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County looks at tax abatement for Chatfield

Fri, Mar 28th, 2008
Posted in Government

PRESTON - The Fillmore County Board listened to the public and representatives from Chatfield encouraging the county to approve the tax abatement plan for the Hilltop Estates Development at their March 25 meeting. Commissioners Stafford Hansen and Marc Prestby were absent. The development will be located in the South eastern part of Chatfield. The new Elementary School and as many as 362 homes are in the plans. Mike Bubany of David Drown and Associates explained that because of an error in the public notice for the county's public hearing, a continued public hearing to be held April 15 at 4:00 p.m. will be necessary before final action by the county can be made. Bubany apologized for the error and his firm will pay for the cost of the continued hearing on that date. The notice for the hearing will be published on March 31.

Chairman Randy Dahl explained that the presentation for the abatement was made to the county Economic Development Authority (EDA) on March 19 and that by a vote of 3 for and 1 against approval was given to bring the issue before the county board. Ron Zeigler, community development coordinator representing the city of Chatfield, gave a brief history of the planning to this point including six school referendums over the last ten years. It was noted that the development project is consistent with a goal of the county's Comprehensive Plan (2006) to encourage new housing. The purpose of the tax abatement is to provide public infrastructure that will make residential growth possible. He noted that the county plan says that the county should work with developers to use available tools like tax abatement to finance development.

The tax abatement is to be used to finance the infrastructure including a booster station to bring water to the top of the hill, an additional road (Hillside Drive) and a walking path to make the school building more accessible, and to build a fund for a large future sanitary service pipe when and if the need arises. The sewer pipe is estimated to cost about $500,000 in today's dollars. Chatfield will construct a water tower to serve the school and the new development and bear the cost of the tower construction. The topography of the area is driving the need for the tax abatement. The elevation change from Main Street to the top of the development area is 260 feet. The additional road will be in part financed by assessments where there are usable lots and in part by the tax abatement.

Over the next thirty years or so, the developer, Geoff Griffin, and the city of Chatfield, hope to have as many as 362 new homes valued in today's dollars at $250,000 each. Most all of these homes would be built on the Fillmore County side of the line. The development is projected to bring in as much as $80,000,000 to the tax base over the years. The city of Chatfield will bear the risk if homes are not built. The city is putting aside money in a building fund to pay down some of the bond debt should homes not be built at or near the expected rate.

Mayor Curt Sorenson of Chatfield says the that they anticipate about ten new homes to be built each year. It is estimated that with every 2-3 homes one more student will be attending school. Sorenson claims that it should be a "win-win" for all three government units including the city, school district and the county. Sorenson says the tax abatement agreement is an example of true cooperative government. He suggested that Chatfield is best situated to get property tax revenue growth for the county. Sorenson expects the development will help to increase the population of Chatfield to around 3500 or more over the fifteen year period.

School Superintendent Don Hainlen suggested that this has become more of a challenge than the school board expected. On March 13 the school board held its public hearing and then by a vote of 6 for and 0 against approved the tax abatement. The school board approved the tax abatement for the new road and for building a fund for the eventual upgrade and installation of a new sewer pipe, if needed. They did not include the water booster station as they were already paying fees for SAC and WAC (for sewer and water) in the amount of $400,000. Hainlen explained that the board felt another road for access was necessary for safety reasons. He made it clear that the tax abatement does not add new money for the operations of the school district. Hainlen added that property taxes do not give operating money to the school district, as that money comes through the state.

Mike Bubany emphasized that the new home owners will pay property taxes like anyone else based on the value of their property. However, once those taxes are paid 75% of the new taxes will be directed to the city of Chatfield to pay for the infrastructure and the other 25% will be distributed as usual to the various taxing entities including the county, school and city. If the new homes are not built, the county will get its portion of the bare land taxes as it does now. In either case, the county should get as much or more in tax revenue. Bubany maintained that the developer is not likely to build new homes if the infrastructure is not in place. He agreed with Sorenson that Chatfield is the most likely area for residential growth in the county.

Questions and Comments

Commissioner Chuck Amunrud asked about the length of the abatement which is to be as long as fifteen years. Bubany said that the county abatement will go away in a maximum of fifteen years or when the total of $1,100,000 is abated, which ever comes first. If the dollar amount is realized in eight years, for example, the abatement would end. Amunrud was also concerned about using Fillmore County's abatement dollars to fund a sewer pipe that goes into Olmsted County. Sorenson assured Amunrud that the language in the agreement should not allow Fillmore County tax dollars to be used for the portion of the pipe that will be laid in Olmsted County.

