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County denies Harmony’s request for forgivable loan

Fri, Oct 4th, 2013
Posted in All Government

County Attorney Brett Corson offered his comments on Harmony EDA’s request for financial assistance at the county board’s October 1 meeting. The Fillmore County EDA had voted to send the request for the loan to the county board for the board’s consideration several weeks ago.

After the request for the approximately $55,000 forgivable loan was presented to the board on August 20, the board asked that the county attorney look into the legality of the request and to determine if it was consistent with the county EDA’s loan policy.

The Harmony EDA contended that over a 10 year period the county would gain over $50,000 in new taxes when the facility was privatized. Seventy-five percent of those gains would add up to over $38,000 over the 10 year period. If the loan had been approved, the Harmony EDA request was that if the property taxes were paid over the next 10 years, the loan would be forgiven. The second part of the request was that the $19,000 which was recently returned to the county with the de-certification of a TIF District be returned to the city. Together, a portion of the additional property taxes the county would receive due to privatization and the money returned to the county from the de-certified TIF made up the $57,168 request.

Harmony EDA found a buyer for Heritage Grove senior housing facility. It was made clear that the sale would go through with or without the county’s assistance at the board’s August meeting. The 34 unit facility was constructed in 2001 for about $3 million. Harmony Mayor Steve Donney argued in a letter that “the county as a whole has benefited financially from the construction and operation of Heritage Grove.” It was built to fill an unmet need for senior housing related services. Donney maintains the “private sector could not, would not, build such a facility on its own.”

The rub is that the buyer agreed to pay $2 million for the facility which will leave the Harmony EDA with a $500,000 shortfall. Even with a planned city Tax Abatement for 20 years, there still is a $120,000 shortfall. The hope was to have the county provide about $55,000 as a forgivable loan to offset about half of the shortfall.

Corson concluded that the loan would possibly not be in compliance with the Fillmore County Business Subsidy Policy. He listed numerous other concerns including the establishment of a precedent. He suggested the approximately $10.20 per tax payer parcel over 10 years for the city would not necessarily create a financial hardship if the loan was not provided by the county.

The City of Harmony in a letter made a rebuttal argument point by point. Commissioner Duane Bakke said he was not in favor of granting the loan. Nineteen thousand dollars was sent back to the county after a TIF District de-certification. However, the city of Harmony received $67,000 and the school district received $8,500. Bakke said the fact that the city received $67,000 was never brought forward to us.

Bakke went on to make it clear that he has been against extensions of TIF. He questioned whether other cities could ask for help to “bale them out,” citing Preston’s NTC and Lanesboro’s dam.

It was noted in the mayor’s letter that the city of Chatfield in 2008 enjoyed a cooperative tax abatement which indirectly benefited a private developer, suggesting that the provision of funds to indirectly benefit a private party is not a new concept. Bakke insisted that was to help the city to build infrastructure for additional housing.

Bakke stated that the board is asking department heads to cut $175,000 from 2014 budgets. He questioned where this $58,000 is going to come from.

Chairman Randy Dahl asked where the county’s share of the de-certified TIF money ($19,000) went and if it was tied to anything. It was explained that it goes into the county’s general fund. Bakke added it goes to offset the tax levy.

Mayor Donney said the de-certification money was new and unplanned tax revenues and noted that the Harmony EDA could have used all the money for a project. He continued that they had hoped to sell Heritage Grove at a wash but they only had one offer. Donney insisted county residents and taxpayers have benefited, but the city of Harmony taxpayers are paying more. He said the $19,000 was an unexpected windfall for the county and the city could use the whole amount.

Donney argued against Corson’s contention that it is a business subsidy; suggesting therefore, it would not be against the county’s policy.

Bakke made a motion to deny the request. Commissioner Marc Prestby said he didn’t like the process, suggesting the request should have went back to the county EDA because of a lot of unanswered questions. Commissioner Tom Kaase thanked attorney Corson for his detail in laying out the issues helping him come to a decision. The motion to deny was approved.

Veterans Cemetery Update

Attorney Corson reported that all the necessary paperwork for the transfer of land has been completed. Bakke said that he had already requested to have the 18 acres of CRP released from the program which are included in the 167 acres being transferred. He had asked for forgiveness of the penalty for early release as their is no sale of the property.

County coordinator Karen Brown thanked Corson for the time spent getting everything in order. Last week it was announced that the Department of Veteran Affairs has awarded a $10 million grant which will cover 100 percent of the costs to establish the cemetery.

There will be a ceremony to formally donate the land later this month. Later there will be a ground breaking and dedication ceremony.

Community Services

The board continued the discussion on the replacement of the social services manager. Gail Bunge’s request to retire at the end of the year was approved at the last meeting.

Karen Brown said that Winona County wants to continue their relationship which includes a shared community services administrator. The social services manager serves under the Community Services umbrella which includes Veterans and Public Health.

The manager is in charge of social services and the income maintenance area. It is a position that includes managerial, supervisory, and budgeting roles. Commissioner Chuck Amunrud said he didn’t see how the position will change. A motion was approved to advertise for a replacement.

In 2010 the board redesigned or restructured three departments under the community services umbrella to improve efficiency and save taxpayer dollars. Actual costs for community services administration have been reduced by over 20 percent from 2010 to 2013. An adjustment for wage increases show a weighted savings of 27 percent over the same period.

Other Business In Brief

•Sandra Underbakke’s hire as an interim PC/Technician was approved effective October 2. She will work up to 30 hours per week for up to three months until the position is filled. Underbakke previously held this position.

•County Attorney Brett Corson presented his 2014 salary request. His request was for $96,661 which is 95 percent of the average of counties excluding Fillmore County and the two largest and two smallest counties. It also includes a 1.5 percent cost of living increase given to county employees.

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