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Preston reviews industrial park feasibility study

Fri, Apr 11th, 2014
Posted in Preston Government

City Engineer Brett Grabau, Stantec, presented his feasibility report for the North Industrial Park and utility improvements at the Preston City Council’s April 7 meeting. Preston attended to an unusually long agenda involving four public hearings associated with Dairy & Farm and Gehling developments north of Highway 16 and west of Highway 52.

The North Industrial Park is to be located in the southwest quadrant of the Highway 16 and Highway 52 interchange. Grabau noted that a couple of businesses are interested in breaking ground this summer in the proposed North Industrial Park. The possible commercial/industrial development of the two interested businesses combined with the possible annexation of the Dairy & Farm and Gehling properties has brought about utility extension discussions by the EDA and the Utility Commission. The feasibility of the extension of utilities to serve parcels on both sides of Highway 16 was part of the study. There would also need to be improvement to a proposed roadway for the Industrial Park. Access would be off Golfview Drive setback off of Highway 16 for the Industrial Park.

Storm water improvements will be a large part of the development. Grabau explained that with the additional hard surfaces, storm and water retention will be required. He proposed a retention pond requiring 1.19 acres of the Industrial Park.

Councilman Robert Maust suggested the collection pond be moved to property on the other side of Highway 52 to reduce land usage, which is limited in the proposed Industrial Park. There is potentially room for only three lots, possibly just two. He insisted that run off could be controlled without a pond on the top of a hill. Grabau agreed that theoretically Maust’s suggestion would be possible, but more expensive.

Mayor Kurt Reicks was in favor of moving the placement of the retention pond saying it would be great to get the pond out of the industrial area, adding the pond would be further out of town. Reicks said that with the Veterans Cemetery coming, our vision of Preston has to be different than seeing three weedy ponds when coming into town. He maintained that citizens are not pleased with the two Highway 52 ponds that we already have.

City Administrator Joe Hoffman commented that we are assuming costs are the same to treat water off site as on site. Grabau was in the end directed to look into another option for the storm water containment pond, to see if it could be feasibly built on the other side of Highway 52 further down the hill and to see if MPCA would approve.

Estimated utility improvements for phase 1 and 2 water main and utility improvements would total $482,895.

Two options were discussed for site improvements. The higher cost would have more roadway and was estimated to be $531,043. The lesser cost would produce less roadway at $413,104 and was initially recommended by Grabau. However, if the storm water containment pond was moved, this could change that recommendation.

Total expenses for land, streets, water, and sewer were estimated to be about $696,911. Total revenues including lot sales, TIF, and DEED grant were estimated to be $572,177. This would leave a deficit of about $125,000.

Mike Bubany, Drown and Associates, said the maximum risk to the city is about $300,000, but it is more likely the $125,000 figure. He suggested the benefit gained by installing the infrastructure is the incentive it will have for business to come to the city, to open things up for further development north and west of the city. Maust maintained that we have to look at the bigger picture. Bubany added that taxpayers will have a little skin in the game to open things up. Reicks added that development in Preston is moving north of the city.

A DEED grant could pay up to 50 percent of the cost of extending water and electricity. Hoffman said they estimated a possible grant of over $300,000. Resolutions were unanimously approved to apply for business development infrastructure grants to support public infrastructure for the Industrial Park and for the Preston Dairy & Farm Association.

It was noted that the $125,000 not covered by revenues could be added to the bond to be obtained for the 2014 street improvement projects. That figure could be increased if the suggestion to move the containment pond added additional costs.

Public Hearings

During all four public hearings there were no comments from the public.

•Business Subsidy Policy

Hoffman explained that the city’s business subsidy policy was adopted in 2004. Staff recommended the adoption of a new business subsidy policy with criteria that is better suited for today’s developments. Bubany said the new policy will provide more flexibility. The new developments will eventually increase the city’s tax base, but not necessarily add new jobs. A resolution to approve the new policy was approved.

•TIF District number 7

During the second public hearing concerning Tax Increment Financing District number 7, Bubany explained how a TIF District works. For redevelopment purposes the TIF could last up to 26 years. Property taxes on the value of the properties as they are today will continue to be paid out to the city, school district and county. Ninety percent of taxes collected due to the improved value (increased market value) will be reimbursed to the companies (Preston Dairy & Farm and Gehling Auction) each year when collected until the number of years in the TIF agreement is up or until redevelopment costs have been returned to the companies. The risk is the developer’s and not the city’s.

The estimated costs to be paid for with TIF are for land acquisition and site improvements ($341,631). Bubany noted the companies would not likely want to be annexed into the city without the TIF. The TIF will draw them into the city improving the city’s tax base after the TIF agreement is satisfied.

Consideration to establish TIF district number 7 will be made at the special city council meeting to be held on April 9. The TIF district can not be established prior to the annexation of the two parcels.

•Subsidy Agreements

Two more public hearings were held on proposed business subsidy agreements with Preston Dairy & Farm and with Gehling Auction.

Bubany reviewed basic terms for each agreement noting what will be the responsibilities of each company and the city.

The city would agree to extending sewer and water contingent on receiving a state grant from DEED. Ninety percent of the tax increments generated from the redevelopment of the properties will be used to repay a maximum of $150,000 for each business over a period of up to 20 years.

The city council will act on each of these proposed agreements at their April 9 meeting.

Other Business In Brief

•The ambulance service will be holding a fundraiser open house on May 16 at the Fire Hall. Tickets ($15) for a steak dinner prepared by Fillmore County Cattlemen’s Association are available.

Ambulance director Ryan Throckmorton explained that a $25,000 competitive grant from the American Heart Association for rural Minnesota could be applied for to implement 12-Lead cardiac monitors. He said the grant is a one time opportunity.

Throckmorton said one cardiac monitor costs $32,000. However, with the grant it would be discounted and two monitors could be purchased for $45,164. After the grant, the ambulance service cost would be $20,164 for two monitors. He said that with Wi-Fi connections, a patient can be treated while being transported and sent directly to the cath lab, by-passing the emergency room.

The council approved the purchase of two monitors subject to receiving the grant.

•The EDA recommended approval of a $5,000 loan to Melvin Hayner for the Driftless Flyfishing Company. The loan from the revolving loan fund was approved.

Three housing incentive applications had been received for rehabilitation work on homes. All three were approved as long as all guideline qualifications are met as recommended by the EDA. Rehabs must have a minimum investment of $5,000. Incentives in the program could total up to $1,330.

•Teal ribbons are being placed around the city in recognition of Sexual Assault Awareness Month.

•Annexation Final

The Preston City Council convened a special meeting on April 9 to complete business regarding the annexation of the two parcels northwest of the Highway 16 and Highway 52 intersection owned by Preston Dairy & Farm and Gehling Auction. City administrator Joe Hoffman confirmed that notice was received on April 8 that the Chief Administration Law Judge of Minnesota approved the annexation of the parcels.

With the annexation finalized the council passed a resolution establishing TIF District number 7. Two separate resolutions were then adopted completing the process by approving a business subsidy agreement between Preston Dairy & Farm and the city of Preston and by approving a business subsidy agreement between Gehling Auction and the city of Preston.

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