Fergus Falls Mayor Ben Schierer’s answer for a tax abatement request by Otter Tail County Communications and External Relations director, Nick Leonard Wednesday morning gained a quick approval from the Committee of the Whole.
Leonard’s request for a tax abatement for a 60-bed facility on Western Avenue prompted Schierer to propose a public hearing for Monday evening at August’s first meeting of the city council.
Otter Tail County, in partnership with the state of Minnesota, built a 60-bed facility at 1174 Western Ave., in Fergus Falls a decade ago according to Leonard.
“The 60-bed facility was designed to provide care services,” Leonard said. “The state operated at full capacity for less than two years and then they dropped it down to a 16-bed facility.”
Leonard pointed out that there is presently a new awareness of mental-health problems in the state.
“You know and I know we have a significant number of health needs in this community and mental health needs in this region,” Leonard told committee members.
When the state identified the facility in Fergus Falls as the most expensive in their system to operate, Leonard said the county saw the need to be proactive. The county has been moving operations from Western Avenue to a smaller facility on Maryland Lane for the past year.
For several months they have also been dealing with Northstar Behavioral Health, a St. Paul-based, for-profit company that provides both chemical dependency and mental-health treatment.
The Otter Tail County Commissioners on Tuesday approved a five-year lease with Northstar that will ultimately allow the firm to utilize all 60 beds for mental health and chemical dependency treatment. Leonard made a point of explaining that the Western Avenue facility has never generated taxes.
“One of the contingencies is that we facilitate both county and city tax abatements,” Leonard said. “Currently this is a county-owned facility that is utilized by the state. It has never generated tax. Until we get a for-profit company in there it won’t.”
Tax abatement is a reduction of taxes granted by government to encourage economic development.
“The goal is to get them in there,” Leonard said. “Their goal is to ultimately acquire this building. If in fact they extend the lease or if they purchase we will reevaluate the lease.”
North Star’s use of the facility will also generate 45 to 50 full-time jobs, according to Leonard.
The county is asking for a 10-year abatement of taxes in the event Northstar extends the five-year lease.
West Central Initiative director of development, Rebecca Petersen updated the committee on work done by the philanthropic and planning organization. Since 1986 West Central Initiative has invested resources in 82 cities and nine counties of west-central Minnesota to the tune of $10.1 million in grants and $13 million in loans.
Petersen pointed out the city of Fergus Falls is currently contributing $7,500 a year to WCI’s mission. She asked for a slight bump in 2020 of $7,750.
Fergus Falls Public Works director Len Taylor’s request to exceed his department’s equipment budget fund by $130,000 was also heard.
“There are 19 pieces of equipment in the fleet right now that have been identified to be either be sold, traded and fixed that would not be replaced. What would be replaced,” Taylor said. “What would be replaced would be mowers, garbage trucks, dump trucks and pickups and a variety of equipment pieces”
Taylor told the committee there is currently $1.7 million in the equipment fund. The $130,000 requested would be the interest that has accumulated on the fund balance over the last five years.
“It’s not touching the principal,” Taylor said, just before the request was approved.
The City Council meets Monday at 5:30 p.m. in City Hall. The council has scheduled a retreat for Aug. 21 at 8 p.m.