Herald Journal Howard Lake-Waverly Herald, March 25, 2002

Some say 'sweet deal,' others don't bother

By Lynda Jensen

To some who have dreams of an expanded clinic, it's a sweet deal ­ and to others, it's a waste of time and taxpayer money.

A public hearing about the proposed bank expansion of Security State Bank and probable medical clinic expansion attracted a fair-sized crowd Wednesday, asking questions about the project in relation to taxpayer funding.

As it stands, the estimated surface cost to taxpayers will be a cap of $39,000 for project, which will cost the bank an estimated million dollars, said city financial consultant Michele Hartman. (See details.)

The $39,000 comes from rent the clinic would normally pay the city of $1,300 over a 30-month period, which the city would waive. This will help the clinic to make the transition into a new expansion, if this occurs.

The clinic needs this window of time, during the 30-month period, to sustain the financial impact of the expansion, Mayor Gerry Smith said. The clinic was not prepared to take advantage of the bank project, and is trying to figure out how to sustain the somewhat unexpected expansion.

For example, the clinic owns an X-ray machine, which is usable, but dated, Smith said. If the clinic relocated, the clinic would be forced to buy a new one at a ballpark figure of half a million dollars, since the old one cannot be moved, he said.

The city is trying to entice and "lock in" the clinic to expand and take up residence in the new bank building, Mayor Gerry Smith said.

This is the sole purpose for the city becoming involved in the bank project in the first place, Smith said.

This is similar to the city's actions to first entice the clinic to take up residence years ago.

This is part of the commitment and importance of keeping a clinic thriving in a small town, Smith pointed out.

In fact, during the meeting, it was revealed that Ridgeview Clinic was planning to perhaps either consolidate with the Winsted Clinic, or to open a clinic at Waverly or Montrose down the road. The latter would draw away from the Howard Lake facility or may cause it to be relocated, Smith said.

The clinic will probably relocate in some shape or form when its lease comes due in 2006, Councilor Don Danford said.

Aside from this, Smith is hoping to secure Howard Lake on the map for a clinic, and possibly for bigger and better things to come along, such as a doctor taking up residence there, extended clinic hours, and specialists.

In addition, adding the clinic to the bank tax increment financing district would disproportionately improve the city's collection of TIF revenues, Hartman said.

The clinic would change a straight office building into a mixed use space, which commands higher taxes per square foot, she said. This will bring in an additional $6,210 per year over time, which actually would shorten the city's payments by four years, she said.

The bank will take up 10,000 square feet, and the clinic will most likely take up 3,000 square feet.

Ridgeview is currently in the middle of a large expansion. Its Maple Plain office is being consolidated with its Delano clinic, said clinic director Jon Rauen.

Rauen commented that normally they do not receive much feedback about clinic changes such as this, but that Howard Lake residents gave a tremendous supportive response.

He also complimented the city council for its impressive development.

Bank owner John Forstrom commented that the bank is very interested in keeping the clinic as a partner.

The real cost to taxpayers is about a half million dollars, with the clinic included into the new bank building figures, resident Ron Miller said. Miller suggested donating the rent revenue of $39,000 and then cutting the city's losses.

Hartman objected to the word "losses," saying that the city is receiving a city hall building for its money, since its current building is not expandable.

In addition, the city will collect $551,540 from TIF revenues in two districts ­ TIF 10 (the bank project) and TIF 4 (Joe's Sport Shop) to pay for the project over a 27-year period.

"It's like taking tomorrow's money to stimulate businesses today," Hartman said after the meeting.

The main objective of tax increment financing is to focus businesses within a city, in order to avoid creating a dying interior that is so common in small towns, she said. It is also meant to clean up blighted, run-down neighborhoods, she added.

Since the financial arrangements are composed as they are, the city will pay only $18,885 per year ($41,620 out of the general fund, minus $23,435 in TIF revenue) for the entire project.

During the meeting, several attendees commented that it sounded like a good deal ­ even those who were previously opposed to the idea ­ and in fact, some questioned if $39,000 was enough to persuade the clinic.

Resident Verdell Stenberg expressed great doubt that the $39,000 cap would remain that much, pointing to property assessments he experienced that turned out to be triple what he was originally told.

"If it's capped there, that would be a great deal," he said.

Vern Kleve indicated he is not against the bank or clinic, but that he felt it was not the city's business to get involved with the project.

Gene Schmidt strongly objected to any kind of subsidy for the project, saying that the clinic would remain where it is, regardless of what the city does.

"I don't think we'll lose either (the bank or clinic), even if you didn't do a damn thing," Schmidt said.

Hartman indicated it wasn't so much losing as not expanding or leaving the center of town.

Business owner Craig Butturff expressed support for the project, but wondered if the city is subsidizing something that would cause two local businesses to compete against each other, namely the expanded clinic and the Stellar Health Care Center, which he owns.

"I'm all for this project," Butturff said. "It's a steal."

However, Butturff wondered what services the clinic would bring in that would compete with his own chiropractic and physical therapy services, and if the clinic would continue to give patient referrals locally.

This may be addressed in the developer's agreement, Hartman suggested.

"Health care is extremely brutal right now," Butturff said. The competition is rough, he said.

Smith emphasized that the council was not pressured by either the bank or the clinic to come up with any specific numbers for the project, and that the council members willingly entered the proposals on behalf of the public.

"Why did you move your business to Howard Lake?" Smith asked Butturff.

"Because the council was willing to work with me," Butturff said. In fact, Butturff checked out several cities before he located his business in Howard Lake, and Howard Lake was the best match for his needs, with city officials that were willing to help him, he said.

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