Sorenson explained that his home was on the Olmsted County side of Chatfield. It was noted that Chatfield city council members reside half in Olmsted and half in Fillmore County. The school board split is four in Fillmore County and two in Olmsted County.

Commissioner Duane Bakke suggested that the county may want to designate, as did the school board, where its tax abated dollars would go. He asked about the Environmental Assessment Worksheet (EAW) and if it was complete. Sorenson commented that the more thorough Environmental Impact Statement (EIS) should not be required. Bakke was concerned about the areas of 'Decorah Shale' that are in areas where the road would go through. Sorenson assured him that every effort will be made to be as environmentally friendly as possible.

Bakke was interested in the county's tax abatement dollars going to the water tower rather than the road. Amunrud asked about the tower being located on the Olmsted side of the line. Bubany said that the service will mostly be in Fillmore County. At this time, Chatfield intends to build and pay for the tower itself. Bakke felt that sometimes there seems to be a threat implied, if the tax abatement doesn't happen, that the water tower won't be built. Sorenson said that he was offended by the word "threat" and that dates for construction need to be met. No threat is implied, but things need to be done in a timely manner. He added that he had no problem redirecting funds, but it will need to fit everyone's legal requirements.

Public Comment

Former Fillmore County Commissioner Helen Bicknese, Chatfield Township, asked why Olmsted County wasn't involved. Sorenson suggested that Olmsted County will only have ten or so lots on their side of the line, not enough to interest them. She asked if all of the three taxing entities need to approve the tax abatement for it to go forward. Bubany responded that Chatfield has the authority and not all would need to participate, although with one not participating, it would be more difficult to do the project.

Chatfield resident Luke Schieffelbein asked how much needs to be developed before the city is out of the hole. Bubany implied that with 150 new homes in fifteen years or sooner if the bonds are paid off. Chatfield City Clerk Joel Young explained that the city of Chatfield has set aside maybe as much as 60% of the funds needed. The city will add an additional $5,000 per year to a $900,000 levy to further build the fund for capital improvements.

Schieffelbein worried that the city of Chatfield will get "hammered" if the houses aren't built. He expects that to result in higher taxes which will cause residents to leave Chatfield. Sorenson assured him that Chatfield has grown over the last many years by at least ten homes per year. He feels confident that the project will go with the help of the school district and the county.

School Board member Greg LaPlante stated that the school board feels the second access is needed just for the traffic including buses that the school will generate on its own.

A rural resident of Jordan Township suggested that with the poor condition of Hwy 52 from Chatfield to Rochester, people will not move to and build in Chatfield. He expects even a possible negative growth. Sorenson said that they have been working with MnDot on a weekly basis to improve the road which is now scheduled for overlayment in 2011.

Barbara Upton of rural Fountain and a teacher for thirty years was concerned about the students. She maintained that with money being spent on infrastructure and the school building, little will be left for the students. She insisted that Olmsted is a richer county. Upton said that the reason this project is not on the Olmsted side of the line is that Olmsted County doesn't do tax abatements. She insisted that is also why the city didn't take the land offered for free to build the school. Instead, she said that $385,000 was spent to purchase land on the Fillmore County side. She wanted a thirty day extension on the EAW to allow time for review. Upton was concerned about a polluting impact on residents down the hill plus erosion of the hill. She asked that the process be slowed down to allow for further investigation and added that the land was just annexed on February 21, 2008. Upton complained that all has not been open and above board. Mayor Sorenson responded that the city has followed all rules and regulations.

Marvin Anderson, Chatfield Township, complained that his taxes have already seen an increase of 60%. He worried that there is no guarantee these homes will be built. Anderson added that a lot of people out there are not in favor of this.

Again, the hearing will be continued on April 15 at 4:00 p.m. in the Fillmore County Board Room in Preston.

Other Business

• County Recorder David Kiehne requested and received approval to purchase Pictometry equipment at a total cost of $58,737.50 with a three year deal. The purchase was recommended by the technology committee. He noted that the price is $4,000 less than a year ago and it is expected to cost $12,000 more next year. Six departments including emergency, assessor, highway, zoning, GIS, and law enforcement should make use of the satellite imagery technology which allows detailed pictures including the ability to measure depth and distances while in the office. Townships and cities will also have use of the technology.

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