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City grants tax abatement to Frontier Labs

MVTL?CEO Berg wanted policy established before abatement granted

December 19, 2012
By Josh Moniz - Staff Writer , The Journal

NEW ULM The New Ulm City Council unanimously approved Frontier Labs for a tax abatement program on Tuesday for Brand Finstad's proposal to establish an agricultural testing lab at 6 Somsen St.

The program would help pay for required work on the site to make it usable as a lab by providing a rebate after taxes are paid. It would put any risk on Finstad and loans he takes out for the project. The program would provide $4,114 in City property tax rebate and $2,654 from Brown County over a period of 15 years. The City will provide a maximum of $59,392 over the entire period. Finstad would be required to provide four jobs at $14 per hour before benefits.

Thomas Berg, CEO of Minnesota Valley Testing Labs (MVTL), strongly objected to the program at a previous council meeting on the grounds it was tax dollars financing competition with existing an business. At Tuesday's Council meeting, Berg said the Council should delay implementing the program until the City drew up specific criteria and application process for tax abatements programs to avoid subjectivity. Several business people spoke in support of Berg.

Finstad said his business would cover other areas and would not directly compete with Berg.

Berg said that he already competed with the parent portion of Frontier Labs and that Finstad had already been speaking with his customers and Finstad's brother had made offers to buy the testing laboratory of MVTL.

"This is a zero-sum game. He can only grow his business if he takes some of our business," said Berg.

Councilors said they did not want specific parameters with the tax abatement program to allow more flexibility in attracting businesses and to avoid being forced to judge whether one new business was competing with another.

City Manager Brian Gramentz gave the example of one company building large trailers and the other building smaller trailers of the same brand. He said they may not compete for customers, but would compete for welders as employees. He said the Council handles the program similar to its JOBZ or TIF districts while adhering to the Minnesota Legislature's initial intent of having the method more open and flexible.

Councilor Les Schultz said that because Finstad might build within 30 miles of New Ulm regardless of whether the abatement program was approved, he would still be in competition with MVTL if he built elsewhere and New Ulm would not gain the jobs.

Berg repeated his objections and asked what would happen if his business proceeded with a plan to construct a microbiology lab in a few years to accommodate its growth in food science.

Councilor Ruth Ann Webster said that if the project proceeded and Berg applied for subsidies, he would be given the same consideration as Finstad on the basis of what not-yet-created tax revenues the City would be willing to give up in exchange for more local jobs and future tax revenues.

The program will be presented the Council again later for final approval.

After the meeting, Berg said he accepted the Council's decision and would shift focus to trying to outperform Finstad.

"It's alright. Competition is good. Some of the best things I've done has been in response to competition," said Berg.

Tax Forfeiture

The Council approved authorizing Brown County to sell the major Dacotah West Addition, near Cottonwood Street and Dacotah Drive, and the Minnesota River Valley Subdivision, near Liberty Street and North Highland Avenue, for entering tax forfeiture.

Brown County will sell the affected lots, except for converting Outlot A in both properties to storm water holding ponds, to help pay off outstanding special assessments owed on the property. The unpaid assessments must be covered by the City, adding to its debt and expenses.

If the sale revenues are below the assessments owed, the City can newly special assess up to $7,500 per lot on the Dacotah property and $4,000 per lot on the Minnesota Valley property based on how much is left. If the sale exceeds the money owed, the surplus revenue will be divided up among Brown County, the City and District 88.

Brown County will begin work on the action in early January.

Other action

The Council approved increases to liquor licenses. The annual On-Sale Liquor license was increased from $2,500 to $3,000 and On-Sale Wine from $250 to $300.

The Council approved amending the City Code to allow commercial dog kennels in select industrial and commercial zones if smell and noise requirements are met.

(Josh Moniz can be e-mailed at jmoniz@nujournal.com)

 
 

 

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