MONTEVIDEO — Taxpayers may be off the hook for removing a mold-riddled and water-damaged, vacant school building, and Clara City may see in its place 38 new housing units.
The Chippewa County Board of Commissioners approved action on Tuesday to partner with Clara City for the removal of the former Clara City Junior High School facility.
The commissioners agreed to take two steps: To call for bids for its demolition, and to work jointly with Clara City to create a Tax Increment Finance District for the site. Removing the building will open the way for a proposed, 38-unit housing development, Steve Jones, city administrator for Clara City, told the commissioners.
Timing matters. Jones said a developer is hoping to start construction in September if the vacant buildings are removed in time.
Jones said the goal is to create a tax increment finance district to reimburse the costs of clearing the area for redevelopment. Once the property is developed, a private owner will be paying taxes based on the increased value of the site. The difference in taxes from the current valuation to the new valuation would be captured by the tax increment finance district to pay off the costs for demolition and any other approved site work.
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The school property is tax-forfeited. Board chair David Lieser noted that the county, as caretaker of the tax-forfeited property for the state, will eventually find itself responsible for the building’s removal due to its hazardous condition. The TIF District could spare the general taxpayers this cost while helping Clara City and Chippewa County meet a need for more housing units, he noted.
A 2018 study completed for Clara City found that the junior high facility had widespread mold problems and significant water damage. Parts of the interior had also been vandalized. A previous inspection identified asbestos in the facility. It is a compilation of three buildings, including a portion that dates to 1938 and a main area built in 1954.
“A challenging situation,” is how the architect who performed the 2018 analysis characterized it. He described the former gymnasium floor as being “like a skatepark” due to the water damage.
Jones said he believes the building has continued to deteriorate since the 2018 analysis. He said a new inspection will be needed to prove the need for the building’s removal in order to create a TIF District. “I think this will be an easy sell,” he said.
The city has pitched the idea of developing a housing project on the site by offering it as a cleared, shovel-ready property. A developer is looking at either a 38-unit project, estimated at over $7.2 million, or a 26-unit project, estimated at $4.65 million.
It is located about a five-minute walk from the town’s central business district and in close proximity to the MACCRAY school campus, parks, and churches.
Jones said the developer is confident of being able to market the 38-unit sized project. It is being eyed as a market-rate project. Due to inflation, he said the development cost estimates are likely to rise.
A previous estimate for removing the buildings put the cost in the neighborhood of $500,000, according to Jones.
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Ehlers and Associates provided the city with a financial analysis of the proposed TIF district. Those numbers showed the increased tax valuation was more than sufficient to provide the revenues that would be needed to retire the costs for making the site ready for development, Jones told the commissioners.
“We have something there that has to be gone,” said board chair Lieser. “Have to face the music, it has to come down,” he said, while indicating his support for a TIF District.
