
Wednesday, August 21, 2013 4:18 AM
The Fillmore County Board of Commissioners heard from the city of Harmony during its meeting on Tuesday, Aug. 20. Representing Harmony's interests in requesting assistance for the city's Economic Development Authority (EDA) sale of Heritage Grove senior living facility was Mike Bubany of David Drown Associates, Inc.
The city requested a forgivable loan through the Fillmore County EDA to assist in making up a nearly $120,000 shortfall resulting from the privatization of the facility.
City Administrator Jerome Illg, Chris Giesen and Ron Ziegler of Community and Economic Development Associates (CEDA) and Harmony Mayor Steve Donney were also present to lend support.
The facility, built in 2001, had been the managed property of the Harmony EDA until it was not economically feasible for the city to hold on to it. The facility had been backed by the city's general obligation bonds, so as the $3 million building is being sold to Three River Property, LLC, the city owes $2.5 million in interest and principal payments to bond holders. The $2 million sale left the city with a $500,000 shortfall.
At its June 11 city council meeting, Harmony chose to defease the bonds by creating an escrow account to cover all interest and principal payments. Bubany said this was the city's way to ensure bondholders would get paid. They also decided to pay forward roughly $303,000 out of city reserves to bring the shortfall down to $250,000. The shortfall would be taken care of through the first half of a 20-year tax abatement since the facility would be subject to property taxes at roughly $25,000 per year. The reserves would be built back up during the second half of the tax abatement. However, this would leave a shortfall of approximately $120,000.
Bubany told the board the county stands to benefit from Harmony's losses. He mentioned the city has already committed to selling the property and the only way the facility wouldn't sell is if the buyer reneged on the contract.
"Anything we walk away with is better than nothing," he stated. Having met with the Fillmore County EDA, the city asked the county to approve a forgivable loan for approximately $57,000.
The loan would include $19,000 from the county share of a recently decertified Downtown TIF District, which Harmony had sent back to the county instead of spending on another project. Bubany said the city felt it was reasonable to include that as part of the request. The other $38,000 would come from new taxes the county would receive through the privatization of the facility. The taxes would be paid back every year at roughly $3,800 per year.
Mayor Donney pointed out it would end up being a net gain for the county since the facility would be added to the county's tax base. Bubany also made clear that the county would get their money back even if the facility did not pay its taxes. "We want to tell the county this is Harmony dollars paying for Harmony stuff," he explained.
Bubany said the TIF money would be unbudgeted revenue for the county with the $38,000 coming from a revolving loan fund through the EDA.
Commissioner Duane Bakke noted that many EDA projects operating with a revolving loan fund have never paid the money back.
Commissioner Marc Prestby said he understood the TIF money, but asked about the loan, "You think the whole county should participate in the sale?"
Bubany said the county could choose to do a normal abatement instead, but it would prevent the city from acting on the closing date.
Commissioner Tom Kaase asked if the county had done something of this nature before and if it would be setting a precedent. Commissioner Randy Dahl said returning of TIF money is an ongoing process and common.
Bakke brought up again the EDA handles loans with private businesses whereas this was a city guaranteeing a return on the loan.
Donney said that would make it difficult to set a poor precedent.
Bubany asserted that the county doesn't have many public facilities owned by the EDA, which could be privatized.
Following further discussion, the board determined to send the request to county attorney Brett Corson to review. Dahl said it would probably give it a better chance of moving forward.
Bakke agreed, adding the county needed to look at the request from a legal standpoint and review its policies.
The board received 2014 proposed budgets from several county departments, including the University of Minnesota Extension Services, Public Health, Nursing Service, Home Health, Maternal and Child Health, Veteran Services, Social Services, and Women, Infant, Children (WIC).
Jason Marquardt from Veteran Services, reported that his department would be receiving a $10,000 annual grant from the Minnesota Department of Veterans' Affairs. Amunrud said it would provide stability to the office. Marquardt said the grants would be used for office enhancement and outreach efforts to veterans.
The commissioners excised office phone budget dollars from the Extension Services as proposed by Extension Officer Jerrold Tesmer.
Director of Nursing Lantha Stevens went through the Community Services budgets. Public Health is waiting on a U-Care grant for $12,750. Stevens said they had applied for a Safety and Health Improvement Projects (SHIP) grant worth $100,000 for planning costs and $180,000 for implementation. If received, all the money would be spent on salaries and mini-grants toward partners. Stevens reported a decrease in administration costs in WIC. It is not yet known if the department will receive a WIC grant. Dahl asked if the county should spend the money, assuming they would receive reimbursement. Stevens said they were still looking at costs.
In the Nursing Service budget, the county took into account that nursing homes would no longer be reimbursing them for pre-admission screenings. Stevens said the county would lose $40,000 there, though the Department of Human Services has said the county will be more efficiently reimbursed. "We have no way of knowing that," shared Stevens noting it would show up as an expense in their budget without the reimbursement. Dahl mentioned that revenue capture is the most important thing to understand moving forward in the budget.
A public hearing for the county's proposed 2014 budget and levy were set for Nov. 26, to begin at 6 p.m.
In other business, the commissioners dealt with the following issues.
The county agreed to create a new access easement for Erlyn and Sandra Marzolf, who had released their original access easement so the county could begin construction on the anticipated veterans cemetery. The county will pick up the cost of surveying and constructing the new access. Until completed, the Marzolfs have secured temporary field access via the Harmony-Preston Valley State Trail, or until Jan. 1, 2014.
The board approved the warranty deed of land where the proposed veterans cemetery would be built to the State of Minnesota. County Attorney Brett Corson said this was basically a promise to the state that the county was giving a good title to the four parcels of land to be used for the cemetery. Amunrud said things have been moving quickly because the federal government has deadlines for this process. Dahl thanked the public for enabling land donations to go forward. "It's not often you get to participate in something like this to honor our vets," he shared.
The county received 2012 and to-date 2013 numbers from the Southern Minnesota Regional Medical Examiner Office concerning suspicious deaths in the county during that time. R. Ross Reichard, M.D., presented the reports compiled from investigations and postmortem examinations. The office had 69 cases reported to them in 2012. Of those, nine deaths had been certified and undergone autopsies, external or internal examinations. Fourteen other deaths had been certified without examinations. Cardiac issues were the most common factors behind most deaths. No homicides were reported and two suicides had been certified. In the to-date 2013 report, the office had already evaluated 48 cases with one homicide, two suicides and one auto accident. Reichard said the office was on pace to exceed last year's casework. Sheriff Daryl Jensen reported that his office had been pleased with communication between the county and examiners.
Jensen received approval to send three sheriff's office vehicles to auction. The board also approved a joint powers agreement with the Minnesota Public Safety Bureau of Criminal Apprehension to link with the county's new e-charging system. Jensen said the new record management system from Law Enforcement Technology Group was being installed. He also addressed frustrations by local fire and EMS crews who are not on the new 800 MHz dispatch communications system. Cars are being equipped with a patched network of both 800Mhz and the old VHF systems.
The board hired a temporary office support specialist for Community Services, a replacement deputy sheriff and discussed how they would go about filling and defining the county coordinator position to be left by Karen Brown at the end of the year. Bakke said he felt the current coordinator position was what the county wanted. Dahl pointed out Brown's role had grown since she started and asked if the county should advertise a past job description. The issue will be brought up again at the next board meeting Aug. 27.