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Knute Nelson may get tax help for $24.9 million project

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government Alexandria, 56308
Echo Press
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Alexandria Minnesota 225 7th Ave E
P.O. Box 549
56308

Knute Nelson's plan to build a $24.9 million assisted living apartment complex in south Alexandria is on track to receive a tax break.

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At its meeting Tuesday night, the Alexandria City Council set a public hearing to consider the nursing home's application for tax increment financing (TIF).

The city's Economic Development Board has recommended the city to approve the application.

The Knute Nelson Senior Living Campus will be built on a 40-acre parcel of agricultural land near Pioneer Road and 50th Avenue, adjacent from the site for a proposed new high school.

Plans call for a 205,000 square-foot facility that would include a 133-unit senior living campus - a mix of independent and assisted living senior apartments, complete with a wellness center and community spaces shared by the residents.

The complex would have a movie theater, community wellness facilities, community rooms, a beauty shop and other amenities.

Knute Nelson hopes to break ground next spring. Construction is expected to take at least a year and an opening is planned for 2010.

TIF is an economic development tool that cities use to encourage development. Property taxes are frozen for a specified period of time - in this case 13 years - while the property is improved.

The difference between the old and new tax, the increment, is used to help pay for certain parts of the project.

For the Knute Nelson project, the increment is estimated at $143,218 per year, resulting in a total benefit to the developer of $1.7 million. The city would receive 10 percent of that for administrative fees.

After the TIF period expires, taxes are projected to increase from $2,012 per year to $220,358.

The project is expected to create 24 full-time jobs and 32 part-time positions. Pay will range from $9 per hour for housekeeping to the top administrator's pay of $28 per hour.

Because it is a housing TIF, 20 percent of the apartment units must be rented to households whose incomes are 50 percent or less of the Douglas County median gross income.

The TIF public hearing will take place Monday, December 22 at 7:15 p.m. at City Hall.

In other action, the council:

--Accepted a petition from property owners to surface 4,860 feet of Thomas Drive between East Oak Knoll and South Oak Knoll.

The owners agreed to pay 80 percent of the cost.

The council ordered an engineering study to estimate the cost and determine if the project is feasible.

--Approved a walk/run fundraiser for the Alexandria Area YMCA on Saturday, October 25.

The Alexandria Technical College's health and fitness program is designing the new wellness center for the YMCA and organized the fundraiser, "Walk/Run for the Y," as a way of saying thank you, according to Kayla Flynn, ATC student.

The walk will start from the ATC parking lot and participants will walk or run to the YMCA's site along County Road 82 west of Alexandria and back.

Registration will be from 6:30 to 8 a.m. and the event will begin at 8:15 a.m. Cost is $5 per person and free for those 12 and younger. For more information, call Flynn at (320) 760-8710.

--Referred a contract dispute over the construction of 10th Avenue East - the road to the new elementary school - to the city attorney and staff.

The city's engineering firm, Widseth, Smith, Nolting and Associates is requesting Mark Lee Excavating of Alexandria to pay $4,000 in liquidated damages, claiming that the company was four days late in completing the project.

Mark Lee Excavating is contesting the charges, claiming that additional storm sewer work was added to the project.

Daryl Berghuis, representing the contractor, told the council that it could not prove Mark Lee Excavating caused any damages.

Berghuis said the contractor negotiated with the landowner to obtain an easement for the project, a task it wasn't obligated to do. He said the company also swept the road twice, even though CenterPoint Energy created the mess.

Berghuis said considering those factors and other costs absorbed by the contractor, Mark Lee Excavating could claim the city owed it more than $39,000.

Berghuis said the city's engineering firm was being unreasonable and unfair.

Alexandria Mayor Dan Ness responded by saying that council members were not road contractors or attorneys. He suggested the council refer the matter to the city attorney and staff. The council voted unanimously to do just that.

--Accepted a bid of $950,000 from Rink Tec International of Little Canada to replace the ice rink and refrigeration equipment at the Runestone Community Center.

The bid came in below the city's estimate of $973,000.

Work will begin next May and under the terms of the contract, the new floor must be completed by August 1.

Because the new floor will be seamless and no corrodible materials will be used, it's expected to last 50 years.

The new refrigeration system may be expanded to handle a second ice rink if the city ever decides to pursue it.

The council thanked RCC Manager Vinnie Hennen and consultant Scott Ward for their work in researching and planning the project.

In a related action, the council set a public hearing to consider establishing a tax abatement project to help pay for the RCC improvements.

