Bids sought on substation site prep, grading
THE MOUNTAIN LAKE City Council. Seated front, from left, Council Member Dana Kass, Mayor Mike Nelson and Council Member Darla Kruser. Standing back, Council Member Andrew Ysker, left and Council Member David Savage, right.
The Monday, October 3 regular meeting of the Mountain Lake City Council lasted just 38 minutes – but the public hearing on proposed property tax abatements for a new industrial park on the southwest edge of the city that preceded it ran two hours.
The Mountain Lake Economic Development Authority (EDA) has been negotiating the purchase of the parcel. It is the city’s intention to purchase 26.1 acres, at a cost of $342,000 ($14,250 an acre) immediately southwest of the city, north of Minnesota State Highway 60 and east of Cottonwood County Road 27, for the industrial park. If the property is purchased, it will need to be annexed.
The public hearing was required prior to approving the use of pledging/using property tax abatements as a funding mechanism for the repayment of bonds issued to purchase the land.
Reviewed were the abatements, preliminary bank term sheet, project calendar, bond summary and purchase agreement.
Two businesses are interested in building in the location. These include a road maintenance company and a fast food/gas station/convenience store.
Many attending the public hearing were in favor of the project, but had concerns about the cost. A number of questions, concerns and comments about the project were made by members of the public in attendance, along with the council.
Some of the questions posed, along with answers provided by EDA Director Rob Anderson; EDA Assistant Marva Ott; EDA Board Member Vern Peterson and EDA Board Advisory Members Brad Hanson and Dean Janzen, along with Mayor Mike Nelson and City Council members Dana Kass, Darla Kruser, David Savage and Andrew Ysker, and Mountain Lake City Clerk/Administrator Wendy Meyer included –
+ What is the expected cost and size of the lots? A final design with streets and platted lots has not been prepared. Exact size and cost has not yet been determined. The cost of infrastructure will affect the lot cost. Lots will be large to accommodate the commercial and light industrial businesses that are the types of business most likely to locate there.
+ How to tax abatement bonds work? Property taxes from the parcels listed are being pledged to make the bond payments if land sales and other income are not enough. The owners of these properties will not notice any difference on their property tax statement or when they pay their property taxes. The amount of property taxes paid by these properties will not be affected.
+ Could this project raise property owners’ property taxes? Yes, if the project does not cash flow, property taxes might need to be increased. The yearly bond payment for the land purchase will be approximately $32,000. The council’s goal every year is to keep property taxes as low as possible. But, costs go up. An increase caused by this project could be offset with cuts in another area of the budget. Property taxes would not rise if the city makes offsetting budget cuts.
+ Will the new businesses hurt existing businesses? The two existing gas station/convenience stores were contacted by the EDA and were asked to consider participating. Neither business was interested, so another gas station/convenience store company is being sought by the franchisee.
+ Why this location? Why now? The property was identified several years ago by the EDA as being the best location for a new industrial park. The cost to install water, sewer and electricity to this parcel would be cheaper than other areas looked at because utilities are nearby. The property has high visibility and easy access from Highway 60. The city needs another industrial park. There is only one site remaining in Jennie’s Subdivision on the southeast edge of the city. The owner of the 26.1 acres was not interested in selling, but has since passed away. Now, the family wants to sell the land, with a closing date of November 1, 2016.
+ Why can’t the sale wait until there are written commitments from businesses? Businesses are unlikely to commit in writing. Businesses, once they have decided to build, want to get started as soon as possible. Waiting to develop the property until there are firm commitments would cause these businesses to move to neighboring communities where developed industrial park lots are “shovel-ready.” In addition, if the city does not buy the property by November 1, the family will sell it to someone else, more than likely, a farmer. The property could be acquired by condemnation (eminent domain) but that process is not popular and causes hard feelings.
+ Could a private developer be found to buy and develop the property? This is unlikely to happen in smaller outstate cities. The city will need to develop the industrial park itself. Industrial parks in neighboring communities have been developed by that city of its EDA.
+ What is the cost and timeline of infrastructure? Because there are two interested businesses, the EDA envisions that infrastructure work will be done in 2017. In 2015, the city’s engineers estimated that infrastructure cost for 50 acres – the 26.1 acres being considered as well as parcels to the east – would be $2.5 million. The property being purchased is 26.1 acres. No revised estimate has been prepared.
+ The cost of the land, $14,250 an acre, is high. Why is the city paying that much? The family wanted that amount, and was not open to negotiation. They are unhappy with the city. when Highway 60 was moved in the 1980s, the farm was divided by the highway, making it less valuable. The family feels the city should have done more to prevent this from happening.
