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County okays Hillside Estates tax abatement

Fri, Apr 18th, 2008
Posted in Government

PRESTON - On April 15 the Fillmore County Board unanimously adopted a resolution approving a property tax abatement for infrastructure improvements for Hillside Estates in the city of Chatfield. Hilltop Estates includes the new elementary school to be constructed this year and a residential subdivision which may one day have as many as 362 homes. The abatements will reimburse the city for the extraordinary infrastructure that will become necessary to reach an area 260 feet higher than Main Street.

The special meeting of the board was to allow a continuation of the public hearing first held on March 25. Mike Bubany of David Drown and Associates again summarized the projects including a water tower which is to be the sole responsibility of the city of Chatfield, a booster station needed because of the elevation and a new access road, Hillside Drive, to connect the existing subdivision to the development on the hill. Bubany added that the first residential phase of the project has 17 lots. The area will have a second access off Hwy 30. The development is in the Southeastern part of Chatfield.

The proposed abatement will redirect 75% of the county and school district portions of the property taxes on the new residential properties to the city to finance the infrastructure improvements. Chatfield will pay for the costs of the road and booster station through the issuance of general obligation bonds. The bonds will be paid off in part from the city's tax levy, special assessments, collection of water revenues and in part through the redirection of abated taxes from the school district and the county. Twenty-five percent of the property taxes will be distributed to the city, school district and county as usual. Residents on the abated properties will pay taxes on their properties based on their values the same as any other property owner.

Public Input

Two women addressed the board opposing the abatement plan. Barbara Upton of rural Fountain and a long time teacher again insisted that if the board approved the abatement they would be enabling a bad plan. She felt there was a need for a judge to remand an additional thirty days to give the public longer to comment. Upton complained that the public is unaware of all that is going on. She worried about the "Decorah Shale" that the road will need to go through. Upton was informed by Gregg Downing, Minnesota Environmental Quality Board, that an Environmental Impact Statement (EIS) would not be necessary.

Chairman Randy Dahl asked County Attorney Kelly Wagner if the county board was the entity that makes a decision on environmental requirements. Wagner answered that they were not. Dahl requested that public comment be on the issues that the board needs to decide on.

Upton went on to question the use of school district tax revenue to assist a developer. She protested the use of school designated money for anything outside of education.

Pat Capek was concerned about building on Decorah Shale and agreed that the approval of the abatement would be enabling a "bad decision." She advised the board of her experience with Decorah Shale as her home was on Decorah Shale and her basement was most always wet because of the springs. She maintained that the proposed project would be an "unwise" use of the people's money. She noted that the city of Chatfield does not have an ordinance regulating use on Decorah Shale, but added that the county does.

Commissioner Questions

Commissioner Chuck Amunrud asked about the abatement cap limited by Minnesota statute. Bubany said that the largest amount to be abated by the county would be $140,000 in one year and the cap is $200,000.

Commissioner Duane Bakke asked about the county's total abatement to be paid to Chatfield during the maximum of 15 years. Bubany explained that the total cost of the infrastructure improvements to be abated, including interest, is estimated to be 3.3 million dollars, the total of all costs over the life of the bond. The final maturity of the bond would be in 2029. The total paid to the city of Chatfield will not exceed 1.1 million dollars or 33% from the county. Bubany added that if the bids come in lower than expected then the county would be still paying only 33% of that figure. The county only gives up 75% of the revenues it collects on those particular properties of Hillside Estates, and only until a period of fifteen years is up or a total of $1.1 million has been abated by the county, whichever comes first.

Bubany noted that changes were worked out since the county's first public hearing of March 25. Amunrud voiced a concern at that time about having Fillmore County property tax dollars being abated for a sewer pipe which is to be built when needed many years into the future and partly in Olmsted County. The county abatement will not go toward the funding of the sewer pipe. The county abatement will be used solely for financing the road and the booster station.

Chris Gastner listed the changes made in the resolution to satisfy county board members. Language about the sanitary sewer pipe was removed completely, an assurance that the city would build the water tower was included and the 33% participation for the county was noted. Chatfield intends to have the water tower constructed by September 2009.

With the agreement between Chatfield, school district # 227, and Fillmore County, the city will be collecting abatement dollars from the school district and the county to pay for the infrastructure. Bubany passed out a worksheet showing the tax abatements for each entity. The school district abatements going in part for the road and in part for the sewer pipe would total $765,771 over the 15 years or about 19.9% of the total. The county abatements going in part for the road and in part for the booster station would total $1,100,000 or 28.5% of the total cost of the infrastructure improvements over the 15 years. Chatfield will be responsible for the water tower, part of the sewer pipe, and payments to Fingerson/Donahoe for an estimated total of $1,988,265 or 51.6%.

Amunrud speaking to Barbara Upton, said that he also had concerns about school district money going for other than education, but added that the school board has voted to go ahead with their portion.

Decorah Shale

City Engineer David Morrill spoke to the concerns over the construction of the road in areas with Decorah Shale. He said that the road should be constructed according to standards of the industry. He detailed the need for storm water basins and good drainage. He described Decorah Shale as having properties that make it vary with moisture content causing it to contract and crack when dry and to expand when wet.


The board unanimously approved the resolution for the tax abatement including language not to exceed $1,100,000 or 33% and with the sewer excluded.

The board unanimously approved the agreement between the city of Chatfield, school district # 227, and Fillmore County. Both were passed with the contingency that the language in each is approved by Fillmore County Attorney Kelly Wagner.

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