Dairy property purchase sparks spirited debate

What was intended to be a brief review of minor modifications to a purchase agreement between the city and Cheney Properties, owners of the former Mid-Am Dairy site, became something much more lively. Instead of a quick motion to move forward, a sudden rift emerged, and city leaders made their positions clear, as the audience listened with attention piqued.

A bit of background first. Earlier this year, a movement to repurpose the 28.8 acre parcel of land by the river began gaining traction, after running out of steam last year. A price for the lot was set at roughly $1 million, but the expenses required to demolish and improve the area were calculated at an additional $1.5 million. To aid matters, a government grant was secured which would provide 60/40 matching, effectively covering $600,000 of the sticker price.

Proponents envision the new development as a crucial link between existing bike trails, the downtown river walk, and even the river and its residents. With the coal plant on Hoot Lake anticipated to close in the next few years, tax revenue from developing a portion of the property into high-end apartments would also help to alleviate the tax burden on the citizens of Fergus Falls.

Attorney Kent Mattson has worked to represent the city during discussions, and he said modifications to the updated purchase agreement, after it had been retracted last month, were mostly minor. In his presentation to the city council, he explained that the major components of the document were still intact, such as an arrangement to split the cost of due diligence inquiries evenly with the ownership if the property is purchased. Should the city elect not to buy the land, that cost, anticipated around $66,000, would fall solely to the city, but a period of 120 days was granted for a thorough review before a decision need be reached.

Ward 2 Councilman Tom Rufer showed his support for moving forward with further environmental assessments and due diligence, saying, “We don’t know enough to say ‘yes’ to the project, but we also don’t know enough to say ‘no’ to the project.”

What happened next

Next, Steve Eriksson, president of Eriksson Commercial Properties, Inc. and chairman of the Dairy Site Task Force shared details of conversations he had participated in recently regarding the lot. His comments were efficient and informed, and it seemed the meeting was nearing a conclusion until, during a lull in the City Council Chambers, one council member asked a question which took the room by surprise.

“Where are we going to get the money to do this?,” Ward 1 Councilman Jim Fish asked.

No one seemed to know how to respond. After all, numerous meetings had been held regarding the matter, and this re-signing of the purchase agreement appeared to be the next, natural step to take. Mayor Schierer suggested this meeting may not be the time to review the project’s complete funding plans, but then that’s just what happened anyway.

Eriksson and Schierer worked through details of the LCCMR grant to cover the initial purchase and explained that much of the cost would be recouped when the land was sold to developers. Once fully developed, the property would produce tax revenue for the city — a quantity nearly sufficient to offset the loss of the Hoot Lake Plant.

But Fish saw one critical flaw in that logic. Most multi-residence buildings in Fergus Falls have been funded through tax incentives that often persist for years after the structure is built and occupied. If the city were to continue as it has and offer tax breaks, there would be no additional revenue.

Showing his support for the concerns being presented, Ward 2 Councilman Scott Rachels observed there were other risks to be considered. Firstly, staff within the Engineering Department at City Hall were already busily working to review myriad other community projects, such as the Kirkbride property and renovation of the public library. With so many tasks before them and so little time, the only way another project could be completed, he argued, was with the quality of all projects being deteriorated.

“I’m going to vote ‘no’ and the reason I’m voting ‘no’ is, our engineering department now is overloaded,” Rachels said. “Projects are going to suffer, that’s my thought.”

There was another concern, too. Even if every part of the proposal were to go to plan, the cost wouldn’t be recovered for some time — meaning that residents would be left picking up the tab for both the $300,000 per year in lost tax revenue from the coal plant, as well as increased taxes to support the funds required to improve the dairy property.

There was a chance of making a bad situation even worse.

“Somebody has to cash flow this thing… $2 million worth of bonding is $138,000 onto the taxpayers. That’s a 2.5 percent increase for every person in town,” Fish said. “It’s just another thing that adds on, and I’m concerned.”

Defense presents their case

Having stated their objections, councilmen Fish and Rachels relinquished the floor for counter-arguments. Mayor Ben Schierer was first to offer his position, clarifying that the move to acquire the former Mid-Am site was part of an investment in the community that will mature in the long-term, not the immediate present.

“We have a willing seller, we have $600,000 from the State, and I want to see us take a step towards doing what we talked about doing,” Schierer said. “At some point we’re going to have to make an investment if we’re actually going to do the things we talked about doing.”

After listening to the conversation so far, Ward 4 Councilman Rod Spidahl joined the debate. He said that research has shown consistently that other communities who invest in their riverfront see a return of more than double the original outlay. Similarly, he emphasized that the dairy site improvement is one of very few solutions which have been presented to keep taxes from rising in the near future.

“I just want to say this out of respect, but still, I have yet to hear a positive option, Mr. Fish or Mr. Rachels, on what are you going to do to replace that $300,000 loss that we have. How much is that a percentage every year on the taxpayers?,” Spidahl said. “This isn’t something to just save our way out of; we have to be creative and we have to keep up the community.”

Eventually, it was clear that both sides had fully expressed their arguments and further discussion would be of little benefit. A vote was called and the resolution was approved five-to-three, with dissent from council members Fish, Rachels, and Thompson.

The Mayor took the opportunity to once again thank all of those involved in bringing the proposal to fruition and reiterated the potential benefit to the community.

Speaking during the discussion, Spidahl said he feels this project is vital to keeping Fergus Falls alive. “I believe it’s the future of the city, and it’s going to help us offset what we’re losing with Otter Tail Power.”


Source: The Fergus Falls Daily Journal

Link: http://www.fergusfallsjournal.com/2017/09/dairy-property-purchase-sparks-spirited-debate/

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