City of Wanamingo
Regular EDA Meeting
Monday February 12, 2024
6:00 P.M.
Wanamingo City Council Chambers
401 Main Street
Wanamingo MN
PRESENT: Brian Gudknecht, Rebecca Haugen, Ryan Holmes, Jim Kittelson, and Josh Schaefer
ABSENT: Annette Fritz and Laurie Musselman
ALSO PRESENT: Michael Boulton and Andrew Deziel – Kenyon Leader
Brian Gudknecht called the meeting to order at 6:00 p.m.
Pledge of Allegiance followed.
ADOPT AGENDA: Kittelson motioned, seconded by Schaefer to adopt. Approved 5-0-0.
CONSENT AGENDA: Kittelson motioned, seconded by Haugen to approve. Approved 5-0-0.
PRESENTERS: NONE
NEW BUSINESS:
Administrator Boulton provided a memo on the Dollar General development withdrawal. The developers for Dollar General, First Link LLC, did an about face on their plans for expansion in Wanamingo. The Dollar General Development plans have been withdrawn as of January 17th. The City and EDA had been working with First Link LLC, JABE Companies Commercial Real Estate Services, and Kimley-Horn (consulting engineer) to put together a plan for development of commercial land along MN TH 60. JABE Companies and First Link had a signed purchase agreement option with a local landowner in Spring 2023. City staff and WHKS (City Consulting Engineer) along with the realtor, developer, and their consulting engineer had spoken through MN TH 60 road access, stormwater management, water/sewer, construction of the remainder of Hill Avenue from Beverly Street to MN TH 60, and the EDA obtaining the remainder land for future development.
Initially the developer requested private access off MN TH 60. The City explained that MNDOT approved access and would consult the City before review procedures for access. The City explained that Hill Avenue had been planned to be constructed from Beverly Street to MN TH 60. There were additional concerns that MNDOT would only allow one access (private or public) to the land. If the access were to be private, it would landlock the remaining land not utilized by Dollar General. There was also discussion regarding stormwater treatment. Initially, the developer’s plan was to have stormwater treatment on Dollar General’s parcel for their lot. It was laid out to the developer that a regional stormwater treatment pond would be mutual beneficial for the future Dollar General location (not having to utilize so much land and long-term cost savings for maintenance) and the City (by taking stormwater from both the new portion of Hill Avenue and the remainder land). The City suggested that placing all of the proposed public improvements into one City project and publicly bidding it out for economies of scale. It was mutually agreed upon for the City to put together a plan and estimates. WHKS (City consulting engineer), on behalf of the City, put together estimates for the proposed improvements.
The City consulting engineer’s estimates totaled $991,000 ($495,500 for the City and Dollar General in costs split 50%/50%). These estimates included items that may not be included in the final project such as full MNDOT turn and bypass lane along with excess storm water piping and mitigation. It was mutually assuming that the scope of the project could be reduced and that the final bids could also be significantly lower. A draft development agreement was put together by Kennedy & Graven on behalf of the City and EDA. The draft development agreement started out with a 50%/50% cost share for the improvements. The draft development had been shared with First Link LLC for comment. First Link LLC was satisfied with the outline of the development and had no further changes requested before going in front of the Wanamingo EDA and City Council for approval at the January 8th meetings. The EDA and City Council approved the preliminary agreements. It was noted that the 50%/50% cost share on the improvements may need to amended to satisfy the Dollar General Developers. Staff laid out a number of options to amend the cost share in Dollar General Developers’ favor that could be negotiated. The EDA and Council agreed that latitude in final negotiations could be given to staff to complete the draft development agreement.
On January 17th Administrator Boulton was called by the presidents of the First Link LLC and JABE Companies. They were upset that the City was forcing them to be a party to constructing Hill Avenue from MN TH 60 to Beverly Street. They demanded that Dollar General be allowed to construct a private entrance off MN TH 60 in order to meet within budget. Small communities in SE MN have required Dollar General to pay for the highway access and road stub to the end of the property line. The full infrastructure proposal for access, turn lane and Hill Avenue to Beverly Street would cost similar to a private access, turn land, and stub road. There are additional issues of MNDOT access, not allowing to landlock remaining land along MN TH 60, regional stormwater treatment, and access for residents from existing Nelson/Beverly Street were explained.
