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Lamppa terminates lease on new plant

Manager erupts over city clerk’s false claims on project

Marshall Helmberger
Posted 6/11/19

TOWER— Will Lamppa Manufacturing walk away from their new plant in Tower over disagreements with the city’s handling of the long-delayed project?

That remained an open question this week …

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Lamppa terminates lease on new plant

Manager erupts over city clerk’s false claims on project


TOWER— Will Lamppa Manufacturing walk away from their new plant in Tower over disagreements with the city’s handling of the long-delayed project?

That remained an open question this week after plant manager Dale Horihan erupted in frustration during discussion of a series of change orders to the project that Lamppa Manufacturing is seeking to replace equipment they say they didn’t want.

“We’re ready to walk away and leave Tower,” Horihan told the council. “It’s been a miserable process,” he added, noting that the project is nine months behind schedule.

Lamppa Manufacturing had been unable to move into the facility as recently as last month and recent disagreements over the type of ventilation and air exchange systems installed by the contractors have further delayed the company’s move-in date.

At Monday’s meeting, Horihan also complained about the original lease, which had provisions that he said Lamppa didn’t support. He said city officials at the time had failed to make changes to the lease that the company had sought and then pressured Lamppa to sign it without having a chance to read it.

City Clerk-Treasurer Linda Keith argued otherwise, telling Horihan that she had sent him the lease months before. “Bulls#@t!” said Horihan, clearly irritated. He left the meeting moments later. “We’re withdrawing. We’re done.”

Horihan’s comments left council members unsure of how to proceed in addressing concerns that Horihan has raised in recent weeks. They held off on approving some of the change orders that the company had requested until they could get clarification of the company’s intentions.

The city has spent the past year and a half working to build the 9,000 square-foot facility, through a non-recourse loan from the Department of Iron Range Resources and Rehabilitation. Half of the building was supposed to be leased immediately to Lamppa Manufacturing to allow the company to expand production of their wood furnaces and stoves, which have been certified as the cleanest-burning in North America and are now in high demand.

Mayor Orlyn Kringstad said it was a mistake for SEH and the city to have kept Lamppa officials out of the loop on the project as it developed, and indicated he would reach out to Horihan and company owner Daryl Lamppa to see if the situation could be salvaged.

SEH engineer Matt Bolf had, moments earlier, told the council that the issues raised by Horihan at previous meetings had been largely resolved. Bolf reported that he and the project’s mechanical engineer and architect had met with Horihan the previous Thursday, after Horihan had raised concerns about the noise level generated by some of the ventilation equipment that had been installed for the project. He also raised concerns about the energy efficiency of the air exchange system installed in the plant’s paint booth among other issues.

Bolf told the council that the meeting had gone well and that sound testing showed that the equipment used in the project should fall within acceptable standards.

But Horihan challenged Bolf’s presentation. “What irritates me is you can throw out things as actual facts when they are not facts,” he said. Horihan said he had also asked for an analysis of the additional heating costs associated with the paint booth’s air exchange system but hadn’t received it. “As far as I know, it’s all malarkey,” said Horihan, referring to Bolf’s comments.

“I apologize, Dale,” said Bolf. “I thought we had agreement on this.”

On Tuesday, in the wake of Monday’s meeting, Horihan said the company is scrapping its lease with the city, although he said the company remains willing to negotiate a new one. Under the lease signed last summer between the Tower Economic Development Authority and Lamppa Manufacturing, the company has a right to terminate the lease “if possession is not delivered within 90 days of the commencement of the term hereof.” The lease term was originally established as Oct. 1, 2018, so the city needed to have the facility available for Lamppa’s occupancy as of Jan. 1, 2019 — a target the city was unable to meet.

Horihan said he regretted losing his temper but said both he and company owner Daryl Lamppa have been frustrated by the poor communication by SEH and the city clerk-treasurer with officials from Lamppa, and by what he sees as misinformation being put out by those involved. “That’s what just burned my butt, these half-truths that just left people misinformed.”

The discussion on the Lamppa project came relatively early into a five-hour-long council marathon that included other economic development matters.

Among the other contentious items was a lengthy discussion about the state of the city’s planning and zoning process, which has left two RV park proposals stuck in neutral for years over the city’s refusal to allow either party to apply for the needed conditional use permit.

One of the would-be developers, Gary Ross, said he had been advised by a county planner to “buy land somewhere else and move on,” given the city’s ongoing struggles with its planning and zoning process. Ross and his wife Charity have been seeking to build an RV park on an isolated, 58-acre parcel along Pike Bay, located within the city limits, and they’ve fought for six years without being allowed to apply for a conditional use permit.

