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The Albert Lea City Council on Monday voted to implement a special redevelopment tax increment finance district to incentivize future development of the Freeborn National Bank and Jacobson Apartments buildings downtown.

The buildings, at 201 and 211 South Broadway, are both considered structurally substandard, which is a requirement to create a redevelopment TIF district, said Rebecca Kurtz with Ehlers, a public financial advisement firm. 

Kurtz said a developer has not yet been identified for the buildings, but the hope is to establish the district so when the developer is identified, all of the tools would be in place. The specific terms would be approved once a developer and project is identified. 

A TIF incentive plan would provide economic development benefits to help offset project costs, and specifically could allow a developer to use the increment of new tax dollars for a set number of years to pay down the overall cost of the project without impacting existing taxes.

The TIF district would allow a maximum term of 26 years of increment. 

City Manager Ian Rigg said taking the action ahead of a development agreement allows the purchase price to be eligible for TIF reimbursement expense. 

Kurtz said the action is not out of the ordinary, and the hope is that it will help in marketing the buildings. With the TIF district already in place, a developer would not have to wonder if the council would support doing so. 

The council will vote to certify the district at a later time to maximize the benefits when a project is identified. The project would likely include commercial space on the first floor and housing in the upper floors.

Kurtz said though there is not a statutory limit on when the district should be certified, typically attorneys agree it should happen in two to three years. 

The council voted to remove the two buildings from a TIF district already in place since 2004 downtown and put them in the new district.

In other action, the council:

• Heard a presentation from a representative with Bergen KDV regarding the city’s 2021 annual comprehensive financial report. 

Matt Mayer said the city was issued an unmodified or clean report, and no significant deficiencies or material weaknesses were found in internal controls. 

As of the end of 2021, the city had a general fund unassigned fund balance of about $9.038 million, which equaled 53% of the budgeted 2022 expenditures. The city’s fund balance policy calls for a minimum of 45% of the next year’s budgeted expenditures.

Statewide, cities between 10,000 and 20,000 population bring in $1,215 per person in revenue in their cities. He said the city brought in about $53 less per capita for a city its size. 

He noted the city brought in about $364 in property taxes per capita in 2021, compared to $517 by cities of similar size in the state. Intergovernmental revenues, namely local government aid, were higher at $508 per capita in 2021 compared to $367 statewide for similar cities. 

• Awarded the sale of about $5 million in general obligation bonds that will cover improvement projects completed by the city this year. Projects include the East Main Street resurfacing and trail improvements, the U.S. Highway 65 resurfacing and flood mitigation, the reconstruction of Pillsbury and Freeborn avenues, the 2022 overlay project, the resurfacing of the Washington Avenue and Main Street parking lot, the 209th Street and Happy Trails Lane project, and the City Arena roofing and flooring project. 

The bonds have a term of 10 years and will be at  3%. 

Kurtz said the city has a bond rating of AA- and commended the city for its financial practices. 

The bond sale was awarded to Northland Securities out of Minneapolis. 

Kurtz said the sale includes about $239,000 in extra funds not tied to one of the projects. The council decided to keep those funds to apply to future projects in anticipation of rising interest rates in the future. 

• Recognized a Wastewater Surveillance Award the city’s wastewater treatment plant received during the COVID-19 pandemic from the Minnesota Department of Health. 

The city collected raw wastewater samples every week and shipped the samples to the University of Minnesota, where the samples were analyzed for the various strains of COVID-19. 

City Manager Ian Rigg said in the work session the data allowed the city to see ahead of time what was coming down the waste stream.

The city, which has participated in the program since September 2020, was among 43 cities participating. 

• Heard a request from Lucas Schuster with the Pelican Breeze for the city’s financial assistance for a new dock. 

Schuster said the Pelican Breeze first set sail in 1997 as a Convention and Visitors Bureau project and was intended to get people on Albert Lea Lake and aware of the beautiful nature in the community. 

The boat was owned by the CVB at that point as part of a partnership with the city. The boat is now owned by the nonprofit organizations, and all of the business operations are done voluntarily. 

He said the city was instrumental in finding the dock location, installing and taking out the dock each year and actually paying for the dock. 

Schuster said the original two-story boat was replaced with a single-deck boat and is used by both community residents and people from outside of the city. 

Given the past relationship the organization has had with the city and CVB, he said the group is seeking $40,000 but noted the organization is prepared to fundraise some as well. 

The council did not make a decision about the request.

• Voted to deny a variance for an above ground fuel tank at 1407 St. John Ave.

City Planner Megan Boeck said the above ground tank did not meet the city’s locational and site development standards. The Board of Zoning Appeals had a public hearing on the issue in May.

• Had the second reading of an amendment to the city’s ordinance related to pet waste. One of the requirements was that pet waste be picked up immediately when on public property. 
• Had the second reading of an amendment to the city’s ordinance related to local limits on wastewater discharge. The changes were in light of federal limits being updated for cadmium.
• Appointed election judges for the Aug. 9 primary election.
• Accepted donations totaling $350 to the city.