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Developer miffs city officials

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.”

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  • benny

    City council members were miffed huh? Maybe they should be less emotional and possessive of this city property and more open to getting something moving here. Oh wait, that’d require progressive thought void of ego and attitude. Nevermind.

    Sounds like they were trying to take personal ownership and give Mr. Wahi some sort of public verbal spanking- when they themselves should be the ones told to, “knock it off”.

    Newsflash you city fat cats, you’re not the authority, no matter how many times you yell it in the Viking Cafe while banging your shoes on the table.

  • Bob Bergh 998-2100

    Don’t you see the City of Fergus Falls doesn’t have a clue what entrepreneurial skills are all about.

    Due diligence is essential for all, but telling an entrepreneur he can’t talk to someone of his choice is very illegal, unethical, discriminating or ethical!

    Best of luck in your ventures.

  • concerned

    this city council is horrible! they’ve circumvented the peoples right to hold elections and now are so bold they think they have the right to demand a potential investor not be allowed to ask fir advice from an elected representative? shameful!

  • Jake Krohn

    So:

    * The developer wants the title to the property so that he can attract investors and utilize state tax credits;
    * The city wants investors and proof of financial wherewithal before they will give up the title, and;
    * Once the title is given up, the state won’t allow the city to make use of the demolition funds if the project falls through and it comes to that?

    Ignoring the contrived notion for the time being that it’s “all in” on this project or nothing at all, of these three statements, it seems that resolving the last one would make resolving the first two a lot easier. As it is, it almost seems like the state wants to see this fail and the buildings to be torn down. There’s always room for negotiation, right?

    • nanajean

      That is what he was talking to the officials about. How it can be done with out the city losing funds. Is this difficult to understand? I’m afraid I have to agree with the others. Their arguments make sense where some of the others do not. Why does this article not address the behavior of the council as well as our city administrator for blatant violation of the civil rights of a citizen. Any employer would immediately dismiss an employee who behaved in the manner that the council and administrator did.

  • J. Anderson

    The three council members that had an issue with Mr. Wahi contacting a state representative about state funding questions has every “RIGHT” to do what he did. I wouldn’t trust the city council of Fergus Falls either. Their power hungry and all-knowing attitudes are absolutely appalling. Who do they think they are, telling anyone who they can or cannot talk to. You are not the Kings and Queens that can impose your own personal will on the rest of us.

  • bike

    The city of Fergus Falls has a right to be cautious with this type of developer. The listed companies for the prospective developer have little public information available and that which is available lists one of the companies as a computer consultation firm but the firm has no associated website. It is also suspect that the developer would be interested in grant money intended by the state for other purposes. If anyone does some minimal research on the developer and the associated companies it does not inspire confidence in the proposal or developer. Any serious developer would approach the counsel with a properly formed plan and proposal. My question is: Why has Fergus Falls even entertained this clown for this long?

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