EDA rejects Ellingson offer, learns of high demand for downtown business space
Wednesday, February 08, 2017 10:42 AM
The Spring Grove Economic Development Authority (EDA) voted to pass up an offer to sell five industrial park lots on Feb. 1. The ballot was unanimous.
Members heard a report from EDA director Courtney Bergey on the matter before the EDA. President Howard Deters made the motion, which occurred after considerable debate.
The motion stated: “The EDA at this point is not comfortable in moving forward with the sale (of lots) to Ellingson Elevator, in light of the current lease we have and pending the outcome of the BDPI (Business Development Public Infrastructure) grant.”
Those grant dollars would help to pay for a city sewer extension to the park and surrounding area, increasing the value of the lots.
Bergey said that representatives from the company thought that the $9,000 per lot asking price was too high, and they made no counter offer in excess of the $5,000 per lot, which Ellingson Elevator suggested the parcels should go for at an earlier EDA meeting.
The lots average approximately one acre each. There are seven unsold lots at the park, and the five lots in question are valued at $18,000 each on the tax roles, she pointed out.
No one from Ellingson Elevator attended the Feb. 1 meeting.
During private discussions, the company was unwilling to guarantee the creation of two full-time jobs paying $16 per hour or more, Bergey added.
Other proposed terms which Ellingson Elevator “did not comment on” included the establishment of a TIF district at the site, city easements for sewer and a future access road, and a requirement that groundbreaking take place within 24 months.
Failing that, the EDA asked for the right to buy back the land at the original sale price, but the company felt that fair market value should be used if the development failed to materialize, Bergey said.
“The main thing to consider is the price and the jobs and the tax value that would come from that (offer),” she concluded.
A comparison of the projects
A tangled set of circumstances affected the decision. Bergey stated that the Ellingson Elevator project (as described by the company) would generate roughly $8,200 in city taxes annually and capture an estimated $75,085 in TIF dollars over 10 years to help to pay for the proposed sewer.
That $15,000-per-lot TIF total does not compare favorably with the $77,000 per parcel that a Spring Grove Soda Pop expansion would generate from the other two currently undeveloped lots.
In addition, the five lots that Ellingson Elevator sought are currently leased to the Spring Grove Motocross (SGMX), which has asked to continue its operation at the site in 2017.
Bergey said that she’d spoken to Lisa Manske of SGMX, and, “She’s been very patient with us. It’s made me feel pretty bad to talk with her and understand what we’re putting her through... not knowing if their business is going to be here, or if they should start looking for sponsorships, or if they’re going to get kicked out.
“She said that she wasn’t really willing to give us a buy-out number. At this point, she kept going back to, ‘We just need another year to pay off our debt and clean up all the loose ends.’
“They want this year, and then they might re-evaluate. So, in short, we did not get a price. But, that also means that we might avoid a legal process if we decide to just stick with the lease and not sell the land (for 2017 construction).”
Mayor Sarah Schroeder said that the sewer extension “wouldn’t happen until 2018, so they can still have this year.”
“I think that there’s a misconception that she’s offering us this huge number for a buyout,” EDA staffer Ryan Yetzer commented. “She’s never done that. She just wants a year so that she can pay back her costs.”
“They do bring business to town when they have their meets,” member Lorilyn Dehning said.
No new news on the grant
As far as the BDPI grant from DEED (the Minnesota Department of Employment and Economic Development), no definite decision has been made, but chances remain good, Yetzer reported.
“I called the director of the (BDPI) program,” he said. “She gave me some numbers, and it’s good news. There are two projects ahead of us, and there’s currently $300,000 left in the fund. She thinks that they will get those two projects out with that $300,000, meaning that we would be next.”
The program can expect $1.3 million in “base salary” in July of 2017, unless those dollars are specifically cut from DEED, Yetzer added.
Additional state bonding dollars could total up to $10 million, depending on the decisions of the state Legislature.
“We feel good about it at this point,” Yetzer concluded.
“We have really no way of knowing what the final costs will be,” Bergey said. But the city should begin to consider how it would provide the local match.
“Whether that’s a bond, or whether that’s some sort of low-interest loan. We’re pursuing a few things in research right now.
“I think that up until now, I’ve been thinking ‘Well, we’ll see,’ but now I’m starting to feel like this could be a real possibility within the next six months.”
Schroeder said that the City Council is convening a special meeting in March to discuss comprehensive planning. “Maybe that would be a good time to talk about that,” she noted.
Other news from the board
Members tabled discussion on fix-up fund applications. With just one of those received so far from a local business (earlier that day), the group decided to begin their review process at a later meeting.
On a related note, an appeal from the Spring Grove Area Veterans Memorial Group to use fix-up fund dollars to help to pay for moving the WWI monument in the city park was shelved after Deters said it would probably “deviate from the guidelines.”
The matching grant program was set up to help storeowners make improvements to their facades.
Bergey reported, “We’ve had a lot of people interested in downtown space. I think we have a list of five or six people, so what we’ve been doing is trying to figure out an inventory of what the available space actually is, and what that looks like. That way, we can better connect people with leasing agreements or something (similar).”
Next meeting set
The next regular meeting of the Spring Grove EDA will be at 7 p.m. on Wednesday, March 1, at 168 W. Main St.