EDA discusses future of Milford Heights Subdivision

NEW ULM — The future of the Milford Heights Subdivision was discussed by New Ulm’s Economic Development Authority (EDA) Tuesday.

Recently S & P Development purchased 20 acres that make up the second and third phases of the subdivision. The proceeds from this sale are $398,555. S & P Development plans to build twin homes and row homes on the property.

With these improvements coming to the subdivision, the EDA needed to consider options for the remaining unowned homes and bare lots.

The EDA has two spec houses in the subdivision for sale. Both homes have sale prices of $159,900. Ten bare lots are for sale in the subdivision priced at $12,500, $15,00 and $20,000.

There was discussion about turning one of the spec houses into a rental property, but Chair Charlie Schmitz felt the EDA should avoid becoming a landlord. Schmitz believes the construction by S & P Development could spur purchases from others parties.

Les Schultz suggested the spec houses be staged to make them more attractive to buyers. This would involve posting photos online to let potential buyers view the homes before visiting New Ulm.

Schultz was against using the proceeds from the 20-acre sale to build new homes.

“I’ve been on the EDA for two and half years and every home we’ve sold has been at a loss,” he said.

Schmitz felt the EDA needed to move away from neighborhood covenants as it limits what can be built in an area. However, to change a covenant, the EDA would need permission from 50 percent of homeowners.

Housing Coordinator Heather Bregel believes it is unlikely the current Milford Heights home owners would support the removal of the covenant.

City Manager Gramentz said variances from the covenant have been granted on a house-by-house basis. Similar variances could be granted in the future.

Staff agreed to bring back quotes for house staging and basement finishing to the October EDA meeting.

In other news, a request from United Prairie Bank to subordinate an EDA loan to a new bank mortgage was denied by the board.

Eric Bode, on behalf of Vaharoslee, is a participant in the Commercial Property Loan Program administered by the EDA. The property involved is located at 219 N. Broadway and is the current location of Jimmy Johns and Berens Law Office.

The EDA authorized an original loan of $25,000. The balance of this loan is $21,759.64. The request to subordinate the loan would allow the United Prairie Bank to place a new loan of $147,000 on top of the original debt.

Community Development Director David Schnobrich said the EDA has subordinated loans before, but the previous subordination requests dealt with financing for the subject property. This request was unique in that the additional loan would be spent on a different economic development opportunity. Schnobrich said there was no benefit to the lending authority to subordinate the loan.

EDA member Dan Braam agreed based on the information provided.

“There is an extra $147,000 that we really don’t know what it is being used for and it is putting the EDA’s position that much farther behind,” he said.

Braam allowed that his opinion could be changed if there was more information on the purpose of the new loan. Without additional information, approving the request would set a negative precedent for the EDA, he said.

Les Schultz made a motion to deny the request and the motion was unanimously approved.

The group did indicate a willingness to bring this topic back for further discussion in new information was provided.

The EDA approved Fair Market Rents and Payments Standards for next year. On an annual basis, the Department of Housing and Urban Development (HUD) issues new Fair Market Rents (FMRs). The FMRs set by the Federal government are $544 for a single-bedroom, $697 for two-bedroom, $874 for a three-bedroom and $949 for a four-bedroom apartments.

The Section 8 Housing Choice Voucher Program sets a payment standard to identify the maximum amount of rental assistance to be provided to a family. The board accepted a recommendation Housing Coordinator Heather Bregel to set the maximum at assistance at 100 percent. These changes go into effect in October 2017.

The EDA authorized full membership in the Greater Minnesota Partnership (GMNP) with annual dues of $1,500. The EDA has been a member of GMNP since 2014 and staff recommended continuing membership. City Manager Brian Gramentz said GMNP’s focus is economic development. It supports industrial park grants, workforce housing and other economic concerns. GMNP will pursue these concerns with the state Legislature to benefit partnership members.

Economic Development Coordinator Brian Tohal met with Easy Energy Systems in August. The company manufactures small scale ethanol systems for converting grains into liquid fuel. These units are typically purchased by farmers. The company has facilities in southern Minnesota and Iowa. They are currently looking for an additional 85,000 square feet. Tohal provided them with information on the former Palm Beach Marinecraft building and information on potential incentives for which they may be eligible.


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