This would allow the city to collect its share of property taxes from residential parcels near the RCC and pledge those revenues to pay off the debt. The total amount of the abatement over 20 years would be $1.3 million, the estimated principal of the bonds for the RCC project.

The public hearing is set for Monday, October 27 at 7:15 p.m. at City Hall.

The council also agreed to make a request to either the county or the school district to participate in the abatement. It needs a written denial from one or the other to get a 20-year abatement.

-- Accepted a $112,765 bid for an asphalt zipper - a machine used to cut through roads so they can be broken into chunks and hauled away.

The city received only one bid for the equipment, submitted by the only company that makes it - Asphalt Zipper, Inc. of Pleasant Grove, Utah.

Under the terms of the bid, the city will lease the zipper for five years with an option to purchase it.

Public Works Coordinator Bryan Bjorgaard, who requested the purchase, noted that the zipper even has the capability of cutting through frozen ground, which he said could prove useful for repairing watermain breaks in the winter.

-- Agreed to pay Widseth, Smith, Nolting and Associates $43,470 to provide the engineering for the city's 2009 street overlays.

Next year's projects include 4th Avenue, from Hawthorne to Irving Street; 5th Avenue, from Irving to Kenwood; 6th Avenue, from Lake Winona to Douglas; 8th Avenue, from Fillmore to Broadway; the Shoreview Drive loop from 11th Avenue; 11th Avenue from Cedar to Douglas, from Hawthorne to Irving and from Jefferson to Nokomis; Cedar Street from 13th to 15th; Elm Street from 4th to 5th and from 6th to 8th; Hawthorne Street from 5th to 6th, 7th to 9th and 12th to 15th; Jefferson Street from 5th to 6th; and Kenwood Street from 8th to 11th.

The total cost of the overlays is estimated at $285,000.

The city has all of its roads on a five-year plan for resurfacing or reconstruction, according to City Engineer Tim Schoonhoven. Since reconstruction projects are much more expensive, the city tries to periodically surface the roads.

About 125 blocks of the city's streets need to be reconstructed, Schoonhoven said.

--Accepted bids to place and seed topsoil in and around the city's drainage retention pond, which was installed this summer near the airport as part of the southwest storm sewer project.

The low bid for the topsoil was $16,124 and was submitted by Central Specialties of Alexandria. It was well below the city's estimate of $30,280.

The low bid for the seeding work, submitted by Precision Landscaping of Alexandria, was $49,081. The estimate was $52,574.

When the city first piled up the dirt from the pond, it upset many residents in the area. They didn't like the wind whipping the dirt around and they were also worried about erosion, water quality and aesthetics.

At the time, the city didn't think it could do much about the dust and dirt. Aviation regulations prevented the city from seeding the dirt because it would attract birds that would pose dangers at the airport.

The city, however, was eventually able to work out an agreement on how to seed the soil, according to Schoonhoven.

--Authorized city staff to hire an architectural firm to study the plan of moving the city's park department building on 3rd Avenue West to the city's street garage site.

The park department is moving to make way for a new county jail and joint law enforcement center.

--Increased the pension amount for the Alexandria Fire Department Relief Association by 3 percent.

Starting in 2009, firefighters will receive retirement benefits of $6,091 per year of active service, up from $6,010 in 2008. The city's contribution will be $670.

--Appointed Don Clobes to serve on the Alexandria Airport Commission. He will take over for Rob Rydberg, who retired from the position.

The city received several qualified applications for the position, noted Dave Benson, airport commission member, but Clobes stood out above the rest.

He recently retired as both a check airman and a B747 line captain for Northwest Airlines. He also has leadership experience in the Air Force Reserve 934th Airlift Wing in Minneapolis.

Clobes also served as the manager of the Alexandria Airport in the early 1970s.

--Approved the final assessments for the Victor Street improvement project.

The project included street, sanitary sewer, waterline and storm sewer improvements.

The final cost of the work was $86,155, just over the estimate of $82,142. The city's share of the project amounted to $17,274.

The rest, $68,881, was assessed to the two benefiting property owners, Five Star Living and Maynard Peterson.

A public hearing was held before the assessments were approved but nobody spoke.

--Issued the following licenses - charitable gambling to the Vikingland Builders Association, allowing it to sell raffle tickets for a January 10, 2009 event at Inn the Pines; charitable gambling to the Golden Brothers Lions Club to conduct bingo at the Elks Lodge on February 12, 2009; excavating to Doug's Excavating, Inc.

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