+ A farmer will not pay $14,250 an acre. Why can’t the city purchase the land for less than $14,250 an acre, but more than a farmer would pay? The family is not unhappy with any farmers, they are unhappy with the city. If the city is going to purchase the property, the family wants $14,250 an acre.
+ If the city purchases the land, installs infrastructure – and no lots are sold – how much are residential property taxes going to increase? The school district, when preparing for a building project and bond referendum, provides residents with the approximate property tax increase based on the value of the house or business. These figures have not been requested from the Cottonwood County Auditor/Treasurer’s office, but could be.
The purchase agreement was ready for approval at this council meeting. The sale is contingent on the council approving the issuance of bonds at its Monday, October 17 meeting. Discussion was held on the impact of delaying the authorization of the purchase agreement until October 17, and on penalties if the city defaulted on the signed purchase agreement.
In the end, the council approved the resolution approving the use of tax abatements to assist in financing the acquisition of land for an industrial park.
However, city staff was directed to get written commitments from the two groups interested in purchasing lots, an updated cost of infrastructure and property tax increases based on the value of a home or businesses if the project has no lots sales or other income.
Council calls for substation site preparation, grading bids
Preliminary drawings for the substation site in the southeast part of the city were reviewed. Council members called for site preparation and grading bids.
The history of a need for an additional substation dates back to February 2015, when a report on the utility’s substation, prepared by Mike Thielen, Utilities Plus Energy Services, the electrical engineer for the City of Mountain Lake, was presented to the Utility Commission.
The 2015 report identified these following concerns –
+ The transformer and other equipment is 41-years-old.
+ At 41 years, that means there is a 10% chance of transformer failure.
+ At 50 years of age, the failure rate is 50%.
+ A transformer maximum load should not exceed 6,250 Kva (a KVA is simply 1,000 volt amps).
+ With the current load growth, the transformer will reach 6,250 KVA by 2024.
+ Transformer failure would result in outages that are costly, requiring overtime and the purchase of diesel fuel to operate the Municipal Power Plant’s generators, and/or temporary equipment rented to provide electricity to the city.
+ Recommended the construction of a second separate substation which would reduce the interruption of service to customers. The estimated cost of a second separate substation was estimated at $1.5 million to $1.75 million.
The report also noted that the city’s current transformer capacity does not leave any space capacity for new load increases by new customers over-and-above normal load growth. An example is the additional equipment necessary for the operation of Mike Specialties (MSC) also calls for the need for additional power.
Pictured below are the preliminary drawings for the substation site –
In other business
+ Adopted a city ordinance amendment concerning the salaries of Mayor, Council Members and Members of Boards and Commissions. This amendment establishes that compensation for day-long out-of-town meetings be $75.
+ Set Monday, November 14, 5:30 p.m., as the date the council meet as the Canvasing Board to canvas the Tuesday, November 8 municipal election results.
+ Reviewed the city’s snow removal policy, with no changes made. The policy was adopted as presented.
+ Reviewed and approved a contract for ice and snow removal, sanding, salting and hauling of snow on Cottonwood County State Aid Highways 27 and 29 for a total of three miles with Cottonwood County.
+ Discussed abatements at several public nuisance properties.
+ Accepted the resignation of Nathan Harder from the Planning and Zoning Commission.
+ Tabled an unpaid Utility bill to the Monday, November 17 city council meeting.
+ Closed the open meeting to hold a pair closed meeting on two issues – to discuss litigation in Yoder v City of Mountain Lake as per Minnesota Statute 13D.05 Subd. 3b as well as to consider union contract negotiation strategies pursuant to Minnesota Statutes 179.01 – 179A.25. Action from each of the closed meetings included –
- Accepted the settlement in Yoder v City of Mountain Lake and authorized Mountain Lake Mayor Mike Nelson and Mountain Lake City Administrator/Clerk Wendy meyer to sign.
- Decided that Council Member Darla Kruser, Council Member Andrew Ysker and Administrator Meyer will meet to prepare an offer for negotiations with Law Enforcement Labor Services (LELS).
City of Mountain Lake Meeting Dates
+ Mountain Lake City Council meets the first and third Mondays of every month at 6:30 p.m.
+ Utilities Commission meets the second and fourth Thursdays of every month at 7 a.m.
+ Economic Development Authority (EDA) meets the second Friday of every month at 12 noon.
+ Lake Commission meets the second Monday of every month at 6:30 p.m.
+ Library Board meets the second Wednesday of every month at 4:45 p.m.
+ Police Commission meets the second Thursday of every month at 7 p.m.
+ Planning and Zoning meets the last Monday of the month, if needed.
+ Tree Commission meets quarterly – January, April, July and October – at 7:45 p.m.
