City of Wanamingo Regular EDA Meeting - December 12, 2022

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City of Wanamingo

Regular EDA Meeting

Monday December 12, 2022

6:00 P.M.

Wanamingo City Council Chambers

401 Main Street

Wanamingo MN

PRESENT: Stuart Ohr, Ryan Holmes, Rebecca Haugen, & Brian Gudknecht

ABSENT: Jim Kittelson, Laurie Musselman, & Josh Schaefer

ALSO PRESENT: Michael Boulton, Karen Masters, Cheri Roshon, and Tony Holthe.

Brian Gudknecht called the meeting to order at 6:00 p.m.

Pledge of Allegiance followed.

ADOPT AGENDA: Ohr motioned, seconded by Haugen to adopt. Approved 4-0-0.

CONSENT AGENDA: Holmes motioned, seconded by Ohr to approve. Approved 4-0-0.

PRESENTERS:

NEW BUSINESS:

Resolution 22-08 – Approving a Proposed Billing Change to the City/EDA Civil Attorney Services From Jacobsen Law Firm, P.A.: Holmes moved to approve, seconded by Ohr. Passed 4-0-0.

OLD BUSINESS:

Administrator Boulton provided a 2022 Wanamingo Economic Development Update. 2022 continued to have supply chain delays, shortage of labor, and high inflation. Inflation, coupled with increase in the Fed’s rates have seen a slowing of the residential housing market. 2022 did see continued improvement throughout Wanamingo. The City has seen commercial building additions, a number of new homes, and infrastructure improvements. These additions and valuation increases have increased the City of Wanamingo tax base.

One commercial building had an expansion; Revland Alignment building expansion for another large bay and storage area. Revland Alignment’s building addition has a permit value of $162,000. In the residential side we have seen seven (7) new home building permits issued in 2022. The seven homes have a collective building permit valuation of $1,409,000. The seven (7) units is considered a very good year of residential growth in Wanamingo. There have also been a number of new decks, mechanical work, new windows/doors, re-roofing’s, and other home improvement building permits in 2022.

The City constructed a new 250,000-gallon water tower and additional watermain loops in 2022. The project, including the new well house, will be completed in 2023. The water tower will replace the 50,000-gallon downtown water tower (built in 1926) and the 137,000-gallon Mingo View fiberglass tank (built in 1993). This new tower will increase the water pressure 10-15 PSI throughout Wanamingo. The watermain loops will assist with redundancy of water lines, get rid of dead ends, and help turn over water within the system. When completed the new well house will add redundancy in having two full well houses with chemical feeds. The new well house will be equipped with an onsite backup generator so that when power goes out the well will be able to pump water and chemicals into the system when needed. The total project cost is roughly $2.8 million.

2023 has some planned private and public work on the horizon. The City staff are working on a commercial project with Jason Grant Trucking for a cold storage warehouse. City staff have been working with Reckitt/Mead Johnson on making changes to the Wanamingo Medical Center building for offices and training area in two of the four suites. Reckitt/Mead Johnson plans to lease the space for a minimum of 3-5 years. There has been loose discussion on Reckitt/Mead Johnson purchasing the building. Reckitt/Mead Johnson has plans for building expansion along with traffic, parking lot, drainage, and other outside esthetic improvements. Dollar General is purchasing the prior 60 Stop lot with anticipation of constructing a Dollar General store in 2023. Casey’s is purchasing Ag Partner’s Cenex C-Store location. Casey’s is anticipating making improvements to the location. There continues to be some interest in residential single-family dwellings. City Staff anticipates slowdown of construction in 2023 leading to fewer new homes. The City has been working with Zumbrota, Pine Island, Goodhue regarding a regional wastewater treatment facility. The current wastewater treatment facility is at the end of its life and will need to be replaced within the decade. The Cities have hired Winthrop & Weinstine lobbyist firm to help obtain State dollars for the design work and land acquisition costs. The City could choose to be part of a regional facility or construct their own facility, depending on funding. Having capacity and reliability in the water and wastewater treatment are keys to allowing for future growth and current sustainability of the community. The North Zumbro Sanitary Sewer District hinges on State funding through the bonding bill and Point Source Implementation grant in order to be financially feasible.

