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Board denies tax abatement for Frontier Labs

Finstad sought abatement to start ag testing business in New Ulm

January 9, 2013
By Fritz Busch - Staff Writer , The Journal

NEW ULM - Brown County commissioners unanimously denied an economic development tax abatement request Tuesday for the Frontier Labs Project proposed in the airport industrial park.

On Dec. 18, 2012, the New Ulm City Council unanimously approved a resolution authorizing the use of a property tax abatement for the project that includes renovation and expansion of an existing building at 6 Somsen Street.

Estimated to cost $84,871, the project would increase the market value of the property from $257,200 to an estimated $546,400, according to a Jan. 3, 2013 letter to the county board from New Ulm Community Development Director David Schnobrich.

The city's share of the abatement payment would be about $4,114 a year from 2015 through 2028 based on the estimated project market value and 2012 city property tax rates. The county's abatement share would be about $2,655 a year for a $33,291 total county contribution.

Schnobrich told commissioners the airport industrial park building has been empty for several years and that the value difference between the existing building and renovation and expansion project creates the tax abatement.

The letter said the tax abatement program would be done on a "pay-as-you go" basis with Frontier Labs initially paying all project expenses and the city and county reimbursing them as tax abatement revenue is received. If the project does not generate sufficient tax abatement revenue, Frontier Labs would be financially responsible for any deficiencies.

Frontier Labs agreed to provide at least four jobs paying at least $14 an hour plus benefits within two years of building occupancy.

Brad Finstad, representing the project, said plans call for offices and lab space to serve southern Minnesota and Iowa farmers and seed companies with soil and manure testing and related custom work.

Commissioner Scott Windschitl said he had two concerns and cited excerpts from the Brown County Tax Abatement Policy:

(first) C. 6. Business assistance shall not be provided in cases where it would create an unfair competitive advantage for the assisted project; and (second) D. 1. That the project is not financially feasible but - for the use of tax abatement.

"I haven't seen a low-interest loan application with the Brown County Development Corp.," Windschitl said.. "Market competition is good, but I see some direct conflict here with Minnesota Valley Testing Labs."

Finstad said the project building has been empty for six or seven years and the City of New Ulm wants to see it filled.

"We would do services nobody else in this county does. We're a one-stop shop, but there is some overlap (with existing business)," Finstad said.

New Ulm Economic Development Corporation Director Brian Tohal said area competition already exists in the business.

"County policy says I can't create an unfair competitive advantage," Windschitl said.

No public comments were offered.

Commissioners approved:

Adopting a Notice of Intention to Enact a Social Host Ordinance. It will be considered at 9:30 a.m., Tuesday, Feb. 5. County Attorney Bob Hinnenthal said such ordinances will become statewide at some point, but right now, there are spots in counties without them.

A market adjustment of Grade XX, Step 26, plus annual increase for the county attorney, to $98,706 effective Jan. 1. Last year's Brown County Attorney salary was $87,972. This amount compares to 2012 county attorney salaries of $95,000 in Nicollet County, $87,500 in Renville County, and $79,024 in Sibley County.

Releasing forfeiture funds for the County Attorney to buy a computer to be used as evidence presentation in court trial proceedings. A state price quote of $1,119.63 for a Dell Latitude E6430 laptop including disk encryption and sales tax was given.

(Fritz Busch can be e-mailed at fbusch@nujournal.com).

 
 

 

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