Developer miffs city officials [UPDATED]Published 11:03am Thursday, March 22, 2012 Updated 11:17am Thursday, March 22, 2012
A conversation during the Monday night meeting of the Fergus Falls City Council raised some hackles over what is and isn’t appropriate communication in regards to redeveloping the Regional Treatment Center.
The issue arose during a long discussion about the RTC. Atul Wahi, president and CEO of potential developer Geitso Export Management, mentioned that he had been in contact about the project with Fergus Falls’ state representative Bud Nornes. This was new to City Administrator Mark Sievert, who asked Wahi about the remark.
“The city of Fergus Falls owns the RTC property and we’ve dealt with the state and federal legislatures many, many, many times, and I guess (my) question to you, Atul, is where did you find it was your position to go to Rep. Nornes to initiate some type of legislative effort in regard to a property that the city of Fergus falls owns without (our) knowledge?” he said.
Wahi explained that he had asked Nornes if it was possible for the city to transfer the title of the property to him while not forfeiting its RTC grant money from the state. He also defended his right to speak with Nornes and mentioned that he had spoken with Mayor Hal Leland and special advisor on the RTC Kent Mattson about his meeting.
“I wasn’t asking (the state) to transfer the money to me,” he said. “(Nornes) said it was a valid point and they’re looking into it.”
The explanation wasn’t good enough for some city staff. Sievert said that the city had already answered that question for Wahi, while City Attorney Rolf Nycklemoe instructed him to direct his RTC questions to Mattson or Sievert.
“You’re not to be talking to the mayor or (the council members) on an individual basis to try to get permission to do something or not to do something,” he said.
In the days following the meeting, both Wahi and some city representatives clarified their statements.
A couple of weeks prior to the council meeting, said Mattson, Wahi had contacted him.
“He indicated that he was going to be trying to meet with Bud Nornes to talk about the state grant,” Mattson said. “When I asked him why he would want to meet with Bud Nornes, he said to me that he wanted to understand if the grant funds could be used by the city after title transfer.”
It’s an issue Mattson said he’s already explained to Wahi, and one that the city had answered by the state years ago.
“The grant funds can only be expended for approved purposes (demolition or public infrastructure improvements) in the grant agreement,” said Mattson, later adding, “They can’t be spent to benefit a private property owner.”
If the city transferred the property title to Wahi, it could still use some of the money to make infrastructure improvements, but if the plan fell through, the demolition dollars would be off the table.
However, Wahi said he spoke to Nornes because he wanted to know if his idea was even possible.
According to Wahi, his question essentially was, “Is there a way that the funds can be available to the city without reappropriation, (while) at the same time the title transfer could happen so we could proceed with the historical credits and tax credits?”
The question lies at the heart of Wahi’s problems with developing the RTC. His plan relies heavily on state tax credits, but he can’t take advantage of those credits until he has the property. He also believes that wooing investors will be difficult without having the property to show for it.
On the other hand, he said, “the risk to the taxpayer and the city basically revolves around the fact that the city cannot utilize its funds after title transfer for demolition. … That is a loss to the city and it is a risk to the taxpayers because what if the project doesn’t succeed?”
If it is possible for the city to keep the funds, Wahi said, the city could transfer the title to Geitso with the provision that the city gets the property back if his plan, The Global XChange Village, falls through. The city could then use its grant money to tear down all or part of the RTC.
“It eliminates a lot of work for the city, (and) it eliminates all the risk,” he said.
During the meeting, there was a feeling expressed by staff that Wahi had gone around the proper channels of communication. Neither Sievert nor Mattson had been told that Wahi had met with Nornes or Leland (who was not at the Monday meeting and could not be reached for comment).
“He was provided with that answer (about the state grant), and so that should have been sufficient for him,” said Alderman Jo Ellen Thacker.
Nornes, on the other hand, defended Wahi’s March 13 visit, saying that the developer was trying to find a way to move forward while protecting the city.
“There was no effort to change anything,” he said. “There was no effort to have any legislation drafted.”
Nornes and Wahi met with Minnesota Department of Administration representative Wayne Waslaski, who said he’d look into the possibility.
“I didn’t see that I had any need to call (the city) and get permission to have a meeting with him,” said Nornes, adding, “I don’t like to see us almost discouraging someone from coming to our town and doing something.”Tags: Regional Treatment Center