Administrator Boulton gave a 2023 budget update pertaining to the Wanamingo EDA Funds 251, 306, 331, and 604. EDA Fund 251 levy is set to increase from $38,000 in 2022 to $41,000 in 2023. This will help offset small additional costs to keep the fund in a positive balance. Debt service 306 levy is set to stay the same from 2022 to 2023 at $45,000. Debt service fund 306 has a $113,163 balance at the end of 2021. The bond payments are $62,000/year ($59,255 in 2023) through 2025. The levy should stay around $45,000 to assist with covering bond costs through 2025. Debt service 331 levy is set to remain at $10,000 for 2023. The proceeds from the sale of property in 2018 to Concast will support the bond payments for the near future (7.5 years of the 13 remaining yearly payments). The yearly bond payments will be roughly $45,000 ($42,375 in 2023) running through 2031. The fund had a $341,414 balance at the end of 2021. The fund has a $341,414 fund balance at the end of 2021. This will make for roughly $41,000/year moving forward after that until the bond is retired in 2031. In 2023 the City will levy $10,000 with yearly levies reducing to $0 in 2025. In Medical Center Account 604 there are concerns with fund falling behind due to a vacant suite and utility reimbursement only on another suite. The Medical Center Fund owes the General Fund $21,692 at the end of 2021. There was $9,500 less in rent from 2020 compared to 2021. Having Reckitt/Mead Johnson lease two of the suites at the facility for at least the next 3-5 years will help. All the suites in the facility should be full in 2023 leading the financials to be in the black. The Council should consider a future levy of $10,000/year for 2-3 years or a transfer of $25,000 from other fund(s) of $25,000 to make the fund solvent.

Administrator Boulton provided an update memo regarding Reckitt/Mead Johnson’s Medical Center building permit work and lease update. Reckitt/Mead Johnson leased two suites in the Wanamingo Medical Center facility, starting October 1st. The lease was signed for three years with a two-year option. Reckitt/Mead. Reckitt/Mead Johnson has proposed plans to change the back suite entrance/hallway in conjunction with the suite leased by Heidi Smith. The official building permit and plans were submitted on December 7th. A meeting with Heidi Smith will be set up for review and construction logistics. Construction is estimated to start in late December and be completed by February.

Reckitt/Mead Johnson’s plans for the entrance/hallway and the two suites, excluding furnishing, are estimated to cost $235,000. This is a significant investment in the facility. Reckitt/Mead Johnson have openly discussed with staff a desire for a longer lease or the possibility of purchasing the facility. Boulton does not see any issues with extending the lease as an option. Boulton does see potential issues with selling the facility. The main reason for constructing the facility was to house a clinic. Boulton still sees housing a clinic as a need for the community at this facility. There could be provisions in a sale that would require honoring the lease with OMC. However, the lease is not indefinite and could eventually end and be without a clinic. There is also a concern with honoring the current lease with Heidi Smith. The facility is still in a TIF district. The district would need to be de-certified seven years (2029) before TIF is fully repaid. The EDA/City could be losing out on nearly $40,000 that would pay toward the facility bond payments

The EDA owes roughly $350,000 (principal only) on the facility to the USDA. In addition, the Medical Center Fund owes the general fund roughly $25,000. The facility could not be sold less than the County Estimated value without reasons for a write down cost. Boulton does not believe that there is a valid reason for a write down cost. The facility is valued at $619,100 by the Goodhue County Assessor. If the EDA sold the facility for valuation price, the EDA would have roughly $204,000 left after paying off the bond, paying back the general fund, and de-certifying the TIF District seven years early.

The EDA Board should be made aware of the significant investment that Reckitt/Mead Johnson will making in the facility. The EDA Board should be made aware that Reckitt/Mead Johnson may officially approach the Wanamingo EDA Board for either a lease extension or a request to purchase the facility in the near future. The EDA Board agreed that there is a desire to have a clinic in Wanamingo. Holmes stated the Reckitt/Mead Johnson would like to have a clinic operating in Wanamingo for employees. Reckitt/Mead Johnson approached OMC asking if sending employees to clinic for physicals and DOT health checkups would open the clinic earlier. Haugen asked when OMC plans to open back up the clinic. Boulton had heard that OMC had conducted interviews for staffing the Wanamingo clinic. Ohr asked if Reckitt/Mead Johnson staff were working on the Wanamingo Medical Center. Boulton said there won’t be Reckitt/Mead Johnson staff working out of the Wanamingo Medical Center until the construction work is completed. Ohr stated that he heard trailers would be used at the Reckitt/Mead Johnson plant. Boulton stated that Reckitt/Mead Johnson hired a temp agency to bring in sixty (60) workers at the plant. They need the trailers for locker room space. The temporary workers are being housed and bused up from Rochester.