Council member Steve Abrahamson said he had met with a county planner himself, who told him that the county typically approves the use fairly quickly, but then actually issues the permit when the required conditions have been met. But Abrahamson, who serves on the Planning and Zoning Commission, defended the city’s process, even though it differs from St. Louis County’s.

In Tower’s case, the city’s planning and zoning commission requires would-be developers to meet all conditions and have all other agency permits in hand before they will even accept a conditional use permit application, which forces developers to spend potentially tens or even hundreds of thousands of dollars up front, without knowing if the city will ultimately grant a conditional use permit.

Longtime St. Louis County planner Mary Anderson, who retired last month, said there’s a reason that the county’s permit application process is substantially different and can usually be navigated by a prospective developer in a matter of weeks. “We’re basically just approving the use,” she said. “We don’t want people investing their life’s fortune in something that won’t get approved. We try not to put too much burden on the applicant. We want to promote development.”

RV park developer Dave Rose, who has spent over three years seeking to build his own RV park along the East Two River, noted that St. Louis County approved an RV park proposal at Bay View Lodge on Lake Vermilion within a matter of weeks this spring and that the facility is now planning to have sites available for rent by the Fourth of July.

Planning and Zoning Chair Steve Altenburg defended their process and said the commission is following the city’s ordinance.

“Where do we go from here?” asked council member Rachel Beldo in hopes of stemming a heated discussion that seemed destined to drag on without resolution. “I really think we need to pause this. We’re not going to solve this tonight.”

In the end, after a suggestion by new council and planning and zoning member Mary Shedd, the council agreed to ask for a St. Louis County planner to attend the next city planning and zoning meeting to help the members understand the appropriate process for enabling projects to move forward in a timely manner.

Other business:

In other business, the council:

Heard a brief update on the lack of progress on the harbor plat, as the council heard a new laundry list of reasons for delay, including a handful of easement issues, needed mortgage consent forms and an annexation issue. “There are 50-plus easements on the property, some of which go back 50 years,” said Matt Bolf.

Tower Harbor Shores investor Michael Wood noted that the issues holding up the plat have nothing to do with the land slated for town home development. But when the platting was undertaken, it included a much larger piece of city-owned property, including the city’s industrial park where the new Lamppa Manufacturing building is being built.

 Heard a brief ambulance report from Director Steve Altenburg. His written report showed that transfers by the ambulance service are down over last year at this same period, with 44 transfers through May 31, compared to 49 in 2018. That’s despite the fact that the Tower Area Ambulance Service has had paid on-call staffing for the entire first five months of 2019. Last year, the paid on-call staffing didn’t take effect until April 1.


5 comments on this story | Please log in to comment by clicking here
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Richard Hanson

Maybe it's time for the city to look for a new engineering firm. SEH has been screwing things up since I was on the council. same old same old.

Wednesday, June 12, 2019
Lee Peterson

Amazing to me is that apparently no one on the council was designated to work closely with the Lamppa folks and SEH as the project progressed, to keep things going smoothly and to help solve problems, issues and opportunities to make things better as they inevitably arise in a complicated project like this. It seems like avoidable negligence to me. There should have been close, continual contact: the mayor or a council person should have carried the ball through the project’s completion. I wouldn’t simply put the blame on the engineer or a contractor. This is a local project. The city engineer doesn't live here. The mayor and council do...

A lot of public money is going into this project. A lot of public, IRRRB money is going into other projects in the city. The Harbor project is severely behind the 8 ball monetarily. I think it’s time to pause asking for more IRRRB grants for new projects around town until these existing messes can be cleared up and money that the City has transferred out of the Tower AREA Ambulance Service Fund to cover unrelated expenses is restored to the fund. Fair?

Thursday, June 13, 2019
Shaking my head

Maybe it’s time for a new city clerk/treasurer?

Thursday, June 13, 2019
Out of towner

Lee, SEH is the project manager and got paid big money to design, layout and work with contractors on the project. That was their job. Somebody report how much they did get paid watching the project from Duluth. How can you expect a city council member to watch over million dollar building when they get paid pennies for their service and they are already overloaded trying to save the city.

Thursday, June 13, 2019
Lee Peterson

When you run for office, especially in a small town, it shouldn't be about the salary, it is about doing a public service.

Lamppa Mfg. has offered Tower a wonderful opportunity. Someone on the Council should have taken interest in keeping track of the project. And just because there are so many other problems with things the City has touched....isn't an excuse. Don't run for office if you need personal gain for everything you do for your town. Helping make this project a success and delivered on time would have been reward enough for a truly civic minded person and I don't think it would have been that difficult to meaningfully help out.

Monday, June 17, 2019