The president of First Link LLC had choice words for the City. It was explained that the City staff had worked with subordinates in First Link LLC and JABE Companies along with the consulting engineer from Kimley-Horn on the proposed scope of work and rough outline for draft development agreement. City staff proposed changes to the 50%/50% split that would bring the developer’s cost down, suggested bringing in a commercial developer to purchase the land directly from the developer, or assigning a price to the land as part of the development agreement to offset development costs. The developer and realtor presidents were unprofessional and counterproductive with the three phone calls between January 16th and January 17th in seeing the project move forward. The conversations culminated in the First Link President being so upset with the City not immediately allowing a private access off MN TH 60 that he hung up on the conference call.
City staff stated that the Wanamingo City Council and Wanamingo EDA had agreed to the rough outline. City staff were given the authority to negotiate the cost share portion of the agreement. City staff explained to developers that if they were set on a private road that they would have to place the request in writing for City Council and EDA consideration. The developers wanted an immediate answer and staff said that it would materially change the scope of the project and draft development agreement which required action from the City Council and EDA. A suggestion was made by City staff for First Link and Jabe Companies to check with their consulting engineer on the scope of work difference between and private access and City Street access. City staff asked what MNDOT would require for a scope of work for private entrance/turn lane compared to a public City Street. The City consulting engineer stated that the scope of work required by MNDOT for a private entrance would be similar to a City Street. The consulting engineer stated that the savings would not be significant.
The JABE Companies President explained that Dollar General had shifted strategies for future growth in the past few months with a new CEO. Dollar General will only be expanding in communities with a population over 3,000 and will be focusing on expansion into Mexico. The Wanamingo location was still in the pipeline to proceed because a purchase agreement option was signed prior to changes in expansion had taken place. Dollar General had given the developer and realtor budget parameters for the proposed Wanamingo location. Due to higher construction costs and interest rates the MN TH 60 access and stub road costs were holding up the project.
City staff received a text message on January 17th from JABE Companies president stating “Unfortunately, Dollar General and Lou Pappan (First Link LLC President) have decided not to pursue a store in Wanamingo. The costs have gotten too expensive with the road and deceleration lane. We appreciate your efforts.”
The City incurred both direct and indirect costs from the project. The City has invoices from WHKS ($5,989.29) and Kennedy & Graven ($440.00), to date. City staff spent numerous hours with gathering information, negotiating agreements, and directing consultants. The direct costs are recommended to be written off by the general fund. Holmes stated that the City was not going to abandon Hill Avenue. Holmes thought that the developers had made up their mind to quit and were looking to blame the City for their decision. Haugen asked if the developer and realtor would ever have donated the land the EDA. Haugen thought that the whole plan sounded too good to be true. Holmes stated that the old 60-Stop location was still available and already had road access. Kittelson asked if Lew Groth still owned the land and if he was aware. Boulton stated that Monty Schaefer had informed Groth of the deal falling through when discussing renting the land in 2024. Boulton said that he and Groth had discussed what transpired with the Dollar General Development. Schaefer said that interest rates were too high for development and that capital is limited. Schaefer floated the idea of the EDA purchasing the land. Boulton stated that there were no such funds unless a bond was taken out by the EDA/City. Kittelson stated that area commercial lots are slow being developed and cited Kenyon. Schaefer stated that Wanamingo was in a better location for commercial/industrial lots than Kenyon. Kittelson agreed and noted that twenty years ago Wanamingo lost out on commercial/industrial development due condition of roads and having to access US HWY 52 only to the east (before underpass and access at MN TH 57 to the north). Kittelson stated that the Dollar General Development withdrawal is more due to reorganization within the corporate structure than costs or anything involving the Wanamingo EDA or City.
OLD BUSINESS:
There being no further business Schaefer made a motion seconded by Kittelson to adjourn the EDA meeting at 6:14PM. Approved 5-0-0.
________________________ ______________________
Brian Gudknecht, President Michael Boulton, Director
