City Council sets public hearing for Donner property tax abatement
WILLMAR -- The Willmar City Council has set a public hearing for Dec. 15 to consider a property tax abatement request on behalf of a Litchfield company looking to begin operations in Willmar.
WILLMAR - The Willmar City Council has set a public hearing for Dec. 15 to consider a property tax abatement request on behalf of a Litchfield company looking to begin operations in Willmar.
The council voted 7-1 Monday night to set the hearing date and take public comments on the tax abatement application from William Donner of Spicer on behalf of Oil Air Products LLC Fluid Power Specialists of Litchfield.
Council members voting to set the hearing date were Audrey Nelsen, Ron Christianson, Denis Anderson, Bruce DeBlieck, Jim Dokken, Rick Fagerlie and Tim Johnson.
Voting against was Steve Ahmann. He said the abatement amounted to a rent subsidy for the property owner.
The council had earlier requested that Oil Air submit a formal application for the property tax abatement.
The council’s Community Development Committee met last week, received the formal application, and voted to recommend the council set the hearing date, reported Fagerlie, committee chair.
Donner was requesting the council abate not more than $23,000 over an eight-year period. Fagerlie said Kandiyohi County has already approved abating the county portion, estimated at $37,239, contingent upon the council abating the city portion.
Donner requested the abatement on behalf of Oil Air to partially offset increased real estate taxes resulting from the move by Oil Air from a smaller facility in Litchfield to a much larger facility in Willmar, explained Bruce Peterson, city planning and development director.
The abatement would be made available to Oil Air as a pass-through from the property owner, in whose name the documents will be drafted, Peterson explained.
He said the abatement would allow Oil Air to adjust to an increased level of real estate taxes between what the company pays now in Litchfield and what will be paid in Willmar.
Oil Air proposes to lease 18,000 square feet from Donner at the Donnerite business building on Highway 12 East (former Pamida building) and will make $83,540 in improvements. Oil Air is in the business of assembly, sales and delivery of fluid hydraulic hoses.
The company currently has nine employees with a payroll of $350,000. In a three-year projection, the company expects to have 12 to 15 employees and a payroll of $460,000, according to the tax abatement application.
During discussion, Ahmann asked where were the audits, financial performance and five-year capital plan for the business plan.
“Has any of that information been given to the council and has there been any denial from any banks? Where’s the proof showing that this individual does not have the capabilities of funding this $22,000 over that period on his own? Where’s the business plan?’’ he asked.
Peterson said in this particular case no financials were presented because they were not claiming that they needed the tax abatement to do anything other than offset the increase in real estate taxes.
“There’s really no need to advance this project with that request for information,’’ Peterson said. “I did not believe it was necessary.’’
Ahmann said the abatement was more than a rent subsidy with Donner.
“I don’t see that as a major stakeholder in the community. If he owns the building, owns the property, he pays taxes on it with his own pen and paper. That’s a different story. Now we’re looking at subsidized rent for businesses. I can’t support that,’’ Ahmann said.
Christianson clarified that the motion before the council was just to set the hearing date.
Anderson, who was presiding in the absence of Mayor Frank Yanish, and City Administrator Charlene Stevens said yes.
In similar business, the council held a public hearing and voted 8-0 to approve a 10-year property tax abatement not to exceed $25,000 for Gus Wurdell of Hutchinson who will be redeveloping Regency East Mobile Home Park. Peterson said the abatement will offset part of the negative cash flows from the redevelopment.
The Kandiyohi County Board of Commissioners will hold a public hearing Dec. 16 to consider abating the county portion.
Wurdell plans to replenish the housing supply with new and late model manufactured homes. He has written that all homes will be owner occupied. Residents will buy the home and lease the land.
Dokken asked Peterson to explain what Peterson meant that the project “will take a while to gain some steam.’’
Peterson said the property has been neglected for a long time, is a mess and has a negative image with the public.
“It’s going to take Mr. Wurdell a while to bring his concept to the people, gain traction with the people and to achieve the sales that are anticipated. Those are reflected in the cash flow projections,’’ Peterson said.
“I have every confidence that it will be done. But it’s not something that’s going to happen in one or two years. It’s going to take a number of years to build that park back up to full occupancy with a much higher (quality) structure than we’ve seen in the park for a long time,’’ he said.
Wurdell was in the audience but did not speak. He was thanked by Anderson and DeBlieck. Christianson pointed out that the private sector was stepping forward, along with some tax abatement help from the city, and providing affordable housing in Willmar.