Tiger Hills partners ask for change to agreement

Housing market hurts ability to pay

By Sarah Stultz | Albert Lea Tribune

Published Monday, November 24, 2008

The partners of Tiger Hills Development Corp. LLC are coming before the Albert Lea City Council tonight to again ask for an amendment to the phase one agreement of their housing development.

The agreement in place states that the owners are obligated to pay the city for a minimum of four lots per year in phase one of the project, but so far this year they have only paid for two lots. All of the payments are due Nov. 30.

Because of the current housing market conditions, the owners are asking the council to remove the annual minimum obligation of the four lot assessments per year and to allow them to pay the assessments as the lots sell.

In addition, Farmers State Bank, the company that the developers have their letter of credit through, is requesting that the city not call on the letter of credit to pay the assessments, but to instead work with the developers on more flexible terms to obtain payments when lots are sold.

During the Thursday preagenda workshop, City Manager Victoria Simonsen pointed out the different options the council could take.

Victoria Simonsen

Simonsen said the council could not call on the letter of credit or it could lift it. After all, the city has bond payments to make as well, she pointed out.

But if the council did call on the letter of credit, there would be ramifications from that as well.

Albert Lea Mayor Randy Erdman said when making the decision it is important to note how many lots have been sold this year compared to previous years and how many building permits have been issued this year compared to previous years.

In 2004, there were 25 lots sold throughout the city, he said. But in 2008, there have only been eight sold.

In 2004, there were 29 building permits issued, but this year there have only been four. Two of those have belonged to Tiger Hills’ homes.

“The thing is we committed to this in 2005,” Erdman said. “At that time it looked like the right thing to do. Hindsight, maybe it wasn’t. But that development needs to succeed and doesn’t need anymore bashing.”

Simonsen said she expects some other local developers to be present to say they support the request of the Tiger Hills owners.

Last year, the Tiger Hills developers came before the city to request that it not draw on the Tiger Hills letter of credit to make a payment due Nov. 30, 2007.

They sited the downturn in the housing market locally and across the nation as the cause of lack of sales and asked to restructure their debt until market conditions changed.

Randy Erdman

At that time, the council voted to have the mayor and city manager work with the developers on a payment plan for the Nov. 30 payment that was due.

Originally, Tiger Hills developers borrowed $1.4 million from the city to be paid through assessments. They have repaid about 20 percent of that debt.

The development has added $1.78 million in property value to the tax base.

The partners of Tiger Hills Corp. are Greg Moen and Jeff Svoboda.

During the Monday meeting, the council also will:

- Vote on allocating $50,000 in discretionary funds for 2009.

The city received 23 grant applications for the funds totaling $114,000. A committee made up of city staff reviewed the applications and identified whether the city had statutory authority to donate to each request.

That committee made a recommendation to the council to distribute $47,000 of the funds.

During discussion about the topic in the Thursday preagenda workshop, 3rd Ward Councilor George Marin voiced his concern about organizations submitting more than one request, even if it was for two separate events.

“Even though they’re two separate events, they’re really double dipping,” Marin said.

Councilors talked about why some organizations were denied funds, and Simonsen explained that the money is specifically set aside for events that are free to the general public and are cultural or social events.

She said the city did have a few new requests, but there were also several organizations from previous years that did not submit requests.

In the end, she noted, it felt like everyone took a cut in how much they were awarded.

During a point in the discussion, the councilors talked about doing away with the discretionary funds altogether and whether some of the organizations that applied were relying too heavily on the funds.

- Have a public hearing to receive input about changes to the 2009 fee schedule.

Some of the proposed changes to the fee schedule include reducing the amount to adopt an animal from the shelter, increasing boat dock fees, adding hotel inspection fees and increasing library fines, to name a few.

- Have a public hearing to receive input about the distribution of costs in the parking maintenance district that are associated with the downtown.

The parking maintenance district was created in 1976 with the purpose of allocating the costs for providing and maintaining parking for downtown properties.

Proposed changes include eliminating the zones currently in place to divide the cost evenly by the properties. Three other properties not currently in the district would be added. These include the north half of the Freeborn County parking lot, 224 Clark St., and 133 William St.

- Hear a presentation by Hugh Valiant and Emily Hutchins, with the Department of Natural Resources Division of Fisheries, along with a representative of the Shell Rock River Watershed District about shoreland restoration. The presenters will be available to answer questions from the council, staff or members of the public.

- Vote on a request to change the name of Lee Park to Weber Park.

Tribune staff member Ed Shannon, as a member of the Leo Carey American Legion Post, submitted the request at the Nov. 17 Park & Recreation Advisory Board meeting.

Currently at the park there is a plaque on a stone and a flag pole at the site to honor 1st Lt. John Anthony Weber, who was killed in action when his aircraft was shot down on April 7, 1943, near Guadalcanal Island. Weber grew up in a nearby home.

The request was made to honor Weber.

- Vote on whether to adopt the 2009 Albert Lea Port Authority budget.

Albert Lea Economic Development Agency Executive Director Dan Dorman will present the proposed budget as approved at the Oct. 1 Port Authority meeting.

- Have a public hearing about some miscellaneous assessments, including unpaid utility bills, refuse removal and mowing services.

- Vote on whether to defer about $1,700 in assessments at 825 Jefferson Ave. associated with the 2008 mill and overlay project.

- Vote on whether to adopt several policy changes for the Albert Lea Public Library. The Library Advisory Board recommended the changes at its Nov. 20 meeting.

The changes address the increasing number of unattended children at the library, issuing library cards to children and computer lab usage, to name a few of the changes.

- Vote on whether to call a public hearing for Dec. 22 for the rental housing fee schedule.

- Vote on whether to call a public hearing for Dec. 22 for the adoption of the comprehensive plan.

- Vote on whether to call a workshop for 5 p.m. on Dec. 11 with the Freeborn County commissioners.

- Call the initial Truth in Taxation hearing for 7 p.m. on Dec. 1.