Praying for fire recovery funds

The process of rebuilding a half-block section of downtown Alexandria that was destroyed by fire two months ago continues but at an agonizingly slow pace.

The debris from the four ruined buildings looks about the same as it did after the Feb. 25 blaze. The area is still barricaded. The “keep out” signs are still up.

The recovery has met with several delays.

First, the investigation into the fire was hampered by the COVID-19 pandemic that restricted how many insurance investigators could gather at the site.

Another hurdle is the demolition work, which also includes removing hazardous building materials, asbestos, and how to pay for it.

But there is still work being done behind the scenes.

Alexandria City Council members, city staff and some of the property owners talked about the fire recovery effort at a special meeting Monday night, April 27. Nicole Fernholz, director of the Alexandria Area Economic Development Commission, also attended the meeting, which was conducted through a Zoom video conference.

Ferguson Brothers Excavating is ready to begin the demolition but the property owners say there is a $115,000 gap between what the insurance companies will pay and the total combined cost of the demo work for all four buildings, said City Administrator Marty Schultz.

The key to getting something done might rest with the Legislature. Schultz said that the city has contacted local legislators to see if there are some state dollars available. Local legislators have introduced bills that would help address the recovery and the bills are awaiting action by the Legislature, he said.

“We don’t want to wait until the next session,” Schultz said.

Local funding options are also being explored, he added. One possibility is using money in the city’s Revolving Loan Fund to provide a bridge loan with a term of one or two years at a very low interest rate with a balloon payment at the end.

There may also be grant opportunities available through the Minnesota Pollution Control Agency for contamination clean-up.

The uncertainty of the COVID-19 pandemic also adds to the financial risk, Schultz said.

The affected businesses, of course, would prefer grants instead of loans but qualifying for that kind of funding would be a challenge, Schultz said, because there is no proposed redevelopment plan.

Tax-increment financing, for example, was available for the redevelopment project at Third and Broadway because there was a plan in place but that’s not the case with the fire-damaged buildings.

Fernholz agreed that the chances of the property owners receiving a grant through the Minnesota Department of Employment and Economic Development were unlikely if the businesses didn’t have a redevelopment plan.

A property owner said that coming up with one big project for redevelopment has potential but it would be complicated because each business faces a different situation.

Mayor Sara Carlson said the city’s goal is to get the site cleaned up as soon as possible. She said the city would continue to work with local legislators on getting grants.

City leaders asked the property owners what their plans were – whether they planned to rebuild and if there was any agreement among them on what they wanted the city to do.

A property owner, Keith Wilson, said that using the city’s Revolving Loan Fund to receive grants could be a solution but he said it was not allowed.

When asked how much money was in the fund, City Planner Mike Weber said there was about $267,000 in unencumbered funds.

Mayor Carlson noted that the city’s budget committee will be looking into options and is expected to make a recommendation to the council.

City leaders also discussed how the city of Melrose recovered from a downtown fire in 2016. Melrose was able to get legislation passed that provided grant funds to pay for some of the demolition costs. The bill also provided a 20-year tax abatement to pay for redevelopment, which has yet to occur.

Carlson wrapped up the meeting by urging the property owners to contact their local legislators and push for grants or recovery funding. She said the city would continue to work with local legislators on the bills introduced to assist with the recovery.

The 2020 legislative session is set to end on May 18.