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Harmony City Council Report: Harmony discusses tax-free zone

Fri, Aug 15th, 2003
Posted in Features

Mark Thein, Economic Development Authority, outlined a new project the state hopes will help fuel the rural areas economy called Job Opportunity Building Zone. The intent of the zone is to provide tax breaks to encourage expansion and new business growth in the state. The county commissioners signed a resolution showing support for the program in early July."Only rural areas can participate. The state wants Fillmore and 12 other counties to join together", stated Thein. Ten zones with approximately 5,000 acres is the state's goal for the projects coverage. Some of the tax exemptions provided include corporate franchise tax, income tax for operators or investors, sales tax on business purchases, capital gains tax, and employment tax credit for high paying jobs. Qualifying property includes commercial/industrial parcels. Qualified businesses include those in the zone at the time of designation, business expansions to the zone, business startups, business relocations from other states, business relocations from MN if employment is increased by 20% within first year or capital investment is equal to 10% of gross revenues in the preceding tax year. General obligation bonds, land, and school levies are still taxable.Thein said there is property in the Industrial Park at Harmony that would qualify for the program. The city would work around property that is already providing them with "TIF", Tax Increment Financing dollars. (The value that a property adds to a parcel of land is defined as an increment. This translates into dollars for the city.) "I think to compete with other cities we need to participate, though its not the greatest program", said City Administrator Jerome Illg. Twelve years is the longest period of time property can be in the zone. The city would retain the right to any special assessments to property within the zone. City Attorney Richard Nethercut had concerns about a "band wagon" effect with the Tax Free Zone, possibly playing one community against another with no real winners. The regional office wants all applications in for reviewal by August 19. The council approved the application, as the city hasnt had any industrial expansion movement for some time.Fire Department Stuart Morem of the Harmony Fire Department presented a Tri-County Firefighters Association mutual agreement that makes equipment, personnel and other resources available to fire departments within Fillmore, Houston and Winona Counties. There were two major changes within the agreement from past years. Though there has been discussion about making changes to the contract for some time, the April 2002 fire on Lanesboros main street brought the issue to a head. The first change relates to damaged equipment while aiding another countys fire call. Each department shall be responsible for damages incurred with their equipment during a call regardless if it is in their county or not. Each department waives the right to sue another county for losses and damages, if said losses were totally or partially caused by outside officers, employees, or volunteers. The second change modification strikes the $25 per call rate and establishes an hourly charge of $200 with a maximum of $600 for each three-hour period while providing assistance. This is to help cover the cost of providing equipment and employees. Each county requires a policy in place or FEMA will not help reimburse communities when disasters occur. There was discussion on charging a fee to residents for fire calls. Morem pointed out that many insurance policies have a notation on a set amount to cover a call. Still, some residents feel that the service is part of their tax support. Morem noted the agreement is not effective until all communities sign or opt out. This needs to be completed by November. The council will review the subject again at the September meeting. Council approved a gambling permit for the Harmony Legion Bar. The Harmony Fire Relief Association uses the income for such projects as firefighting vehicles, equipment, Jaws of Life tools, ambulance rescue, and other projects. Contamination sitesTim Modjeski and Dave Johnson reviewed their findings on two contamination sites located at 5th & Main and Center & Main. These sites were discovered during the TH 139 project. The first site is believed to be contaminated by a discarded leaking gas tank. The second involves a very old well that showed signs of diesel and gas. Johnson said the old well could be bailed and checked for reappearing signs of fuel contamination. Area businesses would also be looked at to review contamination spreading. MNDOT actually has the easement to both properties but says they dont own it and, therefore, are not responsible. Some of the contaminated soil has been removed already. The city will need to look into the history of both sites and determine past ownership. More additional soil borings and water samples must be completed, with costs of investigation estimated at $10,000-$15,000 per site. Then there is still the cost of clean up and future testing to determine if all contaminates are gone. The city could apply for federal Petrol-Fund money that pays up to 90% of the costs of cleanup. The council will review histories on both sites before taking any further action.Hospital DebtMike Maher, Administrator for Harmonys Hospital, requested the city write off a $103,000 loan that was established in 1994 when the nursing home was sold to the hospital. The business has been paying $20,000 a year to the city instead of taxes against the note. The reason for the request circles around that loan and an additional debt of $867,212 to Gundersen. With these figures butting heads with the hospitals assets, the books show a negative net asset of $850,000. Maher said if the aging heating system should break down, he would not be able to go to the bank and obtain a loan for repairs. Gundersen has agreed to write off $400,000 of their bill and doesnt want to be the "banker" for the local hospital anymore. According to Maher, if Harmony would agree to write off their portion, with an agreement that the city still receive their $20,000 per year payment as usual (for an agreed upon period of time), the hospital would be able to take out an operating loan as needed. "We want to preserve the nursing home, hospital, clinic and Heritage Grove working together, Maher said. The four health care facilities provide quality care for whatever stage an individual is at in their life noted Maher. The council showed concerns over forgiving the loan and not having any leverage in maintaining the $20,000/year income. The city attorney will research the issue and come back with a recommendation.Other businessApproved the refinancing of the $215,000 General Obligation Bonds for the Fire Station at 2.9%.Approved a $155,232.25 payment for blacktop or TH 139 project.Gary Giltner, Wastewater, noted that the outfall line is backing up. Repair work needs to be completed. After 7/23/03, levels of phosphorous will be monitored, which effects plants operation efficiency. He also stated the city received a Certificate of Commendation Award from MPCA for last year not having any permit violations.City Administrator Illg is preparing 2004 budgets and request input from departments. The city must purchase a trench box, (mandated equipment) at an approximate cost of $10,000. The Fire Department will be approached for a donation and the possibility of working on a grant to pay for it.

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