Council approves up to 26 years of Tax-increment financing

After multiple years of negotiation, the Albert Lea City Council on Monday approved moving ahead with the development agreement and financing plan for St. John’s Lutheran Community on Fountain Lake.

With a few small changes to be made to the agreement in the next few days, crews are slated to start pouring the foundation at the end of the week.

“It’s exciting after so many years to be at this point,” said St. John’s Administrator Scot Spates.

Plans include not only a new nursing home but also assisted-living and independent-living complexes, all joined by a town center, which offers services including an activity room and chapel, a barber and beauty shop, a coffee shop, a technology center and a fitness, to name a few. There will also be owner-occupied duplexes. The campus, estimated at $38 million, will be completed over phases and will overlook Edgewater Bay.

Albert Lea City Manager Chad Adams said the project will fill a need for affordable senior housing found in a recent housing study, will create jobs and will complete the sewer and water extension to the northwest part of the city.

St. John’s purchased the 51 acres of property — known by many Albert Leans as “the back nine” — in December 2010 from American Bank of St. Paul for $7,200 per acre. The former Albert Lea Golf Club land had been in the hands of the bank after it was surrendered by commercial developer Scott LaFavre following the property’s foreclosure.

“This is special in so many ways,” said 3rd Ward Councilor George Marin. “It’s is a redeeming of the Eagle’s Rest property.”

The council awarded a $1.58 million contract to Ryan Contracting Co. of Elko for the construction of a sanitary sewer lift station, water and sewer amenities and bituminous and gravel street construction to service the development. Adding that in with engineering costs and other contingencies, St. John’s will be required to pay a $1.9 million assessment, plus interest, over the next 20 years. That includes oversizing the system to allow for future development in that part of the city.

As part of the financing, the council approved tax-increment financing for up to 26 years for the project. Under tax increment finance, St. John’s will use up to 26 years of its taxes to the city, county and school district to fund the sewer and water extension, including the oversizing. The TIF covers 85 percent of the project assessments.

First Ward Councilor John Schulte V said this development cannot be compared to others because it involves a not-for-profit entity.

“This project is filling a need for our community,” Schulte said, noting that the demand for senior housing is increasing.

Schulte said the project will also be a large step toward the development of the northwestern side of Albert Lea. The project would be the first step toward getting sewer and water out to Interstate 90 for future development.

He reassured the public that the project will help grow the city’s tax base — it will just be delayed. He said he supported the project because he thinks it will lead toward further development.

Marin said this project was different than others in town because of the amount of money it entailed. He called St. John’s a grassroots, locally grown organization.

In other action, the council:

• Ordered the advertisement of bids for two road projects slated for this summer.

The first project involves a bituminous overlay, reconstruction. miscellaneous curb and gutter replacement, and miscellaneous sidewalk replacement on streets in the north and central parts of the city.

The second project includes Vine Avenue from Abbott Street to Fountain Street and from Clark Street to West Avenue about 185 east of St. Mary Avenue.

• Approved an application to the Minnesota Department of Natural Resources for a grant that could be used toward purchasing an 11-acre parcel of property near West Ninth Street and Fourth Avenue for the development of a 0.9-mile stretch of trail.

The grant, if acquired, would pay 75 percent of the project cost. The city would pay the remaining 25 percent — or about $19,000.

• Called a public hearing for April 13 regarding tax abatement for a potential market rate housing project. The proposed development would be five buildings that each contain six two- to three-bedroom townhomes.

• Extended the license agreement with the Albert Lea Youth Soccer Association to construct soccer fields at Edgewater Park. The former agreement had expired.

The association continues to fundraise for the project.

• Authorized a new lease agreement with the Albert Lea Community Theatre for use of the Marion Ross Performing Arts Center.

ACT will pay $625 a month for three years.

• Waived the permit fees tied to the demolition of 1116 James Ave. The property is owned by Habitat for Humanity, and the intent is construct a new home on the lot.

• Passed a resolution in support of local government aid, particularly at the state’s 2002 amount.

• Approved a resolution opposing levy limits.

Rasmussen said establishing levy limits should be within control of the local jurisdiction instead of determined at the state level.