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A file photo shows the Lakeland Hotel building in downtown Willmar, Minn. (Tribune file photo)

June 6: Kandiyohi County approves tax abatement for Lakeland Hotel project in downtown Willmar, Minn.

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WILLMAR -- The Kandiyohi County Board of Commissioners unanimously approved a 15-year tax abatement Tuesday that could help make the redevelopment of Willmar's downtown historic Lakeland Hotel financially feasible. The county action follows a 4-3 vote Monday night by the Willmar City Council -- at the end of a nearly two-hour debate -- to approve the same 15-year abatement request.

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By contrast, the county's public hearing lasted about 15 minutes.

"It's a good project," said County Administrator Larry Kleindl. "It's a project that would be beneficial to Kandiyohi County and the surrounding area."

It's the first time the county has agreed to grant abatement of taxes for more than 10 years, and several commissioners expressed concern about extending the abatement for the entire 15 years.

"I think it's our responsibility to help, but I was hoping 10 years would do the trick," said Commissioner Dennis Peterson. "But apparently not."

"You hate to be the ones to kill the project," said Commissioner Dean Shuck.

"We don't ask for abatement lightly," said Rick Goodeman, executive director of the Southwest Minnesota Housing Partnership, which is proposing to purchase and renovate the 85-year-old building and make it the centerpiece of a $3.6 million revitalization project for downtown Willmar.

Without the abatement from the county and city - allowing funds that would otherwise go to taxes to be used for operations costs - the project will not succeed, said Goodeman.

The hotel is the "crown jewel" of downtown Willmar, said Steve Renquist, executive director of the Kandiyohi County and City of Willmar Economic Development Commission.

Renovating the hotel to include shops on the main floor and apartments on the two upper stories could trigger an economic rejuvenation of the city's downtown business community that will result in new businesses and new jobs that could generate hundreds of thousands of dollars in new tax revenues, said Renquist, in his explanation of why the abatement would be a good investment for the county.

At the current tax values, the county abatement would be $95,190 for the 15-year period. If tax values increase 3 percent a year, the abatement would be $110,797.

Because tax abatements are not paid back to a property owner until the property owner pays the taxes, Renquist said there is little if any risk to the county for the hotel project.

Ken Warner, president of the Willmar Lakes Area Chamber of Commerce, said the chamber's board of directors has endorsed the project in the belief that it could indeed rejuvenate the city's downtown image. He said residents and outsiders have a negative view of downtown Willmar and that supporting the hotel project is a "once-in-a-lifetime opportunity to invest in the jewel of downtown" and turn around the town's image to the benefit of the entire community.

The estimated $3.6 million project would be funded with a combination of private and public money including local, state and federal tax credits, abatements and financing through the Willmar Housing and Redevelopment Authority, a Small Cities Development Program grant and owner equity through the housing partnership.

Goodeman said the grants are competitive and there's no guarantee the project will be awarded the financing.

The project "could still fail" to proceed if the grants aren't approved, said Goodeman. "Any little thing could derail it."

The grant recipients won't be announced until October.

If all the financing is secured, the plan calls for renovating the hotel to include shops on the street level and about 10 apartments that would provide what is described as "work force housing" on the second and third floors, apartments that would be leased for between $548 and $658 a month. They would replace the current 30 studio apartments that are rented by low-income adults for about $250 a month.

Willmar City Councilman Jim Dokken, who voted against the request Monday and attended Tuesday's meeting of the County Board, said he's not convinced that tax abatements and credits are the right way to fund the project.

Dokken said he's worried the project will cost more than the financial returns and he is concerned about displacing the current residents in the building.

In other action Tuesday at the meeting of the County Board:

n The commissioners awarded a bid of $205,891 to Otis Elevator Company for updating the elevator in the courthouse.

n The commissioners accepted an environmental assessment worksheet that indicated a more extensive study called an environmental impact statement is not needed on a project to realign County Road 9 near Eagle Lake. However, because a cultural study on the corridor indicated the possibility of American Indian tool-making on a section of land by a creek, the route of the new road has been slightly altered to protect the site.

n The commissioners agreed to ask for assistance from the state Department of Human Services on how to prepare for changes expected next year that will require Kandiyohi County to conduct more assessments of individuals receiving a variety of waivered services. Waiver programs provide home and community-based services to people who might otherwise have to move to nursing homes or other care facilities. In the past the county of origin for the clients was responsible for conducting and paying for the assessments. Starting in May of 2013, the county where the individual currently lives will be responsible. Because Kandiyohi County has numerous services and group homes serving this population, the county wants state help to be prepared for the transition.