Cheri Roshon and Tony Holthe approached the Wanamingo EDA with an access concern at 101 West Avenue. Roshon is a niece to Bobby Carlson and purchased the home last winter. Roshon has no access to park off the street or get to detached garage. She has two vehicles that are parked on the street that create a problem during snow removal. She has hired Zumbro Valley Landscaping to assist her with cleaning out the spot where she parks her vehicles in order to keep from icy/snow damning on the street. The garage street access was removed when the City acquired fifteen (15) feet of the land from the lot to construct Mill Street and connect to West Avenue. Roshon is currently accessing garage through the West side of Holthe’s garage. Roshon asked the EDA how she should access her garage. Roshon stated that there may have been an agreement with the City to provide access. Boulton and Holmes said that they could find no records of any such agreement and that any oral agreements are null and void. Gudknecht stated that the alley off 2nd Street W on the East side of Holthe’s garage would make the most sense. Gudknecht stated that the EDA gave fifteen (15) feet to of land to Carlson because the garage was built over the property line to clear up title issues. Boulton reminded Roshon that he previously advised her two ways to remedy her concern. Boulton stated that Roshon could take the alley of 2nd Street W on the East side of Tony Holthe’s driveway and drive on the grass to garage. The other option would be for Roshon to replace the curb on West Ave and create a driveway on the South side of her home that would lead up to the garage. Holthe questioned whether the old railroad easement could be sold or vacated. Boulton stated that this area is a utility easement. Boulton stated that the easement could not easily be vacated as there are utilities located within the easement. Boulton stated that the EDA/City could pursue having the utilities relocated, but that it would be at the EDA/City’s expense. Boulton stated that there is both underground natural gas and overhead electric in the easement. Boulton stated that a driveway could be installed on the easement, but may get disturbed if utilities need to be accessed or installed within the easement. Roshon asked if the EDA would be willing to sell all or part of the parcel to the East of her garage. Boulton stated that Barney Nesseth had a first right of refusal to purchase the parcel. Nesseth put together a plan for four to five (4-5) small homes of 700-850 square feet. The EDA/City looked at accommodating this type of development by either providing variances or creating another zoning district. Holmes stated that this project came about because Goodhue County has been focusing on seeing additional affordable housing units constructed in the County. Boulton stated that the EDA has a priority of increasing the tax base when this property is sold. Holmes stated that the EDA is running out of property to develop and will need to make an impact on the tax base with development of this property. Holthe stated the Roshon could purchase the property and construct a garage that would add to the tax base. Gudknecht agreed that constructing a larger garage by purchasing a portion of the parcel would add to the tax base. Gudknecht asked if Roshon had spoken with Wayne Sorenson about parking on his property in the winter. Roshon stated that Holthe is allowing her to go through his driveway on the West side of her garage for the winter. Ohr stated that Roshon could park her vehicles on the flat portion of the EDA lot in the winter on Mill Street. Holmes asked what Roshon’s thoughts were for the property if the EDA were to sell it to her. Roshon stated that she liked the concept of small/tiny houses and may wish to pursue this. Roshon stated that tiny houses are affordable housing. Gudknecht asked if tiny homes are temporary or permanent. Roshon stated that tiny homes are considered permanent. Roshon is the local chapter leader of American Tiny Home Association. Holmes stated that this parcel might be best suited for tiny homes as the length is long but the depth is short on the parcel. The City does not have many parcels where tiny homes work. Gudknecht stated that they could sell these lots in the future of Nesseth does not wish to pursue his project.

There being no further business Ohr made a motion seconded by Haugen to adjourn the EDA meeting at 6:58 p.m. Approved 4-0-0.

SIGNED: ATTEST:

______________________ ______________________

Brian Gudknecht, President Michael Boulton, Director