TOWER—The city council here made some final rewrites on the developer agreement for the town home project at the city’s harbor. The council, while on a conference call with attorneys from the Fryberger, Buchanan, Smith & Frederick law firm out of Duluth, finalized the timeline for construction of the second and third town home buildings. Those decisions were needed to finalize details of the tax abatement bond. The timeline calls for construction on the first town home structure to begin in July 2019, with completion in July 2020. The second phase, which would include the second and third town home structures, would begin in July 2020, with completion in July 2021.

The council also discussed details of the tax abatement pay-as-you-go bond that the developer will issue to fund the road and infrastructure costs for the town homes. The council was presented with two scenarios, both of which assume that St. Louis County agrees to 100-percent abatement of the property taxes generated by the project. The city would agree to either 65-percent or 75-percent abatement. According to calculations provided to the council, slightly over one million dollars in taxes would be abated during the ten-year period, which mirrors the projects infrastructure and road costs of $1.1 million. The scenarios assume that the town homes would be taxed at the residential rate. If some of the townhome units are classified as seasonal properties, the actual tax collected would be higher. The city would use the remainder of the property tax over this time period to repay the city’s general fund for the monies used for the harbor project, including the bridge and highway relocation. After the meeting, City Clerk/Treasurer Linda Keith explained that the city is currently carrying a negative $568,000 balance in the harbor fund.

At this point, the city does not have a commitment from St. Louis County on any level of tax abatement. The county is waiting for the final developer agreement before meeting with the interested parties, according to Keith.

This city will also be applying for a $350,000 grant to the IRRRB to help with the upcoming infrastructure costs. The IRRRRB had previously awarded this amount to the project, but told the city they would have to reapply after the funding deadline expired last December.

“This is a catch-22,” noted Orlyn Kringstad, speaking on behalf of the developers. “They have to sign the developer agreement without knowing the abatement payback from the county.”

Mayor Josh Carlson agreed.

“But we have to get this development agreement signed,” he said.

Carlson said a contingency could be added into the agreement, to cover the possibility that the county tax abatement is different from the current assumptions.

Council members noted the land in question is not paying any county property taxes currently, and that the county has little maintenance expense with the project, since the city would be responsible for snowplowing and other maintenance.

The attorneys told council members that such tax abatement cases are decided on their own merits, and that this project is unique and will enhance the city in the long run.

The council passed a motion to approve the scenario with the city abating 65 percent of the local tax revenue, and the assumption the county would abate 100 percent. Under the scenario, the city would still collect an estimated $307,300 over the ten-year period, which would be earmarked to repay the city’s general fund.

Residential

teardowns

The council also discussed at length how to address the funding shortfall in two proposed residential teardowns. The IRRRB program will cover 75 percent of the costs, leaving 25 percent for the property owner or the city. The city has a list of five or six residential properties that are currently vacant and in irrepairable condition. The owners of two of the homes have agreed to be demolished, opening up lot space for new housing. The remaining homes are under control of a bank or insurance company, which will not permit demolition at this time.

The estimate for demolition of the two properties, one a mobile home at 408 South Second St., and the other a home at 711 Main Street is $12,217, which leaves $4,741 to be funded locally. City Clerk/Treasurer Linda Keith noted that if asbestos is found in either structure, it will increase the demolition costs.

The city does not have a formal policy in place on such demolition projects. The city has helped with some of the local costs of such projects in the past.

“Do we want these eyesores gone if the owners are not able to pay their share of the costs?” asked Keith.

In one of the current cases, the owner is not able to pay their share of the cost, Keith said. In the second case, the owner, Tim Kotzian, was at the meeting, and noted when he bought the home in 2003, he had planned on remodeling it, but the project fell through due to health issues. “Now the basement has started to collapse and there is a lot of water flowing through the basement into the sewer.” Kotzian noted he had been paying taxes on the property each year.

Carlson said there were many issues to consider, such as whether the city would be setting a precedent by paying the 25-percent portion or if the city could guarantee the newly-vacant lot would be developed and not just added onto a neighbor’s yard.

“Taking down these buildings is a good thing, especially in a residential area,” he said. “But something needs to go back on that land again.”

The city decided to go ahead with the pre-removal asbestos testing, and then make a final decision at the next council meeting on Nov. 13. The city does have a contractor lined up to do the work, if they decide to proceed, so it could be done this fall.

In other business the council:

 Accepted the resignations of two fire department members, Jason Picard and Tera Kultala, who have both moved out of the immediate area.

Approved a new fire department member, Steve Syverson.

 Approved refunding approximately $3,160 to Dave Rose. Rose had paid a deposit of $7,500 to the city to cover engineering costs relating to his proposed RV Park development. He has since withdrawn his proposal. The city did incur $4,336 in billing from their engineering firm on the project. In addition, Keith noted she spent over 160 hours of clerk time spent on the project.

 Approved a revised bid for Nordic Group of $679,284 for the trail work at the harbor area. The bid was revised so it came in under the city’s grant funding of $680,000. Changes included replacing custom-made fencing with more readily available wrought iron fencing and changing the width of the floating dock sections so a custom-built width was not needed.

 Accepted a grant for ski trail maintenance from the state of Minnesota for $1,725.

 Heard that officials from the census office had met with the city. They are asking the city to set up a local committee to help make sure everyone gets counted, and also noted that census job workers will be hired in the area. For more information, visit 2020census.gov/jobs or call 1-855-562-2020. Keith said she would see if the Tower Soudan Civic Club and/or TEDA is interested in helping out with the census committee effort.

 The next city council meeting will be on Tuesday, Nov. 13, due to the Nov. 12 Veterans Day observance.