WILLMAR -- The Kandiyohi County Board of Commissioners unanimously approved a 15-year tax abatement Tuesday that could help make the redevelopment of Willmar's downtown historic Lakeland Hotel financially feasible. The county action follows a 4-3 vote Monday night by the Willmar City Council -- at the end of a nearly two-hour debate -- to approve the same 15-year abatement request.

By contrast, the county's public hearing lasted about 15 minutes.

"It's a good project," said County Administrator Larry Kleindl. "It's a project that would be beneficial to Kandiyohi County and the surrounding area."

It's the first time the county has agreed to grant abatement of taxes for more than 10 years, and several commissioners expressed concern about extending the abatement for the entire 15 years.

"I think it's our responsibility to help, but I was hoping 10 years would do the trick," said Commissioner Dennis Peterson. "But apparently not."

"You hate to be the ones to kill the project," said Commissioner Dean Shuck.

"We don't ask for abatement lightly," said Rick Goodeman, executive director of the Southwest Minnesota Housing Partnership, which is proposing to purchase and renovate the 85-year-old building and make it the centerpiece of a $3.6 million revitalization project for downtown Willmar.

Without the abatement from the county and city - allowing funds that would otherwise go to taxes to be used for operations costs - the project will not succeed, said Goodeman.

The hotel is the "crown jewel" of downtown Willmar, said Steve Renquist, executive director of the Kandiyohi County and City of Willmar Economic Development Commission.

Renovating the hotel to include shops on the main floor and apartments on the two upper stories could trigger an economic rejuvenation of the city's downtown business community that will result in new businesses and new jobs that could generate hundreds of thousands of dollars in new tax revenues, said Renquist, in his explanation of why the abatement would be a good investment for the county.

At the current tax values, the county abatement would be $95,190 for the 15-year period. If tax values increase 3 percent a year, the abatement would be $110,797.

Because tax abatements are not paid back to a property owner until the property owner pays the taxes, Renquist said there is little if any risk to the county for the hotel project.

Ken Warner, president of the Willmar Lakes Area Chamber of Commerce, said the chamber's board of directors has endorsed the project in the belief that it could indeed rejuvenate the city's downtown image. He said residents and outsiders have a negative view of downtown Willmar and that supporting the hotel project is a "once-in-a-lifetime opportunity to invest in the jewel of downtown" and turn around the town's image to the benefit of the entire community.

The estimated $3.6 million project would be funded with a combination of private and public money including local, state and federal tax credits, abatements and financing through the Willmar Housing and Redevelopment Authority, a Small Cities Development Program grant and owner equity through the housing partnership.

Goodeman said the grants are competitive and there's no guarantee the project will be awarded the financing.

The project "could still fail" to proceed if the grants aren't approved, said Goodeman. "Any little thing could derail it."

The grant recipients won't be announced until October.

If all the financing is secured, the plan calls for renovating the hotel to include shops on the street level and about 10 apartments that would provide what is described as "work force housing" on the second and third floors, apartments that would be leased for between $548 and $658 a month. They would replace the current 30 studio apartments that are rented by low-income adults for about $250 a month.

Willmar City Councilman Jim Dokken, who voted against the request Monday and attended Tuesday's meeting of the County Board, said he's not convinced that tax abatements and credits are the right way to fund the project.

Dokken said he's worried the project will cost more than the financial returns and he is concerned about displacing the current residents in the building.

In other action Tuesday at the meeting of the County Board:

- The commissioners awarded a bid of $205,891 to Otis Elevator Company for updating the elevator in the courthouse.

- The commissioners accepted an environmental assessment worksheet that indicated a more extensive study called an environmental impact statement is not needed on a project to realign County Road 9 near Eagle Lake. However, because a cultural study on the corridor indicated the possibility of American Indian tool-making on a section of land by a creek, the route of the new road has been slightly altered to protect the site.

- The commissioners agreed to ask for assistance from the state Department of Human Services on how to prepare for changes expected next year that will require Kandiyohi County to conduct more assessments of individuals receiving a variety of waivered services. Waiver programs provide home and community-based services to people who might otherwise have to move to nursing homes or other care facilities. In the past the county of origin for the clients was responsible for conducting and paying for the assessments. Starting in May of 2013, the county where the individual currently lives will be responsible. Because Kandiyohi County has numerous services and group homes serving this population, the county wants state help to be prepared for the transition.

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Carolyn Lange
A reporter for more than 30 years, Carolyn Lange covers county government and regional news with the West Central Tribune.
(320) 894-9750
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