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Harmony City Council approves sale of Heritage Grove

Fri, Jun 14th, 2013
Posted in Harmony Government

By Jade Sexton

The Harmony City Council and the Economic Development Authority (EDA) held a special joint meeting on June 11 to discuss the purchase offer for the Heritage Grove assisted living center.

Remax Realtor Roxanne Johnson was present, as was Ron Braasch of Braasch Commercial Real Estate. Mark Dickson attended representing the Oxford managing company that has managed Heritage Grove for the last few years.

EDA President Chris Skaalen explained the purchase agreement was signed by the EDA and the buyers, but needed final approval from the city council.

The council approved the purchase agreement with Clara House, LLC for $2 million.

Mayor Steve Donney said the EDA and the city have been looking to sell the property for a long time, and there aren’t many buyers out there. Councilor Jim Bakken agreed. “I think it’s as good an offer as we’re going to get,” he said.

Roxanne Johnson agreed. “This property belongs in the private sector,” she said. “That was the goal all along.”

Mike Bubany of David Drown Associates, explained the city has outstanding debt on the property that makes selling more complicated. The bond has a call option, which means the city agreed not to pre-pay the amount for eight years, which will be up in 2016. He explained creating an escrow that would allow the repay the bonds. It costs money to create an escrow, and with the principal, the fees, and escrow costs, the amount comes to around $2.5 million. This leaves the city with a $500,000 shortfall.

Bubany mentioned that Heritage Grove will now be a taxable property, which it has never been since it was owned by the EDA. The city can expect to receive $25,000 in taxes next year. The city could use a tax abatement to cover the shortfall. They would have to have a public hearing to inform residents that the taxes on the property can cover the principal. The interest portion would have to be paid with tax levy, and would be around $14,500 a year.

Bubany also reminded the council that the city currently budgets $40,000 a year to subsidize Heritage Grove, much more than the amount that would have to be levied.

Bubany will be meeting with the Fillmore County EDA Director Chris Gastner to discuss a possibility of county participation, as the county will also benefit from the taxes.

As for the bond sales, Bubany recommended negotiating with a single party instead of going with the open market. He had approached Skaalen, who is President of the First State Bank in Harmony. He added that with a local bank, there is flexibility.

Donney asked about using reserves instead of using a general obligation bond. It would save money, but Bubany had some concerns about using it up, as it’s nice to have cash available when it becomes needed. There was some discussion about using reserves to cover half of the $500,000 shortfall.

A public hearing for the tax abatement will be held at the regular meeting on July 9.

Chamber Requests

Chamber of Commerce Director Emily Ellis showed the council a plan for the sign that will be going up outside the Visitor’s Center. A large tree was recently removed from the spot, and Ellis felt a sign was needed to guide people to the Visitor’s Center. It will be 48 inches wide and 24 inches tall and visible from both sides.

Ellis also said Ruben Hershberger had offered to bring a garden bench and two chairs to go outside the Visitor’s Center. The council approved, as long as they are not permanent and the Chamber and the City are not responsible if anything happens to them.

There was also discussion about the glass front door of the Visitor’s Center, which was recently broken by a wheelchair. Ellis asked about getting an electric opener for the door. She also mentioned the doors are very narrow and hard to get wheelchairs through. Illg will be looking at the cost of replacing the door and installing an opener.

Ellis also mentioned a golf tournament going on June 30, and the plans for the 4th of July, which are going well. There are 50 parade entries so far, and buttons are available for sale now. The beer tent will be open that week on Wednesday, Thursday, and Friday.

Road patching

In his building and maintenance report, Chris Johnson brought up some patching that needs to be done on the road that goes by Kwik Trip. Brett Grabau from Bonestroo drew up informal plans to show where the work needs to be done. Illg said that Kwik Trip is willing to help with a portion of the cost, as the road benefits them as well. The estimate total cost is $15-16,000, but they will be getting quotes from local contractors.

Garbage for Snowbirds

After a discussion at last month’s meeting regarding garbage fees, Illg put together a policy about snowbirds, or people who leave Minnesota in the winter and live in southern states for a few months. There was concern about having to pay for garbage pick-up even when they are not using the service.

The new policy states that if a person is going to be gone for at least three months, they will come into the office after they return home and will receive a credit for the amount paid during those months.

Other Business

Illg spoke to the council about the hail damage that occurred in several spots in town. Insurance will be covering the damage done on the roof of the bathroom at the north park, as well as the shelter there. There were also some dents at the Community Center, but Illg said they were very minor and he doesn’t think anything needs to be done right now.

The council approved an increase in electricity and water rates. For average usage, the increase comes to 1.62 percent.

The liquor license for Wheelers was approved on the condition that the proper documents are turned in by the end of the week. The application was due in May.

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