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Harmony Council discusses antique mall and other projects

Fri, May 16th, 2008
Posted in Government

Plans will soon be underway for a new antique mall in Harmony's Industrial Park. Terry and Jean Ingvalson of Mabel will be putting up a new building which will house multiple antique vendors. Mike Bubany of David Drown Associates attended the City Council meeting on May 13 to explain the TIF (Tax Increment Financing) plan for the lot, which was approved by the council.

According to Bubany, the lots in the area cost $12,000, plus the tax assessments of $19,000, or a total of around $31,000. Making the antique mall a TIF district will mean the city will capture all of the new taxes that are generated, such as property taxes. The taxes will go directly to the city until it has repaid itself the cost of the land plus interest at five percent.

Bubany discussed the budget for the project, which will be much larger than needed at $640,000. They are making room in the budget for future projects in the Industrial Park area if they arise. There is a nine year maximum for the TIF district, and the city will be receiving approximately $7,700 a year in tax increment revenue after administration fees and the mandatory percentage that goes to the state.

Bubany showed the council a chart with the hypothetical decrease in tax rate, which shows what would happen to the tax rate in Harmony if the project was done without using TIF. The decrease was less than one percent. He also estimated the impact on city service costs to be around $261 a year. That is what using TIF for the project will cost the other residents of Harmony until the TIF is paid off, since the property will not be a part of the whole tax base for those years.

The council passed the resolution to set up the TIF district, the inter-fund loan and the development agreement set up by City Attorney Richard Nethercut.

Alley Improvements

Bubany also answered questions about using TIF money to make improvements on the alley behind the bank on Main Street. The area is part of TIF district 1, which has been there since 1985. The city would like to place electrical line and tear up the alley for reconstruction. Bubany said that it is perfectly fine to use TIF money for the improvements, as long as it is stated that possible building expansions in the area could not be done without it.

Brett Grabau was also at the meeting to talk about the grant the EDA received to put a parking lot in the same alley. He had a few designs that would work, and the one that was the easiest and the cheapest was to have a strip of diagonal parking along the west side of the alley. The area would have 22 paved parking spots, and the alley would be a one-way.

The council also approved using TIF money to install the electrical conduits in the alley this year. Next summer more electrical work will be done.

Mobile Home Park

Recently the EDA (Economic Development Authority) advertised for proposals on potential projects where the mobile home park used to be. The EDA purchased that land to clear it out and have it developed. Council member Sherry Hines, a member of the EDA, stated they received three proposals. The first one was to split it into two parcels and Ivan Vreeman and Chris Johnson would buy the south half. The second proposal was that Ivan Vreeman would buy the whole thing. The third proposal was that Jim Lutes would purchase the entire area and place town homes there.

According to Hines, the EDA had a joint meeting with the Planning and Zoning commission, and as a result of that meeting it was found that there are no problems with the property being classified as an A1, and will not need to go to an R2. At the meeting the EDA decided to reject all the proposals and go to the council for some direction.

Hines wanted to know what the council members wanted done with the property, and whether they should try to recapture expenses on the property, maximize the tax base, or just sell at any price to get rid of it.

"You know what I think," Mayor Dave Kingsley said. "Sell it to the highest bidder."

Council member Gerald Shuck said that the tax base is a major consideration. "Maybe a combination of these would serve the best interest of the city."

Shuck believed keeping property values in the area the same is important, and whatever is built there should be in the spirit of what's in the neighborhood, which is all residential.

Mayor Kingsley expressed his desire to get rid of the property and move on. "We have so many other things to worry about right now," he said. "I don't know why we're talking about this."

Chris Johnson spoke to the council about living in the area for 30 years, and how it was good to see the EDA clean up the mobile home park. He said that he had put in a proposal along with Vreeman, and that Lutes had claimed that he was solicited by the EDA for a proposal. Lutes responded by saying that the EDA had asked him to look at the land.

Vreeman expressed some concerns about buying the entire lot and putting up a storage shed for the golf carts that he sells. Since the area will not be rezoned an R2, he is worried that he wouldn't be able to use the shed for commercial storage.

The council recommended the EDA accept the first proposal, with Vreeman and Johnson both purchasing the south half, and the EDA will establish a price and sell the other half.

City Audit

Lloyd Johnson, who has done the city's annual audit for many years, explained that he is going through a two-year transition phase with accountants Smith and Schafer, who presented the audit report for 2007 at the council meeting.

The auditors found that all of the financial statements they looked at with City Administrator Jerome Illg were correct, and that Illg did a very good job with the accounting for the city. They went over the fund balances for the end of the year, as well as the revenues, expenditures and reserves for the general fund, ambulance, fire, library and other funds.

The property tax levy brought in $397,000. LGA (Local Government Aid) has only increased seven percent over the last five years, and actually decreased one percent in '07. When LGA does not cover cost increases, the city then needs to increase their levy.

The Capital Projects fund has $258,000, and the electric fund has $552,000. There is no debt in the electric fund, and the money is set aside for future maintenance and improvements. The sewer fund debt is getting paid down, and the fire fund has a deficit due to purchasing a new fire truck.

The state recommends having 35-50 percent of the general fund balance unreserved or set aside, and Harmony's unreserved fund balance is 61 percent, or $416,298.

Dobie Days and 4th of July

Cory Scrabeck requested and received a temporary liquor license for Dobie Days this summer, which will be held on August 15, 16 and 17. According to Scrabeck, a few things have been added this year, including an extra day on Sunday with two bands playing. There will also be mud bogs and mud volleyball. Scrabeck will be hiring Premiere Security, who will have three guards to assist the two police officers. The council approved the license pending the proof of proper insurance.

The council also approved a temporary liquor license for the Harmony Area Chamber of Commerce for the 4th of July festivities.

A temporary liquor license fee of $25 was approved. There has not been a fee before this year.

Other business

The Historical Society received a grant to complete their sinkhole project, and have asked the city to be a fiscal agent for the grant. Mark Bishop informed the council that part of the project has already been completed, and there will be a staircase into the sinkhole and signage explaining the karst geology of the area. The sinkhole will be donated to the DNR when completed, who will then be responsible for the upkeep. The city approved as long as they were listed in the insurance as additional insured.

A seal coating bid was approved from Knife River for $32,395.79.

The council also approved a Mutual Aid Agreement with Canton Fire Department, and liquor licenses for the Harmony Golf Course, Harmony Legion, Time Out Sports Bar and Wheelers.

During May through August the City Council will be having two meetings a month, on the second and fourth Tuesdays.

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