The City of Rushford has been carefully planning the reconstruction of a hangar at its municipal airport for the last two years. The easterly hangar building, with six units, was a complete loss due to a fire, and additional damage was sustained to the AD Building/pilot’s lounge facility. The western hangar, housing units 7-12 received no damage. Without nine rented hangar units, the city will lose its National Plan of Integrated Airport Status status with the Federal Aviation Administration (FAA) and no longer have access to $150,000 in funding from the agency each year. If degraded to an “unclassified” airport, the city will face stiffer competition from other airports for projects and be at the whim of the agency for any project approvals.
A state grant agreement for engineering and site prep was approved by the city council last June for hangar reconstruction. The funding includes a 75% contribution by the state for engineering and construction administration, site prep including floor and foundation, and T-hangar addition structure. The city is contributing 25%, or $85,086, plus the $376,633 received for the T-hangar building insurance.
Early 2021 engineer’s estimates indicated the base bid construction cost at $623,725. Alternate 1, addition of a fifth hangar unit to the design, was $779,225 and Alternate 2, the addition of both Alternate 1 and a sixth hangar unit to the design, was estimated at $934,725. The proposed timeline was for construction to begin this April, wrapping up by July.
Now, engineers Mead & Hunt and the city are seeing the full effect of the pandemic and inflation have had on costs. Skyrocketing price increases were seen in the five bidders’ proposals with the low bid on a four-unit ringing it at $864,944 and the high bid at just shy of $1.2 million. The low bidder was Olympic Builders, of Holmen, Wis. This is difference of roughly $240,000 for the four-unit and $363,000 for the five-unit hangar. After the amount the city was planning to contribute through the state agreement, plus the funds from the League of Minnesota Cities Insurance Trust, the city will need to find additional $60,000-90,000 to construct the hangar.
With the cost per square foot and desire to meet FAA guidelines, it’s likely the city would seek to build the five-unit hangar. Bid pricing is good for 90 days, so Mead & Hunt is using the time to have additional discussions with the FAA and the Minnesota Department of Transportation to help cover the shortfall. Federal cost-sharing is always preferred with its 90/10 local share split versus the state’s 75/25. A third option, a rebid with different materials such as wood or masonry instead of steel, is also an option, but the council was quick to note the longevity and low maintenance involved with a steel hangar.
“We’ve always had an ‘If you build it, they will come’ mentality,” noted Airport Commission Chairwoman Charla Miertschin. “We had these conversations 12 years ago. We were blessed with having the second one filled quickly. Funding is the huge difference here. We’re looking at building something smaller than we did for twice the cost.”
The project has a long window for project completion and the FAA will not be conducting another hangar count until fall 2023, but the city would still need to find tenants to rent the hangars following construction. “At this time, it’s wait until we hear back about whether or not there’s funding available to close that gap,” stated Mayor Terri Benson. If additional funding can be found and the project continues to move forward, the council will see an analysis of what would be paid, where it would be coming from, and how it would affect the rest of the budget.
In other news, Fillmore County Assessor Jason McCaslin was present to discuss the processes and regulations used for determining property tax values. Proposed market change for 2022 assessment would see a 23% increase to building values, bringing the median ratio to 94.5%.
The Minnesota Department of Revenue sets compliance measures and requires the median ratio be between 90 and 105% to be in compliance. “The assessor’s role is to make sure the property tax burden is distributed as evenly as possible per state statute. We are not singling out anyone when we inspect properties and when you see your value go up, the jurisdiction is not gaining more revenue.”
Properties are required by the state to be physically inspected at least once every five years, but valuations are adjusted annually to keep the median ratio, coefficient of dispersion, and price related differential all at compliant levels. McCaslin noted the statute is a little gray in this area and while some counties inspect 20% of each jurisdiction every year, Fillmore County inspects one complete jurisdiction every year. Despite doing part keeping a bit more presence in the area, the process is more efficient to all and move on, according to McCaslin.
The Department of Revenue also calculates the percentage of inflation or deflation which must be incorporated in the valuation of each jurisdiction. “This year, it’s crazy… off the charts,” noted McCaslin. “That’s a lot of inflation. It’s pretty crazy, but it’s something we have to abide by.”
“Is Rushford alone in this scenario? Absolutely not. There are a lot of substantial increases made,” he added. Valuation notices will be out in March. That’s the time to appeal,” he urged. “Once the board of equalization adjourns in June, we’re limited in what we can do. I can’t say people aren’t going to see a tax increase, but it’s not going to be as big as it could be.”
“I hope this helps you understand and gives you enough information about what’s coming down the pipe so property owners can understand,” he concluded. This year, the county will be reappraising all properties in Rushford. Appraisers will examine the exterior and interior, including joists, basement, and glancing through the remainder of rooms. “It’s 10-15 minutes tops. We try to be the least invasive that we can.”
The next regularly scheduled council meeting is Monday, March 14, at 6:30 p.m., at city hall. The public is encouraged to attend.
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