By Tim Douglass

tdouglass@pctribune.com

Glenwood City Commissioners approved moving forward on a Tax Increment Financing (TIF) District for the Pope County HRA/EDA, current owners of the tax-forfeited Fremad building and adjacent properties in Glenwood.

Commissioners called for a public hearing on Wednesday, March 29 on the proposed establishment of a Tax Increment Financing District to assist with the redevelopment of the Fremad and adjacent buildings.  Jason Murray, executive director of the Pope County HRA/EDA, told commissioners last Tuesday that the county and the HRA/EDA had worked since 2014 to sell the Fremad building and even had a local business interested in redeveloping the building into an office building, but those redevelopment efforts “simply weren’t feasible.”  

He said that the county had been working with adjacent building owners since last September and  told commissioners the county had reached agreements with those owners to purchase their buildings and expected to “close” on  the purchases within a few weeks.

“I see this as a beginning of a resolution to the Fremad buildings and I’m excited to see what happens from here,” Glenwood City Commissioner Mavis Pattee told Murray.  The commission voted 4-0 (with Mayor Sherri Kazda absent) to approve the public hearing on establishing the TIF District .

Establishing a TIF district will assist with the costs involved with the demolition of the Fremad and adjacent buildings as well as re-establishing utilities and preparing the property for sale and redevelopment, according to Murray.

Commissioner Neil Haynes asked Murray about the surface of the lot once the buildings were removed.  “Unfortunately I don’t have that detail for you, but we are committed to bringing the property back to development standards,” Murray said. 

He said that the integrity of the property would be restored for development, but added that utilities would have to be moved or re-established and that there are a lot of details that have to be addressed “as we move through the process.”  

He said that the county and the county HRA/EDA want to create as much value in the property as possible.

He did tell commissioners that once the buildings are removed and the lot is filled it would have to sit for at least a year to settle before it could be redeveloped.  “There won’t be a building on that property immediately after demolition,” he explained. 

Why is the Fremad building a “county” issue?

The State of Minnesota, by statue, forces local county governments to bear the cost and burden of resolving tax-forfeited property, according to Pope County Administrator Kersten Kappmeyer.  In a news release from Pope County, Kappmeyer said those issues include abating hazards and nuisances posed by tax-forfeited properties.  

Often, this means the state forces a county to deal with a situation where a property is undesirable and has little economic value when the county assumes responsibility, he said.  “Once forfeited, is its no surprise the property has little value, otherwise the prior owners would have been able to sell it or otherwise leverage its value to pay the tax liabilities,” Kappmeyer stated.

He also pointed out that counties are “forced to take responsibility for such property with no money appropriated by the state to carry out the unfunded mandate.

That is why Tax Increment Financing (TIF) is being sought in a partnership with the City of Glenwood and federal American Rescue Plan Act (ARPA) grant dollars are being considered to pay the costs “to avoid a burden being placed on local taxpayers for a situation the county or its residents in no way created,” Kappmeyer stated.

There is no plan for the site 

to be a parking lot

The cost of the rehabilitation of the Fremad site into a buildable site is proposed to be funded by a Tax Increment Finance (TIF) district, whereby any increased taxable value generated by the property on the rehabilitated site in the coming years will be pledged toward retiring the expense of rehabilitating the site. This is taxation from valuation that would not exist but for the demolition and redevelopment of the Fremad site, it was explained.  The county has estimated the demolition costs, including the purchase of two adjacent buildings to be about $730,000. “For those costs not recaptured by TIF proceeds, costs may be partially paid by federal ARPA funds previously received by the county,” Kappmeyer explained last week.   

“This approach is intended to ultimately help prepare a blighted site allowing a private party to redevelop it and place the property back on the tax rolls, without an undue burden from the preparation costs being placed on the local taxpayer. And because such redevelopment will in part fund the site’s rehabilitation costs, a ‘parking lot’ or other unimproved land use would not be the type of redevelopment that is intended to take place in this location,” Kappmeyer stated.  

Repurposing the Fremad 

structure has been explored 

for years

Ample opportunity has been given to interested private parties, both locally and regionally, to propose repurposing plans to restore the existing Fremad structure to a condition where it could be occupied in conformance with current building code and standards for new uses, according to the news release from the county.   Kappmeyer said that there have been “many parties interested,” but none have been able to do so in a way that makes economic sense, can bear the costs of labor and materials to bring the structure to standards, and abate the hazards of the property as it was conveyed to the county. 

A January 2017 Conditions Assessment Report gave an estimate of “probable” project cost of $1,538,442.30.  That figure is now approaching or exceeding $2,000,000 in 2023 dollars, if accurate. A review of that report’s conclusions appears to be an absolute “best case” scenario, according to Kappmeyer, “without accounting for additional hazards or issues later engineering reviews outlined with the structure’s integrity.” He added that if repurposing of the current building was pursued, such renovation would require the structure to be brought up to “many modern safety standards and codes, further increasing that cost.”

In  2017 and again in 2018, the Fremad building was offered for sale by auction by the county twice, at very minimal starting bids.  Then in 2019, the property was conveyed to the county HRA-EDA for redevelopment of the site. If such a repurposing plan was feasible, the property would have been purchased when offered; however, no bidders appeared and no one offered the county’s minimal over-the-counter price as low as $10,000 for the building between the 2018 auction and later conveying the property to the HRA-EDA in 2019, it was explained.  

“Dozens of interested parties with an eye toward repurposing the current structure have toured the building both before and after the auction offering, with none being able to put a pencil to paper for a plan that was feasible,” Kappmeyer said.  The few repurposing plans later proposed to the HRA-EDA either did not account for full remediation of the issues at the site or left the taxpayers with increased and/or unwarranted obligations and risks if the plans would have been approved as proposed, he added.

Why are the adjacent buildings affected?

Due to the way buildings were constructed when this block was built, the Fremad building now shelters, provides partial enclosure and shields the two occupied buildings to the Fremad’s west and north. One is the Zuber Law Office, which also was the Pope County Bank building and the other is a building on the north side that is owned by Tom Buysse.  Removing the Fremad building would take one wall from the western structure and would leave the northern structure without critical protection and support, according to latest engineering study.  That’s why the two adjacent buildings are being acquired by the HRA/EDA.  By purchasing those buildings, rehabilitation of the entire site will be more efficient and more cost-effective.  Based on estimates, selective removal of just the Fremad building would be more expensive compared to demolition of the cluster of buildings, it was stated in a report from Sandman Structure Engineers done for the county HRA/EDA in August of 2022.